The Living Organization Essay

The Living Organization™ Norman Wolfe There is a change rippling through the ranks of corporate leadership, a generational shift in the ranks of CEOs and other corporate executives. It is a shift from those who were raised during World War II and moved into leadership roles during the 70s and 80s, to those who were raised in the post-Vietnam era and assumed their leadership roles in the 90s and turn of the century. Where previous generations relied on the traditional military, hierarchical, command and control form of leadership, the new generation focuses on the power of teams, global collaboration and empowerment of employees.

These new leaders are experiencing the limitations of existing business models and are sense the need for something more. It is not that the old models are wrong, in fact many of the elements of those models are still necessary today, but are proving insufficient to meet the needs of today’s leaders, navigating the business environment of the 21st century. If the current economic crisis has taught us anything, it is that the future will not look like the past.

In fact this economic crisis partially resulted from decision making that relies on a business model that does not provide our leaders with enough detail and insight into the impacts of their decisions. This paper is for those new leaders who are seeking to better understand and navigate the complex dynamics impacting their organizations. It presents the foundation of a new business model, keeping what is valid from its predecessor models, adding new concepts to create a consolidated framework that brings it all together. This whitepaper provides today’s leaders a new, more detailed map to navigate the complex business world of this century.

It is the precursor to the book of the same title that will more fully describe the application of The Living Organization™ model to leading organizations in the 21st century. The Need for a New Map A detailed map helps us understand where we are in relationship to where we want to go. A good map also explains the terrain between those two points so we can effectively choose the path that will best serve us. It is no different in business. Like any map, the one we use to navigate our business lives – or for that matter, all aspects of our lives is based on our underlying beliefs about how the world works.

These core beliefs set the framework that allows us to make choices among the myriad of options available. © Quantum Leaders, Inc 2008 – 2009 These beliefs are formed from our personal experiences and what we learn and adopt from the experiences of others, which in turn determines our understanding of how the world works. Over time, these beliefs and experiences evolve into rules and then into the frameworks, the maps, we use to provide direction and define the options we can choose from. Over time we depend on these maps to be complete and accurate navigational tools.

They generally provide order and guidance which allow us to navigate our daily life choices. But the very attributes that make them effective, ordering and simplifying our world, cause them to act as filters. We become so reliant on these filters that we literally cannot recognize anything that is outside the boundaries. As the diagram above illustrates, for any given challenge there are a range of possible solutions. Our internal frameworks, however, filter the options actually available to us. Any solution outside our existing framework literally does not exist to us.

Even more dangerous, if there is an underlying causal issue that must be addressed first; we will never see it or factor it into our solution. For example, one of the core beliefs held about business is that they are primarily machines of production. Within this framework, we view all things from the perspective of enhancing the machine’s performance and apply metrics as if we were simply fine-tuning the machine. In this worldview, people are components of the machine and the way people in an organization are treated is a function of this core belief.

Another core belief is that we can control and predict both the demand and output of the machine. But many of us now realize this is not as simple as we might think (or desire). It is useful to look back at the state of the world when our current maps were first developed since maps always emanate from our experiences and those of others we choose to accept. Most of our current core beliefs emanate from the Industrial Revolution of the early 1900s where the modern day corporation was given birth. © Quantum Leaders, Inc 2008 – 2009 The following chart compares the world of the early 1900s with that of first decade of this century.

Early 20th Century Local community (national at best) Change relatively slow (sometimes beyond the span of a life) Product life cycles measured in years, maybe decades Direct cause-effect relationships explained much (Scientific Management ruled) Labor force mostly unskilled Social contract Management can plan and predict with high degree of certainty Competition within industry (well defined boundaries) Slow Low- Moderate 21st Century Global community Change occurring with increasing pace Product life cycles often measured in months Events seem to come out of nowhere – sense of random occurrence Labor force mostly educated, even for blue collar jobs Meaning and Purpose Plans are difficult to predict with any certainty Industry boundaries are fluid – competition coming from anywhere Almost Instantaneous Extreme Geographic Reach Rate of change Product Life Cycles Degree of causality Level of workforce education and skills Employment relationship Predictability Competitive landscape Speed of Communication Level of complexity With such significant differences why would we expect the map we used to navigate 20th century business to be equally effective in the 21st century environment? And yet that is the situation we currently find ourselves in. Let’s be clear, we are not advocating replacing our current maps.

The maps we have been using are still valid in many regards and much of their guidance is still applicable. If this was not the case, we would have thrown them out a long time ago and replaced them with something more effective. The maps are not wrong; they are simply not sufficiently detailed to help us navigate a more rigorous landscape. Would you want to use the map on the left to navigate today’s’ freeway systems? Of course not! © Quantum Leaders, Inc 2008 – 2009 Building a New Map: The Physics of The Living Organization™ Model It is useful to build a new map on a foundation that is as true today as it was in years past, and likely to be true for many years in the future.

