ORGANIZATIONS & LEADERSHIP

(IPC408)

3-0-0
 1.0 INTRODUCTION
ORGANIZATIONS & LEADERSHIP (IPC408)

Reference Books:
o Arie De Geus, The Living Company, Longview Publishing Limited,
1997.
o Peter Senge, The Fifth Discipline, Published by Doubleday, 2006.
o James Collins, Good to Great, Random House Business Books,
2001.
o James Collins and Jelly Porras, Built to Last, Random House
Business Books, 2001.
o Chris Argyris and Donald A. Schon, Organizational Learning: A
Theory of Action Perspective, Addison-Wesley Publishing
Company, 1978.
ORGANIZATIONS & LEADERSHIP (IPC408)

UNIT - I
1.0 INTRODUCTION
Organizations and the prevailing system of management, Life
expectancy of organizations, Organization as a living being.
The Learning Organization:
The Shift from Capitalism to a Knowledge Society, Economic success
versus learning, the memory of the future, Theories on why
companies fail to see what is happening around, Tools for foresight,
Planning and the illusion of certainty, Learning disabilities, Learning
organization, Single loop learning and Double loop learning, Case
study.
 1.0 INTRODUCTION
Commercial Corporations

ℓ 500 years of activity, a tiny fraction of the time span of

human civilization
ℓ Successful as producers of material wealth
ℓ Major vehicle for sustaining exploding world population
with goods and services making civilized life possible
ℓ Most of them are dramatic failures or underachievers in
spite of their potential to deliver
ℓ Exist at a primitive stage of evolution
ℓ Develop and exploit only a fraction of their capability
 1.0 INTRODUCTION
Lifespan of a Company

o Average life expectancy of Fortune 500 Company is 40-50

years. (less than average lifespan of a human being !)

o 1/3 of Fortune 500 companies in 1970 had vanished by 1983.

(13 years !)

o Study in 1996 Stratix consulting group - Amsterdam - average

life expectancy of all firms, regardless of size, is 12.5 years
(Japan and Europe).
 1.0 INTRODUCTION

More than 100 years old

The Stora company – paper, pulp and chemical manufacturer

Sweden 700 yrs old

Sumitomo Group – copper casting Japan Started in 1590

Shell Group – oil and petroleum Britain & the Netherlands Started
in 1890

DuPont, the Hudson’s Bay Company, W. R. Grace and Kodak, Mitsui,

---
Size and Diversification moves matter.
 1.0 INTRODUCTION
Features of Long Lived Companies

Shell study of companies older than Shell (100 years), 27

in detail of 40. Why did they survive?

1. Sensitive to their environment (in harmony with the world around

them – tuned to what was going on).
2. Cohesive, with a strong sense of identity. (People felt part of them
- community
- managers chosen from within - "stewards").
3. Tolerant (of activities on the margin - experiments, eccentricities...
- did not exert overly centralized control).
4. Conservative in financing (frugal, money in land – could
pursue options their competitors could not)
 1.0 INTRODUCTION

Company – a living being?

What if we thought about a company as a living being?

What is the alternate view of a company if we do not

see it as a living being?
 1.0 INTRODUCTION
Economic Companies Vs. Living Companies
Arie de Geus identifies two different types of commercial companies in existence today,
distinguished, among other factors, by their primary reason for being in business.
To explain the difference, de Geus borrows from evolutionary theory
ECONOMIC COMPANY LIVING COMPANY
Definition: corporate "machine" Definition: Living work community
Purpose: the production of wealth for a small Purpose: longevity; the development of its own
inner group of managers and investors- potential.
producing maximum results with minimum
resources.
Management priority: optimization of capital Management priority: optimization of people
assets to maximize profits, using people as to increase the company’s potential, with
a means to that end. profit as a means to that end.
Employees: "outsiders," recruited for their Employees: members of a community, which
skills, who work with their eventual exit in holds certain values in common. The
mind. They trade their time and expertise company will help the members to reach
for money, and feel little loyalty to the their individual potential, because it is
company. understood that this is in the company’s
self-interest.

