Manager's Pocket Guide To Systems Thinking and Learning

THE MANAGER’S POCKET GUIDE TO
SYSTEMS THINKING
& LEARNING
by Stephen G. Haines
HRD PRESS
Amherst, Massachusetts
Copyright © 1998, Centre for Strategic Management
All rights reserved. Any reproduction of this material in any media

without written permission of the publisher is a violation of existing
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TABLE OF CONTENTS
Introduction ......................................................................... v
— OVERVIEW —
Chapter I
Understanding Systems Thinking & Learning................ 1
Presents the big picture and four concepts of systems thinking.
— APPLICATIONS —
Chapter II
Standard Systems Dynamics ............................................ 37
Presents the 12 principles, questions, and tools that good
systems thinkers know and regularly use.
Chapter III
Phase A: The Outcome-Thinking Tools ............................ 81
Offers practical tools for becoming customer-focused
and results-oriented.
Chapter IV
Phase B: Feedback and Learning Tools ........................... 91
Stresses the key tools in creating the learning organization.
Chapter V
The A-B-C-D Systems Model ............................................ 105
Provides tools to increase the effectiveness of many key
management processes.
iii
The Manager’s Pocket Guide to Systems Thinking & Learning
Chapter VI
Levels of Living Systems................................................... 149
Includes tools to guide learning and change at six
important levels of organizational functioning.
Chapter VII
The Rollercoaster of Change ............................................. 173
Offers five different uses of the systems thinking concept
most essential to productive change efforts.
Chapter VIII
Summary Tool: A Strategic Management System ........... 191
Brings all the tools together into the systems thinking
framework that progressive managers need.
— CONCLUSION —
Chapter IX
Summary of Systems Thinking and Learning ................. 199
Bibliography ......................................................................... 207
About the Author ................................................................. 217
iv
INTRODUCTION
The purpose of this guidebook is to provide progressive

managers with practical tools for enhancing learning,
change, and performance on individual, team, and orga-
nizational levels. The design and content of these tools are
based on systems thinking and learning, a way of thought,
understanding, and action that offers each of us a better
means to achieve the results we desire.
FROM THEORY TO AUTHENTIC PRACTICE
Systems thinking comes from a rigorous scientific discipline

called General Systems Theory, which developed from the
study of biology in the 1920s. The theory centered on the
natural world, the living systems there-in, and the common
laws governing those systems. Its major premise was that
such laws, once known, could serve as a conceptual frame-
work for understanding the relationships within any sys-
tem, and for handling any problems or changes encom-
passed by that system. Consequently, the theory empha-
sized the value of viewing a system as a whole, of gaining
a perspective on the entire “entity” before examining its
parts. It is this emphasis that informs and shapes the prac-
tice of systems thinking—the authentic kind, the kind we
will be concerned with in this book.
Authenticity is an important point because the term sys-

tems thinking has risen into popular use—a result of the
practice’s major role in Peter Senge’s bestseller The Fifth
Discipline—and, as an organizational-change buzzword,
it is often applied indiscriminately. People use systems
thinking (and systems learning as well) to cover a broad
range of meanings, from anything that links up with
v
something else to a list of topics that all relate to training,

education, and achieving change. This overgeneralization
not only undermines the distinct power of systems thinking
but also brings into question whether most people know
what the word system even means.
To clarify matters from the start, here are the definitions

essential to the use of authentic systems thinking, and on
which the contents of this guidebook are based.
DEFINITIONS: SYSTEM AND SYSTEMS THINKING

➥ System—A set of components that work together
for the overall objective of the whole
➥ Systems thinking—A new way to view and
mentally frame what we see in the world; a
worldview and way of thinking whereby we see
the entity or unit first as a whole, with its fit and
relationship to its environment as primary
concerns
The connection of systems thinking to General Systems

Theory is evident in the above definition. Whatever
happened to the theory itself? It never made the leap into
mainstream consciousness, and thus became a lost art—
at least until now.
FROM CHAOS AND COMPLEXITY TO

ELEGANT SIMPLICITY
In this book, the secrets of General Systems Theory—its

perceptions of the natural world around us, its framework
and characteristics—have been rediscovered and put into
vi
Introduction
practical tools for success in today’s chaotic and complex

world. I’ve taken these natural laws and organized them
into four categories:
1. The Seven Levels of Living (Open) Systems
2. The Laws of Natural Systems: Standard Systems

Dynamics
3. The A-B-C-D Systems Model
4. Changing Systems: The Natural Cycles of Life and

Change
Each category represents an elegantly simple concept

that, in conjunction with the others, gives us an invaluable
framework for viewing the world and its systems. By
adopting this new perspective, we can bring order and re-
finement to our understanding of those systems, thus im-
proving our ability to problem-solve and effect needed
changes within them.
SYSTEMS THINKING: A NEW ORIENTATION

TO LIFE
For over 20 years I have seen firsthand just how useful

the systems thinking framework is as an orientation to life.
In my younger, military days I was trained in engineering—
a discipline grounded in analytical and reductionist
thinking—and so the framework came as quite a revelation
to me. It has since helped me become more successful in my
career, first as a senior corporate executive and then as a
CEO and consultant to CEOs. And it can help you become
more successful too.
Why is systems thinking so effective as an orientation to

life? Because it is based on a simple but profound truth:
vii
Living systems are the natural order of life. Most of us,

however, overlook this truth; we tend to take natural and
universal laws for granted, rather than explore their secrets
to see what they can teach us about life and our perceptions
of the world. It is an unfortunate tendency, and one I hope
to help remedy through the tools in this guidebook.
So get ready for a new orientation to life—for an elegantly

simple way to view the world and better understand the
dynamics of its systems. Let systems thinking and learning
clarify and simplify how you see reality, so you too can
operate more successfully in today’s complex and globally
interconnect world. Here’s to elegant simplicity . . . and to
systems solutions!
viii
OVERVIEW
1. Understanding Systems
Thinking & Learning
A new age—the Systems Age—has clearly begun. Today’s

technological changes and innovations focus mainly on
systems, particularly electronic ones, and on systems
linking and interface (e.g., GATT, Mercosur, the Internet).
The systems around us have multiplied and enlarged, often
to overwhelming numbers and proportions. Corporations
span the globe; communications satellites ring the skies.
As distance is redefined, systems collide in countless ways,
defying our comprehension of change and the adequacy our
usual problem-solving methods. We find ourselves in a
small world of enormous complexity, a new world that
demands we see it from a new perspective—a systems
perspective—with a mindset attuned to processes, patterns,
and relationships. Systems thinking is tailor-made to meet
this demand and to help us manage our organizations in
the Systems Age.
DISCOVERING THE SYSTEMS THINKING MINDSET
To begin with, we must understand that any mindset

consists of mental models, or concepts, that influence our
interpretation of situations and predispose us to certain
responses. These models, which are replete with beliefs
and assumptions, thus strongly determine the way we
understand the world and act in it. The irony is, they
1
become so ingrained in us, as tendencies and predisposi-

tions, that we seldom pay attention to them. Even when
something in our experience calls them into question—
an “unsolvable” problem, perhaps, or an “unmanagable”
interpersonal conflict—we miss the call. Those problems
and conflicts, patched up for the time being, never really
get resolved, and we wonder why success eludes us.
Often, not until a crisis hits, driving us deep into ourselves,

do we realize we’ve been acting on unfounded beliefs or
outmoded assumptions, and finally shift our mindset. But
we don’t always catch the obvious lesson: that we need to
put ourselves in touch with our mental models, hold them
up to the light and look for biases and unsupported “facts,”
those things which cause us to misunderstand the world;
in short, that we must take an active role in shaping our
mindsets, opting for mental models which better “capture”
the world we need to understand. It is at this point where
the systems thinking mindset comes in.
Mindset and Worldview
The beauty of this mindset is that its mental models are
based on natural laws, principles of interrelationship, and
interdependence found in all living systems. They give us
a new view of ourselves and our many systems, from the
tiniest cell to the entire earth; and as our organizations
are included in that great range, they help us define
organizational problems as systems problems, so we can
respond in more productive ways. The systems thinking
mindset is a new orientation to life. In many ways it also
operates as a worldview—an overall perspective on, and
understanding of, the world.
To develop this mindset, we must first look to three fun-

damental principles of living systems: that of openness,
interrelationship, and interdependence.
2
I. Understanding Systems Thinking & Learning
The Principle of Openness

Any system falls into one of two basic categories: open or
closed. An open system accepts inputs from its environment,
acts on the inputs to create outputs, and releases the out-
puts to its environment. In contrast, a closed system is
isolated and hermetic; an experimental, sterile chemistry
lab would be an example. Virtually every system in which
we operate is an open system, although some are more open
than others—a key to success, as we shall see later in this
guidebook.
By viewing the systems around us as open ones, we become
more aware of their interactions with their environment.
This awareness is crucial, for if we are to manage change,
make decisions, and solve problems within systems, our
considerations must include that environment as well as the
systems components that support the objective of the whole.
This is the nature of systems, and we have to work with it.
The Principles of Interrelationship and
Interdependence
When one component of a system changes, it affects many
other systems components and may even alter the entire
system. Likewise, when a system itself changes, it has a
necessary effect on the other systems in its environment.
Why? Because there are points of relationship and inter-
dependence that extend through and across systems and
link them in various ways.
Just think of an ecosystem like a salt marsh. Its
inhabitants—biological systems such as birds, insects,
mollusks, grasses, algae—depend on the conditions of
that marsh; but the conditions also depend on them. If
the grasses begin to die off, for example, the birds will be
more vulnerable to intruders and have no place to nest;
their absence will cause condition breakdown for other
inhabitants, who will likely overpopulate; moreover, the
3
lack of grasses will mean more erosion. If poor conditions

continue, eventually the marsh will be little more than a
drainage hole.
Why might the grasses begin to die? Because of a change
in the marsh’s environment, in other systems. Maybe an
increase in storms has resulted in a closed breechway,
causing water deoxygenation (a causal chain running from
weather to coastal to marshland systems); or perhaps or a
rise in beach traffic has lead to more exhaust pollutants
(a confluence of chemical, technological and biological
systems). And the loss of the marsh will affect the entire
coastal area, itself a system full of systems and interrelated
with, and interdependent on, its environmental systems.
The above is, of course, a worst-case scenario, yet we see
similar scenarios all the time, and not only in ecological
systems. We see them in the failure of businesses, com-
munities, and even nations; these too are living systems,
part of the natural order of life. We also see them in
ourselves, for we are biological entities, each body a
configuration of physical and mental systems. Our overall
well-being is inextricably bound up in the well-being of
those systems, with patterns of interdependence linking
them to one another and their environment. Just how
strong these links are becomes clearer all the time. We now
know, for instance, that mental stress can compromise the
immune system and that an optimistic attitude can help the
body heal faster. Because neither stress nor optimism can
be looked at under a microscope, this relationship strikes
some people as odd, even dubious; but to someone with a
systems thinking mindset, it makes complete sense—is
simply the laws of living systems at work.
Putting the Principles to Work
Once we get a mental handle on the principles of openness,
interrelationship, and interdependence, it is only natural
4
➤ “SEEING” EARTH: A SYSTEMS MINDSET EXERCISE
To grasp the marvelous “fabric” of systems, mentally stand back

for a moment from your life, your work, your city, state, nation,
world. Think of the NASA photographs of Earth—find one in a
book, if possible—and imagine you are out in space, seeing our
blue and white planet shining in the immense blackness.
Does Earth seem isolated and independent to you? If so, shift

your perspective. Think of the solar system and the gravitational
force exerted by the sun and the planets and their moons.
Consider the distribution of matter across the planets, the basic
structure of the atoms which link that matter, the force which
holds atoms and molecules together. Imagine, if you can, that
suddenly, in one area of the solar system—say the area around
Jupiter—there is a breakdown in those forces. What happens to
Earth? Does it seem as isolated and independent anymore?
Now focus on Earth itself. Think about the statement “Earth is a

chaotic mess of unrelated and isolated events, conditions, and
living things.” Does this statement make sense? How could you
disprove it simply by looking at our planet? Does its blueness
and whiteness (its seas and atmosphere) and its shine
(reflectivity) indicate unrelatedness and isolation? Do these
features rely only on themselves for their existence? What else
do they rely on? And what relies on them? Would the statement
“Earth is a single, complex organism” make far more sense?
Why? What does it imply?
for us to wonder how we can get a practical handle on

putting them to work in our organizations and other living
systems. The fact is, many of us have already begun to do
it. Collaborative, team, and systems-oriented efforts are
becoming more and more common in organizations and
communities. Also, there are fields of thought such as
Gestalt Therapy, Complexity Theory, and Chaos Theory,
5
and technological areas like operations research, tele-

communications, and information systems, that deal with
the interrelationship of processes and patterns—the art
of systems thinking in its broadest sense. Among its practi-
tioners are such diverse people as Fritjoff Capra, Jay
Forester, Peter Senge, Russ Ackoff, Meg Wheatley, Eric
Trist, and Ludwig von Bertalanffy, all of whom recognize
that systems behave in accordance with these principles,
and that what we see changing on one systems level will
affect other levels in various, ongoing patterns of cause and
effect.
To become practitioners of that art ourselves, we need to

start looking at societal and organizational problems as
systems problems and seek systems-integrated solutions.
Rather than identify a problem as one isolated occurrence,
we must learn to identify and solve patterns of problems.
We also must try to detect patterns of relationship and
interdependence between systems, looking for “leverage
points”—areas of influence that, if acted upon, can lead
to lasting beneficial changes throughout those systems.
Our systems thinking mindset thus requires mental models

that help us discover more than just “partial systems”
solutions—what we tend to get in today’s systems-focused
efforts. As yet there is only one body of thought that pro-
vides us with those mental models, offering us a way to
reach fully integrated solutions to our systems problems.
And it is not Gestalt Therapy or Chaos Theory. It is General
Systems Theory, a lost art based on a natural perspective
of the world and its many systems. Perhaps because its
originators were primarily biologists, this theory looks not
to artificial constructs or paradigms for its understanding
of the world, but to life itself, acknowledging that living
systems are the natural order of life. Let’s take a closer
look.
6
GENERAL SYSTEMS THEORY
In the 1920s, biologist Ludwig von Bertalanffy and others

proposed the idea of a general theory of systems that would
embrace all levels of science, from the study of a single cell
to the study of society and the planet as a whole. They were
seeking these generalizations in order to create a recogniz-
able standard of scientific principles that could then be
applied to virtually any body of work. Out of this study
came the scientific application called General Systems
Theory.
Geoffrey Vickers, in 1970, explained the theory more in

layman’s terms:
The words general systems theory imply that some things

can usefully be said about systems in general, despite the
immense diversity of their specific forms. One of these
things should be a scheme of classification.
Every science begins by classifying its subject matter,
if only descriptively, and learns a lot about it in the pro-
cess . . Systems especially need this attention, because an
adequate classification cuts across familiar boundaries
and at the same time draws valid and important
distinctions which have previously been sensed but not
defined.
In short, the task of General Systems Theory is to find the
most general conceptual framework in which a scientific
theory or a technological problem can be placed without
losing the essential features of the theory or the problem.
This theory, then, is a marvelous vehicle for framing

and describing universal relationships. Its basic precept is
that, in our work on any problem, the whole should be our
primary consideration, with the parts secondary. The theory
also states that parts play their role in light of the purpose
7
for which the whole exists—no part can be affected without

affecting all other parts. Thus, when we want to study any
system, be it organizational, organic, or scientific in nature,
we must begin at the right place.
The place to start is with the whole.

All parts of the whole—and their relationships
to one another—evolve from this.
This conceptual approach is therefore quite different from

our familiar reductionist, analytic, and mechanistic ways
of thinking—ones whose age has come and gone. Moving
beyond them won’t be easy, but it can be done.
SYSTEMS THINKING VERSUS “MACHINE AGE” THINKING
In The Fifth Discipline, Peter Senge succintly captures the

situation we’re faced with. He states:
From an early age, we’re taught to break apart problems

in order to make complex tasks and subjects easier to deal
with. But this creates a bigger problem . . . we lose the
ability to see the consequences of our actions, and we lose
a sense of connection to a larger whole.
When did this “lesson” take hold in our society? Quite

possibly in the Agricultural Age. Many social theorists
believe that today’s problems stem from that age, when we
found ways to dominate nature and make it subservient to
our immediate needs. The Industrial Revolution furthered
that dominating mode, as it was a “mechanistic revolution”
fueled by the intent to take over and conquer Mother
Nature. And it worked—or so we thought.
8
The mechanistic approach to effecting change is no longer

viable, if it ever was. As Russell Ackoff reminds us, “We
[have been] attempting to deal with problems generated
by a new [systems] age with techniques and tools that we
inherit from an old [mechanistic] one.” Ackoff believes these
old techniques and tools developed as the Agricultural Age
closed and the Machine Age began. In his view, the latter
spawned three fundamental concepts: reductionism,
analysis, and mechanization. He further believes they now
must change if we want to be in step with the Systems Age.
The Fundamental Concepts of the Machine Age

1. Reductionism. This concept’s premise is that if you
take anything and start to take it apart, or reduce it to its
lowest common denominator, you will ultimately reach
indivisible elements. For instance, in reductionism, the
cell would be the ultimate component of life.
2. Analysis. A powerful mode of thinking, analysis

takes the entity/issue/problem apart, breaking it up into its
components. At that point in analysis, you would solve the
problem, then aggregate the solutions into an explanation
as a whole. Analysis tends to explain things by the behavior
of their parts, not the whole!
Even today, analysis is probably the most common tech-

nique used in corporations. Managers “cut their problems
down to size,” reducing them to a set of solvable components
and then assembling them into a solution as a whole. It is
still so much the norm that many continue to see analyzing
as synonymous with thinking. Instead, synthesis or holistic
systems thinking is what’s required.
3. Mechanization. This seeks to explain virtually every

phenomenon by resorting to a single relationship: cause
and effect. However, mechanization has a key consequence:
9
when we find the cause, we believe we don’t need anything

else, so the environment becomes irrelevant. Indeed, the
whole effort of scientific study is about relationships that
can be studied in isolation and in laboratories—a closed-
systems view of the world.
Mechanization colored how we looked the world as a whole.
It brought us assembly lines, mass production, countless
machines—and the idea that we live in a mechanistic,
rather than organic, world. We have gone from thinking of
machines as a means for mass production to thinking of the
whole world as a machine, not as “Mother Nature,” with a
will and a mind of her own.
Appearance and Reality
While the reductionist, analytic, and mechanistic
approaches may appear to resolve ongoing problems,
they actually fail to provide long-term, permanent solu-
tions. Analytic thinking is perhaps the biggest culprit
among them, for it is such a common way of thinking that
we’re hardly aware of doing it. Because its central, linear
approach is to problem-solve only one issue at a time, other
issues must wait their turn, and this alone can cause
problems. It’s the inherent deficiency of this thinking
mode—something important to remember and be on the
alert for.
Simple analytic thinking focuses on cause-and-effect:
one cause for every one effect. It asks the all too common
either/or question. Its weakest link, and the reason it’s
not working in today’s world, is that it doesn’t take into
consideration the environment, other systems, and the
multiple and/or delayed causality that surrounds each
cause and effect. Nor does it consider a part’s interrelation-
ships and interdependencies with other parts.
Analytic thinking, when paired with reductionism, does
makes us “micro-smart”—that is, good at thinking through
10
individual projects and elements—but it also makes us

“macro-dumb” at planning for the whole portfolio. Here are
a few dramatic examples of how analytic thinking has run
amuck and led to needless complexity.
• The U.S. Naval Academy Regulations—Over
1000 pages, as compared to 10 pages when the
Academy opened 150 years ago. Both versions cover
the same topics, but whereas the earlier one assumes
readers can apply common sense, the other spells out
each and every probability.
• Heath Care—Thousands of small, specialized pro-
grams, often based on grants created for singular,
simplistic problems and solutions
• Specialized Government Districts—Thousands of
unaccountable districts: water districts, assessment
districts, school districts, and so forth
• Federal Intelligence Agencies—We have 16 agencies
of the federal government concerned with intelligence.
They sound like alphabet soup: CIA, NSA, DIA, NIS,
NCS, and so on.
• Congressional Subcommittees—Too many to enumer-
ate. Every time a new issue comes along, Congress
establishes a new subcommittee, to the detriment of
good government.
Is it any wonder we feel overwhelmed using the analytic

approach to systems problems?
Furthermore, we must consider that the world of systems

consists of circular entities (and feedback loops), in which
multiple causality is integrally tied to multiple effects in an
open and free-flowing environment. Clearly, analytic
thinking cannot begin to comprehend, much less manage,
the reality of such a world—which just happens to be the
real world we live in.
11
At first glance, systems thinking

may appear more complex and
multilevel than analytic or reduct-
ionist thinking, but once we become
familiar with its central concepts
and framework, we find it helps us
detect the order in complexity and is
more accommodating to our under- Start thinking of systems
standing of reality. The conceptual as circular entities!
linchpin of systems thinking, and of
its mindset, is that all systems are circular entities. This
concept, which is based on the actual nature of systems, is
integral to the input-transformation-output-feedback model
that forms the framework for systems thinking and reflects
the natural order of life.
Once we get used to the systems thinking mindset, com-

plexities fade away and our perspective is like that of an
astronaut, someone taking a higher but no less accurate
view of things . . . seeing the world as it really is, not as
people wish it to be or assume it to be because of Machine
Age ideas. Through the four elegantly simple concepts
described next, anyone can adopt this mindset.
MOVING INTO THE SYSTEMS THINKING MINDSET
As we saw in the Introduction, the systems thinking

mindset relies on the four concepts below. All are essential
to our understanding of systems and systems change. We’ll
look at each one in turn.

In his classic book, Living Systems, James G. Miller contri-
buted this key concept of systems levels, which is being
used more frequently in today’s organizations. The seven
levels form a specific hierarchy of systems:
12
➥ THE FOUR CONCEPTS OF SYSTEMS THINKING

Dynamics
Change
1. Cell—The basic unit of life

2. Organ—The organic systems within our bodies
3. Organism—Single organisms such as humans,
animals, fish, birds
4. Group—Teams, departments, families, and similar
bodies composed of members
5. Organization—Firm, company, neighborhood,
community, city, private and public organizations,
and nonprofit organizations
6. Society—States, provinces, countries, nations,
regions within countries
7. Supranational system—Global systems, continents,
regions, Earth
Our Focus in This Guidebook. We will be concerned

primarily with the living systems at these three levels:
3. Organisms—Individuals
4. Group—Teams and departments
5. Organization—Companies, firms, communities
13
We will also focus on the intersections of these systems with

one another; that is, the “collision” of systems with other
systems. Those intersections are expressed as:
3A. One-to-one
4A. Between departments
5A. Organization and its environment
To conduct a systematic large-scale change effort, we must

look at all three systems levels and all three collisions of
levels. Also, we must be aware that the further we move
towards the higher-level systems, the more complex the
system will be—and the greater our need for the skills,
willingness, and readiness to deal with that complexity.
See the learning aid on the following page for a depiction
of the six levels as the Six Rings of Focus and Readiness.
Systems Within Systems: Interrelationship. The systems

hierarchy illustrates the interrelatedness and interdepend-
ence of systems, and the impact that systems have on one
another. Thus does the hierarchy validate the concept of
“systems within systems”—another key element to applying
the lost art of systems thinking.
In viewing our organizations in this way—as levels of

systems within, and colliding with, other systems—we align
ourselves with the principles of openness, interrelation, and
interdependence, and so cement the systems concept. When
problem-solving, we look for patterns of behavior and events,
rather than at isolated events, and we work on understand-
ing how each pattern relates to the whole. We begin to see
how problems are connected to other problems—and are
forced to look at solving those problems in a new light. In
fact, the solution to any systems problem is usually found
at the next highest system (see the Einstein quotation in
14
LEARNING AID
CONCEPT 1. THE SEVEN LEVELS OF LIVING (OPEN) SYSTEMS
HIERARCHY L EVELS OF THINKING
1. Cell Problems that are created
2. Organ by our current level of thinking
can’t be solved by that same
3. Organism/Individual level of thinking.
4. Group/Team Organizational —Albert Einstein
5. Organization Focus If we generally use analytic
6. Society/Community thinking, we now need real
systems thinking to resolve
7. Supranational System our issues.
—Stephen G. Haines
The Six Rings of Focus and Readiness
3A. Organization-Environment
3. Total Organization
2A. Between Departments
2. Workteams
1A. One-to-One
1. Self READINESS HIGH RINGS
Increased
– Complexity
– Readiness-Willingness
– Skills Growth
Note: Rings 3, 4, 5 are three of the seven levels of living systems.

Rings 3A, 4A, 5A are “collisions” of systems with other systems.
15
the learning aid). With this approach we end up with

precisely what we need: fully integrated solutions to our
systems problems.

