Praise
from Influential Executives,
Thought Leaders and Writers for
The
Living Organization®
“The Living Organization® is blazing a trail to a new world. You will never again see your organization, or relate to your employees, customers, and investors in the same old way. Norman Wolfe’s insightful reframing of how business operates frees us from the shackles of the "great machine" and opens us to the possibility of realizing the fullest of our human potential, individually and collectively.”
Chip Conley, Executive Chairman, Joie de Vivre and author of "Peak: How Great Companies Get Their Mojo from Maslow"
“I’ve always believed that people are central to the success of any organization. Norman Wolfe gets that. In his new book The Living Organization®, he guides readers through the concept of organizations as living energy. People are energy, and The Living Organization® is created by people’s activities, relationships, and context regarding what they do and why they do it. This is an intriguing book.”
Ken Blanchard, coauthor of The One Minute Manager® and Lead with LUV
“For successful leaders who want to get even better this book is a must read. The Living Organization® is a powerful and penetrating exploration of what really creates great companies. It completely reframes how to understand your organization while also providing a simple and pragmatic approach to achieve your loftiest dreams.”
Marshall Goldsmith - million-selling author of the New York Times bestsellers, MOJO and What Got You Here Won't Get You There
“This is an inspiring reframing of how we understand business creates bottom-line result. I couldn't put it down. The Living Organization® reinforces so much of what I know to be true about the power of culture and inspiration to move organizations. Every leader will find dozens of powerful insights in this book to help engage their teams in new patterns of healthy growth and long-term success.”
Casey Sheehan, CEO, Patagonia
“Norman Wolfe so brilliantly reveals the magic needed to sustain today’s businesses – the true essence of the human spirit. The Living Organization® is a practical guide on what it takes to leverage that human spirit and build a sustainable, conscious and profitable organization.”
Kip Tindell, Chairman and CEO, The Container Store
“At Trader Joe's, I worked with a great team to build a remarkable company with a deep sense of purpose and truly cared for all the stakeholders we served. I enjoyed success only through the painfully slow process of trial and error. The Living Organization® would have made my journey a lot easier, and quicker. Do yourself a favor and read this book now. It will transform the way you think about your organization, and your role as a leader!
Doug Rauch, Former President, Trader Joe's
“Imagine a world in which soulful purpose is the guiding force in individual and organizational life. Norman Wolfe is a prophet of this new world. Filled with incisive observations and captivating stories from the front lines of commerce, The Living Organization® is a powerful manifesto for the new paradigm of conscious business.”
Michael J. Gelb, Author of How to Think Like Leonardo Da Vinci and BRAIN POWER: Improve Your Mind As You Age
“Norman Wolfe explores indisputable truths from a new perspective beyond business; we are all connected, it's all energy, love is just a particular frequency and positive relationship energy inside and outside the organization is the key to all successes. Simply contemplating Norman's process enhances awareness and one's ability to pay attention to what really matters, a purposeful bottom line. I am convinced that there is a relationship between meaning and purpose, happiness and performance.”
Don Piper, Entrepreneurship Discipline Lead, Bainbridge Graduate Institute
“The Living Organization® will transform the way business leaders understand and manage their organizations. With keen insights, Norman Wolfe takes us on a journey in creating an organization that is alive with energy and passion, and adaptability and innovations in response to a dynamically changing environment.”
Sam Yau, Former CEO, National Education Corporation, Director of 2 public companies & Chairman, The Esalen Inst.
“In today’s global business world the traditional business models which rely largely on left brain quantitative thinking and actions, while still necessary are no longer sufficient. The Living organization insightfully provides many of the missing pieces. With clarity borne from years of real life experiences, Norman Wolfe reframes and broadens our understanding of how organizations can create better results. Every CEO, board member and senior executive will benefit from the practical guidance this book provides.”
John Rehfeld, former GM/ CEO of Toshiba America, Seiko Instruments and Proxima corporation, currently a director of two public companies, Executive MBA professor at Pepperdine and USD, and author, Alchemy of a Leader
“Drawing on his deep and extensive experience building successful teams and organizations as a corporate manager and consultant, Norman Wolfe reveals the vibrant structure and magical process of The Living Organization® and provides a map for traversing the terrain to create an extraordinary business.”
Jeff Klein, author, Working for Good: Making a Difference While Making a Living
“Have you ever wondered why some groups seem so full of energy and vitality bubbling with enthusiasm, creating results while others barely progress even with substantial prompting and pushing? In "The Living Organization" we are granted access to that hidden dynamic that controls the energy--and results--of any group. In this new insightful book, Norman Wolfe reveals a model that strengthens our ability to harness the often unconscious energetics that determine outstanding results and greatness in a company. The practical tool this book offers will allow you to enlist your group's deeper energies to drive uncommon success.”
Rick Ferris, President Sequoia Realty Corp.
“We have lived for too long believing that we have to check our emotional and spiritual self at the door when we enter the world of work. No More! Norman Wolfe will expand your current thinking and reveal the very act of creating financial success requires we bring our entire self into our work. In this groundbreaking book he provides practical tools to combine the forces of our Activity, Relationship and Context to create results beyond what we thought possible.”
