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Journal of Association Leadership

Living Strategy Revisited: A Sense-and-Respond Approach to Enterprise Management

Winter 2006 Journal cover Winter 2006

These two gifts, along with the continued encouragement of Arian Ward and the interest Living Strategy has generated among my colleagues, have served to sustain my confidence that we are indeed on to something. You’d like to hear that enhanced results are my encouragement. As measured by the yardsticks of revenue growth and surplus, I’d build an initially weak but now strengthening case. We’ve reversed a couple of years of revenue setbacks, and yes, we’ve improved the bottom line, but mostly through price increases and investment returns. I can’t say strategy was the reason for improved outcomes yet. But I’ll take progress on both measures (revenue and bottom line) as reasons to be optimistic. At the same time, I don’t want to undersell the magnitude of change Living Strategy has enabled in our organization. Transformation is the word we used to describe what we’ve set out to accomplish. How long does transformation take? I can’t find the definitive answer. A better question might be, how long do you get? And my favorite: where would you be had you not begun the transformation process?

We’ve learned a great deal over the past three years; some learnings are hard, others just take hard work. Here are a few of our most important lessons.

New Vision, New Structure
The Living Strategy gave us a new vision, and with new vision came a reorganization of our human resources to align with the needs of the vision. Since the vision invited significant change, the reorganization was significant. With Living Strategy came the invitation to ask the board, how should we be governed in the 21st century? And they responded with sweeping changes to streamline the organization and increase its agility. One of our key lessons in 10 years of anticipating the future is that the hardest thing to anticipate is the impact of the increasing rate of change. Any organization not planning and acting on the need to become more adaptive in response to changes in the environment is losing ground and quickly.

From Passive to Active
In days of old, a strategic planning committee spent two days developing a plan and delivered it to the board. The board, with little time and less capability, listened to a presentation of the strategy and generally approved the plan with little real understanding and even less ownership. It was a passive yet predictable world. If all you want from your board is an approval stamp, don’t start asking them important questions. If, on the other hand, you want to tap the wisdom of the board, then start asking them important questions and providing them time to delve into those questions. Don’t be surprised when their response is to dig in. There’s a culture change for you. And don’t be surprised when from the diversity of their talents and experience comes a diversity of opinion and even conflict. Are you ready to guide a leadership body through conflict? Is your objective consensus or evolutionary transformation? Because real transformation almost never comes through consensus; change is just too difficult and painful for some to embrace up front.13 It’s more like 20-60-20, where 20 percent lead the way, 20 percent are totally averse to change, and 60 percent are undecided. The key is when the undecided majority has engaged in sufficient informed dialogue and personal reflection to make the shift. It’s remarkable how quickly this can happen after hours of frustrating debate with seemingly insurmountable obstacles being thrown up. Then, in a matter of minutes, enough leaders have made the shift to propel us along our path into the future. Clearly, engaging in these important questions is the right thing to do, but don’t underestimate what you’ll learn with your leadership as you experience the shift in culture.

  • Why should we stake the future of our association on a single meeting of one group and its ability to foresee the future? 
  • Why do our approaches to strategy reflect the view that the future is relatively predictable when we all know that it is unpredictable?
  • Why does everyone follow pretty much the same old recipe for strategic planning when organizations and their environments are so different, especially across different industries and markets?
  • Why do we continue to use organizational models and approaches designed for mechanized factories when we are only too aware that associations and their environments are made up of freethinking people, not controllable machines?

Questions like these led the authors to seek out new approaches to setting the strategic direction of an organization like ASQ, the American Society for Quality. In 2002, we developed what we came to call Living Strategy. (Living Strategy is a service mark of Ward & Alexander Enterprises Inc. (dba Community Frontiers).) We first described Living Strategy in the winter 2004 issue of the Journal of Association Leadership: In short, Living Strategy is the dynamic story of the shared aspirations, strategic direction, and strategic outcomes of the association and the community it supports. It is emerging and continuously evolving from the collective knowledge of the community and from an expanding network of ongoing dialogue among all members of the community around the questions that matter most to them. This is all seamlessly woven into the fabric of the current organization through a continuous process of reflection and renewal.1 Living Strategy sets and dynamically adapts the strategic direction of the association to what is emerging in the organization’s environment. But any strategy is only as good as the ability of the organization to execute that strategy. So ASQ has been creating a complementary approach to managing the enterprise we call a sense-and-respond system. It links and aligns the association’s strategic, operational, and cultural environments as a whole enterprise system working together to ensure that the association fully realizes its Living Strategy. Just as Living Strategy is a knowledge–2 and whole systems–based3 approach to strategy, a sense-and-respond system is a knowledge– and whole systems–based approach to aligning and guiding the whole enterprise.

Strategic Planning Living Strategy

 Assumes you can predict the future and develop successful plans based on those predictions.

 Consists of strategic thinking, questions, dialogue, and stories; assumes you can’t predict the future, but you can collectively prepare for what might emerge and therefore, successfully respond to it.(a) ”The only kind of strategy that makes sense in the face of unpredictable change is a strategy to become adaptive . . . Planned responses do not work.”(b)
 

Rigidly scheduled and time-bound (“once every two years”; “looking three to five years into the future”); assumes that strategy needs to be newly developed, deployed, and implemented each time you do strategic planning.

 

“Strategy as inquiry”;(c) ongoing and dynamic, designed to change whenever change is indicated; produces more stable strategic direction (unless the environment changes drastically), because it only changes when it needs to, not when the calendar says it’s time to generate a new plan.

 

Planning is done by a select group of leaders and so-called experts in a rigid, hierarchical organization that uses strategy as a political tool to maintain the status quo or jockey for more power, prestige, and resources. After a few face-to-face interactions, a small group develops the final strategic plan. This select group uses a linear planning process, producing a static document that is meant to serve as the complete expression of the organization’s strategic direction.

