Renewal Capability For Sustainable Growth V7

Building Renewal Capabilityfor

Sustainable Innovation & Growth

© Dean Robb, Ph.D. 2008

• Opening Remarks / Background

• Key Quotes

• Key Paradigm Shifts

• The Core Problem

• Renewal Capability: The Cycle of Renewal

• Renewal Capability: Key Attributes / Characteristics

• Self-Renewing Organizations: Cultural Foundations

• Leadership for Renewal: Managing Alignment and Differences

• How We Get There

• Institutions vs. Self-Renewing Organizations

Building Renewal Capability: Agenda


Opening Remarks

• Brief history: How I got here

• Purpose: Co-inquiry / co-learning

• Model as transformative vision – a “new pair of glasses”

• Practice emerges from in-sight – “seeing into”


Key Quotes

Foundations of Individual andOrganizational Renewal


Motivating Quotes

“True creativity always involves a paradigm change,

a transformation and a new way of perceiving.”

- Nicholas Lore


Motivating Quotes

“To exist is to change, to change is to mature, to

mature is to go on creating oneself endlessly.”

-Henri Bergson


Motivating Quotes

"The intuitive mind is a sacred gift and the

rational mind is a faithful servant. We

have created a society that honors the

servant and has forgotten the gift."

- Albert Einstein


Motivating Quotes

“This, I believe, is the ultimate precept a

theory of organization can give: not a

manual for dictators of any denomination to

more efficiently to subjugate human beings

by the scientific application of Iron Laws, but

a warning that the Leviathan of organization

must not swallow the individual without

sealing its own inevitable doom.”

- L. V. Bertalanffy (1969)

General Systems Theory


Motivating Quotes

Insanity is doing the same thing over and over

again, expecting different results.

-or-

If you keep on doing what you’ve always done,

you’ll keep on getting what you’ve always gotten.

- Anonymous


Paradigm Shifts: A Sea Change

The Emergence of Renewal


Shift in Worldview:Basic Assumptions

Dying Paradigms Emerging Paradigms

Mechanistic model Living, adaptive, evolutionary model

Linear business growth Non-linear complex growth (Renewal)

Business Growth = Strategy Execution

Business Growth =Strategy Execution +

Creative Renewal Stability / Continuity Continuous Adaptation

Control Order; Coherence; IntegrityPrediction Prediction + Emergence


Shift in Worldview: The Social World

Dying Paradigms Emerging ParadigmsParent-Child

Psychological ContractAdult-Adult

Psychological Contract

Executives & Workforce (split)

Community of Shared Purpose

Authoritarian Leadership Collaborative Partnering

Masculinity Integration ofFeminine & Masculine

Patriarchy No “archy” at all

Mastery & Ego Continuous Learning & Humility


Dying Paradigms Emerging ParadigmsPerformance to Specifications

Engagement & Contribution

Compliance CommitmentCommand-and-Control Freedom + Accountability

Conformity Conscious CommunityInstitutional (Role-based)

RelationshipsPost-institutional Business Intimacy

The basic human need for emotional and spiritual

growth is ignored:“It’s not our problem”

Interdependence of Organizational and Individual

Growth


Shift in Worldview: The Social World

The Core Problem:

The Usual Organizational Life-Cycleand

The Myth of Linear Growth


Dreaming

The Dream

Launching

The

Venture

Getting

Organized

Making ItBecoming

An

Institution

Dying

Closing

In

(W. Bridges)© Dean Robb, Ph.D. 2008

The Usual Organizational Life-Cycle

Dreaming

The Dream

Launching

The

Venture

Getting

Organized

Making It

Becoming

a Cash

Cow

Exit

Winding

Down


The Cycle

of

Renewal

Organization Institution


The Usual Progression

“The rules of The Game are quite simple: Report quarterly earnings that rise with the smooth

predictability of a bunny slope. Treat yourself as a god for managing those smooth quarterly earnings.

And pay yourself accordingly. When anybody suggests that you have made a strategic blunder,

fold to those instincts and bury the mistake in divestitures and a series of restructuring charges.

Mastering the Game can make you feel like a master of the universe. Then one day you wake up

and realize the Game has mastered you.”

