Nearly two decades ago, MIT professor Peter Senge wrote a best-selling business book that introduced the notion of “learning organizations.” [The Fifth Discipline, New York: Doubleday, 1990]. “As he describes it, a learning organization is one in which ‘people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole together.’ Such organizations tend to be more flexible, adaptive, and productive—critical qualities in a time of rapid change.” [“Peter Senge’s Necessary Revolution,” BusinessWeek online, 11 June 2008] Almost every entrepreneur wants to create a company whose environment fosters innovation, its employees are self-motivated, and everyone understands and works toward a common goal. It’s not as easy as it sounds, but it is critical for success. Senge has now directed his attention and intellect toward broader collaborative enterprises and has published the results in his new book The Necessary Revolution: How Individuals and Organizations Are Working Together to Create a Sustainable World (New York: Doubleday, 2008). According to the BusinessWeek article:
“Senge and his co-authors grapple with the daunting environmental problems we face, and highlight innovative steps taken by individuals and corporations, often in partnership with global organizations such as Oxfam, toward a more sustainable world.”
The article, which is primarily excerpts from an interview with Senge, introduces Senge’s reflections by noting how his first book relates to the second.
“It may seem surprising that an expert in management and organizational change is focusing on sustainability, but there is a strong connection to Senge’s work. In his earlier book, he laid out an approach to management that combines systems thinking, collaboration, and team learning. … In The Necessary Revolution, Senge applies the same thinking to a system bigger and more complex than the organization: global society. The book is a call to arms, an argument to business leaders that they must rethink their approach to the environment or, as one executive told Senge, ‘we won’t have businesses worth being in in 20 years.’ But the authors don’t linger on the problems, focusing instead on the stories and insights of successful innovators, on creative solutions, and on practical approaches to meeting these challenges.”
As noted above, the bulk of the article consists of excerpts of an interview with Senge conducted by Jessie Scanlon in Senge’s office. The interview was focused on “the critical role that business will play in the coming revolution, the visionary leaders at companies such as Nike and Costco, and the future of the corporation.” The first question was why he titled the book The Necessary Revolution. Senge replied:
“I don’t really like the word ‘necessary’ because it makes it seem we have no choice. On the one hand, we don’t. There’s only so much water in the world. There’s only so much topsoil. There’s only one atmosphere, so there’s only so much CO2 that can be stuffed into the atmosphere. But real change occurs when people make choices. We’re not going to get out of the predicament that we’re in by a lot of teeny incremental things. It’s going to take bold ideas. The word ‘revolution’ was meant to be in the spirit of the Industrial Revolution. Not a political revolution because this absolutely has to be a nonpartisan issue. The future doesn’t belong to one party or another.”
I have been arguing for some time that in order for industrial age organizations to transform into information age globally integrated enterprises they are going to have to shed industrial age thinking and structures. Senge similarly argues that the many industrial age beliefs are going to have to be abandoned. He explains:
“One industrial age belief is that GDP or GNP is a measure of progress. I don’t care if you’re the President of China or the U.S., if your country doesn’t grow, you’re in trouble. But we all know that beyond a certain level of material need, further material acquisition doesn’t make people happier. So you have a society predicated on the idea that you have to keep growing materially, and yet nobody actually believes it.”
Scanlon also asked Senge if he had discovered any patterns about the kinds of people that are leading the charge in the “necessary revolution.” He indicated he had.
“The first is obvious: People have to be passionate. These are innovators in a fundamental sense, and innovators innovate because there is something that they are passionate about. Second, they all in different ways were able to step back and see a bigger picture. This is a huge challenge for people in companies, because so many companies are dominated by short-term perspective and because lots of people in key positions simply aren’t very good or don’t care very much about the bigger picture. Watch how the decisions are made. Are they thinking of the value of the company 10 years after they retire, or are they thinking about the value of their stock options this year? The other two things we focused on are the ability to connect with lots of people and collaborate across boundaries—you could call it high levels of relational intelligence. The final element that we saw again and again is a shift [in strategy] away from ‘we’ve got to stop doing x, y, or z’ and all the negativism that tends to pervade these issues.”
For those familiar with studies about innovation, all of this should sound familiar. Most innovators are motivated by ideas more than profits. Seeing their ideas implemented is what keeps their fires stoked — sometimes to the point of personal exhaustion. Senge’s point about seeing the big picture is also well known. Every good book on innovation or change management stresses the importance of vision and how to communicate that vision to others so that it permeates the entire organization. Sometimes that process is called alignment. Next Senge talks about connectivity and collaboration — generating what Frans Johansson calls the “Medici Effect.” Finally, he talks about attitude. Entrepreneurs and innovators are, by nature, optimistic people. It is that sense of optimism that attracts both capital and people to their causes. A company filled with skeptical or negative people will never find a vision large enough to position it properly for the future.