 Living Strategy continuously emerges out of several ongoing, interwoven strands:

  • Individual reflection and work
  • Face-to-face and virtual interactions and collaborations
  • Dialogue across the whole community of organizational stakeholders It lives as compelling stories, images, questions, and expressions of the community’s aspirations, priorities, and inquiries into the future. It acknowledges that the organization and its environment form an inter connected system where strategy serves to focus and align the interactions of the whole system toward a future collectively envisioned and evolved by those stakeholders. Textual expressions of the strategy are considered to be snapshots of the organization’s strategy at a given point in time. Graphics such as those produced by a graphic recorder (d) illustrate and bring to life the textual expressions of strategy.
 

Like an all-knowing, all-powerful patriarch of old, the organization assumes responsibility for the future of its members and other stakeholders. Yet much of the organization’s strategy for dealing with the future is its planned response to external forces that it doesn’t understand and over which it has little control.  Democracy and free speech get lip service, at best, even in many organizations that call themselves member organizations.

 

“The law of requisite variety”: if a system is to adapt to its external environment, it must incorporate at least as much variety as its environment.(e) Living Strategy emerges from and supports the association’s community. This community includes anyone who may have a stake in the outcome of the association’s endeavors, even if they don’t yet know they have a stake (such as potential new members or markets). The diversity, intelligence, and passion of the entire community is tapped to creatively seize or make opportunities to co-create its own future, rather than waiting to let it happen to them.

 

Strategic planning is mainly an academic exercise with little relevance to the daily work of the association, as people must refer to a cheat sheet, wall chart, or Web page to even remember this year’s plan.

 

Everyone in the association lives strategy as a natural part of their work and relationship with the association. Each person has a deep understanding of the Living Strategy, in his or her own words but with the shared meaning. He or she keeps one foot in the present and one foot in the future.

a Michael Fradette and Steve Michaud, The Power of Corporate Kinetics: Create the Self-Adapting, Self-Renewing, Instant-Action Enterprise (New York: Deloitte & Touche Consulting Group LLC and Simon and Schuster, 1998).

b Stephan H. Haeckel, Adaptive Enterprise: Creating and Leading Sense-and-Respond Organizations (Boston: Harvard Business School Press, 1999).

c Juanita Brown of Whole Systems Associates, telephone interview with the authors, August 29, 2003.

d For information about graphic recording, visit the International Forum of Visual Practitioners site at www.visualpractitioner.org.

e W. R. Ashby, An Introduction to Cybernetics, Part Two: Variety (London: Methuen, 1956).

Developing a Sense-and-Respond System at the American Society for Quality

The American Society for Quality (ASQ) is headquartered in Milwaukee, Wisconsin. Its vision is “to make quality a global priority, organizational imperative, and personal ethic, and in doing so, become the community of choice for everyone who seeks quality concepts, techniques, and tools to improve themselves and their world.” ASQ is a large, successful, 403(b) professional association founded in 1946, with 100,000 members, 200 employees, and a $40 million budget.

This article is an account of the progress ASQ has made in developing a sense-and-respond system to complement its Living Strategy, followed by Paul Borawski’s reflections on what he has learned since he first introduced Living Strategy to ASQ in 2002.4 The concepts and approaches behind ASQ’s Living Strategy and sense-and-respond system are presented in the sidebars, where they have been contrasted with more traditional approaches. The sidebars also provide you with a set of principles you can use to apply these concepts to your own organization, as you can’t be expected to follow the same approach used in an organizational context that may be quite different from your own.

ASQ Chart

Elements of ASQ’s Sense-and-Respond System
What follows is a description of each element of the sense-and-respond system that ASQ has developed so far.

Sense-and-Assess System
We have developed an ASQ sense-and-assess system, and enterprise-wide deployment is in progress. The purpose of this system is to act as the front end to the sense-and-respond system, providing continuous input about conditions, changes, and trends that may require ASQ action, assessing this input against defined criteria, and triggering the appropriate response, if any. Other parts of the sense-and-respond system then provide these responses, which include the following: rapid operational response to an immediate need; tactical review of the current business plan and essential activities; strategic dialogue about a complex issue requiring possible changes to Living Strategy or an initiative to develop a new strategic capability needed to effectively respond to the threat or opportunity; gathering more detailed intelligence about the issue; or doing nothing at all.

This isn’t a completely new idea, since ASQ and most other enterprises have already been doing this to some extent. But this is a more conscious, integrated process that can be relied on to provide more consistent, timely responses to the things that need our attention and to filter out the less important distractions that would otherwise divert our scarce time, energy, and resources away from the areas most in line with our Living Strategy. We have chosen to use the more organic term “sense” instead of other, more traditional terms, such as information or intelligence gathering or research, to help develop an organizational mindset and culture that views the society as an organic living system.

The sensing part of this system takes many forms, as vital knowledge about the internal and external environments of the organization can come from almost any source. One key source of knowledge about what may possibly emerge in the future that could be of strategic importance to the organization is a periodic futures study. ASQ is in the midst of its fourth futures study, exploring how the association’s possible futures may have changed since the last study in 2002.5 The goal of the futures study isn’t to predict the future; that’s impossible in our complex, volatile environment. Instead, it is aimed at enhancing the organization’s anticipatory, responsive, and adaptive skills.

By identifying the forces shaping the future, developing a set of scenarios about how those forces might play out, and then engaging in strategic dialogues around the implications of these for quality and ASQ, the organization and all its stakeholders can mentally rehearse how they might respond in different situations that could emerge. Although it is unlikely that any of these scenarios will happen exactly as described, it is the process of talking about how we can work together to respond and adapt to opportunities, challenges, and changing conditions that enables us to be better prepared when things do happen and change.