One principle we know is valid throughout all of life, and is likely to stay valid, is the First law of Thermodynamics. “Everything is Energy and that energy can neither be created nor destroyed” This law remains valid through all the advances in physics, chemistry and biology. Can it be a principle we can rely on to help in defining a more detailed map for business of the 21st century? If everything is energy that can neither be created nor destroyed, then it follows that everything in the universe is energy constantly undergoing transformation. In fact, we know this is true at all levels of life and science; from the atomic structures that underlie everything in the universe to the basic building blocks of life – the cell.

Furthermore, we know that life is continuously evolving from simple structures joining together to form more complex structures. For example the single cell amoeba, over time evolved into multi-cell organisms, and these evolved into multi-cell organisms that can divide and build more complex life forms. And these simple life forms evolved over time into what many consider the highest and most complex form of life, people. All organisms are living systems directing flows of energy, transforming them into desired results. Complex living systems are systems that are themselves comprised of other living systems. The human body is such a complex living system – comprised of cells which are living entities unto themselves.

Different cells are oriented towards specific functions such as heart cells, brain cells, liver cells, blood cells and so on. These individual cells join with other cells with as similar orientation and collectively form these particular organs. The organs interact with each other forming the complex system known as the human body. © Quantum Leaders, Inc 2008 – 2009 The Living Organization™ The complex living system called the human body is a perfect analogue to the even more complex corporate body. Buy SmartDraw! – purchased copies print this document without a watermark . Visit www. smartdraw. com or call 1-800-768-3729. The basic building block for the company is the individual who, like cells, tends to have a specific orientation.

Each individual joins with other individuals of like orientation to form departments and the departments form the complex system known as the corporate body. Since business is a system made up of living systems comprised of other living systems then: Business is a Complex Living System that Directs the Flow of Energy Transforming it into a Desired Result However, this only tells part of the story: describing the physical components of the organization, and to leave it at that would be ignoring a vital element. Although we can describe the human body as being the collection of all its physical components, in doing so we would not capture the totality of human experience.

The same is true for the corporation To be human is more than just being a collection of cells, organs, blood flow and neurological activity. There is something else that is part of the total human system. While philosophers, psychologist and theologians may differ in what they call this element or how they explain it, there is wide and uniform agreement that there is something more than the mere physical body. © Quantum Leaders, Inc 2008 – 2009 This element is often referred to as the “spirit” of the person that drives, and animates the physical body. The same applies to organizations. This is a concept that is not foreign from our current view of business.

We see it all the time in our commonly used language such as “they have a real spirit”, “team spirit”, or Esprit de Corps”. We also know that all living entities appear to have a core reason for existing. The Greeks called this the Daemon; the Romans called it the Genius. It is the basic animating spirit that drives each individual living system. It is that which makes an acorn become a mighty oak. Every living thing has a purpose, a unique reason for existing. And since organizations are living entities, they too come into existence for a unique reason. Each organization serves a unique purpose and has a unique contribution to make. This is what I call their “SOULFUL PURPOSE”.

Building A New Map Building on the foundation that a corporation is a complex living entity following the rules of all complex living systems, let’s create a new model, a map that includes all the old terrain while adding the necessary details that allows us to navigate the terrain of the 21st century; a map that explains how The Living Organization™ directs and transforms the flow of energy into desired results. One of the more recent and significant contributions made to the field of management practices is the introduction of the Balanced Scorecard. It formalized the idea that the organization is a system comprised of interdependent components.

They defined the four major components as: financial, markets, processes and learning and growth. This integrative, holistic systems view still has a lot of merit. And while it made a significant contribution it did not go far enough. It built on and propagated the core belief that business is a machine of production whose purpose is to produce a financial return. Those familiar with the Balanced Scorecard model will see similarities to The Living Organization™ model. We have kept those elements that still apply and added elements not included. We have also redefined some of the core underlying beliefs that make the map more consistent with the current understanding of an organization as a complex living system.

Let’s look at the model in detail, first exploring the physics of The Living Organization™ and then delving into the spirit of business. © Quantum Leaders, Inc 2008 – 2009 The Living Organization – The Physics Since all living systems serve to transform energy into a desired result, one can view the fulfillment of the Soulful Purpose as the purpose for the system’s transformation process. Each cell is created to perform a certain function. People have their individual unique intended purpose (though admittedly not as easy to determine as a cell. An organization also has a Soulful Purpose- the reason the organization comes into existence and is and defines how it will transform energy into desired results.

In the human system, our Soulful Purpose guides us to become an engineer or an artist; and further whether we will pursue mechanical or biological engineering. Or if we are guided to the arts will we pursue the path of a dancer or a painter. Similarly, in business, the unique contribution the organization makes is expressed in the form of the goods and services provided to the markets it serves. And the common definition of “success” is goods and services that are highly valued and adopted by a market. Let’s use the following diagram to understand the flow of energy as it travels through the organization driven by its Soulful Purpose and transformed into highly valued goods and services. The Living Organization™ – The Flow of Energy © Quantum Leaders, Inc 2008 – 2009 The Basic Flow

In organizations, the primary source of energy is the people contributing their energy through their individual and collective efforts and unique talents. It is from the active release of energy through their efforts that organizations derive the major source of energy for the transformation process. Energy that flows totally free cannot be expected to transform into a desired output. What would happen if you put people in a room and told them to simply “be active”? Would you get your desired result, the transformation of effort into goods or services? Not likely. Energy generated by the individuals in this scenario would likely be diffused, what we might call “unfocused” effort.

