Book Review #1: Senge

For this assignment write a seven page (excluding title page and reference sheet) double-spaced book review and critique of the Senge text. Please be sure to summarize the main concepts (4 pages), outline the relevance of the text to modern business strategy (1 1/2 pages), and present a personal description as to how you will use the concepts in your career (last 1 1/2 pages). This is an individual assignment that shall be completed by each student.

You should use in-text APA citations. All other APA formatting guidelines should be followed (title page, headers, bibliography page, headers, page numbers, etc). Please make this deliverable look extraordinarily professional. Do not use your own styling techniques, triple spacing, before/after spacing, etc. Adhere to the guidelines from these instructions and the syllabus.

Your grade will be based on these criteria:

• Summary of content
• Analysis of relevance to modern business
• Application to your career
• Intellectual merit
• Quality of writing
• Use of APA and formatting

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In the long run, the only sustainable
source of competitive advantage is
your organization’s ability to learn
faster than its competition.
Founder and Director of the Center
for Organizational Learning at MIT’s
Sloan School of Management, which
boasts such members as Intel, Ford,
Herman Miller, and Harley Davidson,
author Peter M. Senge has found a means
of creating a “learning organization.” In
THE FIFTH D ISC IPL IN E , he draws
the blueprints for an organization where
people expand their capacity to create
the results they truly desire, where new
and expansive patterns of thinking are
nurtured, where collective aspiration is set
free, and where people are continually
learning how to learn together. THE
FIFTH DISCIPLINE fuses these features
into a coherent body of theory and
practice, making the whole of an
organization more effective than the sum
of its parts.
Company after company, from Intel to
AT&T to Procter & Gamble to Coopers
and Lybrand, have adopted the
disciplines of the learning organization to
rid themselves of the learning
“disabilities”
C O N T I N U E D O N B A C K F L A P

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THE
FIFTH
DISCIPLINE
THE ART AND
PRACTICE OF
THE LEARNING
ORGANIZATION
P e t e r M. S e n g e
C U R R E N C Y
D O U B I E D A Y
New York London Toronto Sydney Auckland

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TO DIANE
For more information on Currency Doubleday’s new ideas on business, please write:
Currency Doubleday
1540 Broadway—Eighteenth Floor
New York, New York 10036
A CURRENCY PAPERBACK
PUBLISHED BY DOUBLEDAY
a division of Bantam Doubleday Dell Publishing Group, Inc. 1540
Broadway, New York, New York 10036
CURRENCY and DOUBLEDAY
are trademarks of Doubleday,
a division of Bantam Doubleday Dell
Publishing Group, Inc.
The Fifth Discipline was originally published in hardcover by Currency Doubleday, a division of
Bantam Doubleday Dell Publishing Group, Inc., in 1990.
BOOK DESIGN BY RICHARD ORIOLO
Permission to reprint Navajo sand painting given by the
Wheelwright Museum of the American Indian, Santa Fe,
New Mexico, Photography by Kay V. Weist.
The Library of Congress has cataloged the Currency hardcover edition as follows:
Senge, Peter M. The fifth discipline: the art and practice of
the learning organization/Peter M. Senge. — 1st ed.
p. cm.
“A Currency book”—T.p. verso. 1. Organizational effectiveness.
2. Work groups. I. Title. II. Title: Learning organization.
HD58.9.S46 1994
658.4-dc20 90-2991
CIP
ISBN 0-385-26095-4 Copyright ©
1990 by Peter M. Senge
Introduction to the Paperback Edition and Some Tips for First-Time Readers copyright © 1994
by Peter M. Senge
All Rights Reserved Printed in
the United States of America

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C O N T E N T S
Introduction to the Paperback Edition
Some Tips for First-Time Readers
ix
xxi

P A R T I
H O W O U R A C T I O N S C R E A T E O U R
R E A L I T Y . . . A N D H O W W E C A N
C H A N G E I T
1 “Give Me a Lever Long Enough … and Single-Handed I Can Move
the World” 3
2 Does Your Organization Have a Learning Disability? 17
3 Prisoners of the System, or Prisoners of Our Own Thinking? 27

P A R T I I
T H E F I F T H D I S C I P L I N E : T H E
C O R N E R S T O N E O F T H E L E A R N I N G
O R G A N I Z A T I O N
4 The Laws of the Fifth Discipline
5 A Shift of Mind
6 Nature’s Templates: Identifying the Patterns
That Control Events
7 The Principle of Leverage
8 The Art of Seeing the Forest and the Trees
57
68
93
114
127

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P A R T I I I
T H E C O R E D I S C I P L I N E S : B U I L D I N G
T H E L E A R N I N G O R G A N I Z A T I O N
9 Personal Mastery 139
10 Mental Models 174
11 Shared Vision 205
12 Team Learning 233

P A R T I V
P R O T O T Y P E S
13 Openness 273
14 Localness 287
15 A Manager’s Time 302
16 Ending the War Between Work and Family 306
17 Microworlds: The Technology of the Learning Organization 313
18 The Leader’s New Work 339
P A R T V
C O D A
19 A Sixth Discipline?
20 Rewriting the Code
21 The Indivisible Whole
Appendix 1. The Learning Disciplines
Appendix 2. Systems Archetypes
Notes
Acknowledgments
Index
363
364
368
373
378
391
411
414

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P A R T I
How Our Actions
Create Our Reality..
and How We Can
Change It

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1
“GIVE ME A LEVER
LONG ENOUGH.. . A N D
SINGLE-HANDED I CAN
MOVE THE WORLD”

From a very early age, we are taught to break apart problems, to fragment the world.
This apparently makes complex tasks and subjects more manageable, but we pay a
hidden, enormous price. We can no longer see the consequences of our actions; we lose
our intrinsic sense of connection to a larger whole. When we then try to “see the big
picture,” we try to reassemble the fragments in our minds, to list and organize all the
pieces. But, as physicist David Bohm says, the task is futile—similar to trying to
reassemble the fragments of a broken mirror to see a true reflection. Thus, after a while
we give up trying to see the whole altogether.
The tools and ideas presented in this book are for destroying the illusion that the
world is created of separate, unrelated forces. When we give up this illusion—we can
then build “learning organizations,” organizations where people continually expand
their capacity to create the results they truly desire, where new and expansive patterns
of thinking are nurtured, where collective aspiration is set free, and where people are
continually learning how to learn together.
As Fortune magazine recently said, “Forget your tired old ideas about leadership. The
most successful corporation of the 1990s will be something called a learning
organization.” “The ability to learn faster than your competitors,” said Arie De Geus,
head of planning for Royal Dutch/Shell, “may be the only sustainable competitive
advantage.” As the world becomes more interconnected and business becomes more
complex and dynamic, work must become more “learningful.” It is no longer sufficient
to have one person learning for the organization, a Ford or a Sloan or a Watson. It’s
just not possible any longer to “figure it out” from the top, and have everyone else
following the orders of the “grand strategist.” The organizations that will truly excel in
the future will be the organizations that discover how to tap people’s commitment and
capacity to learn at all levels in an organization.
Learning organizations are possible because, deep down, we are all learners. No one
has to teach an infant to learn. In fact, no one has to teach infants anything. They are
intrinsically inquisitive, masterful learners who learn to walk, speak, and pretty much
run their households all on their own. Learning organizations are possible because not
only is it our nature to learn but we love to learn. Most of us at one time or another
have been part of a great “team,” a group of people who functioned together in an
extraordinary way— who trusted one another, who complemented each others’
strengths and compensated for each others’ limitations, who had common goals that
were larger than individual goals, and who produced extraordinary results. I have met
many people who have experienced this sort of profound teamwork—in sports, or in
the performing arts, or in business. Many say that they have spent much of their life
looking for that experience again. What they experienced was a learning organization.

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The team that became great didn’t start off great—it learned how to produce
extraordinary results.
One could argue that the entire global business community is learning to learn
together, becoming a learning community. Whereas once many industries were
dominated by a single, undisputed leader —one IBM, one Kodak, one Procter &
Gamble, one Xerox—today industries, especially in manufacturing, have dozens of
excellent companies. American and European corporations are pulled forward by the
example of the Japanese; the Japanese, in turn, are pulled by the Koreans and
Europeans. Dramatic improvements take place in corporations in Italy, Australia,
Singapore—and quickly become influential around the world.
There is also another, in some ways deeper, movement toward learning organizations,
part of the evolution of industrial society. Material affluence for the majority has
gradually shifted people’s orientation toward work—from what Daniel Yankelovich
called an “instrumental” view of work, where work was a means to an end, to a more
“sacred” view, where people seek the “intrinsic” benefits of work.1 “Our grandfathers
worked six days a week to earn what most of us now earn by Tuesday afternoon,” says
Bill O’Brien, CEO of Hanover Insurance. “The ferment in management will continue
until we build organizations that are more consistent with man’s higher aspirations
beyond food, shelter and belonging.”
Moreover, many who share these values are now in leadership positions. I find a
growing number of organizational leaders who, while still a minority, feel they are part
of a profound evolution in the nature of work as a social institution. “Why can’t we do
good works at work?” asked Edward Simon, president of Herman Miller, recently.
“Business is the only institution that has a chance, as far as I can see, to fundamentally
improve the injustice that exists in the world. But first, we will have to move through
the barriers that are keeping us from being truly vision-led and capable of learning.”
Perhaps the most salient reason for building learning organizations is that we are only
now starting to understand the capabilities such organizations must possess. For a long
time, efforts to build learning organizations were like groping in the dark until the
skills, areas of knowledge, and paths for development of such organizations became
known. What fundamentally will distinguish learning organizations from traditional
authoritarian “controlling organizations” will be the mastery of certain basic disciplines.
That is why the “disciplines of the learning organization” are vital.
DISCIPLINES OF THE LEARNING ORGANIZATION
On a cold, clear morning in December 1903, at Kitty Hawk, North Carolina, the
fragile aircraft of Wilbur and Orville Wright proved that powered flight was possible.
Thus was the airplane invented; but it would take more than thirty years before
commercial aviation could serve the general public.
Engineers say that a new idea has been “invented” when it is proven to work in the
laboratory. The idea becomes an “innovation” only when it can be replicated reliably on
a meaningful scale at practical costs. If the idea is sufficiently important, such as the
telephone, the digital computer, or commercial aircraft, it is called a “basic innovation,”
and it creates a new industry or transforms an existing industry. In these terms, learning
organizations have been invented, but they have not yet been innovated.
In engineering, when an idea moves from an invention to an innovation, diverse
“component technologies” come together. Emerging from isolated developments in
separate fields of research, these components gradually form an “ensemble of
technologies that are critical to each others’ success. Until this ensemble forms, the
idea, though possible in the laboratory, does not achieve its potential in practice.2
The Wright Brothers proved that powered flight was possible, but the McDonnell
Douglas DC-3, introduced in 1935, ushered in the era of commercial air travel. The
DC-3 was the first plane that supported itself economically as well as aerodynamically.
During those intervening thirty years (a typical time period for incubating basic

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innovations), myriad experiments with commercial flight had failed. Like early
experiments with learning organizations, the early planes were not reliable and cost
effective on an appropriate scale.
The DC-3, for the first time, brought together five critical component technologies
that formed a successful ensemble. They were: the variable-pitch propeller, retractable
landing gear, a type of lightweight molded body construction called “monocque,” radial
air-cooled engine, and wing flaps. To succeed, the DC-3 needed all five; four were not
enough. One year earlier, the Boeing 247 was introduced with all of them except wing
flaps. Lacking wing flaps, Boeing’s engineers found that the plane was unstable on take-
off and landing and had to downsize the engine.
Today, I believe, five new “component technologies” are gradually converging to
innovate learning organizations. Though developed separately, each will, I believe,
prove critical to the others’ success, just as occurs with any ensemble. Each provides a
vital dimension in building organizations that can truly “learn,” that can continually
enhance their capacity to realize their highest aspirations:
Systems Thinking. A cloud masses, the sky darkens, leaves twist upward, and we
know that it will rain. We also know that after the storm, the runoff will feed into
groundwater miles away, and the sky will grow clear by tomorrow. All these events are
distant in time and space, and yet they are all connected within the same pattern. Each
has an influence on the rest, an influence that is usually hidden from view. You can
only understand the system of a rainstorm by contemplating the whole, not any
individual part of the pattern.
Business and other human endeavors are also systems. They, too, are bound by
invisible fabrics of interrelated actions, which often take years to fully play out their
effects on each other. Since we are part of that lacework ourselves, it’s doubly hard to
see the whole pattern of change. Instead, we tend to focus on snapshots of isolated
parts of the system, and wonder why our deepest problems never seem to get solved.
Systems thinking is a conceptual framework, a body of knowledge and tools that has
been developed over the past fifty years, to make the full patterns clearer, and to help
us see how to change them effectively.
Though the tools are new, the underlying worldview is extremely intuitive;
experiments with young children show that they learn systems thinking very quickly.
Personal Mastery. Mastery might suggest gaining dominance over people or things.
But mastery can also mean a special level of proficiency. A master craftsman doesn’t
dominate pottery or weaving. People with a high level of personal mastery are able to
consistently realize the results that matter most deeply to them— in effect, they
approach their life as an artist would approach a work of art. They do that by becoming
committed to their own lifelong learning.
Personal mastery is the discipline of continually clarifying and deepening our
personal vision, of focusing our energies, of developing patience, and of seeing reality
objectively. As such, it is an essential cornerstone of the learning organization—the
learning organization’s spiritual foundation. An organization’s commitment to and
capacity for learning can be no greater than that of its members. The roots of this
discipline lie in both Eastern and Western spiritual traditions, and in secular traditions
as well.
But surprisingly few organizations encourage the growth of their people in this
manner. This results in vast untapped resources: “People enter business as bright, well-
educated, high-energy people, full of energy and desire to make a difference,” says
Hanover’s O’Brien. “By the time they are 30, a few are on the “fast track” and the rest
‘put in their time’ to do what matters to them on the weekend. They lose the
commitment, the sense of mission, and the excitement with which they started their
careers. We get damn little of their energy and almost none of their spirit.”
And surprisingly few adults work to rigorously develop their own personal mastery.
When you ask most adults what they want from their lives, they often talk first about

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what they’d like to get rid of: “I’d like my mother-in-law to move out,” they say, or “I’d
like my back problems to clear up.” The discipline of personal mastery, by contrast,
starts with clarifying the things that really matter to us, of living our lives in the service
of our highest aspirations.
Here, I am most interested in the connections between personal learning and
organizational learning, in the reciprocal commitments between individual and
organization, and in the special spirit of an enterprise made up of learners.
Mental Models. “Mental models” are deeply ingrained assumptions, generalizations,
or even pictures or images that influence how we understand the world and how we
take action. Very often, we are not consciously aware of our mental models or the
effects they have on our behavior. For example, we may notice that a co-worker dresses
elegantly, and say to ourselves, “She’s a country club person.” About someone who
dresses shabbily, we may feel, “He doesn’t care about what others think.” Mental
models of what can or cannot be done in different management settings are no less
deeply entrenched. Many insights into new markets or outmoded organizational
practices fail to get put into practice because they conflict with powerful, tacit mental
models.
Royal Dutch/Shell, one of the first large organizations to understand the advantages
of accelerating organizational learning came to this realization when they discovered
how pervasive was the influence of hidden mental models, especially those that become
widely shared. Shell’s extraordinary success in managing through the dramatic changes
and unpredictability of the world oil business in the 1970s and 1980s came in large
measure from learning how to surface and challenge manager’s mental models. (In the
early 1970s Shell was the weakest of the big seven oil companies; by the late 1980s it
was the strongest.) Arie de Geus, Shell’s recently retired Coordinator of Group
Planning, says that continuous adaptation and growth in a changing business
environment depends on “institutional learning, which is the process whereby
management teams change their shared mental models of the company, their markets,
and their competitors. For this reason, we think of planning as learning and of
corporate planning as institutional learning.”3
The discipline of working with mental models starts with turning the mirror inward;
learning to unearth our internal pictures of the world, to bring them to the surface and
hold them rigorously to scrutiny. It also includes the ability to carry on “learningful”
conversations that balance inquiry and advocacy, where people expose their own
thinking effectively and make that thinking open to the influence of others.
Building Shared Vision. If any one idea about leadership has inspired organizations
for thousands of years, it’s the capacity to hold a shared picture of the future we seek to
create. One is hard pressed to think of any organization that has sustained some
measure of greatness in the absence of goals, values, and missions that become deeply
shared throughout the organization. IBM had “service”; Polaroid had instant
photography; Ford had public transportation for the masses and Apple had computing
power for the masses. Though radically different in content and kind, all these
organizations managed to bind people together around a common identity and sense of
destiny.
When there is a genuine vision (as opposed to the all-too-familiar “vision
statement”), people excel and learn, not because they are told to, but because they want
to. But many leaders have personal visions that never get translated into shared visions
that galvanize an organization. All too often, a company’s shared vision has revolved
around the charisma of a leader, or around a crisis that galvanizes everyone temporarily.
But, given a choice, most people opt for pursuing a lofty goal, not only in times of
crisis but at all times. What has been lacking is a discipline for translating individual
vision into shared vision—not a “cookbook” but a set of principles and guiding
practices.

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The practice of shared vision involves the skills of unearthing shared “pictures of the
future” that foster genuine commitment and enrollment rather than compliance. In
mastering this discipline, leaders learn the counterproductiveness of trying to dictate a
vision, no matter how heartfelt.
Team Learning. How can a team of committed managers with individual IQs above
120 have a collective IQ of 63? The discipline of team learning confronts this paradox.
We know that teams can learn; in sports, in the performing arts, in science, and even,
occasionally, in business, there are striking examples where the intelligence of the team
exceeds the intelligence of the individuals in the team, and where teams develop
extraordinary capacities for coordinated action. When teams are truly learning, not only
are they producing extraordinary results but the individual members are growing more
rapidly than could have occurred otherwise.
The discipline of team learning starts with “dialogue,” the capacity of members of a
team to suspend assumptions and enter into a genuine “thinking together.” To the
Greeks dia-logos meant a free-flowing of meaning through a group, allowing the group
to discover insights not attainable individually. Interestingly, the practice of dialogue
has been preserved in many “primitive” cultures, such as that of the American Indian,
but it has been almost completely lost to modern society. Today, the principles and
practices of dialogue are being rediscovered and put into a contemporary context.
(Dialogue differs from the more common “discussion,” which has its roots with
“percussion” and “concussion,” literally a heaving of ideas back and forth in a winner-
takes-all competition.)
The discipline of dialogue also involves learning how to recognize the patterns of
interaction in teams that undermine learning. The patterns of defensiveness are often
deeply engrained in how a team operates. If unrecognized, they undermine learning. If
recognized and surfaced creatively, they can actually accelerate learning.
Team learning is vital because teams, not individuals, are the fundamental learning
unit in modern organizations. This where “the rubber meets the road”; unless teams
can learn, the organization cannot learn.
If a learning organization were an engineering innovation, such as the airplane or the
personal computer, the components would be called “technologies.” For an innovation
in human behavior, the components need to be seen as disciplines. By “discipline,” I do
not mean an “enforced order” or “means of punishment,” but a body of theory and
technique that must be studied and mastered to be put into practice. A discipline is a
developmental path for acquiring certain skills or competencies. As with any discipline,
from playing the piano to electrical engineering, some people have an innate “gift,” but
anyone can develop proficiency through practice.
To practice a discipline is to be a lifelong learner. You “never arrive”; you spend your
life mastering disciplines. You can never say, “We are a learning organization,” any
more than you can say, “I am an enlightened person.” The more you learn, the more
acutely aware you become of your ignorance. Thus, a corporation cannot be “excellent”
in the sense of having arrived at a permanent excellence; it is always in the state of
practicing the disciplines of learning, of becoming better or worse.
That organizations can benefit from disciplines is not a totally new idea. After all,
management disciplines such as accounting have been around for a long time. But the
five learning disciplines differ from more familiar management disciplines in that they
are “personal” disciplines. Each has to do with how we think, what we truly want, and
how we interact and learn with one another. In this sense, they are more like artistic
disciplines than traditional management disciplines. Moreover, while accounting is good
for “keeping score,” we have never approached the subtler tasks of building
organizations, of enhancing their capabilities for innovation and creativity, of crafting
strategy and designing policy and structure through assimilating new disciplines.
Perhaps this is why, all too often, great organizations are fleeting, enjoying their
moment in the sun, then passing quietly back to the ranks of the mediocre.

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Practicing a discipline is different from emulating “a model.” AH too often, new
management innovations are described in terms of the “best practices” of so-called
leading firms. While interesting, I believe such descriptions can often do more harm
than good, leading to piecemeal copying and playing catch-up. I do not believe great
organizations have ever been built by trying to emulate another, any more than
individual greatness is achieved by trying to copy another “great person.”
When the five component technologies converged to create the DC-3 the commercial
airline industry began. But the DC-3 was not the end of the process. Rather, it was the
precursor of a new industry. Similarly, as the five component learning disciplines
converge they will not create the learning organization but rather a new wave of
experimentation and advancement.
THE FIFTH DISCIPLINE
It is vital that the five disciplines develop as an ensemble. This is challenging because
it is much harder to integrate new tools than simply apply them separately. But the
payoffs are immense.
This is why systems thinking is the fifth discipline. It is the discipline that integrates
the disciplines, fusing them into a coherent body of theory and practice. It keeps them
from being separate gimmicks or the latest organization change fads. Without a
systemic orientation, there is no motivation to look at how the disciplines interrelate.
By enhancing each of the other disciplines, it continually reminds us that the whole can
exceed the sum of its parts.
For example, vision without systems thinking ends up painting lovely pictures of the
future with no deep understanding of the forces that must be mastered to move from
here to there. This is one of the reasons why many firms that have jumped on the
“vision bandwagon” in recent years have found that lofty vision alone fails to turn
around a firm’s fortunes. Without systems thinking, the seed of vision falls on harsh
soil. If nonsystemic thinking predominates, the first condition for nurturing vision is
not met: a genuine belief that we can make our vision real in the future. We may say
“We can achieve our vision” (most American managers are conditioned to this belief),
but our tacit view of current reality as a set of conditions created by somebody else
betrays us.
But systems thinking also needs the disciplines of building shared vision, mental
models, team learning, and personal mastery to realize its potential. Building shared
vision fosters a commitment to the long term. Mental models focus on the openness
needed to unearth shortcomings in our present ways of seeing the world. Team learning
develops the skills of groups of people to look for the larger picture that lies beyond
individual perspectives. And personal mastery fosters the personal motivation to
continually learn how our actions affect our world. Without personal mastery, people
are so steeped in the reactive mindset (“someone/something else is creating my
problems”) that they are deeply threatened by the systems perspective.
Lastly, systems thinking makes understandable the subtlest aspect of the learning
organization—the new way individuals perceive themselves and their world. At the
heart of a learning organization is a shift of mind—from seeing ourselves as separate
from the world to connected to the world, from seeing problems as caused by someone
or something “out there” to seeing how our own actions create the problems we
experience. A learning organization is a place where people are continually discovering
how they create their reality. And how they can change it. As Archimedes has said,
“Give me a lever long enough . . . and single-handed I can move the world.”
METANOIA—A SHIFT OF MIND
When you ask people about what it is like being part of a great team, what is most
striking is the meaningfulness of the experience. People talk about being part of
something larger than themselves, of being connected, of being generative. It becomes

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quite clear that, for many, their experiences as part of truly great teams stand out as
singular periods of life lived to the fullest. Some spend the rest of their lives looking for
ways to recapture that spirit.
The most accurate word in Western culture to describe what happens in a learning
organization is one that hasn’t had much currency for the past several hundred years. It
is a word we have used in our work with organizations for some ten years, but we always
caution them, and ourselves, to use it sparingly in public. The word is “metanoia” and it means a
shift of mind. The word has a rich history. For the Greeks, it meant a fundamental shift or
change, or more literally transcendence (“meta”—above or beyond, as in “metaphysics”) of mind
(“noia,” from the root “nous,” of mind). In the early (Gnostic) Christian tradition, it took on a
special meaning of awakening shared intuition and direct knowing of the highest, of God.
“Metanoia” was probably the key term of such early Christians as John the Baptist. In the
Catholic corpus the word metanoia was eventually translated as “repent.”
To grasp the meaning of “metanoia” is to grasp the deeper meaning of “learning,” for learning
also involves a fundamental shift or movement of mind. The problem with talking about
“learning organizations” is that the “learning” has lost its central meaning in contemporary usage.
Most people’s eyes glaze over if you talk to them about “learning” or “learning organizations.”
Little wonder—for, in everyday use, learning has come to be synonymous with “taking in
information.” “Yes, I learned all about that at the course yesterday.” Yet, taking in information
is only distantly related to real learning. It would be nonsensical to say, “I just read a great book
about bicycle riding—I’ve now learned that.”
Real learning gets to the heart of what it means to be human. Through learning we
re-create ourselves. Through learning we become able to do something we never were
able to do. Through learning we reperceive the world and our relationship to it.
Through learning we extend our capacity to create, to be part of the generative process
of life. There is within each of us a deep hunger for this type of learning. It is, as Bill
O’Brien of Hanover Insurance says, “as fundamental to human beings as the sex drive.”
This, then, is the basic meaning of a “learning organization”—an organization that is
continually expanding its capacity to create its future. For such an organization, it is not
enough merely to survive. “Survival learning” or what is more often termed “adaptive
learning” is important—indeed it is necessary. But for a learning organization,
“adaptive learning” must be joined by “generative learning,” learning that enhances our
capacity to create.
A few brave organizational pioneers are pointing the way, but the territory of
building learning organizations is still largely unexplored. It is my fondest hope that this
book can accelerate that exploration.
PUTTING THE IDEAS INTO PRACTICE
I take no credit for inventing the five major disciplines of this book. The five
disciplines described below represent the experimentation, research, writing, and
invention of hundreds of people. But I have worked with all of the disciplines for years,
refining ideas about them, collaborating on research, and introducing them to
organizations throughout the world.
When I entered graduate school at the Massachusetts Institute of Technology in
1970, I was already convinced that most of the problems faced by humankind
concerned our inability to grasp and manage the increasingly complex systems of our
world. Little has happened since to change my view. Today, the arms race, the
environmental crisis, the international drug trade, the stagnation in the Third World,
and the persisting U.S. budget and trade deficits all attest to a world where problems
are becoming increasingly complex and interconnected. From the start at MIT I was
drawn to the work of Jay Forrester, a computer pioneer who had shifted fields to
develop what he called “system dynamics.” Jay maintained that the causes of many
pressing public issues, from urban decay to global ecological threat, lay in the very well-
intentioned policies designed to alleviate them. These problems were “actually systems”

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that lured policymakers into interventions that focused on obvious symptoms not
underlying causes, which produced short-term benefit but long-term malaise, and
fostered the need for still more symptomatic interventions.
As I began my doctoral work, I had little interest in business management. I felt that
the solutions to the Big Issues lay in the public sector. But I began to meet business
leaders who came to visit our MIT group to learn about systems thinking. These were
thoughtful people, deeply aware of the inadequacies of prevailing ways of managing.
They were engaged in building new types of organizations —decentralized,
nonhierarchical organizations dedicated to the well-being and growth of employees as
well as to success. Some had crafted radical corporate philosophies based on core
values of freedom and responsibility. Others had developed innovative organization
designs. All shared a commitment and a capacity to innovate that was lacking in the
public sector. Gradually, I came to realize why business is the locus of innovation in an
open society. Despite whatever hold past thinking may have on the business mind,
business has a freedom to experiment missing in the public sector and, often, in
nonprofit organizations. It also has a clear “bottom line,” so that experiments can be
evaluated, at least in principle, by objective criteria.
By why were they interested in systems thinking? Too often, the most daring
organizational experiments were foundering. Local autonomy produced business
decisions that were disastrous for the organization as a whole. “Team building”
exercises sent colleagues white-water rafting together, but when they returned home
they still disagreed fundamentally about business problems. Companies pulled together
during crises, and then lost all their inspiration when business improved. Organizations
which started out as booming successes, with the best possible intentions toward
customers and employees, found themselves trapped in downward spirals that got
worse the harder they tried to fix them.
Then, we all believed that the tools of systems thinking could make a difference in
these companies. As I worked with different companies, I came to see why systems
thinking was not enough by itself. It needed a new type of management practitioner to
really make the most of it. At that time, in the mid-1970s, there was a nascent sense of
what such a management practitioner could be. But it had not yet crystallized. It is
crystallizing now with leaders of our MIT group: William O’Brien of Hanover
Insurance; Edward Simon from Herman Miller, and Ray Stata, CEO of Analog
Devices. All three of these men are involved in innovative, influential companies. All
three have been involved in our research program for several years, along with leaders
from Apple, Ford, Polaroid, Royal Dutch/ Shell, and Trammell Crow.
For eleven years I have also been involved in developing and conducting Innovation
Associates’ Leadership and Mastery workshops, which have introduced people from all
walks of life to the fifth discipline ideas that have grown out of our work at MIT,
combined with IA’s path-breaking work on building shared vision and personal
mastery. Over four thousand managers have attended. We started out with a particular
focus on corporate senior executives, but soon found that the basic disciplines such as
systems thinking, personal mastery, and shared vision were relevant for teachers, public
administrators and elected officials, students, and parents. All were in leadership
positions of importance. All were in “organizations” that had still untapped potential
for creating their future. All felt that to tap that potential required developing their own
capacities, that is, learning.
So, this book is for the learners, especially those of us interested in the art and
practice of collective learning.
For managers, this book should help in identifying the specific practices, skills, and
disciplines that can make building learning organizations less of an occult art (though
an art nonetheless).
For parents, this book should help in letting our children be our teachers, as well as
we theirs—for they have much to teach us about learning as a way of life.

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For citizens, the dialogue about why contemporary organizations are not especially
good learners and about what is required to build learning organizations reveals some
of the tools needed by communities and societies if they are to become more adept
learners.

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2
DOES YOUR
ORGANIZATION
HAVE A LEARNING
DISABILITY?

Few large corporations live even half as long as a person. In 1983, a Royal
Dutch/Shell survey found that one third of the firms in the Fortune “500” in 1970 had
vanished.1 Shell estimated that the average lifetime of the largest industrial enterprises
is less than forty years, roughly half the lifetime of a human being! The chances are
fifty-fifty that readers of this book will see their present firm disappear during their
working career.
In most companies that fail, there is abundant evidence in advance that the firm is in
trouble. This evidence goes unheeded, however, even when individual managers are
aware of it. The organization as a whole cannot recognize impending threats,
understand the implications of those threats, or come up with alternatives.
Perhaps under the laws of “survival of the fittest,” this continual death of firms is
fine for society. Painful though it may be for the employees and owners, it is simply a
turnover of the economic soil, redistributing the resources of production to new
companies and new cultures. But what if the high corporate mortality rate is only a
symptom of deeper problems that afflict all companies, not just the ones that die? What
if even the most successful companies are poor learners—they survive but never live up
to their potential? What if, in light of what organizations could be, “excellence” is
actually “mediocrity”?
It is no accident that most organizations learn poorly. The way they are designed and
managed, the way people’s jobs are defined, and, most importantly, the way we have all
been taught to think and interact (not only in organizations but more broadly) create
fundamental learning disabilities. These disabilities operate despite the best efforts of
bright, committed people. Often the harder they try to solve problems, the worse the
results. What learning does occur takes place despite these learning disabilities—for
they pervade all organizations to some degree.
Learning disabilities are tragic in children, especially when they go undetected. They
are no less tragic in organizations, where they also go largely undetected. The first step
in curing them is to begin to identify the seven learning disabilities:
1. “I AM MY POSITION”
We are trained to be loyal to our jobs—so much so that we confuse them with our
own identities. When a large American steel company began closing plants in the early
1980s, it offered to train the displaced steelworkers for new jobs. But the training never
“took”; the workers drifted into unemployment and odd jobs instead. Psychologists

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came in to find out why, and found the steelworkers suffering from acute identity
crises. “How could I do anything else?” asked the workers. “I am a lathe operator.”
When asked what they do for a living, most people describe the tasks they perform
every day, not the purpose of the greater enterprise in which they take part. Most see
themselves within a “system” over which they have little or no influence. They “do
their job,” put in their time, and try to cope with the forces outside of their control.
Consequently, they tend to see their responsibilities as limited to the boundaries of
their position.
Recently, managers from a Detroit auto maker told me of stripping down a Japanese
import to understand why the Japanese were able to achieve extraordinary precision
and reliability at lower cost on a particular assembly process. They found the same
standard type of bolt used three times on the engine block. Each time it mounted a
different type of component. On the American car, the same assembly required three
different bolts, which required three different wrenches and three different inventories
of bolts—making the car much slower and more costly to assemble. Why did the
Americans use three separate bolts? Because the design organization in Detroit had
three groups of engineers, each responsible for “their component only.” The Japanese
had one designer responsible for the entire engine mounting, and probably much more.
The irony is that each of the three groups of American engineers considered their work
successful because their bolt and assembly worked just fine.
When people in organizations focus only on their position, they have little sense of
responsibility for the results produced when all positions interact. Moreover, when
results are disappointing, it can be very difficult to know why. All you can do is assume
that “someone screwed up.”
2. “THE ENEMY IS OUT THERE”
A friend once told the story of a boy he coached in Little League, who after dropping
three fly balls in right field, threw down his glove and marched into the dugout. “No
one can catch a ball in that darn field,” he said.
There is in each of us a propensity to find someone or something outside ourselves
to blame when things go wrong. Some organizations elevate this propensity to a
commandment: “Thou shall always find an external agent to blame.” Marketing blames
manufacturing: “The reason we keep missing sales targets is that our quality is not
competitive.” Manufacturing blames engineering. Engineering blames marketing: “If
they’d only quit screwing up our designs and let us design the products we are capable
of, we’d be an industry leader.”
The “enemy is out there” syndrome is actually a by-product of “I am my position,”
and the nonsystemic ways of looking at the world that it fosters. When we focus only
on our position, we do not see how our own actions extend beyond the boundary of
that position. When those actions have consequences that come back to hurt us, we
misperceive these new problems as externally caused. Like the person being chased by
his own shadow, we cannot seem to shake them.
The “Enemy Is Out There” syndrome is not limited to assigning blame within the
organization. During its last years of operation, the once highly successful People
Express Airlines slashed prices, boosted marketing, and bought Frontier Airlines—all
in a frantic attempt to fight back against the perceived cause of its demise: increasingly
aggressive competitors. Yet, none of these moves arrested the company’s mounting
losses or corrected its core problem, service quality that had declined so far that low
fares were its only remaining pull on customers.
For many American companies, “the enemy” has become Japanese competition, labor
unions, government regulators, or customers who “betrayed us” by buying products
from someone else. “The enemy is out there,” however, is almost always an incomplete
story. “Out there” and “in here” are usually part of a single system. This learning

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disability makes it almost impossible to detect the leverage which we can use “in here”
on problems that straddle the boundary between us and “out there.”
3. THE ILLUSION OF TAKING CHARGE
Being “proactive” is in vogue. Managers frequently proclaim the need for taking
charge in facing difficult problems. What is typically meant by this is that we should
face up to difficult issues, stop waiting for someone else to do something, and solve
problems before they grow into crises. In particular, being proactive is frequently seen
as an antidote to being “reactive”—waiting until a situation gets out of hand before
taking a step. But is taking aggressive action against an external enemy really
synonymous with being proactive?
Not too long ago, a management team in a leading property and liability insurance
company with whom we were working got bitten by the proactiveness bug. The head of
the team, a talented vice president for claims, was about to give a speech proclaiming
that the company wasn’t going to get pushed around anymore by lawyers litigating
more and more claims settlements. The firm would beef up its own legal staff so that it
could take more cases through to trial by verdict, instead of settling them out of court.
Then we and some members of the team began to look more sys-temically at the
probable effects of the idea: the likely fraction of cases that might be won in court, the
likely size of cases lost, the monthly direct and overhead costs regardless of who won
or lost, and how long cases would probably stay in litigation. (The tool we used is
discussed in Chapter 17, “Microworlds.”) Interestingly, the team’s scenarios pointed to
increasing total costs because, given the quality of investigation done initially on most
claims, the firm simply could not win enough of its cases to offset the costs of
increased litigation. The vice president tore up his speech.
All too often, “proactiveness” is reactiveness in disguise. If we simply become more
aggressive fighting the “enemy out there,” we are reacting—regardless of what we call
it. True proactiveness comes from seeing how we contribute to our own problems. It is
a product of our way of thinking, not our emotional state.
4. THE FIXATION ON EVENTS
Two children get into a scrap on the playground and you come over to untangle
them. Lucy says, “I hit him because he took my ball.” Tommy says, “I took her ball
because she won’t let me play with her airplane.” Lucy says, “He can’t play with my
airplane because he broke the propeller.” Wise adults that we are, we say, “Now, now,
children—just get along with each other.” But are we really any different in the way we
explain the entanglements we find ourselves caught in? We are conditioned to see life
as a series of events, and for every event, we think there is one obvious cause.
Conversations in organizations are dominated by concern with events: last month’s
sales, the new budget cuts, last quarter’s earnings, who just got promoted or fired, the
new product our competitors just announced, the delay that just was announced in our
new product, and so on. The media reinforces an emphasis on short-term events—after
all, if it’s more than two days’ old it’s no longer “news.” Focusing on events leads to
“event” explanations: “The Dow Jones average dropped sixteen points today,”
announces the newspaper, “because low fourth-quarter profits were announced
yesterday.” Such explanations may be true as far as they go, but they distract us from
seeing the longer-term patterns of change that lie behind the events and from
understanding the causes of those patterns.
Our fixation on events is actually part of our evolutionary programming. If you
wanted to design a cave person for survival, ability to contemplate the cosmos would
not be a high-ranking design criterion. What is important is the ability to see the saber-
toothed tiger over your left shoulder and react quickly. The irony is that, today, the
primary threats to our survival, both of our organizations and of our societies, come
not from sudden events but from slow, gradual processes; the arms race, environmental

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decay, the erosion of a society’s public education system, increasingly obsolete physical
capital, and decline in design or product quality (at least relative to competitors’ quality)
are all slow, gradual processes.
Generative learning cannot be sustained in an organization if people’s thinking is
dominated by short-term events. If we focus on events, the best we can ever do is
predict an event before it happens so that we can react optimally. But we cannot learn
to create.
5. THE PARABLE OF THE BOILED FROG
Maladaptation to gradually building threats to survival is so pervasive in systems
studies of corporate failure that it has given rise to the parable of the “boiled frog.” If
you place a frog in a pot of boiling water, it will immediately try to scramble out. But if
you place the frog in room temperature water, and don’t scare him, he’ll stay put. Now,
if the pot sits on a heat source, and if you gradually turn up the temperature, something
very interesting happens. As the temperature rises from 70 to 80 degrees F., the frog
will do nothing. In fact, he will show every sign of enjoying himself. As the temperature
gradually increases, the frog will become groggier and groggier, until he is unable to
climb out of the pot. Though there is nothing restraining him, the frog will sit there
and boil. Why? Because the frog’s internal apparatus for sensing threats to survival is
geared to sudden changes in his environment, not to slow, gradual changes.
Something similar happened to the American automobile industry. In the 1960s, it
dominated North American production. That began to change very gradually. Certainly,
Detroit’s Big Three did not see Japan as a threat to their survival in 1962, when the
Japanese share of the U.S. market was below 4 percent. Nor in 1967, when it was less
than 10 percent. Nor in 1974, when it was under 15 percent. By the time the Big Three
began to look critically at its own practices and core assumptions, it was the early
1980s, and the Japanese share of the American market had risen to 21.3 percent. By
1989, the Japanese share was approaching 30 percent, and the American auto industry
could account for only about 60 percent of the cars sold in the U.S.2 It is still not clear
whether this particular frog will have the strength to pull itself out of the hot water.
Learning to see slow, gradual processes requires slowing down our frenetic pace and
paying attention to the subtle as well as the dramatic. If you sit and look into a
tidepool, initially you won’t see much of anything going on. However, if you watch long
enough, after about ten minutes the tidepool will suddenly come to life. The world of
beautiful creatures is always there, but moving a bit too slowly to be seen at first. The
problem is our minds are so locked in one frequency, it’s as if we can only see at 78
rpm; we can’t see anything at 33 l/3. We will not avoid the fate of the frog until we
learn to slow down and see the gradual processes that often pose the greatest threats.
6. THE DELUSION OF LEARNING FROM EXPERIENCE
The most powerful learning comes from direct experience. Indeed, we learn eating,
crawling, walking, and communicating through direct trial and error—through taking
an action and seeing the consequences of that action; then taking a new and different
action. But what happens when we can no longer observe the consequences of our
actions? What happens if the primary consequences of our actions are in the distant
future or in a distant part of the larger system within which we operate? We each have a
“learning horizon,” a breadth of vision in time and space within which we assess our
effectiveness. When our actions have consequences beyond our learning horizon, it
becomes impossible to learn from direct experience.
Herein lies the core learning dilemma that confronts organizations: we learn best
from experience but we never directly experience the consequences of many of our
most important decisions. The most critical decisions made in organizations have
systemwide consequences that stretch over years or decades. Decisions in R&D have
first-order consequences in marketing and manufacturing. Investing in new

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manufacturing facilities and processes influences quality and delivery reliability for a
decade or more. Promoting the right people into leadership positions shapes strategy
and organizational climate for years. These are exactly the types of decisions where
there is the least opportunity for trial and error learning.
Cycles are particularly hard to see, and thus learn from, if they last longer than a year
or two. As systems-thinking writer Draper Kauffman, Jr., points out, most people have
short memories. “When a temporary oversupply of workers develops in a particular
field,” he wrote, “everyone talks about the big surplus and young people are steered
away from the field. Within a few years, this creates a shortage, jobs go begging, and
young people are frantically urged into the field—which creates a surplus. Obviously,
the best time to start training for a job is when people have been talking about a
surplus for several years and few others are entering it. That way, you finish your
training just as the shortage develops.”3
Traditionally, organizations attempt to surmount the difficulty of coping with the
breadth of impact from decisions by breaking themselves up into components. They
institute functional hierarchies that are easier for people to “get their hands around.”
But, functional divisions grow into fiefdoms, and what was once a convenient division
of labor mutates into the “stovepipes” that all but cut off contact between functions.
The result: analysis of the most important problems in a company, the complex issues
that cross functional lines, becomes a perilous or nonexistent exercise.
7. THE MYTH OF THE MANAGEMENT TEAM
Standing forward to do battle with these dilemmas and disabilities is “the
management team,” the collection of savvy, experienced managers who represent the
organization’s different functions and areas of expertise. Together, they are supposed
to sort out the complex cross-functional issues that are critical to the organization.
What confidence do we have, really, that typical management teams can surmount these
learning disabilities?
All too often, teams in business tend to spend their time fighting for turf, avoiding
anything that will make them look bad personally, and pretending that everyone is
behind the team’s collective strategy —maintaining the appearance of a cohesive team.
To keep up the image, they seek to squelch disagreement; people with serious
reservations avoid stating them publicly, and joint decisions are watered-down
compromises reflecting what everyone can live with, or else reflecting one person’s
view foisted on the group. If there is disagreement, it’s usually expressed in a manner
that lays blame, polarizes opinion, and fails to reveal the underlying differences in
assumptions and experience in a way that the team as a whole could learn.
“Most management teams break down under pressure,” writes Harvard’s Chris
Argyris—a longtime student of learning in management teams. “The team may function
quite well with routine issues. But when they confront complex issues that may be
embarrassing or threatening, the ‘teamness’ seems to go to pot.”4
Argyris argues that most managers find collective inquiry inherently threatening.
School trains us never to admit that we do not know the answer, and most corporations
reinforce that lesson by rewarding the people who excel in advocating their views, not
inquiring into complex issues. (When was the last time someone was rewarded in your
organization for raising difficult questions about the company’s current policies rather
than solving urgent problems?) Even if we feel uncertain or ignorant, we learn to
protect ourselves from the pain of appearing uncertain or ignorant. That very process
blocks out any new understandings which might threaten us. The consequence is what
Argyris calls “skilled incompetence”—teams full of people who are incredibly proficient
at keeping themselves from learning.