But that is just one form of sensing. Sensing can take many other forms, encompassing anything that could provide potentially valuable information about our internal or external environment. Other forms of sensing being used at ASQ that we are trying to synthesize into a whole-systems view 6 include the following:

  • Traditional research methods such as customer or member surveys, market segmentation studies, and environmental scans
  • Information gathered in the normal conduct of operations that could provide valuable insights to others in the society around current and emerging thinking and behaviors of key stakeholders, such as from customer service activities, Web site use, online discussion boards, and e-mail and other correspondence with stakeholders
  • More community-centered methods such as feedback from stakeholder dialogues, special community events such as the member leader summit held in October 2005, and serendipitous sensing that can come from anyone in our ASQ community about events, opportunities, trends, disruptive technologies, challenges, and so on, that could significantly affect the society
  • Building relationships with the individual and organizational leaders in the quality field, key partners and suppliers, especially disruptive technology vendors, and other trendsetters and early adopters 
  • Ongoing benchmarking of what other organizations are thinking, planning, and doing in areas of interest to ASQ, in our industry as well as outside of it, in all types of organizations: public, private, nonprofit, educational

Strategic Dialogues
The heart of Living Strategy is strategic dialogues among all stakeholders who could influence or be affected by the organization’s strategic direction. An exciting development in this area has been the more than 40 strategic dialogues we have already held at ASQ and are continuing to hold with members and other stakeholders about Living Strategy and the future of quality and ASQ. These dialogues have provided not only an effective channel for communicating Living Strategy firsthand to our members and an effective, interesting way for members to interact with leaders and each other but also an important information source in the sense-and-assess system. Strategic dialogues, usually in the form of cafes,7 are probably the most important part of sensing, because they provide the deepest insights and therefore the most knowledge about the quality community’s deepest needs, cares, and concerns. The results of these dialogues were fed back into the sense-and-assess system, where they resulted in quick responses to immediate needs expressed or in reflection and dialogue on the deeper long-term issues raised. ASQ board members led the way in facilitating these dialogues and then proceeded to cascade them to other leaders. The cascade approach, in which a new dialogue facilitator works with someone who has already done one, aided by a stakeholder dialogue kit consisting of templates and examples, rapidly spread these dialogues throughout the association.

A similar kit-and-cascade approach to spreading these dialogues to stakeholders outside of the traditional ASQ membership areas, such as health care, education, government, and sustainability, is being developed and piloted. Engaging stakeholders in these new markets has proved challenging, as there is much less incentive for professionals outside the quality field to participate in dialogue about the future of quality. But we have been gradually learning how to engage them by using more creative promotional approaches and by attaching the dialogues to some other venue that serves as the primary attractor. Although it often ends up being the highlight of the entire event for participants once they have experienced it, most people still haven’t come to appreciate meaningful dialogue enough for it to serve as the main attractor to an event.

Even though ASQ has had the same difficulty in getting large numbers of people to interact online that so many other organizations have experienced, these stories and initial dialogues have been the catalysts of some of the most important changes in ASQ. This is because the online environment provides the most transparent form of communication and encourages that same level oftransparency in the organization. The lesson here is the essence of sense and respond: exactly how or where the sensing and response take place isn’t what’s important. What is important is that they are happening, that they involve the whole stakeholder community, and that they are propelling the organization in the right direction.

Living Strategy dialogues among the board and other member and staff leaders also continued to grow in richness and effectiveness as they became a key part of the assessment process. Rather than trying to cover every aspect of Living Strategy each year, the scan-and-assessment process has helped to direct these dialogues and the board of directors’ actions at the strategic issues most critical to the future of ASQ and quality, such as developing new models for membership and governance that make the society more adaptable, responsive, transparent, and focused on member value. Of course, if something in the environment changes dramatically – if the futures study reveals critical new forces significantly reshaping the future of quality, for instance – then the entire strategy can be reexamined.

These strategic dialogues are currently spreading beyond the board to include all ASQ member leaders (what ASQ calls volunteer leaders). A series of member leader engagements, featuring a variety of knowledge sharing, dialogue, and collaboration approaches, is designed to foster a trust-based, society-wide member leader community, to fully understand members’ value expectations and needs, and to identify and exceed these expectations and needs.8

This is an excellent example of how a Living Strategy approach focuses the strategic time, attention, and resources of the organization on those things the higher-level strategic dialogue has identified as most critical to the future of the organization. The focused strategic dialogue and resultant actions then spread throughout the association. In fact, stakeholder dialogues have spread well outside the intended circle to global venues where the sensing has been valuable and the cost a fraction of what traditional research would have cost. Organically, these stakeholder dialogues are taking a life of their own and are being conducted under ASQ guidance around the world, feeding back their knowledge to inform the system.

Organizational Alignment
ASQ has been working to align the whole organization around its Living Strategy and to link the process and measures we use to assess strategic progress with other organizational measurement systems. We have been using whole-systems tools to provide a synthesized view of the whole enterprise, showing how the different parts of it connect and interact to deploy the Living Strategy.

From a living systems perspective, the ultimate form of organizational alignment is shared understanding. The goal is to enable all stakeholders to gain some form of whole-systems understanding of the enterprise and how they fit into that bigger picture. This understanding is a form of what is often referred to as a shared mental model,9 and it enables people to work together far more effectively and collaboratively than when they simply follow the rules without any knowledge of why (that is, how their work contributes to the strategic success of the enterprise) and how what they do affects the other parts of the organization and vice versa.

