The fifth in our series of interviews asking a number of noted thought leaders for their views on a few basic but essential questions on Organizational Change.

“Without having solved this primary problem of self-deception and assumed objectivity, no other problem will be solvable.”

In between helping organizations find their way through the maze of massive and rapid change, working on the continued success of XPLANE, the consulting company that he founded, publishing books and racking up more frequent flier miles in a year than most of us do in a lifetime, Dave Gray still took time out on a Sunday to give his views on my few basic questions about organizational change.

Mike:
Hi Dave thank you for making the time to do this. I’m really interested in getting different views and perspectives on some fairly basic, but fundamental questions around change in organizations in our current socio-economic environment. I know from discussions that you and I have had in the past that you’re really fascinated and deeply involved in looking at change and from some rather unexpected angles.

Dave:
I think I’m just really, really curious about our species. And sometimes you can get great insights from comparing ourselves to other species. I think actually there’s a connection between ants and humans in the topic you want to cover today.

Mike:
Really!

Dave:
An individual ant cannot exhibit much complex behavior, but an ant colony, as a whole, exhibits extremely complex behavior, because of the interactions between the ants. And we can assume that the individual ant is unaware of this complexity.

One of the big problems I see in the world of business and change is that people, especially senior executives, like to think of themselves as objective, which is great, but it’s impossible to be objective about a system that you are inside of.

I think we tend to believe that we’re looking at our human organizations from an outside and objective point of view, like a human looking at an ant colony. We have this belief that we’re able to study it from that perspective, when in fact we’re one of the ants.

Liminal Thinking is about recognizing and embracing the fact that you are not outside the system but inside of it. If the problem you’re trying to solve is something that you care about in any way, then, by definition, you’re a part of it.

We are moving from a world in which we had thousands and thousands of independent organizations (ant colonies) to a world in which we are one connected, inter-dependent colony. Software and the internet are connecting everything. Even physical objects are now being connected digitally. It does not seem possible or likely that we will be able to reverse that process.

We are interdependent now and must learn to thrive in this new reality.

Mike:
Do you see major change generally as being inevitable and essential to organizations, the world over, in both commercial and non-commercial environments?

Dave:
Absolutely. And it’s very clear that for the next, foreseeable period of time, value creation is being driven by software.

It doesn’t matter what you do; if you’re in the business of moving tomatoes from the farm to the grocery store, or if you’re in the business of making wine, or if you’re in the business of manufacturing industrial equipment, it’s all the same. If you’re not thinking about becoming a software company. or building a software company, or being a part of the software that allows those things to be found, manipulated, changed, improved, and delivered, it’s just going to come down to being the lowest cost provider. You’re not going to be in the locus of where the value is being created.

Mike:
Right.

Dave:
You’re gonna be driven by the winds of what those software companies are deciding to do. If you look at taxi drivers and what’s happening with things like Uber and Lyft – this is happening everywhere. It’s happening with Amazon buying Whole Foods. What are they doing? Well, they realize that they have very few weak points in their experience strategy, but one of them is that you can’t touch the stuff before you buy it. Another weakness is that fresh food is really hard to store in a warehouse.

I would predict that in Whole Foods you’re gonna start seeing a lot of things that are not at Whole Foods today but that Amazon wants you to be able to touch and look at and buy, like refrigerators and stoves.

Mike:
You think that the sheer pressure of changing technology and the increasing super dominance of software makes change inevitable?

Dave:
If we look at the Fortune 500, I still see quite a few old school retailers on there. I think that’s  going to change. If we look at the Fortune 500 in five years, or 10 years, we’re going to see it being completely dominated by software companies.

Mike:
Do you think this kind of change will just be too fundamental for most companies to be able to negotiate?

Dave:
Many of my clients are the very ones who are trying to respond to this  emerging reality and I believe that it is possible for them to do so successfully. Only there are not a lot of great examples to point to at this stage, which is what has gotten me into the stuff that I’ve been working on lately, and some of it with you.

Mike:
That actually brings us, nicely onto my next question, which was what part do you think that leaders changing their own mindset might play in being able to negotiate this kind of period of change? It’s epic, isn’t it?

Dave:
It is epic. I wouldn’t necessarily characterize it as a mindset shift. I know that’s the popular term for it, but I might characterize it as an improvement in self-awareness.

I’m not sure exactly what people mean by the word mindset, but I think there’s an idea out there that you have one mindset and what you need to do is change it to another mindset, and then you’re done. If you flip that switch and you click it through, oh, now you’ve got the right mind.

Mike:
That does seem to be a way that many people are approaching this coming shift. 

Dave:
There is a very, very famous book,  Mindset: The New Psychology of Success by Carol Dweck, who talks about fixed versus growth mindsets. To me, even that description is part of the problem, because it looks and sounds like a binary thing, when in actuality,  everyone’s growing and evolving all the time. I don’t think it’s a binary thing where we can say that some people have a fixed mindset, and some people have a growth mindset.