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DISABILITIES AND DISCIPLINES
These learning disabilities have been with us for a long time. In The March of Folly,
Barbara Tuchman traces the history of devastating large-scale policies “pursued
contrary to ultimate self-interest,”5 from the fall of the Trojans through the U.S.
involvement in Vietnam. In story after story, leaders could not see the consequences of
their own policies, even when they were warned in advance that their own survival was
at stake. Reading between the lines of Tuchman’s writing, you can see that the
fourteenth-century Valois mon-archs of France suffered from “I am my position”
disabilities— when they devalued currency, they literally didn’t realize they were driving
the new French middle class toward insurrection.
In the mid-1700s Britain had a bad case of boiled frog. The British went through “a
full decade,” wrote Tuchman, “of mounting conflict with the [American] colonies
without any [British official] sending a representative, much less a minister, across the
Atlantic . . . to find out what was endangering the relationship . . .”6 By 1776, the start
of the American Revolution, the relationship was irrevocably endangered. Elsewhere,
Tuchman describes the Roman Catholic cardinals of the fifteenth and sixteenth
centuries, a tragic management “team” in which piety demanded that they present an
appearance of agreement. However, behind-the-scenes backstabbing (in some cases,
literal backstabbing) brought in opportunistic popes whose abuses of office provoked
the Protestant Reformation.
We live in no less perilous times today, and the same learning disabilities persist,
along with their consequences. The five disciplines of the learning organization can, I
believe, act as antidotes to these learning disabilities. But first, we must see the
disabilities more clearly—for they are often lost amid the bluster of day-to-day events.

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3
PRISONERS OF
THE SYSTEM, OR
PRISONERS OF OUR
OWN THINKING?

In order to see the learning disabilities in action, it helps to start with a laboratory
experiment—a microcosm of how real organizations function, where you can see the
consequences of your decisions play out more clearly than is possible in real
organizations. For this reason, we often invite people to take part in a simulation called
the “beer game,” first developed in the 1960s at the Massachusetts Institute of
Technology’s Sloan School of Management. Because it is a “laboratory replica” of a real
setting, rather than reality itself, we can isolate the disabilities and their causes more
sharply than is possible in real organizations. This reveals that the problems originate in
basic ways of thinking and interacting, more than in peculiarities of organization
structure and policy.
The beer game does this by immersing us in a type of organization which is rarely
noticed but widely prevalent: a production/distribution system, the kind responsible for
producing and shipping consumer and commercial goods in all industrial countries. In
this case, it’s a system for producing and distributing a single brand of beer. The players
at each position are completely free to make any decision that seems prudent. Their
only goal is to manage their position as best they can to maximize their profits.1
As with many games, the “playing” of a single session of the beer game can be told as
a story. There are three main characters in the story—a retailer, a wholesaler, and the
marketing director of a brewery.2 This story is told, in turn, through each of the players’
eyes.
THE RETAILER
Imagine that you’re a retail merchant. Perhaps you’re the franchise manager of a brightly
lit twenty-four-hour chain store at a suburban intersection. Or maybe you own a mom-
and-pop grocery on a street of Victorian-era brownstones. Or a discount beverage outlet
on a remote highway.
No matter what your store looks like, or whatever else you sell, beer is a cornerstone
of your business. Not only do you make a profit on it, but it draws customers in to
buy, perhaps, popcorn and potato chips. You stock at least a dozen different brands of
beer, and keep a rough tally of how many cases of each are in your back room, which is
where you keep your inventory.
Once each week, a trucker arrives at the rear entrance of your store. You hand him a
form on which you’ve filled in that week’s order. How many cases of each brand do you
want delivered? The trucker, after he makes his other rounds, returns your order to your
beer wholesaler, who then processes it, arranges outgoing orders in a proper sequence,
and ships the resulting order to your store. Because of all that processing, you’re used
to a four-week delay on average on your orders; in other words, a delivery of beer
generally arrives in your store about four weeks after you order it.

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You and your beer wholesaler never speak to each other directly. You communicate
only through those check marks on a piece of paper. You probably have never even met
him; you know only the truck driver. And that’s for good reason: you have hundreds of
products in your store. Dozens of wholesalers dole them out to you. Meanwhile, your
beer wholesaler handles deliveries to several hundred stores, in a dozen different
cities. Between your steady deluge of customers and his order-shuffling, who has time
for chitchat? That single number is the only thing you need to say to each other.
One of your steadiest beer brands is called Lover’s Beer. You are dimly aware that it’s
made by a small but efficient brewery located about three hundred miles away from you.
It’s not a super-popular brand; in fact, the brewery doesn’t advertise at all. But every
week, as regularly as your morning newspaper deliveries, four cases of Lover’s Beer sell
from the shelves. Sure, the customers are young— most are in their twenties—and
fickle; but somehow, for every one who graduates to Miller or Bud, there’s a younger
sister or brother to replace him.
To make sure you always have enough Lover’s Beer, you try to keep twelve cases in
the store at any time. That means ordering four cases each Monday, when the beer truck
comes. Week after week after week. By now, you take that four-case turnover for
granted; it’s inextricably wedded to the image in your mind of the beer’s performance.
You don’t even articulate it to yourself when placing the order: “Oh, yeah,” runs the
automatic litany. “Lover’s Beer. Four cases.”
Week 2: Without warning, one week in October (let’s call it Week 2), sales of the beer
double. They jump from four cases to eight. That’s all right, you figure; you have an
eight-case surplus in your store. You don’t know why they’ve sold so much more
suddenly. Maybe someone is having a party. But to replace those extra cases, you raise
your order to eight. That will bring your inventory back to normal.
Week 3: Strangely enough, you also sell eight cases of Lover’s Beer the next week.
And it’s not even spring break. Every once in a while, in those rare moments between
sales, you briefly ponder the reason why. There’s no advertising campaign for the
beer; you would have received a mailing about it. Unless the mailing got lost, or you
accidentally threw it out. Or maybe there’s another reason . . . but a customer comes in,
and you lose your train of thought.
At the moment the deliveryman comes, you’re still not thinking much about Lover’s
Beer, but you look down at your sheet and see that he’s brought only four cases this time. (It’s
from the order you placed four weeks ago.) You only have four cases left in stock, which means—
unless there’s a drop-back in sales—you’re going to sell out all your Lover’s Beer this week.
Prudence dictates an order of at least eight cases to keep up with sales. Just to be on the safe
side, you order twelve so you can rebuild your inventory.
Week 4: You find time on Tuesday to quiz one or two of your younger customers. It turns
out that a new music video appeared a month or so back on the popular cable television
channels. The video’s recording group, the Iconoclasts, closes their song with the line, “I take
one last sip of Lover’s Beer and run into the sun.” You don’t know why they used that line, but
Week 2

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your wholesaler would have told you if there was any new merchandising deal. You think of
calling the wholesaler, but a delivery of potato chips arrives and the subject of Lover’s Beer slips
your mind.
When your next delivery of beer comes in, only five cases of beer arrive. You’re chagrined now
because you have only one case in stock. You’re almost sold out. And thanks to this video,
demand might go up even further. Still, you know that you have some extra cases on order, but
you’re not sure exactly how many. Better order at least sixteen more.
Week 5: Your one case sells out Monday morning. Fortunately, you receive a shipment for
seven more cases of Lover’s (apparently your wholesaler is starting to respond to your higher
orders). But all are sold by the end of the week, leaving you with absolutely zero inventory.
Glumly, you stare at the empty shelf. Better order another sixteen. You don’t want to get a
reputation for being out of stock of popular beers.
Week 6: Sure enough, customers start coming in at the beginning of the week, looking
for Lover’s. Two are loyal enough to wait for your backlog. “Let us know as soon as it
comes in,” they say, “and we’ll be back to buy it.” You note their names and phone
numbers: they’ve promised to buy one case each.
Only six cases arrive in the next shipment. You call your two “backlogged” customers.
They stop in and buy their shares; and the rest of the beer sells out before the end of the
week. Again, two customers give you their names to call as soon as your next shipment
arrives. You wonder how many more you could have sold had your shelves not been
empty at the end of the week. Seems there’s been a run on the beer: none of the stores
in the area have it. This beer is hot, and it’s apparently getting more popular all the time.
After two days of staring at the parched, empty shelf, it doesn’t feel right to order
any less than another sixteen cases. You’re tempted to order more, but you restrain
yourself because you know the big orders you’ve been placing will start to arrive soon.
But when . . . ?
Week 7: The delivery truck brings only five cases this week, which means that you’re
facing another week of empty shelves. As soon as you fill your back orders, Lover’s Beer
is sold out again, this time within two days. This week, amazingly, five customers give you
their names. You order another sixteen and silently pray that your big orders will start
arriving. You think of all the lost potato chip sales.
Week 4

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Week 8: By now, you’re watching Lover’s Beer more closely than any other product you
sell. The suspense is palpable: every time a customer buys a six-pack of that quiet beer,
you notice it. People seem to be talking about the beer. Eagerly, you wait for the trucker
to roll in the sixteen cases you expect.
But he brings only five. “What do you mean, five?” you say. “Gee, I don’t know
anything about it,” the deliveryman tells you. “I guess they’re backlogged. You’ll get
them in a couple of weeks.” A couple of weeks!?! By the time you call your backlogged
customers, you’ll be sold out before you can sell a single new case. You’ll be without a
bottle of Lover’s on your shelf all week. What will this do to your reputation?
You place an order for twenty-four more cases—twice as much as you had planned to
order. What is that wholesaler doing to me, you wonder? Doesn’t he know what a
ravenous market we have down here? What’s going through his mind, anyway?
THE WHOLESALER
As the manager of a wholesale distributing firm, beer is your life. You spend your days
at a steel desk in a small warehouse stacked high with beer of every conceivable brand:
Miller, Bud, Coors, Rolling Rock, a passel of imported beers—and, of course, regional
beers such as Lover’s Beer. The region you serve includes one large city, several smaller
satellite cities, a web of suburbs, and some outlying rural areas. You’re not the only
beer wholesaler here, but you’re very well established. For several small brands,
including Lover’s Beer, you are the only distributor in this area.
Mostly, you communicate with the brewery through the same method which retailers
use to reach you. You scribble numbers onto a form which you hand your driver each
week. Four weeks later, on average, the beer arrives to fill that order. Instead of ordering
by the case, however, you order by the gross. Each gross is about enough to fill a small
truck, so you think of them as truckloads. Just as your typical retailer orders about four
cases of Lover’s Beer from you, week after week after week, so you order four
truckloads from the brewery, week after week after week. That’s enough to give you a
typical accumulation of twelve truckloads’ worth in inventory at any given time.
By Week 8, you had become almost as frustrated and angry as your retailers. Lover’s
Beer had always been a reliably steady brand. But a few weeks ago—in Week 4,
actually—those orders had abruptly started rising sharply. The next week, orders from
retailers had risen still further. By Week 8, most stores were ordering three or four times
their regular amount of beer.
At first, you had easily filled the extra orders from your inventory in the warehouse.
And you had been prescient; noting that there was a trend, you had immediately raised
the amount of Lover’s Beer you ordered from the brewery. In Week 6, after seeing an
article in Beer Distribution News about the rock video, you had raised your brewery order
still further, to a dramatic twenty truckloads per week. That was five times as much

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beer as your regular order. But you had needed that much; the beer’s popularity was
doubling, tripling, and even quadrupling, to judge from the stores’ demand.
By Week 6, you had shipped out all the beer you had in inventory and entered the
hellishness of backlog. Each week you sent out what you could, and sent the stores
paperwork equivalents of I.O.U.s to cover the rest. A few of the larger chain stores
called you and got what preferential treatment you could offer, but the Lover’s Beer in
your inventory was gone. At least you knew it would be only a couple of weeks more
before the extra beer you ordered would begin to arrive.
In Week 8, when you had called the brewery to ask if there was any way to speed up
their deliveries (and to let them know that you were upping your order to thirty
truckloads), you were dismayed to find out that they had only just stepped up
production two weeks before. They were just learning of the increase in demand. How
could they be so slow?
Now it’s Week 9. You’re getting orders for twenty truckloads’

worth of Lover’s Beer per week, and you still don’t have it. By the end of last week, you had
backlogged orders of another twenty-nine truckloads. Your staff is so used to fielding calls that
they’ve asked you to install an answering machine devoted to an explanation about Lover’s Beer.
But you’re confident that, this week, the twenty truck-loads you ordered a month ago will finally
arrive.
However, only six truckloads arrive. Apparently the brewery is still backlogged, and the larger
production runs are only now starting to get shipped out. You call some of your larger chains and
assure them that the beer they ordered will be coming shortly.
Week 10 is infuriating. The extra beer you were expecting—at least twenty truckloads’
worth—doesn’t show. The brewery simply couldn’t ramp up production that fast. Or so you
guess. They only send you eight truckloads. It’s impossible to reach anybody on the phone
down there—they’re apparently all on the factory floor, manning the brewery apparatus.
The stores, meanwhile, are apparently selling the beer wildly. You’re getting unprecedented
orders—for twenty-six truckloads this week. Or maybe they’re ordering so much because they
can’t get any of the beer from you. Either way, you’have to keep up. What if you can’t get any of
the beer and they go to one of your competitors?
You order forty truckloads from the brewery.
In Week 11, you find yourself tempted to take extra-long lunches at the bar around the corner
from your warehouse. Only twelve truckloads of Lover’s Beer arrive. You still can’t reach
anybody at the brewery. And you have over a hundred truckloads’ worth of orders to fill:
seventy-seven truckloads in backlog, and another twenty-eight truckloads’ worth of orders from
the stores which you receive this week. Some of those backlog costs come due, and you’re
afraid to tell your accountant what you expect.

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You’ve got to get that beer: you order another forty truckloads from the brewery.
By Week 12, it’s clear. This new demand for Lover’s Beer is a far more major change than you
expected. You sigh with resignation when you think of how much money you could make if you
only had enough in stock. How could the brewery have done this to you? Why did demand have
to rise so quickly? How are you ever expected to keep up? All you know is that you’re never going
to get caught in this situation again. You order sixty more truckloads.
For the next four weeks, the demand continues to outstrip your supply. In fact, you can’t
reduce your backlog at all in Week 13.
You finally start receiving larger shipments from the brewery in Weeks 14 and 15. At the
same time, orders from your stores drop off a bit. Maybe in the previous weeks, you figure,
they overordered a bit. At this point, anything that helps work off your backlog is a welcome
reprieve.
And now, in Week 16, you finally get almost all the beer you asked for weeks ago: fifty-
five truckloads. It arrives early in the week, and you stroll back to that section of the
warehouse to take a look at it, stacked on pallets. It’s as much beer as you keep for
any major brand. And it will be moving out soon.
Throughout the week, you wait expectantly for the stores’ orders to roll in. You even
stop by the intake desk to see the individual forms. But on form after form, you see the
same number written: zero. Zero. Zero. Zero. Zero. What’s wrong with these people?
Four weeks ago, they were screaming at you for the beer, now, they don’t even want any.
Suddenly, you feel a chill. Just as your trucker leaves for the run that includes the
brewery, you catch up with him. You initial the form, and cross out the twenty-four
truckloads you had ordered, replacing it with a zero of your own.
Week 17: The next week, sixty more truckloads of Lover’s Beer arrive. The stores still
ask for—zero. You still ask for—zero. One hundred and nine truckloads of the stuff
sit in your warehouse. You could bathe in the stuff every day, and it wouldn’t make
a dent.
Week 14

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Surely the stores will want more this week. After all, that video is still running. In your
brooding thoughts, you consign every retailer to the deepest corner of hell; the corner
reserved for people who don’t keep their promises.
And, in fact, the retailers once again order zero cases of Lover’s Beer from you. You,
in turn, order zero truckloads from the brewery. And yet, the brewery continues to
deliver beer. Sixty more truckloads appear on your dock this week. Why does that
brewery have it in for you? When will it ever end?
THE BREWERY
Imagine that you were hired four months ago to manage distribution and marketing at the
brewery, where Lover’s Beer is only one of several primary products. Yours is a small
brewery, known for its quality, not its marketing savvy. That’s why you were hired.
Now, clearly, you have been doing something right. Because in only your second
month (Week Six of this game), new orders had begun to rise dramatically. By the end
of your third month on the job, you felt the satisfaction of getting orders for forty gross
worth of beer per week, up dramatically from the four when you started. And you
shipped out . . . well, you shipped out thirty.
Because breweries get backlogs too. It takes (in your brewery, at least) two weeks from
the time you decide to brew a bottle of beer until the moment when that beer is ready for
shipment. Admittedly, you kept a few weeks’ worth of beer in your warehouse, but those
stocks were exhausted by Week 7, only two weeks after the .rising orders came in. The
next week, while you had back orders for nine gross and another twenty-four gross in
new orders, you could send out only twenty-two gross. By that time you were a hero
within your company. The plant manager had given everyone incentives to work double-
time, and was feverishly interviewing for new factory help.
You had lucked out with that Iconoclasts’ video mentioning the beer. You had
learned about the video in Week 3—from letters written by teenagers to the
brewery. But it had taken until Week 6 to see that video translate into higher orders.
Even by Week 14, the factory had still not caught up with its backlogged orders.
You had regularly requested brew batches of seventy gross or more. You had
wondered how large your bonus would be that year. Maybe you could ask for a
percentage of the profits, at least once you caught up with back orders. You had even
idly pictured yourself on the cover of Marketing Week.
Finally, you had caught up with the backlog in Week 16. But the next week, your
distributors had asked for only nineteen gross. And last week, Week 18, they had not

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asked for any more beer at all. Some of the order slips actually had orders crossed
out on them.
Now, it’s Week 19. You have a hundred gross of beer in inventory. And the orders,
once again, ask for virtually no new deliveries. Zero beer. Meanwhile the beer you’ve
been brewing keeps rolling in. You place the phone call you’ve dreaded making to
your boss. “Better hold off on production for a week or two,” you say. “We’ve
got”—

and you use a word you’ve picked up in business school—”a discontinuity.” There is silence on the
other end of the phone. “But I’m sure it’s only temporary,” you say.
The same pattern continues for four more weeks: Weeks 20, 21, 22, and 23. Gradually
your hopes of a resurgence slide, and your excuses come to sound flimsier and flimsier.
Those distributors screwed us, you say. The retailers didn’t buy enough beer. The press
and that rock video hyped up the beer and got everybody sick of it. At root, it’s the
fickle kids—they have no loyalty whatsoever. How could they buy hundreds of cases
one month, and nothing at all the next?

Nobody misses you when you borrow the company car at the beginning of Week 24.
Your first stop is the wholesaler’s office. Not only is it the first time you have ever
met face to face, but it is only the second time you have ever spoken. There has never
been anything to say until this crisis. You greet each other glumly, and then the
wholesaler takes you out to the back warehouse. “We haven’t gotten an order for your
brand in two months,” says the wholesaler. “I feel completely jerked around. Look!
We still have 220 truckloads here.”

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What must have happened, you decide together, is that demand rose rapidly, and
then fell dramatically. Another example of the fickleness of the public. If the retailers
had stayed on top of it and warned you, this would never have happened.
You are working over the phrasing of a marketing strategy report in your mind on
the way home when, on a whim, you decide to stop at the store of a retailer you pass
along the way. Fortuitously, the owner of the store is in. You introduce yourself and
the retailer’s face breaks into a sardonic grin. Leaving an assistant in charge of the
shop, the two of you walk next door to a luncheonette for a cup of coffee.
The retailer has brought along the shop’s inventory tally notebooks, and spreads them open
across the table. “You don’t know how much I wanted to strangle you a few months ago.”
“Why?” you ask.
“Look—we’re stuck with ninety-three cases in our back room. At this rate, it’s going to be
another six weeks before we order any more.”
Six weeks, you think to yourself. And then you pull out a pocket calculator. If every retailer in
this area waits six weeks before ordering any more beer, and then only orders a few cases a
week, it’s going to be a year or more before they put a dent in those 220 truckloads sitting at
the wholesaler’s. “This is a tragedy,” you say.
“Who let it happen—I mean, how can we keep it from happening again?”
“Well, it’s not our fault,” says the retailer, after sipping some coffee. “We were selling four
cases of beer when that music video came out. Then, in Week 2, we sold eight cases.”
“And then it mushroomed,” you say. “But then why did it die down?”
“No, you don’t understand,” says the retailer. “The demand never mushroomed. And it
never died out. We still sell eight cases of beer—week after week after week. But you didn’t
send us the beer we wanted. So we had to keep ordering, just to make sure we had enough to
keep up with our customers.”
“But we got the beer out as soon as it was necessary.”
“Then maybe the wholesaler screwed up somehow,” says the retailer. “I’ve been wondering if
I should switch suppliers. Anyway, I wish you’d do a coupon promotion or something, so I could
make back some of my costs. I’d like to unload some of those ninety-three cases.”
You pick up the tab for coffee. Then, on your trip back, you plan the wording of your
resignation notice. Obviously, you’ll be blamed for any layoffs or plant closings that come out of
this crisis—just as the wholesaler blamed the retailer, and the retailer blamed the wholesaler, and
both of them wanted to blame you. At least it’s early enough in the process that you can quit
with some dignity. If only you could come up with some explanation to show that it
wasn’t your fault—to show that you were the victim, instead of the culprit.
L E S S O N S OF THE B E E R GAME
1. Structure Influences Behavior
Different people in the same structure tend to produce qualitatively
similar results. When there are problems, or performance fails to live
up to what is intended, it is easy to find someone or something to
blame. But, more often than we realize, systems cause their own crises, not
external forces or individuals’ mistakes.
2. Structure in Human Systems is Subtle
We tend to think of “structure” as external constraints on the
individual. But, structure in complex living systems, such as the
“structure” of the multiple “systems” in a human body (for
example, the cardiovascular and neuromuscular) means the basic
interrelationships that control behavior. In human systems, structure

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includes how people make decisions—the “operating policies”
whereby we translate perceptions, goals, rules, and norms into
actions.
3. Leverage Often Comes from New Ways of Thinking
In human systems, people often have potential leverage that they do
not exercise because they focus only on their own decisions and
ignore how their decisions affect others. In the beer game, players
have it in their power to eliminate the extreme instabilities that
invariably occur, but they fail to do so because they do not
understand how they are creating the instability in the first place.

People in the business world love heroes. We lavish praise and promotion on those
who achieve visible results. But if something goes wrong, we feel intuitively that
somebody must have screwed up. In the beer game, there are no such culprits. There
is no one to blame. Each of the three players in our story had the best possible
intentions: to serve his customers well, to keep the product moving smoothly through
the system, and to avoid penalties. Each participant made well-motivated, clearly
defensible judgments based on reasonable guesses about what might happen. There
were no villains, but there was a crisis nonetheless—built into the structure of the
system.
In the last twenty years, the beer game has been played thousands of times in classes
and management training seminars. It has been played on five continents, among people
of all ages, nationalities, cultural origins, and vastly varied business backgrounds. Some
players had never heard of a production/distribution system before; others had spent a
good portion of their lives working in such businesses. Yet every time the game is
played the same crises ensue. First, there is growing demand that can’t be met. Orders
build throughout the system. Inventories are depleted. Backlogs grow. Then the beer
arrives en masse while incoming orders suddenly decline. By the end of the
experiment, almost all players are sitting with large inventories they cannot unload—
for example, it is not unusual to find brewery inventory levels in the hundreds
overhanging orders from wholesalers for eight, ten, or twelve cases per week.3
If literally thousands of players, from enormously diverse backgrounds, all generate
the same qualitative behavior patterns, the causes of the behavior must lie beyond the
individuals. The causes of the behavior must lie in the structure of the game itself.
Moreover “beer game”-type structures create similar crises in real-life production-
distribution systems. For instance, in 1985, personal computer memory chips were
cheap and readily available; sales went down by 18 percent and American producers
suffered 25 to 60 percent losses.4 But in late 1986 a sudden shortage developed and was
then exacerbated by panic and overordering. The result was a 100 to 300 percent increase
in prices for the same chips.5 A similar surge and collapse in demand occurred in the
semiconductor industry in 1973 to 1975. After a huge order buildup and increases in
delivery delays throughout the industry, demand collapsed and you could have virtually
any product you wanted off any supplier’s shelf overnight. Within a few years, Siemens,
Signetics, Northern Telecom, Honeywell, and Schlumberger all entered the business by
buying weakened semiconductor manufacturers.6
In mid-1989, General Motors, Ford, and Chrysler, as the May 30 Wall Street Journal
put it, “were simply producing far more cars than they were selling, and dealer
inventories were piling up … The companies already are idling plants and laying off
workers at rates not seen for years.”7 Entire national economies undergo the same
sorts of surges in demand and inventory overadjustments, due to what economists call
the “inventory accelerator” theory of business cycles.
Similar boom and bust cycles continue to recur in diverse service businesses. For
example, real estate is notoriously cyclic, often fueled by speculators who drive up

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prices to attract investors to new projects. “The phone would ring,” Massachusetts
condominium developer Paul Quinn told the “MacNeil-Lehrer Newshour” in 1989, “in our
offices, and we said ‘How are we going to handle this? We’ll tell everybody to send in a
$5,000 check with their name and we’ll put them on the list.’ The next thing we knew,
we had over 150 checks sitting on the desk.” The glut followed quickly on the boom: “It
was a slow, sinking feeling,” Quinn said, interviewed in a seaside town full of unsold
developments. “Now’s the time to start building for the next boom. Unfortunately, the
people in the real estate industry are too busy trying to address the problems they have
left over from the last one.”8
In fact, reality in production-distribution systems is often worse than the beer game. A
real retailer can order from three or four wholesalers at once, wait for the first group of
deliveries to arrive, and cancel the other orders. Real producers often run up against
production capacity limits not present in the game, thereby exacerbating panic
throughout the distribution system. In turn, producers invest in additional capacity
because they believe that current demand levels will continue into the future, then find
themselves strapped with excess capacity once demand collapses.
The dynamics of production-distribution systems such as the beer game illustrate the
first principle of systems thinking:
STRUCTURE INFLUENCES BEHAVIOR
When placed in the same system, people, however different, tend to produce similar results.
The systems perspective tells us that we must look beyond individual mistakes or bad
luck to understand important problems. We must look beyond personalities and events. We
must look into the underlying structures which shape individual actions and create the
conditions where types of events become likely. As Donella Meadows expresses it:
A truly profound and different insight is the way you begin to see that the system causes
its own behavior.9
This same sentiment was expressed over a hundred years ago by a systems thinker
of an earlier vintage. Two thirds of the way through War and Peace, Leo Tolstoy breaks
off from his narrative about the history of Napoleon and czarist Russia to contemplate
why historians, in general, are unable to explain very much:
The first fifteen years of the nineteenth century present the spectacle of an
extraordinary movement of millions of men. Men leave their habitual pursuits; rush
from one side of Europe to the other; plunder, slaughter one another, triumph and
despair; and the whole current of life is transformed and presents a quickened activity,
first moving at a growing speed, and then slowly slackening again. What was the cause
of that activity, or from what laws did it arise? asked the human intellect.
The historians, in reply to that inquiry, lay before us the sayings and doings of some
dozens of men in one of the buildings in the city of Paris, summing up those doings and
sayings by one word —revolution. Then they give us a detailed biography of Napoleon,
and of certain persons favorably or hostilely disposed to him; talk of the influence of
some of these persons upon others; and then say that this it is to which the activity is
due; and these are its laws.
But, the human intellect not only refuses to believe in that explanation, but flatly
declares that the method of explanation is not a correct one . . . The sum of men’s
individual wills produced both the revolution and Napoleon; and only the sum of those
wills endured them and then destroyed them.
“But whenever there have been wars, there have been great military leaders; whenever
there have been revolutions in states, there have been great men,” says history.
“Whenever there have been great military leaders there have, indeed, been wars,” replies
the human reason; “but that does not prove that the generals were the cause of the wars,

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and that the factors leading to warfare can be found in the personal activity of one
man.10. Tolstoy argues that only in trying to understand underlying “laws of history,” his
own synonym for what we now call systemic structures, lies any hope for deeper
understanding:
For the investigation of the laws of history, we must completely change the subject
of observations, must let kings and ministers and generals alone, and study the
homogeneous, infinitesimal elements by which the masses are led. No one can say
how far it has been given to man to advance in that direction in understanding the
laws of history. But it is obvious that only in that direction lies any possibility of
discovering historical laws; and that the human intellect has hitherto not devoted to
that method of research one millionth part of the energy that historians have put into
the description of the doings of various kings, ministers, and generals . . .”
The term “structure,” as used here, does not mean the “logical structure” of a
carefully developed argument or the reporting “structure” as shown by an organization
chart. Rather, “systemic structure” is concerned with the key interrelationships that
influence behavior over time. These are not interrelationships between people, but
among key variables, such as population, natural resources, and food production in a
developing country; or engineers’ product ideas and technical and managerial know-
how in a high-tech company.
In the beer game, the structure that caused wild swings in orders and inventories
involved the multiple-stage supply chain and the delays intervening between different
stages, the limited information available at each stage in the system, and the goals, costs,
perceptions, and fears that influenced individuals’ orders for beer. But it is very important
to understand that when we use the term “systemic structure” we do not just mean
structure outside the individual. The nature of structure in human systems is subtle
because we are part of the structure. This means that we often have the power to alter
structures within which we are operating.
However, more often than not, we do not perceive that power. In fact, we usually
don’t see the structures at play much at all. Rather, we just find ourselves feeling compelled to act
in certain ways.
In 1973, psychologist Philip Zimbardo performed an experiment in which college
students were placed in the roles of prisoners and guards in a mock prison set up in the
basement of the psychology building at Stanford. What started as mild resistance by the
“prisoners” and assertiveness by the “guards,” steadily escalated into increasing
rebelliousness and abusiveness, until the “guards” began to physically abuse the “prisoners”
and the experimenters felt the situation was dangerously out of control. The experiment
was ended prematurely, after six days, when students began to suffer from depression,
uncontrollable crying, and psychosomatic illnesses.12
I’ll never forget one particularly chilling illustration of the power of structure in
international politics. It occurred in a private meeting with a high-ranking member of the
Soviet embassy, a few months after the Soviets had sent troops into Afghanistan. The
official talked, eloquently and with great sincerity, about how the U.S.S.R. had been the
first to recognize the country after its founding. The U.S.S.R. had been the first to come
to its aid, repeatedly, when there was internal strife or instability. Beginning in the late
1970s, as threats from guerrilla factions increased, the ruling government asked for
increasing Soviet assistance. Modest assistance led to greater needs for broader help. It
came to a point, the official explained, where “We really had no choice but to
intervene militarily.”
As I listened to this tale, I couldn’t help but think of how retailers or wholesalers in the
beer game will explain, when the game is over, that they really had no choice but to keep
increasing their orders. It also brought to mind similar stories of American officials, ten
or fifteen years earlier, trying to explain how the United States became entangled in
Vietnam.

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What, exactly, does it mean to say that structures generate particular patterns of
behavior? How can such controlling structures be recognized? How would such
knowledge help us to be more successful in a complex system?
The beer game provides a laboratory for exploring how structure influences behavior.
Each player—retailer, wholesaler, and brewery —made only one decision per week: how
much beer to order. The retailer is the first to boost orders significantly, with orders
peaking around Week 12. At that point, the expected beer fails to arrive on time—
because of backlogs at the wholesale and brewery levels. But the retailer, not thinking of
those backlogs, dramatically increased orders to get beer at any cost. That sudden jump
in orders is then amplified through the whole system—first by the wholesaler, and then
by the brewery. Wholesaler orders peak at about 40, and brewery production peaks at
about 80.
The result is a characteristic pattern of buildup and decline in orders at each
position, amplified in intensity as you move “up-stream,” from retailers to breweries. In
other words, the further from the ultimate consumer, the higher the orders, and the more
dramatic the collapse. In fact, virtually all brewery players go through major crises,
ending with near-zero production rates only weeks after having produced 40, 60, 100 or
more gross per week.13
The other characteristic pattern of behavior in the game can be seen in the
inventories and backlogs. The retailer’s inventory begins to drop below zero at around
Week 5. The retailer’s backlog continues to increase for several weeks and the retailer
doesn’t get back to a positive inventory until around Weeks 12 to 15. Similarly, the
wholesaler is in backlog from around Week 7 through around Weeks 15 to 18, and the
brewery from Week 9 through Weeks 18 to 20. Once inventories begin to accumulate,
they reach large values (about 40 for the retailer, 80 to 120 for the wholesaler, and 60 to
80 for the brewery by Week 30)—much larger than intended. So each position goes
through an inventory-backlog cycle: first there is insufficient inventory, then there is too
much inventory.
These characterisic patterns of overshoot and collapse in ordering and inventory-
backlog cycles occur despite stable consumer demand. The actual consumer orders
experienced only one change. In Week 2, consumer orders doubled—going from four
cases of beer per week to eight. They remained at eight cases per week for the rest of the
game.
In other words, after a one-time increase, consumer demand, for the rest of the
simulation, was perfectly flat! Of course, none of the players other than the retailer knew
consumer demand, and even the retailers saw demand only week by week, with no clue
about what would come next.
After the beer game, we ask the people who played wholesalers and brewers to draw
what they think the consumer orders were. Most draw a curve which rises and falls,
just as their orders rose and fell.14 In other words, the players assume that if orders in
the game rose and collapsed, this must have been due to a surge and collapse in
consumer orders. Such assumptions of an “external cause” are characteristic of
nonsystemic thinking.
Players’ guesses regarding consumer demand shed light on our deeply felt need to
find someone or something to blame when there are problems. Initially, after the game is
over, many believe that the culprits are the players in the other positions. This belief is
shattered by seeing that the same problems arise in all plays of the game, regardless of
who is manning the different positions. Many then direct their search for a scapegoat
toward the consumer. “There must have been a wild buildup and collapse in consumer
demand,” they reason. But when their guesses are compared with the flat customer
orders, this theory too is shot down.
This has a devastating impact on some players. I’ll never forget the president of a
large trucking firm sitting back, wide-eyed, staring at the beer game charts. At the next
break, he ran to the telephones. “What happened?” I asked when he returned.

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“Just before we came here,” he said, “my top management team had concluded a
three-day review of operations. One of our divisions had tremendously unstable
fluctuations in fleet usage. It seemed pretty obvious that the division president didn’t
have what it took to get the job done. We automatically blamed the man, just as each of
us in the experiment automatically blamed the brewery. It just hit me that the problems
were probably structural, not personal. I just dashed out to call our corporate
headquarters and cancel his termination process.”
Once they see that they can no longer blame one another, or the customer, the
players have one last recourse—blame the system. “It’s an unmanageable system,” some
say. “The problem is that we couldn’t communicate with each other.” Yet this too turns
out to be an untenable position. In fact, given the “physical system” of inventories,
shipping delays, and limited information, there is substantial room for improving most
team’s scores.
REDEFINING YOUR SCOPE OF INFLUENCE: HOW TO IMPROVE
PERFORMANCE IN THE BEER GAME
To begin to see the possibilities for improvement, consider the outcomes if each
player did nothing to correct his inventory or backlog. Following the “no strategy”
strategy, each player would simply place new orders equal to orders he received. This is
about the simplest ordering policy possible. If you receive new incoming orders for four
cases of beer, you place orders for four. If you receive incoming orders for eight, you
place orders for eight. Given the pattern of consumer demand in this game, that means
ordering four cases or truckloads every week—until you receive your first order of eight.
Thereafter you order eight.
When this strategy is followed unswervingly by all three players, all three positions
settle into a form of stability by Week 11. The retailer and wholesaler never quite catch
up with their backlogs. Backlogs develop, as in the basic game, due to the delays in
getting orders filled. Backlogs persist because the players make no effort to correct them—
because the “no strategy” strategy precludes placing the orders in excess of orders
received needed to correct backlogs.
Is the “no strategy” strategy successful? Probably, most players would say no. After
all, the strategy generates persistent backlogs. This means that everyone throughout the
system is kept waiting longer than necessary for his orders to be filled. In real life, such
a situation would, undoubtedly, invite competitors to enter a market and provide better
delivery service. Only producers/distributors with monopolies on markets would be likely
to stick to such a strategy.15
But the strategy eliminates the buildup and collapse in ordering, and the associated
wild swings in inventories. Moreover, total cost generated by all positions in the “no
strategy” strategy is lower than what is achieved by 75 percent of the teams that play the
game!16 In other words, the majority of players in the game, many of them experienced
managers, do much worse than if they simply placed orders equal to the orders they
receive. In trying to correct the imbalances that result from “doing nothing,” most
players make matters worse, in many cases dramatically worse.
On the other hand, about 25 percent of the players score better than the “no
strategy” strategy, and about 10 percent score very much better. In other words,
success is possible. But it requires a shift of view for most players. It means getting to
the heart of fundamental mismatches between common ways of thinking about the
game—what we will later call our “mental model” of it—and the actual reality of how
the game works. Most players see their job as “managing their position” in isolation
from the rest of the system. What is required is to see how their position interacts with
the larger system.
Consider how you feel if you are a typical player at any position. You pay close
attention to your own inventory, costs, backlog, orders, and shipments. Incoming orders
come from “outside”—most wholesalers and brewers, for instance, are shocked by the

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implacable mystery of those latter-half orders, which should be high numbers, but
instead appear week after week as “zero, zero, zero, zero.” You respond to new
orders by shipping out beer, but you have little sense of how those shipments will
influence the next round of orders. Likewise, you have only a fuzzy concept of what
happens to the orders you place; you simply expect them to show up as new shipments
after a reasonable delay. Your perspective of the system looks something like this:

Given this picture of the situation, if you need beer it makes sense to place more
orders. If your beer doesn’t arrive when expected, you place still more orders. Given this
picture of the situation, your job is to “manage your position,” reacting to changes in
the “external imputs” of incoming orders, beer arrivals, and your supplier’s delivery delay.
What the typical “manage your position” view misses is the ways that your orders
interact with others’ orders to influence the variables you perceive as “external.” The
players are part of a larger system that most perceive only dimly. For example, if they
place a large number of orders, they can wipe out their supplier’s inventory, thereby
causing their supplier’s delivery delay to increase. If they, then, respond (as many do) by
placing still more orders, they create a “vicious cycle” that increases problems
throughout the system.
This vicious cycle can be set off by any player who panics, anywhere within the
system—be he retailer, or wholesaler. Even factories can create the same effect, simply
by failing to produce enough beer. Eventually, as one vicious circle influences other
vicious circles, the resulting panic spreads up and down the entire production-
distribution system. Once the panic builds momentum, I have seen players generate
orders that are twenty to fifty times what is actually needed to correct real inventory
imbalances.
To improve performance in the beer game players must redefine their scope of
influence. As a player in any position, your influence is broader than simply the limits of
your own position. You don’t simply place orders which go off into the ether and return
as beer supplies; those orders influence your supplier’s behavior. Which in turn might
influence yet another supplier’s behavior. In turn, your success is not just influenced by
your orders; it is influenced by the actions of everyone else in the system. For example, if
the brewery runs out of beer, then pretty soon, everyone else will run out of beer. Either
the larger system works, or your position will not work. Interestingly, in the beer game and in
many other systems, in order for you to succeed others must succeed as well. Moreover, each player
must share this systems viewpoint—for, if any single player panics and places a large
order, panics tend to reinforce throughout the system.