- Bill George, former CEO of Medtronic, and current Director at Goldman Sachs, Target, Novartis, and the Harvard Business School

The Myth of Continuous Linear Growth


Task One:

Performance:

Responding Effectively to a Context

Task Two:

Adaptation:

Responding Effectively to a Change in Contexts

Growth: Alternating Cycles of Task One and Task Two

The Real Growth Process: The Cycle of Renewal


Desired:Continuous

LinearGrowth

Actual:CyclicalGrowth

Sustainable Growth: A Cyclical Process

Adaptive Change Periods:• Strategy & Organization Not

Aligned with Environment

• Lower Performance

Performance Plateaus:• Strategy & Organization

Aligned with Environment

• High Performance


Organizational Renewal Capability:An Integration of Complements

Performance:

Disciplined Execution

Adaptation:

Creative Renewal

• Value Delivery: ExistingStrategy, Products, Services

• Value Creation: NewStrategies, Products, Services

• Mastery of an Existing Game: Success within an existingCompany-Market configuration

• Learning/Creating New Games: Success adapting to changes in Company-Market configuration

• Focus: Short-term performance • Focus: Long-term organic growth

• Metrics: Efficiency, Productivity, Consistency, Repeatability, Quality, Cost

• Metrics: Effectiveness, Market Alignment, Customer Satisfaction, Top-Line Growth


Renewal Capability RequiresTwo Complementary Sub-Systems

TheSelf-RenewingOrganization


Performance System

• Focus: Short-term Task• Shared mission/vision, short-term strategy & goals• “Zone of Alignment” & Disciplined Execution

• Structure:• Organizational structure, roles, responsibilities• Business, operational, management and support processes/

procedures• Management systems

• Culture• Shared norms, values, patterns of relationship, ideology

• Competencies• Capabilities that are focused on, developed, rewarded• (Mostly) focused on short-term, disciplined execution


Adaptation System

• Focus: Long-term Development• Deep Purpose: Source of meaning & vitality• Wellspring of sustainable innovation, entrepreneurship,

adaptation and renewal• Domain of unaligned, unassimilated differences,

unprocessed organizational memory• Structure:

• Strategic, Product, Service, Process Innovation processes• Organizational learning & development processes• Personal & Interpersonal development processes

• Culture• Values that foster innovation, growth, change

• Competencies• Focused on developmental growth, adaptation, innovation• Untapped, latent (“invisible”) capabilities


Access Align

AdaptationSystemDifferences

EnergyCommitment

Learning

Play

PerformanceSystem

AlignmentClosureFocus

RationalityStructureAction

Goal Achievement

Uses for Adaptation System

• Change

• Gaincommitment

• Innovate

• Learn

• Newcapabilities

• Increaserange ofoptions

• ImprovePerformanceSystem

• Renewvitality


Adaptation System: Level of Development

Performance System: Level of

Development

Low

High

High

Renewal Capability Profile

1 2 3 4 5 6 7 8 9 10

10

9

8

7

6

5

4

3

2

1

Q1:

Risky

Q2:

Responsive

Q3:

Repeatable

Q4:

Renewable


Self-Renewing Organizations:

Underlying Competencies


Task mastery Learning

Aligning behavior Leveraging differences

Performance Adaptation

Problem-solving Creativity, Imagination

Rational intelligence Emotional intelligence

Planning & control Embracing the unexpected

Detail focus Systemic focus

Integration of Competencies


Execution Innovation

Focus & Closure Options & Ambiguity

Performance Adaptation

Action Reflection

Financials Spirit and Soul

Role Authentic Self

Integration of Competencies


PerformanceCompetencies

DIFFER

ENC

ES

AdaptationCompetencies

Leaders

Spectrum of Renewal Competencies


Self-Renewing Organizations:

Cultural Foundations


Is Culture a Bunch ofTouchy-feely BS?