Dynamics
Standard systems dynamics, found in all living systems,
exhibit 12 characteristics, the focus of our discussion here.
They have been adapted, with my own comments, from
Academy of Management Journal (December, 1972), and
organized into four categories as follows:
1. THE WHOLE
Characteristics:
1. Holism (Synergism, Organicism, Gestalt)
2. Open Systems
3. System Boundaries
4. Input-Transformation-Output Model
5. Feedback
II. THE GOALS

Characteristics:
6. Multiple Outcomes/Goal-Seeking
7. Equifinality of Open Systems
III. THE INTERNAL WORKINGS

Characteristics:
8. Entropy
9. Hierarchy
10. Interrelated Parts (Subsystems or Components)
IV. THE LONG-TERM RESULTS

Characteristics:
11. Dynamic Equilibrium (Steady State)
12. Internal Elaboration
16
Although it is important to understand each individual

characteristic, keep in mind that it is the relationship
between these parts and characteristics, and their fit into
one whole system, that is key. Systems dynamics are all
about relationships.
I. THE WHOLE
1. Holism (Synergism, Organicism, Gestalt). The whole
is not just the sum of its parts; the system itself can be
explained only as a totality. Holism is the opposite of elem-
entarism, which views the total as the sum of its individual
parts. For instance, we write letters, but our hands cannot
write alone, as separate parts; they can only do so as part of
our overall human system.
This leads us to the basic definition of a system as a holistic
unit that is “the natural way of life.” A system has overall
purposes and transformational synergy when it is optimally
effective.
➥ Example
Many managers believe a corporate strategic plan is
just a “roll-up” of lower-level plans. This is a clear case
of elementarism, one that usually results in poor imple-
mentation and that perpetuates a lot of turf battles and
“silos.” People lack holistic vision and a strategic plan
to serve as an overall framework for efficiency and
cooperation.
➥ Experienced Dynamics
Instead of holism, we usually see ineffective change
that is parts- or activity-focused, leading to suboptimal
results.
2. Open Systems. Systems are usually either (1) rela-

tively closed, or (2) relatively open. As we saw earlier, open
systems receive inputs from their environment, work with
17
those inputs, and return them to the environment in

modified form as outputs; in other words, open systems
exchange information, energy, or material with their
environment. Biological and social systems are inherently
open systems; mechanical systems may be open or closed.
The three keys to success for any system are its ability
(1) to be interactive with its environment, (2) to fit that
environment, and (3) to be connected to that environment.
A crucial task for any system is to scan the environment
and then adapt to it.
➥ Example
Excellent organizations are marked by their intense
desire to be open to feedback and their constant search
for information from their environment that will help
them thrive and lead.
Many organizations and their cultures are relatively
closed systems with a low environmental scan—a
myopic view in today's rapidly changing world.
3. Systems Boundaries. When we consider the above,

it naturally follows that all systems have boundaries which
separate them from their environments. The concept of
boundaries furthers our understanding of the distinction
between open and closed systems. The relatively closed
system has rigid, impenetrable boundaries, whereas the
open system has permeable boundaries between itself and a
broader suprasystem. Thus an open system can more easily
integrate and collaborate with its environment.
Boundaries are no trouble to define in physical and bio-

logical systems, but they are quite difficult to delineate in
social systems, such as communities and organizations.
18
This may be why our legislative systems provide so much

protection for individual rights, and less for “the common
good” of a community.
In organizations, the boundaries are relatively open, which

makes them somewhat vague in terms of our knowing and
fully understanding their limits. In today’s society, with its
worldwide, instantaneous communications, our boundaries
are increasingly more open.
➥ Example
To shift from analytic to systems thinking, we must be
able to recognize systems and their boundaries; only
then can we work with, and hope to change, the system.
We often see closed boundaries leading to fragmenta-
tion, turf battles, separation, and parochialism, when
integration and collaboration is what is needed.
4. Input-Transformation-Output Model. The open

system can be viewed as a transformation model. Its
relationship with its environment is dynamic: it receives
various inputs, transforms these inputs in some way, and
exports outputs. This is the way natural and living systems
operate—and the core systems thinking model and frame-
work that you must internalize if you want to use systems
thinking in a practical way. The model can be combined
with Feedback (characteristic 5) and the Seven Levels of
Systems Thinking (systems concept 1) to create a flow chart
showing how systems change and transform over time.
➥ Example
On the most basic level, we must take inputs (e.g., food
and water) and transform them into vital nutrients if
we are to survive rather than perish.
19
Because our piecemeal analytic and reductionist view
of the world is so narrow, we often miss outcomes—
feedback and environmental considerations.
5. Feedback. This is important to our understanding
of how a system maintains a steady state. Information
concerning the system’s outputs or process is fed back into
the system as an input, perhaps leading to changes in the
transformation process to achieve more effective future
outputs. Often this informational input helps us get to the
root of problems.
Feedback can be either positive or negative. Positive feed-
back indicates that the steady state of a system is presently
effective. Negative feedback indicates that the system is
deviating from a prescribed course and should readjust to
a new steady state. Some systems-related field, such as
cybernetics, are based on negative feedback.
Both forms of feedback stimulate learning and change.
It is essential for us to receive and understand feedback,
even (and very often especially) when the news is bad and
suggests root causes and underlying problems we’d rather
not hear about.
➥ Example
The basic concept of the learning organization, as
distinct from all the rhetoric surrounding it, directs
us toward gathering as much feedback as possible,
even negative feedback, so we can act on it to create
new learning. Only through feedback can organiza-
tions hope to learn and grow at all systems levels—
individual, team, and organization.
We often get very little informational input about our
performance or the performance of the organization
20
itself. What we tend to get is financial feedback—only

part of the overall picture.
II. THE GOALS
6. Multiple Outcomes/Goal-Seeking. Biological and

social systems appear to have multiple goals or purposes.
Social organizations set multiple goals, if for no other
reason than that their members and subunits have different
values and objectives. Goal achievement in today’s multi-
cultural, diverse society is particularly difficult, for we as
members of that society bring such an assortment of goals
to it.
Since this is a characteristic of all systems, it follows that
a common, detailed vision for any organization or society is
crucial to coordinated and focused actions by its members.
➥ Example
The clash between individual and organizational
goals in present-day organizations causes much
conflict and lost productivity for all concerned,
ultimately creating lose-lose situations. It has
contributed to the dehumanization, delayering, and
mechanization of work, alienating many of today’s
workers.
Often, instead of embracing multiple outcomes, we
engage in artificial either/or thinking, which leads
to conflict rather than cooperation.
7. Equifinality of Open Systems. In mechanistic sys-

tems there is a direct cause-and-effect relationship between
the initial conditions and the final state. Biological and
social systems operate differently. Equifinality suggests
that certain results may be achieved with different initial
21
conditions and in different ways. It offers us a basis for the

flexibility, agility, and choice needed in today's dynamic
world.
This view suggests that social organizations can accomplish
their objectives with diverse inputs and with varying
internal activities (processes). For this reason, there is
usually not one “best” way to solve most problems; in other
words, as the saying goes, there’s more than one way to skin
a cat!
➥ Example
Because we lack one “best” way to solve organizational
problems, it is crucial for us to be “strategically consist-
ent” to consensual, multiple goals, yet “operationally
flexible” (or empowering) in working to achieve those
goals. This encourages us to challenge our minds—to
employ our mental skills in determining how to achieve
goals. And as long as our goals are clear and based on a
shared vision, we can succeed at it.
Too often we ignore the complexity of an issue, insist-
ing upon, and fighting about, the “best way to do
things.” We immediately look for a direct, one-to-one,
cause-and-effect relationship that would explain the
issue; then we try to find a simple, singular solution.
But such solutions do not work in a systems world,
that is, our world today.
III. THE INTERNAL WORKINGS

8. Entropy. Physical systems are subject to the force of
entropy, which increases until eventually the entire system
fails. The tendency toward maximum entropy is a move-
ment to disorder, complete lack of resource transformation,
and death. For instance, people with anorexia do not
22
consume enough food to maintain their physical bodies;

if the disorder continues, they perish.
In a closed system, the change in entropy must always be

“positive,” meaning toward death. However, in open bio-
logical or social systems, entropy can be arrested and may
even be transformed into negative entropy—a process of
more complete organization and enhanced ability to
transform resources. Why? Because the system imports
energy and resources from its environment, leading to
renewal. This is why education and learning are so
important, as they provide new and stimulating input
(termed neg-entropy) that can transform each of us.
“From the time we’re born, we begin to die” is an apt adage

here. Our cells completely regenerate every seven years
through neg-entropy, and, in a sense, we become completely
new persons. Regular follow-up and feedback are key to this
needed renewal.
➥ Example
Most change efforts fail because they aren’t given
enough follow-up, reinforcement, and new energy.
Many managers want to get everything up and run-
ning on autopilot, but this is the antithesis of what
actually makes change happen. In systems terms, it
takes negative entropy—new energy—to make change
occur. In fact, most executives are concerned about
getting employee “buy-in,” when “stay-in” is even more
difficult to get and retain over time (for more on this
topic, see Haines, Sustaining High Performance).
Lack of negative entropy, or new energy, is what leads to
obsolescence, rigidity, decline, and (ultimately) death.
23
9. Hierarchy. A system consists of subsystems (lower-

order systems) and is itself part of a suprasystem (higher-
order system). Any living system thus has a hierarchy of
components. In today’s politically correct environment, the
concept of hierarchy is quite unpopular, but it is a perm-
anent fact of life. The issue is to “flatten” the hierarchy as
much as possible—to “go with the flow” of life and what
makes sense, in a natural, self-organizing type of way.
What we do not want is the imposition of rigid and artificial
structures.
Since systems are hierarchical, the organizational system is
higher than the department/unit/team as a system, which is
higher than the individual employee as a system (whether
we’re happy about that or not). If we don’t like the hier-
archy or fit, we need to work either to change how the
hierarchy operates, or to lessen it; however, it cannot be
eliminated, as some would naively propose—it’s simply
inherent in systems.
➥ Example
To get an idea of how hierarchies work in the natural
world, and how essential they are to it, think about the
food chain—an inescapable hierarchy, found in both
terrestrial and aquatic environments, and often
crossing between them.
Instead of finding natural, common-sensical hier-
archies in our organizations, we often find artificial,
rigid hierarchies; they are usually subject to bloated
bureaucracies based on the old “command and
control,” as if we can ever truly and surely control
others.
10. Interrelated Parts (Subsystems or Components).
By definition, a system is composed of interrelated parts or
elements in some kind of relationship with one another.
24
This is true for all systems— mechanical, biological, and

social. Every system has at least two elements, and these
elements are interconnected.
The whole idea of a system is to optimize—not maximize—

the fit of its elements in order to maximize the whole. If we
merely maximize the elements of systems, we end up sub-
optimizing the whole (2 plus 2 equals 3—less than it should,
and less than we want it to).
To get a handle on this concept, consider what happens

to college football players who try to artificially maximize
their muscles and weight with steroids: they do serious
long-term harm to their bodies, and sometimes the damage
is so severe it leads to premature death.
➥ Example
In organizations, it is vital to get all the related sub-
systems working together toward the achievement
of business goals. However, too often departments
compete with one another, individually attempting
to maximize their influence in the organization, to the
detriment of other departments and, ultimately, to that
of the organization as a whole.
Balancing the demands of each department is difficult

and should be a key role of senior organizational lead-
ers. Unfortunately, this leads to conflict-resolution
issues and skills that many leaders in both private
and public organizations would rather ignore.
We often experience artificial and separate silos,
parts and components that managers try mightily to
protect; but doing so is impossible in a system with
natural and related parts.
25
IV. THE LONG-TERM RESULTS
11. Dynamic Equilibrium (Steady State). The concept

of a dynamic equilibrium in “steady state” is closely related
to that of negative entropy. A closed system eventually
must attain an equilibrium state with maximum entropy:
death or disorganization. However, an open system may
attain a state whereby the system remains in dynamic
equilibrium through the continuous inflow of materials,
energy, information, and feedback. This leads to balance
and stability. Unfortunately, it also feeds resistance to
change, creating “ruts” and habits.
Our tendency to resist change in our lives and in our

organizations, and to return to balance through dynamic
equilibrium, is normal and natural. However, in today’s
rapidly changing environment, if we want the stability we
desire, we must become adaptable and flexible to change in
a personal way.
➥ Example
Dynamic equilibrium is why culture change in organi-
zations is far more difficult to achieve than isolated
change. Culture change requires modifying all aspects
of the organization’s internal workings so the whole
will enter a new “steady state.”
Resistance to change often leads to short-term myopic
views and actions that lead nowhere.
12. Internal Elaboration. Closed systems move toward

entropy and disorganization. In contrast, open systems
tend to move toward greater differentiation, elaboration,
and detail, and a higher level of organizational sophis-
tication. This may sound good, but it can actually lead to
26
organizational complexity and bureaucracy in its worst

form. Complexity must be continuously resisted, for it
develops naturally; it is also part of the natural process
of ossification, rigidity, and death.
➥ Example
This is why the KISS method and the directives to
clarify and simplify are so crucial to success in our
lives and organizations. Also, the “elimination of
waste,” in total quality management and reengineer-
ing terms, is a positive trend toward reversing
ossification.
Organizational growth, with all its complexities, often
leads us into confusion or outright chaos; we’re at a loss
for ideas that can help us manage such a situation.
Systems thinking changes all that.
Be sure to see the learning aid for standard

systems dynamics, on the following page.

Do you usually think in terms of outputs, feedback, inputs,
and throughputs, and how they relate to their environment?
If not, don’t feel bad—you’re not alone. All of them are
phases of the A-B-C-D Systems Model, a conceptual frame-
work that gives systems thinkers an effective way to view
systems. Its name is a reflection of our definition of a
system:
A set of components that work together for
the good of the whole
This point underscores how essential the model is to our
adopting the systems thinking mindset.
27
LEARNING AID
CONCEPT 2. THE LAWS OF NATURAL SYSTEMS:
STANDARD SYSTEMS DYNAMICS
Natural Laws/Desired State vs. Experienced Dynamics

1. Holism: Overall purpose— 1. Parts- and activity-focused;
focused synergy; transformation suboptimal results
2. Open Systems: Open to 2. Closed systems; low
environment environmental scan
3. Boundaries: Integrated; collab- 3. Fragmented; turf battles; separate;
orative integrated; collaborative parochial
4. Input/Output: How natural 4. Piecemeal and narrow
systems operate analytic view of world
5. Feedback: On effectiveness; 5. Low feedback; financial
on root causes of problems feedback only
6. Multiple Outcomes: Goals 6. Artificial either/or thinking
7. Equifinality: Flexibility and 7. Direct cause-and-effect;
agility one “best” way
8. Entropy: Follow-up; inputs of 8. Decline; rigidity;
energy; renewal obsolescence; death
9. Hierarchy: Flatter organization; 9. Hierarchy; bureaucracy;
self-organizing command and control
10. Interrelated Parts: Relation- 10. Separate parts, com-
ships; participation ponents, entities; silos
11. Dynamic Equilibrium: Culture; 11. Short-term myopic view;
stability and balance ruts; resistance to change
12. Internal Elaboration: Details 12. Complexity and
and sophistication confusion
28
FIGURE 1. Conceptual Model
C Input A Output
D Throughput
TODAY “THE SYSTEM” FUTURE
B Feedback
FEEDBACK LOOP
E ENVIRONMENT
The A-B-C-D Systems Model
Understanding and Using the Model. To comprehend our

model (shown in Figure 1), we first must understand that a
system is anything but a static entity; rather, it is a living,
ongoing process that requires inputs, outputs, and feedback.
The activities associated with these requirements constitute
the various phases of the process.
In terms of looking at those phases in order to effect change
in a system, we must begin where analytic thinking would
have us end up—at the output phase. We ask “Where do we
want to be?” and then think and work backwards through
the system phases to create the desired future state (this
is partly why some people refer to systems thinking as
“backwards thinking”).
When applied to problem solving, the model focuses us on
results (outputs) rather than knee-jerk solutions, and so
we work toward better, longer-term answers and solutions.
When everyone in an organization knows how to frame
issues in this way, discussions about problems (and
29
group problem-solving efforts in general) take on a new

dimension—one in which clarity and focus are possible,
despite all the complexity. Thus it is important to teach
the model to organizational members at all levels.
FIGURE 2. Alternative View of the A-B-C-D Systems Model
Phase C Phase D Phase A

INPUT THROUGHPUT OUTPUT
(Current State) (Transitional State) (Future State)
ENERGIZING
Energizing &&INTEGRATING
Integrating
FORCES
Forces
Phase B
FEEDBACK LOOP
E WITHIN THE ENVIRONMENT
Figure 2 further elucidates the systems thinking frame-

work. It details the states that correspond to the A, C, and
D phases, particularly that of the Phase D, Throughput.
You may find this a handy addition when teaching the
model to others.
The Phases of the A-B-C-D Systems Model. Each model

phase leads us to a particular question that guides our
thinking and problem-solving. It is essential to remember
that, in asking any question, we keep in mind a fifth,
ongoing question: What is changing in the environment
that we need to consider? Now let’s take a closer look.
30
PHASE A—OUTPUT. This is the defining phase in the

systems model, the output that results from the
system’s activity. It leads us to the crucial question:
➤ Where do we want to be?

(What are our outcomes? purposes? goals?)
This is the Number One question that systems thinkers

ask when they are dealing with any situation or prob-
lem. It should always be asked in the context of the
system’s environment and other system levels.
PHASE B—FEEDBACK LOOP. It is at this point in

systems thinking that we start thinking backward
to determine what must take place for our desired
outcome to occur. We ask:
➤ How will we know we have reached it?

(How will we know we have achieved the
outcomes, purposes, or goals?)
Phase B is where we decide how we will measure our

achievement. We then feed that decision back into the
system. This phase also operates as a way to see if
Phase A needs more work; for example, we may find
the goal has been too broadly defined and needs
redefinition.
Be sure to keep asking the question . . .

What is changing in the environment that we
need to consider?
31
PHASE C—INPUT. In this phase we begin to create

strategies for closing the gap between what is happen-
ing right now and what should happen in the future.
We ask the question:
➤ Where are we right now?

(What are today’s issues and problems?)
Analytic thinkers start with today’s issues; so they end

up problem-solving isolated events. Instead, we must
see today’s issues in light of desired outcomes.
PHASE D—THROUGHPUT. Now we look at the system

and its interdependencies, and ask:
➤ How do we get from here to our desired place?

(How do we close the gap from A to C in a
complete, holistic way?)
With those interdependencies in mind, we focus on

the processes, activities, and relationships that the
system must implement in order to produce the desired
outcome. We also plan for the processes that must be
developed and put into motion now.
The Unlimited Uses of the Systems Model. Any set of

requirements can be adapted to the model as long as you
use the same A-B-C-D locator phases and include the
environment. Some of the model’s many organizational
applications are included in later chapters; however, as
a framework and an orientation to life, the model is appli-
cable to virtually any situation you encounter. Use it in all
that you think about, act upon, and evaluate.
32
LEARNING AID
Concept 3. The A-B-C-D Systems Model
C Input A Output
D Throughput
TODAY “THE SYSTEM” FUTURE
B Feedback
FEEDBACK LOOP
E ENVIRONMENT
THE SYSTEMS-PHASE QUESTIONS, IN SEQUENCE

A. Where do we want to be? (What are our outcomes, purposes, goals?)
B How will we know we have reached it? (How will we know we
have achieved the outcomes, purposes, goals?)
C. Where are we now? (What are today’s issues and problems?)
D. How do we get from here to our desired place? (How do
we close the gap from C to A in a complete, holistic way?)
ALSO: What is changing in the environment that we need
to consider? (This is an ongoing question throughout all phases.)
WHY THINKING MATTERS The way you think creates the results
How you think you get. The most powerful way to
is how you act improve the quality of your results is
is how you are. to improve the way you think.
33

Change
Our natural world does not operate in a linear, sequential
fashion, despite all our training and traditional models. Life
expresses itself in cycles of change, such as the turn of
generations and the seasonal year. Even the bull and bear
markets on Wall Street aren't immune to such cycles. I call
this natural rhythm of life the Rollercoaster of Change, a
name that takes into account the complexities of change
in our dynamic world.
The following are a few historical and natural cycles of
change and learning.
The Environment Civilizations Historical Ages

• Ocean tides • Inca, Aztec, • Hunting &
• Volcanoes Mayan empires gathering
• Whale & bird • Chinese • Dark Ages
migration dynasties • Agricultural
• Lunar cycle • Roman Empire • Industrial
• Day & night • British Empire • Information
Age
Industries Travel Life
• Start-Up • Automobile • Birth, death,
• High-Growth • Ocean liner new generation
• Maturity • Mass Transit • Food chain
• Decline • Airplanes • Food cycle
• Renewal • Space shuttle • Growth,
decline
We as human, living systems keep on changing. It is a

natural part of life (and death). Change is constant. The
key is finding simplicity on the far side of complexity. The
Rollercoaster of Change, presented in the following learning
aid, helps us get there. Its many uses will be discussed
later, in a variety of tools.
34
LEARNING AID
Concept 4. Changing Systems:
The Natural Cycles of Life and Change
“The Rollercoaster of Change”
(The Key to Strategic Change)
MAJOR QUESTIONS MAJOR USES

• Not if, but when to go • Personal transitions
through shock? • Employee self-management
• How deep is the trough? • Stages of learning—all
• How long will it take? types
• Will we get up the right side • Interpersonal relationships
and rebuild? • Coaching sequence
• At what level will we rebuild? • Dialogue and discovery
• How many different roller- • Conflict management
coasters will we experience? • Situational leadership
• Are other changes occurring? tasks
• Will we hang in and • Teams, groups, meetings
persevere? • Strategic Planning
• How to deal with normal • Core strategies
resistance? (cutting/building)
• How to create a critical mass • Overall management of
for change? change
35
APPLICATIONS
II. Standard Systems Dynamics
This chapter presents 12 tools that will help you apply

the principles of standard systems dynamics and other key
concepts to systems-related change efforts. The tools focus
on the questions that good systems thinkers know and
regularly use, and offer guidelines for working productively
with the answers.
TOOL
NO. THE APPLICATIONS
1. Systems Preconditions
—What entity (system or “collision of systems”) are we
dealing with, and what are its boundaries?
— What levels of the overall entity do we want to change?
2. Desired Outcomes
—What are the desired outcomes?
3. The Need for Feedback
—How will we know we have achieved the desired
outcomes?
4. Environmental Impact
—What is changing in the environment that we need to
consider?
5. Looking at Relationships
—What is the relationship of x to y and z?
(Continued)
37
TOOL
NO. THE APPLICATIONS (Concluded)
6. The What and the How
—Are we dealing with ends (the what) or with means (the
how)?
7. The Iceberg Theory of Change
—What new processes and structures are we using to
ensure succesful change?
8. Buy-In and Stay-In
—What must we do to ensure buy-in and stay-in
(perseverance) over time, and thus avoid the problem of
entropy?
9. Centralize and Decentralize
—What should we centralize and what should we
decentralize?
10. Multiple Causes: Root Causes
—What multiple causes lie at the root of our problem or
concern? (That is, what are the root causes of our
problem or concern?)
11. KISS: From Complexity to Simplicity
—How can we move from complexity to simplicity, and
from strict consistency to flexibility, in the solutions we
devise?
12. The Ultimate Question: Superordinate Goals
—What is our common higher-level (superordinate) goal?
➥ These Tools Will Get You Started on Systems Thinking!
38
TOOL
Application of
1 SYSTEMS • Seven Levels of Living Systems
PRECONDITIONS • Standard Systems Dynamics
— 3. Boundaries
A. THE OBJECT OF CHANGE

To begin with, you must be clear on what overall system you
are trying to change. You must also be clear on its
boundaries, both physical and mental. Where does it all
start and end? Your preliminary question is therefore:
What entity (system or “collision of systems”) are

? we dealing with, and what are its boundaries?
This question may seem obvious, but many people fail to

ask it at all. They launch into change efforts with only a
vague idea of what they want to change, and so quickly run
into problems. Consider this question a precondition to any
intelligent, effective action and change.
➤ PRINCIPLE: The entity to be changed must be clear.
Challenge the obvious—look for the seven levels of living

systems and define which ones you are dealing with. Know
the entity you want to change, and its limits.
➥ Example
Are you trying to change yourself, your department, a
business process, a partnership, or the entire organization?
Is it relatively open or closed in its environmental
interactions?
Set realistic goals, focusing on what is actually achievable,
even if with a stretch. “Think globally, act locally” is an apt
phrase here.
39
GUIDELINES FOR USE

1. Be clear on the entity you are discussing, especially its
boundaries with the environment.
2. Be aware that solutions to issues of change and leader-
ship will be different for each system level you deal with
(see tool below). For instance, personal change and
learning solutions are different from team or
organizational change solutions.
3. Troubleshoot all solutions to predict their effects as
best as possible. Will they help you achieve the desired
changes in your entity of choice?
B. LEVELS OF CHANGE
To direct your change efforts accurately, you need to look
closely at the entity’s internal levels or “rings” and answer
this question:
What levels of the overall entity do we want to

? change?
In this section of Tool 1, we will focus on change that creates

a high-performance organization. Such a goal requires that
you pay attention to all the systems levels within the
organization, and to the interactions of those systems—their
“collision” with one another. Each level has unique purposes
and solutions, and each is important to success.
Figure 3, on the next page, presents the “tree rings” of an

overall organizational system. Note the recognition of the
relationship between the rings (or levels). This kind of
framing device can be used to depict the levels of any overall
system.
40
FIGURE 3. STRATEGIC CHANGE
3A. Organization-Environment
3. Total Organization
2A. Between Departments
2. Workteams
1A. One-to-One
1. Self READINESS HIGH RINGS
Increased
– Complexity
– Readiness-Willingness
– Skills Growth
The Six Rings of Focus and Readiness
The General Objectives of Working at Each Level/Ring

Each system level corresponds to certain general improve-
ment issues. For instance, if you goal is to improve personal
competency, you will need to work primarily at the Self
level/ring and take into consideration any other rings that
have a bearing on competency matters.
The rings and their related issues are as follows:
1. Self—Individuals, self-mastery
• Improve personal competency and effectiveness
• Trustworthiness issues
1A. One-to-One Relationships—Interpersonal skills and
effectiveness
• Improve the interpersonal and working relationships and
productivity of each individual
• Trust issues
2. Workteams—Groups, team effectiveness
• Improve the productivity of the team as well as its members
• Empowerment and interpersonal roles and issues
41
2A. Between Departments—Intergroups, conflict/horizontal

cooperation
• Improve the working relationships and business processes
between teams/departments horizontally to serve the customer
better
• Horizontal collaboration/integration issues (Note: This is the
ring most likely to need improvements.)
3. Total Organization—The “fit”

• Improve the organization’s systems, structures, and processes
to better achieve business goals and develop potential; while
pursuing your vision and strategic plan, develop the
organization’s capacity to provide
an adaptive system of change
• Alignment issues
3A. Organization-Environment—Strategic plans

• Improve the organization’s sense of direction, response to its
customers, and proactive management of its environment and
stakeholders by reinventing strategic planning for the demands
of the future
• Adaptation to environmental issues
Organizational Change by Levels/Rings

The managers of the organization’s levels/rings must get
involved in the change. Each one should be given time to
understand, accept, and integrate the change; consequently,
the manager will own the vision and change and lead them
at his or her level. Specific levels would include (in
descending order of hierarchy):
• Board
• CEO
• Senior management (interpersonal relations)
• Middle management (department by department)
• Cross-functional (department by department) conflict resolution
and cooperation
• Workers across entire organization
It is important to sell and resell the change throughout

many organizational levels. Themes from the Rollercoaster
of Change are useful in helping people come to terms with
change. Notable among those themes are the following:
42
1. Awareness, shock, depression

2. Education, skills
3. Experimentation
4. Understanding, hope
5. Commitment to building the new vision
6. Fuller appreciation
7. Integration of ongoing behaviors
GUIDELINES FOR USE

1. Engineer success up front by determining which rings of
the organization you are trying to change. Also,
determine what other rings will need changing first in
order for you to achieve your desired outcome.
2. Always be sure to look at the purposes of the rings you
are trying to change. Begin by using the list of purposes
presented in this tool; then think of purposes unique to
your situation.
3. Get people involved in the change effort, particularly
managers. Remember: you don’t just want buy-in from
managers; you also want stay-in from them.
Also, be sure to look at all the rings of your organization.
As you have seen in this tool, that means board members
and CEOs too!
43
TOOL
Application of
2 DESIRED Standard Systems Dynamics
OUTCOMES — 6. Multiple Outcomes
Success
The great successful men (and women) of the world have
used their imagination. . . . They think ahead and create
their mental picture, and then go to work materializing that
picture in all its details, filling in here, adding a little there,
altering this a bit and that a bit, but steadily building—
steadily building.
—Robert Collier
This is where Phase A of the A-B-C-D Systems Model

actually begins, and so we ask the Number One system’s
thinking question:
What are the desired outcomes? (That is,

? Where do we want to be?)
Since systems usually have multiple outcomes, this is a

more complex question than it appears at first glance.
➤ PRINCIPLE: Systems are goal-seeking.
Develop clarity and agreement on this before starting to act.