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There are two key guidelines for players in the game.
First, keep in mind the beer that you have ordered but which, because of the delay,
has not yet arrived. I call this the “Take two aspirin and wait” rule. If you have a
headache and need to take aspirin, you don’t keep taking aspirin every five minutes until
your headache goes away. You wait patiently for the aspirin to take effect because you
know that aspirin operates with a delay. Many players keep ordering beer every week
until their inventory discrepancy goes away.
Second, don’t panic. When your supplier can’t get you the beer you want as quickly as
normal, the worst thing you can do is order more beer. Yet, that is exactly what many
players do. It takes discipline to contain the overwhelming urge to order more when
backlogs are building and your customers are screaming. But, without that discipline, you
and everyone else will suffer.
These guidelines are consistently missed by most players because they are evident only
if you understand the interactions that cross the boundaries between different
positions. The “take two aspirin and wait” guideline comes from understanding the
delay embedded in the response of your supplier’s shipments to changes in your
orders placed. The “don’t panic” guideline comes from understanding the vicious cycle
created when your orders placed exacerbate your supplier’s delivery delay.
How well can players do if they follow these guidelines?
It is not possible to totally eliminate all overshoots in orders and all
inventory/backlog cycles. It is possible to hold these instabilities to a very modest level, a
small fraction of what occurred in Lover’s Beer. It is possible to achieve total costs that
are one fifth of the “do nothing” strategy, or about one tenth the typical costs achieved
by teams. In other words, substantial improvements are possible.
THE LEARNING DISABILITIES AND OUR WAYS OF THINKING
All of the learning disabilities described in Chapter 2 operate in the beer game:
• Because they “become their position,” people do not see how their actions affect
the other positions.
• Consequently, when problems arise, they quickly blame each other—”the enemy”
becomes the players at the other positions, or even the customers.
• When they get “proactive” and place more orders, they make matters worse.

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• Because their overordering builds up gradually, they don’t realize the direness of
their situation until it’s too late.
• By and large, they don’t learn from their experience because the most important
consequences of their actions occur elsewhere in the system, eventually coming back
to create the very problems they blame on others.17
• The “teams” running the different positions (usually there are two or three
individuals at each position) become consumed with blaming the other players for
their problems, precluding any opportunity to learn from each others’ experience.18
The deepest insights in the beer game come from seeing how these learning disabilities
are related to alternative ways of thinking in complex situations. For most, the overall
experience of playing the game is deeply dissatisfying because it is purely reactive. Yet,
most eventually realize that the source of the reactiveness lies in their own focus on week-
by-week events. Most of the players in the game get overwhelmed by the shortages of
inventory, surges in incoming orders, disappointing arrivals of new beer. When asked to
explain their decisions, they give classic “event explanations.” I ordered forty at Week 11
because my retailers ordered thirty-six and wiped out my inventory.” So long as they
persist in focusing on events, they are doomed to reactiveness.
The systems perspective shows that there are multiple levels of explanation in any
complex situation, as suggested by the diagram below. In some sense, all are equally
“true.” But their usefulness is quite different. Event explanations—”who did what to
whom”— doom their holders to a reactive stance. As discussed earlier, event
explanations are the most common in contemporary culture, and that is exactly why
reactive management prevails.
Systemic Structure (generative)
Patterns of Behavior (responsive)
Events (reactive)
Pattern of behavior explanations focus on seeing longer-term trends and assessing
their implications. For example, in the beer game, a pattern of behavior explanation
would be: “Production/distribution systems are inherently prone to cycles and
instability, which become more severe the further you move from the retailer.
Therefore, sooner or later, severe crises are likely at the brewery.” Pattern of behavior
explanations begin to break the grip of short-term reactiveness. At least they suggest
how, over a longer term, we can respond to shifting trends.19
The third level of explanation, the “structural” explanation, is the least common and most
powerful. It focuses on answering the question, “What causes the patterns of behavior?”
In the beer game, a structural explanation must show how orders placed, shipments, and
inventory interact to generate the observed patterns of instability and amplification;
taking into account the effects of built-in delays in filling new orders, and the vicious cycle
that arises when rising delivery delays lead to more orders placed. Though rare,
structural explanations, when they are clear and widely understood, have considerable
impact.
An exceptional example of a leader providing such insight was Franklin Roosevelt,
when he went on the radio on March 12, 1933, to explain the four-day “banking
holiday.” In a time of panic, Roosevelt calmly explained how the banking system
worked, structurally. “Let me state the simple fact that when you deposit money in a
bank the bank does not put the money into a safe-deposit vault,” he said. “It invests
your money in many different forms of credit— bonds, mortgages. In other words, the
bank puts your money to work to keep the wheels turning around . . . ” He explained
how banks were required to maintain reserves, but how those reserves were inadequate
if there were widespread withdrawals; and why closing the banks for four days was

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necessary to restore order. In so doing, he generated public support for a radical but
necessary action, and began his reputation as a master of public communication.20
The reason that structural explanations are so important is that only they address
the underlying causes of behavior at a level that patterns of behavior can be changed.
Structure produces behavior, and changing underlying structures can produce different
patterns of behavior. In this sense, structural explanations are inherently generative.
Moreover, since structure in human systems includes the “operating policies” of the
decision makers in the system, redesigning our own decision making redesigns the
system structure.21
For most players of the game, the deepest insight usually comes when they realize that
their problems, and their hopes for improvement, are inextricably tied to how they think.
Generative learning cannot be sustained in an organization where event thinking
predominates. It requires a conceptual framework of “structural” or systemic thinking,
the ability to discover structural causes of behavior. Enthusiasm for “creating our
future” is not enough.
As the players in the beer game come to understand the structures that cause its
behavior, they see more clearly their power to change that behavior, to adopt ordering
policies that work in the larger system. They also discover a bit of timeless wisdom
delivered years ago by Walt Kelly in his famous line from “Pogo”: “We have met the
enemy and he is us.”

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P A R T II
The Fifth
Discipline:
The Cornerstone
of the Learning
Organization

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4
THE LAWS OF
THE F I F T H
D I S C I P L I N E 1
1. Today’s problems come from yesterday’s “solutions.”
Once there was a rug merchant who saw that his most beautiful
carpet had a large bump in its center.2 He stepped on the bump to
flatten it out—and succeeded. But the bump reappeared in a new
spot not far away. He jumped on the bump again, and it disappeared
—for a moment, until it emerged once more in a new place. Again and
again he jumped, scuffing and mangling the rug in his frustration; until
finally he lifted one corner of the carpet and an angry snake slithered
out.
Often we are puzzled by the causes of our problems; when we
merely need to look at our own solutions to other problems in the
past. A well-established firm may find that this quarter’s sales are off
sharply. Why? Because the highly successful rebate program last
quarter led many customers to buy then rather than now. Or a new
manager attacks chronically high inventory costs and “solves” the
problem—except that the salesforce is now spending 20 percent
more time responding to angry complaints from customers who are

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still waiting for late shipments, and the rest of its time trying to
convince prospective customers that they can have “any color they
want so long as it’s black.”
Police enforcement officials will recognize their own version of this
law: arresting narcotics dealers on Thirtieth Street, they find that
they have simply transferred the crime center to Fortieth Street. Or,
even more insidiously, they learn that a new citywide outbreak of
drug-related crime is the result of federal officials intercepting a large
shipment of narcotics—which reduced the drug supply, drove up the
price, and caused more crime by addicts desperate to maintain their
habit.
Solutions that merely shift problems from one part of a system to
another often go undetected because, unlike the rug merchant, those
who “solved” the first problem are different from those who inherit
the new problem.
2. The harder you push, the harder the system pushes back.
In George Orwell’s Animal Farm, the horse Boxer always had the
same answer to any difficulty: “I will work harder,” he said. At first, his
well-intentioned diligence inspired everyone, but gradually, his hard
work began to backfire in subtle ways. The harder he worked, the
more work there was to do. What he didn’t know was that the pigs
who managed the farm were actually manipulating them all for their
own profit. Boxer’s diligence actually helped to keep the other animals
from seeing what the pigs were doing.3 Systems thinking has a name for
this phenomenon: “Compensating feedback”: when well-intentioned
interventions call forth responses from the system that offset the
benefits of the intervention. We all know what it feels like to be facing
compensating feedback—the harder you push, the harder the system
pushes back; the more effort you expend trying to improve matters,
the more effort seems to be required.
Examples of compensating feedback are legion. Many of the best
intentioned government interventions fall prey to compensating
feedback. In the 1960s there were massive programs to build low-
income housing and improve job skills in decrepit inner cities in the
United States. Many of these cities were even worse off in the 1970s
despite the largesse of government aid. Why? One reason was that
low-income people migrated from other cities and from rural areas to
those cities with the best aid programs. Eventually, the new housing
units became overcrowded and the job training programs were

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swamped with applicants. All the while, the city’s tax base continued
to erode, leaving more people trapped in economically depressed
areas.
Similar compensating feedback processes have operated to thwart
food and agricultural assistance to developing countries. More food
available has been “compensated for” by reduced deaths due to
malnutrition, higher net population growth, and eventually more
malnutrition.
Similarly, efforts to correct the U.S. trade imbalance by letting the
value of the dollar fall in the mid-1980s were compensated for by
foreign competitors who let prices of their goods fall in parallel (for
countries whose currency was “pegged to the dollar,” their prices
adjusted automatically). Efforts by foreign powers to suppress indig-
enous guerrilla fighters often lead to further legitimacy for the guer-
rillas’ cause, thereby strengthening their resolve and support, and
leading to still further resistance.
Many companies experience compensating feedback when one of
their products suddenly starts to lose its attractiveness in the market.
They push for more aggressive marketing; that’s what always
worked in the past, isn’t it? They spend more on advertising, and
drop the price; these methods may bring customers back temporarily,
but they also draw money away from the company, so it cuts corners
to compensate. The quality of its service (say, its delivery speed or
care in inspection) starts to decline. In the long run, the more
fervently the company markets, the more customers it loses.
Nor is compensating feedback limited to “large systems”—there
are plenty of personal examples. Take the person who quits smoking
only to find himself gaining weight and suffering such a loss in self-
image that he takes up smoking again to relieve the stress. Or the
protective mother who wants so much for her young son to get along
with his schoolmates that she repeatedly steps in to resolve problems
and ends up with a child who never learns to settle differences by
himself. Or the enthusiastic newcomer so eager to be liked that she
never responds to subtle criticisms of her work and ends up embit-
tered and labeled “a difficult person to work with.”
Pushing harder, whether through an increasingly aggressive inter-
vention or through increasingly stressful withholding of natural in-
stincts, is exhausting. Yet, as individuals and organizations, we not only
get drawn into compensating feedback, we often glorify the suffering
that ensues. When our initial efforts fail to produce lasting
improvements, we “push harder”—faithful, as was Boxer, to the

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creed that hard work will overcome all obstacles, all the while blinding
ourselves to how we are contributing to the obstacles ourselves.
3. Behavior grows better before it grows worse.
Low-leverage interventions would be much less alluring if it were not
for the fact that many actually work, in the short term. New houses
get built. The unemployed are trained. Starving children are spared.
Lagging orders turn upward. We stop smoking, relieve our child’s
stress, and avoid a confrontation with a new coworker. Compensating
feedback usually involves a “delay,” a time lag between the short-term
benefit and the long-term disbenefit. The New Yorker once published a
cartoon in which a man sitting in an armchair pushes over a giant
domino encroaching upon him from the left. “At last, I can relax,” he’s
obviously telling himself in the cartoon. Of course, he doesn’t see that
the domino is toppling another domino, which in turn is about to
topple another, and another, and that the chain of dominoes behind
him will eventually circle around his chair and strike him from the
right.
The better before worse response to many management interven-
tions is what makes political decision making so counterproductive. By
“political decision making,” I mean situations where factors other
than the intrinsic merits of alternative courses of action weigh in
making decisions—factors such as building one’s own power base,
or “looking good,” or “pleasing the boss.” In complex human systems
there are always many ways to make things look better in the short
run. Only eventually does the compensating feedback come back to
haunt you.
The key word is “eventually.” The delay in, for example, the
circle of dominoes, explains why systemic problems are so hard to
recognize. A typical solution feels wonderful, when it first cures the
symptoms. Now there’s improvement; or maybe even the problem
has gone away. It may be two, three, or four years before the problem
returns, or some new, worse problem arrives. By that time, given
how rapidly most people move from job to job, someone new is
sitting in the chair.
4. The easy way out usually leads back in.
In a modern version of an ancient Sufi story, a passerby encounters a
drunk on his hands and knees under a street lamp. He offers to help
and finds out that the drunk is looking for his house keys. After

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several minutes, he asks, “Where did you drop them?” The drunk
replies that he dropped them outside his front door. “Then why look
for them here?” asks the passerby. “Because,” says the drunk,
“there is no light by my doorway.”
We all find comfort applying familiar solutions to problems, sticking
to what we know best. Sometimes the keys are indeed under the street
lamp; but very often they are off in the darkness. After all, if the
solution were easy to see or obvious to everyone, it probably would
already have been found. Pushing harder and harder on familiar
solutions, while fundamental problems persist or worsen, is a reliable
indicator of nonsystemic thinking—what we often call the “what we
need here is a bigger hammer” syndrome.
5. The cure can be worse than the disease.
Sometimes the easy or familiar solution is not only ineffective; some-
times it is addictive and dangerous. Alcoholism, for instance, may start
as simple social drinking—a solution to the problem of low self-esteem
or work-related stress. Gradually, the cure becomes worse than the
disease; among its other problems it makes self-esteem and stress even
worse than they were to begin with.
The long-term, most insidious consequence of applying nonsystemic
solutions is increased need for more and more of the solution. This is
why ill-conceived government interventions are not just inef- -fective,
they are “addictive” in the sense of fostering increased dependency and
lessened abilities of local people to solve their own problems. The
phenomenon of short-term improvements leading to long-term
dependency is so common, it has its own name among systems
thinkers—it’s called “Shifting the Burden to the Inter-venor.” The
intervenor may be federal assistance to cities, food relief agencies, or
welfare programs. All “help” a host system, only to leave the system
fundamentally weaker than before and more in need of further help.
Finding examples of shifting the burden to the intervenor, as natural
resource expert and writer Donella Meadows says, “is easy and fun and
sometimes horrifying”4 and hardly limited to government intervenors.
We shift the burden of doing simple math from our knowledge of
arithmetic to a dependency on pocket calculators. We take away
extended families, and shift the burden for care of the aged to
nursing homes. In cities, we shift the burden from diverse local
communities to housing projects. The Cold War shifted respon-

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sibility for peace from negotiation to armaments, thereby strength-
ening the military and related industries. In business, we can shift the
burden to consultants or other “helpers” who make the company
dependent on them, instead of training the client managers to solve
problems themselves. Over time, the intervenor’s power grows—
whether it be a drug’s power over a person, or the military budget’s
hold over an economy, the size and scope of foreign assistance agen-
cies, or the budget of organizational “relief agencies.”
Shifting the Burden structures show that any long-term solution
must, as Meadows says, “strengthen the ability of the system to
shoulder its own burdens.” Sometimes that is difficult; other times it is
surprisingly easy. A manager who has shifted the burden of his
personnel problems onto a Human Relations Specialist may find that
the hard part is deciding to take the burden back; once that happens,
learning how to handle people is mainly a matter of time and com-
mitment.
6. Faster is slower.
This, too, is an old story: the tortoise may be slower, but he wins the
race. For most American business people the best rate of growth is
fast, faster, fastest. Yet, virtually all natural systems, from ecosystems
to animals to organizations, have intrinsically optimal rates of growth.
The optimal rate is far less than the fastest possible growth. When
growth becomes excessive—as it does in cancer—the system itself will
seek to compensate by slowing down; perhaps putting the
organization’s survival at risk in the process. In Chapter 8, the story of
People Express airlines offers a good example of how faster can lead
to slower—or even full stop—in the long run.
Observing these characteristics of complex systems, noted biologist
and essayist Lewis Thomas has observed, “When you are dealing with
a complex social system, such as an urban center or a hamster, with
things about it that you are dissatisfied with and eager to fix, you
cannot just step in and set about fixing with much hope of helping. This
realization is one of the sore discouragements of our century.”5
When managers first start to appreciate how these systems principles
have operated to thwart many of their own favorite interventions,
they can be discouraged and disheartened. The systems principles
can even become excuses for inaction—for doing nothing

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rather than possibly taking actions that might backfire, or even make
matters worse. This is a classic case of “a little knowledge being a
dangerous thing.” For the real implications of the systems perspective
are not inaction but a new type of action rooted in a new way of
thinking—systems thinking is both more challenging and more
promising than our normal ways of dealing with problems.
7. Cause and effect are not closely related in time and space.
Underlying all of the above problems is a fundamental characteristic of
complex human systems: “cause” and “effect” are not close in time
and space. By “effects,” I mean the obvious symptoms that indicate
that there are problems—drug abuse, unemployment, starving children,
falling orders, and sagging profits. By “cause” I mean the interaction of
the underlying system that is most responsible for generating the
symptoms, and which, if recognized, could lead to changes producing
lasting improvement. Why is this a problem? Because most of us
assume they are—most of us assume, most of the time, that cause and
effect are close in time and space.
When we play as children, problems are never far away from their
solutions—as long, at least, as we confine our play to one group of
toys. Years later, as managers, we tend to believe that the world
works the same way. If there is a problem on the manufacturing line, we
look for a cause in manufacturing. If salespeople can’t meet targets,
we think we need new sales incentives or promotions. If there is
inadequate housing, we build more houses. If there is inadequate food,
the solution must be more food.
As the players in the beer game described in Chapter 3 eventually
discover, the root of our difficulties is neither recalcitrant problems
nor evil adversaries—but ourselves. There is a fundamental mismatch
between the nature of reality in complex systems and our predominant
ways of thinking about that reality. The first step in correcting that
mismatch is to let go of the notion that cause and effect are close in
time and space.
8. Small changes can produce big results—but the areas of highest
leverage are often the least obvious.
Some have called systems thinking the “new dismal science” because
it teaches that most obvious solutions don’t work—at best, they
improve matters in the short run, only to make things worse in the
long run. But there is another side to the story. For systems

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thinking also shows that small, well-focused actions can sometimes
produce significant, enduring improvements, if they’re in the right
place. Systems thinkers refer to this principle as “leverage.”
Tackling a difficult problem is often a matter of seeing where the
high leverage lies, a change which—with a minimum of effort—
would lead to lasting, significant improvement.
The only problem is that high-leverage changes are usually highly
nonobvious to most participants in the system. They are not “close in
time and space” to obvious problem symptoms. This is what makes
life interesting.
Buckminster Fuller had a wonderful illustration of leverage that also
served as his metaphor for the principle of leverage—the “trim tab.” A
trim tab is a small “rudder on the rudder” of a ship. It is only a
fraction the size of the rudder. Its function is to make it easier to turn
the rudder, which, then, makes it easier to turn the ship. The larger
the ship, the more important is the trim tab because a large volume of
water flowing around the rudder can make it difficult to turn.
But what makes the trim tab such a marvelous metaphor for leverage
is not just its effectiveness, but its nonobviousness. If you knew
absolutely nothing about hydrodynamics and you saw a large oil
tanker plowing through the high seas, where would you push if you
wanted the tanker to turn left? You would probably go to the bow
and try to push it to the left. Do you have any idea how much force it
requires to turn an oil tanker going fifteen knots by pushing on its
bow? The leverage lies in going to the stern and pushing the tail end of
the tanker to the right, in order to turn the front to the left. This, of
course, is the job of the rudder. But in what direction does the rudder
turn in order to get the ship’s stern to turn to the right? Why to the
left, of course.
You see, ships turn because their rear end is “sucked around.”
The rudder, by being turned into the oncoming water, compresses
the water flow and creates a pressure differential. The pressure dif-
ferential pulls the stern in the opposite direction as the rudder is
turned. This is exactly the same way that an airplane flies: the air-
plane’s wing creates a pressure differential and the airplane is
“sucked” upward.
The trim tab—this very small device that has an enormous effect
on the huge ship—does the same for the rudder. When it is turned
to one side or the other, it compresses the water flowing around the
rudder and creates a small pressure differential that “sucks the rud-

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vs of the Fifih Discipline
der” in the desired direction. But, if you want the rudder to turn to
the left, what direction do you turn the trim tab?—to the right,
naturally.
The entire system—the ship, the rudder, and the trim tab—is
marvelously engineered through the principle of leverage. Yet, its
functioning is totally nonobvious if you do not understand the force
of hydrodynamics.
So, too, are the high-leverage changes in human systems nonob-
vious until we understand the forces at play in those systems.
There are no simple rules for finding high-leverage changes, but
there are ways of thinking that make it more likely. Learning to see
underlying “structures” rather than “events” is a starting point;
each of the “systems archetypes” developed below suggests areas of
high- and low-leverage change.
Thinking in terms of processes of change rather than “snapshots” is
another.
9. You can have your cake and eat it too—but not at once.
Sometimes, the knottiest dilemmas, when seen from the systems
point of view, aren’t dilemmas at all. They are artifacts of “snapshot”
rather than “process” thinking, and appear in a whole new light
once you think consciously of change over time.
For years, for example, American manufacturers thought they had to
choose between low cost and high quality. “Higher quality products
cost more to manufacture,” they thought. “They take longer to
assemble, require more expensive materials and components, and
entail more extensive quality controls.” What they didn’t consider was
all the ways the increasing quality and lowering costs could go hand in
hand, over time. What they didn’t consider was how basic
improvements in work processes could eliminate rework, eliminate
quality inspectors, reduce customer complaints, lower warranty
costs, increase customer loyality, and reduce advertising and sales
promotion costs. They didn’t realize that they could have both goals, if
they were willing to wait for one while they focused on the other.
Investing time and money to develop new skills and methods of
assembly, including new methods for involving everyone responsible for
improving quality, is an up front “cost.” Quality and costs may both go
up in the ensuing months; although some cost savings (like reduced
rework) may be achieved fairly quickly, the full range of cost savings
may take several years to harvest.

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Many apparent dilemmas, such as central versus local control, and
happy committed employees versus competitive labor costs, and
rewarding individual achievement versus having everyone feel valued
are by-products of static thinking. They only appear as rigid “either-
or” choices, because we think of what is possible at a fixed point in
time. Next month, it may be true that we must choose one or the
other, but the real leverage lies in seeing how both can improve over
time.6
10. Dividing an elephant in half does not produce two small elephants.
Living systems have integrity. Their character depends on the
whole. The same is true for organizations; to understand the most
challenging managerial issues requires seeing the whole system that
generates the issues.
Another Sufi tale illustrates the point of this law. As three blind
men encountered an elephant, each exclaimed aloud. “It is a large
rough thing, wide and broad, like a rug,” said the first, grasping an ear.
The second, holding the trunk, said, “I have the real facts. It is a
straight and hollow pipe.” And the third, holding a front leg, said, “It is
mighty and firm, like a pillar.” Are the three blind men any different
from the heads of manufacturing, marketing, and research in many
companies? Each sees the firm’s problems clearly, but none see how
the policies of their department interact with the others. Interestingly,
the Sufi story concludes by observing that “Given these men’s way
of knowing, they will never know an elephant.”
Seeing “whole elephants” does not mean that every organizational
issue can be understood only by looking at the entire organization.
Some issues can be understood only by looking at how major functions
such as manufacturing, marketing, and research interact; but there are
other issues where critical systemic forces arise within a given
functional area; and others where the dynamics of an entire industry
must be considered. The key principle, called the “principle of the
system boundary,” is that the interactions that must be examined are
those most important to the issue at hand, regardless of parochial
organizational boundaries.
What makes this principle difficult to practice is the way organi-
zations are designed to keep people from seeing important interac-
tions. One obvious way is by enforcing rigid internal divisions that
inhibit inquiry across divisional boundaries, such as those that grow up
between marketing, manufacturing, and research. Another is by

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“leaving” problems behind us, for someone else to clean up. Many
European cities have avoided the problems of crime, entrenched
poverty, and helplessness that afflict so many American inner cities
because they have forced themselves to face the balances that a
healthy urban area must maintain. One way they have done this is by
maintaining large “green belts” around the city that discourage the
growth of suburbs and commuters who work in the city but live
outside it. By contrast, many American cities have encouraged
steady expansion of surrounding suburbs, continually enabling
wealthier residents to move further from the city center and its prob-
lems. (Impoverished areas today, such as Harlem in New York and
Roxbury in Boston were originally upper-class suburbs.) Corporations
do the same thing by continually acquiring new businesses and
“harvesting” what they choose to regard as “mature” businesses
rather than reinvesting in them.
Incidentally, sometimes people go ahead and divide an elephant in
half anyway. You don’t have two small elephants then; you have a
mess. By a mess, I mean a complicated problem where there is no
leverage to be found because the leverage lies in interactions that
cannot be seen from looking only at the piece you are holding.
11. There is no blame.
We tend to blame outside circumstances for our problems. “Someone
else”—the competitors, the press, the changing mood of the
marketplace, the government—did it to us. Systems thinking shows us
that there is no outside; that you and the cause of your problems are
part of a single system. The cure lies in your relationship with your
“enemy.”

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5
A SHIFT OF MIND
S E E I NG T H E W O R L D A N E W
There is something in all of us that loves to put together a puzzle,
that loves to see the image of the whole emerge. The beauty of a
person, or a flower, or a poem lies in seeing all of it. It is interesting
that the words “whole” and “health” come from the same root (the
Old English hal, as in “hale and hearty”). So it should come as no
surprise that the unhealthiness of our world today is in direct propor-
tion to our inability to see it as a whole.
Systems thinking is a discipline for seeing wholes. It is a framework
for seeing interrelationships rather than things, for seeing patterns of
change rather than static “snapshots.” It is a set of general
principles—distilled over the course of the twentieth century, spanning
fields as diverse as the physical and social sciences, engineering, and
management. It is also a set of specific tools and techniques, originating
in two threads: in “feedback” concepts of cybernetics and in “servo-
mechanism” engineering theory dating back to the nineteenth century.
During the last thirty years, these tools have

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been applied to understand a wide range of corporate, urban, re-
gional, economic, political, ecological, and even physiological sys-
tems.1 And systems thinking is a sensibility—for the subtle
interconnectedness that gives living systems their unique character.
Today, systems thinking is needed more than ever because we are
becoming overwhelmed by complexity. Perhaps for the first time in
history, humankind has the capacity to create far more information
than anyone can absorb, to foster far greater interdependency than
anyone can manage, and to accelerate change far faster than
anyone’s ability to keep pace. Certainly the scale of complexity is
without precedent. All around us are examples of “systemic
breakdowns”—problems such as global warming, ozone depletion, the
international drug trade, and the U.S. trade and budget deficits —
problems that have no simple local cause. Similarly, organizations break
down, despite individual brilliance and innovative products, because
they are unable to pull their diverse functions and talents into a
productive whole.
Complexity can easily undermine confidence and responsibility— as
in the frequent refrain, “It’s all too complex for me,” or “There’s
nothing I can do. It’s the system.” Systems thinking is the antidote to
this sense of helplessness that many feel as we enter the “age of
interdependence.” Systems thinking is a discipline for seeing the
“structures” that underlie complex situations, and for discerning
high from low leverage change. That is, by seeing wholes we learn how
to foster health. To do so, systems thinking offers a language that
begins by restructuring how we think.
I call systems thinking the fifth discipline because it is the conceptual
cornerstone that underlies all of the five learning disciplines of this
book. All are concerned with a shift of mind from seeing parts to
seeing wholes, from seeing people as helpless reactors to seeing them
as active participants in shaping their reality, from reacting to the
present to creating the future. Without systems thinking, there is
neither the incentive nor the means to integrate the learning disci-
plines once they have come into practice. As the fifth discipline,
systems thinking is the cornerstone of how learning organizations
think about their world.
There is no more poignant example of the need for systems thinking
than the U.S.-U.S.S.R. arms race. While the world has stood and
watched for the past forty years, the two mightiest political powers
have engaged in a race to see who could get fastest to where no one
wanted to go. I have not yet met a person who is in favor of

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the arms race. Even those who regard it as absolutely necessary, or
who profit from it, will, in their quieter moments, confess that they
wish it were not necessary. It has drained the U.S. economy and
devastated the Soviet economy. It has ensnared successive admin-
istrations of political leaders, and terrified two generations of the
world’s citizens.
The roots of the arms race lie not in rival political ideologies, nor in
nuclear arms, but in a way of thinking both sides have shared. The
United States establishment, for example, has had a viewpoint of the
arms race that essentially resembled the following:

At the same time, the Soviet leaders have had a view of the arms
race somewhat resembling this:

From the American viewpoint, the Soviets have been the aggressor,
and U.S. expansion of nuclear arms has been a defensive response to
the threats posed by the Soviets. From the Soviet viewpoint, the
United States has been the aggressor, and Soviet expansion of
nuclear arms has been a defensive response to the threat posed by
the Americans.
But the two straight lines form a circle. The two nations’ individual,
“linear,” or nonsystemic viewpoints interact to create a “system,” a
set of variables that influence one another:

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The systems view of the arms race shows a perpetual cycle of
aggression. The United States responds to a perceived Threat to
Americans by increasing U.S. arms, which increases the Threat to the
Soviets, which leads to more Soviet arms, which increases the Threat
to the United States, which leads to more U.S. arms, which increases
the Threat to the Soviets, which . . . and so on, and so on. From their
individual viewpoints, each side achieves its short-term goal. Both
sides respond to a perceived threat. But their actions end up creating
the opposite outcome, increased threat, in the long run. Here, as in
many systems, doing the obvious thing does not produce the obvious, desired
outcome. The long-term result of each side’s efforts to be more secure
is heightened insecurity for all, with a combined nuclear stockpile of
ten thousand times the total firepower of world War II.
Interestingly, both sides failed for years to adopt a true systems
view, despite an abundance of “systems analysts,” sophisticated
analyses of each others’ nuclear arsenals, and complex computer
simulations of attack and counterattack war scenarios.2 Why then
have these supposed tools for dealing with complexity not empowered
us to escape the illogic of the arms race?
The answer lies in the same reason that sophisticated tools of
forecasting and business analysis, as well as elegant strategic plans,
usually fail to produce dramatic breakthroughs in managing a business.
They are all designed to handle the sort of complexity in which there are
many variables: detail complexity. But there are two types of complexity. The
second type is dynamic complexity, situations where cause and effect are
subtle, and where the effects over time of interventions are not
obvious. Conventional forecasting, planning, and analysis methods are
not equipped to deal with dynamic complexity. Mixing many
ingredients in a stew involves detail complexity, as does following a
complex set of instructions to assemble a machine, or taking inventory
in a discount retail store. But none of these situations is especially
complex dynamically.
When the same action has dramatically different effects in the
short run and the long, there is dynamic complexity. When an action
has one set of consequences locally and a very different set of con-
sequences in another part of the system, there is dynamic complexity.
When obvious interventions produce nonobvious consequences, there
is dynamic complexity. A gyroscope is a dynamically complex machine:
If you push downward on one edge, it moves to the left; if you push
another edge to the left, it moves upward. Yet, how trivi-

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ally simple is a gyroscope when compared with the complex dy-
namics of an enterprise, where it takes days to produce something,
weeks to develop a new marketing promotion, months to hire and
train new people, and years to develop new products, nurture man-
agement talent, and build a reputation for quality—and all of these
processes interact continually.
The real leverage in most management situations lies in understanding dynamic
complexity, not detail complexity. Balancing market growth and
capacity expansion is a dynamic problem. Developing a
profitable mix of price, product (or service) quality, design, and
availability that make a strong market position is a dynamic
problem. Improving quality, lowering total costs, and satisfying
customers in a sustainable manner is a dynamic problem.
Unfortunately, most “systems analyses” focus on detail complexity
not dynamic complexity. Simulations with thousands of variables and
complex arrays of details can actually distract us from seeing patterns
and major interrelationships. In fact, sadly, for most people “systems
thinking” means “fighting complexity with complexity,” devising
increasingly “complex” (we should really say “detailed”) solutions to
increasingly “complex” problems. In fact, this is the antithesis of real
systems thinking.
The arms race is, most fundamentally, a problem of dynamic com-
plexity. Insight into the causes and possible cures requires seeing the
interrelationships, such as between our actions to become more secure
and the threats they create for the Soviets. It requires seeing the
delays between action and consequence, such as the delay between a
U.S. decision to build up arms and a consequent Soviet counter-
buildup. And it requires seeing patterns of change, not just snapshots,
such as continuing escalation.
Seeing the major interrelationships underlying a problem leads to
new insight into what might be done. In the case of the arms race, as
in any escalation dynamic, the obvious question is, “Can the vicious
cycle be run in reverse?” “Can the arms race be run backward?”
This may be just what is happening today. Soviet General Secretary
Mikhail Gorbachev’s initiatives in arms reduction have started a new
“peace race” with both sides eager to keep pace with the other’s
reductions in nuclear arsenals. It is too early to tell whether the shifts
in policy initiated by the Soviets in 1988 and 1989 will initiate a
sustained unwinding of the U.S.-U.S.S.R. arms race. There

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are many other factors in the global geopolitical system beyond the
pure U.S.-U.S.S.R. interaction. But we appear to be witnessing the first
glimmer of a genuinely systemic approach.3
The essence of the discipline of systems thinking lies in a shift of
mind:
• seeing interrelationships rather than linear cause-effect
chains, and
• seeing processes of change rather than snapshots
The practice of systems thinking starts with understanding a simple
concept called “feedback” that shows how actions can reinforce or
counteract (balance) each other. It builds to learning to recognize types of
“structures” that recur again and again: the arms race is a generic or
archetypal pattern of escalation, at its heart no different from turf
warfare between two street gangs, the demise of a marriage, or the
advertising battles of two consumer goods companies fighting for
market share. Eventually, systems thinking forms a rich language for
describing a vast array of interrelationships and patterns of change.
Ultimately, it simplifies life by helping us see the deeper patterns lying
behind the events and the details.
Learning any new language is difficult at first. But as you start to
master the basics, it gets easier. Research with young children has
shown that many learn systems thinking remarkably quickly.4 It appears
that we have latent skills as systems thinkers that are undeveloped,
even repressed by formal education in linear thinking. Hopefully,
what follows will help rediscover some of those latent skills and bring
to the surface the systems thinker that is within each of us.
S E E I N G C I R C L E S O F C A U S A L I T Y 5
Reality is made up of circles but we see straight lines. Herein lie the
beginnings of our limitation as systems thinkers. One of the reasons
for this fragmentation in our thinking stems

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from our language. Language shapes perception. What we see de-
pends on what we are prepared to see. Western languages, with their
subject-verb-object structure, are biased toward a linear view.6 If we
want to see systemwide interrelationships, we need a language of
interrelationships, a language made up of circles. Without such a
language, our habitual ways of seeing the world produce fragmented
views and counterproductive actions—as it has done for decision
makers in the arms race. Such a language is important in facing
dynamically complex issues and strategic choices, especially when
individuals, teams, and organizations need to see beyond events and
into the forces that shape change.
To illustrate the rudiments of the new language, consider a very
simple system—filling a glass of water. You might think, “That’s not a
system—it’s too simple.” But think again.
From the linear viewpoint, we say, “I am filling a glass of water.”
What most of us have in mind looks pretty much like the following
picture:

But, in fact, as we fill the glass, we are watching the water level rise.
We monitor the “gap” between the level and our goal, the “desired
water level.” As the water approaches the desired level, we adjust the
faucet position to slow the flow of water, until it is turned off when
the glass is full. In fact, when we fill a glass of water we operate in a
“water-regulation” system involving five variables: our desired water
level, the glass’s current water level, the gap between the two, the
faucet position, and the water flow. These variables are organized in a
circle or loop of cause-effect relationships which is called a “feedback
process.” The process operates continuously to bring the water level
to its desired level:

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People get confused about “feedback” because we often use the
word in a somewhat different way—to gather opinions about an act
we have undertaken. “Give me some feedback on the brewery deci-
sion,” you might say. “What did you think of the way I handled it?” In
that context, “positive feedback” means encouraging remarks and
“negative feedback” means bad news. But in systems thinking,
feedback is a broader concept. It means any reciprocal flow of influ-
ence. In systems thinking it is an axiom that every influence is both
cause and effect. Nothing is ever influenced in just one direction.
HOW TO READ A SYSTEMS DIAGRAM
The key to seeing reality systemically is seeing circles of influence
rather than straight lines. This is the first step to breaking out of
the reactive mindset that comes inevitably from “linear”
thinking. Every circle tells a story. By tracing the flows of
influence, you can see patterns that repeat themselves, time after
time, making situations better or worse.
From any element in a situation, you can trace arrows that
represent influence on another element:

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Above, the faucet position arrow points to water flow. Any
change made to the faucet position will alter the flow of water.
But arrows never exist in isolation:

To follow the story, start at any element and watch the
action ensue, circling as the train in a toy railroad does
through its recurring journey. A good place to start is with the
action being taken by the decision maker:
I set the faucet position, which adjusts the water flow, which changes the
water level. As the water level changes, the perceived gap (between the
current and desired water levels) changes. As the gap changes, my hand’s
position on the faucet changes again. And so on . . .
When reading a feedback circle diagram, the main skill is to
see the “story” that the diagram tells: how the structure creates
a particular pattern of behavior (or, in a complex structure,
several patterns of behavior) and how that pattern might be
influenced. Here the story is filling the water glass and gradually
closing down the faucet as the glass fills.
Though simple in concept, the feedback loop overturns deeply
ingrained ideas—such as causality. In everyday English we say, “I am
filling the glass of water” without thinking very deeply about the real
meaning of the statement. It implies a one-way causality—”I

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am causing the water level to rise.” More precisely, “My hand on
the faucet is controlling the rate of flow of water into the glass.”
Clearly, this statement describes only half of the feedback process: the
linkages from “faucet position” to “flow of water” to “water level.”

But it would be just as true to describe only the other “half” of
the process: “The level of water in the glass is controlling my hand.”
pesiReo
WAT&*
WAT6P
level*
Both statements are equally incomplete. The more complete state-
ment of causality is that my intent to fill a glass of water creates a
system that causes water to flow in when the level is low, then shuts
the flow off when the glass is full. In other words, the structure
causes the behavior. This distinction is important because seeing
only individual actions and missing the structure underlying the actions,
as we saw in the beer game in Chapter 3, lies at the root of our
powerlessness in complex situations.

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In fact, all causal attributions made in everyday English are highly
suspect! Most are embedded in linear ways of seeing. They are at best
partially accurate, inherently biased toward describing portions of
reciprocal processes, not the entire processes.
Another idea overturned by the feedback perspective is anthro-
pocentrism—or seeing ourselves as the center of activities. The simple
description, “I am filling the glass of water,” suggests a world of human
actors standing at the center of activity, operating on an inanimate
reality. From the systems perspective, the human actor is part of the feedback
process, not standing apart from it. This represents a profound shift in awareness.
It allows us to see how we are continually both influenced by and
influencing our reality. It is the shift in awareness so ardently
advocated by ecologists in their cries that we see ourselves as part of
nature, not separate from nature. It is the shift in awareness
recognized by many (but not all) of the world’s great philosophical
systems—for example, the Bhagavad Gita’s chastisement:
All actions are wrought by the qualities of nature only. The self,
deluded by egoism, thinketh: “I am the doer.”7
In addition, the feedback concept complicates the ethical issue of
responsibility. In the arms race, who is responsible? From each
side’s linear view, responsibility clearly lies with the other side: “It is
their aggressive actions, and their nationalistic intent, that are causing
us to respond by building our arms.” A linear view always suggests a
simple locus of responsibility. When things go wrong, this is seen as
blame—”he, she, it did it”—or guilt—”I did it.” At a deep level,
there is no difference between blame and guilt, for both spring from
linear perceptions. From the linear view, we are always looking for
someone or something that must be responsible—they can even be
directed toward hidden agents within ourselves. When my son was
four years old, he used to say, “My stomach won’t let me eat it,”
when turning down his vegetables. We may chuckle, but is his
assignment of responsibility really different from the adult who says,
“My neuroses keep me from trusting people.”
In mastering systems thinking, we give up the assumption that
there must be an individual, or individual agent, responsible. The
feedback perspective suggests that everyone shares responsibility for problems
generated by a system. That doesn’t necessarily imply that everyone
involved can exert equal leverage in changing the system.