In order to create a desired result, energy must be directed in much the same way waveguides focus light energy to form laser light. In business, these energy waveguides are the work flow and other business processes we use to help define how work is to be performed. These energy waveguides are also the means for integrating and mixing the energies of the various elements of the organization; integrating energy from various departments, between different locations, and across different countries. It is these business processes that guide the flow of energy, directing and transforming it along the way to the desired output. The desired output being the highly valued goods and services provided to customers and markets that adopt them in large numbers.

This is the basic system flow of every business; the organization’s Soulful Purpose defines its purpose and the goods and services it will provide as its unique contribution, its service to the market. The Living Organization™ transforms the energy of its people into those goods and services with its business processes serving as the waveguides for the transformational process. The Living Organization™ is a Learning Organization. Continuing on with our diagram there is a flow of energy from Process back to People labeled learning. One of the unique attributes of living systems is their capacity to learn. And as they learn, they increase their ability to create more energy.

Peter Senge, in his 1990 book The Fifth Discipline brought the seminal idea of the learning organization into the limelight. To quote from his book, Senge says learning organizations are: …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 to see the whole together. Arie de Geus, a follower of Senge, in his book The Living Company, underscores the importance of a learning organization. In his role as head of planning for Royal Dutch Shell, he explored why most companies die before their time and why a few seem to be able to continue on for hundreds of years.

He defines a company as a living entity for its ability to learn and adapt and for its people to learn and grow. © Quantum Leaders, Inc 2008 – 2009 All living systems must learn so they can adapt to changing environments or they will die. People also learn to adapt and they grow and expand from their learning. It is in the very process of putting forth their efforts to accomplish specific goals and desired results that creates the opportunity for learning. As people learn, they increase their capacity to contribute more energy. Why should organization leaders focus their time, effort and resources on facilitating the development of their people?

Simple: it increases the flow of energy through the system without requiring additional units of energy (i. e. people) to do so. Increasing the flow of energy Learning is developmental. Since the source of energy comes from the people, it is helpful to understand the dynamics which increase the flow of energy. Certainly one can increase energy by simply adding more people. However, this runs counter to the desire to most efficiently use resources. Therefore, it would be useful to examine how we can improve efficiency by increasing the energy flow per unit of labor employed. One thing we know about people is that the more skilled they become at what they do, the more they can do.

In essence, they can transform energy into goods and services more efficiently. Hence learning becomes a key component of the model, one that the organization is wise to invest in. A fascinating aspect of this model is that the very act of applying effort towards a desired outcome generates feedback. But it is the ability to process the feedback and convert it into changed behaviors (i. e. more effective effort) that result s in learning and therefore increased capacity. That people can learn and the process of learning increases capacity to contribute more energy makes people a unique energy source. What we do not know is if there is a limit to the energy a single person can draw on.

The Experience factor People play another role that makes their development equally important. People define the experience our customers have with our company. Just think about the significance of this statement – “people define the experience our customers have with our company. ” Early in my career, working in one of the sales offices for Hewlett Packard, there was a receptionist who every person in that office worshipped. This was a curious thing for a young new systems engineer why was this person who was “just a receptionist” so highly respected? That is until one of the longterm sales people told me, “Fran is the first person a customer speaks to.

She is the face of the company and the customers’ experience of the company, including their experience of our products and service, is set by how she treats them. ” This is a lesson I have never forgot. Ever wonder why we pay $4. 80 for a cup of coffee at Starbucks when you can get the same basic product – coffee – at 7-11 or other similar convenience stores for $1. 39. © Quantum Leaders, Inc 2008 – 2009 The coffee at both venues is basically the same (some argue that the convenience store coffee actually tastes better). The higher revenue received by Starbucks is related to the premium the market places on the overall experience of purchasing coffee there. One evening I went to a Starbucks and they were closed to the public for that night. In fact all the Starbucks were closed that night.

Starbuck’s revenue had been suffering and to correct the problem they set out to retrain all the Baristas. They had a four hour training session all over my area in Southern California (maybe all over the country) to bring back the “Starbuck’s experience. ” They recognized that the customer’s experience is generated from the energy of the people within their organization and “the Starbuck’s experience” is at the heart of their value proposition. The role of profit – the feedback loop As with all systems, this system requires a feedback mechanism to ensure that the process is operating at the desired level of effectiveness, achieving the desired results.

The gauge we use to measure organizational performance is the financial system. It provides the needed visibility into the system’s operational performance, without which we would not be able to make the necessary adjustments to the overall system when it is determined to be out of balance. The foundation feedback metrics in business is profit, and its two major components: revenue and expense. While profit is considered by many as being the root of all evil, it is anything but. In fact, the bottom line is a critically important aspect of any successful enterprise (including non-profits). Revenue is the measure of value perceived by the market.