Keep in mind there are usually multiple outcomes (we’re not
dealing with either/or questions as reductionist thinkers
do). Other words for outcomes (the “what”) include vision,
ends, goals, objectives, mission, purpose.
Without agreement on ends, our actions will never have a

chance of succeeding. Once the “what” is clear, there are
many ways to try to attain it, such as by empowerment.
44
➥ For Example
Organizational outcomes often include the needs of
customers, employees, and stockholders, as well as
the community, suppliers, and so forth. Asking this
question sends us into “backwards thinking,” which
keeps us from focusing on only isolated events.
Further, these desired outcomes are all about setting

goals. Goal setting and careful goal selection (that is, the
establishment of a vision or purpose and meaning) are
primary criteria for success.
➥ For Example
In simple, meetings-management terms, it means
making daily “to do” lists like the one below, so you
focus on actions and results, not just quick talk and
a few good ideas.
Meetings “To Do” List

What to Do/Achieve By Whom By When
GUIDELINES FOR USE

1. Make this tool’s question your Number One question too.
Ask it before you do anything in life, whether what you
do is work-related or not. Remember, this is synonymous
with Phase A’s question:
Where do we want to be?
45
TOOL
Application of
3 THE NEED Standard Systems Dynamics
FOR FEEDBACK — 5. Feedback
Once we have identified our desired outcomes, we need to

address the all-important question:
How will we know we have achieved the desired

? outcomes?
This corresponds to the A-B-C-D System Model’s Phase B

question, How will we know we have reached it (the place we
want to be)?
The concept of feedback is important to our understand-

ing of how a system maintains a steady state or changes
successfully. In practical terms, information concerning the
system’s outputs is fed back into the system as an input—
that is, the results of past performance are reinserted
into the system—and if need be, the system’s behavior
is modified. Positive feedback tells us the system is “on
course” to achieving the desired outcomes; negative feedback
indicates the system is “off course” and must change.
Negative feedback is actually good in the sense that it
stimulates learning. In fact, the ability to manage such
feedback well is a survival skill today.
➤ PRINCIPLE: As an input, feedback requires receptivity; it

calls for us to be flexible and adaptable.
Because our world is so changeable, solutions that work

today may simply not work tomorrow; therefore, despite the
importance of finding initial solutions to problems, our
primary concern is to ensure we receive constant feedback
46
and know how to work with it. The ability to be flexible and
adaptable is crucial here; fortunately, the more we receive
and work with feedback, the better our ability becomes.
Feedback teaches us to learn, grow, adapt, and change as
our goals and environment require. It is a vital input of
learning organizations, helping people at all system levels
(individual, team, and organization) deal with change
personally and professionally.
GUIDELINES FOR USE

1. Look at feedback as a gift—be open and receptive to
it; even encourage it. Ask for feedback from all your
customers, your employees, your direct reports and
peers, and anyone who can help you learn and grow
as a person, as a professional, as a leader of your
organization.
2. Work on developing self-mastery—the interpersonal style
needed to genuinely encourage others to provide feed-
back, and the mental attitude needed to stay receptive
even when feedback is negative. Don’t be defensive, and
always thank the feedback giver. Remember, you’re the
one who decides, after some reflection, whether the
feedback merits action and, if so, what action to take.
3. Ensure that feedback in your organization is received and
applied in the context of the entire system. Limiting
feedback to select levels is like limiting team-performance
results to select team members: it makes no sense at all,
especially if changes are needed.
4. Bring to your organization all that you personally learn
about feedback, receptivity, flexibility, and adaptability.
The more senior your level in the organization, the more
important this is.
47
TOOL
Application of
4 ENVIRONMENTAL Standard Systems Dynamics
IMPACT — 2. Open Systems
— 3. Boundaries
Organizations and individuals who do not constantly scan

their environment to see what is changing are unlikely to be
successful in today’s world. Therefore, we must continually
ask:
What is changing in the environment that we we

? need to consider?
In organizational terms, this means we must keep scanning

the environment for changes in anything from our competi-
tion to the political scene. At minimum there are seven
areas we need to keep an eye on. They can be remembered
by the acronym SKEPTIC.
Socio-demographics Technology
“ K”ompetition Industry
Economics Customers
Politics
In terms of the individual, it means paying attention to

environmental changes that may have an impact on our
roles in life. We should consider at least four areas, which
we can remember by the acronym PITO.
Personal—Body, mind, spirit

Interpersonal—Family, friends, colleagues
Team—Associations, community, department
Organization—Job, career, wealth
48
➤ PRINCIPLE: Systems require work and alignment from the

outside in, not the inside out.
Remember to employ “backwards thinking.” Start with

the environment—the wants and needs of the customer,
for example—and the desired outcomes; then work back-
wards into the organization to determine how to meet the
demands of the environment, and the outcomes, while still
meeting the multiple needs of other key stakeholders in the
environment.
Align all employees, suppliers, the entire organization,

and business processes across departments to meet those
demands and produce the desired outcomes. This is the
conceptual basis for business process reengineering in
today’s organizations. However, it is often fragmented into
departmental elements or internal cost-cutting activities,
and it neglects to consider customer impact.
GUIDELINES FOR USE

1. Set up an environmental scanning system in your
organization, and assign a senior person or team the
responsibility of collecting data on each SKEPTIC area.
2. Conduct quarterly environmental scanning sessions in
which everyone shares information they have gathered.
From this, deduce trends and impacts on your
organization.
3. Annually revise your strategic plan, with the above as key
input.
4. Keep yourself open to what is changing in the
environment. Find out what is going on not just through
the typical media, such as television and newspapers, but
through other means as well, such newsletters.
49
TOOL Application of
5 • Seven Levels of Living Systems
LOOKING AT
• Standard Systems Dynamics
RELATIONSHIPS — 9. Hierarchy
— 10. Interrelated Parts
A. THE QUESTION OF RELATIONSHIP

In systems thinking, we are always looking at the
relationship of the part or event to both (1) the overall
system outcomes, and (2) all other parts and events within
the system. We ask the question:
? What is the relationship of x to y and z?
To fully address the question, we must keep in mind:
• In systems, the whole is primary and the parts/events

are secondary. The parts are only important within
their relationship to other parts/events.
• Balance and optimization is the key, not dominance
and maximization of a single part.
• In systems, relationships and processes are what's
important; not departments/units and events.
• We need to think from events and parts to
relationships and processes.
➤ PRINCIPLE: The whole is more important that the part;

relationships and processes are key.
It is essential for us to continually assess how the parts fit

or link together in an integrated process in support of the
whole outcome. Moreover, each part’s effectiveness cannot
be analyzed in a void, but only in relationship to the other
parts and the processes that lead to the whole. Always
50
remember, a system cannot be subdivided into independent

parts. Change in one part affects the whole and the other
interdependent parts or processes. This is true whether we
are talking about teams, departments, and organizations, or
society as a whole—something we all still need to learn and
understand.
➥ For Example
In organizations, the question is not, How can I maxi-
mize my job or department's impact?; it is, How can
we all work and fit together in support of the overall
objectives of the organization? To that end, each year
all major departments need to share their annual plans
with senior executives and middle managers and other
professionals to ensure everyone knows what everyone
else is doing, and to give others a chance to critique
those plans. This is actually a large group team-
building process.
In personal terms, systems thinking is about finding
patterns and relationships in your work and your life, and
learning to reinforce or change these patterns to achieve
personal fulfillment. This can actually help simplify your
life, as you see interconnections between what initially seem
like disperate parts.
➥ For Example
What is the relationship between your fitness and
energy level, your overall feeling of health, and the
stamina needed to do your job and run your life each
day? In looking at a question like this, you begin to
apply system thinking to your life.
Create synergy in your life. Synergy is the working together
of two or more parts of any system, to produce an effect
greater than the sum of the parts’ individual effects. It is
increasing your outcomes by working with others in a
particularly effective way.
51
GUIDELINES FOR USE

1. In using this tool, remember the principle of
interdependence. We have only to look at photographs of
Earth to know that all of us are parts of the same global
fabric, with patterns of interdependency linking us. Apply
this kind of vision to your life and to your organization.
2. Focus on your interrelatedness with others in your life,
and think about how your visions (intents and desired
outcomes) affect others. Share these visions, asking for
feedback on them on a regular basis. Pay attention to
your impact on others, and think about their impact on
you. Keep asking the question What is the relationship of
x to y and z?
3. On a professional level, get others thinking about
interdependencies and interrelationships between systems
levels and parts. Propose this tool’s question as a basis
for thought when problem solving.
B. COROLLARY: SOLVING THE EITHER/OR PUZZLE

A puzzle is a problem that we usually cannot solve
because we make an incorrect assumption or self-imposed
constraint that precludes solution.
—Russ Ackoff (1991)
The analytic tyranny of either/or questions dictates that

we must select one of two options (x or y), and only one; thus
it sets up an immediate opposition between two things (x
versus y), often at the expense of our seeing connections and
interrelationships that could lead to better problem solving.
Furthermore, many issues have multiple causes and

multiple outcomes, and by looking at them in an either/or
fashion, we fail to see the entire picture. If we want to avoid
this pitfall, and similar pitfalls related to this-versus-that
52
thinking, then we need to defy the analytic tyranny by

answering either/or questions with an emphatic “Yes, both.”
The one “best” answer must evolve into the answers we

need to truly solve the problems that confront us. That
requires us to stress the “and” of things—to develop the
ability to embrace, at any one time, two or more different
opinions, extremes, or seemingly contradictory statements.
This is the genius of systems thinking. Instead of turning
problems into puzzles, it looks at them head-on.
➥ For Example
The question “Is it x or y?” is usually based on an
incorrect assumption: that there is only one answer
in all cases. This mistaken assumption occurs in
organizations, in families, in all interpersonal
relationships, and often results in needless conflict,
differences of opinions, and hard feelings.
GUIDELINES FOR USE

1. Don't get caught up in either/or debates. State areas of
agreement first, rather than debating; then state your
area of disagreement if there actually is one. When
someone asks you an either/or question, answer “Yes,
both” to surface artificial disagreement.
2. Learn to distinguish between the tyranny of either/or
questions and the more open process of making distinc-
tions between things. (If someone held up a pencil and
asked, “Is this a pencil or a pen,” you would not say
“Yes, both.”)
3. Get others in your organization thinking in less opposi-
tional ways. A close look at either/or questions is a good
way to start people thinking about assumptions in
general and the danger of unexamined ones.
53
TOOL
Application of
6 THE WHAT AND Standard Systems Dynamics
THE HOW — 4. Input-Output
A. ENDS AND MEANS

To work effectively toward the desired outcomes, and to
communicate clearly about them, we must distinguish
between the ends (the what) and the means (the how) at
our system level. We should ask:
Are we dealing with the ends (the what) or with

? the means (the how)?
Here are our definitions of these terms:
The Ends (The What): The multiple outcomes

The Means (The How): The many different ways to achieve
the same outcomes; process, fit and
interrelationship of parts are key.
Their relation to the A-B-C-D Systems Model is shown

below, along with inputs and specific examples.
Phase C = Inputs ➠ Phase D = Means/How ➠ Phase A = Ends/What
(Input Phase) (Throughput Phase) (Output Phase)

• Strategies • Tasks, activities, actions • Goals, results, objectives
• Resources • Processes, operations, • Vision, mission, values
• Information, data departments • Outcomes, purposes
• People, money facilities • Elements, parts, components
54
It is important to realize that what constitutes an outcome

to you and your systems level is a means to an end for the
larger system. The what of one person (or department or
team) is therefore a how of the larger organization—and
the systems hierarchy within the overall system is the how
(along with input from the organization’s environment). All
levels need to understand what the ends of the overall
system are, or confusion can set in.
➥ For Example
Large-company divisions often do not know the multiple
outcomes of the overall system. This is why such
divisions tend to be perplexed by “higher-up” decisions.
➤ PRINCIPLE: All systems are linked to other systems

(some larger, some smaller) in the hierarchy.
No system is independent of any other; we are all linked

together in hierarchies of systems. Pay attention to the sets
of linkages within the organization system and between the
organization and other systems (an example of the latter
would be supplier, organization, customer).
GUIDELINES FOR USE

1. When meetings get difficult, ask “Are we dealing with
ends or means?” And pursue the answer.
2. Whenever giving project assignments, be careful to
separate the ends from the means. Also, when you receive
a project assignment, pay close attention to ends and
means.
3. If you want to measure success, then measure ends, not
means.
(Continued)
55
GUIDELINES FOR USE (Concluded)

4. If you aren't clear on a task, ask why you are doing the
task. It will move you toward the ends. Ask again, two or
three times, to get to the real ends.
5. In interpersonal matters, if conflict threatens to break
out, call a truce and see whether the argument is over
whats or hows; then get agreement on the what.
Agreement there often mitigates fights over hows.
B. TEACHING AND LEARNING—MEANS AND ENDS

What is the difference between teaching and learning?
Teaching is the way to accomplish learning; it is the means.
Learning is the outcome; it is the end-goal of teaching.
Schools focus on teachers and teaching, but they need to
keep in mind the desired outcome—the student's actual
learning. Teachers and trainers of all types should ask
themselves:
Are You
The Guide on The Side
—or—
The Sage on The Stage?
Facilitators and Platform Presenters are Different!
There are a number of other key distinctions between

teaching and learning, as the following table illustrates.
(Note that teaching is not solely responsible for all of these
outcomes.)
56
LEARNING AND TEACHING: DISTINCTIONS

Learning (Outcomes) Teaching (Means)
Andragogy Pedagogy
Leader of Man (Adult) Leader of Child
Self-Directed Self-Concept Dependent
Rich Past Experiences Little
Social Roles Readiness Biological Development
Immediate Application Time Perspective Postponed Application
Problem-Centered Learning Orientation Subject-Centered
Learner Locus of Control Trainer
Always remember to ask the question introduced by this

tool: Are we dealing with the ends (the what) or the means
(the how)? It can serve you well in both your professional
and private life.
GUIDELINES FOR USE

1. Recognize this crucial distinction between means and
ends, and focus on ends—the learning.
2. Use this tool with later ones to assist with real learning;
through active learning processes facilitated by an expert
on process.
3. Be careful of “content experts” who have no learning
skills beyond “platform presentations.” People rarely
learn this way.
57
TOOL
Application of
7 THE ICEBERG Standard Systems Dynamics
THEORY OF CHANGE The Natural Cycles of Life
and Change
When we are changing a system, three elements come into

play in all interpersonal and system interactions.
1. The content of the change; the change-related tasks

and goals
2. The process of change; how we carry out the tasks and
meet the goals
3. The structures or framework within which the content
and process operate; the arrangements we must set up
to manage change
The first element (content) is obvious: it’s what we focus

on the most. However, the other two are often difficult to
“see,” for change is like an iceberg where 87 percent of the
issues and solutions are below the surface. The second
element (process) lies just below the surface, and the
third (structures) lies deep below. As both are essential
to success, we must bring them to light by asking:
What new processes and structures are we using

? to ensure successful change?
➤ PRINCIPLE: The steady-state equilibrium, however much

we want it, can be dangerous in a changing
world.
Our natural inclination is to maintain the status quo, with

its comfort, familiarity, and stability, rather than pursue
change, with its awkwardness, uncertainty, and ambiguity.
58
Change requires us to face the difficult issues of (1) admit-

ting we need to change and being willing to do so, and
(2) acquiring new skills and abilities to function more
effectvely. But if we have a clear structure for change—a
framework and arrangements that help us manage change
before it manages us—then both content and process will
be easier for us to understand, accept, and work with.
Structure operates like a fulcrum:
CONTENT PROCESS
STRUCTURE
Also, knowledge and information are just inputs, and

neither is enough of an input to be effective by itself; thus
we must develop skills in working with systems if we are to
learn and grow as we undergo change. We must consider,
too, that short-term creative destruction can at times be the
key to long-term advances, and that today’s “steady state” is
really one of constant change.
➥ For Example
Designing, building, and sustaining a customer-focused
high-performance learning organization for the 21st
century requires a balance in how organizations spend
their time and energy between content, processes, and
structure.
Above all, what we need to avoid is content myopia.
Content Myopia—
The Failure to Focus on Process and Structures
Remember: Change is dependent on process and structures!
59
FIGURE 4. THE WAY TO ACHIEVE THE COMPETITIVE EDGE
1.
13% Content
—What
(Visible)
2. Process—How
(Below the Surface)
87%
3. Structures—Framework
(Deep Foundation)
The Iceberg Theory of Change

Systems change requires a major focus on structure and process
in order to achieve the desired content.
GUIDELINES FOR USE

1. If you want effective change, then building a change-
management game plan and a yearly map/project plan
of the implementation is a must. This is especially true
if you want to implement a strategic plan. Present the
latter on the game plan’s final page to ensure imple-
mentation. Also, include key processes and structures in
the game plan.
2. For help with the process of change, see the Rollercoaster
of Change in Chapter I; also check out Tool 28.
3. For help with some structures of change, see the menu on
the next page.
4. Keep track of the changes in your life. Hold a “summit”
with yourself now and then. Consider holding such
summits with your family.
60
PRIIMARY STRATEGIC CHANGE MANAGEMENT

(STRUCTURES AND ROLES)
“A Menu”
1. Visionary Leadership—CEO/Senior Executives with Personal Leadership
Plans (PLPs)
• For repetitive stump speeches and reinforcement
• To ensure integration of all parts & people towards the same vision/values
2. Internal Support Cadre (informal/kitchen cabinet)
• For day-to-day coordination of implementation process
• To ensure the change structures & processes don’t lose out to day-to-day
3. Executive Committee
• For weekly meetings and attention
• To ensure follow-up on the top 12–25 priority yearly actions from the
Strategic Plan
4. Strategic Change Leadership Steering Committee (formal)
• For bimonthly/quarterly follow-up meetings to track, adjust and refine
everything (including the Vision)
• To ensure follow-through via a yearly comprehensive map of implementation
*5. Strategy Sponsorship Teams
• For each core strategy and/or major change effort
• To ensure achievement of each one; including leadership of what needs to
change
*6. Employee Development Board (Attunement of People’s Hearts)
• For succession—careers—development—core competencies (all levels)—
performance management appraisals
• To ensure fit with our desired values/culture—and employees as a competitive
edge
*7. Technology Steering Committee/Group
• For computer—telecommunications—software fit and integration
• To ensure “system-wide” coordination around information mangement
(Continued)
61
PRIIMARY STRATEGIC CHANGE MANAGEMENT

(STRUCTURES AND ROLES) (concluded)
*8. Strategic Communications System (and Structures)

• For clear two way dialogue and understanding of the Plan/implementation
• To ensure everyone is heading in the same direction with the same
strategies/values
*9. Measurement and Benchmarking Team
• For collecting and reporting of Key Success Factors, especially customers,
employees, competitors
• To ensure an outcome/customer-focus at all times
10. Annual Department Plans
• For clear and focused department plans that are critiqued, shared, and
reviewed
• To ensure a fit, coordination, and commitment to the core strategies and
annual top priorities
11. Whole System Participation
• For input and involvement of all key stakeholders before a decision affecting
them is made. Includes Parallel Processes, Search Conferences, management
conferences, etc.
• To ensure a critical mass in support of the vision and desired changes
*Subcommittees of $4: the Leadership Steering Committee
62
TOOL
Application of
8 Standard Systems Dynamics
BUY-IN AND STAY-IN — 6. Entropy
We must regularly focus on using feedback to reverse

systems entropy—the normal tendency of a system to run
down and deteriorate over time. Lack of buy-in isn't the
killer here: it's lack of stay-in over time. Therefore we need
to ask:
What must we do to ensure buy-in and stay-

? in over time (perseverance), and thus avoid
entropy?
All business problems conform to the laws of inertia—the

longer you wait to look at a problem, the harder it is to
correct.
• Entropy is the tendency for any system to run down
and eventually become inert.
• Incremental degradation is the “inroad” of entropy—
and the main barrier to achieving the “fit” of all
organization processes and actions with the
organization’s espoused values and vision.
Thus for any system to be effective and maintain stay-in, it
must receive attention, booster shots, stop checks, and so
forth on a regular basis.
➤ PRINCIPLE: If entropy is not reversed, the system will die.
Systems can continuously increase in complexity until they

become bureaucratic and ossified, ultimately resulting in
the death of the system. All living systems require the
constant inputs of energy and feedback if they are to reverse
63
such entropy. Sometimes the chaos and disorder of a

system presents a discouraging picture, but as Meg
Wheatley discusses in her recent book, these are often
precursors to renewal and growth at a higher level.
➥ For Example
While human beings obviously have a finite life cycle,
it doesn’t have to be this way for neighborhoods,
communities, and organizations. For them, the renewal
process that reverses the entropy is key to long-term
success.
The role of feedback here is the good news, for in our world
of instantly accessible information networks, we have an
almost limitless supply of constant feedback to provide us
with new inputs toward change. However, there is a
downside to this situation, as we often hit information
overload, which leads to more complexity in our lives.
The Telltale Signs of Organizational Entropy

How do you know if your organization is experiencing
entropy? The following list, from DePree and Miller (1987),
presents the telltale signs.
• A tendency toward formality and politeness versus

effectiveness
• Turf battles among key people
• No longer having time for celebrations and recognition
• A growing feeling that achieving goals is the same as a
reward
• When people stop telling legendary stories of the founders
and other key people
• The acceptance of complexity and ambiguity, and the ability
as normal and acceptable
• Promotion of people just like you
64
• When people begin to have different meanings of words like

quality, or service, or customer
• When problem-solvers become mainly reactive
• Managers who seek to control rather than empower others
• When the pressure of day-to-day operations pushes aside our
concern for vision and long-time direction
• An orientation toward the traditional rules of MBAs and
engineering logic alone rather than taking into account such
things as contribution, spirit, excellence, beauty, and joy
• When people think of customers as problems rather than as
opportunities to serve
• Thick policy manuals and job description
• Leaders who rely on structures instead of people
• A loss of confidence in judgment of the leaders by the rank
and file and wisdom
• increased rudeness
• A focus on forecasting versus planning
Building a Critical Mass for Change

Normally change leaders focus on buy-in to create a critical
mass for change. It can up to two years to build the critical
mass for large-scale change. Here are some ways to do it.
1. Modify drafts of the strategic plan. Review the plan, and

share and gain feedback from the people affected by it.
2. Throughout planning and implementation, hold feedback
meetings with your key stakeholders in parallel with your
thinking and decision making; not later in the sequence.
3. Develop trust in your leadership by being open to feedback
through a Strategic Change Leadership steering committee.
If there are any skeptics, get them talking, and listen to
them.
65
4. Develop three-year business plans for all business units and

major support departments, involving key stakeholders and
staff as well.
5. Develop annual plans for all departments, divisions, and
sections under the strategic plan/core strategy umbrella.
6. Put out updates after each meeting of the strategic change
steering committee, and ask for feedback.
7. Use strategic sponsorship teams as change agents for each
core strategy/major change.
8. Implement quick changes and actions so people know you
are serious once you start the change.
9. Review reward systems and the performance appraisal form
to reinforce core values and core strategies.
10. Answer the question “What in it for me?” (WIIFM) for each
person affected by the change. In this way you take into
consideration many issues, from political to cultural, that
may affect the success of the change.
“Skeptics Are My Best Friends”

Remember that skeptics can be your best friends here. If
you encounter skeptics at any level, be sure to ask them
why they believe the changes will not work out. Get them to
identify what they see as the roadblocks to the change, and
listen to what they have to say—don't argue or try to force
them to agree with you. It may turn out that those road-
blocks are the key items you will need to overcome to ensure
the successful achievement of your vision and then most
skeptics will buy and and stay in.
The following shows a two-year profile for building the

support needed to create the critical mass.
66
Year 1. Involves . . .
All Employees
• Core Strategic Planning/Major
Change Team Management
• Plus 20 to 40 key “others”
• The collective management Planning Critical
team Team Mass
Year 2. Involves . . .
• The rest of the organization
• Other key external stakeholders
Institutionalizing the Desired Changes