Tom Zender, Former CEO, Unity Worldwide, Author of “God Goes to Work”, Evolutionary Leader, Corporate Executive
“In today's world it is critical that businesses all across our globe act and behave from an ethical stance. In this thought provoking and insightful book, Norman Wolfe teaches that as a living being, organizations are governed by the same forces that govern all living entities. Morals and ethics no longer are an afterthought, but are shown to be at the core of creating results. This is a must read guidebook for every leader doing business in the 21st Century.”
Russell Williams, CEO, Passkeys Foundation and The Ethical Edge
“To lead today requires leveraging the power of the whole - and that requires the use of multiple intelligences. Leaders must access and draw from the living energy of organizational systems. In The Living Organization®, Norman Wolfe offers the clarity and depth of insight that comes from experience. He teaches leaders how to develop and use their cognitive, emotional and spiritual intelligences to tap the organization's intelligence. This "intelligence of the collective" is what creates extraordinary success.”
Cindy Wigglesworth, President, Deep Change, Inc., Creator of the SQi Spiritual Intelligence assessment
“The Living Organization® offers an innovative and exciting new perspective on managing organizations. This book takes the purpose of the firm from a dry afterthought to the central management issue. Managers who take its message seriously will find themselves reframing their understandings of both their organizations and their roles for the better.”
Dr. Philip Bromiley, Dean's Professor of Strategic Management, Merage School of Business, University of California, Irvine
“The world is hungry for a new paradigm of business. We can see all around us that the old ways don’t work, but so many in leadership positions don’t know what to do or where to turn. The Living Organization® provides a model to work with, practical steps to implement, and inspiration to keep you going. Join the movement of conscious capitalists who are making a difference in the world. This book provides you the support and guidance you need.”
Judi Neal, Ph.D. Director, Tyson Center for Faith and Spirituality in the Workplace, Author of Edgewalkers: People and Organizations that Take Risks, Build Bridges, and Break New Ground, and co-author with Alan Harpham of Spirituality and Project Management
TRANSFORMING BUSINESS TO CREATE EXTRAORDINARY RESULTS
Book 1: Encounter
Norman Wolfe
The Living Organization®
Norman
Wolfe
Published by Quantum Leaders Publishing at Smashwords
©
2011 Norman Wolfe
All rights reserved
All rights reserved. Except as permitted by applicable copyright laws, no part of this book may be reproduced, duplicated, sold or distributed in any form or by any means, either mechanical, by photocopy, electronic, or by computer, or stored in a database or retrieval system, without the express written permission of the publisher, except for brief quotations by reviewers.
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(Note: if you copy and paste this into your
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This is a work of non-fiction. The ideas presented are those of the author alone. All references to possible income to be gained from the techniques discussed in this book relate to specific past examples and are not necessarily representative of any future results specific individuals may achieve.
Illustrations
by Lauren Card
Cover design by Michael Glock, PhD
The Living Organization, ARC Framework, Strategic Compass, Soulful Purpose, Real Time Execution, and RTE-S are trademarks or registered trademarks of Quantum Leader, Inc.
Print copies of The Living Organization are available at a discount when purchased in quantity by corporations, associations and other organizations. For information, contact Quantum Leaders Publishing at 7 Shasta, Irvine, CA 92612
The Living Organization® Trilogy
Book 1 – Encounter
Book 2 – The Journey
Book 3 – A New World
To Gregg Gallagher
His friendship and critical thinking helped midwife this work into life. May he bring these same qualities to his Eternal Life.
How does one begin to acknowledge all the people who have contributed to and supported my journey? There are those who have directly contributed to the writing effort, there are those who have contributed to the evolution of the models and methods presented in this book, and there are those who provided loving support and encouragement along the way.
This book, however, represents more than just the ideas, models, and methods. It is a reflection of my personal journey with creating results, both on an organizational basis and on a personal basis. My journey of development as a person is deeply entwined with the book’s underlying philosophy. It is with profound gratitude that I acknowledge all the people who have contributed, consciously and unconsciously, directly and indirectly, positively and negatively, to my life, my growth and my development as a person.
I want to specifically acknowledge my three editors. Peter Gerraro was my initial writing consultant who helped get the seeds of my ideas onto paper. Through his guided interviewing he managed to convert my ideas into written form and provide the initial structure to convert a concept into a book. Paul Roberts, a master storyteller, challenged me each step of the way until I understood the story I wanted to tell. He helped me understand the fullness of the story and how it paralleled other great trilogies. Lee Pound took what was already a good story and refined it. He guided me to bring more of my life into the story, making it and the whole book more fully alive.
This book is designed to address the needs of Leadership Teams (Boards, CEOs and Executive teams) to overcome their challenges in creating desired results. Many of the theories and methods come from my work with the many clients I have been honored to serve. I want to serve them better, to make them more effective, which drives me to deepen my understanding of the dynamic forces that create or block their dreams.
This would not have been possible without the support of my many clients who allowed me to test these ideas, concepts and methods. I want to specifically acknowledge two of them.
I was first introduced to National Technical Systems in 1990 when I met one of its founders and then CEO and Chairman, Dr. Jack Lin. Jack understood the power of the unconscious forces that define success and continuously explored how best to work with these forces. This led to a culture that was open to exploring new and often non-traditional ways of creating collective results. Bill McGinnis, who replaced Jack as CEO, continued the exploration, opening himself and his executive team to work with the energies of Context and Relationship. The lessons I learned working with these two great CEOs and their teams greatly influenced what is presented in the book.