Economic Companies Vs. Living Companies
Discipline and Cohesion: are
maintained hierarchical control,
often highly centralized.
Entry-level Recruitment: handled by
the numbers, and seen as filling the
necessary positions to best serve
the asset base of the company.
Executive Recruitment: often brought
in from the outside.
Governance: Sacrifices its people when
necessary to maximize profit and
shareholder value.
Learning Abilities: centralized control
reduces the space in the
organization, and thereby, it’s
learning abilities.
1.0 INTRODUCTION
Discipline and Cohesion: are based on through the
trust that results from the understanding that
both the company and its members will adhere
to their obligation of mutual development of
the potential.
Entry-level Recruitment: seen as a rite of passage,
representing the first moment for testing the fit
between the new member and the community.
Executive-Level: usually promoted from within the
organization.
Governance: Sacrifices assets over people when
necessary to ensure the company’s long-term
survival, even at the expense of the
shareholder.
Learning Abilities: trust allows space and tolerance
both inside the hierarchy and towards the
outside world, resulting in higher levels of
institutional learning.
 1.0 INTRODUCTION
Lifespan of a Company

Why do so many companies die prematurely?

Companies die because their managers focus on the

economic activity of producing goods and services,
and they forget that their organization’s true nature is
that of a community of humans.
 1.0 INTRODUCTION
Lifespan of a Company

ℓ Low life expectancy and low vitality of firms - symptoms of

overall health of the enterprise (like individuals!)
ℓ Most large, apparently successful organizations are
profoundly unhealthy
ℓ Members of these organizations do not experience that their
company is suffering from low life expectancy
ℓ They experience corporate health as work stress, endless
struggle for power and control, and the cynicism and
resignation that result from a work environment that stifles
rather than releases human imagination, eneryg and commitment
 1.0 INTRODUCTION
Prevailing System of Management

‘Our prevailing system of management has destroyed our

people. People are born with intrinsic motivation, self-respect,
dignity, curiosity to learn, joy in learning. The forces of
destruction begin with toddlers – a prize for the best
Halloween costume, grades in school, gold stars – and on up
through the university. On the job, people, teams, and divisions
are ranked, reward for the top, punishment for the bottom.
Management by Objectives, quotas, incentive pay, business
plans, put together separately, division by division, cause
further loss, unknown and unknowable’.
– Dr. Deming
 1.0 INTRODUCTION
Constituents of Prevailing System of Management

Management by measurements
 Focusing on short-term metrics
 Devaluing intangibles (you can measure only 3 percent of
what matters – Deming)

Compliance-based cultures
 Getting ahead by pleasing the boss
 Management by fear

Managing outcomes
 Management sets targets
 People are held accountable for meeting management targets
 1.0 INTRODUCTION
Prevailing System of Management

‘Right answers’ vs. ‘wrong answers’

 Technical problem solving is emphasized
 Diverging(systemic) problems discounted

Uniformity
 Diversity is a problem to be solved
 Conflict is suppressed in favor of superficial agreement

Predictability and controllability

 To manage is to control
 The ‘holy trinity of management’ is planning, organizing,
controlling
 1.0 INTRODUCTION
Prevailing System of Management

Excessive competitiveness and distrust

 Competition between people is essential to achieve desired
performance
 Without competition among people there is no innovation

Loss of the whole

 Fragmentation
 Local innovations do not spread

Will this system of management ever change on a large scale?

 1.0 INTRODUCTION
Prevailing System of Management

Transformation of prevailing system of

management is possible through
transformation of prevailing system of
education
 1.0 INTRODUCTION
Prevailing System of Management

The transformation of the prevailing system of management is

the need of the hour.

The transformation requires ‘profound knowledge’ largely

untapped in contemporary institutions.