Like any organization, ASQ goes through an annual budgeting and business planning process to plan and allocate money for our operations and essential activities in the next fiscal year. But we recognize that this tactical process needs to evolve to become more flexible and responsive to rapidly changing environmental conditions, just as Living Strategy has created this capability at the strategic level. We’ve taken the first step toward this goal by integrating our existing business planning process with the elements of the sense-and-respond system described here to provide a whole enterprise management system. Assessing performance is also an important aspect of enterprise management. So ASQ has linked its balanced scorecard, used to measure organizational performance, to the strategic success indicators used to assess strategic progress.

 Traditional Approach to Enterprise Management: Plan, Control, Change
 

The strategic planning mindset is that if you plan everything well enough you can then control everything and everyone in the organization according to the plan.

 

Strategic planning is a mechanistic approach that relies on traditional management processes and information systems to find out what people need to know about the environment, make centralized decisions about what they should do with this business intelligence, and then inform and manage them to implement these decisions. Traditional research methods are used for intelligence gathering and environmental scanning.

 

Measurements give us the ability to plan and control. If something is within our acceptable measurement range, it’s working fine; if not, either we have to make people improve their performance or we have to change the plan.

 Sense-and-Respond System: Understand, Influence, Evolve
 The organization is an organic whole system of interconnected, interdependent individuals, informal groups, and formal organizations whose behavior we can’t predict and control, but we can understand them well enough that we can influence their behavior. By understanding their mindsets, needs, and behaviors, we can try to design a whole system based on our understanding that is flexible and adaptable enough to accommodate the changes and uncertainties inherent in living systems, and then continuously evolve the design based on our observations of the system in action.

 The nervous system of the organization is an interconnected, knowledge and trust-based communication system consisting of the following elements:

  • Sensing: supplements traditional information gathering by tapping into the collective intelligence of all stakeholders within the system—their existing knowledge and their real-time awareness of significant events, ideas, trends, and needs in the environment. The intelligence they provide is far richer than that provided by traditional research surveys and other intelligence gathering methods, as it doesn’t have a built-in delay or filter, and they can provide the context around the data, such as the stories and thought processes behind their answers, which turns the data into meaningful information.
  • Sense making: a triage process that enables the enterprise to determine the best course of action to take for a given sensory input. Not another mechanistic gatekeeper that impedes rapid decision making and response, but an organic process driven by a set of simple rules and roles that builds the intelligence into the whole system that enables this decision making, what turns the information into useful knowledge (f) and uncovers the rich underlying patterns and themes that are not evident when we look at independent data streams.
  • Response: the organizational capability to quickly respond to sensory inputs that warrant an organizational response, at the point in the organization where the response will be most effective. This means that this part of the organization must already have access to the knowledge and the necessary authority and responsibility to respond appropriately, what turns the knowledge into effective action. This is the essence of the agile organization (g) and the intelligent organization.(h)
 As with Living Strategy, ongoing dialogue forms the heart of this living system. This is because rich, meaningful dialogue tends to create trust-based relationships and shared knowledge, two of the most critical factors in the success of any organization. Uninformed dialogue rarely produces much value for anyone, so the dialogue needs to be linked to the enterprise’s information and measurement systems and to decision-making elements of the sense-and-respond system.i Measurement is about informing this dialogue to make it more meaningful and resultant decisions more effective, not about making sure everyone makes their numbers. Measurement also helps us understand the system better so we can continue to evolve its design and improve the likelihood of getting what we want from our actions by clarifying what in the system drives what outcomes. The sense-and-respond system uses systems thinking and other whole-systems toolsj to help understand and guide the enterprise. But systems tools can be applied just as mechanically as any other tool. For that reason, any use of a tool should be accompanied by meaningful dialogue both before it’s used, to provide the context for what we’d like to learn from using the tool, and after it’s used, to gain deeper, shared insights around the questions that prompted its use. This cycling between dialogue and focused, tool-supported action is characteristic of an effective sense-and-respond system.

 


f Also known as the Hierarchy of Awareness, or the DIKW model, as first identified by Manfred Kochen in Information for Action: From Knowledge to Wisdom (Academic Press, 1975) and expanded upon by Russell Ackoff and others.

g Agility is “the ability of an organization to thrive in a continuously changing, unpredictable business environment,” according to Paradigm Shift International, www.parshift.com/docs/aermodA0.htm, October 4, 2005.

h Pinchot & Company, www.pinchot.com/MainPages/BooksArticles/IntelligentOrganization/ TheIntellOrg.html, October 4, 2005.

i Stephan H. Haeckel, Adaptive Enterprise: Creating and Leading Sense-and-Respond Organizations (Boston: Harvard Business School Press, 1999).

j For a good set of systems thinking and whole-systems tools, visit the Pegasus Communications site at www.pegasuscom.com.

Cultural Evolution
All these changes to ASQ’s strategic and tactical processes would be impossible without a culture that supports this new way of viewing the world and responding to it. Effective leadership and communication form the heart of this culture. ASQ leaders took a hard look at themselves and asked some probing questions about who we are and who we need to be to support the Living Strategy and the living organization we are creating to deploy it. Both staff and member leaders have been exploring these questions and working together to develop the shared understanding and individual and collective skills needed to successfully lead ASQ to fully realizing its vision.

An interesting and valuable byproduct of regularly engaging in meaningful dialogue throughout the organization is that cultural evolution has been occurring naturally. Deep, rich dialogue is the single greatest tool for cultural evolution, so this is no surprise. You can’t regularly engage people in deeply meaningful dialogue without beginning to break down the barriers and establish the trust, respect, and communication and leadership skills that are the core of any healthy culture.