The higher the perceived value by the market and the larger the market that perceives such value, the more revenue the firm will generate. Revenue received is a function of value perceived. Expenses are the measure of energy consumed by the organization, energy classically defined as labor and materials. Expenses should thus be viewed as the efficiency rating of the organization in transforming energy into its goods and services. The lower the expenses the more efficient and productive the system is. Profit is the feedback that informs the organization about how much the market perceives the value of its goods and services in relation to the consumption of energy required to produce it.

Without a proper gauge to providing the necessary feedback to the system, the system can easily become out of balance causing it to oscillate out of control and eventually fail. So what’s wrong with profit? If profit is such a critical component, why do so many people feel profit is the “root of all evil? ” It is not profit itself but the elevation of profit as the “Soulful Purpose” – the focus on profit as the primary (if not sole reason) for the organizations’ existence – which is misguided. In fact, it is the “pure © Quantum Leaders, Inc 2008 – 2009 profit motive” (the desire to achieve profit for its own sake) that continues to be the root cause for most of the failings we have experienced in business and society.

If profit is the gauge used in the feedback loop and I don’t like the reading I am getting, I have two choices. One is to take appropriate action to identify what aspects of the system may be out of balance and make the necessary adjustments. An alternative – and seductive – approach is to adjust the gauge to provide the reading I want. The second approach might sound a bit illogical, improbable and even dangerous; but farfetched? Unfortunately not. All too often, this is what many “managers” have chosen to do over the past decade. Off-Balance Sheet financing is one such adjustment. Another is the clever creation of default swaps and other financial instruments that obscure an accurate reading of the gauge.

Yes, much of the “creative financial engineering” we have recently experienced is nothing more than adjusting the feedback loop rather than paying attention to the underlying system performance. This is what happens when the focus shifts primarily (or exclusively) to pursuing the profit motive instead of the core, or Soulful Purpose of why the organization exists. Positive profit is excess energy Energy cannot be created or destroyed so energy is constantly changing forms. Money is simply another form of energy, and as any economist will tell you, a healthy economy is one realizing a certain velocity of money (rate of energy flow). Money is energy exchanged for products and services in proportion to perceived value.

Money is also converted into primary sources of energy, people and the tools that leverage their energy, as well as materials converted into products. Expenses represent the amount of energy converted into products. When an organization earns a profit, it collects more energy than it consumes, which it stores that energy for later use. This we call retained earnings, or more appropriate retained energy. Retained energy provides energy that is converted at a later date to grow the organization. In fact, the proper way to view the capital structure and the capital markets is as an energy reserve, a battery that is charged with energy to be drawn upon later.

When an organization is in need of additional energy to respond to growth, it draws from its own retained earnings/energy, to hire people, or to acquire energy leveraging devices – tools and equipment. These actions increase the capacity of the organization to fulfill the increased demand from the marketplace. Of course this is a simplified view of the balance sheet which in reality embodies many complex scenarios. One can borrow money (energy) from others in a variety of combinations of debt and equity. Yet the underlying fundamental principle is that the capital structure represents the energy resources available to flow into the system, The Living Organization™ that produces the desired result. © Quantum Leaders, Inc 2008 – 2009 The Living Organization™ Model – The Spirit

The key to success is to maximize energy contribution while minimizing energy loss flowing through the system, as it is transformed into valued goods and services. As with other forms of energy, the energy passing through the organizational system is not just one energy field but a range of different energy frequencies. Similar to light passing through a prism, the energy flowing through The Living Organization ™ is a spectrum of energy fields. Looking at the model three dimensionally, there are three distinct energy fields operating that are interrelated. These three fields are Activity, Relationship and Context. © Quantum Leaders, Inc 2008 – 2009

Activity is the energy of doing. It is both the “what” and the “how” of the work to be done. It represents the physical world of what we can see, hear, and touch. Everything in the physical world is sequenced by time and space so this field is characterized by linear, sequential activity. Work flows from one step to the next. And since it is sequential, everything appears to follow a cause-effect relationship. This field of energy is the domain of mental energy, specifically the left brain, which controls analytical skills and spatial relationships. This field consists of rational thought energy and adheres to the rules of logic given its sequential, cause-effect nature.

We can assess one’s ability to utilize this energy field by measuring Mental Intelligence or the IQ. Notwithstanding some of the limitations of the current assessment instruments to measure IQ, it is generally a fair indication of one’s analytical, linguistic and spatial reasoning, all characteristics of effective use of Activity Energy. Activity Energy has dominated most of the traditional management methods and processes. It fits well with the idea of the corporation as the “machine of production. ” Scientific Management principles of Frederick Taylor, work specialization and the organization of work into production lines are all ways organizations have sought to effectively manage the Activity Energy.