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But it does imply that the search for scapegoats—a particularly al-
luring pastime in individualistic cultures such as ours in the United
States—is a blind alley.
Finally, the feedback concept illuminates the limitations of our
language. When we try to describe in words even a very simple
system, such as filling the water glass, it gets very awkward: “When I
fill a glass of water, there is a feedback process that causes me to
adjust the faucet position, which adjusts the water flow and feeds
back to alter the water position. The goal of the process is to make
the water level rise to my desired level.” This is precisely why a new
language for describing systems is needed. If it is this awkward to
describe a system as simple as filling a water glass, imagine our difficulties
using everyday English to describe the multiple feedback processes in an
organization.
All this takes some getting used to. We are steeped in a linear
language for describing our experience. We find simple statements
about causality and responsibility familiar and comfortable. It is not
that they must be given up, anymore than you give up English to
learn French. There are many situations where simple linear descrip-
tions suffice and looking for feedback processes would be a waste of
time. But not when dealing with problems of dynamic complexity.
REINFORCING AND BALANCING FEEDBACK AND
DELAYS: THE BUILDING BLOCKS OF
SYSTEMS THINKING
There are two distinct types of feedback processes: reinforcing and
balancing. Reinforcing (or amplifying) feedback processes are the engines
of growth. Whenever you are in a situation where things are growing,
you can be sure that reinforcing feedback is at work. Reinforcing
feedback can also generate accelerating decline—a pattern of decline
where small drops amplify themselves into larger and larger drops,
such as the decline in bank assets when there is a financial panic.
Balancing (or stabilizing) feedback operates whenever there is a goal-
oriented behavior. If the goal is to be not moving, then balancing
feedback will act the way the brakes in a car do. If the goal is to be
moving at sixty miles per hour, then balancing feedback will cause you
to accelerate to sixty but no faster. The “goal” can be an explicit target,
as when a firm seeks a desired market share, or it can be

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implicit, such as a bad habit, which despite disavowing, we stick to
nevertheless.
In addition, many feedback processes contain “delays,” interruptions
in the flow of influence which make the consequences of actions
occur gradually.
All ideas in the language of systems thinking are built up from
these elements, just as English sentences are built up from nouns
and verbs. Once we have learned the building blocks, we can begin
constructing stories: the systems archetypes of the next chapter.
REINFORCING FEEDBACK: DISCOVERING
HOW SMALL CHANGES CAN GROW
If you are in a reinforcing feedback system, you may be blind to how
small actions can grow into large consequences—for better or for
worse. Seeing the system often allows you to influence how it works.
For example, managers frequently fail to appreciate the extent to
which their own expectations influence subordinates’ performance. If
I see a person as having high potential, I give him special attention to
develop that potential. When he flowers, I feel that my original
assessment was correct and I help him still further. Conversely,
those I regard as having lower potential languish in disregard and
inattention, perform in a disinterested manner, and further justify, in
my mind, the lack of attention I give them.
Psychologist Robert Merton first identified this phenomenon as the
“self-fulfilling prophecy.”8 It is also known as the “Pygmalion effect,”
after the famous George Bernard Shaw play (later to become My Fair
Lady). Shaw in turn had taken his title from Pygmalion, a character in
Greek and Roman mythology, who believed so strongly in the beauty
of the statue he had carved that it came to life.
Pygmalion effects have been shown to operate in countless situa-
tions.9 An example occurs in schools, where a teacher’s opinion of a
student influences the behavior of that student. Jane is shy and does
particularly poorly in her first semester at a new school (because her
parents were fighting constantly). This leads her teacher to form an
opinion that she is unmotivated. Next semester, the teacher pays
less attention to Jane and she does poorly again, withdrawing further.
Over time, Jane gets caught in an ever-worsening spiral of withdrawal,
poor performance, “labeling” by her teachers, inattention, and further
withdrawing. Thus, students are unintentionally

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“tracked” into a high self-image of their abilities, where they get
personal attention, or a low self-image, where their poor class work is
reinforced in an ever-worsening spiral.
In reinforcing processes such as the Pygmalion effect, a small change
builds on itself. Whatever movement occurs is amplifed, producing
more movement in the same direction. A small action snowballs, with
more and more and still more of the same, resembling compounding
interest. Some reinforcing (amplifying) processes are “vicious cycles,”
in which things start off badly and grow worse. The “gas crisis” was a
classic example. Word that gasoline was becoming scarce set off a
spate of trips to the local service station, to fill up. Once people
started seeing lines of cars, they were convinced that the crisis was
here. Panic and hoarding then set in. Before long, everyone was
“topping off” their tanks when they were only one-quarter empty, lest
they be caught when the pumps went dry. A run on a bank is another
example, as are escalation structures such as the arms race or price
wars.
But there’s nothing inherently bad about reinforcing loops. There
are also “virtuous cycles”—processes that reinforce in desired di-
rections. For instance, physical exercise can lead to a reinforcing
spiral; you feel better, thus you exercise more, thus you’re rewarded by
feeling better and exercise still more. The arms race run in reverse, if
it can be sustained, makes another virtuous circle. The growth of any
new product involves reinforcing spirals. For example, many products
grow from “word of mouth.” Word of mouth about a product can
reinforce a snowballing sense of good feeling (as occurred with the
Volkswagen Beetle and more recent Japanese imports) as satisfied
customers tell others who then become satisfied customers, who tell
still others.
Here is how you might diagram such a process:

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Reinforcing Sales Process Caused by Customers Talking to Each
Other About Your Product
This diagram shows a reinforcing feedback process wherein
actions snowball. Again, you can follow the process by walking
yourself around the circle:
If the product is a good product, more sales means more satisfied
customers, which means more positive word of mouth. That will lead to
still more sales, which means even more widespread word of mouth . . . and
so on. On the other hand, if the product is defective, the virtuous cycle
becomes a vicious cycle: sales lead to less satisfied customers, less positive
word of mouth, and less sales; which leads to still less positive word of
mouth and less sales.
The behavior that results from a reinforcing loop is either acceler-
ating growth or accelerating decline. For example, the arms race
produces an accelerating growth of arms stockpiles:

HOW TO READ A
REINFORCING CIRCLE

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Positive word of mouth produced rapidly rising sales of Volkswa-
gens during the 1950s, and videocassette recorders during the 1980s. A
bank run produces an accelerating decline in a bank’s deposits.
Folk wisdom speaks of reinforcing loops in terms such as “snowball
effect,” “bandwagon effect,” or “vicious circle,” and in phrases
describing particular systems: “the rich get richer and the poor get
poorer.” In business, we know that “momentum is everything,” in
building confidence in a new product or within a fledgling organization.
We also know about reinforcing spirals running the wrong way. “The
rats are jumping ship” suggests a situation where, as soon as a few
people lose confidence, their defection will cause others to defect in a
vicious spiral of eroding confidence. Word of mouth can easily work in
reverse, and (as occurred with contaminated over-the-counter drugs)
produce marketplace disaster.
Both good news and bad news reinforcing loops accelerate so
quickly that they often take people by surprise. A French school-
children’s jingle illustrates the process. First there is just one lily pad in
a corner of a pond. But every day the number of lily pads doubles. It
takes thirty days to fill the pond, but for the first twenty-eight days,
no one even notices. Suddenly, on the twenty-ninth day, the pond is
half full of lily pads and the villagers become concerned. But by this time
there is littie that can be done. The next day their worst fears come
true. That’s why environmental dangers are so worrisome, especially
those that follow reinforcing patterns (as many environmentalists fear
occurs with such pollutants as CFCs). By the time the problem is
noticed, it may be too late. Extinctions of species often follow patterns
of slow, gradually accelerating decline over long time periods, then
rapid demise. So do extinctions of corporations.
But pure accelerating growth or decline rarely continues un-
checked in nature, because reinforcing processes rarely occur in
isolation. Eventually, limits are encountered—which can slow
growth, stop it, divert it, or even reverse it. Even the lily pads stop
growing when the limit of the pond’s perimeter is encountered.
These limits are one form of balancing feedback, which, after reinforcing
processes, is the second basic element of systems thinking.

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BALANCING PROCESSES:
DISCOVERING THE SOURCES OF STABILITY
AND RESISTANCE
If you are in a balancing system, you are in a system that is seeking
stability. If the system’s goal is one you like, you will be happy. If it is
not, you will find all your efforts to change matters frustrated— until
you can either change the goal or weaken its influence.
Nature loves a balance—but many times, human decision makers act
contrary to these balances, and pay the price. For example, managers
under budget pressure often cut back staff to lower costs, but
eventually discover that their remaining staff is now overworked, and
their costs have not gone down at all—because the remaining work
has been farmed out to consultants, or because overtime has made
up the difference. The reason that costs don’t stay down is that the
system has its own agenda. There is an implicit goal, unspoken but very
real—the amount of work that is expected to get done.
In a balancing (stabilizing) system, there is a self-correction that
attempts to maintain some goal or target. Filling the glass of water is a
balancing process with the goal of a full glass. Hiring new employees is
a balancing process with the goal of having a target work force size or
rate of growth. Steering a car and staying upright on a bicycle are also
examples of balancing processes, where the goal is heading in a desired
direction.
Balancing feedback processes are everywhere. They underlie all
goal-oriented behavior. Complex organisms such as the human body
contain thousands of balancing feedback processes that maintain
temperature and balance, heal our wounds, adjust our eyesight to
the amount of light, and alert us to threat. A biologist would say that all
of these processes are the mechanisms by which our body achieves
homeostasis—its ability to maintain conditions for survival

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in a changing environment. Balancing feedback prompts us to eat
when we need food, and to sleep when we need rest, or—as shown
in the diagram above—to put on a sweater when we are cold.
As in all balancing processes, the crucial element—our body tem-
perature—gradually adjusts itself toward its desired level:

Organizations and societies resemble complex organisms because
they too have myriad balancing feedback processes. In corporations,
the production and materials ordering process is constantly adjusting in
response to changes in incoming orders; short-term (discounts) and
long-term (list) prices adjust in response to changes in demand or
competitors’ prices; and borrowing adjusts with changes in cash
balances or financing needs.

Planning creates longer-term balancing processes. A human re-
source plan might establish long-term growth targets in head count
and in skill profile of the work force to match anticipated needs.
Market research and R&D plans shape new product development
and investments in people, technologies, and capital plant to build
competitive advantage.
What makes balancing processes so difficult in management is that
the goals are often implicit, and no one recognizes that the balancing
process exists at all. I recall a good friend who tried, fruitlessly, to
reduce burnout among professionals in his rapidly growing training
business. He wrote memos, shortened working hours, even closed

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and locked offices earlier—all attempts to get people to stop over-
working. But all these actions were offset—people ignored the
memos, disobeyed the shortened hours, and took their work home
with them when the offices were locked. Why? Because an unwritten
norm in the organization stated that the real heros, the people who
really cared and who got ahead in the organization, worked seventy
hours a week—a norm that my friend had established himself by his
own prodigious energy and long hours.

TIM6
To understand how an organism works we must understand its
balancing processes—those that are explicit and implicit. We could
master long lists of body parts, organs, bones, veins, and blood
vessels and yet we would not understand how the body functions—
until we understand how the neuromuscular system maintains balance,
or how the cardiovascular system maintains blood pressure and
oxygen levels. This is why many attempts to redesign social systems
fail. The state-controlled economy fails because it severs the multiple
self-correcting processes that operate in a free market system.10 This is
why corporate mergers often fail. When two hospitals in Boston, both
with outstanding traditions of patient care, were

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This diagram shows a balancing feedback process.
To walk yourself through the process, it’s generally easiest to
start at the gap—the discrepancy between what is desired and
what exists:
Here, there is a shortfall in cash on hand for our cashflow needs. (In
other words, there’s a gap between our desired and actual cash balances.)
Then look at the actions being taken to correct the gap:
We borrow money, which makes our cash balance larger, and the gap
decreases.
The chart shows that a balancing process is always operating
to reduce a gap between what is desired and what exists.
Moreover, such goals as desired cash balances change over
time with growth or decline in the business. Regardless, the
balancing process will continue to work to adjust actual cash
balances to what is needed, even if the target is moving.
HOW TO READ A
BALANCING CIRCLE DIAGRAM

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merged several years ago, the new larger hospital had state-of-the-art
facilities but lost the spirit of personal care and employee loyalty that
had characterized the original institutions. In the merged hospital,
subtle balancing processes in the older hospitals that monitored
quality, paid attention to employee needs, and maintained friendly
relationships with patients were disrupted by new administrative
structures and procedures.
Though simple in concept, balancing processes can generate sur-
prising and problematic behavior if they go undetected.
In general, balancing loops are more difficult to see than reinforcing
loops because it often looks like nothing is happening. There’s no
dramatic growth of sales and marketing expenditures, or nuclear arms,
or lily pads. Instead, the balancing process maintains the status quo,
even when all participants want change. The feeling, as Lewis
Carroll’s Queen of Hearts put it, of needing “all the running you can
do to keep in the same place,” is a clue that a balancing loop may
exist nearby.
Leaders who attempt organizational change often find themselves
unwittingly caught in balancing processes. To the leaders, it looks as
though their efforts are clashing with sudden resistance that seems to
come from nowhere. In fact, as my friend found when he tried to
reduce burnout, the resistance is a response by the system, trying to
maintain an implicit system goal. Until this goal is recognized, the
change effort is doomed to failure. So long as the leader continues to
be the “model,” his work habits will set the norm. Either he must
change his habits, or establish new and different models.
Whenever there is “resistance to change,” you can count on there
being one or more “hidden” balancing processes. Resistance to
change is neither capricious nor mysterious. It almost always arises
from threats to traditional norms and ways of doing things. Often
these norms are woven into the fabric of established power relation-
ships. The norm is entrenched because the distribution of authority
and control is entrenched. Rather than pushing harder to overcome
resistance to change, artful leaders discern the source of the resis-
tance. They focus directly on the implicit norms and power relation-
ships within which the norms are embedded.

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DELAYS: WHEN THINGS HAPPEN . . . EVENTUALLY
As we’ve seen, systems seem to have minds of their own. Nowhere is
this more evident than in delays—interruptions between your actions
and their consequences. Delays can make you badly overshoot your
mark, or they can have a positive effect if you recognize them and
work with them.
“One of the highest leverage points for improving system perfor-
mance,” says Ray Stata, CEO of Analog Devices, “is the minimization
of system delays.” Stata is referring to an increasing awareness on
the part of American manufacturers that while they have worked
traditionally to control tightly the amount of inventory in warehouses,
their Japanese counterparts have concentrated on reducing delays—a
much more successful effort. “The way leading companies manage
time,” says George Stalk, vice president of the Boston Consulting
Group, “—in production, in new product development, in sales and
distribution—represents the most powerful new source of competitive
disadvantage.”
Delays between actions and consequences are everywhere in
human systems. We invest now to reap a benefit in the distant future;
we hire a person today but it may be months before he or she is fully
productive; we commit resources to a new project knowing that it
will be years before it will pay off. But delays are often unappreciated
and lead to instability. For example, the decision makers in the beer
game consistently misjudged the delays that kept them from getting
orders filled when they thought they would.
Delays, when the effect of one variable on another takes time,
constitute the third basic building block for a systems language. Vir-
tually all feedback processes have some form of delay. But often the
delays are either unrecognized or not well understood. This can
result in “overshoot,” going further than needed to achieve a desired
result. The delay between eating and feeling full has been the nemesis
of many a happy diner; we don’t yet feel full when we should stop
eating, so we keep going until we are overstuffed. The delay between
starting a new construction project and its completion results in
overbuilding real estate markets and an eventual shakeout. In the beer
game, the delay between placing and receiving orders for beer regularly
results in overordering.
Unrecognized delays can also lead to instability and breakdown,
especially when they are long. Adjusting the shower temperature,

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Here’s our earlier “water faucet” feedback diagram again —
but this time, with antiquated plumbing. Now there’s a sig-
nificant delay between the time you turn the faucet, and the
time you see change in the water flow. Those two cross-hatch
lines represent the delay.
Arrows with cross-hatch lines don’t tell you how many sec-
onds (or years) the delay will last. You only know it’s long
enough to make a difference.
When you follow an arrow with a delay, add the word
“eventually” to the story you tell in your mind. “I moved the
faucet handle, which eventually changed the water flow.” Or, “I
began a new construction project and, eventually, the houses
were ready.” You may even want to skip a beat— “one,
two”—as you talk through the process.
HOW TO READ A DELAY

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for instance, is far more difficult when there is a ten-second delay
before the water temperature adjusts, then when the delay takes only
a second or two.
CURRENT

During that ten seconds after you turn up the heat, the water
remains cold. You receive no response to your action; so you perceive
that your act has had no effect. You respond by continuing to turn up
the heat. When the hot water finally arrives, a 190-degree water
gusher erupts from the faucet. You jump out and turn it back; and,
after another delay, it’s frigid again. On and on you go, through the
balancing loop process. Each cycle of adjustments compensates
somewhat for the cycle before. A diagram would look like this:

The more aggressive you are in your behavior—the more drastically
you turn the knobs—the longer it will take to reach the right
temperature. That’s one of the lessons of balancing loops with delays:
that aggressive action often produces exactly the opposite of what is
intended. It produces instability and oscillation, instead of moving you
more quickly toward your goal.
Delays are no less problematic in reinforcing loops. In the arms
race example, each side perceives itself as gaining advantage from

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expanding its arsenal because of the delay in the other side’s re*
sponse. This delay can be as long as five years because of the time
required to gather intelligence on the other side’s weaponry, and to
design and deploy new weapons. It is this temporary perceived ad-
vantage that keeps the escalation process going. If each side were able
to respond instantly to buildups of its adversary, incentives to keep
building would be nil.
The systems viewpoint is generally oriented toward the long-term
view. That’s why delays and feedback loops are so important. In the
short term, you can often ignore them; they’re inconsequential. They
only come back to haunt you in the long term.
Reinforcing feedback, balancing feedback, and delays are all fairly
simple. They come into their own as building blocks for the “systems
archetypes”—more elaborate structures that recur in our personal
and work lives again and again.

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6
NATURE’S
TEMPLATES:
IDENTIFYING THE
PATTERNS THAT
CONTROL EVENTS
ome years ago, I witnessed a tragic accident while on an early spring
canoe trip in Maine. We had come to a small dam, and put in to
shore to portage around the obstacle. A second group arrived,
and a young man who had been drinking decided to take his rubber raft
over the dam. When the raft overturned after going over the dam, he
was dumped into the freezing water. Unable to reach him, we
watched in horror as he struggled desperately to swim downstream
against the backwash at the base of the dam. His struggle lasted only a
few minutes; then he died of hypothermia. Immediately, his limp body
was sucked down into the swirling water. Seconds later, it popped up,
ten yards downstream, free of the maelstrom at the base of the dam.
What he had tried in vain to achieve in the last moments of his life, the
currents accomplished for him within seconds after his death.
Ironically, it was his very struggle against the forces at the base of the
dam that killed him. He didn’t know that the only way out was
“counterintuitive. If he hadn’t tried to keep his head above water,
but instead dived down to where the current flowed downstream, he
would have survived.
S

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expanding its arsenal because of the delay in the other side’s re-
sponse. This delay can be as long as five years because of the time
required to gather intelligence on the other side’s weaponry, and to
design and deploy new weapons. It is this temporary perceived ad-
vantage that keeps the escalation process going. If each side were able
to respond instantly to buildups of its adversary, incentives to keep
building would be nil.
The systems viewpoint is generally oriented toward the long-term
view. That’s why delays and feedback loops are so important. In the
short term, you can often ignore them; they’re inconsequential. They
only come back to haunt you in the long term.
Reinforcing feedback, balancing feedback, and delays are all fairly
simple. They come into their own as building blocks for the “systems
archetypes”—more elaborate structures that recur in our personal and
work lives again and again.

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6
NATURE’S
TEMPLATES:
IDENTIFYING THE
PATTERNS THAT
CONTROL EVENTS
ome years ago, I witnessed a tragic accident while on an early spring
canoe trip in Maine. We had come to a small dam, and put in to
shore to portage around the obstacle. A second group arrived, and
a young man who had been drinking decided to take his rubber raft
over the dam. When the raft overturned after going over the dam, he
was dumped into the freezing water. Unable to reach him, we
watched in horror as he struggled desperately to swim downstream
against the backwash at the base of the dam. His struggle lasted only a
few minutes; then he died of hypothermia. Immediately, his limp body
was sucked down into the swirling water. Seconds later, it popped up,
ten yards downstream, free of the maelstrom at the base of the dam.
What he had tried in vain to achieve in the last moments of his life, the
currents accomplished for him within seconds after his death.
Ironically, it was his very struggle against the forces at the base of the
dam that killed him. He didn’t know that the only way out was
“counterintuitive. If he hadn’t tried to keep his head above water,
but instead dived down to where the current flowed downstream, he
would have survived.
S

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This tragic story illustrates the essence of the systems perspective,
first shown in the beer game in Chapter 3, and again in the arms race at
the beginning of Chapter 5. Structures of which we are unaware hold us
prisoner. Conversely, learning to see the structures within which we
operate begins a process of freeing ourselves from previously unseen
forces and ultimately mastering the ability to work with them and
change them.
One of the most important, and potentially most empowering, in-
sights to come from the young field of systems thinking is that certain
patterns of structure recur again and again. These “systems arche-
types” or “generic structures” embody the key to learning to see
structures in our personal and organizational Jives. The systems ar-
chetypes—of which there are only a relatively small number’—suggest
that not all management problems are unique, something that
experienced managers know intuitively.
If reinforcing and balancing feedback and delays are like the nouns
and verbs of systems thinking, then the systems archetypes are anal-
ogous to basic sentences or simple stories that get retold again and
again. Just as in literature there are common themes and recurring
plot lines that get recast with different characters and settings, a
relatively small number of these archetypes are common to a very
large variety of management situations.
The systems archetypes reveal an elegant simplicity underlying the
complexity of management issues. As we learn to recognize more and
more of these archetypes, it becomes possible to see more and more
places where there is leverage in facing difficult challenges, and to
explain these opportunities to others.
As we learn more about the systems archetypes, they will no
doubt contribute toward one of our most vexing problems, a problem
against which managers and leaders struggle incessantly—speciali-
zation and the fractionation of knowledge. In many ways, the greatest
promise of the systems perspective is the unification of
knowledge across all fields—for these same archetypes recur in bi-
ology, psychology, and family therapy; in economics, political science,
and ecology; as well as in management.2
Because they are subtle, when the archetypes arise in a family, an
ecosystem, a news story, or a corporation, you often don’t see them so
much as feel them. Sometimes they produce a sense of dejd vu, a hunch
that you’ve seen this pattern of forces before. “There it is again,” you
say to yourself. Though experienced managers already know many of
these recurring plot lines intuitively, they often don’t

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know how to explain them. The systems archetypes provide that
language. They can make explicit much of what otherwise is simply
“management judgment.”
Mastering the systems archetypes starts an organization on the
path of putting the systems perspective into practice. It is not enough
to espouse systems thinking, to say, “We must look at the big picture
and take the long-term view.” It is not enough to appreciate basic
systems principles, as expressed in the laws of the fifth discipline
(Chapter 4) or as revealed in simulations such as the beer game
(Chapter 3). It is not even enough to see a particular structure under-
lying a particular problem (perhaps with the help of a consultant).
This can lead to solving a problem, but it will not change the thinking that produced
the problem in the first place. For learning organizations, only when
managers start thinking in terms of the systems archetypes, does
systems thinking become an active daily agent, continually revealing
how we create our reality.
The purpose of the systems archetypes is to recondition our per-
ceptions, so as to be more able to see structures at play, and to see the
leverage in those structures. Once a systems archetype is identified, it
will always suggest areas of high- and low-leverage change. Presently,
researchers have identified about a dozen systems archetypes, nine of
which are presented and used in this book (Appendix 2 contains a
summary of the archetypes used here). All of the archetypes are made
up of the systems building blocks: reinforcing processes, balancing
processes, and delays. Below are two that recur frequently, and which
are steppingstones to understanding other archetypes and more
complex situations.
ARCHETYPE 1 : LIMITS TO GROWTH
DEFINITION
A reinforcing (amplifying) process is set in motion to produce a
desired result. It creates a spiral of success but also creates inadvertent
secondary effects (manifested in a balancing process) which eventually
slow down the success.
MANAGEMENT PRINCIPLE Don’t
push growth; remove the factors limiting growth.

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WHERE IT IS FOUND
The limits to growth structure is useful for understanding all situa-
tions where growth bumps up against limits. For example, organiza-
tions grow for a while, but then stop growing. Working groups get
better for a while, but stop getting better. Individuals improve them-
selves for a period of time, then plateau.
Many sudden but well-intentioned efforts for improvement bump
up against limits to growth. A farmer increases his yield by adding
fertilizer, until the crop grows larger than the rainfall of the region can
sustain. A crash diet works at first to shave off a few pounds of fat,
but then the dieter loses his or her resolve. We might “solve” sudden
deadline pressures by working longer hours; eventually, however, the
added stress and fatigue slow down our work speed and quality,
compensating for the longer hours.
People who try to break a bad habit such as criticizing others
frequently come up against limits to growth. At first, their efforts to
stop criticizing pay off. They criticize less. The people around them
feel more supported. The others reciprocate with positive feelings,
which makes the person feel better and criticize less. This is a rein-
forcing spiral of improved behavior, positive feelings, and further
improvement. But, then, their resolve weakens. Perhaps they
start to find themselves facing the aspects in others’ behavior that
really gives them the most trouble: it was easy to overlook a few little
things, but this is another matter. Perhaps, they just become
complacent and stop paying as close attention to their knee-jerk
criticisms. For whatever reason, before long, they are back to their old
habits.
Once, in one of our seminars, a participant said, “Why, that’s just
like falling in love.” Cautiously, I asked, “How so?” She re-
sponded, “Well, first, you meet. You spend a little time together and it’s
wonderful. So you spend more time together. And it’s more
wonderful. Before long, you’re spending all your free time together.
Then you get to know each other better. He doesn’t always open the
door for you, or isn’t willing to give up bowling with his buddies—
every other night. He discovers that you have a jealous streak, or a bad
temper, or aren’t very neat. Whatever it is, you start to see each
other’s shortcomings.” As you learn each other’s flaws, she re-
minded the rest of us, the dramatic growth in feelings comes to a
sudden halt—and may even reverse itself, so that you feel worse
about each other than you did when you first met.

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STRUCTURE
In each case of limits to growth, there is a reinforcing (amplifying)
process of growth or improvement that operates on its own for a
period of time. Then it runs up against a balancing (or stabilizing)
process, which operates to limit the growth. When that happens, the
rate of improvement slows down, or even comes to a standstill.

UNDERSTANDING AND USING THE STRUCTURE
Limits to growth structures operate in organizations at many levels.
For example, a high-tech organization grows rapidly because of its
ability to introduce new products. As new products grow, revenues
grow, the R&D budget grows, and the engineering and research staff
grows. Eventually, this burgeoning technical staff becomes increasingly
complex and difficult to manage. The management burden often
falls on senior engineers, who in turn have less time to spend on
engineering. Diverting the most experienced engineers from en-
gineering to management results in longer product development
times, which slow down the introduction of new products.3

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To read any “limits to growth” structure diagram, for example,
start with the reinforcing circle of growth. That circle provides the
structure with its initial momentum. Walk yourself around the circle:
remind yourself how new product growth might generate revenues,
which in turn can be reinvested to generate more new products. At
some point, however, the forces will shift—here, for example, the
growth in R&D budget eventually leads to complexity beyond the
senior engineers’ ability to manage without diverting precious time
from product development. After a delay (whose length depends on
the rate of growth, complexity of products, and engineers’ man-
agement skills), new product introductions slow, slowing overall
growth.
Another example of limits to growth occurs when a professional
organization, such as a law firm or consultancy, grows very rapidly
when it is small, providing outstanding promotion opportunities. Mo-
rale grows and talented junior members are highly motivated, ex-
pecting to become partners within ten years. But as the firm gets
larger, its growth slows. Perhaps it starts to saturate its market
niche. Or it might reach a size where the founding partners are no
longer interested in sustaining rapid growth. However the growth
rate slows, this means less promotion opportunities, more in-fighting
among junior members, and an overall decline in morale. The limits to
growth structure can be diagrammed as follows:4

PATTERN OF BEHAVIOR
In each of these structures, the limit gradually becomes more pow-
erful. After its initial boom, the growth mysteriously levels off. The
technology company may never recapture its capabilities for devel-
oping breakthrough new products or generating rapid growth.

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Eventually, growth may slow so much that the reinforcing spiral
may turn around and run in reverse. The law firm or consulting firm
loses its dominance in its market niche. Before long, morale in the
firm has actually started on a downward spiral, caused by the rein-
forcing circle running in reverse.
Limits to growth structures often frustrate organizational changes
that seem to be gaining ground at first, then run out of steam. For
example, many initial attempts to establish “quality circles” fail ul-
timately in U.S. firms, despite making some initial progress. Quality
circle activity begins to lead to more open communication and col-
laborative problem solving, which builds enthusiasm for more quality
circle activity. But the more successful the quality circles become,
the more threatening they become to the traditional distribution of
political power in the firm. Union leaders begin to fear that the new
openness will break down traditional adversarial relations between
workers and management, thereby undermining union leaders’ ability to
influence workers. They begin to undermine the quality

circle activity by playing on workers’ apprehensions about being
manipulated and “snowed” by managers: “Be careful; if you keep
coming up with cost saving improvements on the production line,
your job will be the next to go.”5
Managers, on the other hand, are often unprepared to share con-
trol with workers whom they have mistrusted in the past. They end

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up participating in quality circle activities but only going through the
motions. They graciously acknowledge workers’ suggestions but fail to
implement them.

Rather than achieving steady acceptance, quality circle activity rises
for a time—then plateaus or declines. Often, the response of the
leader to disappointing results from the quality circle simply feeds
fuel to the flame. The more aggressively the leader promotes the
quality circle, the more people feel threatened and the more
stonewalling takes place.
You see similar dynamics with “Just in Time” inventory systems,
which depend on new relationships of trust between suppliers and
manufacturers. Initial improvements in production flexibility and
cost are not sustained. Often, the supplier in a JIT system eventually
demands to be a sole source to offset the risk in supplying the man-
ufacturer overnight. This threatens the manufacturer, who is used to
placing multiple orders with different suppliers to guarantee control of
parts supply. The manufacturer’s commitment to JIT then wavers.
The supplier’s commitment to JIT can likewise waver, once he
realizes that the manufacturer demands to be his prime customer.
Used to having multiple customers, the supplier can’t help but wonder
whether the manufacturer will go on ordering parts from multiple

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suppliers and then suddenly cancel orders. The more aggressively
you try to change the process, the more aware both sides are of their
risks. Thus, the more likely they are to hedge those risks by sticking to
traditional practices of multiple suppliers and multiple customers,
thereby undermining the trust a JIT system requires.6
HOW TO ACHIEVE LEVERAGE
Typically, most people react to limits to growth situations by trying to
push hard: if you can’t break your bad habit, become more diligent in
monitoring your own behavior; if your relationship is having problems,
spend more time together or work harder to make the relationship
work; if staff are unhappy, keep promoting junior staff to make them
happy; if the flow of new products is slowing down, start more new
product initiatives to offset the problems with the ones that are bogged
down; or advocate quality circle more strongly.
It’s an understandable response. In the early stages when you can
see improvement, you want to do more of the same—after all, it’s
working so well. When the rate of improvement slows down, you
want to compensate by striving even harder. Unfortunately, the
more vigorously you push the familiar levers, the more strongly the
balancing process resists, and the more futile your efforts become.
Sometimes, people just give up their original goal—lowering their goal
to stop criticizing others, or giving up on their relationship, or giving
up on quality circle or JIT improvements.
But there is another way to deal with limits to growth situations. In
each of them, leverage lies in the balancing loop—not the reinforcing loop. To
change the behavior of the system, you must identify and change the limiting
factor. This may require actions you may not yet have considered,
choices you never noticed, or difficult changes in rewards and norms.
To reach your desired weight may be impossible by dieting alone—you
need to speed up the body’s metabolic rate, which may require aerobic
exercise. Sustaining loving relationships requires giving up the ideal of
the “perfect partner”— the implicit goal that limits the continued
improvement of any relationship. Maintaining morale and productivity
as a professional firm matures requires a different set of norms and
rewards that salute work well done, not a person’s place in the
hierarchy. It may also require distributing challenging work assignments
equitably and not to “partners only.” Maintaining effective product
development pro-

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cesses as a firm grows requires dealing with the management burden
brought on by an increasingly complex research and engineering
organization. Some firms do this by decentralizing, some by bringing in
professionals skilled in managing creative engineers (which is not easy),
and some by management development for engineers who want to
manage.
Not surprisingly, where quality circles have succeeded they have
been part of a broader change in managerial-employee relationships. In
particular, successes have involved genuine efforts to redistribute
control, thereby dealing with the union and management concerns
over loss of control. Likewise, successful Just in Time systems have
taken root as part of “Total Quality” programs that focus on meeting
customer needs, stabilizing production rates, and sharing benefits
with valued suppliers. These changes were necessary to overcome the
distrust that lay behind traditional goals of maintaining multiple
sources of supply and multiple customers. In successful cases, man-
agers had to ignore temptations to think that quality circle failures
were due to individual troublemakers; or that JIT problems came
from a recalcitrant supplier.7
But there is another lesson from the limits to growth structure as
well. There will always be more limiting processes. When one source of
limitation is removed or made weaker, growth returns until a new
source of limitation is encountered. In some settings, like the growth of
a biological population, the fundamental lesson is that growth
eventually will stop. Efforts to extend the growth by removing limits can
actually be counterproductive, forestalling the eventual day of
reckoning, which given the pace of change that reinforcing processes
can create (remember the French lily pads) may be sooner than we
think.
HOW TO CREATE YOUR OWN
“LIMITS TO GROWTH” STORY
The best way to understand an archetype is to diagram your
own version of it. The more actively you work with the arche-
types, the better you will become at recognizing them and
finding leverage.
Most people have many limits to growth structures in their lives.
The easiest way to recognize them is through the pattern

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of behavior. Is there a situation in which things get better and
better at first, and then mysteriously stop improving? Once
you have such a situation in mind, see if you can identify the
appropriate elements of the reinforcing and balancing loops:8

First, identify the reinforcing process—what is getting better
and what is the action of activity leading to improvement?
(There may be other elements of the reinforcing process, but
there are always at least a condition which is improving, and an
action leading to the improvement.) It might, for instance, be
the story of an organizational improvement: an equal op-
portunity hiring program, for example. The “growing action” is
the equal opportunity program itself; and the condition is the
percentage of women and minorities on staff. For example, as
the percentage of women in management increases, confidence
in or commitment to the program increases, leading to still
further increase in women in management.
There is, however, bound to be a limiting factor, typically an
implicit goal, or norm, or a limiting resource. The second step is
to identify the limiting factor and the balancing process it
creates. What “slowing action” or resisting force starts to come
into play to keep the condition from continually improving? In
this case, some managers might have an idea in their minds of
how many women or minority executives are “too much.” That
unspoken number is the limiting factor; as soon as that
threshold is approached, the slowing action—manager’s
resistance—will kick in. Not only will they resist more equal
opportunity hires, but they may make life exceptionally difficult
for the new people already in place.
Once you’ve mapped out your situation, look for the lever-
age. It won’t involve pushing harder; that will just make the

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resistance stronger. More likely, it will require weakening or
removing the limiting condition.
For the best results, test your limits to growth story in real
life. Talk to others about your perception. Test your ideas
about leverage in small real-life experiments first. For example,
you might seek out one person whom you perceive as holding
an implicit quota for “enough women,” but who is also
approachable, and ask him. (See the reflection and inquiry skills
section in Chapter 10, “Mental Models,” for how to do this
effectively.)
A R C H E T Y P E 2 :
S H I F T I N G T H E B U R D E N
DEFINITION
An underlying problem generates symptoms that demand attention.
But the underlying problem is difficult for people to address, either
because it is obscure or costly to confront. So people “shift the
burden” of their problem to other solutions—well-intentioned, easy
fixes which seem extremely efficient. Unfortunately, the easier “so-
lutions” only ameliorate the symptoms; they leave the underlying
problem unaltered. The underlying problem grows worse, unnoticed
because the symptoms apparently clear up, and the system loses
whatever abilities it had to solve the underlying problem.
MANAGEMENT PRINCIPLE
Beware the symptomatic solution. Solutions that address only the
symptoms of a problem, not fundamental causes, tend to have short-
term benefits at best. In the long term, the problem resurfaces and
there is increased pressure for symptomatic response. Meanwhile, the
capability for fundamental solutions can atrophy.

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WHERE IT IS FOUND
Shifting the burden structures are common in our personal as well as
organizational lives. They come into play when there are obvious
“symptoms of problems” that cry out for attention, and quick and
ready “fixes” that can make these symptoms go away, at least for a
while.
Consider the problem of stress that comes when our personal
workload increases beyond our capabilities to deal with it effectively.
We juggle work, family, and community in a never-ending blur of
activity. If the workload increases beyond our capacity (which tends
to happen for us all) the only fundamental solution is to limit the
workload. This can be tough—it may mean passing up a promotion
that will entail more travel. Or it may mean declining a position on the
local school board. It means prioritizing and making choices. Instead,
people are often tempted to juggle faster, relieving the stress with
alcohol, drugs, or a more benign form of “stress reduction” (such as
exercise or meditation). But, of course, drinking doesn’t really solve
the problem of overwork—it only masks the problem by temporarily
relieving the stress. The problem comes back, and so does the need
for drinking. Insidiously, the shifting the burden structure, if not
interrupted, generates forces that are all-too-familiar in contemporary
society. These are the dynamics of avoidance, the result of which is
increasing dependency, and ultimately addiction.
A shifting the burden structure lurks behind many “solutions”
which seem to work effectively, but nonetheless leave you with an
uneasy feeling that they haven’t quite taken care of the problem.
Managers may believe in delegating work to subordinates but still rely
too much on their own ability to step in and “handle things” at the
first sign of difficulty, so that the subordinate never gets the necessary
experience to do the job. Businesses losing market share to foreign
competitors may seek tariff protection and find themselves unable to
operate without it. A Third World nation, unable to face difficult
choices in limiting government expenditures in line with its tax
revenues, finds itself generating deficits that are “financed” through
printing money and inflation. Over time, inflation becomes a way of life,
more and more government assistance is needed, and chronic deficits
become accepted as inevitable. Shifting the burden structures also
include food relief programs that “save” farmers

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from having to grow crops, and pesticides that temporarily remove
vermin, but also eliminate natural controls, making it easier for the
pest to surge back in the future.
STRUCTURE
The shifting the burden is composed of two balancing (stabilizing)
processes. Both are trying to adjust or correct the same problem
symptom. The top circle represents the symptomatic intervention;
the “quick fix.” It solves the problem symptom quickly, but only
temporarily. The bottom circle has a delay. It represents a more
fundamental response to the problem, one whose effects take longer
to become evident. However, the fundamental solution works far
more effectively—it may be the only enduring way to deal with the
problem.
Often (but not always), in shifting the burden structures there is
also an additional reinforcing (amplifying) process created by “side
effects” of the symptomatic solution. When this happens, the side
effects often make it even more difficult to invoke the fundamental
solution—for example, the side effects of drugs administered to correct
a health problem. If the problem was caused originally by an unhealthy
lifestyle (smoking, drinking, poor eating habits, lack of exercise), then
the only fundamental solution lies in a change in lifestyle. The drugs
(the symptomatic solution) make the symptom better, and remove
pressure to make difficult personal changes. But they also have side
effects that lead to still more health problems, making it even more
difficult to develop a healthy lifestyle.