Scanlon asked Senge how else companies must change beyond being able to practice what Peter Schwartz calls “the art of the long view”? He responded:
“You go to any MBA program, and you will be taught the theory of the firm, that the purpose of the firm is the maximization of return on invested capital. I always thought this was a kind of lunacy. A well-managed business will have a high return on invested capital. But that’s a consequence. It’s not a way to manage a business. I remember a great quote of Peter Drucker. He said: ‘Profit for a company is like oxygen for a person. If you don’t have enough of it, you’re out of the game. But if you think your life is about breathing, you’re really missing something.’ The purpose [of an enterprise] is never making money. And I think a lot of the best innovators inside big companies, the reason they succeed is that they really understand the theory of their business.”
Although that sounds a bit confusing — i.e., understanding the differences between “economic theory of the firm” with the “theory of business” — Senge provides an example of what he means.
“Costco is about long-term, reliable, quality supply. It’s the key to the business. When the woman who got the Food Lab work embedded in Costco first started talking about the predicament of farmers, people were a little suspicious. They thought the predicament of farmers is a big problem in the world. That’s why there are charities, and that’s why we give money to charities. They couldn’t see the connection to their business until she got them to see that they wouldn’t have long-term quality supply if farming communities were destroyed. So she connected the issue to the theory of their business—but not the economic theory of the firm. Well-managed businesses could not possibly have gotten where they are believing this [economic theory of the firm] nonsense.”
The excerpted interview concludes with responses to three quick questions: Where are we in the revolution? What role can governments play? and, Are businesses inherently more global?
“[In answer to the first question,] we’re pretty much in the beginning. I can certainly say that from the 10 years since we organized this network, the people who joined were small bands of radicals in their companies, even if they were senior. But in virtually all of those companies, those people aren’t radicals anymore. There are wild cards obviously: major economic decline. Innovation requires resources to invest, and you can see many companies pulling back and going into an intense protective mode in a major extended period of financial distress. [As for the second question concerning governments,] if you are realistic about how our present society works, the economic clout—and a lot of the political clout, frankly—is in the business sector. And it’s the locus of innovation. But you’ve got to build these networks. I think Paul Hawken’s recent book, Blessed Unrest: How the Largest Movement in the World Came into Being and Why No One Saw It Coming (Viking Press, 2007) was on the money. The growth of the civil society is historic, and in some ways it’s a response to the inability of government to deal with these kind of issues. Governments, especially democratic ones, are short-term and nationalistic. These problems are long-term and global. [Finally, in response to the question about the global nature of businesses,] yes, they’re global, and because they’re global they’ve begun to build partnerships across their value chains. But I don’t think business is sufficient. We’re going to see a lot of partnerships, as companies partner with global organizations like the World Wildlife Fund and Oxfam and, eventually, with governments.”
In other posts, I’ve referred to some of the points Senge made — particularly the importance of connectivity. Be it connectivity within a globally integrated enterprise or between communities of practice (Senge’s last point). Almost every economist will tell you that national economic policies don’t carry the same weight they used to because so much of the economy is interconnected globally. Still, governments must play a role in helping develop solutions to global challenges. Trying to isolate one’s nation from such problems only exacerbates the situation and demonstrates a lack of leadership unworthy of the trust placed in governments by their citizens. Senge’s point, I believe, is that the connected citizenry of the world are not going to allow the inaction of governments to stop their attempts to address growing challenges. The fact that they feel empowered to do something is one of the characteristics of the information age.
Senge’s book, which is co-authored by Bryan Smith, Nina Kruschwitz, Joe Laur, and Sara Schley, is divided into seven parts: Endings, New Beginnings; The Future is Now; Getting Started; Seeing Systems; Collaborating Across Boundaries; From Problem Solving to Creating; and, The Future. Within those sections are intriguing sub-section titles like: New Thinking, New Choices; Never Doubt What One Person and a Small of Co-Conspirators Can Do; Risks and Opportunities: The Business Rationale for Sustainability; The Tragedy and Opportunity of the Commons; The Imperative to Collaborate; Innovation Inspired by Living Systems; and The Future of Us. The book should be a good read and I wouldn’t be a bit surprised if it doesn’t inspire a post or two in the future.