From the time Jim Summers took over as President of SafeNet Mykotronx division, he had a deep connection to the organization’s Soulful Purpose™. It was this connection that has guided Jim to establish the vision of what was possible for this organization. I have had the honor of working with Jim and his team for over 8 years, taking the organization through a number of growth transitions as it doubled its size. I am deeply grateful for the opportunity to work with and learn how viewing an organization as a living entity enhances its ability to continuously improve and increases its ability to grow.
Because my life had been an exploration into improving myself to improve my personal as well as business results, it has become a tapestry of many roads exploring many disciplines. One particular path I have traveled for the past 8 years is working with my teacher, guide, and mentor Brugh Joy. I will be forever in his debt, and those who have traveled the path of Joys Jubilation with me. This journey provided me an understanding of and direct experience working with the deeper energies of what many call a Divine Mystery.
I want to also acknowledge the many consultants who have been part of Quantum Leaders since its founding in 2002 and those friends who were gracious enough to mentor and advise me on this journey. Each has left their mark on The Living Organization® and me. I specifically acknowledge three of them. Kevin McGourty was the first consultant to join Quantum Leaders and showed me that others would be willing to bring my vision to reality. Don Hicks has supported our efforts for over 5 years in defining what it takes to sell our services. This book is dedicated to Gregg Gallagher who challenged my thinking every step of the way, leading to a more robust and detailed product. Gregg passed on unexpectedly and his presence and contributions are sorely missed. Of the advisors I acknowledge Mike Kucha and David Kinnear, who brought different perspectives and helped, refine the model.
Finally I want to acknowledge two people that are closest and most dear to me. My daughter Lindsay taught me what it really means to be a parent, a custodian of another living being’s spirit. She taught me how to help prepare that being to give that spirit full expression. It is this experience of guiding another being towards maturity that is the basis for how to develop an organization to fully express its spirit.
My wife Jane has taught me most of all. Not only did I learn the beauty of seeing the world through the eyes of an artist, I have also come to understand and live life as an unfolding improvisational play. She showed me the meaning and power of acceptance and gratitude. Her ability to see me as what I can be, her support through all the challenges that life can bring, and the love she openly and graciously shares, has given me the strength and confidence to pursue my dreams.
And to all of you who have chosen to read this book – Thank You!
Chapter 1 - A Shock to Our System
Chapter 2 - The Living Organization – The Secret of Life
The Magic of Living Organizations
More than a call for Social Good
Chapter 3 - It’s all about Energy
Results are energies transformed
Energy patterns that create are alive
The Evolutionary Flow of Energy
Chapter 4 - The Energy of Business
The Source of All Energy: Our People
Chapter 5 - Profit: The Good, Bad and Ugly
Chapter 6 - The Rainbow Within
Activity - the Energy of Doing
Relationship - the Energy of Interactions
Chapter 7 - Synergy - The Multiplier Effect
Chapter 8 - Experience: The Driver of Perceived Value
Chapter 9 - Where the Magic Hides
Context - the Energy of Meaning and Purpose
What gets measured gets improved
All Results Start In the Context Field
Chapter 10 - The True Nature of Business
Chapter 11 - Putting it all Together
A New field – Strategy Execution
Strategic Planning is Dead – Long Live Strategy Execution
The title, the lyrics and the music
Chapter 12 - Executing in Real Time
Real Time Execution System™ (RTE-S™)
Get ready the future is coming
Incrementing or Innovating – It makes a difference
Put your money where your mouth is
Chapter 13 - The Journey Continues
Business as the Driving Force of Society
How Capitalism’s Reputation Changed
The Emergence of the Humanistic View
By John Mackey, Co-CEO, Whole Foods Market
Do we need a new way to think about business, corporations, and capitalism for the 21st Century? Do we need to create a new business paradigm? Corporations are probably the most influential institutions in the world today and yet many people do not believe that they can be trusted. Instead corporations are widely perceived as greedy, selfish, exploitative, uncaring – and interested only in maximizing profits. In the early years of the 21st century, major ethical lapses on the part of big business contributed to a growing distrust of business. Increasingly, many people believe there must be something wrong with both corporations and capitalism.
The problem does not lie in the system of capitalism but rather in the theories we use to guide our decisions. Although economic theory has evolved since Adam Smith wrote The Wealth of Nations in 1776, many economists continue using industrial and machine metaphors to explain how the economy works. According to this model, business operates like a machine—business owners input various amounts of capital, labor, and land at the start. Profits then spit out on the other side of the metaphorical machine.
Today’s real challenge for the corporation and the economy overall, is that most modern economists and business leaders’ thinking is still grounded in a theoretical model that does not acknowledge the complex interdependencies of all the various constituencies and all the dynamics that impact success. The existing model simply fails to provide sufficient guidance for success in the 21st Century.
For business to reach its fullest potential in the 21st Century, we need a new business paradigm that moves beyond simplistic machine/industrial models to one that embraces the complexity and interdependencies, in which corporations exist today. Complexity and interdependency is our reality and our economic and business theories need to evolve to reflect this truth.
The Living Organization® is that evolutionary perspective. It presents a fresh new way to understand what an organization is and how it operates. It directs us to understand how organizations draw from complexity and interdependence to develop, grow and evolve. We begin to see businesses as living entities in relationship with all its stakeholders, which is all part of an evolutionary journey for advancing society. This is the same fascinating discovery I made over the last 30 years as CEO of Whole Foods Market.