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UNDERSTANDING AND USING THE STRUCTURE
The shifting the burden structure explains a wide range of behaviors
where well-intended “solutions” actually make matters worse over the
long term. Opting for “symptomatic solutions” is enticing. Apparent
improvement is achieved. Pressures, either external or internal, to “do
something” about a vexing problem are relieved. But easing a
problem symptom also reduces any perceived need to find more
fundamental solutions. Meanwhile, the underlying problem remains
unaddressed and may worsen, and the side effects of the symptomatic
solution make it still harder to apply the fundamental solution. Over
time, people rely more and more on the symptomatic solution, which is
becoming increasingly the only solution. Without anyone making a
conscious decision, people have “shifted the burden” to increasing
reliance on symptomatic solutions.
Interactions between corporate staff and line managers are fraught
with shifting the burden structures. For example, busy managers are
often tempted to bring in human resource specialists to sort out
personnel problems. The HR expert may solve the problem, but the
manager’s ability to solve other related problems has not improved.
Eventually, other personnel issues will arise and the manager will be just
as dependent on the HR expert as before. The very fact that the
outside expert was used successfully before makes it even easier to
turn to the expert again. “We had a new batch of difficulties, so we
brought in the personnel specialists again. They are getting to know our
people and our situation well, so they are very efficient.” Over time,
HR experts become increasingly in demand, staff costs soar, and
managers’ development (and respect) declines.
Shifting the burden structures often underlie unintended drifts in
strategic direction and erosion in competitive position. A recent
group of executives in a high-tech firm were deeply concerned that
their company was “losing its edge” by not bringing dramatic new
products to market. It was less risky to improve existing products.
However, they feared that a culture of “incrementalism” rather than
“breakthrough” was being fostered. The safer, more predictable,
easier-to-plan-for-and-organize processes of improvement innovation
were becoming so entrenched that the managers wondered if the
company was still capable of basic innovation.
As I listened, I recalled a similar strategic drift described by managers
of a leading consumer goods producer, which had become

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more and more dependent on advertising versus new product devel-
opment. Whenever business sagged for one of its many products, the
tendency was to run a new advertising promotion. The advertising
culture had become so entrenched, that the last three CEOs were all
ex-advertising executives, who frequently wrote ad copy personally.
Meanwhile, the flow of major new products had dwindled to a trickle
under their leadership.
A special case of shifting the burden, which recurs with alarming
frequency, is “eroding goals.” Whenever there is a gap between our
goals and our current situation there are two sets of pressures: to
improve the situation and to lower our goals. How these pressures
are dealt with is central to the discipline of personal mastery, as will be
shown in Chapter 9.
Societies collude in eroding goals all the time: witness the lowered
standards for “full employment” in the United States. The federal full-
employment target slid from 4 percent in the 1960s to 6 to 7 percent
by the early 1980s. (In other words, we were willing to tolerate 50 to
75 percent more unemployment as “natural.”) Likewise, 3 to 4
percent inflation was considered severe in the early 1960s, but a
victory for anti-inflation policies by the early 1980s. In 1984, the U.S.
Congress passed the “Gramm-Rudman-Hollings” deficit reduction bill.
The original bill called for reaching a balanced budget by 1991. Shortly
thereafter, it was clear that the budget reduction was not proceeding
on pace, so the target was shifted to 1993. This eroding goal structure
can be diagrammed as follows:
As we will see in the next two chapters, similar eroding goal dy-
namics play out in organizations around goals for quality, goals for
innovation, goals for personal growth of employees, and goals for
organizational improvement. In effect, we all can become “addicted”
to lowering our goals. Or, as a bumper sticker I saw recently said, “If all
else fails, lower your goals.”

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PATTERN OF BEHAVIOR
Regardless of the choice of symptomatic solution, it works—in a
way. Drinking, for example, lifts some tension, at least for a while. It
relieves the problem symptom. If it didn’t, people wouldn’t drink. But
it also gives the person the feeling of having “solved the problem,”
thereby diverting attention from the fundamental problem—
controlling the workload. Failing to take a stand may well cause the
workload to gradually increase further, since most of us are continually
besieged by more demands on our time than we can possibly respond
to. Over time, the workload continues to build, the stress returns, and
the pressure to drink increases.
What makes the shifting the burden structure insidious is the subtle
reinforcing cycle it fosters, increasing dependence on the symptomatic
solution. Alcoholics eventually find themselves physically

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addicted. Their health deteriorates. As their self-confidence and
judgment atrophy, they are less and less able to solve their original
workload problem. To trace out the causes of the reinforcing cycle,
just imagine you are moving around the “figure eight” created by the
two interacting feedback processes: stress builds, which leads to more
alcohol, which relieves stress, which leads to less perceived need to
adjust workload, which leads to more workload, which leads to more
stress.
These are the generic dynamics of addiction. In fact, almost all
forms of addiction have shifting the burden structures underlying
them. All involve opting for symptomatic solutions, the gradual atrophy
of the ability to focus on fundamental solutions, and the increasing
reliance on symptomatic solutions. By this definition,
organizations and entire societies are subject to addiction as much as
are individuals.
Shifting the burden structures tend to produce periodic crises,
when the symptoms of stress surface. The crises are usually resolved
with more of the symptomatic solution, causing the symptoms to
temporarily improve. What is often less evident is a slow, long-term
drift to lower levels of health: financial health for the corporation or
physical health for the individual. The problem symptom grows
worse and worse. The longer the deterioration goes unnoticed, or
the longer people wait to confront the fundamental causes, the more
difficult it can be to reverse the situation. While the fundamental
response loses power, the symptomatic response grows stronger and
stronger.

HOW TO ACHIEVE LEVERAGE
Dealing effectively with shifting the burden structures requires a
combination of strengthening the fundamental response and weak-
ening the symptomatic response. The character of organizations is
often revealed in their ability (or inability) to face shifting-the-burden
structures. Strengthening fundamental responses almost always re-
TIME

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quires a long-term orientation and a sense of shared vision. Without a
vision of succeeding through new product innovation, pressures to
divert investment into short-term problem-solving will be over-
whelming. Without a vision of skilled “people-oriented” managers, the
time and energy to develop those skills will not be forthcoming.
Without a shared vision of the role government can and should play,
and for which people will provide tax revenues to support, there can be
no long-term solution to balance government spending and income.
Weakening the symptomatic response requires willingness to tell the
truth about palliatives and “looking good” solutions. Managers might
acknowledge, for example, that heavy advertising “steals” market
share from competitors, but doesn’t expand the market in any
significant way. And politicians must admit that the resistance they
face to raising taxes comes from the perception that the government is
corrupt. Until they deal credibly with perceived corruption, they will
neither be able to raise taxes nor reduce spending.
A splendid illustration of the principles of leverage in shifting the
burden structures can be found in the approach of some of the most
effective alcoholism and drug treatment programs. They insist that
people face their addiction on one hand, while offering support
groups and training to help them rehabilitate on the other. For ex-
ample, the highly successful Alcoholics Anonymous creates powerful
peer support to help people revitalize their ability to face whatever
problems were driving them to drink, with a sense of vision that
those problems can be solved. They also force individuals to ac-
knowledge that “I am addicted to alcohol and will be for my entire
life,” so that the symptomatic solution can no longer function in
secret.9
In the business example of managers becoming more and more
dependent on HR consultants, the managers’ own abilities must be
developed more strongly, even though that may mean a larger initial
investment. The HR experts must become coaches and mentors,
not problem solvers, helping managers develop their own personal
skills.
Sometimes symptomatic solutions are needed—for example, in
treating a person suffering from a disease created by smoking or
drinking. But symptomatic solutions must always be acknowledged as
such, and combined with strategies for rehabilitating the capacity for
fundamental solution, if the shifting the burden dynamic is to be
interrupted. If symptomatic solutions are employed as if they are
fundamental solutions, the search for fundamental solutions stops
and shifting the burden sets in.

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HOW TO CREATE YOUR OWN
“SHIFTING THE BURDEN” STORY
There are three clues to the presence of a shifting the burden
structure. First, there’s a problem that gets gradually worse
over the long term—although every so often it seems to get
better for a while. Second, the overall health of the system
gradually worsens. Third, there’s a growing feeling of help-
lessness. People start out feeling euphoric—they’ve solved
their problem!—but end up feeling as if they are victims.
In particular, look for situations of dependency, in which
you have a sense that the real issues, the deeper issues, are
never quite dealt with effectively. Again, once you have such a
situation in mind, see if you can identify the appropriate
elements of the reinforcing and balancing loops.

Start by identifying the “problem symptom.” This will be the
“squeaky wheel” that demands attention—such as stress,
subordinates’ inabilities to solve pressing problems, falling
market share. Then identify a “fundamental solution” (there
may be more than one)—a course of action that would, you
believe, lead to enduring improvement. Then, identify one or
several “symptomatic solutions” that might ameliorate symp-
toms for a time.
In fact, “fundamental solutions” and “symptomatic solu-
tions” are relative terms, and what is most valuable is recog-
nizing the multiple ways in which a problem can be addressed,
from the most fundamental to the most superficial.
Then identify the possible negative “side effects” of the
symptomatic solution.
The primary insights in shifting the burden will come from
(1) distinguishing different types of solutions; (2) seeing how
reliance on symptomatic solutions can reinforce further reli-
ance. The leverage will always involve strengthening the bottom
circle, and/or weakening the top circle. Just as with limits to
growth, it’s best to test your conclusions here with small
actions—and to give the tests time to come to fruition. In
particular, strengthening an atrophied ability will most likely take
a long period of time.

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Limits to growth and shifting the burden are but two of the basic
systems archetypes. Several others are introduced in the following
chapters. (Appendix 2 summarizes all the archetypes used in this
book.) As the archetypes are mastered, they become combined into
more elaborate systemic descriptions. The basic “sentences” become
parts of paragraphs. The simple stories become integrated into more
involved stories, with multiple themes, many characters, and more
complex plots.
But the archetypes start the process of mastering systems thinking.
By using the archetypes, we start to see more and more of the circles
of causality that surround our daily activity. Over time, this leads
naturally to thinking and acting more systemically.
To see how the archetypes get put into practice, the next chapter
examines one way in which limits to growth and shifting the burden
have proven useful—in understanding the ways a company with
great growth potential can fail to realize that potential.

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7
THE PRINCIPLE OF
LEVERAGE
To me, bottom line of systems thinking is leverage—seeing where
actions and changes in structures can lead to significant, enduring
improvements. Often, leverage, follows the principle of economy of
means: where the best results come not from large-scale efforts but
from small well-focused actions. Our nonsystemic ways of thinking are
so damaging specifically because they consistently lead us to focus on
low-leverage changes: we focus on symptoms where the stress is
greatest. We repair or ameliorate the symptoms. But such efforts only
make matters better in the short run, at best, and worse in the long
run.
It’s hard to disagree with the principle of leverage. But the leverage in
most real-life systems, such as most organizations, is not obvious to
most of the actors in those systems. They don’t see the “structures”
underlying their actions. The purpose of the systems archetypes,
such as limits to growth and shifting the burden, is to help see those
structures and thus find the leverage, especially amid the pressures
and crosscurrents of real-life business situations.

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For example, let’s look at a real story that we have seen again and
again. In fact, the following case is a mosaic pieced together from
several specific instances where the same story unfolded.1
WHEN WE CREATE OUR OWN
” M A R K E T L I M I T A T I O N S ”
In the mid-1960s a new electronics company was founded with a
unique high-tech product—a new type of computer. Thanks to its
engineering know-how, WonderTech had a virtual lock on its market
niche. There was enormous demand for its products, and there were
enough investors to guarantee no financial constraints.
Yet the company, which began with meteoric growth, never sus-
tained its rapid growth after its first three years. Eventually it declined
into bankruptcy.
That fate would have seemed unthinkable during WonderTech’s
first three years, when sales doubled annually. In fact, sales were so
good that backlogs of orders began to pile up midway through their
second year. Even with steadily increasing manufacturing capacity
(more factories, more shifts, more advanced technology), the demand
grew so fast that delivery times slipped a bit. Originally they had
promised to deliver machines within eight weeks, and they intended
to return to that standard; but with some pride, the top management
told investors, “Our computers are so good that some customers
are willing to wait fourteen weeks for them. We know it’s a problem,
and we’re working to fix it, but nonetheless they’re still glad to get the
machines, and they love ’em when they get ’em.”
The top management knew that they had to add production capacity.
After six months of study, while manufacturing changed from a one-
shift to a two-shift operation, they decided to borrow the money to
build a new factory. To make sure the growth kept up, they
pumped much of the incoming revenue directly back into sales and
marketing. Since the company sold its products only through a direct
sales force, that meant hiring and training more sales people. During the
company’s third year, the sales force doubled.
But despite this, sales started to slump at the end of the third year.

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At this point, the new factory came on-line. “We’ve hired all these
people,” said the vice president of manufacturing. “What are we
going to do with them?” The top management began to panic about
what to tell their investors, after they had spent all this money on a
new manufacturing facility. It was as if everyone in the company
simultaneously turned and looked at one person: the marketing and
sales vice president.
Not surprisingly, the marketing and sales VP had become a rising
star in the company. His force had done so well during the initial
boom that he had anticipated a promotion. Now there was a slump,
and he was under heat to turn sales around. So he took the most
likely course of action. He held high-powered sales meetings with a
single message: “Sell! Sell! Sell!” He fired the low performers. He
increased sales incentives, added special discounts, and ran new
advertising promotions describing the machine in an exciting new way.
And indeed, sales rose again. The sales and marketing VP found
himself once more hailed as a hero, a born-again motivator who
could take charge of a tough situation. Once again, WonderTech was in
the happy position of having rapidly rising orders. Eventually, backlogs
began to grow again. And after a year, delivery times began to rise
again—first to ten weeks, then to twelve, and eventually to sixteen.
The debate over adding capacity started anew. But this time, having
been stung on the last occasion, the top management was still more
cautious. Eventually, approval of a new facility was granted, but no
sooner had the papers been signed than a new sales crisis started. The
slump was so bad that the sales and marketing vice president lost his
job.
Over the next several years, and through a succession of marketing
managers, the same situation recurred. High sales growth oc-
By the middle of the fourth year, sales had dropped off to crisis
levels. The curve of sales, so far, looked like this:

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The company prospered modestly, but never came close to fulfilling
its original potential. Gradually, the top managers began to fear that
other firms would learn how to produce competing products. They
frantically introduced ill-conceived improvements in the product. They
continued to push hard on marketing. But sales never returned to the
original rate of growth. The “wonder” went out of WonderTech.
Eventually, the company collapsed.
In his final statement to the lingering members of his executive
team, the CEO said, “We did great under the circumstances, but the
demand just isn’t there. Clearly it was a limited market—a niche
which we have effectively filled.”
The tale of WonderTech is hardly a novel one. Of every ten startup
companies, one half will disappear within their first five years, only
four survive into their tenth year, and only three into their fifteenth
year.2 Whenever a company fails, people always point to specific events
to explain the “causes” of the failure: product problems, inept
managers, loss of key people, unexpectedly aggressive competition, or
business downturns. Yet, the deeper systemic causes for
unsustained growth are not recognized. With the aid of the
systems archetypes, these causes often can be understood and, in
many cases, successful policies can be formulated. The irony of
WonderTech is that, given its product and its market potential, it could
have grown vigorously for many years, not just two or three.
WonderTech’s managers could not see the reasons for their own
decline. This was not for lack of information. They had all the signif-
icant facts—the same facts that you have after reading this story.
But they could not see the structures implicit in those facts.
As a systems thinker trying to diagnose WonderTech’s problem,
you would look for clues—anything that might suggest an archetype.
curred in spurts, always followed by periods of low or no growth.
The pattern looked like this:

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You’d begin with the most obvious pattern ofiPPbr. growth
leaped up at first, amplifying itself to grow stronger and stronger. But
the growth gradually slowed, and eventually sales stopped growing
altogether. This pattern is the classic symptom of limits to growth.
There are many possible reinforcing (amplifying) processes that
could have produced WonderTech’s original rapid sales growth. In-
vestment in products, investment in advertising, good word of mouth
—all could have reinforced past success into future success. But one
especially evident in the WonderTech story was the reinforcing process
created by investing revenues in increasing the sales force: more
sales meant more revenues, which meant hiring salespeople, which
meant more sales.

The other part of any limits to growth structure, of course, is a
balancing (stabilizing) process. Something had to make the sales slow
down. But sales only slow down when a market is saturated, when
competition grows, or when customers grow disenchanted. In this
case, the need for the WonderTech computer was still strong, and
there was no significant competition. There was one factor which
turned customers off: long delivery times. As backlogs rise relative to
production capacity, delivery times increase. A reputation for poor
delivery service builds, eventually making it harder for WonderTech’s
salespeople to make more sales. The limits to growth structure, then,
looks like this:

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In a limits to growth structure, the worst thing you can do is push
hard on the reinforcing process. But that’s exactly what Wonder-
Tech’s managers did. They tried to reignite the “engine of growth”
through sales incentives, marketing promotions, and minor product
improvements—none of which had any leverage. The leverage
would lie with the balancing process.
Why wasn’t that balancing process noticed? First, WonderTech’s
financially oriented top management did not pay much attention to
their delivery service. They mainly tracked sales, profits, return on
investment, and market share. So long as these were healthy, delivery
times were the least of their concerns. When financial performance
weakened, pressures shifted to boost orders. Usually, by this time,
delivery times were already starting to come down because orders
were falling. Thus, whether times were good, or times were bad, the
top management paid little attention to the time customers had to wait
to get their computers.
Even if they had, they would not necessarily have seen delivery time
as a key factor affecting sales. Delivery times had been getting longer
and longer, for more than a year and a half, before the first sales crisis
hit. This reinforced an attitude among top management: “Customers
don’t care about late shipments.” But that complacency was
misplaced; customers were concerned, but their concern was obscured,
to WonderTech’s management, by a built-in delay in the system. A
customer would say, “I want the machine delivered in eight weeks.”
The salesperson would say fine. But after nine, ten, or twelve weeks,
there would still be no machine. After several more months, gossip
would filter out. However, the number of potential customers was
vast. And the gossip had little effect until it eventually mushroomed
into a widespread reputation for poor deliveries. In the chart above,
this delay falls in the arrow between Delivery Time and Sales
Difficulty.
WonderTech’s managers had fallen prey to the classic learning
disability of being unable to detect cause and effect which were
separated in time. In general, if you wait until demand falls off, and then
get concerned about delivery time, it’s way too late. The slow delivery
time has already begun to correct itself—temporarily. At WonderTech,
delivery times grew worse during the third year, the last year of rapid
growth. Then they improved during the downturn that followed; but
then they grew worse again.
Over the entire ten-year history of the firm, there was an unfortu-
nate trend of rising delivery times, interrupted by periodic improve-

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ments. Alongside that was a gradual decline in the overall health of the
system—as seen in slowing growth and declining profits. The
company made money in spurts, but lost money like mad in every
downturn. The euphoria of the early growth period gave way to
discouragement and, eventually, despair. People felt, at the end, as if
they were victims. While the CEO said publicly that they had done
great under the circumstances, privately he acknowledged that they
had been misled by initial marketing projections that forecast a huge
potential market that was never realized.
What no one realized was that the situation at WonderTech de-
scribed a classic shifting the burden structure. There was a problem
symptom (delivery time) that worsened steadily, albeit with periodic
improvements. The overall health of the enterprise was also steadily
worsening, and there was a growing feeling of victimization. As a
systems thinker, you would first identify that key problem symptom,
and then the symptomatic and fundamental responses to it. In this
case, the fundamental response (the lower circle in the diagram
below) is to expand production capacity to control delivery time.
Delivery times above WonderTech’s standard indicate the need for
more capacity, which once it eventually arrives on-line, will correct
long delivery times. But if this fundamental response is slow in coming,
the burden shifts to the symptomatic response (the upper circle) of
customer dissatisfaction in declining orders. Since WonderTech’s
managers didn’t solve the problem of long delivery times by adding
manufacturing capacity rapidly enough, disgruntled would-be cus-
tomers “solved” the problem by walking away.

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Moreover, as WonderTech allowed the “disgruntled customer”
process to operate, the symptomatic response tended to get stronger
and stronger—just as you’d expect from a shifting the burden struc-
ture. This occurred as WonderTech’s reputation for poor delivery
service spread through its market; whenever WonderTech entered a
new period of rising delivery times, word spread more and more
rapidly. Meanwhile, the fundamental response grew weaker. “Having
been stung” when they added capacity that was left idle by falling orders,
WonderTech’s top management grew increasingly cautious in
committing to new capacity additions. That meant that new capacity
took longer and longer to come on-line—or never came on-line at all.
By the time WonderTech’s managers were finally ready to add
capacity, the symptomatic response had already relieved the pressure,
and delivery times had started to fall. Thus their long-term plan for
building capacity apparently failed them each time. “Let’s wait a little
longer before building,” they said, “to make sure the demand is
there.”
In effect, there was a horserace going on between the two re-
sponses. Over time, the symptomatic response became more rapid,
while the fundamental response became more sluggish. The net
effect was that gradually the “disgruntled customer” response
assumed more and more of the burden for controlling delivery
times.
As delivery times steadily worsened, WonderTech’s customer
base evolved toward customers who were less sensitive to poor de-
livery service. That meant they were more sensitive to price. Such
customers are less loyal and easily lured away by competitors offering
lower prices. WonderTech was drifting into the vulnerable position of
being a low-quality, low-price supplier, in a market which they had
pioneered.
WonderTech’s fate could have been reversed. There was a point of
leverage in the structure: the firms’ original commitment to an eight-
week delivery time. In the shifting the burden structure, the first
thing a systems thinker looks for is what might be weakening the
fundamental response. In this case, the firm had a delivery time
standard—eight weeks—that obviously never meant a great deal to the
financially preoccupied top managers.
After three years, the actual operating standard to which manufac-
turing had become accustomed was about ten weeks. Over time, as
delivery problems returned, the standard continued to drift. No one
thought much about it, least of all top management. When they

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wanted to know if additional capacity was need, they would check with
manufacturing, which reinforced the eroding standard throughout the
organization.
As it happened, the second marketing and sales vice president
periodically relayed his customers’ dissatisfaction with poor deliveries to
the management team. His counterpart in manufacturing acknowledged
that they occasionally got behind their backlogs, but only when their
capacity was inadequate. But the top managers said, “Yes, we know it’s a
problem, but we can’t rush into major invest- ,| ments unless we’re
certain demand will be sustained.” They didn’t realize that demand
would never be sustained until they made the investment.
We will never know for certain what might have happened if the
company had held tight to its original goal and continued to invest
aggressively in manufacturing capacity. But simulations based on this
structure (combining limits to growth and shifting the burden) and on
actual sales figures have been conducted in which the delivery time
standard is not allowed to erode. In these simulations, sales continue
to grow rapidly throughout the ten years, although there are still
periodic plateaus. Delivery time fluctuates, but does not drift upward
and the delivery time standard is constant at eight weeks. WonderTech
now realizes its growth potential. At the end of the ten years, sales are
many times higher than in the original case.3

The original sales and marketing vice president had grasped these
problems intuitively. He argued from the outset that WonderTech
was assessing its factory capacity all wrong. “We only compare

17. září 2004 110 ze 412

capacity to the number of orders we have,” he said, “instead of the
potential volume of orders that we would have if we were operating at
our best.” Unfortunately, the VP’s arguments were
interpreted as excuses for poor sales performance, and his
insights went unheeded. It didn’t help that he had no way,
conceptually, to explain his thinking. Had he been able to
describe the systems archetypes, perhaps more people
would have grasped what seemed intuitive to him.
In fact, the subtle dynamics of WonderTech confirm an
intuition of many experienced managers: that it is vital to
hold to critical performance standards “through thick and
thin,” and to do whatever it takes to meet those standards.
The standards that are most important are those that
matter the most to the customer. They usually include
product quality (design and manufacture), delivery service,
service reliability and quality, and friendliness and concern
of service personnel. The systemic structure at
WonderTech converts this management intuition into an
explicit theory, which shows how eroding standards and
sluggish capacity expansion can undermine the growth of
an entire enterprise. The complete structure comes from
integrating limits to growth and shifting the burden:

As shown here, the two structures overlap, sharing one
balancing process—where disgruntled customers reduce
their orders due to long delivery times. The same balancing
circle that diverts attention from adding capacity (in shifting
the burden) also keeps sales from expanding (in limits to
growth). Whether the “disgruntled customer”
ML*.

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circle becomes dominant depends on how the firm responds
when delivery times are long. If standards are allowed to drift, the
firm’s response is weakened and “the burden shifts” to the
disgruntled customers. In other words, the company unwittingly
becomes addicted to the limiting of its own growth.
C H O O S I N G B E T W E E N
S E L F – L I M I T I N G OR S E L F –
S U S T A I N I N G G R O W T H
The systemic structure underlying WonderTech explains many complex
situations where companies that were once growing rapidly and were
highly successful fail mysteriously. In fact, this structure is another
systems archetype called growth and underinvestment, a bit more
complicated than the two previous archetypes. This archetype operates
whenever a company limits its own growth through underinvestment.
Underinvestment means building less capacity than is really needed to
serve rising customer demand. You can recognize growth and
underinvestment by the failure of a firm to achieve its potential
growth despite everyone’s working tremendously hard (a sign of the
underinvestment). Usually, there is continuing financial stress—which,
ironically, is both cause and consequence of underinvestment.
Financial stress makes aggressive investment difficult or impossible, but
the financial stress today originates in the underinvestment of the past.
If you look closely, you will also see eroding or declining standards,
within the company or industry, for “quality.” (By quality we mean all
the things that matter to a customer, such as product quality, service
quality, and delivery reliability). Standards erode, or fail to continually
advance with competition, which results in a failure to invest in
building capacity to serve customer needs. (“Investing” may mean
adding or improving physical capacity, training personnel, improving
work processes, or improving organizational structures.) Disgruntled
customers then go elsewhere. Or, if there is no elsewhere, as in the
case of eroding standards in an entire industry, customers stop asking
for what they can’t have. Reduced customer demand eliminates the
symptoms of unmet demand. It also reduces financial resources to
invest in more capacity.
If all this happened in a month, the whole organization or industry
would be mobilized to prevent it. It is the gradualness of the eroding

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goals and declining growth that makes the dynamics of this structure
so insidious. This is the structure that underlies the “boiled frog”
syndrome discussed in the learning disabilities of Chapter 2. The
frog’s standards for water temperature steadily erode, and its capacity
to respond to the threat of boiling atrophies.
For a single firm such as WonderTech, the result is a slow, steady
decline in market share and profitability. For an entire industry, the
result is increasing vulnerability to foreign competitors with higher
standards, happening so slowly that it’s difficult to detect, often
masked by “shifting the burden” palliatives such as increased adver-
tising, discounting, “restructuring,” or lobbying for tariff protection. In
my opinion, the dynamics of eroding goals and underinvestment lie at
the heart of the demise, between the mid-1960s and mid-1980s, of
many American manufacturing industries, such as steel autos, machine
tools, and consumer electronics. In each of these industries, loss of
market share to foreign competitors, which was invariably blamed on
external factors, had its origins, at least in part, in weak standards for
customer satisfaction, underinvestment, and unhappy customers.
There are many examples of growth and underinvestment in service
industries as well. Schools which let the quality of their courses slip,
until they lose accreditation. Hospitals whose reputation for patient
care erodes as old facilities are not upgraded and the staff becomes
increasingly overworked. Radio and television stations that cut their
reporting budgets and let “happy talk” substitute for in-depth news
coverage. One such prominent industry example will be examined in
the next chapter—the case of People Express Airlines.
When understood, the growth and underinvestment structure can
be a powerful guide for a company trying to create its own future. Jay
Forrester tells an interesting story from the early days of the Digital
Equipment Corporation. The company started operations in a corner
of one floor of an old mill building outside Boston, with about a
dozen employees. As a member of Digital’s Board of Directors (Digital
was founded by several of Forrester’s former MIT graduate students),
Forrester later persuaded the board to rent the whole football-field-
sized floor as soon as the space became available. But that leap in
capacity, which seemed outrageous at first, allowed Digital to grow
without eroding its standards. A most dramatic experience, Forrester
said later, was to come back only six months later and find the entire
floor full of people, productively employed. This episode was one of
the first for a company that has achieved one of

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the finest records of sustained growth in corporate history. For
years, Digital maintained a land bank of lots all over New England, so
that it had land ready when it wanted to add capacity.
The art of systems thinking lies in being able to recognize increasingly
(dynamically) complex and subtle structures, such as that at
WonderTech amid the wealth of details, pressures, and cross currents
that attend all real management settings. In fact, the essence of
mastering systems thinking as a management discipline lies in seeing
patterns where others see only events and forces to react to. Seeing the
forest as well as the trees is a fundamental problem that plagues all
firms, as is illustrated in the next chapter.

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8
THE ART OF
SEEING THE FOREST
AND THE TREES
f all recent U.S. presidents, probably none immersed himself so
deeply in the issues facing the nation than Jimmy Carter. Yet,
President Carter was widely seen as a relatively ineffective leader,
leaving office with a 22 percent approval rating, the lowest of any
president since the end of World II, including Richard Nixon.’
Jimmy Carter was a victim of complexity. Carter’s thirst to know
about issues firsthand left him drowning in details, without a clear
perspective on those details. But, in fact, was Carter really that
different from most contemporary leaders, in either the public or
private sector? How many CEOs today can stand and give a fifteen-
minute speech that lays out a compelling explanation of the systemic
causes of an important issue, and the high- and low-leverage strategies
for dealing with that issue?
We all know the metaphor of being able to “step back” far enough
from the details to “see the forest for the trees.” But, unfortunately,
for most of us when we step back we just see “lots of trees.” We
pick our favorite one or two and focus our attention and efforts for
change on those.
O

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Systems thinking finds it greatest benefits in helping us distinguish
high- from low-leverage changes in highly complex situations. In
effect, the art of systems thinking lies in seeing through complexity to
the underlying structures generating change. Systems thinking does
not mean ignoring complexity. Rather, it means organizing complexity
into a coherent story that illuminates the causes of problems and how
they can be remedied in enduring ways. The increasing complexity of
today’s world leads many managers to assume that they lack
information they need to act effectively. I would suggest that the
fundamental “information problem” faced by managers is not too
little information but too much information. What we most need are
ways to know what is important and what is not important, what
variables to focus on and which to pay less attention to—and we need
ways to do this which can help groups or teams develop shared
understanding.
T H E P E R I L S O F
B E I N G A
P I O N E ER
One of the most spectacular and regrettable rises and falls of a pro-
totype learning organization was People Express Airlines.2 It is a
parable of complexity that could not be disentangled in time to save the
organization. Founded in 1980 to provide low-cost, high-quality airline
service to travelers in the Eastern United States, People Express grew
in five years to be the nation’s fifth-largest carrier. Along the way,
People Express established a reputation as a corporate pioneer,
crafting a stirring corporate philosophy articulated by charismatic
founder Don Burr. “Most organizations believe that humans are
generally bad and you have to control them and watch them,” said
Burr in one typical statement. “At People Express, people are trusted
to do a good job until they prove they definitely won’t . . .”3 The airline
translated that philosophy into a host of innovative human resource
policies that have since been adopted by many other firms, such as job
rotation, team management, universal stock ownership, and only four
levels of hierarchy (with only four pay levels in the whole company).
Yet, despite its spectacular early success, in September 1986 People
Express was taken over by Texas Air Corporation, having lost $133
million in the first six months of 1986 alone. Many theories have been
offered to explain People’s growth and

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collapse. Burr and the airline had gained much public attention for
unusually “soft,” people-oriented management policies. Hard-
headed business analysts felt that People’s decline proved that
“business is business.” Lofty ideals and democratic workplaces
conflict with profits, they said. Others blamed Burr and his manage-
ment team for failing to provide ongoing strategic leadership—espe-
cially after the purchase of Denver-based Frontier Airlines in 1985,
which brought in four thousand new employees who shared neither
People’s values nor its business strategy.
Some of People’s own executives, including Burr himself, offer a
different explanation. In 1984, partly in response to the success of low-
cost carriers such as People Express, American Airlines introduced its
Sabre seat-reservation computer system, ushering in a new era of “load
management”—meaning that airlines could offer a limited number of
seats at much-reduced prices, while still booking business passengers
and others at full coach. It was a dramatic change in the airline
business, and it brought People Express up against significant price
competition for the first time.
It is no wonder that People Express poses such a puzzle. Under-
standing what went wrong requires sorting out an enormously com-
plex set of factors such as:
F L E E T
Planes
Capacity of aircraft
Routes
Scheduled flights
Competitor routes
& flights Service
hours per
plane (per day)
Fuel efficiency
H U M A N
R E S O U R C E S
Service personnel
Aircraft personnel
Maintenance
personnel Hiring
Training Turnover
Morale
Productivity
Experience Team
management Job
rotation Stock
ownership
Temporaries
C O M P E T I T I V E
F A C T O R S
Market size Market
segments Reputation
Service quality
Competitor service
quality
Fares
“Load
management”
Competitor fares

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FINANCIAL
VARIABLES
Revenues
Profit
Cost of plane
operations Cost
of service
operations Cost
of marketing
Wages Stock price
Growth rate Debt
Interest Rate
“POLICY
LEVERS”
(A few of the key decisions that
People’s management must make)
Buying planes
Hiring people
Pricing
Marketing expenditures “Service
scope” (range of services to offer)
Such “laundry lists” of important variables hint at the enormous
detail complexity of realistic management problems. It’s easy to get lost
in the “trees” of these details and lose sight of the “forest”—
mastering the dynamic complexity essential to successful strategy.
Here’s where the discipline of systems thinking finds its greatest
advantage. By using the systems archetypes we can learn how to
“structure” the details into a coherent picture of the forces at play.
A THEORY OF WHAT
H A P P E N E D A T P E O P L E E X P R E S S
Disentangling a complex story such as People Express Airlines starts
with identifying the forces that shaped its evolution and the structures
that may have lain behind those forces. This can lead to a very
different picture of a firm’s problems than suggested by just looking at
the events.
People Express started with an innovative product concept, and
the lowest costs in the industry. (People Express was the first airline
founded after the 1978 U.S. airline deregulation.) The airline boasted a
combination of deeply discounted fares and friendly, no-frills services
(for example, meals and baggage handling were extra charges). Flying
People Express on many of its East Coast routes was cheaper

17. září 2004 118 ze 412

than taking a bus. This quickly attracted so many new customers
that, by the third quarter of 1982, Burr announced at People Ex-
press’s quarterly financial meeting: “We’re now the biggest carrier, in
terms of departures, at any New York airport.”4
In its early days, with universal stock ownership, People’s em-
ployees had tremendous morale buoyed by the company’s rapid success
and exciting vision. “I have never flown on an aircraft,” wrote one
journalist in 1982, “whose help is so cheerful and invested in their
work.”5 As Burr said, “At People Express, attitude is as important as
altitude.”
But that early reputation, and those low prices, brought demand
that began, by mid-1982, to outstrip the company’s ability to serve.
Lori Dubose, managing officer for Human Resources, was quoted as
having trouble finding “enough people to staff adequately” and still
“have some time for management development.” By November
1982, one third of People’s staff was temporary help—four hundred
temporaries in all. In terms of simple head count, there were probably
enough “Customer Service Managers,” as People Express’s service
personnel were called, to keep pace. But the innovative job rotation
and team management concepts meant that training and assimilation
of service personnel took much longer than in more traditional airlines.
Despite these difficulties, demand for People’s deep discount
flights continued to grow phenomenally. Passenger seat miles more
than doubled in 1982, and again in 1983. By the end of 1983, People
was one of the most profitable carriers in the industry. Its stock was
trading at $22 a share, up from $8.50 at startup. Despite being over-
worked, many of People’s employees were growing wealthy. Burr
preached the merits of hard work in the pursuit of a lofty vision:
“People get more fatigued and stressed when they don’t have a lot to
do. I really believe that, and I think I have tested it. . . . It’s
sensational what direction can do. The beauty of the human condition
is the magic people are capable of when there’s direction. When there’s
no direction, you’re not capable of much.” Revenues doubled again
in 1984, although profits did not rise proportionately.
Meanwhile, People Express’s customers were complaining more
about service problems. There were more and more ticketing and
reservation delays, and canceled or overbooked flights. On-board
flight attendants became less friendly and less efficient. Customers
forgave all this at first, and kept returning to the airline. Thus, there
was no apparent penalty for poor service. But during 1984 and 1985,

17. září 2004 119 ze 412

increasing numbers of customers began to trickle away. Growth be-
came entirely driven by price, and People Express’s customers
became increasingly price conscious, not quality conscious. Even-
tually, People’s stock price fell, which diminished morale and service
further. By its last year of operation, flying People Express had become
such a dismal experience that it was nicknamed “People Distress,” and
its once loyal customers began to patronize other carriers.
People Express’s chronic problems with service quality and having
enough competent and committed service personnel suggests subtle
similarities to WonderTech, with its problems of inadequate
manufacturing capacity and eroding delivery service—even though the
specifics at People Express differed in almost every way from the
specifics at WonderTech. WonderTech was a manufacturing company.
People Express was a service business. Whereas the critical capacity
variable at WonderTech was production capacity, the critical capacity
variable at People Express was “service capacity,” the composite of
personnel, experience, and morale. WonderTech drove growth
through aggressive additions to its direct sales force. People Express
drove growth through aggressive additions to its fleet and flight
schedule. WonderTech foundered because of worsening delivery times
and eroding delivery time standards. People Express foundered
because of declining customer service quality and standards for
service. But despite all those differences, underlying both were the
dynamics of growth and underinvestment, the systems archetype that
explains one of the most common ways that organizations
inadvertently limit their own growth.
Below is how the growth and underinvestment structure looks,
mapped onto the People Express story.
At People Express, this structure produced a pattern of rapid
growth and equally rapid decline, which you can see in the following
charts of behavior over the five years’ time period.6 Sales grew rapidly
then slowed and then went into decline. Profits rose, then collapsed,
and turned into large losses. Service quality started high then steadily
eroded. Fleet size grew rapidly, as did the number of service personnel,
but service capacity failed to keep pace with passenger growth.
For the managers at People Express, underinvestment was, per-
haps, even harder to see than it was at WonderTech. After all, hadn’t
People been extremely aggressive in investing in aircraft capacity? But
the critical underinvestment was in service capacity, not aircraft

17. září 2004 120 ze 412

capacity. Moreover, inadequate service capacity was masked, to a
degree, by tremendous growth in total head count. People didn’t fail to
expand the number of service personnel to meet its customer growth;
it failed to build the composite of people, skills, and organizational
infrastructure that was needed to serve customer demand at high levels
of quality.7

Yet, People Express could have been an enduring success, in the
opinion of those of us who have tried to understand it systemically. It
had a unique product-cost position that would have been very
difficult for competitors to match. Had the firm been able to maintain
133

17. září 2004 121 ze 412

high service quality to go with its low fares, it would have been hard
to beat. Falling to maintain service quality made price its only com-
petitive advantage, which in turn made it vulnerable.
At MIT, John Sterman has created a computer-based “micro-
world” of the People Express case history called the “People Express
Flight Simulator.” At the beginning of the school year, all incoming
master’s degree students in the Management School get to try their
hand at seeing how well they might have done at the reins of People
Express. As a learning tool, the flight simulator lets students try a
wide range of policies and strategies in an attempt to exploit People
Express’s initial advantage in cost and market position. They try
marketing promotions and price cuts. They try hiring more service
personnel and less service personnel. They try not expanding the fleet
so rapidly (e.g., not buying Frontier Airlines) and they try expanding
more rapidly. They try redefining the “scope” of People’s services to
include more or fewer services for the basic fare. As they come to
understand the growth and underinvestment dynamics, they come
around to strategies that succeed in sustaining growth in revenues and
profits, maintaining high service quality, and expanding service capacity
at a pace in balance with passengers carried. The key is strengthening
the “fundamental solution” of building service capacity. This is best
done by limiting demand growth and by a commitment to service
quality. Both objectives can be achieved through simple changes,
especially through:
• 25 percent higher fares (still two thirds of average industry fares)
• Sustained, high service standards
Though simple, these high-leverage changes represent a shift in
basic strategy. Sustained high service standards create a commitment
to service quality as a competitive advantage. Many have suggested that
People grew too fast, but the leverage lies in pricing somewhat higher,
both to slow down growth and to increase profits to invest in building
service capacity. Slightly higher prices would have left People Express
with more room to maneuver (say by temporarily lowering price)
when competitors started to chip away at the firm’s price advantage.
(In the simulator—even with a sharp drop in competitor fares, as
occurred when computerized reservation systems were introduced—
People Express still remains successful with the above strategy.)
In the end, People Express’s executives’ belief that the enemy
was “out there” kept them from seeing the contradictions in their

17. září 2004 122 ze 412

135
own policies and strategies. The company sought to innovate with
dramatically new ideas in human resource policies, yet it also tried to
become a major national player in the airline industry within a few years.
The two goals were internally contradictory. For example, to sustain
100 percent per year growth, you need “cookie cutter” jobs for which
people can be trained in weeks, rather than the sophisticated human
resource system requiring many months for people to master many
different types of skills.
Consequently, the airline slipped into a vicious cycle of underin-
vestment and eroding quality (for both customers and employees)
that belied all of the executives’ original worthy ideals about employee
management and customer service. It is impossible to say with
certainty what would have happened if they had kept high service
quality as an unshakable goal and priced their product so they could
build adequate service capacity. With the right mix of policies, People
Express’s innovative human-resource policies and timely entry into
the deregulated airline industry might have produced an enduring
success story. One thing is certain, People Express had a unique
industry position that would have been very difficult for major
carriers to match if it had been able to sustain the enthusiasm and
commitment of its people.
Mastering such basic archetypes as growth and underinvestment is
the first step in developing the capability of seeing the forest and the
trees—of seeing information in terms of broad and detailed patterns.
Only by seeing both can you respond powerfully to the challenge of
complexity and change.
But, ultimately, mastering the language of systems thinking also
requires the other complementary learning disciplines. Each contributes
important principles and tools that make individuals, teams, and
organizations more able to make the shift from seeing the world
primarily from a linear perspective to seeing and acting systemically.