Elements of profound knowledge:

 Theory of variation (statistical theory and method)
 Understanding a system
 Theory of knowledge (mental models)
 Psychology – Intrinsic motivation (personal vision and
genuine aspiration)
 1.0 INTRODUCTION
Transforming Prevailing System of Management

The elements of profound The five disciplines represent approaches

knowledge can be presented / (theories and methods) for developing
mapped to five learning three core learning capabilities:
disciplines:

1. Personal mastery  Fostering aspiration

2. Mental models  Developing reflective
conversation
3. Shared vision
 Understanding complexity
4. Team learning
5. Systems thinking
Planning for Team task

21-01-2015

# Team Company
1 A Motorola – Zenith, IC
2 B Sony – Kenwood, IC
3 C Ford – General Motors, IC
4 D Wal-Mart – Ames, IC
5 E Walt-Disney – Columbia, IC
6 F Hewlette-Packard – Texas Instruments, IC
7 G Proctor & Gamble – Colgate, IC
 1.0 INTRODUCTION

The Shift from Capitalism to a Knowledge Society

Profit or Longevity & Life Expectancy ? Manager’s Dilemma

Path of highest immediate return on
investment > survival of the company
& their job
Corporate success and longevity are interwoven
The world of business has shifted from
Key Sources of Wealth one dominated by capital to one
dominated by resources in past 50 years
Land & Natural Resources
Products
Capital
Services
Labour
Shift of value:

Land Capital Knowledge

 1.0 INTRODUCTION
Memory of the Future

How do companies anticipate the need for change?

Why doesn’t a company see what is happening?

Myths:
• Managers are stupid

• We can only see when a crisis opens our eyes

• We can only see what we have already experienced

• We cannot see what is emotionally difficult to see

• We can only see what is relevant to our view of the future

 1.0 INTRODUCTION
Memory of the Future

Managers are stupid

Not intellectually equipped to cope with the changing nature of

their environment 
Acting intelligently in isolation vs company’s intelligence to foresee
problems together 
We can only see when a crisis opens our eyes
Human resistance to change vs crisis 
Act with foresight, the company must act on signals, rather than on pain.

We can only see what we have already experienced

Old companies with rich histories prevail over young ones 

Old and experienced companies consistently miss signals

 1.0 INTRODUCTION
Memory of the Future

We cannot see what is emotionally difficult to see

Emotional pain 
Foresight

We can only see what is relevant to our view of the future

Human memory of the future 

Organizational memory of the future 
 1.0 INTRODUCTION
Time to Ponder

Financial analysts, shareholders and many executives tell us

that corporations exist primarily to provide a financial
return. Some economists offer a rather broader sense of
purpose. Companies, they say, exist to provide products and
services, and therefore to make human life more
comfortable and desirable. ‘Customer orientation’ and other
management fashions have translated this imperative into
the idea that corporations exist to serve customers.
Politicians, meanwhile, seem to believe that corporations
exist to provide for the public good; to create jobs and
ensure a stable economic platform for all the ‘stakeholders’
of the society.
Do you agree with the point of view stated on the purpose of
corporations in this paragraph? Why or why not? Justify your point of
view with supporting material.
 1.0 INTRODUCTION
Learning organizations

Organizations where people continually expand their capacity

to create the results they truly desire, where new and
expansive patterns of thinking are nurtured, where collective
aspiration is set free, and where people are continually
learning how to learn together. - Peter Senge

"Forget your tired old ideas about leadership. The most

successful corporation of the 1990s will be something called a
learning organization." - Fortune magazine

"The ability to learn faster than your competitors may be the

only sustainable competitive advantage."
- Arie De Geus, Head of planning for Royal Dutch/Shell
 1.0 INTRODUCTION
Disciplines of the Learning Organization