When Whole Foods Market’s co-founders created the company in 1980 we infused it with a few simple ideals and core values and then created very simple business structures to help fulfill those ideals. However, as the company grew a process of dynamic self-organization took place to fulfill the original purpose. The business and even the purpose evolved over time through the dynamic interaction of the various interdependent stakeholders with each other and with the business itself. This interactive relationship of an organization with all its stakeholders (customers, employees, investors, suppliers, and the community) is what is so richly expressed in The Living Organization®. It provides a deeper understanding into why Whole Foods Market consistently created success for all the stakeholders and why our purpose has become deeper, richer, and more complex over the years.
Through the lens of The Living Organization®, we can see the solutions to many of our challenges as a business and within society. A business as a machine does not, and cannot, have any social consciousness or social responsibility. A business viewed as a living entity is, like all people within a society, a citizen with a social and moral responsibility to both itself and society. A machine does not learn and adapt to its environment, but adaptation is the very essence of all living entities. Machines merely produce, they cannot innovate, while living entities can actually dream of and create a healthier future.
Every successful CEO and organization leader will find within the pages of The Living Organization® the same secrets of success they have learned over the course of their careers, only it will look very different. It does not read like a traditional business book providing a rehashing of the same old management theories. It does not reject the traditional theories; rather it adds to and expands them. It provides a fresh new perspective that can deepen our understanding of the things that successful CEOs have stumbled on through trial and error.
Because it is a new paradigm that draws from many disciplines, it will challenge us. It will challenge the way we think, it will challenge how we interact with our employees, our suppliers, our customers, our investors and our communities. It will challenge us to grow up, become more conscious and like all living entities, evolve.
When we are small children we are egocentric, concerned only about our own needs and desires. As we mature, we expand our consciousness and grow beyond this egocentrism; we begin to care about others – our families, friends, communities, and countries. Our capacity to love can expand even further, to loving people from different races, religions, and countries – potentially to unlimited love for all people and even for other sentient creatures. This is the potential of human beings, expanding consciousness and taking joy in the flourishing of people and other living beings everywhere.
Living Organizations® also have the potential to evolve in consciousness, and the collection of all businesses can evolve towards a conscious capitalism. Let each organization leader, whether for-profit, non-profit or government, learn the art of leading a Living Organization®; of guiding its growth and development towards greater consciousness to better serve its customers and in turn further the advancement of a healthy society.
As a professional magician I am sworn, on the graves of Houdini, Blackstone, and all the other great magicians, to never reveal the secrets behind the magic. Today I am about to break that vow. I am going to reveal the secret behind the magic. Not the magic behind creating the illusion we see on the stage, but the magic behind creating the results we get in business and in life.
Every CEO Executive, team leader and even every individual contributor wants to create the results they set as their goals. This is certainly true for me. This desire led me on a continual journey of exploration and discovery to answer the questions, “How are results created, what is the trick to improving my success rate, and why does the same effort sometimes produce results and sometimes not?”
This journey has two parallel paths, my business career and my personal growth and development. These two paths are not separate and distinct paths but are an interwoven journey of reaching and seeking, attempts and failures, and the eventual success that follows. Mostly it is a journey of discovery, a journey that has revealed to me much about the secrets that lie behind the results we create, of how and why we get the results we get.
Two days stand out in my mind, two days that marked the beginning of two distinct journeys. Two journeys that would over time merge into a single journey.
March 4, 1969 was a beautiful sunny day in New York, the first day of spring-like weather after a long cold winter. I was a senior at NYU and a group of us spent the day in Bear Mountain State Park enjoying the coming of spring. It was also the beginning of Purim; the Jewish holiday that celebrates the end of the dark of winter and the coming light of spring.
I had spent the evening with a group of Jewish students who were celebrating with music and songs that brought me back to my youth and family gatherings.
When I returned to my room, I felt the sweetness of the day mixed with longing for days past, the interplay of joy and sadness. My roommate was there and as we talked he pulled out a book by Alan Watts. He read a passage, “To know white you must know black, to know up, down must exist.” In a flash I was transformed.
I didn’t know what an epiphany meant until years later but in that moment I experienced what would certainly be an epiphany: a spontaneous understanding, what some might call a spontaneous awakening. In that moment my world flashed in front of me. People formed a circle before my eyes and as each person’s face appeared a sense of deep understanding and pure love filled me.
This deep loving feeling stayed with me for months and it seemed my relationship with everything in life was vivid, peaceful and loving. I began reading Alan Watts, Herman Hesse, Joseph Campbell and others. My whole world began to re-form and I was filled with a purpose to journey into a deeper understanding of life, a journey of spiritual discovery that to this day is a significant part of my life.
I took this newfound awareness with me upon graduation as I entered the world of work. I started my career as a system analyst for Pratt & Whitney Aircraft designing applications and writing code for fuel cell testing. It was a very different world from the open exploration into the deeper mysteries that dominated my previous six months.
Where the one tapped into the mystical, curious, discovery side of me, the world of computers engaged the logical, analytical rational parts of my being. I found that the two worlds, while very distinct, seemed to draw on each other. My analytical side made sense of the mystical discoveries I would have and the mystical creative side brought innovative approaches to the challenges of logic and program design.
I entered on the second path of my journey on July 19, 1976. I remember this day so vividly because like my day of awakening, the events of that day marked what might be called a second awakening, but of a different kind.