The more modern versions are the efforts of Business Process Engineering, Six Sigma, and the principle of “what you measure is the behavior you get”. Activity still remains a critical field of energy for managing organizations, as it is the only field of kinetic energy. The other two fields, as we will see, increase the potential energy available for conversion into kinetic energy and it is in the activity field where this conversion occurs. It is also the field of energy that is within our capacity to observe and measure. Perhaps someday we will have tools that can directly measure the other two fields but for now it is what we can observe and measure in the Activity field that provides indirect measures of the impact of the other two fields.

This is one of the reasons it would be foolish to think the old map – the tools, methods and view that the corporation is a machine to be fine tuned – should be replaced. They are still very necessary yet alone they are not sufficient to fully manage all the forces at work within an organization. Relationship is of the energy of interactions. It is the energy that flows from one field to another. It is the energy that flows from two or more people involved in an Activity as well as the energy that flows from the Context field to the Activity Field. The broad concept of communication is how we normally think of this flow of energy. I use this term because “communication” encompasses a multitude of © Quantum Leaders, Inc 2008 – 2009 information (energy) exchanges.

Communications of thoughts through language, or communication of feelings through vocal or body language are examples of Relationship energy exchanged between people. This also includes business reports or the seemingly endless series of meetings that represent Relationship energy exchange among organizational units. And then there are the belief & value systems at the organizational and individual levels that are Relationship energy exchanges between the Context and the Activity fields (more on this later in the explanation of Context). Unlike Activity energy, which is revealed in observable discrete cause-effect relationships, relationship energy is best understood in terms of energy patterns. Think of it as the pattern that emerges in a mosaic.

The discrete tile pieces are the actions in the Activity field, but the collection of which reveal a pattern that identifies the Relationship Energy exchange. The information carried by this energy is processed by the right hemisphere of the brain which is the pattern recognition center. Our ability to recognize the broader patterns of our lives provides our empathic ability, the ability to relate to others and to our environment”. (I differentiate empathic ability from the more traditional term “emotions” to distinguish emotional response from Relationship energy processing). It was only over the last few decades that we recognized we can measure one’s ability to process Relationship Energy.

While the recognition that there are other intelligences beside the cognitive, Mental Intelligence (IQ) dates back to the early decades of the 1900s, it wasn’t until the publication of Daniel Goleman’s book “Emotional Intelligence” in 1995 that the assessment of Emotional intelligence (EQ) became prevalent within the business community. While Activity energy is the act of converting potential energy into kinetic energy, relationship energy adds to the pool of potential energy available for conversion. You can draw on personal experiences to know how this works. Reflect on a time when you have been part of a team where everyone is aligned and coordinated. What does this feel like? The typical answer is “I felt energized. ” Now reflect on a time when you have been part of a team that one might call dysfunctional. How does that feel. The typical answer is “draining”.

When we work with someone we are in conflict with, we tend to guard and withhold some portion of our energy. Conversely, when we are in a positive relationship with our co-workers, we tend to feel more energized and desire to contribute more. We often speak of this experience in terms of synergy, positive synergy being the sum is greater than the parts, or 2+2=5. This dynamic is why there has been such a keen focus on teamwork and collaboration to improve organization effectiveness since the 1970s. In addition to viewing the organization as a “machine of production” we added the view of the organization as an endeavor of human interactions. The Experience customers feel when interacting with our organizations resides within this field of energy.

To improve customer experience and hence increase perceived value requires actions that will affect the energy in the Relationship field. © Quantum Leaders, Inc 2008 – 2009 Context is the energy of purpose and meaning. It is the “why” behind all that we do. It is the newest field of energy to be explored in the business world; and though it has the greatest impact on overall business success, it is the least understood or implemented. Many leading edge thinkers over the last few decades have either hinted at or began to discuss the importance of this energy. Luminaries such as Stephen Covey, Ken Blanchard, James Autry, Peter Senge, Margaret Wheatley and many others have been discussing it either in terms of leadership, organization culture, or the learning organization.

They have all recognized there is a field of energy that underlies and impacts what we do at the Activity field. While we have come to realize the importance of issues like culture, creativity and intuition, we really do not yet fully understand their nature. At best, it is set aside as being that “squishy stuff” and we return to what we know best: the realm of what we do and how we do it (Activity). When we do attempt to address these issues, we often do so by defining them within the context of activities, e. g. visioning exercises or creativity sessions. Unfortunately, this relegates them to an intellectual process, thus losing much of the energy that emanates from the Context field.

To better understand Context, think of it as the Life Force, that energy from which all things emerge. There is much information about the Life Force energy but we must look outside the domain of business to find it. In Western spiritual traditions it is known as Holy Spirit or the Latin”Spiritus”. In Eastern traditions we recognize it in the concepts of Chi, or Prana. And if we wanted to draw on popular culture, we can reference the concept of “The Force” from Star Wars. Most of the time we do not pay attention to this field of energy as our thoughts are dominantly focused on what we are doing and perhaps a little on who we are doing it with.