Analogy

December 1903 - Airplane invented by Wilbur & Orville Wright Invention

30+ years later - Commercial aviation could serve the general public
Innovation

1935 - McDonnel Douglas DC-3 - First plane which involved five

critical technologies

i. The variable pitch propeller, Isolated developments in separate

ii. Retractable landing gear, fields of research form ensemble of
iii. Light weight body ‘monocque’, Technologies in DC-3
iv. A radial air cooled engine,
v. Wing flaps
 1.0 INTRODUCTION
Disciplines of the Learning Organization

Learning organizations have been invented, but they have not yet been innovated

Personal Mental
1. Systems Thinking Mastery Models

2. Personal Mastery
Learning
Organization
3. Mental Models Systems Shared
Thinking Vision
4. Shared Vision
Team
5. Team Learning Learning
 1.0 INTRODUCTION
Disciplines of the Learning Organization

Systems thinking
• mind shift & understanding change processes.
• ‘feedback’ to reinforce/counteract action.
• recognise recurring structures
• remove root causes/problems
Personal Mastery
• personal competence and vision
• developing patience to look at reality objectively
Mental Models
• changing ingrained assumptions about influencing factors.
Shared Vision
• use instincts, intuition by sharing personal vision
• pictures of the future
Team Learning
• dialogue, discussion, group relationships
• accelerate org. learning thru. Synergy 2+2=5
 1.0 INTRODUCTION

Learning Disabilities

1. I am my position
2. The enemy is out there
3. The illusion of taking charge
4. The fixation on events
5. The parable of the boiled frog
6. The delusion of learning from experience
7. The myth of the management team

The five disciplines of the learning organization can act as

antidotes to learning disabilities.
Thank You
ORGANIZATIONS & LEADERSHIP (IPC408)

UNIT - I

2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION

The laws of the systems thinking, A shift of mind, Seeing the

world anew, Seeing circles of causality, the building blocks of
systems thinking, Nature’s templates: Identifying the patterns
that control events, Archetypes, Self-limiting or self-sustaining
growth, Case study.
 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION

The laws of the systems thinking

₰ Today's problems come from yesterday's "solutions."

₰ The harder you push, the harder the system pushes back.

₰ Behavior grows better before it grows worse.

₰ The easy way out usually leads back in.

₰ The cure can be worse than the disease.

 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION

The laws of the systems thinking

₰ Faster is slower.

₰ Cause and effect are not closely related in time and space.

₰ Small changes can produce big results—but the areas of

highest leverage are often the least obvious.
₰ You can have your cake and eat it too—but not at once.

₰ Dividing an elephant in half does not produce two small

elephants.
₰ There is no blame.
 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Shift of Mind -- from seeing parts to seeing wholes

Systems Thinking

Systems thinking is a discipline for seeing the wholes. A

framework for understanding structures, patterns and
relationships that mold Organizational behaviour /
performance.

₪ It is seeing interrelationships rather than linear cause-effect chains

₪ It is seeing pattern of change rather than snapshots
₪ It is an appreciation of how our actions shape our reality
₪ It is a language for learning and acting
 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Shift of Mind

The Systems Iceberg

Events – Reactive
What did what to whom – reactive
Common in contemporary culture
EVENTS

Patterns/behaviours - Responsive
PATTERNS

Structure – Generative
STRUCTURE Like an iceberg the big important structure is hidden

System structures are often invisible

 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Shift of Mind

Seeing the World Anew

 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Shift of Mind

Seeing the World Anew

 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Shift of Mind

Seeing the World Anew

Detail Complexity
 There are many variables
 Visible cause and effect situations

Dynamic Complexity
 Cause and effect are subtle
 Effects over the time of interventions are not obvious
 Conventional forecasting, planning and analysis methods
are not equipped to deal with
 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Shift of Mind

Seeing the World Anew

Dynamic Complexity
 The same action has dramatically different effects in the
short run and the long
 The action has one set of consequences locally and a very
different set of consequences in another part of the system
 Obvious interventions produce non-obvious consequences

The real leverage in most management situations lies in

understanding dynamic complexity, not detail complexity
 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Shift of Mind

Seeing Circles of Causality

Reality is made up of circle but we see straight lines

Filling a glass of water – is it a system?