17. září 2004 123 ze 412

P A R T I I I
The Core Disciplines:
Building the
Learning
Organization

17. září 2004 124 ze 412

9
PERSONAL MASTERY
THE S P I R I T OF THE
L E A R N I N G O R G A N I Z A T I O N
Organizations learn only through individuals who learn. Individual
learning does not guarantee organizational learning. But without it no
organizational learning occurs.
A small number of organizational leaders are recognizing the radical
rethinking of corporate philosophy which a commitment to individual
learning requires. Kazuo Inamori, founder and president of Kyocera (a
world leader in advanced ceramics technology used in electronic
components, medical materials, and its own line of office automation
and communications equipment), says this:
Whether it is research and development, company management, or
any other aspect of business, the active force is “people.” And
people have their own will, their own mind, and their own way of
thinking. If the employees themselves are not sufficiently motivated
to challenge the goals of growth and technological develop-

17. září 2004 125 ze 412

ment . . . there will simply be no growth, no gain in productivity,
and no technological development.1
Tapping the potential of people, Inamori believes, will require new ,|
understanding of the “subconscious mind,” “willpower,” and “ac-‘
tion of the heart . . . sincere desire to serve the world.” He teaches
Kyocera employees to look inward as they continually strive fori
“perfection,” guided by the corporate motto, “Respect Heaven and(
Love People.” In turn, he believes that his duty as a manager starts I
with “providing for both the material good and spiritual welfare of I
my employees.” |
Half a world away in a totally different industry, Bill O’Brien, \
president of Hanover Insurance, strives for i
. . . organizational models that are more congruent with human;
nature. When the industrial age began, people worked 6 days a;
week to earn enough for food and shelter. Today, most of us have
these handled by Tuesday afternoon. Our traditional hierarchical
organizations are not designed to provide for people’s higher order g
needs, self-respect and self-actualization. The ferment in management
will continue until organizations begin to address these needs, for
all employees.
Also like Inamori, O’Brien argues that managers must redefine
their job. They must give up “the old dogma of planning, organizing I
and controlling,” and realize “the almost sacredness of their respon- I
sibility for the lives of so many people.” Managers’ fundamental J
task, according to O’Brien, is “providing the enabling conditions for I
people to lead the most enriching lives they can.”

I
Lest these sentiments seem overly romantic for building a busi- |
ness, let me point out that Kyocera has gone from startup to $2 \
billion in sales in thirty years, borrowing almost no money and j
achieving profit levels that are the envy of even Japanese firms. |
Hanover was at the rock bottom of the property and liability industry ; in
1969 when O’Brien’s predecessor, Jack Adam, began its recon-
struction around a core set of values and beliefs about people.
Today, the company stands consistently in the upper quarter of its
industry in profits and has grown 50 percent faster than the industry
over the past ten years.
No less a source of business acumen than Henry Ford observed,
The smallest indivisible reality is, to my mind, intelligent and is
waiting there to be used by human spirits if we reach out and call
them in. We rush too much with nervous hands and worried

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minds. We are impatient for results. What we need . . . is rein-
forcement of the soul by the invisible power waiting to be used
. . . I know there are reservoirs of spiritual strength from which we
human beings thoughtlessly cut ourselves off . . . I believe we shall
someday be able to know enough about the source of power, and the
realm of the spirit to create something ourselves . . .
I firmly believe that mankind was once wiser about spiritual
things than we are today. What we now only believe, they knew.2
“Personal mastery” is the phrase my colleagues and I use for the
discipline of personal growth and learning. People with high levels of
personal mastery are continually expanding their ability to create the
results in life they truly seek. From their quest for continual learning
comes the spirit of the learning organization.
M A S T E R Y A N D P R O F I C I E N C Y
Personal mastery goes beyond competence and skills, though it is
grounded in competence and skills. It goes beyond spiritual unfolding
or opening, although it requires spiritual growth. It means approaching
one’s life as a creative work, living life from a creative as opposed to
reactive viewpoint. As my long-time colleague Robert Fritz puts it:
Throughout history, almost every culture has had art, music,
dance, architecture, poetry, storytelling, pottery, and sculpture. The
desire to create is not limited by beliefs, nationality, creed,
educational background, or era. The urge resides in all of us . . . [it]
is not limited to the arts, but can encompass all of life, from the
mundane to the profound.3
When personal mastery becomes a discipline—an activity we in-
tegrate into our lives—it embodies two underlying movements. The
first is continually clarifying what is important to us. We often spend too
much time coping with problems along our path that we forget why
we are on that path, in the first place. The result is that we only have a
dim, or even inaccurate, view of what’s really important to us.
The second is continually learning how to see current reality more
clearly. We’ve all known people entangled in counterproductive re-
lationships, who remain stuck because they keep pretending every-
thing is all right. Or we have been in business meetings where

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everyone says, “We’re on course relative to our plan,” yet an honest
look at current reality would show otherwise. In moving toward a
desired destination, it is vital to know where you are now.
The juxtaposition of vision (what we want) and a clear picture of
current reality (where we are relative to what we want) generates what
we call “creative tension”: a force to bring them together, caused by
the natural tendency of tension to seek resolution. The essence of
personal mastery is learning how to generate and sustain creative
tension in our lives.
“Learning” in this context does not mean acquiring more infor-
mation, but expanding the ability to produce the results we truly
want in life. It is lifelong generative learning. And learning organizations
are not possible unless they have people at every level who practice it.
Sadly, the term “mastery” suggests gaining dominance over people
or things. But mastery can also mean a special level of proficiency. A
“master” craftsperson, for instance, doesn’t dominate pottery or
weaving. But the craftsperson’s skill allows the best pots or fabrics to
emerge from the workshop. Similarly, personal mastery suggests a
special level of proficiency in every aspect of life—personal and
professional.
People with a high level of personal mastery share several basic
characteristics. They have a special sense of purpose that lies behind
their visions and goals. For such a person, a vision is a calling rather than simply
a good idea. They see “current reality” as an ally, not an enemy. They
have learned how to perceive and work with forces of change rather
than resist those forces. They are deeply inquisitive, committed to
continually seeing reality more and more accurately. They feel
connected to others and to life itself. Yet they sacrifice none of their
uniqueness. They feel as if they are part of a larger creative process,
which they can influence but cannot unilaterally control.
People with a high level of personal mastery live in a continual
learning mode. They never “arrive.” Sometimes, language, such as the
term “personal mastery,” creates a misleading sense of definite-ness, of
black and white. But personal mastery is not something you possess. It
is a process. It is a lifelong discipline. People with a high level of
personal mastery are acutely aware of their ignorance, their
incompetence, their growth areas. And they are deeply self-confident.
Paradoxical? Only for those who do not see that “the journey is the
reward.”

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At Hanover, where the quest is for “advanced maturity,” O’Brien
has written of truly mature people as building and holding deep values,
making commitments to goals larger than themselves, being open,
exercising free will, and continually striving for an accurate picture of
reality. They also, he asserts, have a capacity for delayed gratification,
which makes it possible for them to aspire to objectives which others
would disregard, even considering “the impact of their choices on
succeeding generations.” O’Brien points to a deficiency in modern
society’s commitment to human development:
Whatever the reasons, we do not pursue emotional development
with the same intensity with which we pursue physical and intel-
lectual development. This is all the more unfortunate because full
emotional development offers the greatest degree of leverage in
attaining our full potential.4
“WHY WE WANT IT”
“The total development of our people,” O’Brien adds, “is essential to
achieving our goal of corporate excellence.” Whereas once the “morals
of the marketplace” seemed to require a level of morality in business
that was lower than in other activities, “We believe there is no
fundamental tradeoff between the higher virtues in life and economic
success. We believe we can have both. In fact, we believe that, over the
long term, the more we practice the higher virtues of life, the more
economic success we will have.”
In essence, O’Brien is articulating his own version of the most
common rationale whereby organizations come to support “personal
mastery”—or whatever words they use to express their commitment to
the growth of their people. People with high levels of personal mastery
are more committed. They take more initiative. They have a broader
and deeper sense of responsibility in their work. They learn faster.
For all these reasons, a great many organizations espouse a
commitment to fostering personal growth among their employees
because they believe it will make the organization stronger.
But O’Brien has another reason for pursuing personal mastery,
one closer to his own heart:
Another and equally important reason why we encourage our people
in this quest is the impact which full personal development can have
on individual happiness. To seek personal fulfillment only

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outside of work and to ignore the significant portion of our lives
which we spend working, would be to limit our opportunities to be
happy and complete human beings.
Herman Miller’s president Ed Simon said recently, “Why can’t
work be one of those wonderful things in life? Why can’t we cherish
and praise it, versus seeing work as a necessity? Why can’t it be a
cornerstone in people’s lifelong process of developing ethics, values,
and in expressing the humanities and the arts? Why can’t people
learn through the process that there’s something about the beauties of
design, of building something to last, something of value? I believe that
this potential is inherent in work, more so than in many other places.”
In other words, why do we want personal mastery? We want it
because we want it.
It is a pivotal moment in the evolution of an organization when
leaders take this stand. It means that the organization has absolutely,
fully, intrinsically committed itself to the well-being of its people.
Traditionally, there was a contract: an honest day’s pay for an honest
day’s labor. Now, there is a different relationship between employee
and institution.
Pollster Daniel Yankelovich has been taking the pulse of the
American public for forty years. As noted in Chapter One, Yanke-
lovich has pointed to a “basic shift in attitude in the workplace”
from an “instrumental” to a “sacred” view of work. The instrumental
view implies that we work in order to earn the income to do what we
really want when we are not working. This is the classic consumer
orientation toward work—work is an instrument for generating
income. Yankelovich uses the word “sacred” in the sociological not
religious sense: “People or objects are sacred in the sociological sense
when, apart from what instrumental use they serve, they are valued
for themselves.”5
Traditionally, organizations have supported people’s development
instrumentally—if people grew and developed, then the organization
would be more effective. O’Brien goes one step further: “In the type of
organization we seek to build, the fullest development of people is on
an equal plane with financial success. This goes along with our most
basic premise: that practicing the virtues of life and business success
are not only compatible but enrich one another. This is a far cry from
the traditional ‘morals of the marketplace.’ ”
To see people’s development as a means toward the organization’s

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ends devalues the relationship that can exist between individual and
organization. Max de Pree, retired CEO of Herman Miller, speaks of a
“covenant” between organization and individual, in contrast to the
traditional “contract” (“an honest day’s pay in exchange for an honest
day’s work”). “Contracts,” says De Pree, “are a small part of a
relationship. A complete relationship needs a covenant . . . a covenantal
relationship rests on a shared commitment to ideas, to issues, to
values, to goals, and to management processes . . . Covenantal
relationships reflect unity and grace and poise. They are expressions of
the sacred nature of relationships.”6
In Japan, a Christian Science Monitor reporter visiting the Matsushita
corporation observed that “There is an almost religious atmosphere
about the place, as if work itself were considered something sacred.”
Inamori of Kyocera says that his commitment to personal mastery
simply evolved from the traditional Japanese commitment to lifetime
employment. “Our employees agreed to live in a community in which
they would not exploit each other, but rather help each other so that
we may each live our life fully.”
“You know the system is working,” O’Brien said recently, “when you
see a person who came to work for the company ten years ago who
was unsure of him/herself and had a narrow view of the world and
their opportunities. Now that person is in charge of a department of a
dozen people. He or she feels comfortable with responsibility, digests
complex ideas, weighs different positions, and develops solid reasoning
behind choices. Other people listen with care to what this person says.
The person has larger aspirations for family, company, industry, and
society.”
There is an unconditional commitment, an unequivocating courage,
in the stand that an organization truly committed to personal mastery
takes. We want it because we want it.
R E S I S T A N C E
Who could resist the benefits of personal mastery? Yet, many people
and organizations do. Taking a stand for the full development of your
people is a radical departure from the traditional contract between
employee and institution. In some ways, it is the most radical departure
from traditional business practices in the learning organization. There
are obvious reasons why companies resist encouraging personal
mastery. It is “soft,” based in part on unquantifiable concepts

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such as intuition and personal vision. No one will ever be able to
measure to three decimal places how much personal mastery con-
tributes to productivity and the bottom line. In a materialistic culture
such as ours, it is difficult even to discuss some of the premises of
personal mastery. “Why do people need to talk about this stuff?”
someone may ask. “Isn’t it obvious? Don’t we already know it?”
A more daunting form of resistance is cynicism. The human potential
movement, and along with it much of “humanistic management,”
overpromised itself to corporations during the 1970s and 1980s. It
prompted executives to idealize each other and expect grand, instant,
human character transformations, which can never happen.
In combating cynicism, it helps to know its source. Scratch the
surface of most cynics and you find a frustrated idealist—someone
who made the mistake of converting his ideals into expectations. For
example, many of those cynical about personal mastery once held
high ideals about people. Then they found themselves disappointed,
hurt, and eventually embittered because people fell short of their
ideals. Hanover’s Bill O’Brien points out that “burnout” comes
from causes other than simply working too hard. “There are teachers,
social workers, and clergy,” says O’Brien, “who work incredibly hard
until they are 80 years old and never suffer “burnout”— because they
have an accurate view of human nature. They don’t over-romanticize
people, so they don’t feel the great psychological stress when people
let them down.”
Finally, some fear that personal mastery will threaten the established
order of a well-managed company. This is a valid fear. To empower people
in an unaligned organization can be counterproductive. If people do not share
a common vision, and do not share common “mental models” about
the business reality within which they operate, empowering people
will only increase organizational stress and the burden of management
to maintain coherence and direction. This is why the discipline of
personal mastery must always be seen as one among the set of
disciplines of a learning organization. An organizational commitment to
personal mastery would be naive and foolish if leaders in the
organization lacked the capabilities of building shared vision and shared
mental models to guide local decision makers.

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THE D I S C I P L I N E O F
P E R S O N A L M A S T E R Y
The way to begin developing a sense of personal mastery is to ap-
proach it as a discipline, as a series of practices and principles that must
be applied to be useful. Just as one becomes a master artist by continual
practice, so the following principles and practices lay the groundwork
for continually expanding personal mastery.
PERSONAL VISION
Personal vision comes from within. Several years ago I was talking with
a young woman about her vision for the planet. She said many lovely
things about peace and harmony, about living in balance with nature. As
beautiful as these ideas were, she spoke about them unemotionally, as
if these were things that she should want. I asked her if there was
anything else. After a pause, she said, “I want to live on a green
planet,” and started to cry. As far as I know, she had never said this
before. The words just leaped from her, almost with a will of their
own. Yet, the image they conveyed clearly had deep meaning to her—
perhaps even levels of meaning that she didn’t understand.
Most adults have little sense of real vision. We have goals and
objectives, but these are not visions. When asked what they want, many
adults will say what they want to get rid of. They’d like a better job—
that is, they’d like to get rid of the boring job they have. They’d like to
live in a better neighborhood, or not have to worry about crime, or
about putting their kids through school. They’d like it if their mother-
in-law returned to her own house, or if their back stopped hurting. Such
litanies of “negative visions” are sadly commonplace, even among very
successful people. They are the byproduct of a lifetime of fitting in, of
coping, of problem solving. As a teenager in one of our programs once
said, “We shouldn’t call them ‘grown ups’ we should call them ‘given
ups.’ ”
A subtler form of diminished vision is “focusing on the means not
the result.” Many senior executives, for example, choose “high
market share” as part of their vision. But why? “Because I want our
company to be profitable.” Now, you might think that high profits is an
intrinsic result in and of itself, and indeed it is for some. But for

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surprisingly many other leaders, profits too are a means toward a still
more important result. Why choose high annual profits? “Because I
want us to remain an independent company, to keep from being taken
over.” Why do you want that? “Because I want to keep our integrity
and our capacity to be true to our purpose in starting the
organization.” While all the goals mentioned are legitimate, the last—
being true to our purpose—has the greatest intrinsic significance to
this executive. All the rest are means to the end, means which might
change in particular circumstances. The ability to focus on ultimate intrinsic
desires, not only on secondary goals, is a cornerstone of personal mastery.
Real vision cannot be understood in isolation from the idea of
purpose. By purpose, I mean an individual’s sense of why he is alive. No
one could prove or disprove the statement that human beings have
purpose. It would be fruitless even to engage in the debate. But as a
working premise, the idea has great power. One implication is that
happiness may be most directly a result of living consistently with
your purpose. George Bernard Shaw expressed the idea pointedly
when he said:
This is the true joy in life, the being used for a purpose recognized by
yourself as a mighty one . . . the being a force of nature instead of
a feverish, selfish little clod of ailments and grievances complaining
that the world will not devote itself to making you happy.7
This same principle has been expressed in some organizations as
“genuine caring.” In places where people felt uncomfortable talking
about personal purpose, they felt perfectly at ease talking about
genuine caring. When people genuinely care, they are naturally com-
mitted. They are doing what they truly want to do. They are full of
energy and enthusiasm. They persevere, even in the face of frustration
and setbacks, because what they are doing is what they must do. It is
their work.
Everyone has had experiences when work flows fluidly; when he
feels in tune with a task and works with a true economy of means.
Someone whose vision calls him to a foreign country, for example, may
find himself learning a new language far more rapidly than he ever
could before. You can often recognize your personal vision because it
creates such moments; it is the goal pulling you forward that makes all
the work worthwhile.
But vision is different from purpose. Purpose is similar to a direc-

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tion, a general heading. Vision is a specific destination, a picture of a
desired future. Purpose is abstract. Vision is concrete. Purpose is
“advancing man’s capability to explore the heavens.” Vision is “a
man on the moon by the end of the 1960s.” Purpose is “being the
best I can be,” “excellence.” Vision is breaking four minutes in the
mile.
It can truly be said that nothing happens until there is vision. But it
is equally true that a vision with no underlying sense of purpose, no
calling, is just a good idea—all “sound and fury, signifying nothing.”
Conversely, purpose without vision has no sense of appropriate
scale. As O’Brien says, “You and I may be tennis fans and enjoy
talking about ground strokes, our backhands, the thrill of chasing
down a corner shot, of hitting a winner. We may have a great con-
versation, but then we find out that I am gearing up to play at my
local country club and you are preparing for Wimbledon. We share the
same enthusiasm and love of the game, but at totally different scales
of proficiency. Until we establish the scales we have in mind, we might
think we are communicating when we’re not.”
Vision often gets confused with competition. You might say,
“My vision is to beat the other team.” And indeed, competition can be
a useful way of calibrating a vision, of setting scale. To beat the
number-ten player at the tennis club is different from beating the
number one. But to be number one of a mediocre lot may not fulfill
my sense of purpose. Moreover, what is my vision after I reach
number one?
Ultimately, vision is intrinsic not relative. It’s something you desire
for its intrinsic value, not because of where it stands you relative to
another. Relative visions may be appropriate in the interim, but they
will rarely lead to greatness. Nor is there anything wrong with
competition. Competition is one of the best structures yet invented
by humankind to allow each of us to bring out the best in each other.
But after the competition is over, after the vision has (or has not)
been achieved, it is one’s sense of purpose that draws you further,
that compels you to set a new vision. This, again, is why personal mastery
must be a discipline. It is a process of continually focusing and refocusing on what
one truly wants, on one’s visions.
Vision is multifaceted. There are material facets of our visions,
such as where we want to live and how much money we want to
have in the bank. There are personal facets, such as health, freedom,
and being true to ourselves. There are service facets, such as helping

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others or contributing to the state of knowledge in a field. All are
part of what we truly want. Modern society tends to direct our atten-
tion to the material aspects, and simultaneously foster guilt for our
material desires. Society places some emphasis on our personal de-
sires—for example, it is almost a fetish in some circles to look trim
and fit—and relatively little on our desires to serve. In fact, it is easy to
feel naive or foolish by expressing a desire to make a contribution. Be
that as it may, it is clear from working with thousands of people that
personal visions span all these dimensions and more. It is also clear
that it takes courage to hold visions that are not in the social
mainstream.
But it is exactly that courage to take a stand for one’s vision that
distinguishes people with high levels of personal mastery. Or, as the
Japanese say of the master’s stand, “When there is no break, not
even the thickness of a hair comes between a man’s vision and his
action.”8
In some ways, clarifying vision is one of the easier aspects of
personal mastery. A more difficult challenge, for many, comes in
facing current reality.
HOLDING CREATIVE TENSION
People often have great difficulty talking about their visions, even
when the visions are clear. Why? Because we are acutely aware of the
gaps between our vision and reality. “I would like to start my own
company,” but “I don’t have the capital.” Or, “I would like to pursue
the profession that I really love,” but “I’ve got to make a living.”
These gaps can make a vision seem unrealistic or fanciful. They can
discourage us or make us feel hopeless. But the gap between vision
and current reality is also a source of energy. If there was no gap,
there would be no need for any action to move toward the vision.
Indeed, the gap is the source of creative energy. We call this gap creative
tension.
Imagine a rubber band, stretched between your vision and current
reality. When stretched, the rubber band creates tension, representing
the tension between vision and current reality. What does tension seek?
Resolution or release. There are only two possible ways for the
tension to resolve itself: pull reality toward the vision or pull the vision
toward reality. Which occurs will depend on whether we hold steady to
the vision.

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The principle of creative tension is the central principle of personal
mastery, integrating all elements of the discipline. Yet, it is widely
misunderstood. For example, the very term “tension” suggests anxiety
or stress. But creative tension doesn’t feel any particular way. It is the
force that comes into play at the moment when we acknowledge a
vision that is at odds with current reality.
Still, creative tension often leads to feelings or emotions associated
with anxiety, such as sadness, discouragement, hopelessness, or
worry. This happens so often that people easily confuse these
emotions with creative tension. People come to think that the creative
process is all about being in a state of anxiety. But it is important to realize
that these “negative” emotions that may arise when there is creative
tension are not creative tension itself. These emotions are what we call
emotional tension.
If we fail to distinguish emotional tension from creative tension, we
predispose ourselves to lowering our vision. If we feel deeply
discouraged about a vision that is not happening, we may have a
strong urge to lighten the load of that discouragement. There is one
immediate remedy: lower the vision! “Well, it wasn’t really that
important to shoot seventy-five. I’m having a great time shooting in
the eighties.”
Or, “I don’t really care about being able to play in recital. I’ll have to
make money as a music teacher in any case; I’ll just concentrate
there.” The dynamics of relieving emotional tension are insidious
because they can operate unnoticed. Emotional tension can always be
relieved by adjusting the one pole of the creative tension that is
completely under our control at all times—the vision. The feelings
that we dislike go away because the creative tension that was their

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source is reduced. Our goals are now much closer to our current
reality. Escaping emotional tension is easy—the only price we pay is
abandoning what we truly want, our vision.
The dynamics of emotional tension deeply resemble the dynamics of
eroding goals that so troubled WonderTech and People Express, in
Chapters 7 and 8. The interaction of creative tension and emotional
tension is a shifting the burden dynamic, similar to that of eroding
goals, that can be represented as follows:

When we hold a vision that differs from current reality, a gap
exists (the creative tension) which can be resolved in two ways. The
lower balancing process represents the “fundamental solution”: taking
actions to bring reality into line with the vision. But changing reality
takes time. This is what leads to the frustration and emotional tension
in the upper balancing process, the “symptomatic solution” of
lowering the vision to bring it into line with current reality.
But a onetime reduction in the vision usually isn’t the end of the
story. Sooner or later new pressures pulling reality away from the
(new, lowered) vision arise, leading to still more pressures to lower the
vision. The classic “shifting the burden” dynamic ensues, a subtle
reinforcing spiral of failure to meet goals, frustration, lowered vision,
temporary relief, and pressure anew to lower the vision still further.
Gradually, the “burden” is shifting increasingly to lowering the vision.
At WonderTech and People Express relieving emotional tension
took the form of decline in key operating standards that seemed
impossible to meet—standards for delivery performance and for ser-

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vice quality. The decline was especially difficult to see because it
was gradual. During each crisis at Wonder Tech delivery standards
eroded just a bit relative to where they had settled after the last
crisis. Likewise, managers at People Express didn’t wake up one
morning and declare, “We’ve solved our problems keeping pace
with growth, we’ll lower our service standards.” Rather, service
standards eroded quietly during repeated crises and with turnover
among key leaders. So, too, do eroding personal goals go unrecog-
nized, as we gradually surrender our dreams for the relationships we
want to have, the work we want to do, and the type of world we
want to live in.
In organizations, goals erode because of low tolerance for emo-
tional tension. Nobody wants to be the messenger with bad news.
The easiest path is to just pretend there is no bad news, or better
yet, “declare victory”—to redefine the bad news as not so bad by
lowering the standard against which it is judged.
The dynamics of emotional tension exist at all levels of human
activity. They are the dynamics of compromise, the path of mediocrity.
As Somerset Maugham said, “Only mediocre people are always at their
best.”
We allow our goals to erode when we are unwilling to live with
emotional tension. On the other hand, when we understand creative
tension and allow it to operate by not lowering our vision, vision
becomes an active force. Robert Fritz says, “It’s not what the vision is,
it’s what the vision does.” Truly creative people use the gap between
vision and current reality to generate energy for change.
For example, Alan Kay, who directed the research at Xerox Palo
Alto Research Center (PARC) that led to many key features of the
personal computer, actually had a vision for a different machine,
which he called the “dynabook.” This would be a book that was
interactive. A child could test out his understanding, play games, and
creatively rearrange the static presentation of ideas offered by the
traditional book. Kay failed, in a sense, because the “dynabook” never
became a reality. But the vision reshaped the computer industry. The
prototype machines developed at PARC achieved the functionality—
windows, pull-down menus, mouse control, iconic displays (images
rather than words)—that was introduced commercially ten years later
in the Macintosh.
Bill Russell, the legendary center for the Boston Celtics basketball
team, used to keep his own personal scorecard. He graded himself
after every game on scale from one to one hundred. In his career he

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never achieved more than sixty-five. Now, given the way most of us
are taught to think about goals, we would regard Russell as an abject
failure. The poor soul played in over twelve hundred basketball
games and never achieved his standard! Yet, it was the striving for
that standard that made him arguably the best basketball player
ever.9
It’s not what the vision is, it’s what the vision does.
Mastery of creative tension transforms the way one views “failure.”
Failure is, simply, a shortfall, evidence of the gap between vision and
current reality. Failure is an opportunity for learning— about
inaccurate pictures of current reality, about strategies that didn’t work
as expected, about the clarity of the vision. Failures are ! not about our
unworthiness or powerlessness. Ed Land, founder and president of
Polaroid for decades and inventor of instant photography, had one
plaque on his wall. It read:
A mistake is an event, the full benefit of which has not yet been
turned to your advantage.
Mastery of creative tension brings out a capacity for perseverance
and patience. A Japanese executive in one of our seminars once told
me how, in his view, Japanese and Americans have quite different
attitudes toward time. He said that, “U.S. businessmen in Japan to
negotiate business deals often find the Japanese evasive and reticent to
‘get down to business.’ The American arrives in Japan on a tight,
carefully planned five-day schedule and immediately wants to get to
work. Instead, the Japanese greet them with a polite, formal tea
ceremony instead, never getting down to nuts and bolts. As the days go
by, the Japanese keep their slow pace, while the Americans become
antsier and antsier. For the American,” the executive said, “time is
the enemy. For the Japanese, time is an ally.”
More broadly, current reality itself is, for many of us, the enemy. We
fight against what is. We are not so much drawn to what we want to
create as we are repelled by what we have, from our current reality.
By this logic, the deeper the fear, the more we abhor what is, the
more “motivated” we are to change. “Things must get bad enough, or
people will not change in any fundamental way.”
This leads to the mistaken belief that fundamental change requires a
threat to survival. This crisis theory of change is remarkably wide-
spread. Yet, it is also a dangerous oversimplification. Often in work-
shops or presentations, I will ask, “How many of you believe people
and organizations only change, fundamentally, when there is a cri-

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sis?” Reliably, 75 to 90 percent of the hands go up. Then I ask people
to consider a life where everything is exactly the way they would
like—there are absolutely no problems of any sort in work, personally,
professionally, in their relationships, or their community. Then I ask,
“What is the first thing you would seek if you had a life of absolutely
no problems?” The answer, overwhelmingly, is “change —to create
something new.” So human beings are more complex than we often
assume. We both fear and seek change. Or, as one seasoned
organization change consultant once put it, “People don’t resist
change. They resist being changed.”
Mastery of creative tension leads to a fundamental shift in our
whole posture toward reality. Current reality becomes the ally not the
enemy. An accurate, insightful view of current reality is as important as a clear
vision. Unfortunately, most of us are in the habit of imposing biases
on our perceptions of current reality, a subject we will return to in
depth in the following chapter on mental models. “We learn to rely on
our concepts of reality more than on our observations,” writes Robert
Fritz. “It is more convenient to assume that reality is similar to our
preconceived ideas than to freshly observe what we have before our
eyes.”10 If the first choice in pursuing personal mastery is to be true to
your own vision, the second fundamental choice in support of
personal mastery is commitment to the truth.
Both are equally vital to generating creative tension. Or, as Fritz
puts it, “The truly creative person knows that all creating is achieved
through working with constraints. Without constraints there is no
creating.”
“STRUCTURAL CONFLICT”: THE
POWER OF YOUR POWERLESSNESS
Many people, even highly successful people, harbor deep beliefs
contrary to their personal mastery. Very often, these beliefs are
below the level of conscious awareness. To see what I mean, try the
following experiment. Say out loud the following sentence: “I can
create my life exactly the way I want it, in all dimensions—work,
family, relationships, community, and larger world.” Notice your
internal reaction to this assertion, the “little voice” in the back of
your head. “Who’s he kidding?” “He doesn’t really believe that.”
“Personally and in work, sure—but, not ‘community’ and ‘the larger

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world. …….. What do I care about the ‘larger world’ anyhow?” All of
these reactions are evidence of deep-seated beliefs.
Robert Fritz, who has worked with literally tens of thousands of
people to develop their creative capacities, has concluded that prac-
tically all of us have a “dominant belief that we are not able to fulfill our
desires.” Where does this belief come from? Fritz argues that it is an
almost inevitable by-product of growing up:
As children we learn what our limitations are. Children are rightfully
taught limitations essential to their survival. But too often this
learning is generalized. We are constantly told we can’t have or can’t
do certain things, and we may come to assume that we have an
inability to have what we want.”
Most of us hold one of two contradictory beliefs that limit our
ability to create what we really want. The more common is belief in our
powerlessness—our inability to bring into being all the things we really
care about. The other belief centers on unworthiness—that we do not
deserve to have what we truly desire. Fritz claims that he has met only
a handful of individuals who do not seem to have one or the other of
these underlying beliefs. Such an assertion is difficult to prove
rigorously because it is difficult to measure deep beliefs. But if we
accept it as a working premise, it illuminates systemic forces that can
work powerfully against creating what we really want.
Fritz uses a metaphor to describe how contradictory underlying
beliefs work as a system, counter to achieving our goals. Imagine, as
you move toward your goal, there is a rubber band, symbolizing
creative tension, pulling you in the desired direction. But imagine also
a second rubber band, anchored to the belief of powerlessness or
unworthiness. Just as the first rubber band tries to pull you toward your
goal, the second pulls you back toward the underlying belief that you
can’t (or don’t deserve to) have your goal. Fritz calls the system
involving both the tension pulling us toward our goal and the tension
anchoring us to our underlying belief “structural conflict,” because it is
a structure of conflicting forces: pulling us simultaneously toward and
away from what we want.
Thus, the closer we come to achieving our vision, the more the
second rubber band pulls us away from our vision. This force can
manifest itself in many ways. We might lose our energy. We might
question whether we really wanted the vision. “Finishing the job”
might become increasingly difficult. Unexpected obstacles develop in
our path. People let us down. All this happens even though we are
unaware of the structural conflict system, because it originates in

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deep beliefs of which we are largely unaware—in fact, our unaware-ness
contributes to the power of structural conflict.
Given beliefs in our powerlessness or unworthiness, structural
conflict implies that systemic forces come into play to keep us from
succeeding whenever we seek a vision. Yet, we do succeed sometimes,
and in fact many of us have become adept at identifying and achieving
goals, at least in some areas of our lives. How do we overcome the
forces of structural conflict?
Fritz has identified three generic “strategies” for coping with the
forces of structural conflict, each of which has its limitations.12 Letting
our vision erode is one such coping strategy. The second is “conflict
manipulation,” in which we try to manipulate ourselves into greater
effort toward what we want by creating artificial conflict, such as
through focusing on avoiding what we don’t want. Conflict
manipulation is the favored strategy of people who incessantly worry
about failure, managers who excel at “motivational chats” that point
out the highly unpleasant consequences if the company’s goals are not
achieved, and of social movements that attempt to mobilize people
through fear. In fact, sadly, most social movements operate through
conflict manipulation or “negative vision,” focusing on getting away
from what we don’t want, rather than on creating what we do want:
antidrugs, antinuclear arms, antinuclear power, antismok-ing, anti-
abortion, or antigovernment corruption.
But many ask, “What’s wrong with a little worry or fear if it helps us
achieve our goals?” The response of those who seek personal mastery
is the simple question: “Do you really want to live your life in a state of
fear of failure?” The tragedy is that many people who get hooked on
conflict manipulation come to believe that only through being in a
state of continual anxiety and fear can they be successful. These are
the people who, rather than shunning emotional tension, actually
come to glorify it. For them, there is little joy in life. Even when they
achieve their goals, they immediately begin worrying about losing what
they have gained.
Fritz’s third generic strategy is the strategy of “willpower,” where

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we simply “psych ourselves up” to overpower ill forms of resis-
tance to achieving our goals. Lying behind willpower strategies, he
suggests, is the simple assumption that we “motivate ourselves
through heightened volition.” Willpower is so common among
highly successful people that many see its characteristics as synon-
ymous with success: a maniacal focus on goals, willingness to “pay the
price,” ability to defeat any opposition and surmount any obstacle.
The problems with “willpower” are many, but they may hardly be
noticed by the person focused narrowly on “success.” First, there is
little economy of means; in systems thinking terms, we act without
leverage. We attain our goals, but the effort is enormous and we may
find ourselves exhausted and wondering if “it was worth it” when we
have succeeded. Ironically, people hooked on willpower may actually
look for obstacles to overcome, dragons to slay, and enemies to
vanquish—to remind themselves and others of their own prowess.
Second, there are often considerable unintended consequences.
Despite great success at work, the master of “willpower” will often
find that he or she has gone through two marriages and has terrible
relationships with his or her children. Somehow, the same dogged
determination and goal orientation that “works” at work doesn’t quite
turn the trick at home. (Chapter 16, “Ending the War Between Work
and Family,” develops these ideas further.)
Worse still, just as with all of the coping strategies, “willpower”
leaves the underlying system of structural conflict unaltered. In par-
ticular, the underlying belief in powerlessness has not really
changed. Despite significant accomplishments, many “highly successful
people” still feel a deep, usually unspoken, sense of powerlessness in
critical areas of their lives—such as in their personal and family
relationships, or in their ability to achieve a sense of peace and
spiritual fulfillment.
These coping strategies are, to a certain extent, unavoidable. They
are deeply habitual and cannot be changed overnight. We all tend to
have a favorite strategy—mine has long been “willpower,” as those
close to me can attest.
Where then is the leverage in dealing with structural conflict? If
structural conflict arises from deep underlying beliefs, then it can be
changed only by changing the beliefs. But psychologists are virtually
unanimous that fundamental beliefs such as powerlessness or unwor-
thiness cannot be changed readily. They are developed early in life
(remember all those “can’ts” and “don’ts” that started when you

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were two?). For most of us, beliefs change gradually as we accumu-
late new experiences—as we develop our personal mastery. But if
mastery will not develop so long as we hold unempowering beliefs,
and the beliefs will change only as we experience our mastery, how
many we begin to alter the deeper structures of our lives?
COMMITMENT TO THE TRUTH
We may begin with a disarmingly simple yet profound strategy for
dealing with structural conflict: telling the truth.
Commitment to the truth often seems to people an inadequate
strategy. “What do I need to do to change my behavior?” “How do I
change my underlying belief?” People often want a formula, a
technique, something tangible that they can apply to solve the problem
of structural conflict. But, in fact, being committed to the truth is far
more powerful than any technique.
Commitment to the truth does not mean seeking the “Truth,” the
absolute final word or ultimate cause. Rather, it means a relentless
willingness to root out the ways we limit or deceive ourselves from
seeing what is, and to continually challenge our theories of why
things are the way they are. It means continually broadening our
awareness, just as the great athlete with extraordinary peripheral
vision keeps trying to “see more of the playing field.” It also means
continually deepening our understanding of the structures underlying
current events. Specifically, people with high levels of personal mastery
see more of the structural conflicts underlying their own behavior.
Thus, the first critical task in dealing with structural conflicts is to
recognize them, and the resulting behavior, when they are operating. It
can be very difficult to recognize these coping strategies while we are
playing them out, especially because of tensions and pressures that
often accompany them. It helps to develop internal warning signals,
such as when we find ourselves blaming something or somebody for
our problems: “The reason I’m giving up is nobody appreciates me,”
or “The reason I’m so worried is that they’ll fire me if I don’t get the
job done.”
In my life, for example, I often felt that people let me down at
critical junctures in major projects. When this happened, I would
“bulldoze” through, overcoming the obstacle of their disloyalty or
incompetence. It took many years before I recognized this as a re-

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curring pattern, my own special form of the “willpower” strategy,
rooted in a deep feeling of being powerless to change the way others
let me down. Invariably, I ended up feeling as if “I’ve got to do it all
myself.”
Once I recognized this pattern, I began to act differently when a
colleague let me down. I became angry less often. Rather, there was a
twinge of recognition—”Oh, there goes my pattern.” I looked more
deeply at how my own actions were part of the outcome, either by
creating tasks that were impossible to accomplish, or by undermining
or demotivating the other person. Further, I worked to develop skills
to discuss such situations with the people involved without
producing defensiveness. Chapter 10, Mental Models, illus-trates these
skills.
I would never have developed those skills or known how to put
them into practice without a shift of mind. So long as I saw the
problem in terms of events, I was convinced that my problems were
externally caused—”they let me down.” Once I saw the problem as
structurally caused, I began to look at what I could do, rather than at
what “they had done.”
Structures of which we are unaware hold us prisoner. Once we
can see them and name them, they no longer have the same hold on
us. This is as much true for individuals as it is for organizations. In fact,
an entire field is evolving, structural family therapy, based on the
assumption that individual psychological difficulties can be understood
and changed only by understanding the structures of
interdependencies within families and close personal relationships.
Once these structures are recognized, in the words of David Kantor, a
pioneer in the field, “It becomes possible to begin to alter structures to
free people from previously mysterious forces that dictated their
behavior.”13
Discovering structures at play is the stock and trade of people with
high levels of personal mastery. Sometimes these structures can be
readily changed. Sometimes, as with structural conflict, they change
only gradually. Then the need is to work more creatively within them
while acknowledging their origin, rather than fighting the structures.
Either way, once an operating structure is recognized, the structure
itself becomes part of “current reality.” The more my commitment to
the truth, the more creative tension comes into play because current
reality is seen more for what it really is. In the context of creative
tension, commitment to the truth becomes a generative force, just as
vision becomes a generative force.
One of the classic illustrations of this process is Charles Dickens’s

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A Christmas Carol. Through the visitations of the three ghosts on
Christmas Eve, Scrooge sees more and more of the reality from
which he has turned away. He sees the reality of his past, how the
choices he made steadily whittled away his compassion and increased
his self-centeredness. He sees the reality of his present, especially
those aspects of reality that he has avoided, such as Tiny Tim’s illness.
And he sees the reality of his likely future, the future that will occur if
he continues in his present ways. But then he wakes up. He realizes that
he is not the captive of these realities. He realizes that he has a choice.
He chooses to change.
Significantly, Scrooge can’t make the choice to change before he
becomes more aware of his current reality. In effect, Dickens says
that life always avails the option of seeing the truth, no matter how
blind and prejudiced we may be. And if we have the courage to
respond to that option, we have the power to change ourselves pro-
foundly. Or, to put it in more classic religious terms, only through the
truth do we come to grace.
The power of the truth, seeing reality more and more as it is,
cleansing the lens of perception, awakening from self-imposed dis-
tortions of reality—different expressions of a common principle in
almost all the world’s great philosophic and religious systems. Bud-
dhists strive to achieve the state of “pure observation,” of seeing
reality directly. Hindus speak of “witnessing,” observing themselves
and their lives with an attitude of spiritual detachment. The Koran
ends with the phrase, “What a tragedy that man must die before he
wakes up.” The power of the truth was no less central to early
Christian thinking, although it has lost its place in Christian practice
over the last two thousand years. In fact, the Hebrew symbols used to
form the word Yeheshua, “Jesus,” include the symbols for Jehovah, ” H
1 H V with the additional letter shin (t£J) inserted in the middle. The
symbols for Jehovah carry the meaning, “That which was, is, and will
be.” The inserted shin modifies the meaning to “that which was, is, and
will be, delivers.” This is the probable origin of the statement “The
truth shall set you free.”
USING THE SUBCONSCIOUS, OR, YOU DON’T REALLY
NEED TO FIGURE IT ALL OUT
One of the most fascinating aspects of people with high levels of
personal mastery is their ability to accomplish extraordinarily complex
tasks with grace and ease. We have all marveled at the breath-