But when we “tap into this energy”, we certainly are aware of its existence. We experience the energy when we are drawn to work on something that we are passionate about. We feel it when we get “lost” in what we are doing and time does not exist. When we are connected to this field we feel an almost infinite amount of energy from which to draw on and apply it to achieve all manner of desired results. But since this field of energy is practically infinite, we draw to us a relatively small portion for our use. Think of the portion that is ours as being held within a container, our “Personal Context”. This container is takes the form of our beliefs systems, our paradigms, and our values.

It is the culture and values of our society, our social groups, our families and us as individuals that defines the container of our personal context energy field. It is reasonable to assume that energy flows between our personal context field and the broader infinite context field. It is the connecting nature of this field that allows us to have a “sense of knowing” about ourselves, others and our world. © Quantum Leaders, Inc 2008 – 2009 The energy in the Context field carries information that cannot be processed through our left-brain’s analytical, logical processing or even our right-brain’s pattern processing center. This information is processed through the body as a “felt sense”, a sort of holistic knowing without rational explanation. Some call it intuitional knowing, a gut feeling.

Some refer to it as following the still quiet voice within and others refer to it as following the heart. There is recent scientific evidence of neurological processing centers within parts of our bodies other than the brain. For example, the Institute of HeartMath has found brain cells within the makeup of the heart. According to Dr. Michael Gershon, a professor of anatomy and cell biology at ColumbiaPresbyterian Medical Center in New York City, “The brain is not the only place in the body that’s full of neurotransmitters. A hundred million neurotransmitters line the length of the gut, approximately the same number that is found in the brain… I suggest we have three basic processing centers; the Heart-Brain to process the information in the Context Field, in the same way the Right-Brain processes the information from the Relationship field and the Left-Brain processes the Activity field information. To further support the idea that the Context field is becoming recognized as important to success in business there has, over the last decade, been an increase in activity to measure one’s ability to process Context energy information. In 1997, Danah Zohar introduced the concept of Spiritual Intelligence and along with Ian Marshall has been exploring the ability to define and measure this intelligence. Since the turn of this century we are seeing an increase in the amount of research and work being applied to defining and assessing one’s ability to process and work with Context energy, ones Spiritual Intelligence or SQ.

Soulful Purpose as defined in The Living Organization™ model resides in the Context field. © Quantum Leaders, Inc 2008 – 2009 The interactions of Activity – Relationship – Context A metaphorical picture may help visualize the three fields of energy and how they interact with each other, Imagine two ice bergs floating within the ocean to understand the interdependencies that exist. The surface of the iceberg that we can observe and measure is the Activity field. It is the field of energy that is most easily processed via the human senses. It is in the Activity field where potential energy (that which lies beneath the surface) converts into kinetic energy and transforms into the goods and services we sell and buy.

Since we can physically observe and measure the Activity field and it is where potential energy is converted to kinetic energy of transformation, we tend to think of it as being the most significant of the three energy fields. It is why we seek to solve our challenges in business with solutions oriented towards Activity. However, while it is certainly a critical part of the overall flow of energy, it is only one of three and by no means the most significant one. Below the surface is the Context field, the source of all energy. The portion of the iceberg that resides below the surface represents our Personal Context; while the ocean represents the deeper, virtually infinite field of energy of the Collective Context.

While the Activity field appears to be outside the Context field, it is very much contained by and operating within this larger energy field. Through this metaphor we can better visualize how much of © Quantum Leaders, Inc 2008 – 2009 our lives, our Activity is guided and directed by Context energy. This is why so much effort and attention is now being applied to better understanding this field of energy. The Personal Context is our personal beliefs, values and frameworks. It is where our Soulful Purpose resides. It is what differentiates one individual from another. It determines the unique container we call “I/me”. It is the source of our passions and our loves.

As many know, and psychology teaches us, most of our lives reside in our personal unconscious. That is, what lies under the surface of our conscious awareness often determines and may even overwrite our conscious efforts, our above the surface Activity. When a group of individuals come together to achieve a common purpose they form a new entity, This new entity operates with the same dynamics between Activity and Context as we find in single individual. Similarly the dynamics and energy forces are the same for a grouping of other groups as they are for a group of individuals. Each should be viewed as a single entity with a Personal Context and Activity fields interacting in the same manner as a single individual alone.

The Relationship field is energy that is transferred between energy fields. In the diagram, we see it as lines of energy emanating from the icebergs. These lines represent the energy exchanged between individuals or the energy exchanged between one’s Personal Context and the Collective Context. Or the energy exchanged between the Personal Context field and the Activity field. If we look at this as neurological processing centers, imagine that energy enters our systems from the Collective Context field through the Heart-Brain and is experienced as a felt sense. This information is then passed to the Right-Brain that discerns patterns and creates associations.

This discernment and associating is passed to the Left-Brain for categorization and storage, and then drawn on for decision making and action. Maximizing the Flow Since the organization is a complex living entity designed to direct the flow of energy transforming it into the desired results, then the amount of energy available to the organization is critical. We can conceptualize this as a formula representing the relationship between the three frequencies of energy previously discussed. E = (A * R ) 2 C Activity energy (A) is directly proportional to the amount of effort each individual puts forth. It is primarily a direct, one to one, linear relationship.