 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Shift of Mind

Seeing Circles of Causality

System of tap water: who is deciding : Statement 1 of causality
you or water level ?
I am causing the water level to rise

Statement 2 of causality
The level of water in the glass
is controlling my hand
Both statements are equally
incomplete

Every influence is both cause and effect

 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Shift of Mind
Seeing Circles of Causality
Feedback Perspective
System of tap water: who is
deciding : you or water level ?
Statement of causality

Intent to fill a glass of water

creates a system that causes
water to flow in when the level is
low, then shuts the flow off when
the glass is full.

Anthropocentrism
From the systems perspective, the human actor is part of the
feedback process, not standing apart from it. This represents a
profound shift in awareness.
 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Shift of Mind

Building blocks of Systems Thinking

There are basically two building blocks of all
system representation:
Reinforcing Loop
Reinforcing and Balancing loops
Better
Students Students

Improved Good
Results Practices Results Practices

Better
Services Services

Amplifying Growth
Reinforcing loop helps discover how
small changes can grow
 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Shift of Mind

Building blocks of Systems Thinking Reinforcing Loop

Mediocre
Students
Students

Poor Poor
Results Practices
Results Practices

Services Mediocre
Services

Amplifying Collapse

Vicious Cycle
 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Shift of Mind

Building blocks of Systems Thinking

Better
Students
Reinforcing Loop

Improved Good
Results Practices

Better
Services
Balancing loop helps discover the
sources of stability and resistance
Increased
Expectations
Balancing Loop

Capability
Limitations
 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Nature’s Templates

Archetype-1 - Limits to Growth

A reinforcing (amplifying) process is set in motion to produce a desired result.
It creates a spiral of success but also creates inadvertent secondary effects
(manifested in a balancing process) which eventually slow down the success.
Better Not fully
Students Appreciated
Don,t push growth; remove the
factors limiting growth
Improved Good
Results Practices

Improper
Better
Implementation
Services
(Complacency/Complexity)

Reinforcing Loop Balancing Loop

Archetype – pattern of structure that recurs again and again
 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Nature’s Templates

Limits to Growth Structure

In reality, we never grow without limits. In every aspect of life, patterns
of growth and limits come together in various combinations.
Sometimes growth dominates; sometimes limits dominate.

Limiting
Condition

Growing Slowing
Condition
Action Action

Reinforcing Loop Balancing Loop

How to achieve leverage?

 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Nature’s Templates

Limits to Growth

GROWTH
PROCESS
Initiatives to Complexity of
Quality Improvements
Quality issues
improvement
LIMITING
PROCESS

Organizational
Capacity to improve
 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Nature’s Templates

Limits to Growth
 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Nature’s Templates

Archetype-2 – Shifting the Burden

An underlying problem generates symptoms that demand

attention. But the underlying problem is difficult for people to
address, either because it is obscure or costly to confront. So
people ‘shift the burden’ of their problem to other solutions –
well-intentioned, easy fixes which seem extremely efficient.
Unfortunately, the easier ‘solutions’ only ameliorate the
symptoms; they leave the underlying problem unaltered. The
underlying problem grows worse, unnoticed because the
symptoms apparently clear up, and the system loses whatever
abilities it had to solve the underlying problem.
 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Nature’s Templates

Archetype-2 – Shifting the Burden

 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Nature’s Templates

Archetype-2 – Shifting the Burden

Dilute
delivery

Falling academic standards

Teacher
Performance

Activity
oriented delivery
 2.0 THE CORNER STONE OF THE LEARNING ORGANIZATION
Nature’s Templates

Archetype-2 – Shifting the Burden

Bring in
HR expert

Expectation that
HR experts
Personnel solve problems
Performance
Problem

Develop
managers’
ability
THANK YOU