My wife and I just returned from two weeks visiting the UK during the bi-centennial anniversary of the United States. We were visiting the very place from which our country was born, born not out of intention but out of conflict. We were visiting the culture that rejected our forefathers and now embraced us as friends.
I was returning to work this day, renewed, rejuvenated and filled with a new sense of beginning. I was just completing my first year as manager of a Service District for Hewlett Packard. It was not an easy year for me, struggling with the role of management and the challenges it brought forth. I knew I had a lot to learn, but was eager to jump in and conquer this like I did everything else in my life.
The first person I saw was my boss, who called me into his office to give me my performance review. As I sat and read his comments and his ranking I was devastated. It seems in his opinion I did not do one thing right. The ratings were unacceptable in every category. I was a complete and utter failure.
How could this be? I knew I had some struggles, I knew I had a lot to learn, but completely unacceptable?
I began questioning whether I was really cut out for management. My whole career I had always received outstanding reviews. It was the innovative work I did at Pratt & Whitney using HP’s computers that landed me the job as Systems Engineer for HP in Southern California. The outstanding work I was doing as System Engineer, with both the sales people and customers, caused my current boss to offer me the position of District Service Manager.
I was excited when I was given the opportunity to move into management for I was convinced I could really help the people who worked for me to be as successful in their careers as I was. Still filled with the earlier discoveries of how life worked, of love and caring for others, I knew I could help others become successful.
But now after this review I wasn’t sure. Perhaps I should return to the world of computers where I was safe and successful. Computers, after all, were logical, results definable and predictable. Not so with people. And though I was very successful in dealing with customers there seemed to be something more when it came to leading an organization.
But a number of other managers, my peers and superiors, individuals who would become mentors and coaches, saw something in me I did not yet see. They encouraged me to stick with management believing I had all the attributes to become a great leader. It was good they believed in me for at that time I had great doubts. But I chose to heed their advice and I am really glad I did.
For this started my second journey, the one of discovering what it took to successfully lead an organization. Out of conflict was born a new determination, a determination to discover the secrets of business and organization success.
And so I set out to become an expert at managing organizations and the people who comprised them. And like every manager, I hungered for one thing – to always achieve the goals I set for my organization. Many of these goals were mine, a sense of purpose I wanted my organizations to achieve, which of course were merged with goals given me by my boss, or later when I was COO or CEO, the ones established by the boards of directors or investors. Regardless of who established the goals, all that mattered to me was exceeding them.
I have spent the last 40 years of my life traveling these two paths. The first is a spiritual path delving ever deeper into the mysteries of why I do what I do, how do I create what I want and why life unfolds the way it does. The second path is that of achieving business results, growth, profits, and improved performance. These two paths continually intersect, cross over, circle around and intermingle with each other. There always seemed to be parallels I could draw on from one path that provided insights into the challenges of the other.
It wasn’t until the early part of this century, as I was working on defining the purpose and mission of Quantum Leaders that I began to get a sense that what for many years seemed to me to be two very different paths were in fact the same path. They were both complementary sides of the same coin, the same journey; a journey to find the secret formula for success in all endeavors of life – a philosopher’s stone that will guarantee the success of any organization and the people within it.
This journey led to the development of The Living Organization® model – the subject of this book.
I have written this book because I sense there is a major change happening in the ranks of corporate leadership, a generational shift in the ranks of CEOs and other corporate level executives. It is a shift from those who were raised during World War II and moved into leadership roles during the 70s and 80s, to those who were raised in the post Vietnam era and came into the leadership roles in the 90s and turn of the century.
The previous generation relied on military, hierarchical organization, command and control leadership. The new generation was schooled in the power of teams, global collaboration and empowerment of employees. But the old paradigm still has a hold on the system and prevents these ideas from taking hold.
This generational shift in leadership coincides with the recognition that what worked in the past is not working any more. “What got us here won’t get us there,” the title of Marshal Goldsmith’s latest book declares. There is a breakdown of our existing business models and the new leaders sense it. If the recent economic crisis has taught us anything, it is that the future will not look like the past. The framework, the very paradigm we have used to guide our efforts in creating results no longer produces the same level of results. Some even question whether it works at all. The magic has left us, or so it seems. In reality the magic is still there. It is simply that we never understood the whole picture of how we did what we did. We simply lack the insight, the details of how the magic of creating results actually works.
This book is for those new leaders who are seeking to better understand how to navigate the multiplicity of dynamics impacting their organizations. It presents the foundation of a new business model, keeping what is valid from its predecessor models, adding new concepts to create a consolidated framework that brings it all together. This book provides today’s leaders a new, more detailed map to navigate the complex business world of this century.
We start by explaining the need for a new business model, revealing the limitations of the existing paradigm, while also recognizing what elements are still important going forward. We then lay the foundation of the new paradigm, The Living Organization® model. By shifting the lens from the organization as a machine of production to a living creator of results we can begin to get a glimpse of how this will reveal many heretofore secrets of success, Chapters 1 & 2.
Key to every living entity, key to life itself is the understanding that everything is energy. In Chapter 3 we present an overview of the nature of energy and its role in creating results. With this understanding we will take you through the process of how energy flows through an organization on its journey of transformation into creating the desired results. It describes the role each of the domains of business – people, process, customers and financial – plays in the transformation process. We show where the old paradigm fits in the new model, keeping what is valid from the former approaches while adding new concepts to create a more robust holistic organic framework for today’s leaders, Chapters 4 - 10.