It can be enhanced by leveraging human effort with tools, which has been the primary approach for increasing this energy for the last 100 years. We provide © Quantum Leaders, Inc 2008 – 2009 machines, computers, or other technologies to leverage the energy provided by each entity, whether it be an individual or a group. We are following Archimedes’ edict “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world. ” Over the last 3+ decades we have come to appreciate the value of people working together in high performing teams. Increasing the collaboration among individuals and groups can achieve much more with fewer resources. This is the impact of the Relationship field hat empirically appears to be geometric in its impact on increasing the amount of energy available to be directed and transformed. It is only within the last decade that there has been a growing recognition of the impact of the Context field. The Context energy manifests in employee engagement, commitment and passion connecting the potential energy of the individual to a much richer, almost infinite, field of energy. We see this best in the world of nonprofits. People will work 40, 50 or more hours a week at their paying jobs and leave feeling tired and drained. These same individuals will go to their nonprofit, committing more time and energy and leave feeling exuberant. Where does the energy come from?

Where did that person, drained of energy from their paying job, find a new source of energy they willingly contribute for no pay and leave feeling more energetic then when they entered? And perhaps more importantly, how do we get our employees to draw from the same deep well of energy for the jobs they are being paid for? This is the power of Context energy. This is why the Context field has an exponential impact on the total flow of energy through the system. © Quantum Leaders, Inc 2008 – 2009 The Living Organization™ Model – Putting it to work We can now look at the organization and understand that it is a complex living system directing the flow of energy, transforming it into the desired results.

We know the primary source of energy is the individuals whose energy is directed through energy waveguides. We call these waveguides the business processes that define how work flows through the organization. Leadership is the third component along with people and process that determines how well an organization creates its desired results for the market it serves. Leadership plays the distinct role of determining and voicing how the soulful purpose will be realized, that is the goods and services to be delivered, and the basic business model the company will follow. The combination of People-Process-Leadership is the dynamic trio interfacing with the marketplace to drive success. The ARC Framework™

The Living Organization describes the flow of energy through the system and defines the three fields of energy Activity, Relationship and Context (ARC). Overlaying each energy field onto each of the key organizational components of Markets, Process, People and Leadership gives us the ARC Framework for understanding and assessing the dynamic forces working within an organization. © Quantum Leaders, Inc 2008 – 2009 A – Markets: This is where the parameters of success are determined; how well the organization provides solutions to the need of the marketplace. This is the where we decide the products and services we will provide to serve specific markets and where we measure the success by the value the market perceives as represented by the revenue received.

R – Markets: This is the domain of all the relationships we establish between the organization and the market. In includes, customers, suppliers, alliances and partners. C – Markets: Markets like organizations are also living entities and as such they also have dynamic forces that are at play driving the trends and direction of market movements. The better the organization can determine these dynamic market forces the better is its ability to provide solutions ahead of its competition. A – Process: This is where we look at the workflows, metrics and the overlying business model. It is the domain for process re-engineering and improvement efforts.

It is where we determine the metrics that provide the right feedback, allowing us to monitor and improve the process flows. At the corporate level this would define the overall workflow or the overall business model. Applied to each of the functional units of sale, marketing, operations engineering, HR, finance and IT, we would be looking at the more detailed workflow for each function. R – Process: This is ensuring that the organization design facilitates effective communication among operational units as well as the information flow through the organization and between and among the various units. C – Process: This is the domain of the organization’s (or unit) culture. It is here that the Soulful Purpose is found and the mission and values of the organization.

A – People: This is the individual and collective ability to perform the technical and functional requirement of the job. R – People: This covers interpersonal skills of an individual or a group as a collective entity. It is the ability to communicate effectively as well as listen to and empathize with another. C – People: These are the intrapersonal skills, those skills that allow and individual or a group to have a deeper understanding of their internal drivers. What motivates them, and drives their passion. It also covers the skills to relate to something greater than one’s self and to be in service to others. A – Leadership: The traditional role of managing the organization, plan-lead-organize-control. Making sure that what needs to happen is happening.

R – Leadership: This is the ability to build teams and foster collaboration among individuals and groups. C- Leadership: This is the ability to inspire and motivate. This is the ability of the leadership team to raise the level of passion, commitment and engagement that creates the added energy available from the Context field. © Quantum Leaders, Inc 2008 – 2009 When applying the ARC Framework™ it is important to recognize there are interdependencies and precedence across the 12 segments. For example when working with a client, we were looking at making changes to their relationship with the reseller channel. While part of the effort was to work out the definition of the new relationship (A- Process), this alone would not have been successful.

As we were discussing these changes it became apparent that the core belief of the organization, stemming from its early days when it was true, was that they needed the resellers more than the resellers needed them. No matter how we changed the process elements, until the core beliefs of the organization (C – Process) were changed no effective change would occur. Traditional interventions would eventually get there but only after many failed attempts revealed what was really getting in the way. The ARC Framework™ provided the needed level of detail to map a path to successful improvement thereby eliminating wasted effort and speeding strategy execution.