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takingly beautiful artistry of the championship ice skater or the prima
ballerina. We know that their skills have been developed through
years of diligent training, yet the ability to execute their artistry with
such ease and seeming effortlessness is still wondrous.
Implicit in the practice of personal mastery is another dimension of
the mind, the subconscious. It is through the subconscious that all of
us deal with complexity. What distinguishes people with high levels of
personal mastery is they have developed a higher level of rapport
between their normal awareness and their subconscious. What most
of us take for granted and exploit haphazardly, they approach as a
discipline.
Is the subconscious relevant in management and organizations?
Inamori of Kyocera says:
When I am concentrating . . . I enter the subconscious mind. It is
said that human beings possess both a conscious and subconscious
mind, and that our subconscious mind has a capacity that is larger
by a factor of ten . . . ”
When I talk about our “mind,” I risk being called crazy. None-
theless, I think therein may lie the hint to the secret that may
determine our future.
O’Brien of Hanover likewise sees tapping mental capabilities for-
merly ignored as central to building the new organization:
The greatest unexplored territory in the world is the space be-
tween our ears. Seriously, I am certain that learning organizations
will find ways to nurture and focus the capabilities within us all that
today we call “extraordinary.”
But what is “extraordinary” is actually closely related to aspects of
our lives that are so “ordinary” that we hardly notice them. Our lives
are full of myriad complex tasks which we handle quite competently
with almost no conscious thought. Try an experiment: touch the top of
your head. Now, how did you do that? For most of us, the answer
resembles, “Well, I just thought about my hand on my head —or, I
formed a mental image of my hand on top of my head—and voila, it
just was there.” But at a neurophysiological level, raising your hand to
the top of your head is an extraordinarily complex task, involving
hundreds of thousands of neural firings as signals move from the
brain to your arm and back again. This entire complex activity is
coordinated without our conscious awareness. Likewise, if you had
to think about every detail of walking, you’d be in big

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trouble. Walking, talking, eating, putting on your shoes, and riding a
bicycle are all accomplished with almost no conscious attention— yet
all are, in fact, enormously complex tasks.
These tasks are accomplished reliably because there is an aspect of
our mind that is exceedingly capable of dealing with complexity. We
call this dimension of mind the “subconscious,” because it operates
“below” or “behind” the level of conscious awareness. Others call it
“unconscious” or “automatic mind.”14 Whatever it is called, without
this dimension of mind it would be quite impossible to explain how
human beings ever succeed in mastering any complex task. For one
thing we can say confidently is that these tasks are not accomplished
through our normal awareness and thinking alone.
Equally important, the subconscious is critical to how we learn. At
one point in your life you were unable to carry out “mundane” tasks
such as walking, talking and eating. Each had to be learned. The infant
does not get the spoon in her mouth the first time out—it goes over
the left shoulder, then the right shoulder, then the cheek. Only
gradually does she learn to reliably reach her mouth. Initially, any new
task requires a great deal of conscious attention and effort. As we
“learn” the skills required of the task, the whole activity gradually
shifts from conscious attention to subconscious control.
For example, when you first learned to drive a car, it took consid-
erable conscious attention, especially if your were learning to drive on
a standard transmission. In fact, you might have found it difficult to
carry on a conversation with the person next to you. If that person had
asked you to “slow down, downshift, and turn right” at the next corner,
you might have given up then and there. Yet, within a few months or
less, you executed the same task with little or no conscious attention.
It had all become “automatic.” Amazingly, before long you drove in
heavy traffic while carrying on a conversation with the person sitting
next to you—apparently giving almost no conscious attention to the
literally hundreds of variables you had to monitor and respond to.
For example, when we first learn to play the piano or any musical
instrument, we start by playing scales. Gradually, we move up to
simple and then more complex compositions, leaving scales behind as
a task that can be handled with little conscious attention. Even
concert pianists, when sitting down to an unfamiliar piece will play that
piece at half speed in order to allow concentration on the mechanics
of hand and pedal positions, rhythm and tempo. But when the
concert comes, the same pianist places no conscious attention

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on the mechanics of playing the piece. This leaves his conscious
attention to focus exclusively on the aesthetics of the performance.”
We have all mastered a vast repertoire of skills through “training”
the subconscious. Once learned, they become so taken for granted,
so “subconscious,” we don’t even notice when we are executing
them. But, for most of us, we have never given careful thought to
how we mastered these skills and how we might continue to develop
deeper and deeper “rapport” between our normal awareness and
subconscious. Yet, these are matters of the greatest importance to
the discipline of personal mastery.16
This is why, for instance, people committed to continually devel-
oping personal mastery practice some form of “meditation.”
Whether it is through contemplative prayer or other methods of simply
“quieting” the conscious mind, regular meditative practice can be
extremely helpful in working more productively with the subconscious
mind. The subconscious appears to have no particular volition. It
neither generates its own objectives nor determines its own focus. It
is highly subject to direction and conditioning—what we pay
attention to takes on special significance to the subconscious. In our
normal highly active state of mind, the subconscious is deluged with a
welter of contradictory thoughts and feelings. In a quieter state of
mind, when we then focus on something of particular importance,
some aspect of our vision, the subconscious is undistracted.
Moreover, there are particular ways that people with high levels of
personal mastery direct their focus. As discussed earlier, they focus on
the desired result itself, not the “process” or the means they assume
necessary to achieve that result.
Focusing on the desired intrinsic result is a skill. For most of us it is
not easy at first, and takes time and patience to develop. For most of
us, as soon as we think of some important personal goal, almost
immediately we think of all the reasons why it will be hard to achieve —
the challenges we will face and the obstacles we will have to overcome.
While this is very helpful for thinking through alternative strategies for
achieving our goals, it is also a sign of lack of discipline when thoughts
about “the process” of achieving our vision continually crowd out our
focus on the outcomes we seek. We must work at learning how to
separate what we truly want, from what we think we need to do in
order to achieve it.
A useful starting exercise for learning how to focus more clearly on
desired results is to take any particular goal or aspect of your vision.
First imagine that that goal is fully realized. Then ask yourself the
question, “If I actually had this, what would it get me?” What

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people often discover is that the answer to that question reveals
“deeper” desires lying behind the goal. In fact, the goal is actually an
interim step they assume is necessary to reach a more important
result. For example, a person has a goal of reaching a certain level in
the organizational hierarchy. When she asks herself, “What would it get
me to be a senior VP?” she discovers that the answer is “respect of
my peers” or “being where the action is.” Though she may still aspire
to the position, she now sees that there is also a deeper result she
desires—a result she can start to hold as part of her vision now,
independent of where she is in the organizational hierarchy.
(Moreover, if she doesn’t clarify “the result” she truly seeks, she may
reach her stated goal and find that the more senior position is
somehow still dissatisfying.)
The reason this skill is so important is precisely because of the
responsiveness of the subconscious to a clear focus. When we are
unclear between interim goals and more intrinsic goals, the subcon-
scious has no way of prioritizing and focusing.
Making clear choices is also important. Only after choice are the
capabilities of the subconscious brought fully into play. In fact, making
choices and focusing on the results that are really important to us
may be one of the highest leverage uses of our normal awareness. As
Inamori puts it:
I often tell a researcher who is lacking in dedication . . . unless [he]
is motivated with determination to succeed, he will not be able to
go past the obstacles . . . When his passion, his desire, becomes so
strong as to rise out of his body like steam, and when the
condensation of that which evaporated occurs . . . and drops back
like raindrops, he will find his problem solved.
Commitment to the truth is also important for developing subcon-
scious rapport—for the same basic reasons that lie detectors work.
Lie detectors work because when most human beings do not tell the
truth they create some level of internal stress, which in turn generates
measurable physiological effects—blood pressure, pulse rate, and
respiration. So, not only does deceiving ourselves about current reality
prevent the subconscious from having accurate information about
where we are relative to our vision, but it also creates distracting input
to the subconscious, just as our “chatter” about why we can’t achieve
our vision is distracting. The principle of creative tension recognizes
that the subconscious operates most effectively when it is focused
clearly on our vision and our current reality.
The art of working effectively with the subconscious incorporates

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many techniques. An effective way to focus the Subconscious is
through imagery and visualization. For example, world-class swim-
mers have found that by imagining their hands to be twice their
actual size and their feet to be webbed, they actually swim faster.
“Mental rehearsal” of complex feats has become routine psychological
training for diverse professional performers.
But the real effectiveness of all of this still hinges on knowing what it
is that is most important to you. In the absence of knowing what truly
matters to you, the: specific practices and methods of working with the
subconscious run the risk of becoming mechanical techniques—simply
a new way of manipulating yourself into being more productive. This is
not an idle concern. Almost all spiritual traditions warn against
adopting the techniques of increased mental powers without diligently
continuing to refine one’s sense of genuine aspiration.
Ultimately, what matters most in developing the subconscious
rapport characteristic of masters is the genuine caring for a desired
outcome, the deep feeling of it being the “right” goal toward which to
aspire. The subconscious seems especially receptive to goals in line
with our deeper aspirations and values. According to some spiritual
disciplines, this is because these deeper aspirations input directly to,
or are part of, the subconscious mind.
A wonderful example of what can be accomplished in the pursuit of
something truly important to a person is the story of Gilbert Kaplan, a
highly successful publisher and editor of a leading investment
periodical. Kaplan first heard Mahler’s Second Symphony in a re-
hearsal in 1965. He “found himself unable to sleep. I went back for
the performance and walked out of the hall a different person. It was
the beginning of a long love affair.” Despite his having had no formal
musical training, he committed time and energy and a considerable sum
of his personal finances (he had to hire an orchestra) to the pursuit
of learning how to conduct the piece. Today, his performances of the
symphony have received the highest praise by critics throughout the
world. The New York Times praised his 1988 recording of the
symphony with the London Symphony Orchestra as one of the five
finest classical recordings of the year and the president of the New
York Mahler Society called it “the outstanding recorded
performance.” A strict reliance on only conscious learning could
never have achieved this level of artistry, even with all the “willpower”
in the world. It had to depend on a high level of subconscious
rapport which Kaplan could bring to bear on his new “love affair.”

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In many ways, the key to developing high levels of mastery in
subconscious rapport comes back to the discipline of developing
personal vision. This is why the concept of vision has always figured so
strongly in the creative arts. Picasso once said:
It would be very interesting to record photographically, not the
stages of a painting, but its metamorphoses. One would see perhaps
by what course a mind finds its way toward the crystallization of its
dream. But what is really very serious is to see that the picture
does not change basically, that the initial vision remains almost intact
in spite of appearance.17
P E R S O N A L M A S T E R Y A N D
T H E F I F T H D I S C I P L I N E
As individuals practice the discipline of personal mastery, several
changes gradually take place within them. Many of these are quite
subtle and often go unnoticed. In addition to clarifying the “struc-
tures” that characterize personal mastery as a discipline (such as
creative tension, emotional tension, and structural conflict), the sys-
tems perspective also illuminates subtler aspects of personal mastery —
especially: integrating reason and intuition; continually seeing more of
our connectedness to the world; compassion; and commitment to the
whole.
INTEGRATING REASON AND INTUITION
According to an ancient Sufi story, a blind man wandering lost in a
forest tripped and fell. As the blind man rummaged about the forest
floor he discovered that he had fallen over a cripple. The blind man
and the cripple struck up a conversation, commiserating on their
fate. The blind man said, “I have been wandering in this forest for as
long as I can remember, and I cannot see to find my way out.” The
cripple said, “I have been lying on the forest floor for as long as I can
remember, and I cannot get up to walk out.” As they sat there talking,
suddenly the cripple cried out. “I’ve got it,” he said. “You hoist me up
onto your shoulders and I will tell you where to walk. Together we can
find our way out of the forest.” According to the ancient storyteller,
the blind man symbolized rationality. The cripple

17. září 2004 153 ze 412

symbolized intuition. We will not find our way out of the forest until’
we learn how to integrate the two.
Intuition in management has recently received increasing attention
and acceptance, after many decades of being officially ignored. Now;!
numerous studies show that experienced managers and leaders relyf
heavily on intuition—that they do not figure out complex problems!
entirely rationally. They rely on hunches, recognize patterns, and|
draw intuitive analogies and parallels to other seemingly disparate^
situations.18 There are even courses in management schools on intu-tj
ition and creative problem solving. But we have a very long way to
go, in our organizations and in society, toward reintegrating intuition;
and rationality.

1
People with high levels of personal mastery do not set out toi
integrate reason and intuition. Rather, they achieve it naturally—as a
by-product of their commitment to use all resources at their dis-;
posal. They cannot afford to choose between reason and intuition* or
head and heart, any more than they would choose to walk on one1 leg
or see with one eye.
Bilateralism is a design principle underlying the evolution of ad-
vanced organisms. Nature seems to have learned to design in pairs;; it
not only builds in redundancy but achieves capabilities not possible
otherwise. Two legs are critical for rapid, flexible locomotion. Two
arms and hands are vital for climbing, lifting, and manipulating objects.
Two eyes give us stereoscopic vision, and along with two; ears,
depth perception. Is it not possible that, following the same design
principle, reason and intuition are designed to work in harmony for
us to achieve our potential intelligence?
Systems thinking may hold a key to integrating reason and intuition.
Intuition eludes the grasp of linear thinking, with its exclusive
emphasis on cause and effect that are close in time and space. The
result is that most of our intuitions don’t make “sense”—that is,
they can’t be explained in terms of linear logic.
Very often, experienced managers have rich intuitions about com-
plex systems, which they cannot explain. Their intuitions tell them that
cause and effect are not close in time and space, that obvious
solutions will produce more harm than good, and that short-term
fixes produce long-term problems. But they cannot explain their
ideas in simple linear cause-effect language. They end up saying, “Just
do it this way. It will work.”
For example, many managers sense the dangers of eroding goals or
standards but cannot fully explain how they create a reinforcing

17. září 2004 154 ze 412

tendency to underinvest and a self-fulfilling prophecy of underreal-
ized market growth. Or, managers may feel that they are focusing on
tangible, easily measured indicators of performance and masking
deeper problems, and even exacerbating these problems. But they
cannot explain convincingly why these are the wrong performance
indicators or how alternatives might produce improved results. Both of
these intuitions can be explained when the underlying systemic
structures are understood.”
The conflict between intuition and linear, nonsystemic thinking
has planted the seed that rationality itself is opposed to intuition. This
view is demonstrably false if we consider the synergy of reason and
intuition that characterizes virtually all great thinkers. Einstein said, “I
never discovered anything with my rational mind.” He once described
how he discovered the principle of relativity by imagining himself
traveling on a light beam. Yet, he could take brilliant intuitions and
convert them into succinct, rationally testable propositions.
As managers gain facility with systems thinking as an alternative
language, they find that many of their intuitions become explicable.
Eventually, reintegrating reason and intuition may prove to be one of
the primary contributions of systems thinking.
SEEING OUR
CONNECTEDNESS TO THE
WORLD
My six-week-old son Ian does not yet seem to know his hands and
feet. I suspect that he is aware of them, but he is clearly not aware
that they are his hands and feet, or that he controls their actions.
The other day, he got caught in a terrible reinforcing feedback loop. He
had taken hold of his ear with his left hand. It was clearly agitating him,
as you could tell from his pained expression and increasing flagellations.
But, as a result of being agitated, he pulled harder. This increased his
discomfort, which led him to get more agitated and pull still harder.
The poor little guy might still be pulling if I hadn’t detached his hand
and quieted him down.
Not knowing that his hand was actually within his control, he
perceived the source of his discomfort as an external force. Sound
familiar? Ian’s plight was really no different from the beer game
players of Chapter 3, who reacted to suppliers’ delivery times as if they
were external forces, or the arms race participants in Chapte/

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5 (“A Shift of Mind”) who reacted to each other’s arms buildups as if
they had no power to change them.
As I thought about Ian, I began to think that a neglected dimension
of personal growth lies in “closing the loops”—in continually dis|
covering how apparent external forces are actually interrelated with
our own actions. Fairly soon, Ian will recognize his feet and hands
and learn he can control their motions. Then he will discover that hi
can control his body position—if it is unpleasant on his back, he can
roll over. Then will come internal states such as temperature, and the
realization that they can be influenced by moving closer or fur ther
from a heat source such as Mommy or Daddy. Eventually comes
Mommy and Daddy themselves, and the realization that their actions
and emotions are subject to his influence. At each stage in this
progression, there will be corresponding adjustments in his in- ternal
pictures of reality, which will steadily change to incorporate more of
the feedback from his actions to the conditions in his life.
But for most of us, sometime early in life this process of closing
the loops is arrested. As we get older, our rate of discovery slow*
down; we see fewer and fewer new links between our actions and|
external forces. We become locked into ways of looking at the world
that are, fundamentally, no different from little Ian’s. i!
The learning process of the young child provides a beautiful met-
aphor for the learning challenge faced by us all: to continually ex-|
pand our awareness and understanding, to see more and more of the
interdependencies between actions and our reality, to see more and
more of our connectedness to the world around us. We will probably!
never perceive fully the multiple ways in which we influence our’
reality. But simply being open to the possibility is enough to free our;]
thinking.

|
Einstein expressed the learning challenge when he said:

]
[the human being] experiences himself, his thoughts and feelings! as
something separated from the rest—a kind of optical delusion) of
our consciousness. This delusion is a kind of prison for us,:
restricting us to our personal desires and to affection for a few
persons nearest to us. Our task must be to free ourselves from this
prison by widening our circle of compassion to embrace all living
creatures and the whole of nature in its beauty.
The experience of increasing connectedness which Einstein de-
scribes is one of the subtlest aspects of personal mastery, one that

17. září 2004 156 ze 412

perives most directly from the systems perspective. His “widening 1
. . circle of compassion” is another.
COMPASSION
rhe discipline of seeing interrelationships gradually undermines
plder attitudes of blame and guilt. We begin to see that all of us are
trapped in structures, structures embedded both in our ways of
Blinking and in the interpersonal and social milieus in which we live. Pur
knee-jerk tendencies to find fault with one another gradually pde,
leaving a much deeper appreciation of the forces within which We all
operate.
[ This does not imply that people are simply victims of systems that
(dictate their behavior. Often, the structures are of our own creation,
put this has little meaning until those structures are seen. For most
jDf us, the structures within which we operate are invisible. We are
jneither victims nor culprits but human beings controlled by forces
tye have not yet learned how to perceive.
We are used to thinking of compassion as an emotional state, !
based on our concern for one another. But it is also grounded in a
level of awareness. In my experience, as people see more of the
systems within which they operate, and as they understand more
clearly the pressures influencing one another, they naturally develop
more compassion and empathy.
COMMITMENT TO THE WHOLE
“Genuine commitment,” according to Bill O’Brien, “is always to
something larger than ourselves.” Inamori talks about “action of
our heart,” when we are guided by “sincere desire to serve the
world.” Such action, he says, “is a very important issue since it has
great power.”
The sense of connectedness and compassion characteristic of in-
dividuals with high levels of personal mastery naturally leads to a
broader vision. Without it, all the subconscious visualizing in the
world is deeply self-centered—simply a way to get what I want.
Individuals committed to a vision beyond their self-interest find
they have energy not available when pursuing narrower goals, as will
organizations that tap this level of commitment. “I do not believe
‘.urn**.

17. září 2004 157 ze 412

there has been a single person who has made a worthwhile discovery or
invention,” Inamori states, “who has not experienced a spiritual
power.” He describes the will of a person committed to a larger
purpose as “a cry from the soul which has been shaken and awak^
ened.”
F OSTERING PER SONAL MASTERY I N j
A N O R G A N I Z A T I O N
It must always be remembered that embarking on any path of per-
sonal growth is a matter of choice. No one can be forced to develop
his or her personal mastery. It is guaranteed to backfire. Organiza tions
can get into considerable difficulty if they become too aggres sive in
promoting personal mastery for their members.
Still many have attempted to do just that by creating compulsory
internal personal growth training programs. However well intent
tioned, such programs are probably the most sure-fire way to impede
the genuine spread of commitment to personal mastery in an organi-
zation. Compulsory training, or “elective” programs that people feell
expected to attend if they want to advance their careers, conflict’
directly with freedom of choice.
For example, there have been numerous instances in recent years of
overzealous managers requiring employees to participate in personal
development training, which the employees regarded as contradictory
to their own religious beliefs. Several of these have resulted in legal
action against the organization.20
What then can leaders intent on fostering personal mastery do?
They can work relentlessly to foster a climate in which the princi- ples
of personal mastery are practiced in daily life. That means building an
organization where it is safe for people to create visions, where
inquiry and commitment to the truth are the norm, and where \
challenging the status quo is expected—especially when the status
quo includes obscuring aspects of current reality that people seek to
avoid.
Such an organizational climate will strengthen personal mastery in
two ways. First, it will continually reinforce the idea that personal
growth is truly valued in the organization. Second, to the extent that
individuals respond to what is offered, it will provide an “on the job
training” that is vital to developing personal mastery. As with any
discipline, developing personal mastery must become a continual,

17. září 2004 158 ze 412

ongoing process. There is nothing more important to an individual
committed to his or her own growth than a supportive environment.
An organization committed to personal mastery can provide that
environment by continually encouraging personal vision, commitment
to the truth, and a willingness to face honestly the gaps between the
two.
Many of the practices most conducive to developing one’s own
personal mastery—developing a more systemic worldview, learning
how to reflect on tacit assumptions, expressing one’s vision and
listening to others’ visions, and joint inquiry into different people’s
views of current reality—are embedded in the disciplines for building
learning organizations. So, in many ways, the most positive actions that
an organization can take to foster personal mastery involve working to
develop all five learning disciplines in concert.
The core leadership strategy is simple: be a model. Commit yourself
to your own personal mastery. Talking about personal mastery may
open people’s minds somewhat, but actions always speak louder
than words. There’s nothing more powerful you can do to encourage
others in their quest for personal mastery than to be serious in your
own quest.

17. září 2004 159 ze 412

10
MENTAL MODELS
W HY TH E BEST IDEAS FAIL
One thing all managers know is that many of the best ideas never get
put into practice. Brilliant strategies fail to get translated into action.
Systemic insights never find their way into operating policies. A pilot
experiment may prove to everyone’s satisfaction that a new ap-
proach leads to better results, but widespread adoption of the ap-
proach never occurs.
We are coming increasingly to believe that this “slip ‘twixt cup and
lip” stems, not from weak intentions, wavering will, or even
nonsystemic understanding, but from mental models. More specifically,
new insights fail to get put into practice because they conflict with
deeply held internal images of how the world works, images that limit
us to familiar ways of thinking and acting. That is why the discipline of
managing mental models—surfacing, testing, and improving our
internal pictures of how the world works—promises to be a major
breakthrough for building learning organizations.
None of us can carry an organization in our minds—or a family,

17. září 2004 160 ze 412

or a community. What we carry in our heads are images, assumptions,
and stories. Philosophers have discussed mental models for centuries,
going back at least to Plato’s parable of the cave. “The Emperor’s
New Clothes” is a classic story, not about fatuous people, but about
people bound by mental models. Their image of the monarch’s dignity
kept them from seeing his naked figure as it was.
In surveying the accomplishments of cognitive science in his book
The Mind’s New Science, Howard Gardner writes, “To my mind, the
major accomplishment of cognitive science has been the clear
demonstration of. . . a level of mental representation” active in
diverse aspects of human behavior.1 Our “mental models” determine
not only how we make sense of the world, but how we take action.
Harvard’s Chris Argyris, who has worked with mental models and
organizational learning for thirty years, puts it this way: “Although
people do not [always] behave congruently with their espoused
theories [what they say], they do behave congruently with their
theories-in-use [their mental models].”2
Mental models can be simple generalizations such as “people are
untrustworthy,” or they can be complex theories, such as my as-
sumptions about why members of my family interact as they do. But
what is most important to grasp is that mental models are active— they
shape how we act. If we believe people are untrustworthy, we act
differently from the way we would if we believed they were
trustworthy. If I believe that my son lacks self-confidence and my
daughter is highly aggressive, I will continually intervene in their
exchanges to prevent her from damaging his ego.
Why are mental models so powerful in affecting what we do? In part,
because they affect what we see. Two people with different mental
models can observe the same event and describe it differently,
because they’ve looked at different details. When you and I walk into
a crowded party, we both take in the same basic sensory data, but we
pick out different faces. As psychologists say, we observe selectively.
This is no less true for supposedly “objective” observers such as
scientists than for people in general. As Albert Einstein once wrote,
“Our theories determine what we measure.” For years, physicists ran
experiments that contradicted classical physics, yet no one “saw” the
data that these experiments eventually provided, leading to the
revolutionary theories—quantum mechanics and relativity—of
twentieth-century physics.3
The way mental models shape our perceptions (is no less important in
management. For decades, the Big Three of Detroit believed that

17. září 2004 161 ze 412

people bought automobiles on the basis of styling, not for quality of
reliability. Judging by the evidence they gathered, the automaker*
were right. Surveys and buying habits consistently suggested that;
American consumers cared about styling much more than abou^
quality. These preferences gradually changed, however, as German and
Japanese automakers slowly educated American consumers ii the
benefits of quality and style—and increased their share of thf U.S.
market from near zero to 38 percent by 1986.” According t<$ management consultant Ian Mitroff, these beliefs about styling we™ part of a pervasive set of assumptions for success at General Md| tors:5 GM is in the business of making money, not cars. Cars are primarily status symbols. Styling is therefore more im-i portant than quality. The American car market is isolated from the rest of the world. Workers do not have an important impact on productivity or prod- uct quality. Everyone connected with the system has no need for more than a fragmented, compartmentalized understanding of the business. As Mitroff pointed out, these principles had served the industry well for many years. But the auto industry treated these principles as "a magic formula for success for all time, when all it had found was a particular set of conditions . . . that were good for a limited time." The problems with mental models lie not in whether they are right or wrong—by definition, all models are simplifications. The problems with mental models arise when the models are tacit—when they exist below the level of awareness. The Detroit automakers didn't say, "We have a mental model that all people care about is styling." They said, "All people care about is styling." Because they remained unaware of their mental models, the models remained unex-amined. Because they were unexamined, the models remained unchanged. As the world changed, a gap widened between Detroit's mental models and reality, leading to increasingly counterproductive actions.6 As the Detroit automakers demonstrated, entire industries can develop chronic misfits between mental models and reality. In some ways, close-knit industries are especially vulnerable because all the member companies look to each other for standards of best practice. 17. září 2004 162 ze 412 Such outdated reinforcement of mental models occurred in many basic U.S. manufacturing industries, not just automobiles, throughout the 1960s and 1970s. Today, similar outdated mental models dominate many service industries, which still provide mediocre quality in the name of controlling costs. (See Chapter 17, "Micro-worlds," for an example.) Failure to appreciate mental models has undermined many efforts to foster systems thinking. In the late 1960s, a leading American industrial goods manufacturer—the largest in its industry—found itself losing market share. Hoping to analyze their situation, top executives sought help from an MIT team of "system dynamics" specialists. Based on computer models, the team concluded that the firm's problems stemmed from the way its executives managed in- ventories and production. Because it cost so much to store its bulky, expensive products, production managers held inventories as low as possible and aggressively cut back production whenever orders turned down. The result was unreliable and slow delivery, even when production capacity was adequate. In fact, the team's computer simulations predicted that deliveries would lag further during business downturns than during booms—a prediction which ran counter to conventional wisdom, but which turned out to be true. Impressed, the firm's top executives put into effect a new policy based on the analysts' recommendations. From now on, when orders fell, they would maintain production rates and try to improve delivery performance. During the 1970 recession, the experiment worked; thanks to prompter deliveries and more repeat buying from satisfied customers, the firm's market share increased. The managers were so pleased that they set up their own systems group. But the new policies were never taken to heart, and the improvement proved temporary. During the ensuing business recovery, the managers stopped worrying about delivery service. Four years later, when the more severe OPEC- induced recession came, they went back to their original policy of dramatic production cutbacks. Why discard such a successful experiment? The reason was the mental models deeply embedded in the firm's management traditions. Every production manager knew in his heart that there was no more sure-fire way to destroy his career than to be held responsible for stockpiling unsold goods in the warehouse. Generations of top management had preached the gospel of commitment to inventory control. Despite the new experiment, ihe^oldmental model was still alive and well. The inertia of deeply entrenched mental models can overwhelm 17. září 2004 163 ze 412 even the best systemic insights. This has been a bitter lesson for many a purveyor of new management tools, not only for systems thinking advocates. But if mental models can impede learning—freezing companies and industries in outmoded practices—why can't they also help ac*< celerate learning? As it happens, several organizations, largely ops erating independently, have given serious attention to this question! in recent years. I N C U B A T I N G A N E W B U S I N E S S W O R L D V I E W Perhaps the first large corporation to discover the potential power of mental models in learning was Royal Dutch/Shell. Managing a highly decentralized company through the turbulence of the world oil business in the 1970s, Shell discovered that, by helping managers clarify their assumptions, discover internal contradictions in those assumptions, and think through new strategies based on new assumptions they gained a unique source of competitive advantage. Shell is unique in several ways that have made it a natural environ- ment for experimenting with mental models. It is truly multicultural, formed originally in 1907 from a "gentleman's agreement" between Royal Dutch Petroleum and the London-based Shell Transport and Trading Company. Royal Dutch/Shell now has more than a hundred! operating companies around the world, led by managers from almost as many different cultures. The operating companies enjoy a high degree of autonomy and local independence. From its beginning, Shell managers had to learn to operate by consensus, because there was no way these "gentlemen" from different countries and cultures would be able to tell each other what to do. As Shell grew and became more global and more multicultural, its needs for building consensus across vast gulfs of style and understanding grew. In the turbulent early 1970s, Shell's tradition of consensus man- agement was stretched to the breaking point. What emerged was a new understanding of the underpinnings of real consensus—an un- derstanding of shared mental models. "Unless we influenced the mental image, the picture of reality held by critical decisionmakers, our scenarios would be like water on a stone," recalled Shell's former senior planner Pierre Wack, in his seminal Harvard Business 17. září 2004 164 ze 412 Review articles about the Shell mental models work.7 Wack had come to this realization in 1972, as he and his colleagues desperately faced their failure to convey to Shell's managers the "discontinuities" they foresaw in the world oil market. That was the year before OPEC and the onset of the energy crisis. After analyzing long-term trends of oil production and consumption, Wack had concluded that the stable, predictable world familiar to Shell's managers was about to change. Europe, Japan, and the U.S. were becoming increasingly dependent on oil imports. Oil-exporting nations such as Iran, Iraq, Libya, and Venezuela were becoming increasingly concerned with falling reserves. Others, such as Saudi Arabia, were reaching the limits of their ability to productively invest oil revenues. These trends meant that the historical, smooth growth in oil demand and supply would eventually give way to chronic supply shortfalls, excess demand, and a "seller's market" controlled by the oil-exporting nations. While Shell's planners did not predict OPEC exactly, they foresaw the types of changes that OPEC would eventualy bring about. Yet, attempts to impress upon Shell's managers the radical shifts ahead had led "no more than a third of Shell's critical decision centers" to act on the new insights. In principle, Shell's "Group Planning" staff were in an ideal posi- tion to disseminate insights about the changes ahead. Group Planning was the central planning department, responsible for coor- dinating planning activities in operating companies worldwide. At the time, Group Planning was developing a new technique called "scenario planning," a method for summarizing alternative future trends. The planners at Shell began to build in the coming discontin- uities into their scenarios. But their audience of Shell managers found these new scenarios so contradictory to their years of experi- ence with predictable growth that they paid little attention to them. At this point, Wack and his colleagues realized that they had fun- damentally misperceived their task. From that moment, Wack wrote, "We no longer saw our task as producing a documented view of the future . . . Our real target was the 'microcosms' "—Wack's word for mental models—"of our decision makers . . . We now wanted to design scenarios so that managers would question their own model of reality and change it when necessary." If the planners had once thought their job was delivering information to the decision makers, it was now clear that their task was to help managers rethink their worldview. In particular, the Group PISnrlers developed a new set of scenarios in January-February 1U/3 which forced the man- 17. září 2004 165 ze 412 agers to identify all of the assumptions that had to be true in order for the managers' "trouble-free" future to occur. This revealed a set of assumptions only slightly more likely to come true than a fairy tale.I Group Planning now built a new set of scenarios, carefully dl signed to take off from the current mental models of Shell manage!! They showed how the prevailing view that "the oil business would continue as usual" was based on underlying assumptions about m nature of global geopolitics and the oil industry; then they showed that these assumptions could not possibly hold in the future that was coming. Then they helped managers begin the process of construct- ing a new mental model—by helping them think through how the, would have to manage in this new world. For example, exploration for oil would have to expand to new countries, while refinery build ing would have to slow down because of higher prices and conse- quently slower demand growth. Also, with greater instability nations would respond differently. Some, with free-market tradi- tions, would let the price rise freely; others with controlled-market policies, would try to keep it low. Thus, control to Shell's locally based operating companies would have to increase to enable them to adapt to local conditions. Although many Shell managers remained skeptical, they took the new scenarios seriously because they began to see that their present understandings were untenable. The exercise had begun to unfreeze managers' mental models and incubate a new world view. When the OPEC oil embargo suddenly became a reality in the1 winter of 1973-74, Shell responded differently from the other oi| companies. They slowed down their investments in refineries, and] designed refineries that could adapt to whatever type of crude oil was available. They forecast energy demand at a consistently lower) level than their competitors did, and consistently more accurately. They quickly accelerated development of oil fields outside OPEC. While competitors reined in their divisions and centralized control —a common response to crisis—Shell did the opposite. This gave their operating companies more room to maneuver while their com- petitors had less. Shell's managers saw themselves entering a new era of supply shortages, lower growth, and price instability. Because they had come to expect the 1970s to be a decade of turbulence (Wack called it the decade of "the rapids"), they responded to the turbulence effectively. Shell had discovered the power of managing mental models. 17. září 2004 166 ze 412 1 The net result of Shell's efforts was nothing short of spectacular. In 1970, Shell had been considered the weakest of the seven largest toil companies. Forbes called it the "Ugly Sister" of the "Seven Bisters." By 1979 it was perhaps the strongest; certainly it and ■xxon were in a class by themselves.8 By the early 1980s, articulat-Wtg managers' mental models was an important part of the planning ■rocess at Shell. About a half-year prior to the collapse of oil prices ■I 1986, Group Planning, under the direction of coordinator Arie de Beus, produced a fictitious Harvard Business School-style case Study of an oil company coping with a sudden world oil glut. Man-■gers had to critique the oil company's decisions. Thus, once again, ■hey prepared themselves mentally for a reality which the planners ■lispected they might have to face. I O V E R C O M I N G " T H E B A S I C I D ISEASES OF TH E HIERARCHY" f'In the traditional authoritarian organization, the dogma was man- Etging, organizing, and controlling," says Hanover's CEO Bill PO'Brien. "In the learning organization, the new 'dogma' will be vi- ' sion, values, and mental models. The healthy corporations will be ones which can systematize ways to bring people together to develop the best possible mental models for facing any situation at hand." O'Brien and his colleagues at Hanover have come to their interest in mental models over a journey comparable in length to Shell's, but dramatically different in almost every other way. Hanover was originally founded in 1852. As noted earlier, it has gone from near-bankruptcy in 1969, when it was acquired by the State Mutual company, to one of the best performing companies in the property and casualty industry today. At $1.5 billion in annual premium sales, Hanover handles only one tenth of the volume of an industry giant such as Aetna, but its compound rate of return since 1980 has been 19 percent, which ranks sixteenth among sixty-eight insurance companies surveyed by Forbes in January 1990. Beginning in 1969, Hanover took on a long-term mission to revamp the traditional hierarchical values that had dominated the organization for so long. "We set out," says O\Brien, "to find what would give the necessary organization and discipline to have work be more congruent with human nature. We gradually identified a set of core values that are actually principles that overcome the basic diseases of the hierarchy." 17. září 2004 167 ze 412 Two of these values in particular, "openness” and "merit," led Hanover to develop its approach to managing mental models. Open- ness was seen as an antidote to what O'Brien called "the disease of gamesplaying that dominated people's behavior in face-to-face meetings. Nobody described an issue at 10:00 in the morning at a business meeting the way they described the issue at 7:00 that evening, at home or over drinks with friends." Merit—making decisions based on the best interests of the organization—was Hanover's antidote to "decisionmaking based on bureaucratic politics, where the name of the game is getting ahead by making an impression, or, if you're already at the top, staying there."9 As openness and merit took hold, a deep belief evolved from them: that decision-making processes could be transformed if people become more able to surface and discuss productively their different ways of looking at the world. But if this was so useful why did it seem so difficult? In the mid-1970s, the ideas of Argyris and his colleagues were beginning to provide an answer. In "action science," they were developing a body of theory and method for reflection and inquiry on the reasoning that underlies our actions.10 Moreover, the tools of action science are designed to be effective in organizations, and especially in dealing with organizational problems. We trap ourselves, say Argyris and his colleagues, in "defensive routines" that insulate our mental models from examination, and we consequently develop "skilled incompetence"—a marvelous oxymoron that Argyris uses to describe most adult learners, who are "highly skillful at protecting themselves from pain and threat posed by learning situations," but consequently fail to learn how to produce the results they really want. Despite having read much of his writing, I was unprepared for what I learned when I first saw Chris Argyris practice his approach in an informal workshop with a half-dozen members of our research team at MIT. Ostensibly an academic presentation of Argyris's methods, it quickly evolved into a powerful demonstration of what action science practitioners call "reflection in action." Argyris asked each of us to recount a conflict with a client, colleague, or family member. We had to recall not only what was said, but what we were thinking and did not say. As Chris began to "work with these cases it became almost immediately apparent how each of us contributed to a conflict through our own thinking—how we made sweeping generalizations about the others that determined what we said and how we behaved. Yet, we never communicated the gener- 17. září 2004 168 ze 412 alizations. I might think, "Joe believes Tin incompetent," but I would never ask Joe directly about it. I would simply go out of my way to try continually to make myself look respectable to Joe. Or,"Bill [my boss] is impatient and believes in quick and dirty solu- tions," so I go out of my way to give him simple solutions even though I don't think they will really get to the heart of difficult issues. Within a matter of minutes, I watched the level of alertness and "presentness" of the entire group rise ten notches—thanks not so much to Argyris's personal charisma, but to his skillful practice of drawing out those generalizations. As the afternoon moved on, all of us were led to see (sometimes for the first time in our lives) subtle patterns of reasoning which underlay our behavior; and how those patterns continually got us into trouble. I had never had such a dramatic demonstration of my own mental models in action, dictating my behavior and perceptions. But even more interesting, it became clear that, with proper training, I could become much more aware of my mental models and how they operated. This was exciting. Later I learned that O'Brien and his management team at Hanover had had a similar experience with Argyris's methods ten years earlier. This had led them to realize that, in O'Brien's words, "Despite our philosophy we had a very long way to go to being able to have the types of open, productive discussion about critical issues that we all desired. In some cases, Argyris' work revealed painfully obvious gamesplaying that we had come to accept. Chris held an incredibly high standard of real openness, of seeing our own thinking and cutting the crap. Yet, he was also not simply advocating "tell everyone everything"—he was illustrating the skills of engaging difficult issues so that everyone learned. Clearly, this was important new territory if we were really going to live our core values of openness and merit." Working with Argyris's colleague Lee Bolman, also of Harvard, Hanover eventually developed a three-day management seminar, called "Merit, Opennness, and Localness," intended to expose all Hanover managers to the basic ideas and practices of action science. These seminars have been attended by virtually all of Hanover's middle and upper management over the past ten years. The basic purpose of the seminars is to extend the practice of these three core values by showing the skills needed^ttKput them into practice. As Paul Stimson, the manager currently in charge of the seminar puts it, "Our first task is to get people to start to appreciate what it means 17. září 2004 169 ze 412 to practice merit, openness, and localness in a learning organization. In traditional organizations, merit means doing what the boss wants, openness means telling the boss what he wants to hear, and localness means doing the dirty stuff that the boss doesn't want to do. So, we have a long way to go in getting people to some new understandings." The first day is spent reviewing the basic concepts, principles, and skills of action science. Most find this enlightening but hardly earth- shaking. "Yes, of course, I agree with this. I always try very hard to be a good inquirer" is a typical response at the end of Day 1. The lights start to go on in Day 2, when Stimson and his colleagues video tape the managers attempting to apply the skills in role-playing exercises. Before their role-playing, the managers identify particular skills they want to work on. For example, a manager in a performance review role-play might want to work on "balancing inquiry and advocacy" (taking a position but also inquiring into others' views and remaining open). But within a few minutes of starting the role-play, the very same manager will be pointing his finger at the subordinate and preaching rather than listening. "When everyone watches the tapes together afterward," Stimson says, "it is often hilarious to see how much our own behavior deviates from what we say we do. People see that there is much more to putting action science skills into practice than merely nodding in agreement." The three-days of the MOL seminar are hardly enough to become masters in the skills of action science, but the very personal exposure and initial opportunity to practice with a group of fellow learners starts a process that continues "back home." Perhaps, equally important, it shows Hanover's seriousness about approaching the mental models discipline as a set of developable skills, not as vague generalities and pieties about "thinking more effectively." Convinced that there was a payoff in helping managers improve their basic thinking skills, Hanover later supported a second manage- ment training to, as O'Brien puts it, "expose the limitations of 'mechanistic thinking.' The problem we saw was the tendency of managers to confront complex business issues with '9-point pro- grams,' as if the problem was fixing a flat tire. This usually results in making problems worse." This second training program, "Thinking about Thinking," was designed and delivered by a retired University of New Hampshire professor, John Beckett. Beckett leads an exhaustive, and surprisingly not exhausting, historical survey of major philosophies of thought, East and West, over five full days. In a 17. září 2004 170 ze 412 process Beckett describes as "sandpaper on the brain," he shows in great detail how radically differing philosophies all have merit. The impact of the Beckett program is striking. "Beckett shows," says O'Brien, "that if you look closely at how Eastern cultures ap- proach basic moral, ethical, and managerial issues, they do make sense. Then he shows that Western ways of approaching these issues also make sense. But the two can lead to opposite conclusions. This leads to discovering that there is more than one way to look at complex issues. It helps enormously in breaking down the walls between the disciplines in our company, and between different ways of thinking." The impact on managers' understanding of mental models is pro- found—most report that they see for the first time in their life that all we ever have are assumptions, never "truths," that we always see the world through our mental models and that the mental models are always incomplete, and, especially in Western culture, chronically nonsystemic. While Beckett does not provide tools for working with mental models as Argyris does, he plants a powerful seed that leaves people more open to seeing the inevitable biases in their own ways of thinking. Beckett also introduces people to basic principles of systems thinking. In particular, he emphasizes the distinction between "process thinking" and seeing only "snapshots," and poses systems thinking as a philosophical alternative to the pervasive ' 're-ductionism" in Western culture—the pursuit of simple answers to complex issues. How has this substantial investment in developing skills and ap- preciation of mental models returned benefits for Hanover's manage- ment? O'Brien and others simply point to Hanover's steadily improving performance over the years: in profitability, Hanover was better than the industry average three out of five times from 1970-74, four out of five times in 1975-79, and ten out of ten years in 1980-89; in growth, Hanover bested the industry average one out of five times in 1970-74, four out of five times in 1975-79, eight out of ten times in 1980-89. From 1985-89, Hanover's average return on equity was 19.8 percent compared with 15.9 percent for the property and liability industry, and its sales growth was 21.8 percent compared with 15 percent for the industry. Anessay in their 1988 annual report on "The Connection Between Learning and Competitiveness" asserts that the firm's commitment to "invest in education during good times and during bad times" has resulted in reaping benefits continuously. 17. září 2004 171 ze 412 Influenced by Argyris, Beckett, and others, Hanover gradually evolved its own approach to mental models—starting with building skills. Through training, frequent management bulletins, and contin- ual practice, the firm attempts to build a foundation of basic skills in reflection, surfacing, and public examination of mental models. The audience target for these efforts is managers throughout the com- pany, not just a small group of "mental model experts." As for the skills themselves, we will look closely at them shortly within the next section. They include: • Recognizing "leaps of abstraction" (noticing our jumps from ob servation to generalization) • Exposing the "left-hand column" (articulating what we normally do not say) • Balancing inquiry and advocacy (skills for honest investigation) • Facing up to distinctions between espoused theories (what we say) and theories-in-use (the implied theory in what we do) It is interesting how personal these skills are. The skills cover not just business issues, but everyday relationships. The discipline concentrates on something which people normally take for granted: how we conduct ourselves in ordinary conversation, especially when complex and conflictual issues are on the table. Most of us believe that all we have to do is "act naturally"; yet the discipline of mental models retrains our natural inclinations so that conversations can produce genuine learning, rather than merely reinforcing prior views. T H E D I S C I P L I N E O F M E N T A L M O D EL S Developing an organization's capacity to work with mental models involves both learning new skills and implementing institutional in- novations that help bring these skills into regular practice. Though Shell and Hanover took immensely different approaches to managing mental models, their work required the same critical tasks. First, they had to bring key assumptions about important business issues to the surface. This goal, predominant at Shell, is vital to any company, because the most crucial mental models in any organization are those shared by key decision makers. Those models, if unexam-ined, limit an organization's range of actions to what is familiar and 17. září 2004 172 ze 412 comfortable. Second, the two companies had to develop the face-to- face learning skills. This was of special concern at Hanover because they wanted managers throughout the company to be skillful with mental models. Both sides of the discipline—business skills and interpersonal is- sues—are crucial. On the one hand, managers are inherently pragmatic (thank goodness). They are most motivated to learn what they need to learn in their business context. Training them in mental modeling or "balancing inquiry and advocacy," with no connection to pressing business issues, will often be rejected. Or, it will lead to people having "academic" skills they do not use. On the other hand, without the interpersonal skills, learning is still fundamentally adaptive, not generative. Generative learning, in my experience, requires managers with reflection and inquiry skills, not just consultants and planners. Only then will people at all levels surface and challenge their mental models before external circumstances compel rethinking. As more companies adopt them, these two aspects of mental mod- eling will become increasingly integrated. In the meantime, based on the experience of Shell, Hanover, and other companies, we can begin to piece together the elements of an emerging discipline. "PLANNING AS LEARNING" AND "INTERNAL BOARDS": MANAGING MENTAL MODELS THROUGHOUT AN ORGANIZATION Institutionalizing reflection and surfacing mental models require mechanisms that make these practices unavoidable. Two approaches that have emerged to date involve recasting traditional planning as learning and establishing "internal boards of directors" to bring senior management and local management together regularly to challenge and expand the thinking behind local decision making. Once Shell's planners had recognized the importance of articulating mental models, they had to develop ways to foster that articulation in over one hundred independent operating companies. That need for global reach is one factor behind Shell's unique approach to mental models, which involves developing and testing a variety of different tools in Group Planning >n~t»ondon, then disseminating them.
Eventually, local planner&master these tools for use with local company
operating managers.
Scenarios, the first tool Shell adapted in pursuit of mental models,