While having a model that is robust enough to describe the forces impacting success in today’s fast shifting environment, it is not sufficient. In Chapters 11 & 12 we delineate a management process that allows the organization leaders, the CEO and executive team, a department head, a team leader or even an individual, to manage the execution, the process of activity needed to achieve the results. This new approach, The Real Time Execution System™, builds on many of the tools and processes that have been developed over the last 3 – 4 decades to improve an organization’s success in achieving its goals. But The Real Time Execution System™ is not constrained by trying to fit itself into a machine, a paradigm that inherently limits the release of the creative forces needed for successful execution. Instead it is rooted in The Living Organization® model providing access and the ability to work with the very forces that breed creativity, passion, engagement, commitment, synergy, unparalleled customer experience and all the other drivers of success.
You are likely to find many of the concepts presented familiar though not necessarily through the lens of business. I draw on many fields of study including physics, psychology, perennial wisdoms, philosophy, and of course business. In some cases I have left untouched the work of others, merely merging it in where I believe it fits best. In other cases I have taken previous work and modified it, either adding concepts or simply reframing them. I have also drawn on work not normally associated with business, recognizing the business is also part of the totality of life.
Like all new discoveries we have the distinct advantage of having available to us the many contributions that have come before. I have built on the work of others and my own “eureka moments,” assembling the puzzle pieces to form a more complete picture of how modern corporations function, and how their resources can better be harnessed to achieve the goals of management and the communities they serve – their “marketplace of customers.” This model is part of an emerging paradigm – the next rung on the evolutionary ladder of organizational theory.
Like all journeys, we are served by having an effective map to guide us. In many regards I felt like an explorer on a journey wandering though many uncharted regions. It is my hope that this book will serve as an effective map guiding the next generation of leaders as they navigate the challenges of our current and ever changing business environment.
“The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew.” -Abraham Lincoln
A Shock to Our System
It’s April 3, 2010. At Apple Stores all across the United States, hundreds of people are lined up eager to grab their very own iPad, finally available after two months of unending promotion. When the doors finally opened, people piled in to be one of the first to own an iPad. Within the first month Apple sold over a million iPads and by March 2011 was up to over 15 million units and climbing.
This was more than just another successful launch of a new Apple product. It was another record breaking launch in a string that started with the iPhone in June 2007, the iPhone 3G in 2008, and the iPhone 3GS in 2009. Each launch drew thousands of buyers waiting in lines at Apple stores and sold millions of products, including 33.75 million iPhones.
Apple achieved the highest volume of sales for any product launch and they did it in the middle of the worst recession since the 1930s; in a market where companies like Bear Stearns and Lehman Brothers were collapsing, banks needed huge bailouts to stay in business, and the once great General Motors (“what’s good for GM is good for the United States”) became the property of the United States government.
Every executive, every leader, no matter the size of their organization or their position within it, has the same overriding objective - to create their desired results. And what leader does not set out to go beyond just creating average results? Every leader has visions of leading their organizations to stand out from the pack, to manifest results that would be considered magical, results like those Steve Jobs, and his team at Apple, consistently repeats with each new product launch.
“Apple sold 15 million iPads in nine months, created a mammoth new product category and started an industry of copycats. Apparently, it doesn’t pay to bet against Jobs’ gut instinct[1].”
Is Apple’s repeated success a fluke that is unique to them, is it Steve Jobs’ unique “gut instinct” that creates Apple’s magic, or is there a set of principles that can truly explain Apple’s success?
This book will explain what truly underlies Apple’s success by looking at the world of creating results from a completely different vantage point. It will provide insights and practices that will allow any company to achieve the magical results of Apple and others. Yes, Apple is not alone in consistently creating results that go beyond great; there are many other companies who have demonstrated similar success during these difficult times that follow a similar pattern.
In his book Firms of Endearment, Raj Sisodia has identified a number of companies who march to a different drummer. These Firms of Endearment (FoE) companies not only embrace the traditional business paradigm, they add to it a set of principles that transcend merely improving the effectiveness of the machine of production. Like all companies, they pay attention to increasing efficiency, cutting costs and maximizing shareholder value, but go beyond these traditional objectives. They add a sense of higher purpose, of caring for and being in service to employees, customers, partners, investors, and the greater society.
Who are these companies and what results do they produce? We all know them and most people aspire to be like them in one form or another. The 30 companies Sisodia studied, all highly admired and often loved by their customers, are Amazon, BMW, CarMax, Caterpillar, Commerce Bank, The Container Store, Costco, eBay, Google, Harley-Davidson, Honda, IDEO, IKEA, JetBlue, Johnson & Johnson, Jordan’s Furniture, L.L.Bean, New Balance, Patagonia, REI, Southwest, Starbucks, Timberland, Toyota, Trader Joe’s, UPS, Wegmans, and Whole Foods.
As for results, over the ten years ending June 30, 2006 they produced a return on investment of 1,026% compared to the S&P’s return of 128%. And during the last five years they have produced a return of 240% compared with the S&P’s return of -13%.
Apple is no fluke, nor is the performance of the FoE companies. These companies perform well and often have a loyal following usually reserved for rock stars and sports teams for a reason. These companies don’t simply produce results, they consistently create magic.