I think people have different ways of operating in different areas of their life and I do think there is a  problem of self-awareness – being able to perceive how the way that you feel, think, and act actually influences all of the things that you’re trying to change. If you cannot become aware of your role as an actor in the systems, then that’s a problem.

That’s what I was getting at with the ant colony example. If you’re not able to recognize that you are an ant – albeit a pretty noticeable ant that a lot of the other ants are paying attention to, causing them to adjust their behavior – that’s a problem. If you’re not aware that every action that you take, even every thought that you think, whether you voice it or not, has impact on your immediate surroundings and also huge ripple effects all around you, that’s a problem

Some of us are more self-aware than others, but I think even those of us who are acutely aware could be even more aware. I don’t think it’s like some people are aware and then some are not. I think we have a whole bunch of stages to work through and we flip in and out depending on our mood, the situation and the day.

Mike:
Maybe it’s just a lifelong process?

Dave:
I think it definitely is. And it takes continuous vigilance.  Rather than a focus on mindset, I would rather see a frame that’s more oriented toward development and self-awareness.

Mike:
You think development and self-awareness in leaders could be key to actually helping people and organizations to adapt to the massive planet-wide change that we’re seeing?

Dave:
Yes, Chris Argyris has a great book where he describes organizational defensive routines and I’ve been reading another book that I would also recommended called Leadership and Self-Deception. I think self-deception is a very useful and interesting term.

The idea of objectivity typically assumes we are up above looking down at the whole ant colony and we can see all the pieces and parts. At a certain level of abstraction we can, and that is not necessarily a useless activity. However if we fail to recognize that we are also in that system, that we are a part of it and are influencing it, then we are engaged in self-deception.

Mike:
A bit like Heisenberg applied to business? You can’t look at something and start measuring it without changing the thing that you’re looking at and measuring?

Dave:
That’s true also, but I think it’s different from what I’m trying to say. What I’m saying is well expressed by Carolyn Taylor, one of the people I interviewed for my book Liminal Thinking. She wrote a book called Walking the Talk and she has focused on culture change for something like 30 years. What she advocates is something that she describes as being in the balcony and on the dance floor at the same time.

We have to be able to interact with others, but a part of us needs to be up on the balcony and trying very hard to understand the situation and observe the whole situation which includes our role. Usually, our focus is on what’s in front of us, not the entirety of what’s going on.

You know, the strange thing is that, even when we pull back, our own self is excluded from most of our thinking.

We tend to see ourselves as the center of everything and we see other people as just objects or obstacles in our way. We have to learn how to see ourselves and everyone else as people working together as part of a system as it forces us to make appropriate adjustments.

I do think that this is the most important problem for any senior leadership team to focus on, because without having solved this primary problem of self-deception and assumed objectivity, no other problem will be solvable.

Mike:
That’s quite a statement.

Dave:
Y
eah, well it’s not my statement. Chris Argyris said this as well. The challenge is that all of the advice and toolkits on leadership, change and management, all of that stuff works if you have done this foundational piece. If you have not done this foundational piece, then it’s just like building a house on the sand. It could be a great house, but without the foundation, it’s just not gonna work.

I’ve come to this conclusion after 25 years of working on organizational change projects of all types, across many different industries.  I spent a lot of time wondering why one worked so well when another one not so well. Well, the reason is because that foundational piece was missing. You can almost smell it when you walk into a company on day one. Even by the way the parking is arranged, even before you enter the building sometimes. Every company has a culture, an ambience, a vibe that it gives off, just like people.

Mike:
That’s true. Can I just ask you, against the background of what you just said about the core thing being awareness? What do terms like values and higher purpose mean to you? I hear them being spoken about in this context quite a lot.

Dave:
I’d like to separate values and purpose here, because I think they are two very different things that too often are conflated.

I don’t think discussions about values are invalid, but I do think they are a trick – a red herring.

If you ask anyone about their values, everyone is on their best behavior. No one’s going to say, “I think other people are useless” or “I think I should be the first one in the room or have the best parking space.” Everyone’s going to say something that sounds a lot better.

Argyris talks about this: the difference between “Espoused Values” and what he called “Theories In Use”. If you ask anyone about their values, they’re always gonna sound great, but if you watch what they do, you will see something different. The values people have drive a lot of things, but let’s be clear, these are not the values that people say they have, but rather their real values that they demonstrate with their behavior.

I’m gonna reference Carolyn Taylor again. Carolyn, said to me, “if you want to know what people really value, look at where they spend their money and look at their calendar and see where they spend their time.” I know that you value this time that we have together, because you put it on your calendar. You know that I value it for the same reason.

If I’m busy or I don’t show up for our meeting, then it gives you the message that I value this less. For example, when I am a customer calling in to a company, and the recorded message says “we value you as a customer” but they put me on hold for 20 minutes, it’s easy to see the disconnect between what they say they value and what they really value.

Value is what you consider important and what is worthwhile to invest time and energy in, whether you’re an individual or an organization. If you value family, then you’re going to prioritize family.