17. září 2004 173 ze 412

force managers to consider how they would manage under different
alternative paths into the future. This offsets the tendency for man-
agers to implicitly assume a single future. When groups of managers
share a range of alternative futures in their mental models, they
become more perceptive of changes in the business environment and
more responsive to those changes. These are exactly the advantages
that Shell enjoyed over its competitors during the post-OPEC era.
Beyond scenarios, Shell continues to experiment with a wide variety
of tools for “mapping” mental models. These include the systems
thinking tools presented in Chapters 4 through 8, as well as the
computer simulation capabilities described in Chapter 17, “Micro-
worlds,” and numerous other “soft systems” tools—so called be-
cause they deal with important nonquantifiable variables which are
usually prominent in managers’ mental models.”
The common denominator of all these tools is that they work to
expose assumptions about important business issues. Shell has insti-
tutionalized managing mental models through its planning process.
Shell managers still generate traditional budget and control plans. But
De Geus and his colleagues have come to rethink the role of planning
in large institutions. It is less important, they have concluded, to
produce perfect plans than to use planning to accelerate learning as a
whole. Long-term success, according to De Geus, depends on, “the
process whereby management teams change their shared mental
models of their company, their markets, and their competitors. For
this reason we think of planning as learning and of corporate planning
as institutional learning.” De Geus goes on to say that the critical
question in planning is, “Can we accelerate institutional learning.?’ “12
Hanover has its own way of institutionalizing mental models.
There the process is guided by a set of operating principles, embedded
in a novel organization structure. Several years ago, the firm put a
network of “internal boards of directors” into place. Internal
boards are composed of two to four senior managers who advise
local general managers (in Hanover these are geographically deter-
mined). The internal boards bring outside perspective and breadth of
view to empower local management through a mechanism much like
corporate boards of directors. Their primary function is to counsel
and advise, not to control local decision makers.
Through the internal boards, there are four levels of “mental mod-
eling”:

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• within the team that directly reports to O’Brien
• between O’Brien’s direct reports and general managers (GMs)
through the internal boards
• between the GMs and their local functional managers
• between functional managers and their local workers and super
visors
At all these levels, the process is essentially the same. But what
prevents Hanover’s national managers from simply imposing their
mental models on local managers? Superficially, the mechanism
looks like that which exists between a CEO and a corporate board of
directors, but the working relationships are more like those among
partners who all share depth of knowledge about a business. “There
are many advantages,” says O’Brien, “of internal boards over more
normal reporting relationships. First, when a local general manager
reports to one senior manager—say, a corporate or group VP—it’s
pretty hard for the two of them to not get in a rut after a while.
Usually, after a couple of years, each one knows the other and has
found all sorts of ways to subtly manipulate their exchanges toward
predetermined ends. It’s rare when such a reporting relationship
continues to foster penetrating inquiry over many years. That
doesn’t seem to happen when you’ve got three or four people on a
board to whom you must continually present and explain your views.
The internal board process tends to foster critical skills of local man-
agers for our kind of organization: the ability to articulate your thinking
on complex subjects, to assimilate diverse views, and to be both
forceful and open. After their interactions with local boards, local
managers find that they are much better prepared to foster learning
within their divisions.”
To guide the internal boards throughout the company, Hanover
developed a set of operating principles for working with mental
models. These principles are meant to establish a priority on inquiry, to
promote a diversity of views rather than conformity, and to un-
derscore the importance of improving mental models at all levels of the
organization. This is the text of Hanover’s “credo”:
HANOVER’S CREDO ON MENTAL MODELS
1. The effectiveness of a leader is related to the continual
improvement of the leader’s mental models.

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2. Don’t impose a favored mental model on people. Mental
models should lead to self-concluding decisions to work
their best.
3. Self-concluding decisions result in deeper convictions and
more effective implementation.
4. Better mental models enable owners to adjust to change in
environment or circumstance.
5. Internal board members rarely need to make direct deci
sions. Instead, their role is to help the General Manager
by testing or adding to the GMs mental model.
6. Multiple mental models bring multiple perspectives to
bear.
7. Groups add dynamics and knowledge beyond what one
person can do alone.
8. The goal is not congruency among the group.
9. When the process works it leads to congruency.
10. Leaders’ worth is measured by their contribution to oth-
ers’ mental models.
“We don’t have any anointed mental models,” says O’Brien, “we
have a philosophy of mental modeling. If we went out to the field
and said, ‘this is the authorized mental model for handling situation
23C,’ we’d have a problem.” Several points in the credo reinforce
this theme. The second point, for example, cautions against imposing
a favored mental model on people. “In other words,” says O’Brien,
“there may be a temptation for the loudest guy, or the highest-
ranking guy, to assume that everyone else will swallow his mental
models lock, stock, and barrel in sixty seconds. Even if his mental
model is better, his role is not to inoculate everyone else with it, but to
hold it up for them to consider.”
Other points of the credo say that people are more effective when
they develop their own models—even if mental models from more
experienced people can avoid mistakes. “Sometimes I might say, ‘If
Billy’s going to learn how to ride a bike, he’s going to have to fall
down.’ I don’t want him to scrape his knee or his elbow; but if it’s
necessary, I might let that happen. Because, to get through life, he’s
got to learn how to ride a bike.”
It’s important to note that the goal is not agreement or con-
gruency. Many mental models can exist at once. Some may disagree.

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All of them need to be considered and tested against situations that
come up. This requires an organizational “commitment to the truth,”
which is an outgrowth of personal mastery. And it takes an
understanding that we may never know the whole truth. Even after
considering the mental models, as O’Brien says, “we might all wind up
in different places. The goal is the best mental model for whoever
happens to be out front on that particular issue. Everyone else fo-
cuses on helping that person (or persons) make the best possible
decision by helping them to build the best mental model possible.”
As O’Brien points out, the goal may not be congruency, but the
process leads to congruency when it works. “We don’t mind if meet-
ings end with people pretty far apart,” O’Brien said. “People put
their positions out and even if you don’t agree with them, you can
recognize their merit because they’re well considered. You can say,
‘For other reasons, I’m not going in your direction.’ It’s amazing, in a
way; people pull together better this way than they would when they
are driven to come to agreement.” For example, he said, there is none
of the bitterness that typically wells up when people feel that they knew
best, but never got a chance to make their case. “It turns out that
people can live very well with the situation where they make their case
and yet another view is implemented, so long as the learning process is
open and everyone acts with integrity.”
Many find the de-emphasis on agreement and congruency surprising.
But I have often encountered statements similar to O’Brien’s from
members of outstanding teams. This belief that “we’ll just talk it out
and we’ll know what to do” turns out to be a cornerstone of what
David Bohm calls “dialogue,” the heart of the discipline of team
learning (see Chapter 12).
REFLECTION AND INQUIRY SKILLS:
MANAGING MENTAL MODELS AT PERSONAL
AND INTERPERSONAL LEVELS
The learning skills of “action science” practitioners such as Chris
Argyris fall into two broad classes: skills of reflection and skills of
inquiry. Skills of reflection concern slowing down our own thinking
processes so that we can become more/aware of how we form our
mental models and the ways they influence our actions. Inquiry skills
concern how we operate in face-to-face (interactions with others,
especially in dealing with complex and conflictual issues. Argyris’s
longtime colleague Donald Schon of MIT has shown the

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importance of reflection on learning in profession including medicine,
architecture, and management. While many professionals seem to stop
learning as soon as they leave graduate school, those who become
lifelong learners practice what he calls “reflection in action,” the
ability to reflect on one’s thinking while acting. For Schon, reflection in
action distinguishes the truly outstanding professionals:
Phrases like “thinking on your feet,” “keeping your wits about
you,” and “learning by doing” suggest not only that we can think
about doing but that we can think about doing something while
doing it. . . . When good jazz musicians improvise together . . .
they feel the direction of the music that is developing out of their
interwoven contributions, they make new sense of it and adjust
their performance to the new sense they have made.13
Reflection skills start with recognizing “leaps of abstraction.”
Leaps of Abstraction. Our minds literally move at lightning speed.
Ironically, this often slows our learning, because we immediately
“leap” to generalizations so quickly that we never think to test
them. The proverbial “castles in the sky” describes our own thinking
far more often than we realize.
The conscious mind is ill-equipped to deal with large numbers of
concrete details. If shown photographs of a hundred individuals,
most of us will have trouble remembering each face, but we will
remember categories—such as tall men, or women in red, or Orientals,
or the elderly. Psychologist George Miller’s famous “magic number
seven plus or minus two” referred to our tendency to focus on a
limited number of separate variables at any one time.14 Our rational
minds are extraordinarily facile at “abstracting” from concrete
particulars—substituting simple concepts for many details and then
reasoning in terms of these concepts. But our very strengths in
abstract conceptual reasoning also limit our learning, when we are
unaware of our leaps from particulars to general concepts.
For example, have you ever heard a statement such as, “Laura
doesn’t care about people,” and wondered about its validity? Imagine
that Laura is a superior or colleague who has some particular habits
that others have noted. She rarely offers generous praise. She often
stares off into space when people talk to her, and then asks, “What
did you say?” She sometimes cuts people off when they speak. She
never comes to office parties. And in performance reviews, she
mutters two or three sentences and then dismisses the person. From
these particular behaviors, Laura’s colleagues have

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concluded that she “doesn’t care much about people.” It’s been
common knowledge—except, of course, for Laura, who feels that
she cares very much about people.
What has happened to Laura is that her colleagues have made a
“leap of abstraction.” They have substituted a generalization, “not
caring about people” for many specific behaviors. More importantly,
they have begun to treat this generalization as fact. No one questions
anymore whether or not Laura cares about people. It is a given.
Leaps of abstraction occur when we move from direct observations
(concrete “data”) to generalization without testing. Leaps of
abstraction impede learning because they become axiomatic. What was
once an assumption becomes treated as a fact. Once Laura’s
colleagues accept as fact that she doesn’t care about people, no one
questions her behavior when she does things that are “noncaring,”
and no one notices when she does something that doesn’t fit the
stereotype. The general view that she doesn’t care leads people to
treat her with greater indifference, which takes away any opportunity
she might have had to exhibit more caring. The result is that Laura
and her colleagues are frozen in a state of affairs that no one desires.
Moreover, untested generalizations can easily become the basis for
further generalization. “Could Laura have been the one behind that
office intrigue? She’s probably the sort who would do that sort of
thing given that she doesn’t care much about people
Laura’s colleagues, like most of us, are not disciplined in distin-
guishing what they observe directly from the generalizations they
infer from their observations. There are “facts”—observable data
about Laura—such as the time spent in a typical performance review or
looking away during a conversation. But “Laura doesn’t listen much”
is a generalization not a fact, as is “Laura doesn’t care much.” Both
may be based on facts, but they are inferences nonetheless. Failing to
distinguish direct observation from generalizations inferred from
observation leads us never to think to test the generalization. So no
one ever asked Laura whether or not she cares. If they had, they
might have found out that, in her mind, she does care very much. They
also might have learned that she has a hearing impediment that she
hasn’t told anyone about and, largely because of that, she is painfully
shy in conversations.
Leaps of abstraction are just ^as common with business issues. At
one firm, many top managers were convinced that “Customers buy
products based on price; the quality of service isn’t a factor.” And

17. září 2004 179 ze 412

it’s no wonder they felt that way; customers continually pressed for
deeper discounts, and competitors were continually attracting away
customers with price promotions. When one marketer who was new to
the company urged his superiors to invest in improving service, he
was turned down kindly but firmly. The senior leaders never tested
the idea, because their leap of abstraction had become a “fact”—
that “customers don’t care about service, customers buy based on
price.” They sat and watched while their leading competitor steadily
increased its market share by providing a level of service quality that
customers had never experienced, and therefore had never asked for.
In high-tech companies, a common belief is that being first to
market is the key to success. This generalization is often based on
concrete experience, but it can also be misleading. The Apple III
computer (an improved version of the Apple II) was an innovative
product, released in 1982, but it had many bugs that turned off
would-be customers, and the product turned out to be one of Apple’s
biggest disappointments. Yet, other computer manufacturers rushed
products to market that were, if anything, less ready. Some of those
products were big winners such as the Sun-3 workstation. Why does the
generalization “first to market” stand up in some instances but not in
others? Because the Sun-3’s customers were sophisticated engineers
who forgave bugs—in part because they could fix them themselves.
The Apple Ill’s largest market, consumers and business people, was
much more unforgiving. They needed the new system to work the
first time out and could easily be intimidated by a powerful machine
that (even though the bugs were fixed within a few months after they
were discovered) had the reputation of unreliability.”
How do you spot leaps of abstraction? First, by asking yourself
what you believe about the way the world works—the nature of
business, people in general, and specific individuals. Ask “What is the
‘data’ on which this generalization is based?” Then ask yourself, “Am I
willing to consider that this generalization may be inaccurate or
misleading?” It is important to ask this last question consciously,
because, if the answer is no, there is no point in proceeding.
If you are willing to question a generalization, explicitly separate it
from the “data” which led to it. “Paul Smith, the purchaser for Bailey’s
Shoes, and several other customers have told me they won’t buy our
product unless we lower the price 10 percent,” you might say. “Thus,
I conclude that our customers don’t care about service quality.” This
puts all your cards on the table and gives you, and

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others, a better opportunity to consider alternative interpretations
and courses of action.
Where possible, test the generalizations directly. This will often lead
to inquiring into the reasons behind one another’s actions. Such inquiry
requires skills that will be discussed below. For example, just coming
up to Laura and asking, “Don’t you care very much about people?”
is likely to evoke a defensive reaction. There are ways of approaching
such exchanges, through owning up to our assumptions about others
and citing the data upon which they are based, that reduce the
chances of defensiveness.
But until we become aware of our leaps of abstraction, we are not
even aware of the need for inquiry. This is precisely why practicing
reflection as a discipline is so important. A second technique from
action science, the “left-hand column,” is especially useful both in
starting and deepening this discipline.
Left-Hand Column. This is a powerful technique for beginning to
“see” how our mental models operate in particular situations. It
reveals ways that we manipulate situations to avoid dealing with how we
actually think and feel, and thereby prevent a counterproductive
situation from improving.
The left-hand column exercise can show managers that, indeed,
they have mental models and those models play an active, sometimes
unwelcome part in management practice. Once a group of managers
have gone through the exercises, not only are they aware of the role of
their mental models but they begin to see why dealing with their
assumptions more forthrightly is important.
The “left-hand column” comes from a type of case presentation
used by Chris Argyris and his colleagues. It starts with selecting a
specific situation where I am interacting with one or several other
people in a way that I feel is not working—specifically, that is not
producing any apparent learning or moving ahead. I write out a
sample of the exchange, in the form of a script. I write the script on
the right-hand side of a page. On the left-hand side, I write what I
am thinking but not saying at each stage in the exchange.
For example, imagine an exchange with a colleague, Bill, after a
big presentation to our boss on a project we are doing together. I had
to miss the presentation, but I’ve heard that it was poorly received.
{
ME: HOW did the presentation go?
BILL: Well, I don’t know. It’s really too early to say. Besides,
we’re breaking new ground here.

17. září 2004 181 ze 412

ME: Well, what do you think we should dof^T’believe that the
issues you were raising are important. BILL: I’m not so sure.
Let’s just wait and see what happens. ME: YOU may be right, but I
think we may need to do more than;
just wait.
Now, here is what the exchange looks like with my “left-hand:
column”:
WHAT I ‘ M
T H I N K I N G
Everyone says the
presentation was a bomb.
Does he really not know how
bad it was? Or is he not
willing to face up
to it?
He really is afraid to see the
truth. If he only
had more
confidence, he could
probably learn from a
situation like this.
I can’t believe he doesn’t
realize how disastrous that
presentation was to our
moving ahead.
I’ve got to find some way to
light a fire under the guy.
WHAT IS S A I D
ME: HOW did the presentation
go?
BILL: Well, I don’t know. It’s
really too early to tell.
Besides, we’re breaking new
ground here.
ME: Well, what do you think
we should do? I believe that
the issues you were raising
are important.
BILL: I’m not so sure. Let’s
just wait and see what
happens.
ME: YOU may be right, but I
think we may need to do
more than just wait.
The left-hand column exercise always succeeds in bringing hidden
assumptions to the surface and showing how they influence behavior.
In the above eXNMBlfk I Ml making two key assumptions about

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Bill: he lacks confidence, especially in regard to facing up to his poor
performance; and he lacks initiative. Neither may be literally true, but
both are evident in my internal dialogue and both influence the way I
handle the situation. My belief in his lack of confidence shows up in my
skirting the fact that I have heard that the presentation was a bomb.
I’m afraid that if I say it directly, he will lose what little confidence he
has, or he will not be able to face the evidence. So, I bring up the
subject of the presentation obliquely. My belief in Bill’s lack of
initiative comes up when we discuss what to do next. He gives no
specific course of action despite my question. I see this as evidence of
his laziness or lack of initiative: he is content to do nothing when
something definitely is required, from which I conclude that I will
have to manufacture some form of pressure to motivate him into
action, or else I will simply have to take matters into my own hands.
The most important lesson that comes from seeing “our left-hand
columns” is how we undermine opportunities for learning in conflic-
tual situations. Rather than facing squarely our problems, Bill and I talk
around the subject. Instead of determining how to move forward to
resolve our problems, we end our exchange with no clear course of
action—in fact, with no clear definition of a problem requiring action.
Why don’t I simply tell him that I believe there is a problem? Why
don’t I say that we must look at steps to get our project back on
track? Perhaps because I am not sure how to bring up these “delicate”
issues productively. Like Laura’s colleagues, I imagine that to bring
them up will provoke a defensive, counterproductive exchange. I’m
afraid that we’ll be worse off than we are now. Perhaps I avoid the
issues out of a sense of politeness or desire not to be critical.
Whatever the reason, the outcome is a dissatisfying exchange and I
resort to looking for a way to “manipulate” Bill into a more forceful
response.
There is no one “right” way to handle difficult situations such as my
exchange with Bill, but it helps enormously to see first how my own
reasoning and actions can contribute to making matters worse. This is
where the left-hand column technique can be usefaKOnce I see more
clearly my own assumptions and how I may be concealing them, there
are several things I might do to move the conversation forward more
productively. All involve sharing my own view and the “data” upon
which it is based. All require being open to the possibility that Bill may
share neither the view nor the data, and that

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both may be wrong. (After all, my informant about the presentation
may have been in error.) In effect, my task is to convert the situation
into one where both Bill and I can learn. This requires a combination of
articulating my views, and learning more about Bill’s views—a process
which Argyris calls “balancing inquiry and advocacy.”
Balancing Inquiry and Advocacy. Most managers are trained to be
advocates. In fact, in many companies, what it means to be a com-
petent manager is to be able to solve problems—to figure out what
needs to be done, and enlist whatever support is needed to get it
done. Individuals became successful in part because of their abilities to
debate forcefully and influence others. Inquiry skills, meanwhile, go
unrecognized and unrewarded. But as managers rise to senior
positions, they confront issues more complex and diverse than their
personal experience. Suddenly, they need to tap insights from other
people. They need to learn. Now the manager’s advocacy skills be-
come counterproductive; they can close us off from actually learning
from one another. What is needed is blending advocacy and inquiry to
promote collaborative learning.
Even when two advocates meet for an open, candid exchange of
views, there is usually little learning. They may be genuinely interested
in each other’s views, but pure advocacy lends a different type of
structure to the conversation:
“I appreciate your sincerity, but my experience and judgment lead
me to some different conclusions. Let me tell you why your pro-
posal won’t work . . . ”
As each side reasonably and calmly advocates his viewpoint just a bit
more strongly, positions become more and more rigid. Advocacy
without inquiry begets more advocacy. In fact, there is a systems
archetype that describes what happens next; called “escalation,” it’s
the same structure as an arms race.
The more vehemently A argues, the greater the threat to B. Thus, B
argues more fiercely. Then A counterargues even more fiercely. And
so on. Managers often find escalations so grueling that, thereafter, they
avoid stating any differences publicly. “It’s too much grief.”
The snowball effect of reinforcing advocacy can be stopped, by
beginning to ask a few questions. Simple questions such as, “What is
it that leads you to that position?” and “Can you illustrate your point
for me?” (Can you provide some “data” or experience in support of
it?) can introject an element of inquiry into a discussion.

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We often tape record meetings of management teams with whom we
are working to develop learning skills. One indicator of a team in
trouble is when in a several hour meeting there are few, if any,
questions. This may seem amazing but I have seen meetings that
went for three hours without a single question being asked! You
don’t have to be an “action science” expert to know there is not a
lot of inquiry going on in such meetings.
But pure inquiry is also limited. Questioning can be crucial for
breaking the spiral of reinforcing advocacy, but until a team or an
individual learns to combine inquiry and advocacy, learning skills are
very limited. One reason that pure inquiry is limited is that we almost
always do have a view, regardless of whether or not we believe that
our view is the only correct one. Thus, just asking lots of questions
can be a way of avoiding learning—by hiding our own view behind a
wall of incessant questioning.
The most productive learning usually occurs when managers com-
bine skills in advocacy and inquiry. Another way to say this is “re-
ciprocal inquiry.” By this we mean that everyone makes his or her
thinking explicit and subject to public examination. This creates an
atmosphere of genuine vulnerability. No one is hiding the evidence or
reasoning behind his views—advancing them without making them
open to scrutiny. For example, when inquiry and advocacy are
balanced, I would not only be inquiring into the reasoning behind
others’ views but would be stating my views in such a way as to
reveal my own assumptions and reasoning and toJnvite others to
inquire into them. I might say, “Here is my viey and here is how I
have arrived at it. How does it sound to you?”^’
When operating in pure advocacy, the goal is to win the argument.
When inquiry and advocacy are combined, the goal is no longer “to
win the argument” but to find the best argument. This shows in how

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we use data and in how we reveal the reasoning behind abstractions.
For example, when we operate in pure advocacy, we tend to use
data selectively, presenting only the data that confirm our position.
When we explain the reasoning behind our position, we expose only i
enough of our reasoning to “make our case,” avoiding areas where; we
feel our case might be weak. By contrast, when both advocacy and
inquiry are high, we are open to disconfirming data as well as
confirming data—because we are genuinely interested in finding,
flaws in our views. Likewise, we expose our reasoning and look for
flaws in it, and we try to understand others’ reasoning.
The ideal of combining inquiry and advocacy is challenging. It can, be
especially difficult if you work in a highly political organization that is
not open to genuine inquiry (Chapter 13, Openness, deals with this
subject further). Speaking as a veteran advocate, I can say that I have
found patience and perseverence needed to move toward a more
balanced approach. Progress comes in stages. For me, the first stage
was learning how to inquire into others’ views when I do not agree
with them. My habitual response to such disagreements was to
advocate my view harder. Usually, this was done without malice but in
the genuine belief that I had thought things through and had a valid
position. Unfortunately, it often had the consequence of polarizing or
terminating discussions, and left me without the sense of partnership I
truly wanted. Now, I very often respond to differences of view by
asking the other person to say more about how he came to his view, or
to expand further on his view. (I am only starting to get to a second
stage of stating my views so as to invite others to inquire into them as
well.)
Though I am still a novice in the discipline of balancing inquiry and
advocacy, the rewards have been gratifying. What has become obvious
on repeated occasions is that, when there is inquiry and advocacy,
creative outcomes are much more likely. In a sense, when two people
operate in pure advocacy, the outcomes are predetermined. Either
person A will win, or person B will win, or both will simply retain their
views. When there is inquiry and advocacy, these limitations dissolve.
Persons A and B, by being open to inquire into their own views, make
possible discovering completely new views.
While mastering the discipline of balancing inquiry and advocacy, I’ve
found that it helps to keep in mind the following guidelines:16
When advocating your view:
• Make your own reasoning explicit (i.e., say how you arrived at
your view and the “data” upon which it is based)

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•Encourage others to explore your view (e.g., “Do you see
gaps in my reasoning?”) •Encourage others to provide
different views (i.e., “Do you
have either different data or different conclusions, or both?”)
• Actively inquire into others’ views that differ from your own
(i.e., “What are your views?” “How did you arrive at your
view?” “Are you taking into account data that are different
from what I have considered?”)
When inquiring into others’ views:
• If you are making assumptions about others’ views, state your
assumptions clearly and acknowledge that they are assump
tions
• State the “data” upon which your assumptions are based
• Don’t bother asking questions if you’re not genuinely inter
ested in the others’ response (i.e., if you’re only trying to be
polite or to show the others up)
When you arrive at an impasse (others no longer appear to be
open to inquiring into their own views):
• Ask what data or logic might change their views.
• Ask if there is any way you might together design an experi
ment (or some other inquiry) that might provide new informa
tion
When you or others are hesitant to express your views or to ex-
periment with alternative ideas:
• Encourage them (or you) to think out loud about what might
be making it difficult (i.e., “What is it about this situation, and
about me or others, that is making open exchange difficult?”)
• If there is mutual desire to do so, design with others ways of
overcoming these barriers
The point is not to follow such guidelines slavishly, but to use
them to keep in mind the spirit of balancing inquiry and advocacy.
Like any “formula” for starting on one of the learning disciplines,
they should be used as “training wheels” on your first bicycle. They
help to get you started, and give you a feel for what it is like to
“ride,” to practice inquiry with advocacy. Asyou gain skill, they can
and probably should be discarded. But it j/s also nice to be able to
come back to them periodically when you encounter some rough
terrain.
However, it is important to keep in mind that guidelines will be of
little use if you are not genuinely curious and willing to change your

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mental model of a situation. In other words, practicing inquiry uj
advocacy means being willing to expose the limitations in your 01
thinking—the willingness to be wrong. Nothing less will make it SM
for others to do likewise.

1
Espoused Theory versus Theory-in-Use. Learning eventually 0 suits in
changes in action, not just taking in new information a| forming
new “ideas.” That is why recognizing the gap betwtil our
espoused theories (what we say) and our “theories-in-use” (n
theories that lay behind our actions) is vital. Otherwise, we im
believe we’ve “learned” something just because we’ve got the nf
language or concepts to use, even though our behavior is completf
unchanged.
For example, I may profess a view (an espoused theory) that pdl
pie are basically trustworthy. But I never lend friends money as
jealously guard all my possessions. Obviously, my theory-in-use, fl|
deeper mental model, differs from my espoused theory.
While gaps between espoused theories and theories-in-use migM be
cause for discouragement, or even cynicism, they needn’t b| Often
they arise as a consequence of vision, not hypocrisy. Fa example, it
may be truly part of my vision to trust people. TheiuT gap between
this aspect of my vision and my current behavior hold the potential
for creative change. The problem lies not in the gai but, as was
discussed in Chapter 9, “Personal Mastery,” in failiri to tell the
truth about the gap. Until the gap between my espouse! theory and
my current behavior is recognized, no learning can occujf
So the first question to pose when facing a gap between espouse!
theory and a theory-in-use is “Do I really value the espouse!
theory?” “Is it really part of my vision?” If there is no commitmeiil to
the espoused theory, then the gap does not represent a tensioif
between reality and my vision but between reality and a view advance
(perhaps because of how it will make me look to others).
Because it’s so hard to see theories-in-use, you may need the helflj of
another person—a “ruthlessly compassionate” partner. In thf quest
to develop skills in reflection, we are each others’ greates| assets. As
Hanover’s Bill O’Brien says, “The eye cannot see itself.’;

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! M E N T A L M O D E L S A N D
T H E F I F T H D I S C I P L I N E
! have come to believe that systems thinking without mental models ||
like the DC-3’s radial air-cooled engine without wing flaps. Just as pte
Boeing 247’s engineers had to downsize their engine because |hey
lacked wing flaps, systems thinking without the discipline of Biental
models loses much of its power. This is why much of our jCUrrent
research at MIT focuses on helping managers to integrate Diental
modeling and systems thinking skills. The two disciplines go naturally
together because one focuses on exposing hidden assumptions and the
other focuses on how to restructure assumptions to reveal causes of
significant problems.
As shown at the outset of the chapter, entrenched mental models
will thwart changes that could come from systems thinking. Managers
must learn to reflect on their current mental models—until prevailing
assumptions are brought into the open, there is no reason to expect
mental models to change, and there is little purpose in systems
thinking. If managers “believe” their world views are facts rather than
sets of assumptions, they will not be open to challenging those world
views. If they lack skills in inquiring into their and others’ ways of
thinking, they will be limited in experimenting col-laboratively with
new ways of thinking. Moreover, if there is no established philosophy
and understanding of mental models in the organization, people will
misperceive the purpose of systems thinking as drawing diagrams
building elaborate “models” of the world, not improving our mental
models.
Systems thinking is equally important to working with mental
models effectively. Contemporary research shows that most of our
mental models are systematically flawed. They miss critical feedback
relationships, misjudge time delays, and often focus on variables that are
visible or salient, not necessarily high leverage. MIT’s John Stef-man
has shown experimentally that players in the beer game, for example,
consistently misjudge the delay in receiving orders once placed. Most
players either don’t see or don’t take into account in their decision
making the critical reinforcing feedbacks that develop when they panic
(place more orders for beer^which wipes out their supplier’s
inventory, forcing them to lengthen shipping delays, which can lead
to further panic). Sterman has shown similar flaws in mental models in a
variety of experiments.17

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Understanding these flaws can help to see where prevailing mental
models will be weakest and where more than just “surfacing” man-
agers’ mental models will be required for effective decisions.
Eventually, what will accelerate mental models as a practical man-
agement discipline will be a library of “generic structures” used! throughout
an organization. These “structures” will be based on systems
archetypes such as those presented in Chapter 6. But, thejl would be
suited to the particulars of a given organization—its prod! ucts, market,
and technologies. For example, the particular “shifting the burden,”
and “limits to growth” structures for an oil compan|| would differ
from those for an insurance company, but the underiyi ing archetypes
would be the same. Such a library should be a naturfdj by-product of
practicing systems thinking within an organization.
Ultimately, the payoff from integrating systems thinking and mefl^ tal
models will be not only improving our mental models (what wfl^ think)
but altering our ways of thinking: shifting from mental modelf
dominated by events to mental models that recognize longer-tern^
patterns of change and the underlying structures producing those
patterns. For example, Shell’s scenarios not only made the compa-j ny’s
managers aware of changes, they shifted the way the managers thought
about those changes. While most other oil companies saw the rise of
OPEC as a onetime event, it signalled a shift in basic patterns of
supply-demand interactions for Shell’s managers—an erai of seller’s
market, instability, high prices, and reduced demandf growth. That
gave those managers a longer-term perspective in which to consider
their strategic options, and it led them to policies which could serve for
the rest of the decade. In other words, scenarios helped Shell’s
managers take a first step up from the world of events—seeing
patterns of change.
Just as “linear thinking” dominates most mental models used for
critical decisions today, the learning organizations of the future will
make key decisions based on shared understandings of interrelation-
ships and patterns of change.

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11
SHARED V I S I O N
A COMMON CARING
You may remember the movie Spartacus, an adaptation of the story of a
Roman gladiator/slave who led an army of slaves in an uprising in 71
B.C.1 They defeated the Roman legions twice, but were finally
conquered by the general Marcus Crassus after a long siege and
battle. In the movie, Crassus tells the thousand survivors in Sparta-
cus’s army, “You have been slaves. You will be slaves again. But you
will be spared your rightful punishment of crucifixion by the mercy of
the Roman legions. All you need to do is turn over to me the slave
Spartacus, because we do not know him by sight.”
After a long pause, Spartacus (played by Kirk Douglas) stands up
and says, “I am Spartacus.” Then the man next to him stands up
and says, “I am Spartacus.” The next man stands up and also says,
“No, I am Spartacus.” Within a minute, everyone in the army is on his
feet.
It does not matter whether this story is apocryphal or not; it dem-
onstrates a deep truth. Each man, by standing up, chose death. But

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the loyalty of Spartacus’s army was not to Spartacus the man. Their’
loyalty was to a shared vision which Spartacus had inspired—the; idea
that they could be free men. This vision was so compelling that j no man
could bear to give it up and return to slavery.
A shared vision is not an idea. It is not even an important idea
such as freedom. It is, rather, a force in people’s hearts, a force off
impressive power. It may be inspired by an idea, but once it goes
further—if it is compelling enough to acquire the support of more;
than one person—then it is no longer an abstraction. It is palpable.
People begin to see it as if it exists. Few, if any, forces in human
affairs are as powerful as shared vision.
At its simplest level, a shared vision is the answer to the question,
“What do we want to create?” Just as personal visions are pictures or
images people carry in their heads and hearts, so too are shared
visions pictures that people throughout an organization carry. They
create a sense of commonality that permeates the organization and
gives coherence to diverse activities.
A vision is truly shared when you and I have a similar picture and are
committed to one another having it, not just to each of us, indi-
vidually, having it. When people truly share a vision they are con-
nected, bound together by a common aspiration. Personal visions
derive their power from an individual’s deep caring for the vision.
Shared visions derive their power from a common caring. In fact, we
have to come to believe that one of the reasons people seek to build
shared visions is their desire to be connected in an important under-
taking.
Shared vision is vital for the learning organization because it pro-
vides the focus and energy for learning. While adaptive learning is
possible without vision, generative learning occurs only when people
are striving to accomplish something that matters deeply to them. In
fact, the whole idea of generative learning—”expanding your ability to
create”—will seem abstract and meaningless until people become
excited about some vision they truly want to accomplish.
Today, “vision” is a familiar concept in corporate leadership., But
when you look carefully you find that most “visions” are one person’s
(or one group’s) vision imposed on an organization. Such visions, at
best, command compliance—not commitment. A shared vision is a
vision that many people are truly committed to, because it reflects
their own personal vision.

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WHY SHARED VISIONS MATTER
It is impossible to imagine the accomplishments of building AT&T,
Ford, or Apple in the absence of shared vision. Theodore Vail had a
vision of universal telephone service that would take fifty years to
bring about. Henry Ford envisioned common people, not just the
wealthy, owning their own automobiles. Steven Jobs, Steve Woz-
niak, and their Apple cofounders saw the power of the computer to
empower people. It is equally impossible to imagine the rapid ascen-
dancy of Japanese firms such as Komatsu (which grew from one
third the size of Caterpillar to its equal in less than two decades),
Canon (which went from nothing to matching Xerox’s global market
share in reprographics in the same time frame), or Honda had they
not all been guided by visions of global success.2 What is most im-
portant is that these individuals’ visions became genuinely shared
among people throughout all levels of their companies—focusing the
energies of thousands and creating a common identity among enor-
mously diverse people.
Many shared visions are extrinsic—that is, they focus on achieving
something relative to an outsider, such as a competitor. Pepsi’s vision
is explicitly directed at beating Coca-Cola; Avis’s vision at Hertz. Yet,
a goal limited to defeating an opponent is transitory. Once the vision
is achieved, it can easily migrate into a defensive posture of “protecting
what we have, of not losing our number-one position.” Such defensive
goals rarely call forth the creativity and excitement of building
something new. A master in the martial arts is probably not focused
so much on “defeating all others” as on his own intrinsic inner
standards of “excellence.” This does not mean that visions must be
either intrinsic or extrinsic. Both types of vision can coexist. But
reliance on a vision that is solely predicated on defeating an adversary
can weaken an organization long term.
Kazuo Inamori of Kyocera entreats employees “to look inward,” to
discover their own internal standards. He argues that, while striving to
be number one in its field, a company can aim to be “better” than
others or “best” in its field. But his vision is that Kyocera should
always aim for “perfection” rather than just being “best.” (Note
Inamori’s application of the principle of creative tension— “it’s not
what the vision is, but what it does . . .”)3
A shared vision, especially one that is intrinsic, uplifts people’s
aspirations. Work becomes part of pursuing a larger purpose embod-

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ied in the organizations’ products or services—accelerating learning
through personal computers, bringing the world into communication
through universal telephone service, or promoting freedom of mov«j
ment through the personal automobile. The larger purpose can alsi be
embodied in the style, climate, and spirit of the organization. Mai de
Pree, retired CEO of the Herman Miller furniture company said his
vision for Herman Miller was “to be a gift to the human spirit! —by
which he meant not only Herman Miller’s products, but itl people, its
atmosphere, and its larger commitment to productive an