But is it magic? I want to tell you something about magic. At one point in my life I was a professional magician, performing every week for three months at a local nightclub. For everyone in the audience, what I did amazed them, wowed them and stupefied them. They couldn’t figure out how the coins could possibly disappear and reappear right in front of their eyes. To them it was simply magic. To me, however, it was not magic. I knew the secrets that lie below the surface. I knew how to create the illusion.
Arthur C. Clark said, “Any sufficiently advanced technology is indistinguishable from magic.”[2] I believe the corollary is also true. What appears to be magic is in reality an advanced technology that is not yet fully understood.
The magical results of Apple, the FoE companies and others only appear to be magic. In reality it is the combination of certain forces, certain energies that logically and rationally produce their results. It appears to be magic because we do not have a good model that explains these forces and how to work with them.
What we need is a new model for business that more fully explains the forces that underlie the creation of magical results, a new model that explains how to manifest the same magical results created by Apple, the FoE companies and many other companies that consistently perform at these levels even if they do not make it to the public limelight.
This book will provide such a model, an evolutionary model that builds on our current models for business success and expands them to explain what they miss or ignore. It will provide a deep understanding of how to work with the forces that mix together to produce the results we create. It will provide the map that will allow you to lead your organization to create the desired outcomes, which to others will appear magical.
But it will not be easy. While the principles may be easy to understand, they will not be easy to adopt and implement. It will call on you to rethink how you believe results are created. You may find yourself standing alone against other advisors, your staff, even your board and your investors.
Our world is undergoing tectonic changes, major shifts in the rules of engagement, the way things get done. No matter where we look, politics, education, the environment, and business are in turmoil. Nothing is stable any more. The maps we’ve used to navigate our world no longer give us the proper guidance they once did.
When our world seems turned upside down, when everything seems uncertain and unpredictable, the natural response is to return to the comfort of what used to work. There is a natural tendency to call for a reinvigoration of what we used to do, to fall back on the old rules of engagement, even in the face of mounting data that the old ways don’t work. Everywhere you turn people will be suggesting a return to fundamentals, to the rules of the “good old days.” This is why it will be challenging to move to a new way of thinking and why it will take courage to adopt a new model for business success.
But as difficult as it will be, do we have a choice? Can we continue to rely on what has worked in the past but is now failing? To paraphrase Einstein’s famous observation, “The significant problems we have cannot be solved by the same type of thinking that created them.” Or as a dear friend and client, Bill McGinnis, CEO of National Technical Systems, is fond of quoting Mark Twain, “If you always do what you have always done, then you will always get the same results you have always gotten.”
I believe that it is at these very times, when the old rules of engagement are failing and our world feels in chaos, that we need the courage to explore and be open to taking steps we have never taken before. This is the very time when we should consider what we rejected in the past. That is what creating magic is about: doing what others do not expect is possible.
The world of commerce has evolved over hundreds of years. Society has evolved from a purely agrarian society to an industrial society. Our world has been on a journey that has taken us from a society of hunters and farmers to craftsman to the modern corporation of efficient production. The rules of commerce have evolved during this journey to the system we call capitalism and the capitalist system has been the engine of progress in every society that has adopted it.
Progress, innovation, and improving the standard of living is what business used to be all about from the early days of mercantilism through the industrial revolution; that is until business turned from being the engine of creation, the source of progress, to the machine of destruction[3].
Can this system, which created widespread success for over 300 years, function in today’s society? Can we still depend on the model that advanced society for so many centuries? Is the very foundation upon which our society is built, free market capitalism, failing us as a system?
At first glance, it might seem that the evidence is heavily weighted towards yes. What we hear in the press and the problems I have mentioned earlier indicate that capitalism has had its day and that we need a new system.
Let’s remember the incredible progress capitalism and the individual businesses that follow its principles have collectively created over the last three centuries and resist the temptation to throw out the baby with the bath water. Much is right with our system. We must resist the impulse to discredit and discard our economic model just because it doesn’t seem to work right now. It could well be the system of economic exchange is sound but its application has been limited.
Yes, Lehman Brothers and Bear Sterns are gone from the scene and the Federal Government owns GM. Yes, housing values have plummeted and many people have lost a significant amount of their net worth. Yes, unemployment is currently at a painful 9% - 10%. Yet many companies survive and even thrive.
Think again about Apple’s extremely successful launches of the iPhone and the iPad. As Sarah Rotman Epps of Forrester Research said, “The iPad isn’t behaving like other consumer devices. It has a steamroller of momentum behind it that indicates incredibly strong demand for this entirely new form factor.”[4]
If Apple, FoE companies and the companies I work with as a consultant can create such magic, why not all companies? Why not your company?
The system has its flaws but all human systems have their flaws. I contend that the basic principles of Capitalism are sound. Rather than declare it a failure, let’s see if we can discover how to enhance its positive attributes while eliminating the negative impacts. Can we create a system that draws on the productive, society-benefiting aspects of capitalism while eliminating its negative side effects? Can the decisions made by our corporate leaders to create their desired results and benefit their organizations, also benefit society? My journey to discover an answer to how results are created also revealed the answer to these questions, which will be revealed in this book and the works that will follow.
I have discovered that the flaw is not the inherent nature of the system but our limited understanding of its inner workings. The framework by which we make decisions within the system is what is causing the system to fail. Put another way, there is nothing wrong with the territory that we are traveling over; our maps simply do not show the full range of terrain. Is it any wonder that every now and then we fall into a pit of quicksand or get caught in a raging river? What is missing from our understanding? What does our current map, our current business model, not reveal?