Lets Look at the DATA

High-Performance Cultures

Multi-Year Harvard B-School

Study

High-PerformanceCultures

Low-Performance Cultures

Revenue Growth +682% +166%

Net Income Growth

+756% +1%

Source: Corporate Culture and Performance, John Kotter


Adaptive Cultures

Measured from 1996 – 2004

AdaptiveCultures

Non-Adaptive Cultures

Net Income Growth +989% -47%

Net Income Growth Index

11.5 1.7

Stock Price Growth +204% +70%

Crawford's Leadership & Culture Study of Fortune 500 companies


High-Performance Cultures: Foundations

• Discipline: Promotes Decisiveness, Standards of Excellence, Direct Accountability

• Liberation: clear boundaries, combined with flexibility within

• Proactive Performance Management: blocks obstructive behaviors; supports, reinforces, rewards constructive behaviors

• Foundations:

• Openness and Trust

• Managed Differences

• Simplicity, Flexibility with Sharp Focus (Implementation)

• Play to People’s Strengths


High-Performance Cultures: Leadership

• Clear Articulation of a Strategic Framework

• Mission, Vision, Values, Strategic Goals, “Critical Few” Measureable Priorities

• Design & Take Accountability for Managing Service-Oriented, Flexible, Efficient Business Processes & Structures

• Engage Their People, and Work Hard to Learn Their Strengths

• Manage Talent Well and Encourage Ongoing Learning

• Communicate Rigorously and Often


• Encourage confidence and risk-taking

Adaptive Cultures: Leadership

• Mistakes proactively utilized for learning & growth

– Hidden downside of Six Sigma: can engender perfectionistic (blaming/punishing, mistake- and risk-averse) culture

• Leadership proactively leads change

• Focus intensely on changing consumer needs

• Facilitate change to meet needs of three constituencies: stockholders, consumers, and employees

– Non-Adaptive cultures: cautious managementthat focuses on protecting its own interests

• Focus on long-term growth – growth prioritized over short-term results



Leadership forInnovation, Growth and Renewal:

Managing Alignment and Diversity

Adaptation

Internal Differences:

• Innovation, adaptation, renewal

• Focus: Long-term growth• Source: diversity,

differences, individuality• Typically untapped

Performance

Alignment:

• Disciplined execution• Focus: Current performance• Source: Aligned (shared)

strategy, goals, people, structure, processes, systems, culture, capabilities

AlignmentMarket


The Central Dilemma

• Compliance – task execution (behavior) according to specs

Individual initiative & creativity threaten smooth-running “production machine”

• Control – to ensure compliance, predictability, consistency

Surprises: “errors” to be rooted out

“Six Sigma” cultures: preoccupied with “error” elimination

• Conformity: Performance excellence via so-called “strong cultures”

The Core Problem: The “3-C’s”Legacy Practices in Managing Alignment


Result: Repression of Internal Diversity and Differences

“The Leviathan of organization must not swallow the individual without sealing its own

inevitable doom.”

- L. V. Bertalanffy, (1969) General Systems Theory

The Core Problem


Activates oppositional energy & activity in the Adaptive System:

• Energy & talent bound up in repressed differences –unavailable to the organization

• Internally fragmented & oppositional system

• Stagnation, demoralization, productivity loss

• Potential for disruptive or dangerous eruptions

Dynamics of Repression

Result: Repression & control yields loss of control;loss of resources for innovation, adaption, growth


“The person who figures out how to harness the

collective genius of his or her organization is going to

blow the competition away.”

-- Walter Wriston, former Chairman/CEO Citicorp

The Solution: “All Hands On Deck”


All Hands On Deck!


A community of adult individuals with the talent,

spirit, ideas and commitment to perform together at a high level, continually create new

forms of value, and reinvent themselves as needed to

adapt to situational change.

Low

Hig

h

High

Hierarchy

Traditional

Societies

Governments

Bureaucracies

Cults

Fascist

States

Fatalist

Totalitarian

States

Societal Underworld:

“Falling Through the Cracks”

Rejected

Alcoholism / Addiction / Violence

Militias

Revolutions

Individualist

Large Metropolitan Centers

Breakdown of standards

Anomie

Instability / Chaos

Opportunism / Exploitation

Community:

The New Frontier

Diversity-in-Community

Communities of Practice

Level of Diversity & Expression

Leve

l of

Gro

up

Be

lon

gin

g

Leve

l of

Gro

up

Be

lon

gin

g

Level of Diversity & Expression Low

Hig

h

High

Economic Underworld:Trapped

Un/Underemployment“McJobs”

Non-Renewable

Individualist

Opportunism & ExploitationCultural fragmentation

Low Organizational LearningChaotic Turbulence

Non-Renewable

Traditional Corporations

Hierarchical InstitutionsConformist Monoculture

OrthodoxyLow Innovation & LearningPerpetuation of Status Quo

Non-Renewable

Renewable Enterprises

Diversity-in-CommunityPartnering/Mutuality

MulticulturalHeterodoxy

High Innovation & LearningEvolution

Renewable Growth


What’s the RESULT?