When the choice of how to spend your limited money and time comes, that’s when your values become evident – in choices and action.  Values are basically beliefs made manifest in your choices and your actions.

Mike:
So you prefer to talk in needs and beliefs. 

Dave:
Yes. You may have a belief that fairness is really important. You can call that a value. I prefer to call it a belief. One reason for this is that it may be useful to challenge a belief now and then.

One reason that I think the language of values is a little bit dangerous and a little bit of a trap is because, let’s face it, every company is going to say they value customers. They are going to say they value shareholders and that they want to create great customer experiences.

But all these “value” exercises are quite often useless and bankrupt. We all know they value money and profits. If you were to read  Enron’s values, they would make you laugh.

Here they are, as laid out in the Enron Annual Report, 2000, p.29:

  • Communication – We have an obligation to communicate.
  • Respect – We treat others as we would like to be treated.
  • Integrity – We work with customers and prospects openly, honestly, and sincerely.
  • Excellence – We are satisfied with nothing less than the very best in everything we do.

Mike:
You’re right, it did make me laugh.

Dave:
Have you ever seen a company come up with a value statement that said making money is its first and most important priority? And yet we know this is often the case. A values exercise is an invitation to self-deception. We need to be focusing on decreasing the self-deception, not deepening it.

Mike:
Yes, indeed.

Dave:
Purpose is different. I think purpose is actually really important. There was a systems theory guy, Stafford Beer who said the purpose of a system is what it does. It’s important to understand your purpose because it’s important to understand what you do. It’s important to understand it deeply.

Any organization that doesn’t know what it does has a problem. If you’re comfortable defining purpose in terms of a job, like Clayton Christensen does, then you can ask a question like, “What’s the job that Ikea does?”

Well, I need to furnish an apartment and I have about a day to do it, not a lot of money and I’m not opposed to putting stuff together. That’s the job.

If I have some physical object that I need to get from here to there, that’s shipping. That’s a job that FedEx and UPS do very well. People have jobs that they need to get done and they hire companies to do those jobs. If you’re a company and you don’t understand what job you’re doing for your customers, you had better start figuring it out.

And that purpose needs to be articulated in such a way that it can be clearly understood by customers and employees alike. Southwest Airlines gets people from point A to point B. They get you there quicker and maybe it’s a little uncomfortable but it’s gonna be fun and it’s cheaper than a bus, but you can count on them to get you there.

Mike:
What piece of advice you would give to organizations wanting to move towards being a better, more complete kind of organization? What would the one piece of advice be?

Dave:
We’re speaking to leaders, right?

Mike:
At whatever level, yes.

Dave:
I would say, start working on the foundations. Most companies don’t have those foundations of self-awareness on the executive team. That severely limits their ability to be effective with any other tool, process, or approach.

It’s an epidemic. It’s a disease. Seriously, have your team read Liminal Thinking, or Leadership and Self-Deception.

Mike:
Okay, the bombshell question: what other questions are we not asking?

Dave:
I had an interesting conversation with a friend who’s big into appreciative inquiry. It’s a great concept. Basically the idea behind appreciative inquiry is about focusing attention. What we tend to focus on, we tend to get more of.

In a business context, we’re often looking at problem solving. Only, the more we focus on problem solving, the more problems we actually end up creating. The classic example is in the field of psychology.

How do you get noted and recognized as a psychologist? You find a new disorder. Therefore, we have now discovered so many disorders that everyone’s got at least two or three. Now what would happen if instead of rewarding and recognizing the discovery of a disorder, we rewarded and recognized something positive?

Mike:
Yeah. This goes back to guys in the 1970’s like Thomas Satz who wrote The Myth of Mental Illness, and the research which was going on parallel to that. They were asking “what’s actually encoded in these underlying models?”

Dave:
I thought it was an interesting discussion because my friend had gone, to my mind, so far in the direction of Appreciative Inquiry that he was unable to recognize when there was actually a problem.

We had a conversation around values as well. He talked about values and value frameworks and how he likes to work with organizations to get them to talk and articulate their values, where they are, where they want to be, and the things that they want to see more of. I was saying I think there’s just a big missing piece here, because what if the things people value and what they want to become are just a bad idea? What if their customers don’t share their values? What if the direction they want to go will actually be a disaster for the company?

I mean, what if they all just go off a cliff together? This happens all the time. To me, the most important thing for any organization is to have a rich exchange of information with the external environment, and that can’t come from inside. It comes from outside.

There’s a lot of talk about values and purpose, which is very inside-out driven. I think what companies need more than anything is ways to let the outside in more. What do your customers value? What are their values? What is their purpose? How aligned is your purpose with anyone else’s purpose? Who should care about what you’re doing?

Companies are not there to be a vehicle for the self-fulfillment of its managers and employees alone. If you’re undergoing significant change, and you’re trying to react to that situation by looking inward, you’re looking in the wrong direction.

Mike:
Agreed. Thanks for taking the time to share your thoughts and insights!

Originally posted on medium.com