Peter Senge: Stakeholder Engagement, Innovation & Sustainability
Thursday, April 4, 2002
In an interactive video presentation, Peter Senge spoke of what is needed to create an environment to sustain deep and profound collaborative learning at a societal level, and eventually move us out of the industrial age.
We are trying to initiate and sustain a deep learning cycle. This is about how a culture changes. The most important way to think about it today is the industrial culture. It is the beliefs, attitudes, and assumptions that we have made in the development of the modern world for the past 200-250 years: for example, the belief we are separate from nature, or our tendency to view what is going on in much of the world as not relevant to us.
Collaborative learning is deep down a set of capacities. There are good reasons why most of us do not have these capacities. The main one is that there was nothing in our formal education process that allowed us to develop our innate abilities to further cultivate our intrinsic capacity to understand interdependence, to think and learn together, to deal with ambiguity, or to nurture clarity about what matters deeply to us as individuals and human beings.
Ultimately, we are trying to bring about a fundamental shift in industrial culture, but any teacher knows that a teacher does not cause learning. The best you can ever do when you are in a position of formal authority is create an environment within which certain key processes of change can be initiated and sustained. There are three key elements to doing this.
At one level there needs to be a conversation about identifying the fundamental aspirations, principles, and intentions of the organization. Every organization has guiding ideas; the fundamental problem is that most of them are pretty weak. For example, the notion that the purpose of the business is to maximize the shareholders’ return on investment is the predominate idea in our modern theory of the organization; unfortunately that idea does not actually motivate anyone. Confusing profitability with purpose is one of the fundamental problems of modern management. Secondly, there are a variety of fairly well known tools and methods (that I won’t go into) for changing environments.
The third and less often considered element essential to creating an environment within which deep learning can be sustained can be called “innovation and infrastructure.” This refers to how we organize ourselves, how we use resources, and how to guarantee the infrastructure for learning. Some organizations have already begun to develop it. The US military, for example, spends enormous amounts of time in practice – in simulations, war games, etc. – and has continued to develop its learning infrastructure for many years. More significantly, they have developed a way to connect the infrastructure with certain guiding ideas and tools. Their “after action reviews” are held after simulated engagements to discussed how the simulation went. They have these conversations in which hierarchy is left out of the room. I do not know virtually any corporation that has that capability. Yet if you do not have such a capacity, forget about the tools and principles; they will not come alive unless you create the context in which to practise them.
Change clearly is a complex business, but not infinitely so. These guiding ideas, tools, and innovations to infrastructure have proven for many years now to be very helpful for all types of organizations. They are also relevant on a global scale.
Over the past 20 years we have been developing a network of corporations working together around organizational learning. Eight to ten years ago we began really pushing to see what subset of that group we could get working together about sustainability. We found that we got very little response. As individuals, it is not hard to get anyone to express their deep concerns for the future of our energy infrastructure for example, but at the level of an organization, if you invite those very same oil executives to a meeting to explore environmental issues they would say, “sorry I can’t come”.
Interestingly, in the last three to four years this has begun to change dramatically. All of a sudden, business executives are interested. I have always been somewhat sceptical of this, having been concerned about this all my career. Nevertheless, I do believe there is a real shift. There is now a growing number of organizations that exist for no other purpose than to serve as a way to foster collaboration around social and environmental unsustainablility. People are coming together on global climate change, through the Global Compact, talking about all the big picture issues. As these forums evolve into deeper conversation, they may develop the ability to talk about tough issues with genuine respect and the capacity to listen to others’ points of view. To use a phrase from one of the audience participants, they may begin to wrap their arms around the fact that the “terms of engagement” may not be their own terms. The simple fact that these forums are starting to exist is very important.
The second domain in which a great deal is going on is companies sharing best practices around how to clean up their act. This second domain is what I call domain of “waste reduction through process improvement.” It is very important, just like the forums. However, these two domains in total are very unlikely to bring about the transformation of the ethos, core logic, or sense of purpose of the culture of large industrial age corporations.
We are very much in the industrial age (not the information age). However, I assume the industrial age will end. The age is like a “bubble”. Inside the bubble, everything you see is consistent - reality seems completely sustainable. Outside the bubble it does not. The industrial age looks fine to us from inside the bubble, but at some gut level, we know it is not and it cannot last. By the time you are three or four years old you know you cannot keep putting more stuff in the same box. The earth is not infinite. A village of 100 with a small percentage owning all the material wealth would not work. You could not live that way, because people could see this could not work. The only reason we think we can get away with it in the world today is that we assume people cannot see.