Without the ARC Framework™ management would be like doctors back at the turn of the 20th Century, limited to collecting information available to their senses: observing skin color, listening to the heart and lungs, etc. The ARC Framework™ provides today’s leaders with the depth of understanding of the forces within an organization in the same way today’s sophisticated tests such as functional MRI and Cat Scans provide doctors with the ability to assess more accurately what is happening within the human body. And with the greater visibility into the dynamic forces operating within the organization, a roadmap can be developed that is integrative, implementable and sustainable and will improve the organization’s ability to produce the desired results. The Changing Role of Leadership

The role of the organization leaders has shifted along with the changes in the business environment over the last 100 years. Though, the emphasis has evolved, the fundamental responsibilities did not go away. As the organization evolved, new responsibilities were added to and built on the previous roles. When the organization was dominantly viewed as a “machine of production” the dominant focus was improving efficiency. The work of Fredrick Taylor and Scientific management took hold and emphasis was streamlining and optimizing the work. Workflow improvement and using tools were considered the most effective ways to improve the productivity of the workforce.

The focus was predominantly on the Activity field and the organization was viewed as a machine and the role of leadership was to optimize the flow of energy and minimize energy loss. The next major shift occurred around the middle of the twentieth century when role of people started to play a larger part of management’s responsibilities. In contrast to the early phase where people were just another cog in the machine of production, now there was recognition that people had a significant impact on performance. With the help of people like Maslow, Rogers, Hertzberg and others, organization leaders began to recognize that people were their most important assets. They began to © Quantum Leaders, Inc 2008 – 2009 recognize that employee satisfaction was important to their level of work effort.

Motivation and empowering employees became part of the leaders required skill set. And the journey of leadership has continued over the last 50 years. We have seen increasing interest in not only employee satisfaction, but also employee engagement. We are moving into the period of leading from meaning and purpose that goes beyond just making profits. The leader is being called to inspire the workforce and less on directing its efforts. As the workplace and the business environment has become more complex the leader’s role becomes setting the tone, articulating and giving life to the Soulful Purpose that passionately aligns everyone in the organization.

The successful leader is no longer able to treat the organization as discreet parts that work independently of each other, but rather must see the integrated whole with each function highly interdependent on each other function. The leader must create a sense of working for the success of the total organization, not just the individual. The leader must also have a high level of intrapersonal skills. They must know themselves; they must lead with compassion and humility. They will be called on to think ambidextrously, to think both strategically and tactically at the same time. Today’s successful leaders will have access to insight and wisdom by which to lead their organization, to the degree they have access to the deeper Context layers. They will be able to intuit what is called for in the moment.

They will be able to see what others cannot see, giving their organizations a significant advantage. They will be Quantum Leaders. The dominant focus of leadership in the 21st century will be: Developing People – It all starts with people and it ends with people. Without the people, there is no organization. Bringing people to realize their fullest potential, where they are passionate about what they do, where they can be in service to the organization’s success and to those the organization serves, is the ultimate key to success. Building Community – Individuals alone do not an organization make. The people must feel a sense of belonging which leads them to strive for the success of the community.

For this to occur, they must feel aligned with the community, knowing that they will find individual success in the community’s success. Teamwork and collaboration become a natural outcome when the community’s success is the priority. Cultivate Context – Underlying all that happens is the Context field. It establishes the frameworks, the lenses through which everyone will view the world. It defines everything that is – and is not – done within your organization. It is the container that shapes and drives behaviors, which in turn are reflected in the relationships we have and which impacts what is and is not accomplished. It is revealed in the stories we tell and our reality is defined by those stories. It is the energy that cannot be seen but is always experienced.

The ability for the leader to work with the energy of the Context field will be critical © Quantum Leaders, Inc 2008 – 2009 Be in Service – The reason an organization exists is to fulfill its Soulful Purpose and the Soulful Purpose is always about being in service to something more than the organization. The leader must represent the attitude of service if the rest of the organization is to experience the energy that flows from this. If we reflect on these four key areas of focus for the 21st century leader, we see there are similarities with another field of human endeavor. As one person in a recent talk I gave noted, this is the focus our traditional spiritual leaders have.

The development of people, not just in what they do but who they are, the building of a community where people can tap into a larger context and recognize they are here to be in service to the larger community, is what the spiritual leaders have always focused on. One can then extrapolate that the new spiritual community of the 21st century is the workplace and the CEO is the Spiritual leader of their community. ”The Journey Continues…” There it is The Living Organization™ Model, a new map for understanding the forces underlying business success and failure. It is our sincerest hope that you have received something very beneficial in return for your time reading this paper.

We believe the model can serve as a guide for improving not only the performance of your organization but your performance as the leader of that organization. This model has been the embodiment of many years of learning on how to create success in the business world. And while it may be a rich and new way to view our challenges, I believe it is only a beginning. New questions come up for each one that is answered. I hope that others will come to understand and embrace this framework, and begin to work with and add to it, making it even more robust and detailed, and thus allowing for greater success for everyone. © Quantum Leaders, Inc 2008 – 2009