Getting long-term stay-in on change projects requires
institutionalizing the desired changes. Ways to do this
include the following:
1. Conduct an organizational assessment to see the status of

the change and whether there are any problems that need
addressing for the change to reach its full effectiveness.
2. Conduct refresher-training courses on the change topic.
3. Hold yearly conferences on the subject (renewal).
4. Make the basic change and any further needed improve-
ments (see item 1) a part of senior line management's goals
and performance appraisal.
5. Conduct a reward system's diagnosis and make appropriate
changes so that the rewards (both financial and non-
financial) are congruent and consistent with the changes.
6. Set up an ongoing audit system. Also find ways to
statistically measure the change effectiveness. Line
managers are used to statistics and generally like them.
7. Ensure you have ways to discuss and reinforce the change at
periodic staff meetings of top management and department
heads.
67
8. Put the changes into organizational policies and procedures;

then make someone accountable for them. Set up permanent
jobs to update the changes, or put the accountability into
existing job descriptions.
9. Use a variety of communications avenues and processes for
both one-way and two-way feedback on the change.
10. Hold periodic team meetings on the subject across the
organization.
11. Have top line managers regularly conduct “deep-sensing”
meetings on the subject, down into the organization.
12. Hold periodic intergroup or interdepartment meetings on
the subject and its status.
13. Set up a process for annually renewing and reexamining the
change in order to improve it on a continuing basis.
14. Have outside consultants conduct periodic visits on the
subject and assess the status of the change.
15. Be doubly sure that the top team continues to model the
changes. (You can “refreeze” this through many other items
on this list.)
16. Set priorities and deadlines for short-term change
improvements.
17. Look closely at the key environmental sectors to be sure
they are reinforcing the changes. (Pay particular attention
to any parent companies or division heads.)
18. Create physical indications of the permanency of the
change; for example, offices, jobs, brochures.
19. Develop “stay agents” or multiple persons who have a strong
interest in maintaining the change. (Do this particularly
among line managers and informal leaders.)
20. Refine change procedures to make them routine and normal.
21. Link other organizational systems to the change.
68
Encourage specific and formal communications,

coordination, and processes between them.
22. Keep the goals and benefits of the change clear and well
known.
23. Assess the potential dangers and pitfalls of the change, and
develop specific approaches and plans to minimize these
dangers.
24. Be alert to other changes that can negatively affect this
change—such as unintended side effects and other
consequences.
25. Don’t have the person who manages the stability also
manage the change. These are two different tasks, calling
for different personalities. Each one should be given its own
separate manager. It only makes sense that change agents
are poor stay agents!
GUIDELINES FOR USE

1. Turn to this tool whenever you need help with the
practical necessities of getting buy-in and long-term stay-
in. Use it to help others understand the often-overlooked
value of stay-in.
2. Ensure that others in your organization understand the
concept of entropy and its effects on an organization.
Take a good look at your organization. Do you see
entropy at work? Also ,make sure that others understand
that entropy can be reversed and lead to renewal and
growth at a higher level.
3. Remember to make “skeptics your best friends” as
detailed here.
4. Expect entropy to occur in every new change you
introduce. Thus, build in specific points to provide
booster shots/check points.
69
TOOL
Application of
9 CENTRALIZE AND Standard Systems Dynamics
DECENTRALIZE — 10. Interrelated Parts
Build strategic consistency and operational flexibility into

your organization. Focus on what is strategic (the “what” or
ends) and what is operational (the “how” or means); avoid
thinking in terms of centralize versus decentralize—it’s too
simplistic. One size no longer fits all; consistency is not
always key, especially in the “how.” Being strategically
consistent in your vision or mission, and operationally
flexible through empowerment, are the successors to the
traditional centralized versus decentralized dilemma.
This leads us to the systems question:
What should we centralize and what should we

? decentralize?
Usually centralization will focus mostly on whats and

decentralization on the hows.
➤ PRINCIPLE: There are many different ways to achieve the

same desired outcomes. Principle: People
support what they help create.
We need to put this systems principle into action by

encouraging those who will be affected by the change to
contribute input to the planning process prior to imple-
menting the change. We also need decision makers who are
willing to accept such input and work with it—leaders who
understand that people naturally want to be involved in
decisions that will have an impact on them, and who see the
advantage in receiving people’s input. The input increases
70
buy-in and stay-in (tool #8) and also often provides better
answers from these closest to the issues. Such leaders know
that thinking in terms of “one best way” simply doesn’t
work, and that participatory management skills are
required.
➥ Example
Today's leadership paradigm calls for a new way of
looking at organizations. It requires a much higher
level of maturity and wisdom—a middle ground
between abdicating responsibility and being all
controlling—with a focus on interdependence.
The Three Levels of Maturity and Wisdom

3. Interdependent (Systems/Teamwork)
2. Independent (Individual/Separate)
1. Dependent (Childlike)
GUIDELINES FOR USE

1. Leaders need to define the few things they must have to
ensure consistency in their organizations; for example,
organizational values and beliefs, shared vision and/or
mission, and key strategies everyone should help carry
out.
2. Most organizations need consistency in the following few
areas: financial arrangements, senior executives/succession
planning, organization identity and visibility, and
positioning in the marketplace vs. the competition with
your customers. Beyond these few strategic consistencies,
operational flexibility and empowerment should reign.
3. In our personal lives, we need tolerance for others, such
as family members, allowing them the flexibility to live
their lives as they want as long as they stay true to
agreed-upon values.
71
TOOL Application of
10 MULTIPLE CAUSES: Standard Systems Dynamics
— 2. Open Systems
ROOT CAUSES
— 11. Dynamic Equilibrium
— 12. Internal Elaboration
It is important to use free-flowing and participative-

management and active-learning techniques to find the
linkages and multiple causality factors that are the root
causes of problems and other concerns. The question we
begin with is simple:
What multiple causes lie at the root of our

? problem or concern? (That is, what are the
root causes?)
Answering it is seldom easy, though, for it’s difficult to

detect root causes, and we are often unaware of their long-
term impact on our lives. If you, as a manager, were to
illustrate some factors that have a long-term impact on
what you do each day, the result might look like this:
Long-Term Impact on What You Do Each Day
72
➤ PRINCIPLE: Root causes and their effects are usually not

linked closely in time and space.
A cause rarely makes a direct, immediate impact on every

effect it is linked to. Furthermore, there is rarely a single
cause behind anything in this world, whether it be a
problem, a human being, or a rainstorm. Most of us know
this in the abstract (or at least sense it); yet in practice,
we still think in terms of immediate, singular causes and
effects—which is an outmoded, mechanization-oriented way
of thinking.
➥ Example
On the organizational problem-solving front, such
thinking leads to the search for fast, convenient
solutions—quick fixes—as if we were dealing with
simple mechanical objects, not unwanted outcomes
in a system within systems.
Our simplistic cause-effect analyses, especially when
coupled with the desire for quick fixes, usually lead to far
more problems than they solve—impatience and knee-jerk
reactions included. If we stop for a moment and take a good
look our world and its seven levels of complex and inter-
dependent systems, we begin to understand that multiple
causes with multiple effects are the true reality, as are
circles of causality-effects.
➥ Example
Consider how our weather and crops are affected by
multiple causes such as these:
• The oceans—moderators of climate
• Atmospheric forces—for instance, the jet streams
• Various combinations of the above—such as El Niño
• Rain forests—high generators of weather
• Geological activity—such as volcanic eruptions (even
very distant ones)
73
Delay time, the time between causes and their impacts, can
highly influence systems. Yet the concept of delayed effect is
often missed in our impatient society, and when it is recog-
nized, it’s almost always underestimated. Such oversight
and devaluation can lead to poor decision making as well as
poor problem solving, for decisions often have consequences
that don’t show up until years later. Fortunately, mind
mapping, fishbone diagrams, and creativity/brainstorming
tools can be quite useful here.
Keep in mind, though, that the complexity encountered

in this area is often far beyond our human ability to
fully assess and comprehend. Thus it is crucial to flag
or anticipate delays, understand and appreciate them,
and learn to work with them rather than against them.
➥ Example
Most of us actually work with such delays all the time,
and base decisions on them. Investments, pensions,
savings, and the like all have delayed effects—ones
we bet our futures on. However, we seldom see that
delayed effect plays a crucial role in other decision-
making and problem-solving areas of our lives.
GUIDELINES FOR USE

1. The training and development function has many active
learning techniques that will help you find root causes.
Involve people affected by a change in the search for
these causes and for solutions.
2. Use these techniques to search for root causes, not
superficial symptoms. Some root causes are very hard to
find. Continually ask, “What else might be a root cause?”
and ask “why” over and over again.
3. Keep an open-systems view of the environment, as it
often contributes to the root causes as well.
74
TOOL Application of
11 KISS: Standard Systems Dynamics
FROM COMPLEXITY — 7. Equifinality
TO SIMPLICITY — 9. Hierarchy
— 12. Internal Elaboration
A. REDUCING BUREAUCRACY
Flexibility, adaptability, speed, and simplicity are far
preferable to rigid plans, tight controls, one-size-fits-all
consistency, and economies of scale. We need to eliminate
the waste of complexity and bureaucracy and try to flatten
system hierarchies. This requires us to ask:
How can we move from complexity to simplicity,

? and from consistency to flexibility, in the
solutions we devise?
➥ Example
To get an idea of how bureaucracy (and analytic
thinking) has run amuck in our lives, see Chapter I,
section “Systems Thinking Versus ‘Machine Age’
Thinking.”
THE GOAL (IN WHATEVER WE DO)

Clarify & Simplify—Clarify & Simplify—Clarify & Simplify
➤ PRINCIPLE: Multilevel systems are too complex to fully

understand and manage centrally.
Privatization and free-market economies generally work

because those closest to the action of a business are allowed
to make decisions for the business. We need to carry this
principle over into big business (and big government as
75
well), realizing that it is the thousands of little decisions

we all make daily in our businesses that shape and meet
market needs, not “higher-up” dictates or regulations.
Clearly, “corporate central” has a role to play in the success
of businesses, but it should not be an all-encompassing one.
Corporate bureacracies should be shaped into smaller units,
so that the people who work in the units—the ones that best
understand the units’ operations and needs—have enough
freedom to act on that understanding. In fact, we may find
in the future that virtual corporations work more effectively
than traditional, vertically integrated and complex ones.
The KISS (“Keep it simple, stupid”) method is more

powerful than many economies of scale. This method begins
with us and the questions we bring to our organizations.
GUIDELINES FOR USE

1. To reduce bureaucracy and create simplicity and flexibility,
answer these 10 questions in terms of your own job or life.
1. What made me angry today? 6. What was wanted?
2. What took too long? 7. What was too complicated?
3. What caused complaints? 8. What was just plain silly?
4. What was misunderstood? 9. What job took too many people?
5. What cost too much? 10. What job took too many actions?
2. Ask yourself these three questions to build in simplicity.
1. What is going well in my organization or personal life, and so should not be changed?
2. What are the abrasive or problem areas that should be examined?
3. If I could change my organization/my life with a “stroke of the pen,” what would I
change?
B. THE RULE OF THREES

In viewing the world, we usually organize things into
threes—for instance: sun, moon, stars; land, air, water. This
a natural human tendency, perhaps because thirds offer us
the simplest conceptual balance in seeing a whole. When
dealing with human constructs, we thus find threes used
76
everywhere as a principle of order and comprehension

(many of us even see ourselves as comprising three parts—
body, mind, and spirit). The KISS method adopts this
tendency, the Rule of Threes, as a primary way to “keep it
simple.”
MANAGEMENT'S ULTIMATE CHALLENGE

Search for the simplicity on the far side of complexity
➥ Example
Here are some applications of the Rule of Threes:
• Individual: Body, mind, spirit
• Learning: Skills, knowledge, feeling/attitude
• Human Interaction: Structure, content, process
GUIDELINES FOR USE

1. Whenever you are trying to influence someone, order
your views into three main points. Most people will find
them easier to remember. (This is a good technique for
talks or presentations, too.)
2. In all you do, ask yourself, “What are my three main
points?” Build frameworks people can remember.
3. When someone is being complex or rambling on, ask the
person for his or her three main points or, if appropriate,
for three “pro” points and three “con” points.
4. As Steve Covey asks in his 7 Habits book (1989), “What is
the third Alternative?” This often helps to stop artificial
and competitive win-lose options and conflicts.
77
TOOL
Application of
12 The Ultimate Question: Standard Systems Dynamics
SUPERORDINATE — 6. Multiple Outcomes
GOALS — 9. Hierarchy
To paraphrase Albert Einstein, problems can't be solved at

the level they were created; so we need to go to the next-
higher systems level and its desired outcome in order to
succeed. By using higher-systems-order outcomes, we focus
on abundance (win-win activities), rather than scarcity
(win-lose). To initiate that focus, we ask:
What is our common higher-level

? (superordinate) goal?
To raise new questions, new possibilities, to regard old

problems from a new angle, requires creative imagination
and marks real advance in science.
—Albert Einstein
➤ PRINCIPLE: Problems cannot be solved at the level they

were created.
This is the ultimate systems principle. It requires that we

advance beyond analytical thinking to genuine systems
thinking in order to resolve our issues. Climb into a mental
helicopter and rise to a higher level to gain a broader per-
spective and a high purpose and a wider range of solutions.
➥ Example
Union-management fights and strikes over pay tend to
amount to a win-lose game. By moving to the higher-
level goal of competing and producing more profitably,
both sides can make more money (increase the size of
the pie).
78
It is also important to apply the ultimate systems principle

to our personal lives.
➥ Example
In your day-to-day life, do you think about your future
vision and your higher-level goals?
If you do not think about the future, you cannot have one.
—John Galsworthy
GUIDELINES FOR USE

1. Whenever it feels like a discussion is going nowhere, ask
“What is the common superordinate goal that everyone
can support?”
2. Ask the above question when you are planning daily,
weekly, monthly, or yearly schedules. Get everyone
involved in the planning to work on the answer.
Sometimes this is seen as a “shared vision or core
strategies.”
79
APPLICATIONS
III. Phase A:
The Outcome-Thinking Tools
The two applications in this chapter center on Phase A of

the A-B-C-D Systems Model: output and the future state.
As we have seen, the question associated with this phase is:
➤ Where do we want to be?

(What are our outcomes? purposes? goals?)
These Phase A tools offer you key, practical assistance in

becoming outcome/results-oriented and customer-focused.
TOOL
13. Focus on Outcomes
14. Customer Focus
➥ These Tools Will Help You Become Outcome-Oriented!
81
TOOL
Application of
13 FOCUS ON Standard Systems Dynamics
OUTCOMES — 4. Input-Output
— 6. Multiple Outcomes
Focusing on outcomes means defining and meeting

customer wants and needs. The value to the customer
is always a mix of five outcomes:
• Choice and customization

• Service excellence, ease of doing business
• High-quality goods and services
• Speed, timeliness, responsiveness
• Total cost (in all ways)
The “star model,” below, shows these outcomes in an easy-

to-remember form. Outstanding strength in any of these
outcomes can help you gain an advantageous position in the
marketplace.
FIGURE 5. CUSTOMER-VALUE STAR MODEL
C = Choice
(Fashion, Control, Customized)
R = Responsiveness S = Service
(Speed, Delivery, (High-Quality
Convenience, Creating Customer Service
Methods, Timing) Customer Relationships)
Value
T = Total Cost Q = Quality Products

(Psychological Cost, Price, Life & Services
Cycle, and Waste/Environment) (Including Information)
82
III. Phase A: The Outcome-Thinking Tools
The Customer-Value Assessment Instrument

Use the following instrument to assess what your customers
currently value (later, in this tool’s guidelines, we will look
at optional uses for the instrument). Once you have your
assessment results, write a competitive-positioning state-
ment of what differentiates you from your competition—a
statement that indicates your core competitive strategy.
CUSTOMER -VALUE ASSESSMENT

Assess. of Score 1 (Low) to 10 (High)
What
Customer
Values
1. 2. 3. 4. 5.
Choice Service Quality Respon- Total Overall
Custom.
(Control) (Relation- Products siveness Cost Comments
Segments ships) & Services
1.
2.
3.
4.
5.
6.
7.
83
Competitive-Positioning
An organization’s competitive positioning may also be called
its driving force, strategic intent, or grand strategy; it is
sometimes referred to as “the mother of all core strategies.”
Such strategy is the main way we achieve a sustained
competitive edge over the competition. In developing your
competitive-positioning statement, you should capture
that way in clear and precise terms, keeping in mind the
information below.
• To avoid competitive disadvantage, you must focus the

strategic thrust on one or two customer values; any
more than that and you're attempting to be “all things
to all people.” The other customer-desired values of the
Star Model should be accomplished at just the level
needed to be competitive.
• This positioning is the key strategic thrust in your
vision and mission statements. All other functions,
directions, decisions, and criteria are subordinate to it.
Competitive positioning also is (or can be):
— The organization's core or distinctive competency
— The who, what, or how of your mission and values
(why is a given)
— The organization’s current reality or possible
reality within a planned period of time
— What the organization is known for—its reputation
or distinctiveness
— What the organization’s rallying cry is derived
from, and what it reinforces
— Something sustainable as an edge over a period of
years and not readily duplicated
84
A Closing Note on Positioning

Remember that competitive business advantages are
difficult to achieve. Sustainable advantage requires the
organization to build and deliver a capability that others
cannot duplicate easily or quickly. Therefore you can gain a
competitive advantage only by doing something difficult; if
it's easy to do, too many other people can do it also.
GUIDELINES FOR USE

1. You also can use the customer-value assessment
instrument to assess the following:
• What you anticipate your customers will value in the
near or far future
• How you are currently meeting customer value
• Where you desire your competitive positioning to be
on the assessment matrix
2. Don’t forget to write a position statement after using the
assessment instrument.
3. Another option is to use the assessment instrument on a
personal level to assess your own career. Whom do you
serve? And how well do you provide these value outcomes
to your organization? If you investigate this option, be
sure to write a competitive-positioning statement once
you receive your results. This positioning should be what
differentiates you from your competition.
85
TOOL
Application of
14 Standard Systems Dynamics
CUSTOMER FOCUS — 4. Input-Output
The only reason for the existence of any organization is to

serve someone else. This is your primary outcome. Thus
once you've identified your customer, the organization’s
entire focus should be on serving that customer.
➥ For Example
If Cadillac has upscale older folks as its customers, the
total organization—its people, plant, products—should
be focused on those customers.
➥ For Example
If part of your purpose in life is to raise your children
well, then you must focus on them properly, giving
them quality time, ensuring they receive a good
education, instilling values in them, and so on.
The “Ten Commandments” of a Customer-Focused

Organization
One way to focus on outcomes is to see whether your
organization is a customer-focused one. Best-practices
research has shown there are 10 primary indicators of a
customer-focused organization. They are presented as
commandments in the following rating sheet (see next
page).
Rate your organization on each commandment, using a

scale from 1 (low) to 10 (high); then simply tally your total
score. Pay attention to the commandments your organiza-
tion did not score well on, and work to improve those areas
of weakness. Celebrate that which you do well.
86
CUSTOMER -FOCUS RATING SHEET

1 5 10 The “Ten Commandments”
of Customer Focus
Low Avg. High
1. Be close to the customer. (Are seniot
__________ executives involved with customers?)
2. Know the customer’s needs. (Is surpassing
__________ them a driving force?)
3. Survey customer satisfaction. (Is this done
__________ regularly on products and services?)
4. Focus on “value-added.” (Have you
considered the Customer-Value Star Model in
__________ Tool 13?)
5. Set measurable service standards and
__________ expectations. (Has this been done for all units?)
6. Handle “moments of truth” productively.
__________ (Are customer complaints resolved well?)
7. Reengineer cross-functional business
__________ processes. (Are they customer-focused?)
8. Base structure on marketplace. (Has this
__________ been done?)
9. Employ “customer recovery” strategies.
(Are they clear and rewarded to surpass customer
__________ expectations?
10. Make sure your people are customer -
__________ friendly. (Are such people hired, and promoted?)
Total Score (out of 100)
87
“Moments of Truth” and Customer Recovery Strategy

Handling “moments of truth” (the sixth commandment)
and employing customer recovery strategy (CRS; the ninth
commandment) are the keys to providing unsurpassed
customer service. If customers are happy with you, they tell
three or four people; if unhappy, they tell a dozen or more.
Thus a major issue for any organization is how to handle
customer problems and complaints in a productive,
customer-satisfying way.
➥ For Example
Each problem or complaint has a story behind it,
which the customer will tell to friends. The question
is, how will the story end? On a good note, or a bad
one? The bottom line is, if the story ends well, both
the organization and the customer benefit.
Checklist: Moments of Truth

The checklist below comprises a number of essentials for
providing unsurpassed customer service. How many do you
act on when a customer-related problem occurs?
CHECKLIST: MOMENTS OF TRUTH

❑ Focus on the 5-to-10-year ROI of the customer.
❑ Focus on your long-term image and reputation.
❑ Empower employees to be creative and innovative at
the “moment of truth,” so you will surpass the
customer's expectations for solutions to the problem.
❑ Provide expenditure authority to do the above.
❑ Ensure accountability equals responsibility.
(Continued)
88
CHECKLIST: MOMENTS OF TRUTH (Concluded)

❑ Focus recovery on future business (e.g., 50 percent
price reduction or free next time).
❑ Speed up the recovery—at the “moment of truth.”
❑ Develop a “customer guarantee” and live up to it or
surpass it.
❑ Ensure your CRS has measures in place for quick
response, knowledgeability, and empathy and
sensitivity, as well as tangibles and other intangibles.
Mastery of Customer Recovery Strategy

There are four levels of responses to customer problems
and complaints, ranging from undesirable responses to
CRS mastery.
The Four Levels of Response to Customer Problems
1. Deny it's our problem. (“We just work here.”)

2. Fight the customers’ concerns but eventually give in to
them. (“They won.”)
3. Meet customer expectations. (“The customer is always
right.”)
4. Meet customer expectations; then do something extra
that the customer doesn’t expect (including offering an
apology).
At what level are you now operating? What might you do to

attain a higher level? What improvement steps are needed?
Answer these questions using the following CRS checklist
and worksheet.
89
GUIDELINES FOR USE

1. Have others in your organization fill out the Customer-
Focus Rating Sheet, and compare results. Look into any
discrepancies between them, build on agreed-upon
strengths, and work to improve areas of weakness.
2. Also share the CRS Checklist and Worksheet with others
in the organization, and work together on the steps to
any needed improvements.
90
APPLICATIONS
IV. Phase B:
Feedback and Learning Tools
The two applications in this chapter center on Phase B of

the A-B-C-D Systems Model: feedback loop. As we have
seen, the question associated with this phase is:
➤ How will we know we have reached our

outcomes, purposes, or goals?
With these Phase B tools, you will better understand the

connections between feedback and learning, and get a good
idea of what is involved in creating a learning organization.
TOOL
15. Feedback and Learning
16. Reinforcement and the Learning Organizaton
➥ These Tools Will Help You Bring Learning to the Organization!
91
TOOL
Application of
15 FEEDBACK AND Standard Systems Dynamics
LEARNING — 5. Feedback
A. FEEDBACK
Feedback loops should be created for all systems levels
(e.g., individuals, teams, HR programs, business processes)
and used regularly to measure desired outcomes and actual
success versus planned success. Each person in the company
should take some time each week to reflect on what he or
she has learned through these loops.
Feedback = Learning = Learning Organization

Feedback is “the breakfast of champions” Learning consists
of knowledge, skills, and attitude
It is important to understand that knowledge itself is an

input, and that learning comprises not just knowledge, but
also skills and attitude. You cannot use the knowledge of
how to meet a clearly defined and agreed-upon objective
unless you also possess the skills (abilities and readiness) to
carry through on that knowledge and have the attitude
(willingness or desire) needed to do so.
In Systems Terms
92
IV. Phase B: Feedback and Learning Tools
GUIDELINES FOR USE

Ask yourself and your team if there is a feedback mechanism
in place for everything you and they do, and if each mech-
anism offers a way to turn information into new learnings
and new applications. Also ask whether people in your
organization improve skills and attitude. (Keep in mind that
this requires practice—not one-hour or one-day briefings.)
B. LEARNING
Figure 6 shows how knowledge, skills, and attitude come
together in the learning of managerial effectiveness. A
FIGURE 6. Managerial Effectiveness Triangle
93
more detailed view of learning in general is shown in

Figure 7, “The Stairway to Learning.” Use it to examine
your own growth and development as a life-long learner
in all types of human dimensions.
GUIDELINES FOR USE

1. Recognize the different kinds of learnings and the steps
involved in learning and applying new knowledge and
skills. (For a four-page article on this topic, contact the
Centre for Strategic Management at 619-275-6528).
2. Teach the Stairway of Learning to your family, team, and
organization. Be especially aware of Step 1: “You don't
know what you don't know.” Finding organizational “best
practices” is the most effective way to get beyond Step 1.
C. UNDERSTANDING THE THREE COMPONENTS OF LEARNING

Most of us don’t really understanding learning and their
combined role of knowledge, skills, and attitude. We know
much more about the activity of teaching, which is only one
method for helping people learn. A brief primer on basics:
“Adults Learn Best by Doing”

But to really learn from experience, you must
process the experience. Otherwise, you may
“learn” the wrong thing.
94
FIGURE 7. THE STAIRWAY OF LEARNING

“People Don’t Know What They Don’t Know”
#5
A Learning Environment— High-Level
one in which everyone is encouraged to: Consistent Performance
L—Letting
#4 • Ability
E—Everyone
A—Acquire Unconscious • New Habits of
R—Recurring Competence Performance Mastery
N—Newness #3 • Practice
Conscious • Practice Skills
Competence • Practice
#2 • Attitude Attitude
Conscious • Knowledge
Incompetence • Initial Skills
Development Knowledge
#1 • Awareness
Unconscious • Open to Feedback
Awareness
Incompetence
“You don’t know
what you don’t Lifelong learning means that we must continually increase our capabilities.
know.”
SOURCE: Jim Mckinlay, Partner, Centre for Strategic Management
Exercise: What Do You Do Well to Facilitate Learning?