A bubble ends two ways. The classic image works very well in financial markets, because usually the bubble bursts and there is a collapse. All of a sudden the strange valuation comes head to head with a larger reality and the weird set of rules turns out to become unsustainable. That would obviously be the most likely scenario for our global industrial age bubble. It is not the scenario any of us would probably choose. The big question is – are there ways that the systemic irrationality that drives behaviour inside the bubble can change of its own accord? That will take penetrating a third, still largely neglected, domain. It is the question of growth.
Anybody in any business of any size knows that to say to your investors, “our strategy is to not grow” is a virtually unthinkable idea. And yet I think the fundamental communication from the environmental movement to the corporate world is “don’t grow” (whether that is said explicitly or not). When one of the leading green architects gave a talk at MIT last fall he confronted this issue directly. He said, “Growth is good.” “If you see a flower growing, does anybody say this is bad? If you see a child growing, does anybody say, anywhere, in any culture, this is bad?” He said, “Earth plus sunlight produces growth.”
In those simple statements he catapulted us all against this extraordinary dilemma: the health of the economy comes down primarily of growth. It is the logic of business, which has increasingly taken over the logic of our societies and especially our political systems. Yet as you ponder these simple statements you realize the issue is not growth; it is the nature of growth.
I would agree, “Growth is good”. From within the perspective of an organization I think we have all felt the energy of a group a people working well together, that energy and excitement of creating something new. So for companies the challenge is to determine how we create something really new: the product that when it is done with its useful life is made into new products; the way of creating values for a customer that actually doesn’t require any materials at all, or that leverages material already in use.
So the third domain is innovation.Drucker defines innovation as creating new sources of value. How do we do that in a way that is completely consistent with the values of life on earth? The question is “what do we want to create?” not “what do we want to stop doing?” You cannot create energy by stopping. There is very little lasting power in a negative vision – a picture of what we want to avoid in the future. Most social movements are motivated by the negative motivation of fear. You cannot innovate that way. Innovation, discovering a new source of value and bringing it forth, is always generated through emotions of excitement and hope and possibility and enthusiasm and joy. When we really appreciate what it means to innovate in an interdependent work we will not longer need to the term sustainability. If I lived in a village of 100 people, I would not have to worry about sustainability, if we were not sustainable, it would be evident –we would pollute the river it is evident. Create extreme inequity in a village it is evident; in the world it is less evident. That is changing.
I have spoken from the corporate perspective; it is not the only one. In order to achieve the changes needed, we are going to have to learn how to cross all these boundaries. It is hard. We have only begun to see how hard it is.
How will corporations, government and civil society accept this third domain?
I expect it will generate a lot of turbulence. I do not know for sure. First within a lot of business it will start to get much closer to the heart of the enterprise as people ask themselves how they are going to grow in new ways. I expect others will say that the whole idea is crazy – there will be massive denial. I would expect quite a few people in the broad “civil society” might have some real problems with this because a lot of the undercurrents of the movements are fuelled by anger and fear, by pain, and by expected pain, and people are going to have to be prepared to let that go. While intellectually I can make the distinction between “more stuff” and “more value,” emotionally is another matter. So if someone says “growth is good,” I hear, “more stuff is good,” but I know more stuff not only does not make more people happy it doesn’t make the planet very happy and tends to get distributed in a way that makes a lot of people very unhappy. So I think it is going to bring to the surface a lot of very complex emotional territory. All of us will have to look deeply at the source of our anxieties and fears as we rethink the nature of growth.
What are the skills that business could offer to the world in the social sector?
Many of the core competencies of enterprises have to do with discerning latent needs and coming up with very imaginative ways to meet those needs. But business can learn from social sector’s innovative programs. It is two way street with immense possibilities. It is not just about getting business, civil society and government working together; it is about how to nurture networks of innovators, likeminded and like spirited people who are basically doing the same thing. As mentioned before, a change starts to happen when individuals no longer lead divided lives. Those individuals could be called innovators. They are human beings who say we are going to do it the way we can feel good about doing it, feel proud and tell our kids, and affect our deepest issues and highest aspirations. That is where the energy starts. Obviously one person is not enough to create a critical mass. These changes are going to be decades in the making. The networks of leaders needed will be developed at all levels and cut across all boundaries and they will always be these individuals who are no longer willing to live divided lives.
What about companies in seemingly unsustainable businesses?
You must find a way to be a high performer in your core business in order to command the resources to innovate. Even though you know your core business is the wrong business, you have to simultaneously embrace short-term process improvement while striving for long-term innovation. How you manage both is hard without appearing insincere. A company that just goes for the long-term moral high ground is going to find itself unable to move toward that high ground if they neglect their core business. Ford is probably the most poignant case – Bill Ford is a deeply sincere environmentalist who wants to see the end of the combustion engine – but he cannot do anything about it until his company is healthy.