Given my background as an engineer, I first looked at business from a scientific perspective, seeing it as a system of dynamic forces. I used Force Field analysis to help me explain, identify, and organize the forces that create society’s situation. Force Field analysis (FFA) is a simple tool developed by Kurt Lewin, the founder of social psychology and one of the first to study group dynamics and organizational development. FFA changed social science and is regularly used for strategic planning.[5]
In Figure 1 I show how this technique provides a framework for looking at the factors (forces) that influence any situation. It asks what forces drive movement towards a goal (driving forces) or block movement from reaching a goal (restraining forces). A similar pairing of forces drives our Capitalist system as a whole, as well as each company within it.
Figure 1
The challenge in analyzing any system is to identify all of the critical forces operating in it. Yet, it is difficult to identify all the forces because of the limiting nature of our worldview. Our individual and collective worldview serves to frame how we understand our world and it also has the characteristic of limiting the information available to us.
When we thought the world was flat, we could not imagine sailing to an undiscovered continent. We couldn’t even imagine such land masses existed. When we believed the earth was the center of the universe, we had no way to truly understand the motion of the planets. Our current worldview about how we create results will be our challenge. It will challenge our ability to look beyond our worldview so we can understand all the forces operating within an economic system of exchange.
Every new discovery challenges some aspect of the old paradigm. The first response from orthodoxy is to reject the new discovery or try to explain it within the existing framework. When the evidence becomes so strong that it exposes the inability of the existing paradigm to fully explain how the world works, a new paradigm evolves. Until then, the forces not fully explained by the current paradigm are relegated to the mystical or the magical.
For example, James Clerk Maxwell developed an accurate theory of electromagnetism by showing that light was electromagnetic radiation operating in the same field that enabled electrical and magnetic phenomena, a field he called the ether. While this advanced the field of classical physics and explained phenomena that could not otherwise be explained, it never explained the forces that lie in this field or how they impacted the world. The ether remained a mystery until the advent of Quantum Physics began to peer under the veil of the subatomic world.
Likewise, forces operating on our economic system today are still relegated to the ether for the same reason. For example, in his attempt to explain the self-regulating nature of the marketplace, Adam Smith wrote, “…and by directing his effort in such a manner as to produce the greatest value for his own gain, he is in this, as in many other cases, led by an invisible hand (emphasis added) to promote an end which was no part of his intention.”[6]
Like the ether of Maxwell’s classical physics, Smith could only recognize that there were impactful forces at play but couldn’t fully explain them. To this day, most economists still accept there are forces which we don’t fully understand or see that regulate the market.
A New York Times headline on September 2, 2010 reads, “Bernanke Says He Failed To See Financial Flaws.” In the article Mr. Bernanke, the Chairman of the Federal Reserve Bank, says, “What I did not recognize was the extent to which the system had flaws and weaknesses in it that were going to amplify the initial shock from sub-prime and make it into a much bigger crisis.”
The forces acting on a system are present whether we recognize them or not. As described by FFA some of the forces drive success while others restrain success. And as Bernanke and others learned, some of the forces are visible and known while others that are not visible can have a tremendous impact.
Take the performance of two teams for example both performing the same activities. One team is highly aligned while the other is fairly dysfunctional. The aligned team will enhance its chances of success while the dysfunctional team may still perform but the path to success will be more difficult. The invisible force of alignment plays a critical role in determining which team will outperform the other. Yet, because it is in the “ether,” alignment is not usually a force most managers actively take into account or even know how to work with. Similarly the unconsciously formed culture of an organization can be a force that energizes the group or it could be a force that prevents the group from changing.
Some forces carry with them shadow forces. Microsoft’s success led it to take on an air of arrogance, a force that is often lying in the shadow of success. This arrogance led to many of its troubles with regulatory agencies around the globe. Because our maps are so limited, the forces that lurk in the shadows will often have unpredictable side effects.
Shadowy forces aren’t inherently bad. They are merely another set of forces that affect our success. The problem arises when our maps do not help us understand their existence. Once understood they can be the source of our greatest development. Psychologist Carl Jung pointed out that when a person learns to integrate their shadow side, the result is greater maturity and wisdom. The same is true for business and our capitalist system. Fire can warm us or burn us. Business can advance society or destroy it. Only through a deeper understanding of the elemental forces can we, as Jung said, reach wisdom.
The only proper response to today’s crises is to understand all the forces impacting the results we create, the visible and the invisible, the light and the shadow. Effective managers will find a new way to understand and use all these forces to create magic. When we understand how to work them, we will make the next quantum leap in improving ourselves, our companies, and our society.
The successes of Apple, Whole Foods, Container Store and the many other companies thriving during these troubled times provide powerful lessons for us. In true scientific fashion, we will reveal and explore the forces, both driving and restraining, that explain the results we observe.
We will make visible the forces that remain hidden because of the limitations of our existing paradigm. Only then can we understand and unleash the hidden magic that lies within all of our organizations.
When a system goes into chaos as capitalism is doing today, when all the old rules no longer apply, we can experience it as a failure of the system. Viewed another way, however, it becomes the natural pattern of evolution.
Evolution, a force of nature that is at times dormant, asserts itself when a species or a system no longer fits its current environment. It asserts itself by creating a crisis that forces the system to adapt to the new environment or die. A similar call to adapt and change has brought us to a critical point in our evolutionary development. The choices we make now will determine the future of business and society.