But we don’t intend merely to let this happen as a byproduct of our Living Strategy efforts; we want to accelerate and focus it on the areas of greatest need. We are already well on our way to evolving the culture of the board of directors and the office of the president, but we still have hundreds of staff, thousands of volunteers, a hundred thousand members, and countless members of the global quality community who could benefit from a similar evolutionary transformation. The next steps in this journey, recently initiated, are to address the member leader and staff cultures.

Quality BoK and Community Focus and Expansion
Our strategic systems modeling revealed that the quality body of knowledge (QBoK)10 and community were the core drivers of ASQ’s strategies and the keys to our success, forming the heart of ASQ’s enterprise whole system as well as the heart of our value offering to our members and customers. This modeling didn’t change ASQ’s strategic direction, as the QBoK and community were already prominently featured in ASQ’s strategies. But it did emphasize the urgency of advancing related projects, as well as the need in all strategic decision making to give them the same level of attention that financial implications are given. There’s also a big boost in confidence every time a different model or tool affirms what we already believe to be true. When several different investigations suggest the same strategy, we increase our confidence that we’re heading in the right direction and reduce our risk of potential strategic failure.

The complex living-systems concepts and approaches we’ve been discussing are also being applied to the deployment of the strategies concerning the quality BoK and the quality community. For example, ASQ is in the third phase of the evolution of a new membership model called the living community model (LCM). The LCM is designed to provide choice and flexibility and to open the doors of membership to anyone interested in the practice or profession of quality. It is also designed to advance ASQ's vision as the “community of choice for everyone who seeks quality technology, concepts, or tools to improve themselves and their world.”11 The living systems concepts of choice, flexibility, and openness apply to the business aspects of the model, such as membership types and benefits, as well as the ways members can organize themselves and interact with the society.

ASQ is also committed to evolving from common association constituent binaries—us versus them, national versus local, volunteers versus staff—to a society-wide community of people who respect and trust each other and work together toward a common vision and purpose,centered around our Living Strategy and driven by collective inquiry into the most compelling questions facing the society and the quality profession and movement. Living Strategy dialogues have planted the seeds for this evolution. More comprehensive efforts are now being launched, starting with a member leader summit held in October 2005 that brought together more than 200 member leaders and staff to explore how we can become a society-wide community committed to working together to enhance member value.12

Complex living-systems concepts and approaches are also helping ASQ access and develop QBoK. Although not fully implemented yet, an enterprise-wide approach to the full QBoK lifecycle has been initiated and has already produced significant enhancements to the accessibility of the existing QBoK. The strategic progress that has been demonstrated since a Living Strategy approach was first introduced at ASQ in mid-2002 has prompted the thought leaders in ASQ and the quality profession to look beyond ASQ to the whole field of quality. They are now thinking, talking, and researching about how the concepts and tools underlying Living Strategy and sense-and-respond can be applied to the QBoK. They see this as perhaps the next big thing for quality, to supplement and evolve other enterprise-wide quality approaches such as total quality management (TQM).


Paul’s Reflections on the Journey

A first-person account by Paul Borawski, CAE, executive director and chief strategic officer (CSO) of the American Society for Quality

You’ve read Arian’s account of the theory and rationale for organizations as living systems, and if you’re like me when I first spoke with Arian, your head is swimming. It sounds complicated, but it really isn’t after you get the hang of the systems-thinking jargon and the living (organic) metaphors. I didn’t really understand how thoroughly programmed I was to mechanistic thinking, but I was trained as an engineer. But from the first conversation with Arian, I knew there was something appealing in his views. Now, living-systems-speak comes easier to me. And don’t be put off by the complexity of what you’ve read. In practice, it’s not that complex and it doesn’t need to get done all at once. Perhaps most personally rewarding for me, I’ve learned a lot along the way, as I’m going to relate to you here.

Through the late 1980s and early 1990s everything ASQ tried worked. Our greatest challenge was managing growth. In the late 1990s the growth ebbed, and by the turn of the century membership, revenue, and surplus started sliding. It was a risky day when I said to the board of 32, “Do you think our future can be built on doing what we currently do better? Or do we need to find new things to do?” (I already knew the answer. Someone told me long ago not to ask boards questions like that unless you knew the answer.) If we didn’t change I could predict the annual erosion. Change, it seemed, wasn’t an option but an imperative. But how do you get a large, old organization to change and change rapidly enough to keep up with a rapidly changing world? And you can’t change just for the sake of change. So how do you change in a way that ensures that your organization is heading in the right direction with that change?

I would never voluntarily go back to traditional models of setting strategic direction. About a year into Living Strategy, I attended a workshop on dynamics of strategy, given by Richard Karash. Richard started the workshop with a short account of the history of strategy. He said strategic planning as we think of it began with the work of Kenneth Andrews in 1971. Remember SWOT? Since then there have been four evolutions, all moving toward a systems approach to dealing with increasing complexity and uncertainty. When did vision get popularized as a part of strategy? Just 15 years ago. Thank you, Peter Senge. This history of strategy was a gift. It provided a context for me to understand Living Strategy and helped me understand why the old models just didn’t work anymore.

The second gift was provided by Adam Kahane, author of Solving Tough Problems. Adam provided a powerful tool that opened my mind to the power of dialogue and the reasons why only through dialogue can the future unfold from the present.

These two gifts, along with the continued encouragement of Arian Ward and the interest Living Strategy has generated among my colleagues, have served to sustain my confidence that we are indeed on to something. You’d like to hear that enhanced results are my encouragement. As measured by the yardsticks of revenue growth and surplus, I’d build an initially weak but now strengthening case. We’ve reversed a couple of years of revenue setbacks, and yes, we’ve improved the bottom line, but mostly through price increases and investment returns. I can’t say strategy was the reason for improved outcomes yet. But I’ll take progress on both measures (revenue and bottom line) as reasons to be optimistic. At the same time, I don’t want to undersell the magnitude of change Living Strategy has enabled in our organization. Transformation is the word we used to describe what we’ve set out to accomplish. How long does transformation take? I can’t find the definitive answer. A better question might be, how long do you get? And my favorite: where would you be had you not begun the transformation process?