Ask yourself, “What do I, or we as an organization, do well
in the area of learning?” Answer by distributing 10 points
across the learning components, shown below.
Learning Components How It Is Today How You Want It to Be

1. Knowledge
2. Skills
3. Attitude
Total Points 10 10
95
GUIDELINES FOR USE

1. What are you teaching and changing? How are you doing
it? Consider these questions in light of the following:
Focus of Change How to Influence Change
Information/Knowledge ..............................................................................Lecture/Video
Sk i l l s ........................................................................................ Demonstration/Practice
Attitude ................................................................................................ Group Discussion
Behavior......................................................................................... Feedback Experience
2. Consider experiential lectures and participative training
techniques as a way to facilitate learning. Here are some
possibilities:
Lecturettes Demonstrations Brainstorming
Models with Role playing Action planning
ice-breakers Simulations Case studies
Dyads/triads Structured Instruments
Buzz groups experiences Problem analysis
Subgroups Questionnaires Films/AV with
Task forces and surveys follow-up discussion
Games/skits Fish bowl Active listening
96
TOOL
Application of
16 REINFORCEMENT Standard Systems Dynamics
AND THE LEARNING — 5. Feedback
ORGANIZATION
A. REINFORCEMENT OF LEARNING
Are you trying to create a learning organization? Or are
you just trying to maximize your retention of the learning
experiences you have? In either case, you need to pay
attention to the need for continuous feedback and
reinforcement of learning.
There are a variety of

methods for sustaining
new behaviors, including
challenge, recognition,
and support. Repetition
is also a key factor in
reinforcement! You should
build these methods into all
of your learning events and
learning opportunities.
Yearly Reinforcement, Bit by Bit

Reinforcing training in bite-sized chunks is an excellent way
to approach this necessity. Use a 52-week reinforcement
program, organizing it as shown in a sample on the next
page. Record the topic of learning and the other details you
need to ensure the learning efforts in your organization
meet with long-term success.
97
FIGURE 8. SAMPLE: 52-WEEK TRAINING REINFORCEMENT PROGRAM
TOPIC WEEK TRAINER TIME

1.
2.
3.
4.
GUIDELINES FOR USE

Other follow-up ideas for learning reinforcement include:
• Contracting for challenge/support
• Setting up a buddy system, lunches, and so on. Use a free-
floating agenda, built at each meeting.
• Creating small groups or teams to teach and review each
learning, to see what is working and what is not
• Following up every few months (holding “alumni sessions”)
B. MINI-TEAM FEEDBACK—RULE OF THREE

At the end of every group meeting and training session, you
should hold a mini-feedback session, at least two or three
minutes long, on how the meeting process (not content)
went and how to learn from it and improve it. This mini-
session acts as a meeting-processing guide. Use the
following threefold formula as an introduction:
In looking at the time frame of this meeting, and to make the
next meeting’s process work even more (or as) effectively, I
recommend we . . .
1. Continue to do the following: [supply details].
2. Do more of [or begin doing] the following: [supply details].
3. Do less of [or stop doing] the following: [supply details].
98
GUIDELINES FOR USE

1. At the end of every meeting, conference, or team/project
effort, use the mini-session threefold formula. It only
takes a few minutes to do this, and it gets you useful
feedback to improve whatever you are doing.
2. Close the mini-session by asking, “If you were to talk to a
good friend about this meeting, what would you tell him
or her about it?”
C. THE LEARNING ORGANIZATION

There are a number of elements integral to organizing
and creating a learning organization, many of which are
included in the learning-organization checklist on the
following page. When you are attempting this kind of
change, it is important to realize that the organization’s
internal capacity for responding to and initiating change
is linked to its capacity for learning, feedback and
organizational renewal.
➥ For Example
Systems design and redesign call for the capacity for
renewal, because as soon as a design is implemented,
its consequences indicate a need for redesign. Therefore:
1. A learning system must be built in to whatever
restructuring you do.
2. Adapting processes (debriefing, ongoing feedback)
must be developed and implemented.
As this example suggests, the best system is an inexact

adaptive-learning, ideal-seeking system. Such a system
helps you deal constructively with the problem of entropy
(see Chapter I for more on this topic) and ensures the
organization’s capacity for renewal meets its crucial need.
99
CHECKLIST: CREATING THE LEARNING ORGANIZATION

Directions: Many of the elements needed to create and organize a
learning organization are listed below. Which ones does your organiza-
tion need? Check off the elements, rating your need from high (H) to
medium (M) to low (L).
H-M-L ACTIONS NEEDED

❏ ❏❏ 1. Reward managers who try to create it.
❏ ❏❏ 2. Process meetings at the end to improve them.
❏ ❏❏ 3. Conduct training and learning experiences at each staff meeting.
❏ ❏❏ 4. Create “whole jobs” with direct customer contact. Give people the
autonomy and freedom to act on and control their own jobs
(“Every employee a manager”).
❏ ❏❏ 5. Provide everyone with jobs/tasks that include OJT and new learning
experiences.
❏ ❏❏ 6. Conduct lots of training with follow-up and applications review, so
it is meaningful and useful to people’s jobs.
❏ ❏❏ 7. Understand and use adult learning theory as a way to present any
and all new situations. Supply people with questions, not solutions.
❏ ❏❏ 8. Set up a 52-week training program (bite-sized learning).
❏ ❏❏ 9. Set up periodic and regular personal feedback for employees on
how they come across to others and on their job performance as
related to objectives.
❏ ❏ ❏ 10. Set up a strategic management-development system for all
management levels. Use managers/executives as the trainers to help
others learn better.
❏ ❏ ❏ 11. Train and evaluate managers and executives in their new role of
TLC—trainer, leader, coach.
(Continued)
100
CHECKLIST: CREATING THE LEARNING ORGANIZATION (Concluded)

H-M-L ACTIONS NEEDED
❏ ❏ ❏ 12. Work daily on continuous performance improvement and

delegation, and track it.
❏ ❏ ❏ 13. Set up debriefings and postmartums to ensure people learn from
their mistakes and experiences.
❏ ❏ ❏ 14. Help the organization develop a culture of forgiveness and
problem-solving, rather than one of blame. Promote
experimentation, discovery, and mistake making as a way to
learn.
❏ ❏ ❏ 15. Inspire a shared vision/common purpose that people can relate to
and enthusiastically embrace.
D. FEEDBACK AND RENEWAL SYSTEMS

Organizations have life cycles just as human do. One of
the big differences, however, is that organizations can
“renew” and rebuild themselves into completely different
organizations, starting all over again. Phase B, Feedback
Loop (from the environment) is a crucial variable at the
start of this process. So is having a new future vision
(Phase A) to act as a magnet, directing everyone forward
to the “renewed” organization.
➥ For Example
A good example of large-scale renewal is what Jack
Welch has done at General Electric. Another is IBM,
which is well on its way to becoming a brand-new
company as a systems service provider (while keeping
its old company as a mainframe manufacturer). Being
a learning organization and using environmental
scanning and feedback are the keys to this.
101
Remember that . . .
Learning organizations cultivate the art of open, attentive

listening. Managers must be open to criticism.
Renewal Practices Questionnaire

The following questionnaire lists 35 practices that contri-
bute to and support organizational renewal. Which of them
can be found in your organization?
QUESTIONNAIRE: RENEWAL PRACTICES

Directions: Do you have the following practices in your organization?
Answer yes or no for each practice. When you are finished, go back
and circle the practices you need to initiate.
Yes No RENEWAL PRACTICES

❑ ❑ 1. Issues-management process (government, community,
stakeholders)
❑ ❑ 2. Environmental scanning system
❑ ❑ 3. Competitor analysis
❑ ❑ 4. Financial reports (short-term and long-term)
❑ ❑ 5. Industry financial comparisons
❑ ❑ 6. Customer data, surveys, feedback, perceptions, focus

group
❑ ❑ 7. Non-customer data, surveys, perceptions, focus group
❑ ❑ 8. Observation of technological trends
❑ ❑ 9. Observation of socio-demographic trends
❑ ❑ 10. Rewards—matching surveys, programs, diagnosis
(Continued)
102
QUESTIONNAIRE: RENEWAL PRACTICES (continued)

❑ ❑ 11. Employee-opinion surveys (morale, motivation,
communication)—annually, by unit
❑ ❑ 12. Culture surveys, focus groups
❑ ❑ 13. Administrative MIS reports
❑ ❑ 14. Action, research
❑ ❑ 15. Advertising, marketing ROI and research
❑ ❑ 16. Management date, opinions
❑ ❑ 17. Task forces, think tanks, discussion groups
❑ ❑ 18. Strategic-planning process
❑ ❑ 19. Unfiltered upward-feedback meetings
❑ ❑ 20. Team building, diagnosis, executive retreats
❑ ❑ 21. Structured experiences, feedback and learning
❑ ❑ 22. Job design, work simplifications
❑ ❑ 23. Organization-effectiveness-suggestion programs (not

just productivity)
❑ ❑ 24. Employee-involvement programs
❑ ❑ 25. Peer evaluations
❑ ❑ 26. Meeting evaluations
❑ ❑ 27. Employee-management meetings
❑ ❑ 28. Offsite meetings, overnights, Outward Bound team

experience
❑ ❑ 29. Performance evaluations, including company values
❑ ❑ 30. MBWA
(Continued)
103
QUESTIONNAIRE: RENEWAL PRACTICES (concluded)

❑ ❑ 31. Feedback, feedback, feedback
❑ ❑ 32. Deep-sensing employee perceptions
❑ ❑ 33. Best-practices research
❑ ❑ 34. Benchmarking
❑ ❑ 35. Work-flow mapping
E. STRATEGIC EDUCATION MODEL

Real learning in an organization requires knowledge
and skills, as well as the right attitude. And to affect
organizational change, it must move up from the individual
to teams and to the organization as a whole. These levels
are essential to creating a learning organization.
Exercise: Strategic Model

Place an H, M, or L in
each box to show the
levels of learning going
on for either (1) you,
(2) your department, or
(3) your organization
as a whole.
104
APPLICATIONS
V. The A-B-C-D Systems Model
The tools in this chapter are designed to increase your

success with a number of key management processes and
activities. They will help you apply the A-B-C-D Systems
Model within the practical dimensions of the workplace.
TOOL
17. “Organization as a System” Model*
18. Reinventing Strategic Management
19. Strategic Life Planning
20. HR Strategic Planning
21. Systemic Team Building
22. Leadership Development as a System
23. Hiring and Promotion as a System
➥ These Tools Will Help You with Key Management Processes!
*Essential reading for all the tools in this chapter.
105
TOOL Application of
17 “ORGANIZATION AS Standard Systems Dynamics
— 1. Holism
A SYSTEM” MODEL — 4. Input-Output
— 10. Interrelated Parts
In this tool, we will focus on a primary application of the

third concept of systems thinking—the A-B-C-D Systems
Model. In Chapter I, we took an in-depth look at this model
as an overall systems concept. Here we will discuss it as an
application to the organization as a system—as a way to
create alignment and attunement for the organization’s
competitive edge.
Refer to the close-up section below whenever necessary, to

ensure you fully understand the “Organization as a System”
Model (for a graphic depiction of the model, see Figure 8).
As was noted earlier, this is essential reading for the other
tools in this chapter, all of which are based on this model.
CLOSE-UP: “ORGANIZATION AS A SYSTEM” MODEL

Phase A: Customer Value (Output)
Systems thinking “begins with the end in mind,” to
borrow a phrase from Stephen Covey. Outcomes, purposes,
missions, visions, goals, objectives, and ends are all terms
that describe Phase A, the outcome of the organization as a
system (also defined as the customer edge). The vital move
here is to define who your customers are and what they
want, and then to position the organization so it has a
unique edge over the competition. This is the first and
foremost strategic and systems thinking task any
organization must invest its efforts in.
106
D. THROUGHPUT
STRATEGIC CHANGE MANAGEMENT PROCESS

ORGANIZATIONAL DESIGN
C. INPUT A. OUTPUT
D. THROUGHPUT
TEAMS
RESOURCE
ALLOCATION PROCESS
IMPROVEMENT TECHNOLOGY
TOOLS
ANNUAL CUSTOMER
NMENT OF DE
ALIG L IVER
NEM EN Y PROC STRATEGIC VALUE
STRATEGIES T OF P ESS
ATTU EOPLE’ REVIEW
S HE A R
STRATEGIC
TS
LEADERSHIP
107
COMMUNICATIONS & MANAGEMENT EMPLOYEE
INVOLVEMENT
STRATEGIC “VISION AND VALUES
HUMAN RESOURCE MANAGEMENT ACHIEVED”
PRACTICES
ORGANIZATIONAL CULTURE = WEB OF RELATIONSHIPS
FIGURE 8. “ORGANIZATION AS A SYSTEM” MODEL
B. FEEDBACK
L
TA
ST KEY SUCCESS EN
E.
•P AK
AR E H FACTORS M •
AL N AN
LE OLD
LP RO SC
RO ERS
CE
VI •
SS EN
•
Obviously, to satisfy customer needs and thus achieve the

desired outcomes, an organization must deal with a
dynamic, changing environment. Good strategic thinking
helps the organization look at future environmental trends
to define where it wants to be within the context of that
environment.
Phase B: Key Success Factors (Feedback Loop)

Phase B corresponds to the feedback loop, or in organiza-
tional terms, the key success factors. These factors are
the quantifiable outcome measures of success and should
be constantly fed back to the organization. (They are
sometimes called goals and objectives.) Feeding back
quantifiable measurements of how the organization is
functioning is essential to organizational learning. It guides
corrections and adjustments throughout the year to ensure
achievement of Phase A, Customer Value.
Whether you describe this phase in terms of objectives,

goals, key success indicators, critical success factors, or the
like, it is all about building a scoreboard of organizational-
success measurements and feeding the status of these back
into the organization so it can learn from them and correct
its actions as necessary.
Phase C: Strategies (Input)

This is where inputs into the organization as a system
deal with creating the strategic edge. The 64-million-dollar
question for organizations is “What core strategies do we
need to adopt?” These strategies are crucial, for they are
the primary means to our ends of achieving organizational
outcomes, especially customer value. They represent
strategic thinking at its very best.
Phase C includes the conversion of strategic plans into

business plans and operational or annual department
108
plans for each aspect of the organization. The operational or

annual department plans are what you implement—not the
strategic plans. A strategic plan is a blueprint and living,
breathing document—a framework for creating business
and operational plans. Thus Phase C inputs are crucial in
defining the core strategies and, through conversion, the
operational plans for implementing change throughout the
organization.
Note that the Phase C tools in this chapter show all the
aspects of strategic planning that lead to developing these
core strategies. I have focused the material in this way,
describing it in one place, for reasons of coherence. Tech-
nically, however, strategic planning includes parts of the
other three phases—A, B, and C—as well.
Phase D: Strategic Change Management Process

(Throughput)
The throughput of the organization as a system has to react
to today’s dynamic organizational changes. This phase
details the inner workings of the organization in terms of
systems and horizontal interdependent process (much as
TQM and reengineering does), rather than by using the
separate “functional boxes” so common in analytic
organizational charts. It has four main components:
1. Strategic change management process
2. Alignment of delivery processes
3. Attunement of people’s hearts
4. The web of relationships
The master component is putting in place a strategic

change management process. It is the overall guiding
leadership and management mechanism to assure that
integrated and systemic change occurs. Instrumental to that
success are the tasks of defining and putting in place the
change processes and structures.
109
The second major component deals with the operational or

technical part of Phase D throughputs—creating the process
edge. This is done through the alignment of the delivery
processes of the organization. In Figure 8, our model’s
alignment component is depicted not as a straight line,
but as a wavy one, for in effect it occurs more in keeping
with the Rollercoaster of Change (systems concept 4). It is
half of the web of relationships (the fourth component,
which strongly influences effective or ineffective delivery
processes) and includes the five elements of organizational
design, resource allocation, teams, process improvement,
and technology tools. Note that most change efforts focus on
this more operational or technical component (often to the
detriment of the organization).
The third major component, attunement of people’s

hearts (and minds), is crucial to creating customer value—
the people edge. It is also the other half of the web of
relationships, which ultimately creates your
organizational culture.
For purposes of explanation, I have separated the social

(the attunement of people’s hearts) from the technical or
operational (the alignment of the delivery processes);
however, both are inextricably combined in Phase D as
the organization’s internal web of relationships that
must integrate well and fit together in support of creating
customer value (Phase A). Without integration and fit, we
not only lack the synergy of 2 plus 2 equals 5, but face the
likelihood that elements in the attunement and alignment
will work against each other. Fit—a word that should be
used with caution when it comes to systems thinking—is
only applicable here in the sense that the basic purpose of
these components is to assist, and work in conjunction with,
other components to help the entire organization create
customer value.
110
We thus encounter (and must manage) a systemic

phenomenon: that maximizing any functional department’s
effectiveness sub-optimizes the whole organization. We
must always remember: the whole is primary and the parts
should only be optimized as a secondary consideration.
GUIDELINES FOR USE

1. Based on extensive best-practices research, the broad
utility of the “Organization as a System” Model includes
its use as:
1. A template, model, or diagnostic tool
2. A framework for thinking and analyzing the organization (or a
department)
3. A source of questions as you make decisions to change items or
tasks in the organization (i.e., implement your strategic plan)
4. A common framework for thinking, communicating, and working
together to change parts of the organization and achieve your vision
5. A way to increase awareness, sensitivity, and understanding of how
an organization works and how the parts should fit together in
support of vision/customers
6. A way to eliminate biases
7. A tool for gaining focus despite organizational complexity
8. A tool to diagnose the status of your effectiveness in achieving the
organization's fit, alignment, and integrity with regard to your
vision and your desired culture
9. An exquisitely simple macro model for getting a handle on
organizational changes
10. A bird's-eye view/framework for looking at the overall organization
• To see multiple cause and effect
• To find a balanced way to “cover the waterfront”
11. An aid for narrowing in on areas needing work
• To set priorities for work
• To see clear linkages/interdependence to other functions, tasks
(Continued)
111
GUIDELINES FOR USE

(Concluded)
12. A road map—a way not to get lost in organization complexity
• To know where you are and how to navigate toward success
• To have a 21st-century road map, not a 1700s one
13. A tool to diagnose problems/solutions in organizations; a way to
increase the chance of success by seeing how one thing affects all
others (vital when you’re attempting culture change)
14. A method for explaining and teaching executives/managers how to
manage and lead strategic planning and change; as a readiness check
15. A guide for large-scale change and for improving individual/team
performance and links to vision/values and direction
16. A way to gain more confidence in your implementation
17. A view of how multi-causes have multi-effects
• Simple cause-effect is obsolete
18. Help to avoid strategies/actions based on a systems diagnosis and
“solid” solutions
See the helpful, best-practices diagnostic tool on the following page.

2. Use the organization system model to conduct a high-
performance survey and assessment on the status of the
components and their interrelationships. See the survey
that closes this tool.
112
BEST-PRACTICES RESEARCH
A Diagnostic Tool for Managing Accelerated Change
PHASES Organization A. B. C.
Type ➽ REACTIVE Industrial Age Systems Age
_____________ ORGANIZATION RESPONSIBLE HIGH-PERF.
Organization ORGANIZATION ORGANIZATION
(Traditional) (Proactive)
➷ as a System
A. 1. Achievement Survival Level & Profitability OK or Customer Value
Output of Results Conflict Only Within Budget ( Results)
B. 2. Feedback Rarely Used Financial/Operational KSFs/Annual

Feedback Loop (Closed System) Measures Only Strategic Review/
Org. Learning
A.–C. 3. Strategic Survival/Confusion 3-Year Forecasts/ Integrate Strategic

Strategic Planning Day to Day Operational Planning Mgmt. System
Planning
D. 4A. Operational Tasks A. Firefighting/Fix A. Maintain Only/ A. Reputation for

Alignment (Quality/Service) It (Low Quality) Obsolete Tasks High-Quality/Service
(of
4B. Technology B. Out of Date B. Piecemeal B. Technology Fit/
Delivery
4C. Resources C. Squeaky Wheel Technology Organization
Processes)
4D. Organizational D. Fragmented C. Incrementalism C. Resources on
Design D. Hierarchy & Clear Focus
E. Adversarial/
4E. Team Development Individ. Focus Bureaucracy D. Networks/Flat
E. Functional Strategic Alliances
4F. Business Processes F. Personal Control
Teams Only E. Cross-Funct’l,
F. Bureaucratic/ Self-Managed
Department F. Customer-Focused
Controls (Value Chain)
D. 5A. Leadership & A. Enforcing Blaming A. Directing/Controlling A. Six Competencies

Attune- Mgmt. (Incompetence) B. Obedient Doers (All System Levels
ment (of 5B. Employee B. Avoid Blame/Wait B. Empowered
People’s Involvement
Hearts)
(Continued)
113
BEST-PRACTICES RESEARCH
A Diagnostic Tool for Managing Accelerated Change
PHASES Organization A. B. C.
Type ➽ REACTIVE Industrial Age Systems Age
_____________ ORGANIZATION RESPONSIBLE HIGH-PERF.
Organization ORGANIZATION ORGANIZATION
(Traditional) (Proactive)
➷ as a System
D. 5C. Strategic C. Minimal/Negative C. Formal Newsletter C. Strategic
Attune- Communications D. Poor People D. Low Risk Positive/Open Book
ment (of 5D. Human Resources Management D. Empower
People’s E. Command &
5E. Culture Change E. One Man Rule Control Employees to
Hearts) Serve Customer
E. Participative
Leadership
(Facilitate &
Support)
E. 6. Strategic Change Avoid Pain Only Isolated Change Transformational
Strategic Management (No Follow-Through) Projects Change—Proactive
Change
Mgmt.
Process
7. Annual Strategic Not on Radar Department Goals & Strategic Plan—

Review Scope Objectives Living, Breathing
Updated Document
Notice the Paradigm Shift from the Industrial Age,

Traditional Organization to the Systems Age,
Proactive Organization
114
HIGH-PERFORMANCE ORGANIZATION SURVEY

Directions: (1) Circle the number that best describes your organization as it is today. Total your score.
(2) Connect the circles with a vertical line. The resulting zigzag shows where your organization’s emphasis has
been (high #s) and not been (low #s). The zigzag’s extent is the extent of lack of congruence and fit of these
parts of your organization with its outputs.
REACTIVE ORG. RESPONSIBLE ORG. HIGH-PERF. ORG.

A B C
A. Output
1. Achievement of Results 1 2 3 4 5 6 7 8 9 10
B. Feedback
2. Feedback Loop 1 2 3 4 5 6 7 8 9 10
A–C Strategic Planning
3. Strategic Planning 1 2 3 4 5 6 7 8 9 10
D. Alignment—Delivery
4A. Operational Tasks (Quality 1 2 3 4 5 6 7 8 9 10
Service)
4B. Technology 1 2 3 4 5 6 7 8 9 10
4C. Resources 1 2 3 4 5 6 7 8 9 10
4D. Organizational Design 1 2 3 4 5 6 7 8 9 10
4E. Team Development 1 2 3 4 5 6 7 8 9 10
4F. Business Processes 1 2 3 4 5 6 7 8 9 10

D. Attunement—People
5A. Leadership & Management 1 2 3 4 5 6 7 8 9 10
5B. Employee Involvement 1 2 3 4 5 6 7 8 9 10
5C. Strategic Communications 1 2 3 4 5 6 7 8 9 10
5D. Human Resources 1 2 3 4 5 6 7 8 9 10
5E. Culture Change 1 2 3 4 5 6 7 8 9 10

D. Strat. Change Mgmt. Proc.
6. Strategic Change Management 1 2 3 4 5 6 7 8 9 10
7. Annual Strategic Review 1 2 3 4 5 6 7 8 9 10

(Continued)
115
HIGH-PERFORMANCE ORGANIZATION SURVEY

Scoring:
TOTAL SCORE = ________________ (160 points possible)
A. High-Performing Organization = 110 to 160 points
B. Responsible Organization = 60 to 110 points
C. Reactive Organization = 0 to 60 points
Comments on Survey Responses/Results:
116
TOOL
Application of
18 REINVENTING STRATEGIC The A-B-C-D
MANAGEMENT Systems Model
Reinvented strategic management, a process from the

Centre for Strategic Management, is a different way to
apply systems thinking and the A-B-C-D framework. Use it
to tailor and build various strategic planning processes and
integrate them right into strategic change. The details of
the process model are shown in Figure 9, on the next page.
The process model illustrates there are many uses of the

four phases of systems thinking.
A. Creating your ideal future (Output)
B. Measuring success (Feedback Loop)
C. Converting strategies to operations (Input, to action)
D. Achieving successful implementation (Throughput,
action) And scanning the environment on a
continuous basis
➥ For Example
Potential applications of this process include:
1. Comprehensive Strategic Plan, to do a
comprehensive strategic planning process for an
entire organization. Requires 10 to 16 days offsite;
full steps 1 to 10, yet tailored to the organization.
(Explaining this full process is beyond our scope
here; for more information and a four-page summary
article about it, contact the Centre for Strategic
Management at 619-275-6528.)
2. Strategic Planning Quick, to conduct a shortened
and less comprehensive version of strategic planning
for an entire organization. This requires five days
117
N
THE “SYSTEMS THINKING” APPROACH TO CREATING YOUR COMPETITIVE EDGE A. OUTPUT
LA -
EG
-P A N RE ”
1. IN
“B
T O PL H E
C. INPUT D. THROUGHPUT
CURRENT STATE
8. FUTURE STATE
PLAN TO
CUSTOMER
9. STRATEGY IMPLEMENTATION 10. ANNUAL STRATEGIC REVIEW
VALUE
IMPLEMENT AND CHANGE AND UPDATE
7. ANNUAL PLANS/
STRATEGIC BUDGETS • ENVIRONMENTAL SCAN
2. IDEAL
118
FUTURE VISION
PARALLEL PROCESS
6. THREE YEAR (With Key Stakeholders)
BUSINESS PLANS @ Each Step • VISION
• ALIGNMENT OF DELIVERY • MISSION
• ATTUNEMENT OF PEOPLE • CORE VALUES
• POSITIONING
• RALLYING CRY
5. STRATEGY
DEVELOPMENT
B. FEEDBACK
FIGURE 9. PROCESS: REINVENTING STRATEGIC MANAGEMENT
•P
•
NT
STARA
E.
H
N
A LL
KE E L
4. CURRENT STATE
CA ME
3. KEY SUCCESS
R
P
VI
ASSESSMENT
• S ON
FACTORS
O L ROC
EN
DE E S
RS S•
offsite. (See the “plan quick” version of the process

model, later in this tool.)
3. Business/Functional Strategic Planning, to
conduct a shortened three-year business planning
process for a line business unit or major support
function/section/program (i.e., element of the larger
organization). Requires 5 to 10 days, depending on if
a comprehensive strategic plan (no. 1 above) is first
accomplished. (See process model, this tool.)
4. Micro Strategic Planning, to develop a strategic
plan for a small organization or business. Requires
two days offsite; do the rest without meetings. (See
process model, this tool.)
5. Strategic Life Plan, to conduct a personal (person,
family, couple) life plan. (Use with Tool 19.)
6. Strategic Human Resource Management, to
create “the people edge” in your organization. (Use
with Tool 20.)
7. Leadership Development System, to enhance
your leadership roles and competencies as a
competitive business edge. (Use with Tool 22.)
8. Organizational Systems Model, to systematically
diagnose any change effort and dramatically
increase your probability of success. (Use in
conjunction with Tool 17.)
9. Team Effectiveness, to comprehensively focus on
all aspects of teams to dramatically enhance their
outcomes and effectiveness. (Use with Tool 21.)
Be sure to go beyond planning

into strategic change with each use!
Tailoring and Rating Sheet

Complete the following tailoring and rating sheet, basing
your ratings on your current understanding of reinventing
strategic planning, using your organization as a model.
119
(Continued)
120
121
Strategic Planning Quick

For a quick-planning variant of reinvented strategic
management, see the process shown in Figure 10, on the
following page.
Three-Year Business Planning or Mini-Strategic Planning

There are three major steps to this kind of planning. The
steps listed below should be taken for all strategic business
units and major organizational support units.
Step 1: Create Your Ideal Future Vision

• Duration—two days
• Conduct educational briefing and Plan-to-Plan or
Corporate Strategic Plan review.
• Refine or develop your vision, mission, and values
in draft form (Step 2 of SPQ model), using
Corporate's as a guide.
• Develop Corporate goals with outcome measures
of success (alternative).
• Develop key-stakeholder parallel process.
Step 2: Convert Strategies to Operations
• Duration—two days
• Finalize your ideal future vision (Step 2).
• Conduct current state assessment (Step 4).
• Develop your core strategies (Step 5) and top-
priority action items for the next year—the “glue.”
• Set up second key-stakeholder feedback.
Step 3: Strategy Implementation and Change
• Duration—at first, one day every two months
• First set of tasks: finalize core strategies and
actions (Steps 5 and 7).
• Set up quarterly meeting of the Strategic Change
Leadership Steering Committee (Step 9) to
maintain plan success and/or decide on SBUs
(Step 6).
• Conduct Plan-to-Implement (Step 8).
122
T
EN
E.
C. INPUT D. THROUGHPUT A. OUTPUT
NM O
VIR
“STRATEGIC CHANGE MANAGEMENT”
EN
CURRENT FUTURE
9. STRATEGY IMPLEMENTATION 10. ANNUAL STRATEGIC REVIEW
STATE AND CHANGE AND UPDATE
STATE
8. Plan-to-Implement 1. Plan-to-Plan
(1 day offsite) (prework)
• Alt: Add Extra Day to
Conduct Plan-to-Implement “CUSTOMER FOCUSED”
BACKWARDS THINKING
PARALLEL PROCESS
(Do after each offsite
123
7. Annual Priorities/ with Key Stakeholders) 2. Ideal Future
Dept. Plans Vision
(1 day offsite) (2 days offsite)
• Finalize Strategies/Actions
• Alt: Annual Planning Review • Envir. Scan
• Alt: Step 6: SBU’s Optional • Vision/Mission (Combined?)
B. FEEDBACK • Core Values developed
• Positioning
FIGURE 10. STRATEGIC PLANNING QUICK PROCESS
T
EN
4/5. Strategy 3. Key Success

Development
NM
Factors (KSF)
(2 days offsite) (do separately)
VIR O
• Finalize Ideal Future/KSFs • Alt: Add Extra Day Offsite to Fully Develop KSFs
EN
• Current State Assessment —OR—

• Core Strategies/Actions • Track Customer and Employee Surveys
• Track Existing Financials and Competitors
Adapted from Steiner (1979), our experiences, a 1991 “Best Practices” literature search, © 1997 Revised Centre for Strategic Management. All rights reserved.
and client feedback ever since.