• A Self-Renewing organization – that is highly adaptable to external market shifts, yet focused on and aligned behind a coherent business strategy

• Because of the way it is led, a continually-renewable connection is forged between corporate strategy and the full capability, commitment, and innovation capacity of ALL your people.


Touchy-feely BS?


Lets Look at the DATA

60-100% employee engagement

24.2% Total Shareholder Return

49-60% employee engagement

9.1% Total Shareholder Return

< 25% employee engagement

Negative Total Shareholder Return

Hewitt Associates Employee Engagement & Best Employer Database of 1500 Companies (2004)

All Hands on Deck – ROI


Higher Proportion of Women Senior Executives

-- Catalyst

35% Higher Return onEquity

34% Higher Total Returnto Shareholders

Geographic Areas with Higher Concentrations of Gays & “Bohemians”

Significantly Higher Tech-Driven Business Growth

Carnegie-Mellon economist Richard Florida

To stay competitive, hire more non-conformists, gays, other minorities

“Conformity is theEnemy of Growth” (JFK)


How We Get There

Principles & Practices


Why Traditional Diversity Won’t Work

• Hierarchical Institutions: Traditional diversity initiatives attempt to “graft” integration of internal diversity onto the upper-left quadrant

• Hierarchical Institutions were DESIGNED to:

• Repress change, creativity and differences

• Maintain and protect a relatively homogeneous in-group (senior execs) who retain all meaningful sources of power and influence

What is required is a transformational change in the foundational design DNA of organized human systems!

Transformational Change:Adult-to-Adult Social Contract


Relational Foundation: Partnering


Adaptation System: Level of Development

Performance System: Level of

Development

Low

High

High

Renewal Capability Profile

1 2 3 4 5 6 7 8 9 10

10

9

8

7

6

5

4

3

2

1

Q1:

Risky

Q2:

Responsive

Q3:

Repeatable

Q4:

Renewable


Strategy/Structure:

• Current strategy implementation plan

• Value Delivery Capabilities:

o Key Functions, Teams

o Business & Operational Processes

o Roles, Responsibilities

o Metrics

• Consumer-Centric organization

Audit Targets:

Improve Performance System:Strategic Options & Recommended Tactics

Strategy & Structure:

• Clarify purpose & strategy

• Audit & implement improvements:

o Financial measures & controls

o Operations

o Product & service quality

• Define, document & improve core business processes

• Clarify roles, responsibilities, boundaries, accountabilities

People:

• Build Commitment-based Alignment

• Build Performance Competencies

Strategic Options:

People:

• Leadership/Management practices: e.g. building commitment-based alignment, engagement, accountability

• High Performance Culture

• Baseline Performance Competencies© Dean Robb, Ph.D. 2008

Audit Targets:

Strategy/Structure:

• Value-Creation processes: new product development, business model innovation

• Key Functions: e.g. R&D, marketing

People:

• Leadership/Management practices: e.g. leveraging differences, building safety & trust, supporting creativity, dealing with difficult problems/issues

• Adaptive Culture elements: e.g. creativity, learning, managing change, emotional intelligence, visioning

• Baseline Adaptation Competencies

• Adaptive Relationship skills

Improve Adaptation System:Strategic Options & Recommended Tactics

Structure:

• Build/redesign Value-Creation processes – R&D, new product development, new business models

People:

• Build Adaptive Relationship skills

• Build Adaptation Competencies

• Build Integrity-based processes to manage differences & issues

• Build trust & safety

• Develop expectations of how individuals, groups & organizations build & manage renewal

Strategic Options:


Summary Comparison:Institution

vs.Self-Renewing Organization


Institution (Defended) Organization

UntappedCapabilities

Characteristics:

• Difficulty letting go of status quo

• Mission: short-term financial performance

• Difficulty with learning, change & development

• Rigidity – High control –Low trust

• Security is key driver

• Anxiety & grief repressed

• Differences & alternatives repressed

Change Process:

Freeze – Unfreeze -Refreeze

AdaptationSystem

PerformanceSystem


Self-Renewing Organization

Characteristics:

• Community sustainability overrides status quo

• Mission: Service to a larger system

• Focus on purpose, meaning

• Balance of performance with learning, change

• Safety & Trust

• Emotion is acceptable

• Insecurity accepted as basic to life

• Differences prized


UntappedCapabilities

AdaptationSystem

PerformanceSystem

Change Process:

Semi-Continuous Flow

Addendum:Going Deeper


Performance System: Adaptation System:

Primary Purpose Short-term results Long-term sustainability

Primary Orientation Status Quo New Ideas & Directions

Underlying Form Production machine Evolving life-form

Visibility Visible, Manifest Somewhat invisible, latent

Core Process(es) Consistent execution Innovation, learning, change

Basis of Effectiveness Efficiency, Productivity,

Quality

Creativity, Relaxation,

Redundancy

Social Foundation Alignment Diversity

Key Activity Tasks Relationships, meaning, emotion

Orientation to change Planned Emergent

Core Competencies Rational, analytical, concrete Inspirational, synthesis, visionary

Summary Comparison


Untapped

Capabilities

Adaptation

Domain

Channel

Performance

Domain

Org

an

iza

tio

n

Accessing Adaptation

Domain:

1) Use of “Negative

Capability”

2) Action Inquiry

3) Create a “Safe

Container – safety,

trust, interpersonal

boundaries

4) Access latent

contents:

Size of Channel:

•Degree of collective

differentiation (vs.

group merger)

•Degree of Repression

Adaptation System:

•Latent capabilities

•Alternative

perspectives

•Identity

•Meaning

•Archetypal contents

•Shadow

•Invisible

•Unaligned

Performance System:

•Structure

•System

•Roles & Tasks

•Shared goals,

norms, perspectives

•Developed

competencies

•“How things get

done”

•Visible

•Aligned

Self-Renewing Human Systems

• Active Imagination

• Symbol

• Group Self-Image

• Story

• Dreams

• Drawing


Performance System: Dynamics

• Provides order, structure and discipline necessary to deliver value, and integrate value creation

• Balances:

• Stability and the need for change

• Environmental requirements with internal needs for growth and development

• Problematic tendencies:

• Narrowing of focus to short-term goals only

• Defending/protecting status quo

• Repressing differences, diversity, alternatives and growth

• Institutionalization


The Performance System is functional to the extent that:

• The current Task Focus aligns with a genuine need in the environment

• Task Structure, Competencies & Culture are aligned with the shared task

• System members are authentically aligned with the Performance System and their role in it

Performance System:Functionality and Alignment


Adaptation System Dynamics

• Source of innovation, vitality & renewal

• Provides balancing corrective to the PS’ short-term tendencies

• Seeks long-term growth of the organization (wholeness):

Fulfillment of deepest & highest purpose

Broadening of strategic & competence spectrum

Development of untapped potential

Integration of internal fragmentation, differences, shadow

• Challenge: Mostly outside of day-to-day awareness


The Cycle of Renewal

PERFORMANCE(Making It)

AWARENESS

ACCEPTANCE(Re)Focus

(Re)Build

Business ModelStrategy

Products/Services

SupportingOrganizationalComponents

+


Performance:

Create excellent results through tight alignment between the Performance Architecture and external & internal needs

• Create a new direction forthe organization

• Work through emotional &political consequences

Acceptance:

Work through emotional &political resistance to change

Awareness:

Sense that the current Performance Architecture no longer meets external or internal needs

(Re)build:

• Redesign and rebuild thePerformance Architecture torealign with changed needs

• Work through emotional &political consequences

(Re)focus:

The Cycle of Renewal: Phases


Documents

Renewal Capability For Sustainable Growth V7