We’ve learned a great deal over the past three years; some learnings are hard, others just take hard work. Here are a few of our most important lessons.

New Vision, New Structure
The Living Strategy gave us a new vision, and with new vision came a reorganization of our human resources to align with the needs of the vision. Since the vision invited significant change, the reorganization was significant. With Living Strategy came the invitation to ask the board, how should we be governed in the 21st century? And they responded with sweeping changes to streamline the organization and increase its agility. One of our key lessons in 10 years of anticipating the future is that the hardest thing to anticipate is the impact of the increasing rate of change. Any organization not planning and acting on the need to become more adaptive in response to changes in the environment is losing ground and quickly.

From Passive to Active
In days of old, a strategic planning committee spent two days developing a plan and delivered it to the board. The board, with little time and less capability, listened to a presentation of the strategy and generally approved the plan with little real understanding and even less ownership. It was a passive yet predictable world. If all you want from your board is an approval stamp, don’t start asking them important questions. If, on the other hand, you want to tap the wisdom of the board, then start asking them important questions and providing them time to delve into those questions. Don’t be surprised when their response is to dig in. There’s a culture change for you. And don’t be surprised when from the diversity of their talents and experience comes a diversity of opinion and even conflict. Are you ready to guide a leadership body through conflict? Is your objective consensus or evolutionary transformation? Because real transformation almost never comes through consensus; change is just too difficult and painful for some to embrace up front.13 It’s more like 20-60-20, where 20 percent lead the way, 20 percent are totally averse to change, and 60 percent are undecided. The key is when the undecided majority has engaged in sufficient informed dialogue and personal reflection to make the shift. It’s remarkable how quickly this can happen after hours of frustrating debate with seemingly insurmountable obstacles being thrown up. Then, in a matter of minutes, enough leaders have made the shift to propel us along our path into the future. Clearly, engaging in these important questions is the right thing to do, but don’t underestimate what you’ll learn with your leadership as you experience the shift in culture.

Another major question is, what behaviors will surface from that unwavering 20 percent who oppose change after an important decision they so steadfastly opposed is made? Don’t be surprised if less than 100 percent of your leaders have the ability to work well, and to their satisfaction, in environments that ask for more than rubber-stamping decisions. If you take the struggles of a few as a sign of trouble you’ll be missing the shift toward greater involvement, greater exposure, and greater accountability. There’s far less room to sit on the sideline. It’s not for everybody. But you’ll be rewarded by wisdom you knew was there that simply wasn’t called upon before. You’ll be rewarded with creativity that was never tapped. Just make sure you’re ready to use it.

Who Gets It, and Who Doesn’t?
As transformation gets under way and your excitement about the prospect of reaching for your vision grows, brace yourself for the wall. The wall isn’t your customers and members; by and large they will have applauded your efforts. The wall is the resistance of what we call member leaders, the thousands of good people who serve the organization on the grassroots level, the folks who get the work done. I was surprised when movement reached them and they pushed back. I hope we’ve now finally learned enough about their needs to handle it better next time. Maybe this is all Change 101, but it caught me by surprise.

The learning for me, and it’s an important learning, is that change is not universally embraced, even when it’s overdue. Those affected directly by the change will want to be involved. Plan for it, and provide more time for it than will probably feel comfortable. Even when you’ve provided for broad scale involvement, don’t assume you’ll get 100 percent buy-in. Remember anger is a response to change. My best advisors told me anger would be unavoidable and it was. Don’t be surprised when anger surfaces, but don’t assume you’ve failed because of it. Sensing anger may just suggest change is occurring. No anger, no change.

From Process to Systems
One of my significant learnings of the past three years is the emergence of systems thinking into my view of the world. Most of us are taught in concepts and processes and that’s great for isolating ideas for learning. But in the real world, concepts and processes do not stand in isolation.

The concepts and processes we learn interact with other concepts and processes; there are interdependencies that create both expected and unexpected consequences. The world is complex. Systems thinking offers tools, albeit young tools, to begin to work with this complexity. Mechanistic models, which treat business as a collection of process machines, give way to more organic, living models. More science is needed, rather than less; it’s just a science unlike any we’ve used before. We’ve created systems views of our organization and of our strategy. From these systems views we can consider whether the system sustains itself or whether it falls apart. From these systems views we can differentiate the drivers of change from the outcomes of change. Money, revenue, for instance, is an outcome. A robust body of knowledge is a driver that leads to money. This knowledge is not self-evident until you do the modeling. With models you can begin to test the consequence of changes to strategy and changes to processes. Because the models are simplified versions of complex systems, they will not be 100 percent predictive, but 30 percent is better than nothing. And from 30 percent you can make improvements that might yield predictive validity of 50 percent. With systems views you can identify which organizational measures are the most important, and these discoveries inform your organizational scorecard. The system view uncovers leading indicators of success, which are much more powerful than the lagging indicators most of us rely on.

I recently had the benefit of discussing leadership with the retired CEO of a large company. We were discussing how CEOs make decisions. My assumption was that all CEOs must be masters of systems thinking, whether they know it or not. How else could they grapple with the enormity and complexity of the enterprises they lead? But this CEO told me that in his experience most CEOs don’t think in systems terms. Systems are complex, and most of us assume they are difficult to understand. Simpler models prevail, more intuition than informed knowledge. I’m not knocking CEOs; I have great admiration for their abilities. I’m just projecting that systems thinking will soon make its way to their skill sets. The accelerating rate of change, the reality of complex global markets, and the unstoppable opportunities of science and technology will overwhelm us all unless we develop new tools. Systems thinking is on the horizon and we’re learning as we go.