Note on Feedback Loop: Key success factors (Step 3) are

not recommended due to time limits; instead, monitor core
strategies and existing financials; survey customers and
employees.
“Micro” Strategic Planning, for Smaller Organizations

Step 1: Create Your Ideal Future Vision (one-day offsite)
• Conduct educational briefing and Plan-to-Plan
before the offsite. (Include key-stakeholder
parallel process.)
• Refine or develop your vision, mission, and values
in draft form (Step 2 of SPQ model).
• Develop a “key success factor” process outside the
offsites.
• Set up a current state assessment to be
accomplished between Steps 1 and 2.
Step 2: Plan-to-Implement Your Future Successfully (one-day offsite)
• Finalize your ideal future vision (Step 2).
• Present/Review current state assessment (Step 4).
• Develop core strategies (Step 5) and action items.
• Set up annual planning/budget process to follow
this micro strategic planning.
Step 3: Strategy Implementation and Change (one-day offsite)
• First set of tasks: finalize core strategies and
annual plans (Steps 5 and 7).
• Set up quarterly meeting of Strategic Change
Leadership Steering Committee (Step 9) to
maintain plan’s success; decide on SBUs (Step 6);
conduct Plan-to-Implement (Step 8).
Note on Feedback Loop: KSFs (Step 3) are not recom-

mended; instead, monitor core strategies and existing
financials; survey customers and employees. Do this outside
planning steps and offsites above; when completed, present to
board/planning team for final approval.
124
TOOL
Application of
19 STRATEGIC • Seven Levels of Living Systems
LIFE PLANNING • The A-B-C-D Systems Model
Look before, or you’ll find yourself behind.

—Benjamin Franklin
(Bartlett’s Familiar Quotations, 14th edition, 1968)
The clarity of an individual’s search for meaning is

important to the organization’s success as well as the
individual’s. The better the match, the better the results
organizationally and professionally. Thus managers need to
help employees develop not only a career path but also a
strategic life plan to stimulate employee initiative and focus
their energy. The A-B-C-D framework is fully applicable to
this goal, as shown in simplified form below and in more
detail in Figure 12 (see next page).
FIGURE 11. STRATEGIC LIFE PLANNING PROCESS—SIMPLIFIED FORM
Start With Personal Visioning—”Backward Thinking”
125
nt
N
“A SYSTEMS APPROACH TO CAREER AND LIFE FULFILLMENT”
L
LA -
me
EG
-P A N R E”
1. IN
on
“B
O
T P HE
vir
En
CURRENT
STATE
7. 8. STRATEGY IMPLEMENTATION 9. ANNUAL STRATEGIC REVIEW FUTURE
PLAN-TO- AND CHANGE AND UPDATE STATE
IMPLEMENT
• ENVIRONMENTAL SCAN
126
6. ANNUAL PLANS/
FINANCES
2. IDEAL
LIFE-LONG LEARNING FUTURE VISION
FIGURE 12. STRATEGIC LIFE PLANNING PROCESS
5. STRATEGY • VALUES
• VISION
DEVELOPMENT
• MISSION
B. FEEDBACK
4. CURRENT STATE 3. LIFE SUCCESS

ASSESSMENT FACTORS (Goals)

Exercises: Personal Vision and Personal Values

Use the following worksheets to begin putting strategic life
planning into practice, and to work, in your life.
WORKSHEET 1: PERSONAL VISION EXERCISE

1. Brainstorm your personal vision; then ask: “How will I know I have achieved my
vision?” Provide answers, using the chart below.
ROLES VISION MEASURES OF SUCCESS
AT YEAR _________
PERSONAL
1. Physical Health
2. Mental/Learning
3. Emotional/Spiritual
(Ethical)
FINANCIAL
4. Lifestyle/Wealth
PROFESSIONAL
5. Job/Career
INTERPERSONAL
6. Social/Friends
7. Community/
Service
8. Immediate Family
(Home, Spouse)
9. Extended Family
(Parents, Siblings)
2. Now try to get your vision down to a single statement. Also, think of what your
“rallying cry” should be, putting it into eight words or less.
(Continued)
127
WORKSHEET 1I: PERSONAL VALUES EXERCISE

Rank the following values from 1 to 15, with 1 being the most important to you and
15 being the least important.
VALUES ACTUAL DESIRED
1. Having good relationships with colleagues ______ ______
2. Professional reputation/respect ______ ______
3. Achievement of organization/unit goals ______ ______
4. Teamwork and collaboration ______ ______
5. Leisure time for enjoyment/fun ______ ______
6. Wealth and prosperity ______ ______
7. Fitness and health ______ ______
8. Contribution, service to society, community ______ ______
9. Acknowledging others’ achievements ______ ______
10. Autonomy/Freedom to act ______ ______
11. Personal growth ______ ______
12. Time with family/close friends ______ ______
13. Ethical behavior ______ ______
14. Excitement and challenge ______ ______
15. Spiritual/Religious time ______ ______
NOTE: If a person’s vision and values don’t match the

organization’s, you have a motivation gap. Identify such
gaps and deal with them personally and organizationally.
128
TOOL Application of
20 HR STRATEGIC • Seven Levels of Living Systems
• Standard Systems Dynamics
PLANNING — 4. Input-Output
• The A-B-C-D Systems Model
This tool presents a systems approach to creating an HR

strategic plan by combining the A-B-C-D framework with
strategic HR areas. A planning model is shown below; an
HR management model is provided later in the tool.
FIGURE 13. HR STRATEGIC PLANNING MODEL

Human Resource Strategic Planning
The People System to Create a High-Performance Organization
129
Using HR Strategic Planning

The steps for HR strategic planning are the same as those
for organizational strategic planning; however, in this case,
you do the planning for the HR function or department, not
the entire organization. The steps are ordered in accordance
with the A-B-C-D framework, as shown below.
Step A: Future State
• Conduct educational briefing and Plan-to-Plan on
entire process.
• Link to organizational vision, mission, values,
strategy.
• Ensure senior management commitment to the
process and its outcomes.
• Define Human Resource ideal future vision.
• Develop clear HR systems model/framework. (Use
A-B-C-D framework; see Figure 14 for guidance.)
Step B: Feedback Loop
• Use HR information systems/HR key success
factors based on the HR Systems Model.
• Set HR standards, measures.
• Use surveys to measure them.
• Use rewards system for HR plan achievement.
• Get stakeholder involvement and input.
Step C: Current State
• Conduct organizational diagnosis on HR system's
effectiveness along with its fit with the other
tracks.
• Develop strategic action items to support the
plan.
• Ensure HR Strategic Plan includes a
consideration of all aspects of the HR Systems
Model, including:
— Succession/manpower planning
— Career development
— Hiring, assimilation, start-up
— ER/HR policies
— Union/management relations
130
— Organization/management development
system
— Training, education system, programs
— Performance/Rewards management
— Compensation and benefits
— EEO/Wellness/QWL
— Internal communications systems
— Job/Organization design and descriptions
— HR MIS
• Provide resource allocation to support the desired
changes.
Step D: Strategy Implementation and Change—Major Activities
• Educate management on HR systems and
organizational behavior.
• Roll out/Communicate the HR strategic plan.
• Become steward, and maintain stewardship, of
the HR strategic plan, organizational culture,
values.
• Ensure fit/integration/coordination with any other
major improvement processes (i.e., systems fit—
alignment and integrity).
Human Resource as a System: The Human Resource

Management Systems Model
Are all of your HR programs and processes linked to your
organization's strategic plan, especially its vision, values
and strategies? To ensure this linkage, use the Strategic
Human Resource Management (HRM) Systems Model,
shown in Figure 14, on the next page. This model will help
you gain the crucial “people edge”—a system of people flow
and movement over time.
The HRM Systems Model is followed by a comprehensive

list of HR practices and programs that will give you a hand
with assessing your “people edge” (see Figure 15).
131
d
E
ar
L
Bo
I
e nt AN
m
“
Leadership in 9 HRM Areas to Build “The People Edge”
l o p -P R E ”
ve TO
De N - N H
e c . LA
Ex 1. P BEG
CURRENT IDEAL
)
5. Developing 6. Empowering 7. Rewarding 8. Retaining
People/Teams
AN NT
O
People/Teams
IRO
Performance Performance
R
STATE FUTURE
(SC N ME
VI
—Trainer—Coach—Facilitator
E NV (SCA N
NM
)
STATE
EN
ENT
“Customer Focused
Backwards Thinking”
132
9. Positive Work Culture
(Employee/Labor Relations)
2. Planning to Build the
People Edge
• HR Strategic Planning
4. Attracting
Talented People
• Strategic Job Profile • ENV. SCAN
• VISION
3. Feedback Systems • MISSION
(PA
• HRIS • VALUES S )
RA
• Organizational Measures ER ESS
LD C
• Performance Management O RO
H P
STA LLEL P
OL
KE L
A LLE
ST RA
K EH R O C
A
E
S
B. FEEDBACK (P
DER SS)
FIGURE 14. STRATEGIC HUMAN RESOURCE MANAGEMENT SYSTEMS MODEL
FIGURE 15. STRATEGIC HRM SYSTEMS MODEL: DETAILS

9 AREAS AND 36 KEY HRM PROCESSES TO ENSURE “THE PEOPLE EDGE”
Vision — Mission — Core Values —

Key Success Factors — Core Strategies
Organization-Wide Strategic Plan
1. Executive Development Board
2. _____ 4. _____ 6. _____ 8. _____

Planning to Build Attracting Empowering Retaining Talented
The People Edge Talented People Performance People/Teams
(5 processes) (3 processes) (5 processes) (3 processes)
___• HR Design Philosophy ___• Excellence in Hiring: A System ___• Performance & Rewards ___• Succession Planning Systems
___• HR Strategic Planning ___• Orientation/Assimilation ___• Exec. Perf. & Rewards ___• Career Development Systems
___• HR Trends ___• Roles-Jobs-Descriptions ___• Employee Empowerment ___• Discipline & Termination
___• HRP Steering Committee ___• Time and Goal Setting
___• Manpower Planning Forecasting ___• Coaching for Commitment
3. _____ 5. _____ 7. _____ 9. _____

Feedback Systems Developing Rewarding Positive Work
Performance Mgmt. People/Teams Performance Environment/Culture
(2 processes) (7 processes) (4 processes) (6 processes)
___• HR MIS System ___• A Learning Organization ___• Perf. Feedback & Appraisals ___• HR Policies
___• HR Audits ___• Management/Employee Dev. ___• Pay for Performance ___• Win-Win (Union/Management.)
___• Designing/Delivering Trng. ___• Cafeteria Rewards That Work ___• How to Work with Executives
___• Training/Behavioral Change ___• Continuous Improvement ___• Benefits Are Supportive
___• Managers as Trainers ___• Employee Assistance Programs
___• Team Effectiveness. ___• Workplace Health/Safety
___• Organization Development
GUIDELINES FOR USE

1. Use the detailed list in Figure 15 to do a comprehensive
assessment of your organization’s “people practices.”
2. After the comprehensive assessment, use the Strategic
HRM Systems Model as part of your HR strategic planning
process. The model will provide you with clear clues to
the strategies you need to implement.
133
TOOL
Application of
21 SYSTEMIC • Standard Systems Dynamics
TEAM BUILDING/INPUT — 4. Input-Output
• The A-B-C-D Systems Model
Systems thinking is the method for problem solving and

team building. The systems approach to team building is
shown below in Figure 16. Here are the steps:
Step 1: Phase A. Define the idea state in the future.
Step 2: Phase B. Develop feedback mechanisms and
norms for people to learn and grow as individuals
or as a team.
Step 3: Phase C. Diagnose where we are now.
Step 4: Action-plan how to get from today (C) to
future (A).
Make your team building and development more systemic,
thorough, and long-lasting by using the A-B-D-C systems
framework.
FIGURE 16. SYSTEMS APPROACH TO TEAM-BUILDING

C A
D
Actions
Current Future
State State
How to get there
and close the “gap”?
B E
Feedback Environment
How will we know we’ve
achieved our ideal?
134
Developing High-Performance Teams

High-performance teams are the way to run the business.
Needed is team development of all types and at all levels
of the organization. The actions below, if taken in the order
presented, will lead to such development.
A. Future State
• Conduct education briefing and Plan-to-Plan on entire
process.
• Ensure senior management's commitment and
willingness to undergo personal growth and guided self-
change.
• Clarify ideal future vision for teams.
• Develop clarity on levels and types of teams desired (by
priority); for example, project teams, functional teams,
cross-functional teams, self-managed teams.
• Link to organizational vision, mission, and values.
B. Feedback Loop
• Team standards and inter/intra-team feedback.
• Stakeholder involvement and input.
• Follow-up/reinforcement systems in place.
• Continual improvement/renewal philosophy in place.
• Rewards systems to reinforce desired changes.
• Best practices research.
C. Current State
• Conduct a team diagnosis of each team and its fit with
the other tracks.
• Develop strategic action items to support the plans for
team development.
• Provide resource allocation to support desired changes.
D. Strategy Implementation and Change—Major Activities

• Ensure education and understanding of the team
development model.
• Conduct team-building process for teams selected with
regular follow-up check points.
135
• Learn skills in:

— Meetings management and role clarification
— Group dynamics, process, and facilitation
— Team leadership and management functions
— Interpersonal and influence management, as well as
communications
— Ethical persuasion, decision making, and conflict
resolution
• Develop a proactive management fit and coordination
with outside sources of impact, the other tracks, and
any other major improvement projects (i.e., systems fit,
alignment, and integrity).
Team-Building Effectiveness
Effective team-building is accomplished by the A-B-C-D
Phases as shown in Figure 16. Each phase and its
accompanying actions are explained below.
Phase I—Data Gathering and Data Analysis/Synthesis

• Personal interviews/other methods
• Observation on the job and studying records
• Requires time to gather input from other specialists and
people with relevant information on team.
• Necessitates time by consultant to collate data into
summary report.
• Preparation of client (team leader) for offsite meeting
Phase II—Offsite Meeting
• Definition of A (clear future vision).
• How will we know we are there? (B)
• Presentation of findings in summary report (C)
— Exactly that—what we looked for, what we found
— Assimilation/analysis of data—what it means
— Problem identification, action planning
• Decisions/Action planning
136
FIGURE 17. EFFECTIVE TEAM BUILDING

C A
D
Phase I Phase II Phase III Phase IV
Needs Team Building Implement Follow-up
Current Future
State State
Analysis Offsite #1 #2 #3
B
Measures/Feedback
— Given the implications of being at C and desiring to

be at A, what needs to happen to get there? (D)
— Result: Plan of specific actions that need to occur, in
what order, involving how many people, by when
Phase III—Implementation of Action Plan (D)
• Accomplish task (i.e., achieve goals).
• Begin to build independence from consultant; do self-
diagnosis of your team effectiveness on an ongoing basis.
Phase IV—Monitoring/Follow-Up (Feedback Loop = B)
• Minimum of two half-day team meetings with consultant
within four to six weeks of, and within three months
following, first offsite meeting in order to assess results
to date and further actions needed; can be on site or off
site as needed.
• Consultant makes periodic visits to staff meetings as
process consultant.
• Consultant works with designated person to monitor
progress of action plan developed at first offsite meeting.
• Involvement of consultant in action steps as appropriate.
137
TOOL
Application of
22 LEADERSHIP • Standard Systems Dynamics
DEVELOPMENT — 4. Input-Output
AS A SYSTEM
If we know one thing today, . . . it is most managers are

made,not born. . . . There has to be systematic work on the
supply, the development, and the skills of tomorrow’s
management. . . . It cannot be left to change.
—Peter F. Drucker (Tarraut, 1976)
Thinking of leadership development as a system, instead of

just providing training programs, is an entirely new way of
thinking. Every leader and organization should think this
way, for when we boil competitive edges to their essence,
leaders and managers are the only true sustainable edge
over the long term. Thus using a system of development is
one of the best ways to gain and maintain this edge,
individual and collectively.
Leadership practices are the ultimate competitive

advantage and the foundation for all else.
➥ For Example
Leadership is needed at all organizational levels.
• Executive • Professional/Technical
• Managerial • Team
• Supervisory • Operational
➥ For Example
Senior management defensiveness is one big barrier to
leadership development. This seems to be a common
problem in change programs, where managers reason
defensively and change becomes a mere fad. Change
138
has to start at the top, as defensive senior managers

are likely to disown any transformation in behavior
or pattern of reason coming from lower levels.
Control and Discipline Start With You as a Leader

He who knows much about others may be learned,
but he who understands himself is more intelligent.
He who controls others may be powerful,
but he who has mastered himself is mightier still.
—Lao Tsu, Tao Te Ching
System Concepts: Strategic Leadership Development

The system concepts below are essential to effective
leadership development and gaining “the people edge.”
(A leadership development system model will follow.)
Core Concepts of Leadership

Set of core concepts . . .
• is the responsibility of senior management.
• is usually carried out and led through an
executive/employee development board (an EDB).
• includes the concept of individual development plan.
• is tied to the strategic plan, especially
strategies/values.
Alignment of People Process

The EDB’s role is to align the following processes to the
strategic plan in order to create “the people edge” at the
executive and lower-management levels.
1. Selection/Hiring
2. Promotion/Succession planning
3. Executive development
4. Management development
139
5. Career development/Life planning

6. Rewards, both intrinsic and extrinsic
Individual Development Plan (IDP) Concept
This needs to cover at least three levels of management:
1. Executives
2. Middle management
3. First-line supervisors
Core Skills and Values
While the continuously changing environment creates
the need for a living, breathing, flexible leadership
development system, it also requires a set of core skills
such as:
• Self-mastery • Training others/Mentoring
• Coaching and them
Counseling • Facilitating groups and teams
• Learning how to learn; • Handling disagreements
reflection time constructively
It also requires valuing the following:
• Integrity • Discovery
• Curiosity • Dialogue
Building a Strategic Leadership

Development System: Model
Our model is shown in Figure 18. Here are its details and
focal considerations, in sequence:
1. Plan-to-Plan
• Hold executive briefing on leadership.
• Form leadership development board and support team.
• Review best-practices research on leadership.
• Tailor the strategic leadership development system to
your needs.
• Make commitment to proceed.
(Note: As preparation for the above, you can read the Centre
for Strategic Management’s summary article on leadership;
contact CSM at 619-275-6528 for details.)
140
N
A SYSTEMS APPROACH TO LEADERSHIP COMPETENCIES
LA -
t
- P AN
1.
h
en
TO P L
d
Le
ar lo pm ip
•
D e ade
o
B ve r s
CURRENT CENTERING
7. LEADERSHIP DEVELOPMENT 8. ANNUAL STRATEGIC REVIEW YOUR
STATE IMPLEMENTATION AND UPDATE LEADERSHIP
6. PLAN-TO-
CREATE CULTURE
141
IMPLEMENT
FOR
LIFE-LONG LEARNING
2. SHARED
5. LEADERSHIP LEADERSHIP
DEVELOPMENT VISION
STRATEGIES
B. FEEDBACK • Organization Vision & Values
• Leadership Competencies
L
4. ASSESSMENT OF 3. LEADERSHIP TA
FIGURE 18. LEADERSHIP DEVELOPMENT SYSTEM PROCESS
LEADERSHIP SUCCESS FACTORS EN

M
COMPETENCIES N N
I R O CA
• Executive Development Progress V S
EN
• Team Reinforcement & Feedback
• Organizational Results
2. Shared Leadership Vision

• Clarify organizational vision, values, strategic plan.
• Establish leadership vision, principles, and mindsets
tied to strategic plan.
• Tailor the leadership competencies/outcomes.
3. Reinforcement and Feedback Systems
• Leadership progress and success factors
• Best-practices benchmarks
• Create or refine feedback on leadership competencies
4. Assessment of Collective Leadership Competencies
• Self and others (360-degree)
• Competency maps
• Other tailored assessments—leadership styles, etc.
5. Leadership Development Strategies (and Actions)
• Master Personal Development Plan (PDP)
inventory/format
• Modular development options
• Resources, timing, and reinforcement
• PDP administration and support structures
• Rewards, recognition, and succession planning tied to
development
• Performance appraisal ties to strategic plan and
development
6. Plan-to-Implement—Leadership Development Board
• Expectations
• Kick-off development
• Buddy system
• Develop coaching and mentoring skills
6A. Personal Development Plans
• Established for each executive, with individual
priorities
• Individual skills assessment; leadership-styles
instruments
142
• One to three years in length

• Clear sign off of authority
7. Implement Leadership Development
• Implementation of coaching and mentoring
• Sharing and spreading our learning
• Track, report, adjust . . .
— quarterly reports
— supervisor reviews
— performance appraisal ties
8. Annual Leadership Review (and Update)
• Yearly revisions/updates
GUIDELINES FOR USE

1. Use this process to create a culture for life-long learning.
A positive culture includes:
• Stairway of Learning
• Supportive, challenging environment
• Positive reinforcement
Remember key stakeholders and environmental scanning.
This includes:
• Customers • Board of Directors
• Suppliers • Employees
2. For further information on this process, presented in a
four-page article, call the Centre of Strategic Management
at 619-275-6528.
143
TOOL
Application of
23 HIRING AND • Standard Systems Dynamics
PROMOTION — 9. Hierarchy
AS A SYSTEM • The A-B-C-D Systems Model
Ensure every selection decision you make is successful.

Take the guesswork out of selection each time and every
time with the A-B-C-D systems approach shown below.
FIGURE 19. HIRING AND PROMOTION AS A SYSTEM
Phase A and D are notably important areas of the model. In

this tool we’ll take a look at these two phases, which
involve, respectively (and in part), building a strategic job
profile (SJP) and making the selection decision.
144
Focus on Phase A. Building The Strategic Job Profile (SJP)

This is the beginning of your search for the right person for
the job. Start by defining your expectations of the new hire,
(Phase A), including job outcomes; then convert them to
your strategic job profile. Use the profile as your input to
drive decision-making (Phase C).
Here are some questions you will need to consider:

• What is the job title?
Pay range/expected offer?
Expected start date?
• What are the responsibilities and design of job?
• Other key jobs and reporting relationships (three-way:
up, down, and sideways), and their fit with this job?
• Hiring manager’s goals and expectations for this job?
• What is the supervisor's managerial style and
personality?
• What are the initial priorities and tasks of this job?
• What challenges and problems are connected to this job?
• What resources are available (people, money, materials)
to do the job?
• What qualifications (knowledge and experience) are
required/preferred?
(a) Required?
(b) Preferred?
• What personal values are desired of the person for the
job?
• What mix of skills is needed?
— Technical _________
— Interpersonal _________
— Managerial/Leadership _________
— Conceptual/Strategic _________
= 100%
• What type of personality/communication style is desired?
(For example, do you want someone who is expressive?
amiable? analytical? driving?)
145
• How does this job fit in the life cycle of the organization?
• What organizational strategic thrust(s) must this person
agree with and help implement?
Focus on Phase D. The Selection Decision Process

The selection process involves a number of tasks and
considerations. Among them are the following:
1. Hold decision meetings.