What Wins: Strategy or Momentum?
I talk to some association leaders who don’t believe in strategic planning or strategic plans. I always wonder how they succeed. I also hear of others who have robust strategic plans that fill large binders but then gather dust on a shelf. So I’d agree with anyone that concludes plans are useless unless acted on. We are also in agreement that transformational change is not easily managed. It’s a bit analogous to changing drivers at high speeds. You don’t have the luxury of stopping; you probably don’t have the luxury of even slowing down. It’s reinvention on the run and it’s challenging. Keep all the balls in the air, and change at the same time. Find the capacity within. And, when business as usual requires attention, guess what suffers: strategy. But that doesn’t mean the transformation has to stop, since cultural transformation can continue in our everyday work, even if strategic transformation has to wait. So we need to create enough momentum for change in our day-to-day operations to sustain us in those times.

My Advice, Three Years In
Get some agreement with your leadership that strategic redirection will require resources to succeed. How fast you change is a matter of how much resource is provided for the change. Sure, some resource can come from substitution: if you publish a magazine every month, for instance, you can substitute magazine content of a strategic nature without creating work. But other resources do not come from substitution. If the addition of new resource isn’t likely, it seems time and attention can only come from one of two sources: stop doing something you’re currently doing (which is never easy), or be prepared for things to slow down as attention is shared between a longer list of items, and for things to be done less well than they were before. I call this a productivity lag. From the onset I thought we’d experience lag. I even told my bosses to expect a lag. But I did not quantify what the lag might be and how long it could last. That was a tactical mistake on my part.

Be prepared to learn and adapt. As the change starts, be watchful of the early signs and marketplace response. Don’t expect all your changes to work, and be ready to adapt when they don’t. I heard somewhere in CEO folklore that the CEO of one of the world’s largest banks, when asked about the pressure to make correct decisions all the time, said he didn’t worry about making right decisions all the time. In fact, he assumed that 50 percent of his decisions would be wrong. He wanted only to make more good decisions than his competitors. It’s not about being right all the time; it’s just as much about creating a rate of change that’s commensurate with your marketplace needs. Old models of due diligence and caution need to be replaced with agreements that a .500 average is as good in business as it is in baseball.

There can be no solace in inaction. The thing I worry about most is people’s fear of committing to change and their desire to hang on to what’s always worked even though long trends show the eventual negative outcome of staying the course. Boards and other leaders need to understand that there’s as much accountability in not changing as there is in changing. Because the world is changing, inaction cannot be a viable choice. We must change, but the questions remain: in what direction, to serve whose vision, and to do what good? Those are questions for the board. Without answers you don’t have direction.

Someone has to push, relentlessly. As the change process begins to unfold you’ll find it’s a bit like rolling a large rock uphill. Without someone’s unrelenting, untiring efforts to roll the rock and place some stakes in the ground so it doesn’t roll back, you won’t make any progress. Change is not the natural tendency of organizations; entropy is. So don’t be surprised when someone has to provide energy to keep the change but there will be days of frustration when you wonder where the cadre is. Provide plenty of time for dialogues that ensure that your cadre shares your understanding of the whats and the whys. Then start pushing before you’re overcome by events.


How Can You Apply These Concepts to Your Organization?
We realize that ASQ isn’t characteristic of most associations. It’s a large professional society whose fundamental focus, namely, quality, involves relatively complex concepts and tools along the same lines as Living Strategy and the sense-and-respond system. Therefore, it wouldn’t make sense for other associations to use the same approach ASQ used. So we have extracted from this approach some core principles that can be applied to an organization of any type or size. Just as ASQ has tailored its approach to fit its needs and culture, you can tailor your strategy development and deployment to meet your needs.

Living Strategy and the sense-and-respond system are about following these principles, not about following a specific recipe or methodology. You can customize your approach to fit your needs and culture any way you wish, as long as you follow these principles. You need to do just enough to gain a shared understanding of what the future holds and what kind of future you want for your association and the community and cause it supports, as well as a reasonable approximation of how best to navigate the association toward that desired future, assuming you can make midcourse corrections as you learn more about what you’re facing.

1. Get the board of directors thinking and talking strategically. Engage them in deep, meaningful dialogue,14 not in shallow discussions or political debates. Focus on the real meaning of the content, not on the format or process. World cafes are an excellent tool to help you do this because they are based on many of the same living-systems principles we are relating here.15

2. Invite diversity and inclusion, but be prepared for what might emerge when you do. The best way to do this is to engage your key stakeholders. Focus on listening to them, not telling them. Then harvest the wisdom that emerges, such as the most important questions, issues, and opportunities for the association to be paying attention to. Again, world cafes are an excellent forum for engaging your stakeholders around the questions that really matter to them.16

3. Focus the time and attention of the board and the key executive officers and staff members on these important strategic questions. You don’t have to wait to meet face-to-face to do this. You can continue your strategic dialogue between board meetings with e-mail and conference calls.

4. Balance stability with flexibility. Abandon the calendar as the driver of your strategy. Instead, let significant events and information become the triggers of your strategic dialogue and changes in direction. You don’t have to change your strategy every time you review it, but you need to be flexible enough to change it when your environment indicates it’s time to do so.

5. Think and work with your association as a whole system. There are many systems tools to help you do this,17 but which tool you use isn’t what’s important. What is important is that you are somehow able to create and engage around a shared understanding of the whole association, especially how its different elements relate to each other and their environment. You don’t have to do this all at once or even get it perfect, since there is no such thing as perfect in a living system. You can start with small, simple steps such as drawing and talking about how different elements of the association relate to each other, and then develop this whole-systems view gradually through a series of similar dialogues with other stakeholders.

6. Develop an organizational culture that supports this new way of thinking and behaving. Introducing dialogue as one of your primary means of communication is a good start in this direction. To help develop a living-systems mindset, begin to introduce a living systems-based language to replace the mechanistic language organizations have been using since the industrial revolution. Examples of more organic terms that can be substituted for some of the more widely used mechanistic terms:

 Use  Instead of
 Elements, aspects   Components, parts
 Sensing   Information gathering
 System, cycle  Process
 Sense making  Information processing, analysis
 Principles, guidelines  Policies, procedures
 People, communities  Human resources, constituencies
 Direction setting   Planning
 Leading, coaching  Managing
 Guiding, navigating  Measuring, controlling
 Cultural evolution  Change management

  

7. Accept the reality that we can’t predict the future, and plan and control the association accordingly using simple linear processes and hierarchical structures. In the nonlinear, dynamic system or environment in which we all exist, we can only anticipate what is most likely to happen through continuous feedback, inquiry, and learning and thus be prepared to respond collaboratively, quickly, and intelligently to whatever emerges from the system. This is often more of a personal evolution than an organizational one, as we all have an inherent desire to control the environment around us. Giving up this illusion of control and embracing the unlimited possibilities of the unknown can be freeing, as we come to feel more comfortable with the increasing levels of uncertainty around us. Even better, it can give us more control over this uncertainty, as we now have the power to serendipitously recognize and act on opportunities that we might have ignored previously since they didn’t fit our plans. We can co-create our own future, rather than letting it happen to us.

Endnotes
1 Paul Borawski and Arian Ward, “Living Strategy: Guiding Your Association through the Rugged Landscape Ahead,” Journal of Association Leadership 2 (Winter 2004): 6-25. To read the article on the Web, visit www.centeronline.org, go to the knowledge resources page, choose the journal from a list of resources, and then select the article by issue and title. For information about obtaining copies, write to journal@centeronline.org.

2 Knowledge is “the human capacity (both potential and actual) to take effective action in varied and uncertain situations.” This definition comes from the Mountain Quest Institute’s Web site at www.mountainquestinstitute.com/definitions.htm, October 4, 2005.

3 For a concise overview of whole-systems concepts, visit a Web site called World Transformation at www.worldtrans.org, and go to the whole systems page, October 4, 2005.

4 Borawski and Ward, “Living Strategy”

5 Peter Schwartz, The Art of the Long View: Planning for the Future in an Uncertain World (New York: Currency, 1996); and Kees van der Heijden, Scenarios: The Art of Strategic Conversation, 2nd ed. (Hoboken: Wiley, 2005).

6 William E. Fulmer, Shaping the Adaptive Organization: Landscapes, Learning, and Leadership in Volatile Times (New York: American Management Association, 2000).

7 For information on world cafes, see www.theworldcafe.com and Juanita Brown with David Isaacs and the World Cafe Community, The World Cafe: Shaping Our Futures through Conversations That Matter (San Francisco: Berrett-Koehler, 2005). See also Kim Porto and Janet McAllen, “The Cafe Model: Engaging Associations in Meaningful Conversation,” The Journal of Association Leadership 2 (Fall 2004): 20-37.

8 For an example of one such member leader engagement, the ASQ Member Value Summit, visit www.asqdetroit.org/documents/member_value.pdf.

9 James L. Ritchie-Dunham and Hal T. Rabbino, Managing from Clarity: Identifying, Aligning, and Leveraging Strategic Resources (New York: Wiley, 2001).

10 A “compilation of generally accepted knowledge on the subject of quality. . . . It serves to organize the sum of information (both practiced and academic) on defining, achieving, measuring, and controlling quality . . . and includes quality definitions, concepts, technologies, and tools, both general and specific.” From a 2004 internal ASQ paper, “Quality Body of Knowledge,” by Dennis Arter and Bill Tony.

11 American Society for Quality, www.asq.org/mediaroom/ news/2004/03/20040323lcm_qa.html, October 4, 2005.

12 For an in-depth account of the ASQ Member Value Summit, visit www.asqdetroit.org/documents/member_value.pdf.

13 Everett M. Rogers, Diffusion of Innovations, 4th ed. (Free Press, 1995).

14 For more information on dialogue (as opposed to discussion or debate), visit www.co-intelligence.org/P-dialogue.html.

15For information on world cafes, see www.theworldcafe.com and Juanita Brown with David Isaacs and the World Cafe Community, The World Cafe: Shaping Our Futures through Conversations That Matter (San Francisco: Berrett-Koehler, 2005). See also Kim Porto and Janet McAllen, “The Cafe Model: Engaging Associations in Meaningful Conversation,” The Journal of Association Leadership 2 (Fall 2004): 20-37.

16 For examples, visit the Living Strategy element of the ASQ site at www.asq.org/strategy. "Getting There: How a Leading Association Charts Its Strategic Path through the Future" relates how these dialogues unfolded, while the links shown under “Insights from the Living Strategy Stakeholder Dialogues” are good examples of the wisdom that has been harvested from these dialogues.

17For a good set of systems-thinking learning aids and tools, visit the Pegasus Communications site at www.pegasuscom.com.

                         
 

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More Articles From Winter 2006 Issue

 From the Editors

 Making a Strong Case for Going Global: A Framework for Analysis

 Living Strategy Revisited: A Sense-and-Respond Approach to Enterprise Management

 Pursuing a Global Mission by Building Organizational Capacity: A Conversation with Carol Bellamy

 The Case of a Diversifying– and Shrinking– Membership

 

 


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