2. Consider whether a quick decision will mean the
right decision.
3. Make sure someone is responsible for reference
checks. (Ask: “Whose responsibility are reference
checks, back doors?”)
4. Verify resumes, especially education section of them.
5. Hold informal interview to get to know the person.
(Consider having dinner with him or her.)
6. Your strategic job profile should act as criteria.
7. Watch out for personal biases. (Do you have biases
to overcome?)
8. Consider whether there are any reasons not to hire
the person (if you “like” him or her).
9. Be aware that assertive people may be threatening
or aggressive types after hire.
10. Be aware that friendly people are sometimes
“wimps” after hire.
Selection Decision Matrix

When hiring for a key position in the organization, put two
to four finalists into a “selection decision matrix” like the
one on the following page. Then compare each finalist
against your decision criteria. Note the use of the SJP in the
selection decision matrix.
146
SELECTION DECISION MATRIX

FINALISTS SKILLS (H-M-L)
STRATEGIC 1. 2. 3. 4.
JOB PROFILE
1. Job Design
2. Roles (3-way)
3. Expectations, Goals
4. Initial Priorities
5. Challenges, Problems
6. Resources Available
7. Supervisor Style
8. Qualifications,
Knowledge,
Experience
9. Personality, Values
10. Management Style
11. Mix of Skills:
(a) Technical
(b) Interpersonal
(c) Mgmt./Leadership
(d)
Conceptual/Strats.
12. Compensation,
Promote Mediocrity
13. Employment
Contracts
147
GUIDELINES FOR USE

1. Note that successful hiring is most effectively done
through the following best practices:
• Multiple interviews
• A group decision process
• Comparing perspectives
• Full references
• Checking past success/behaviors as a guide to future
success/behavior
2. This systems approach can be used for promotion
as well. Add performance reviews and supervisory
recommendations to your list of considerations. Also
pay attention to the outcomes of the job the person
now holds and the outcomes expected in the new
position.
148
APPLICATIONS
VI. Levels of Living Systems
The tools in this chapter are intended to guide learning and

change at six key functional levels of the organization. They
will help you use core strategies and core values as your
“glue” and organizing principles. You will learn how to
apply the concept of the levels of living systems so you can
create rewards systems for all organizational levels and
ensure the methods of communication in your company
meet its systems needs.
TOOL
24. “Glue” and the Cascade of Planning
25. Six Leadership Competencies
26. Total Rewards Systems—All Levels
27. Methods of Communication
➥ These Tools Will Help You with Six Levels of Leadership and
Management Functioning!
149
TOOL
Application of
24 “GLUE” AND • Seven Levels of Living Systems
THE CASCADE • Standard Systems Dynamics
OF PLANNING — 10. Interrelated Parts
Develop your strategic plan, operations plans, and project

plans using the A-B-C-D systems phases and the different
levels of living systems, including regular and annual
strategic reviews and updates.
The Cascade of Planning

This planning method links all the levels of your organiza-
tion, from corporate to business units to departments to
teams to individuals (see Figure 20, on next page). Your core
strategies (shorter-term desired results) and core values
(guides to behavior) play a crucial role in the cascade of
planning: they are your “glue” and organizing principles—
what gives cohesive structure to your planning. Your basic
steps here are thus the following:
1. Use your core strategies and core values as your glue

and organizing principles.
2. Use the cascade of planning levels to link all

organization levels to these strategies and values.
I suggest you use agreed-upon core strategies as your glue,

so you can cascade planning to all major organizational
departments. I also STRONGLY recommend you eliminate
the concepts of business goals, department annual objec-
tives, and individual key result areas (KRAs), replacing
them with your overall core strategies. In this way,
everybody and everywhere in the organization focuses on
the same five or six integrated strategies you have rather
than separate, solo, and functional “departments” and jobs.
150
FIGURE 20. THE CASCADE OF PLANNING
Four Levels
#1
#1 Organization-Wide Strategic Plan Strategic Plan
(Vision — Mission — Values — KSFs) of 3, 5, 10 years
The Glue: Our Core Strategies

The Glue: Our Core Strategies
#2
Business
Units #1 #2 #3 #4
#2
3-Year
Major Business Plans
Support HR Finance Legal PR
Departments
s"
iple
Co
re P rin c
Str
a iz in g
te g gan
ie st a "O r #3
s th e Next 12
Months
#3 Annual Operating Plans/Budgets
(entire organization, especially all management)
Co
re lu es
Str Va
a te or e
gie
s an dC
#4
#4 Performance and Individual
Rewards Planning
Management System and Goal Setting
Vision
Achievement
Priority of Strategies and Focus

With so many choices of outcomes and new technologies in
today’s rapidly changing environment, priority setting and
focus at all levels is essential. You need to concentrate on a
select few strategies, and on future priorities, not just the
current situation.
151
➥ For Example
In personal planning as well as organization-wide
strategic planning, it is crucial to focus on a small
number of core strategies for success, even if that is
difficult (and it usually is). You might have six core
strategies for achieving your vision; less is better here.
Core Strategies and Priority of Annual Action Items

In any organization, you need to set priorities and focus for
the top three actions under each core strategy for the next
12 months (this is another of example of the Rule of Threes).
The question you must ask is, “In terms of ensuring overall
success this year, what top priority action items must be
accomplished?”
Use a format like the one below to chart the actions and
their related concerns (add core strategies to the chart as
needed). And remember, don't try to be all things to all
people—it doesn't work.
SAMPLE CHART FORMAT: PRIORITY SETTING

Core Who Who to When
Strategies Responsible? Involve? Done? Status?
Core Strategy 1
(a)
(b)
(c)
Core Strategy 2
(a)
(b)
(c)
152
The Need for Focus

Once you have determined the action items, you must
focus, focus, focus on achieving them. That focus needs to
be operationalized—is a force behind the glue that holds
organizations together. Remember that you implement
annual department plans, not strategic plans.
➥ For Example
Organizations are typically organized vertically and
downward, by specific factors and professions; however,
work in organizations gets done horizontally, across
functions.
Annual Departmental Plans

Cascading is easiest when all departmental plans are based
on the same core strategies and work horizontally between
functions, since all departments will have the same goals (or
strategies as goals). Here is the procedure for such plans:
1. Each department builds its annual departmental plan

using the same priority-setting charting format shown
above.
2. The drafts of these plans are shared and critiqued in a
large group meeting, with as many members of
management there as possible and practical.
Interestingly enough, the chart column that elicits the
most comments is usually “Who to Involve?”—showing
how little we know of our impact on others, that is, the
relationship and fit of system components.
3. After this sharing of, and feedback on, department
plans, the plans are finalized.
153
154
Performance Appraisals
Performance appraisals are usually poorly accomplished
tasks in most organizations. A performance management
system is far preferable for each and every organization.
To tie your strategic plan to performance appraisal, you

must link the key results areas (KRAs) of every job descrip-
tion to the organization’s (1) core strategies and (2) core
values. Do this by setting up the appraisal over three pages
(in addition to a cover page):
• Page 1—Your organization's core strategies (results).

Performance is appraised in relation to the core
strategies.
• Page 2—Your organization's core values (behaviors).
Performance is appraised in relation to adherence to
the core values.
• Page 3—The individual's career development. Here
career growth and development is considered, as well
as the overall evaluation given.
GUIDELINES FOR USE

1. Adopt this cascade of planning as part of your strategic
management systems.
1. Be aware that until you get the strategic plan down to
your day-to-day decision making and annual performance
appraisal, it is never fully successful.
2. The need to prioritize action items applies to your
personal life as well as professional one. Know your
future vision and core strategies, and the means to
achieve them. Then list your top three actions to
accomplish each strategy.
155
TOOL
Application of
25 SIX LEADERSHIP Seven Levels
COMPETENCIES of Living Systems
Before implementing a leadership development system, we

need to know what competencies and skills a leader might
need. If we apply the seven levels of living systems to this
issue, we find there are six competencies areas (three
systems levels and three collisions of systems levels) that
are essential to leadership.
The “Centering Your Leadership” Model

Few people approach leadership development in systems
terms (in researching 27 popular authors and more than
30 books on this topic, we* found that none looked at it in
systems terms). Yet, once we apply systems thinking to
leadership, we can see that the model offered in this tool
only makes sense, pointing out precisely where leadership
competencies are needed (see Figure 21, next page).
After developing this model, the Centre for Strategic
Management looked at the many skills associated with the
competencies. Using a Delphi technique, along with
research, we reduced those skills to the five most crucial for
each competency. The six competencies and their skills are
as follows:
1. Enhancing Self-Mastery
• Goal Setting
• Integrating Development of My System
• Acting With Conscious Intent
• Ethics and Character Development
• Accurate Self-Awareness
* “We” includes myself plus Chuck Gustafson, Jim Mckinlay, Salere Peekio,
Dennis Rowley, and John Ash of the Centre for Strategic Management.
156
FIGURE 21. “CENTERING YOUR LEADERSHIP” MODEL
CLE OF SUCCESS
C IR
Alliances
157
2. Building Interpersonal Relationships

• Caring
• Effectively Communicating
• Mentoring and Coaching
• Managing Conflict
• Innovating and Creativity
3. Facilitating Empowered Teams
• Practicing Participative Management
• Facilitating Groups
• Delegating and Empowering
• Training
• Building Effective Teams
4. Collaborating Across Functions
• Installing Cross-Functional Teamwork
• Integrating Business Processes
• Valuing the Differences
• Serving Others
• Managing People Processes
5. Integrating Organizational Outcomes
• Reinventing Strategic Planning
• Mastering Strategic Communications
• Positioning the Organization
• Leading Cultural Change
• Organizing and Designing
6. Creating Strategic Alliances
• Scanning the Global Environment
• Practicing Interest-Based Negotiations
• Managing Alliances
• Networking
• International Effectiveness
Survey: Leadership Development Competencies

To tailor your personal leadership or your organization's
leadership development trends, take the survey of 30 skills
on the next two pages.
158
SURVEY: Leadership Development Competencies
159
SURVEY: LEADERSHIP DEVELOPMENT COMPETENCIES (CONCLUDED)
160
GUIDELINES FOR USE

Use this tool to build development options for yourself
or your organization. These might include the following
“development” options.
Question: Which of these do we prefer to use for
development?
❑ Public seminars
❑ Executive seminars—universities
❑ Customized, in-house training
❑ Mentoring—shadowing—guide and confidante
❑ Professional associations
❑ Conference attendance
❑ Committees
❑ Practicums—action learning
❑ Intern programs
❑ Job rotation
❑ Temporary job assignment
❑ Job placement
❑ Task forces
❑ Vendor, field, headquarters visits
❑ Reading lists
❑ Buddy system support
❑ Train others
❑ Goal setting
❑ Body-Mind-Spirit assessment
❑ What else? ______________________
161
TOOL
Application of
26 TOTAL REWARDS Seven Levels
SYSTEMS—ALL LEVELS of Living Systems
One of the keys to organizational success is a total rewards

system, both financial and non-financial, for (1) individuals,
(2) teams, and (3) the entire organization. The rewards
should be timely and meaningful to them, and should be
linked to your strategic plan.
Survey Results: Employees’ Needs

Nationwide survey results** indicate that employees’ top
three job needs are:
1. Recognition for doing good work
2. Freedom for independent thought and action
3. Opportunity for personal growth
Other needs include:

4. Higher salary and/or more benefits
5. Promotion to a better job
6. Job security
7. Satisfying the boss's wishes
8. Prestige and status
According to best-practices research (Haines, 1984, and

updated), effective rewards are:
• Timely
• Significant
• Personally meaningful
* Source: Dr. H. Migliore, Dean, Oral Roberts Business School, and similar
surveys conducted by the author across North America, Asia, and Europe.
162
• Gained through competing with only oneself

• Rewards with multiple winners
Note that “Pay for performance” violates all of these; hence,
the need for a different type of reward—a non-financial one.
Innovative Non-Financial Rewards

Some innovative non-financial rewards that meet the top
three job needs of employees include:
1. Recognition
• Administrative Recognition Program (ICA)—after the
fact
• Thanks cards, letters, pictures, plaques, newsletters
• Team celebration, dinners
• Interteam, projects celebrations
• Tokens—on-the-spot (Paul Revere Insurance)
• “Academy Awards”
• On-the-spot rewards
• Seniority, service awards
• Senior management visits
• Company parties, meetings
2. Freedom/Independent Thought and Actions
• IBM Presidents Club; Seoul Olympics (80/20 Rule)
• Production team awards
• ICA sales meetings, awards quarterly
• Self-managed work teams
• Flex-time, part-time
• Task forces, project teams, quality
• Empowerment, delegation
3. Growth and Development
• Training attendance
• Career development (IJP)
• Job design (Plan—Do—Control)
• Job rotation, pay for knowledge
• Customer/Vendor trips
• Professional development, associations
163
4. Pay
• Fixed/Variable compensation (no merits)
• Restricted stock, cliff vesting
• Benefits: 401K, pension, time off
• Corporate/Unit profit sharing
• Deferred compensation: CD rates
• ESOP
• Immediate leader awards
• Stock purchase plans
Employee Needs Questionnaire

What do employees want from a performance management
system? To find out, have employees fill out the “needs”
questionnaire on the following page. Organize the results;
then use them to reexamine your current total rewards pro-
gram. See if the results are the same as those I’ve observed
over 100 times before and detailed at the beginning of this
text.
GUIDELINES FOR USE

1. Use this tool’s list of innovative rewards as a starting
point to revamp your key non-financial rewards programs
and processes.
2. Revamp your pay program, applying the best practices of
effective rewards.
Remember, those rewards must be (1) timely, (2) signi-
ficant, (3) personally meaningful, (4) gained through “self-
competition” only, and (5) ones where there are multiple
winners.
3. See the exercise that closes this tool to diagnose your
current total rewards program and determine what areas
you need to change.
164
QUESTIONNAIRE: EMPLOYEE NEEDS

Directions: Below are listed 10 personal and job-related needs. Which ones matter
the most to you? Please number these needs, listing them in priority rank order from
1 to 10, with 1 as your highest priority.
PRIORITY NEEDS
(a) Higher salary and more benefits
(b) Recognition for doing good work
(c) Food, clothing, and shelter
(d) Satisfying the boss’s wishes
(e) Promotion to a better job
(f) Personal growth and development
(g) Safety in your work environment
(h) Prestige and status
(i) Job security
(j) Opportunity for independent thought and

action; freedom
Comments:
165
Diagnostic Exercise: Rewards for Total Performance
➤ Questions
1. Use the “rewards cube” above to diagnose how you
are currently rewarding your (1) people, (2) teams,
and (3) organization as a whole.
2. Use it to look at both your current short-term and long-

term rewards.
3. Use it to look at both financial and non-financial

rewards.
4. Compare your answers to questions 1, 2, and 3 above vs.

the innovative rewards list given earlier in this tool. The
big question is whether or not you are providing the top
three rewards people want, as shown earlier in this tool.
5. Lastly, what areas do you need to change?
166
TOOL
Application of
27 METHODS OF • Seven Levels of Living Systems
COMMUNICATION • Standard Systems Dynamics
— 5. Feedback
In today's dynamic and fast-paced environment, we are

hard-pressed to communicate as frequently and effectively
as we would prefer. To compensate for this, we have
developed new, high-tech communications methods such as
E-mail, answering machines, faxes, and the like. However,
they are all “one-way” methods, and good communication
requires two active partners, the sender and the receiver,
and the chance for immediate response and exchange of any
further information needed.
The Ineffectiveness of One-Way Communication

Too much of our quick communication today is one-way,
with the sheer volume of E-mail, letters, faxes, and other
one-way messages taxing our ability to really hear and
understand others. Moreover, we often rely on visual and
auditory cues, such as body language and vocal inflection,
to fully grasp what others are trying to communicate to us,
and to gauge how our message is being understood by
others. One-way communication, which gives us neither
cues nor feedback, is thus relatively ineffective by itself.
➥ For Example
While E-mail can be quick and fast, it is a one-way
method and impersonal in nature. Because the lack of
cues and feedback can lead to misconstrued meanings,
such communication is far more apt to result in angry,
conflict-generating messages than two-way, face-to-face
communication.
167
FIGURE 22. LADDER OF COMMUNICATION EFFECTIVENESS
One-to-One Conversation
Small Group Discussion
Large Group Discussion TWO-WAY
Video Conference COMMUNICATION
Telephone Conversation
Conference Call
Voice Mail
ONE-WAY Pager
COMMUNICATION Handwritten Letter
E-Mail
Fax
Typewritten Letter
Mass-Produced Letter
Newsletter
Brochure
News Item
Advertisement
Handout
Figure 22, illustrates our point, providing a list of communi-

cation methods from the most effective to the least.
Repetition—Repetition—Repetition
People do not hear, and certainly do not understand, every-
thing you say to them. Or they simply may not believe it.
What can you do about this problem? You can repeat what
you have to say, perhaps even three or four times, to get
your message across and to ensure your message is
remembered.
168
Repetition and “stump speeches” are crucial for helping

people through change, especially when the situation is
an emotional one. As the following statistics show, people
need to hear such messages a number of times to feel most
comfortable with, and to understand, what you have to say.
Communication Methods We Recall Approximately

Words = 7% • 10% of what we read
Vocal Tone = 38% • 20% of what we hear
Body Language = 55% • 30% of what we see
Total =100% • 50% of what we see & hear
• 70% of what we say & do
What you do speaks louder • 90% of what we explain as
than what you say! we do
Repetition Increases
Understanding
• 1st time = 10% retention
• 2nd time = 25% retention
• 3rd time = 40%–50% retention
• 4th time = 75% retention
Strategic Communications Matrix

Set up a strategic communications matrix and/or a
“proposed rollout plan” matrix (see sample on the next
page) for communicating change strategically to all your
stakeholders. Use the systems concept of the seven levels of
living systems as a guide for creating your communications
matrix.
169
SAMPLE MATRIX: PROPOSED ROLLOUT PLAN (OF ANY CHANGE)
Key Method Who Resources Who Else Key Issues Status of

Stakeholders of Rollout Responsible? Needed? to Involve? to Address Completion?
1.
Employees
2.
Middle
Mgmt.
3.
Customers
4.
Vendors
5.
Share-
holders
6.
Community
7.
Others
Matrices as Systems Tools

Matrices are great to show relationships between systems or
systems concepts. Simply set up a matrix of the components
or systems you want to analyze. Then work down the verti-
cal column, comparing each component to those in the top
row; fill in the matrix with your comments, and draw the
needed conclusions. This is a good way to build action plans.
170
GUIDELINES FOR USE

1. Analyze your communication methods, or better yet, get
a trusted friend or colleague to help you. Focus on these
questions:
• Which methods to you use most of time?
• Which two-way communications do you underuse?
• Which one-way communications do you overuse?
• What changes must you make to be a more effective
communicator?
2. When communicating, use body language, vocal tone,
and other visual/auditory signals to better convey your
meaning.
3. Teach what you want to learn yourself. You will be more
focused on the material and more aware of communica-
ting the material clearly and comprehensively. Your
enthusiasm will facilitate communication!
171
APPLICATIONS
VII. The Rollercoaster of Change
The application in this chapter focuses on the concept most

essential to guiding organizational change: that of changing
systems, the natural cycles of life and change. As we saw in
Chapter I, this concept can be expressed as the Rollercoaster
of Change. We will look at the Rollercoaster’s many uses,
particularly its application for self-, interpersonal, team,
and organizational change.
TOOL
28. Managing the Rollercoaster of Change
— The Rollercoaster of Self-Change
— The Rollercoaster of Interpersonal Change
— The Rollercoaster of Team Change

— The Rollercoaster of Organizational Change
➥ These Tools Will Help You Guide Organizational Change!
173
TOOL
Application of
28 MANAGING THE • Seven Levels of Living Systems
ROLLERCOASTER • Changing Systems: The Natural
OF CHANGE Cycles of Life and Change
A. THE ROLLERCOASTER OF CHANGE & SYSTEMS THINKING

Systems work in natural cycles and circular ways, which
is quite a departure from our more familiar, analytic and
linear way of thinking about the world. We must keep in
mind that the Rollercoaster of Change is a natural and
normal part of life. Change cycles and input-throughput-
output-feedback cycles occur endlessly throughout the seven
levels of living systems as systems levels interact with one
another. And we are a part of such systems.
➥ For Example
When we go through change, whether personal or
professional, we don’t move on a straight line of
productivity from a to b. Our thoughts, feelings, and
experiences fluctuate between highs and lows; we feel
as if we are on a rollercoaster.
Often, just knowing about the Rollercoaster of Change

helps people who are undergoing change. They see it is
only natural to experience difficulties at such times.
The key is “hanging in there,” in developing persistence.
Nothing in the world can take the place of persistence.

Talent will not; nothing is more common than unsuccessful
men with talent. Genius will not; unrewarded genius is
almost a proverb. Education will not; the world is full of
educated derelicts. Persistence and determination alone are
omnipotent.
—Calvin Coolidge
174
A basic truth of management—if not of life—is that nearly

everything looks like a failure in the middle . . . persistent,
consistent execution is unglamorous, time-consuming, and
sometimes boring.
—Rosabeth Moss Kanter, 1990
Change: An Experience of Loss

We can manage the Rollercoaster of Change better if we
understand that people experiencing change typically feel
a deep sense of loss. They are heading toward new territory,
with old, familiar ways—always so comfortable, and often
valued—falling behind them. Harry Levinson’s insights in
Psychological Man give us a foundation for understanding
loss and its effects on people and organizational change. The
following helpful points are based on his work.
1. Loss creates a feeling of depression for most people.

One loses preferred modes of attaining and giving
affection, handling aggression, dependency needs—
all those familiar routines which we have evolved
and usually taken for granted.
2. Loss is a difficult experience to handle, particularly if
what one leaves behind is psychologically important.
3. All loss must be mourned and the attendant feelings
disgorged if a restitution process is to operate
effectively.
4. Most organization change flounders because the
experience of loss is not taken into account. To
undertake successful organizational change, an
executive must anticipate and provide the means of
working through that loss and all four phases of it.
The four phases of working through loss are clearly shown

in basic model for the Rollercoaster of Change, on the next
page.
175
FIGURE 23. MODEL: CHANGE AND SYSTEMS THINKING

The Rollercoaster of Change and Systems Thinking
Perseverance — The Key to Strategic Change
Chaos and Complexity

Chaos and complexity are a normal and natural part of
the process of change—of discovering new ways of being
and achieving new visions
The Major Change-Related Questions

When planning to undertake any change effort, you need
to ask, and answer, 12 important change-related questions.
They will prepare you and others for the “rollercoaster” to
come, and help you acknowledge the difficulties of change.
176
The 12 Change-Related Questions

1. Not if, but when will we start to go through shock
and depression?
2. How deep is the trough? Is it different for each
person? (What are the implications?)
3. How long will it take? Are employees and
management at the same stage?
4. Will we get up the right (optional) side and rebuild?
5. How do we manage the change proactively?
6. At what level will we rebuild?
7. What new skills do we need to accomplish this?
8. How many different rollercoasters will we experience
during this change?
9. Are there other changes (with their own
rollercoasters) occurring?
10. Will we hang in and persevere at the midpoint (the
lowest point)? How?
11. How will we deal with normal resistance? (Push or
pull?)
12. How will we create a critical mass to support and
achieve the change?
The Many Uses of the Rollercoaster of Change

This model is what you need to know to predict, lead, and
manage any type of change, personal or professional.
➥ For Example
Learning, training, planning, team building, and the like
are just different types of change; our model can help
manage all of them.
177
Variations of the basic model are provided later in this

tool, illustrating its use for self-, interpersonal, team, and
organizational change.
Important Points to Remember

Whatever you are doing personally and professionally in
today’s world, it likely involves some form of change. You
may not call it that, but that's what it is. So becoming an
expert on the natural, predictable cycle of change is
essential. To get there, keep in mind:
• Planning is really planning for change.

• Organizations change when people change, so change
is actually a personal issue, involving behavioral
change for each of us.
• We can't really change others. If we want others to
change, we need to model that change in our own
behavior and our relationships with others; usually
only then is there a possibility of others changing.
GUIDELINES FOR USE

1. Internalize the Rollercoaster of Change and its sequences.
Of course, be sure to remember that any model is only a
simple representation of a complex reality.
2. Share this model with key people whenever you are
involved in any type of change. Ensure people know it is
natural and expected for things to get worse (Stage 2:
Anger/Depression) before they get better (Stage 3 and 4)
when change is involved.
3. Once you know the fundamentals, look at the other
models in this tool and apply their terminology and
actions to your specific situation.
178
B. THE ROLLERCOASTER OF SELF-CHANGE

Self-change is the first key level within the seven levels
of living systems—for us personally, professionally, and
organizationally. Our self-change model is shown below.
FIGURE 24. MODEL: SELF-CHANGE

The Rollercoaster of Self-Change
GUIDELINES FOR USE

1. Learn this model well. Realize the curve of change is
normal and natural; you’re always somewhere on the
curve, but wherever it is, you are, and will be, okay. Also
realize that to help others with change, you yourself must
get to Stage 3 (Hope) at a minimum.
(Continued)
179
GUIDELINES FOR USE

(Concluded)
2. Don't deny your feelings and emotions when you are at
Stage 2; acknowledge them. Take care of yourself; adopt
coping behaviors—take time off, eat healthy, get enough
sleep and exercise.
3. As an employee, follow the advice for each stage of the
curve; especially, “Don’t overreact.”
C. THE ROLLERCOASTER OF INTERPERSONAL CHANGE

Interpersonal skills are obviously essential to success in
your personal and professional life. Since change is constant
for you and everyone else you come in contact with daily, it
is important that you be able to handle the five interper-
sonal situations shown Figure 25, the Rollercoaster of
Interpersonal Change.
➥ For Example
Inclusion, control, growth, openness, and performance
are issues for all of us as we interact with others every
day. They are natural and normal—go on all the time.
GUIDELINES FOR USE

1. Study the five situations presented in the model, and
decide for yourself how you can become flexible enough in
your own style to deal effectively with them.
2. Examine your level of openness. Do you initiate self-
disclosure, or do you “guard your cards”? Are you willing
to be open to feedback even if it hurts, so you can
continue to learn, grow, and be more effective?
(Continued)
180
FIGURE 25. MODEL: INTERPERSONAL CHANGE

The Rollercoaster of Interpersonal Change
*SOURCE: Paul Hersey and Kenneth Blanchard
181
GUIDELINES FOR USE

(Concluded)
3. Be clear on how to interact with others on your own
needs and theirs for inclusion and control. Realize that
control needs often stifle growth.
4. Learn to be flexible. Try to match up your management
style with the needs of others and their situation (hence
the long-term popularity of Hersey & Blanchard's
situation leadership model, on which the third situation
in our model is based).
5. Acquire skills in active listening and questioning as well as
in conveying knowledge and answering questions. Most of
us tend to be good at only one side of this equation in
our interpersonal relationships.
6. Use the model as a guide for improving your skills in
coaching others. Learn effective listening skills; maintain
the relationship between you and the person you are
coaching, even when strong correction is necessary; build
healthy norms between you both, including a clear sense
of purpose and outcomes.
D. THE ROLLERCOASTER OF TEAM CHANGE

The success of organizations, families, and communities
depends on groups of people working together productively
as teams. Whenever people form new teams or join existing
ones, it is natural for them to go through the team version of
the Rollercoaster of Change, as shown in Figure 26.
➥ For Example
Most people assume that by putting groups of people
together into a meeting, they have formed an effective
team—one that can immediately do productive work.
But nothing could be further from the truth.
182
FIGURE 26. MODEL: TEAM CHANGE

The Rollercoaster of Team Change
GUIDELINES FOR USE

1. Most productive work requires teams to function
effectively; therefore it is important to internalize the
four stages of team/group dynamics:
1. Forming 3. Norming
2. Storming 4. Performing
(Continued)
183
GUIDELINES FOR USE (Concluded)

2. Learn techniques for speeding up this rollercoaster or
learning curve of effective teamwork. Spend time at the
beginning of teamwork to define the following:
• Your purpose(s)
• Your norms of acceptable behavior
• Goals and timetables
• Roles and accountabilities and their interdependencies
• A feedback method to continually improve the team
3. Work with each team you are a member of to learn how
to maintain intellectual honesty and the dialogue and
discovery of better solutions that come with it—that is,
learn to “leave your shield at the door” and stop
defending your ideas and taking issues personally. You
can either defend your position/ideas, or expand your
range of information for better decision making; you
cannot do both.
4. Consensus in decision making means that you can actively
support the decision that is made. Work towards making
this an effective tool in your teams.
5. Effective conflict resolution also goes through the stages
of change. Stifling anger and emotions in the name of
politeness and logic is to suppress conflict and its
potential benefits. What are its benefits?
6. “Adults learn best by doing” is a basic truism. To learn
from anything you are doing, whether a formal training
program, a meeting, or the like, you must gain feedback
and insights for improvement at the end of each activity.
Do so by asking these three questions:
1. What just happened?
2. So what can we learn or generalize from all of this?
3. Now what can we do to improve matters by applying
these learnings?
184
E. THE ROLLERCOASTER OF ORGANIZATIONAL CHANGE

While organizations change when people change, there still
is a collective set of behavioral changes the total organiza-
tion must undergo to deal with constant and dynamic
environmental change. This, then, is the ultimate level
of living systems for improved organization effectiveness.
And just as with (and within) the hierarchy of the seven
levels of living systems, organizational change includes the
rollercoaster dynamics of “lower” systems levels: the self,
the interpersonal, and the team (see other change models,
this chapter). Moreover, organization life cycles, strategies,
and culture usually need to change as well.
➥ For Example
Most organizations attempt organization-wide
change in a piecemeal, haphazard fashion. This is
why estimates are that 70 percent to 90 percent of
all major change efforts fail.
In closely examining the Rollercoaster of Organizational

Change (Figure 27, next page), keep in mind that major
change requires close attention to, and fit between and
among, all aspects of the web of relationships (parts or
components) in support of the overall objectives of the
whole system (organization). This includes:
• Individual, interpersonal, team/department cross-
functions and organization-wide changes
• Alignment of your delivery processes based on the
strategies you need in order to achieve world-class
“star results” and customer value (Phase A, Outcomes;
see number 2 in our model).
• Attunement of people's hearts and minds in support of
the new values and desired culture (see number 4 in
our model).
185
FIGURE 27. MODEL: ORGANIZATIONAL CHANGE

The Rollercoaster of Organizational Change
➥ Remember to Align Your Delivery Processes,

Attune People’s Hearts and Minds,
and Develop a Strategic Management System
186
• A strategic management system that includes building

a process for strategic change management. (The basic
model of the Rollercoaster of Change is useful in this
regard; also, we will look at strategic management in
the next chapter.)
As the above list suggests, achieving major large-scale or

transformational change is enormously difficult, with a low
probability of success. However, by using the systems
approach, you will increase the likelihood of success.
The Four Choices of Change

When it comes to organizational change, you have four
options, as shown in Figure 28. Which option will you
choose? What price are you willing to pay to achieve it?
FIGURE 28. THE FOUR CHOICES OF CHANGE
187
The Difficulties of Transformational Change

In dealing with change, be prepared to manage these
difficult issues:
• Everyone changes at different rates and depths.
• Management undergoes change before rank-and-file

employees.
Which is it?
or . . .
• All parts of the organization must fit and work

together for the overall objective of the whole.
For example:
— Marketing — Leadership/Management
— Manufacturing Staffing
— HR Practices — Finance/Budgets
— MIS/Technology — Communications
— Legal — Organization Design
— Operations — Personnel/Payroll
— Public Relations — Business Processes
— Employee — Tasks/Goals
Involvement — Teamwork Rewards/
— Mission Feedback
— Strategy — R&D
— Values/Culture — Engineering
188
• The sense of loss may be overwhelming, making it that

much more difficult to manage the change situation.
Handling the Sense of Loss

Employees’ sense of loss is a highly important issue,
requiring direct and extensive work on Stage 2, Depression
and Anger. The following checklist will help you focus on
your major concerns in this area.
CHECKLIST: STAGE 2 CONCERNS & STRATEGIES

Directions: Check off your concerns regarding Stage 2 of the Rollercoaster of Change;
then develop strategies to deal with them.
❑ 1. Loss of Influence
❑ 2. Loss of Control
❑ 3. Loss of Money
❑ 4. Concerns About Family Reaction to Change
❑ 5. Loss of Social Status
❑ 6. Concerns About Starting Over—Being the “New Kid”
❑ 7. Loss of Future
❑ 8. Loss of Relationships, Networks
❑ 9. Loss of Autonomy
❑ 10. Loss of Professional Identity
❑ 11. Loss of Territory
❑ 12. Concerns About Ability to Handle New Group
❑ 13. Loss of Role
(Continued)
189
CHECKLIST: STAGE 2 CONCERNS & STRATEGIES (Concluded)

❑ 14. Loss of Employment
❑ 15. Loss of Meaning
❑ 16. Concerns About Competency
❑ 17. Fear of Failure
❑ 18. Loss of Satisfaction
❑ 19. Loss of Support
STRATEGIES
190
APPLICATIONS
VIII. Summary Tool:

A Strategic Management System
The application in this chapter will help you set the pre-
vious tools in this guidebook into the context of a strategic
management system. Its guiding systems concept is holism,
which emphasizes the whole is not just the sum of its
parts—that the system itself can only be explained as a
totality. Holism requires total, strategic organizational
management, with the integration of systems tools an
essential part of that management. It is one of the most
fundamental necessities of success in today’s organizations.
TOOL
29. Strategic Management System
— Including the 15 key benefits of a strategic
management system, and a diagnostic tool
for managing problems in your organization
➥ These Tools Will Help You Diagnose Organizational

Problems and also Build a System of Managing Your
Team, Department, or Organization in a More Strategic
and Systems Fashion!
191
TOOL
Application of
29 STRATEGIC Standard Systems Dynamics
MANAGEMENT SYSTEM — 1. Holism
Success in today’s world requires a systems approach to

managing your organization in a more complete, strategic
fashion. The tools you have learned in this guidebook will
help you, but you must use them in an integrated fashion.
A strategic management system is thus a fundamental
necessity.
The quotations below are highly useful for illuminating our

topic here.
Organizations as Systems
Every organization is perfectly designed to get the results it
is getting. Thus, if results are less than desired, the design
should be changed. That includes adjusting structure, work
processes, linkages, information flows, and functions to
meet new needs.
—Quetico Centre,
Keeping Current (Fall 1994)
The Need for a Basic Reorientation of Our Thinking

In one way or another, we are forced to deal with
complexities, with “wholes” or “systems” in all fields of
knowledge. This implies a basic reorientation in scientific
thinking.
—Ludwig Van Bertalanffy
The Need a Strategic Management System

I need to stress at this point that an effective management
system is more than just the sum of the parts . . . it is a set
of integrated policies, practices, and behaviors.
192
VIII. Summary Tool: A Strategic Management System
Sometimes having a good management system is confused

with having high-quality employees. This is a mistake—the
two are quite different. . . . Having high-quality employees
does not assure an organization of having a sustainable
competitive advantage or even a short-term advantage.
—Edward J. Lawler III,
The Ultimate Advantage: Creating
the High-Involvement Organization (1992)
The Winning Formula

Preparation, discipline, and talent, working within the
system, is the winning playoff formula.
—Michael D. Mitchell, St. Louis
Sporting News, (May 16, 1994)
Strategic Management System:

The Imperative for Survival!
The Definition of a Strategic Management System

A strategic management system can be defined as:
• A comprehensive system to lead, manage, and change

our total organization in a conscious, well planned out,
and integrated fashion, based on our core strategies
(and using research that works) to develop and achieve
our ideal future vision.
• A new way to run the business; to manage business in

a systematic way based on our strategies.
• An interactive and participative method in which

people help create the system. And people support
what they help create—this is a basic truth.
193
• A method managed as a complete systems change

(with strategic/annual/individual plans, budgets, and
measurements)
• A successful method if it is . . .
1. Inspired by a common vision and shared
2. Mission-focused/customer-focused
3. Based on organizational values and culture
4. Strategically driven
5. Oriented towards outcomes and results
A strategic management system’s hallmark is strategic

consistency yet operational flexibility (focus, focus, focus).
The 15 Key Benefits of a Strategic Management System

Look closely at these 15 benefits. Are some of them missing
from your organization?
1. Taking an organization-wide, proactive approach to a
changing global world
2. Building an executive team that serves as a model of
cross-functional or horizontal teamwork
3. Having an intense executive development and strategic
orientation process
4. Defining focused, quantifiable outcome measures of
success
5. Making intelligent budgeting decisions
6. Clarifying your competitive advantage
7. Reducing conflict; empowering the organization
8. Providing clear guidelines for day-to-day decision
making
9. Creating a critical mass for change
10. “Singing from the same hymnal” throughout the
organization
194
11. Clarifying and simplifying the barrage of management

techniques
12. Empowering middle managers
13. Focusing everyone in the organization on the same
overall framework
14. Speeding up implementation of the core strategies
15. Providing tangible tools for handling the stress of change
Diagnostic Checklist: Strategic Management System

The checklist below will help you examine your organization
to spot any dysfunctional areas that still require problem
solving and action.
DIAGNOSTIC CHECKLIST: STRATEGIC MANAGEMENT SYSTEM

Directions: Which of these problems do you face? Rate each problem’s severity from
high (H) to medium (M) to low (L); then decide what actions are needed.
H-M-L OUTPUT (PROBLEM) WHAT IS PROBABLY MISSING
❑❑❑ 1. Conflict and survival Ideal Future Vision
(Not shared; plus others below)
❑❑❑ 2. Success unknown Measurement System
(except financial) (Not in place/accountability)
❑❑❑ 3. Confusion and all Core Strategies
things to all people (No consensus; no list of
top-priority items)
❑❑❑ 4. Low implementation Operational Tasks
of quality/service (No dept. annual plans or
accountability/follow-up)
❑❑❑ 5. Incompetence and Leadership and Management Skills
blaming (No values on appraisal)
❑❑❑ 6. Low commitment Resources
and incrementalism (Unfocused; no priorities)
(Continued)
195
DIAGNOSTIC CHECKLIST: STRATEGIC MANAGEMENT SYSTEM

(Concluded)
H-M-L OUTPUT (PROBLEM) WHAT IS PROBABLY MISSING
❑❑❑ 7. Bureaucracy and Organizational Design
fragmentation (Unknown or traditional)
❑❑❑ 8. Low risk-taking, poor HR and Rewards System
people management (Missing; not tied to
values/strategies)
❑❑❑ 9. Adversarial Interdepartment Teamwork
environment (Not focused upon/rewarded)
❑ ❑ ❑ 10. No follow-through Strategic Change
Management System
(Missing system and
accountability)
PROBLEM ACTION NEEDED?
196
Using an Annual Strategic Review

It should be obvious by now that this book’s tools are only
part of an overall system of how to lead and manage an
organization in a systematic and strategic fashion. Good
organizations have this system, and they review it formally
every year as part of an annual strategic review and update
of the organization’s overall direction (see Figure 29, below).
FIGURE 29. YEARLY STRATEGIC MANAGEMENT CYCLE

Envi
tal ronm
men Scan ental
iron An
Env Scan nu
Action, Change, Rev al St
s and Follow-Up i ew ra
an &
s U
te
et
d B l Pl
gi
a
c
g
pd
nu
ud
at
An
e
an
Strategic
Strategies,
Management Vision, Mission,
and Values
Business Plans System
and Priorities
y
Cr
C
re
ur
ng
nt
lyi
ss -S
A
es
al
sm t at R
en e
ts
Feedback
and Measures
197
This review focuses equally on all the components of

the A-B-C-D framework, namely, the customer (Phase A),
feedback and learning (Phase B), the entire strategic plan
(Phase C), and action, change, and follow-up (Phase D).
It includes the need for a strategic change management
process governing and guiding the alignment of delivery
processes and the attunement of people's hearts and minds.
The annual strategic review is the way to refresh, update,

and renew your vision and direction as well as your imple-
mentation plans. Only by doing this once a year in a formal
fashion (along with weekly, monthly, and quarterly follow-
up processes) will you be assured you have designed and
built—and are sustaining—a strategic management system
that is taking you in a long-term positive direction. This is
what assists you year after year in achieving your ideal
future vision (for a detailed look at this, see Sustaining
High Performance, Haines, 1994).
What is your ideal future vision? It should linked to seeing

your customer as the most important outcome of any organi-
zation as a system—or of any person living a fulfilling life.
Draw on the tools you have learned in this guidebook: they
will help you create customer value in both your personal
life and your organizational career, so you can make that
ideal future vision a reality.
198
CONCLUSION
IX. Summary of
Systems Thinking and Learning
Systems thinking offers us a better way of expressing

ourselves, understanding the world, and living our personal
and professional lives than do the old analytic and mechan-
istic thinking modes. The systems perspective gives us a
better view on our “radar scope” and thus a more effective
method of thought, communication, problem solving, and
action. Without it, today’s thinking and problem solving
become the source of tomorrow’s problems.
THE NEW LANGUAGE OF SYSTEMS

People and organizations need to do more than just use
systems tools; they need to adopt systems terminology and
systems-oriented questions into their everyday vocabulary.
These help clarify and simplify “solution seeking,” bringing
into solutions a more holistic light.
To get you started, here is a review of some of the key

terms, principles, and questions of systems thinking.
1. A-B-C-D model or framework. Specifically:

A. Output C. Input
B. Feedback D Throughput
—Within E. The Environment
199
By using this framework, we simplify and better

manage the chaos and confusion that confronts us.
We have more of a chance to see the forest and the
trees.
2. Question: What entity (system or “collision of sys-
tems”) are we dealing with? This is the preliminary
systems question.
3. Basic phase-associated questions:
A. Where do we want to be?
B. How will we know we have reached it?
C. Where are we now?
D. How do we get from here to our desired place?
And E. The ongoing question throughout all phases:
What is changing in the environment that we need
to consider?
4. Means and ends
5. Multiple goal seeking
6. Strategic consistency and operational flexibility
7. “Backwards thinking.” Begin with the end in mind.
8. Principle: The whole is primary, the parts secondary.
9. Synthesis as a new way of thinking, as opposed to the
analytic thinking.
10. Principle: In the environment, living systems interact
in a hierarchy.
11. Feedback stimulates learning and change; it is “the
breakfast of champions.”
12. Negative entropy or positive energy. This is
continuously needed in a system; feedback is
essential for managing it.
200
IX. Summary of Systems Thinking and Learning
13. Relationships and fit are key. Processes are

important—are not separate events.
14. Multiple causes and effects
• Causes and effects are circular, not linear.
• They are not necessarily related in a direct,
immediate way.
15. Simplistic, quick fixes do not work!
16. Systems concept: Seven levels of living systems. In
this book, we have been primarily concerned with
four levels:
3. Individual
4. Group/Team
5. Organization
6. Society/Community
17. KISS method—reduces complexity, rigidity,
bureaucracy, and total systems failure.
18. General Systems Theory—Work closely with the
material in this guidebook until you have a firm
understanding of these terms, principles, and
questions, and can use them comfortably.
THE BENEFITS OF SYSTEMS THINKING AND LEARNING

Systems thinking has a number of far-reaching benefits,
providing us with:
1. An overall framework for making sense out of life's

complexities and its many systems. This framework
allows us to detect patterns and relationships
between systems, and between systems and their
levels, leading to better problem solving.
2. A way to learn new things more easily. Its basic rules
are simple and consistent—they stay the same from
system to system.
201
3. A better approach for integrating new ideas within

the systems context.
4. A clearer way to see and understand what is
going on in any organization or any system and
its environment. Complex problems become easier
to understand, as do the interrelationships of parts
and multiple cause-and-effect cycles.
5. A new and better way to create strategies, problem-
solve, and find leverage points—keeping the
outcome/vision/goal in mind at all times.
6. The key questions of systems thinking and an
A-B-C-D template with which to correctly begin
any diagnostic or discovery work—problem solving
and solution seeking.
7. A way to engage teams and people in a deeper
thought process, analysis, and definition of root
causes, thus leading to longer-lasting results. It
enables groups to generate multiple choices and
different solutions, rather than just quick-fix
answers, when working with difficult problems.
8. A method for getting at the deeper structure and
relationship of process issues—things that are missed
by the “quick-fix” mentality.
9. A challenge to the inaccurate assumptions and
mental models that guide our thinking, acting, and
problem solving. When such factors hold us back, it
usually means new, broader, longer-lasting solutions
do not get identified and implemented and that
creative possibilities are overlooked.
202
10. A view of the dynamic interactions and relationships

of a system’s elements and the collision of the system
with other systems; we thus make better decisions,
with a clearer understanding of the consequences.
11. A better framework for diagramming, mapping,
diagnosing, and analyzing any system—department,
unit, organization, or otherwise. It improves our
problem solving and decision making for that system.
12. A way to manage the complex Systems Age by
focusing on the whole, its components, and the
interrelationships of the components, rather than
by focusing on supposedly isolated and independent
parts and problems.
13. A common framework and model for thinking and
communicating, so people can work together better to
make positive change in any system and achieve the
desired outcomes.
THE KEYS TO SUCCESS IN THE SYSTEMS AGE

What keys do we need to successfully let go of old ways
and grab hold of newer, more effective ways? They lie in
us becoming “paradigm pioneers,” to borrow a term from
Joel Barker. To fully embrace the Systems Age, and to fully
integrate our systems tools, each of us must be willing to do
the following:
• Go beyond our own borders and rules

• Break the rules of past success, not wait until they’re
broken
• Develop new reading habits: suspend our judgment
203
• Be ready for failure, not avoid it: from failure springs

the seeds of future success
• Actively listen to other, rather than prepare our
response to them; therefore listen, listen, listen!
When all is said and done, we will successfully integrate

systems solutions to our systems problems only when we
make the transition from unconscious to conscious systems
applications, terminology, and language.
Organizations need systems thinking and its integrative

approach to problem solving. Thinking across boundaries,
or integrative systems thinking, is the ultimate entre-
preneurial act. Call it business creativity. Call it holistic
thinking. To see problems and opportunities integratively
is to see them as wholes related to larger wholes, rather
than as discrete bits assigned to distinct, separate cate-
gories that never influence or touch one another. Research
has associated this way of thinking with higher levels of
organizational innovation, personal creativity, and even
longer life. Clearly we, as individuals, need systems
thinking too.
How You Think . . . Is How You Act . . .

Is How Your Are!
When we look at resolving today’s problems in order to grow

and thrive in a brand-new age, we must always remind
ourselves that how we approach issues and how we think
about them are just as crucial as what actions we take. One
thing is certain: if we continue to engage an analytic, linear,
reductionistic approach, the resulting entropy and degrada-
tion will eventually grind our systems to a halt—and not
just organizational systems but also the many systems in
204
the organizational environment. The keys to the Systems

Age are thus vital necessities on a widespread scale.
CONCLUSION
Many systems tools and aids are presented in this book.
However, we must remember they are all based on four
fundamental systems concepts:

Dynamics
Change
We can use these four simple concepts to ensure we’re

staying on a systems-thinking track and moving from chaos
and complexity to elegant simplicity. They and the 12 key
systems questions are the beauty of systems thinking. We
can use them as a quick start and reality check as well as a
focus for our synergistic solution-seeking and visioning. If
we remember to consistently pose systems questions first,
and if we always remember that every system is an
indivisible whole, we will be well on our way to discovering
the secrets of the lost art of systems thinking and learning.
205
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216
About the Author
Stephen G. Haines has used systems thinking as his

orientation to life since the late 1970s. He is currently
president and founder of the Centre for Strategic
Management® and an internationally recognized leader
in strategic planning and strategic change. He has over
25 years of diverse international executive and consultant
experience in virtually every part of both the private and
public sectors.
Mr. Haines was formerly president and part owner of

University Associates (UA) Consulting and Training
Services. Prior to that, he was executive vice president
and chief administrative officer of Imperial Corporation
of America, a $13 billion nationwide financial services
firm. He has been on eight top management teams with
organization leadership for operations, planning, human
resources, training, organization development, marketing,
sales, communications, public relations, and facilities.
A 1968 U.S. Naval Academy (at Annapolis) engineering

graduate with a foreign affairs minor, Mr. Haines has an
Ed.D. (ABD) in management and educational psychology
from Temple University and an M.S. in organization
development from George Washington University.
Steve has written six books and eight volumes of

the Centre’s tool kits, guides and best practices (over
4000 pages), all based on systems thinking. He has taught
over 60 different types of seminars and is in demand as a
217
keynote speaker on CEO and Board of Director's issues. He

has served on a number of boards and was chairman of the
board for Central Credit Union in San Diego.
The Centre for Strategic Management® is an unusual mix of

12 master-level partners, consultants, and affiliates in the
United States and Canada, with a growing number of
master-consultant international affiliates in Australia,
Korea, Turkey, South Africa, and Ireland.
218

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THE MANAGER’S POCKET GUIDE TO

All rights reserved. Any reproduction of this material in any media

Cover design by Eileen Klockars

Bibliography ......................................................................... 207

About the Author ................................................................. 217

The purpose of this guidebook is to provide progressive

FROM THEORY TO AUTHENTIC PRACTICE

Systems thinking comes from a rigorous scientific discipline

Authenticity is an important point because the term sys-

something else to a list of topics that all relate to training,

To clarify matters from the start, here are the definitions

DEFINITIONS: SYSTEM AND SYSTEMS THINKING

The connection of systems thinking to General Systems

FROM CHAOS AND COMPLEXITY TO

In this book, the secrets of General Systems Theory—its

practical tools for success in today’s chaotic and complex

1. The Seven Levels of Living (Open) Systems

2. The Laws of Natural Systems: Standard Systems

3. The A-B-C-D Systems Model

4. Changing Systems: The Natural Cycles of Life and

Each category represents an elegantly simple concept

SYSTEMS THINKING: A NEW ORIENTATION

For over 20 years I have seen firsthand just how useful

Why is systems thinking so effective as an orientation to

Living systems are the natural order of life. Most of us,

So get ready for a new orientation to life—for an elegantly

A new age—the Systems Age—has clearly begun. Today’s

DISCOVERING THE SYSTEMS THINKING MINDSET

To begin with, we must understand that any mindset

become so ingrained in us, as tendencies and predisposi-

Often, not until a crisis hits, driving us deep into ourselves,

To develop this mindset, we must first look to three fun-

The Principle of Openness

lack of grasses will mean more erosion. If poor conditions

➤ “SEEING” EARTH: A SYSTEMS MINDSET EXERCISE

To grasp the marvelous “fabric” of systems, mentally stand back

Does Earth seem isolated and independent to you? If so, shift

Now focus on Earth itself. Think about the statement “Earth is a

for us to wonder how we can get a practical handle on

and technological areas like operations research, tele-

To become practitioners of that art ourselves, we need to

Our systems thinking mindset thus requires mental models

GENERAL SYSTEMS THEORY

In the 1920s, biologist Ludwig von Bertalanffy and others

Geoffrey Vickers, in 1970, explained the theory more in

The words general systems theory imply that some things

This theory, then, is a marvelous vehicle for framing

for which the whole exists—no part can be affected without

The place to start is with the whole.

This conceptual approach is therefore quite different from

SYSTEMS THINKING VERSUS “MACHINE AGE” THINKING

In The Fifth Discipline, Peter Senge succintly captures the

From an early age, we’re taught to break apart problems

When did this “lesson” take hold in our society? Quite

The mechanistic approach to effecting change is no longer

The Fundamental Concepts of the Machine Age

2. Analysis. A powerful mode of thinking, analysis