Today’s sophisticated knowledge economy is stuck with the equivalent of an abacus for measuring the actual financial value of corporate assets and liabilities. Denise Caruso, When Balance Sheets Collide With the New Economy, New York Times, Sept 9, 2007

Body and Spirit. These are the two necessary conditions for life in any living, complex adaptive system, whether organization, community, or human being.

Body and Spirit together is the sweet spot of Superperformance. And the ”Spirit” of Super is the Spirit of Servant Leadership. The major discovery of The Superperforming CEO is that Servant Leadership is the Leadership of Superperformance.

This is stunning and extraordinary news. This astonishing discovery is ironic, when examined against the backdrop of the worst employee satisfaction levels in 22 years, according to the widely respected Conference Board. It has been almost a decade since similarly highly regarded Gallup published their famous Q-12 data, showing that over 70% of people at work “are not engaged.”

Last month’s news from the Conference Board means that it’s only gotten worse.  Not 70% but probably 80% or more of people at work are not engaged. Eight out of 10 people, is a very conservative estimate of the people who come to work in this country and do not show up.  In Superperformance language this means the vast majority of companies are operating with only 20% of their right brains turned on.

Only 20%. This is a horrendous discovery. Who would be so knowingly foolish, to leave all this performance, all this earnings potential, on the table?

What is the cost of operating without a culture, without a distributed leadership paradigm, without intrinsically motivated and passionate people?

The Superperforming CEO is a collection of distinctions for operating with “mind wide open” with organizational right brain, organizational leadership hemisphere, fully expressed.

Sam Walton, Herb Kelleher, Richard Teerlink, Warren Buffett, Jack Lowe, Robert Dedman, John Baugh, Ted Bauer, Eric Schmidt, Bill George, George Martinez, and other Superperforming CEOs.

The best kept secret of our business generation is that servant leadership is the leadership of Superperformance.

Which means, if there is a mechanics of Superperformance then it must be a quantum mechanics.

And if there is a science it has to be a life science.

Seeing what’s not there is the key to the future.

Excerpt from The Superpeforming CEO
From Chapter 14:  Distributed Being

If you look into nature, into these places of community, you will find an amazing degree of alignment; there is a beautiful, symmetrical pattern. No friction, no member out of alignment—the flow is seamless. These organisms all behave intelligently, even though their members are unaware of the big picture and there is no “central controller” to guide them. According to futurist and complexity author Kevin Kelly, they are out of control—a state he describes as “distributed being.” Since this is the preferred operating mode of complex biological forms that have thrived for millions of years, Kelly suggests that our own increasingly complex organizations will inevitably follow the same pattern. In the simplest terms, they solve problems by drawing on masses of relatively simple and locally autonomous agents, rather than a single, super-intelligent executive branch. They are bottom-up, self-organizing systems. In the language of complexity science, they are complex adaptive systems (CAS) displaying emergent features.

For organizations, reaching anywhere close to this level of performance is only possible in a decentralized environment. But decentralization of decision rights requires corresponding levels of personal responsibility.

Agile project teams are an excellent example.

George: “Birds flocking, fish schooling, bees swarming, all move effortlessly in the same direction, it is a more efficient way to forage and travel, the whole uses less energy to operate in this way. Somehow great teams and great organizations are able to operate as something approaching this ‘frictionless’ state. There is something extra–something invisible at work.

“Some companies become fossilized by centralizing all authority. This is suboptimal. Decisions have to be made as close to the customer as possible, at the lowest level of knowledge and skill. Organizations are patterns of relationships. Conversations are the heart and soul of organizational life. Conversations shape commitment to the organization and create a sense of what is possible. Like Buckminster Fuller’s trimtab on the rudder of a ship, conversations seem insignificant, but have tremendous hidden power. Conversations characterize everyday work life and negotiations between people in the organization and their customers. They determine the quality of service and the overall effectiveness of the company. In many organizations, conversations are negative and blocked or fall into otherwise destructive loops.

“Change cannot be imposed or controlled from the top or from the outside. It is better to work with people at all company levels to help them discover for themselves what is possible and what can be done better. This helps to facilitate new conversations, which often cross boundaries within organizations. By focusing on those conversations at the core of the organization, the greatest leverage can be created, for executives working on strategy, teams working on projects, the whole organization working on its next transformation, or any other critical business function. Systems, structures and processes all help the effective organization, but they count for little if the conversations and relationships are not real. Imposing command-and-control solutions to business problems, especially around knowledge work, has proven to be almost completely ineffective.”

Lead people, Manage process. Superperformance Proverb

The organization is an organism. Peter Senge

A Great Wind is Blowing

Knowledge and human capital are making a dramatic debut here at the onset of the new decade. Together they signal a critical shift in organizational life to something new and different, especially when it comes to dealing with people. The best of a company’s knowledge and human capital walks out the door everyday at 5:00PM. These two forms of capital are intangible; they have not been a part of the traditional balance sheet. Capturing and increasing the value of these capital assets requires a new set of skills. As many have noted, in the Internet age “knowledge workers” have the leverage. And they carry their means of production with them wherever they go.

The result is that management as a professional discipline is on the verge on a major transformation. While management’s famous guru Peter Drucker insisted that management is the organization’s single most important “organ,” he also declared it is not possible to do it to people. Rather, he stated, “the task is to lead.” Lloyd Provost and his Quality colleagues at API propose that it is only processes that can be managed, and only then through the purposeful application of continual testing and learning, aided by the use of statistical control methods. Esther Dyson drew from the new science of complexity, in particular complex adaptive systems or “CAS” to characterize this impending transformation through a different lens. From this view the new management acts in a distributed way, akin to an “immunity,” a capacity that everyone can and should participate in and practice.

Superperforming management and leadership co-joins improvement and complexity science to create a new approach that leverages both process and culture together. This incredible new “biophysics of optimization” signals a fundamental shift away from a mechanistic view and toward a view of organizations as living organisms.

Only a view of organizations as organic systems can accommodate the discovery of complementarity that is the source of Superperformance. Only a life science can explain it. Organisms and ecosystems evolve, self-organize, and emerge, machines do not. Superperforming Management and Leadership is about the productivity of knowledge, especially as it pertains to increasing customer value and driving unprecedented performance levels. Productivity of knowledge is driven by the inspiration and motivation of people. And people are inspired and motivated by the opportunity to contribute, the chance for personal growth and challenging work, relationships, real involvement in a shared vision, servant leadership, and much, much more.

Unless organizations can encourage intrinsic motivation and affirm these needs, they will not realize their full potential, and the promise of knowledge productivity will elude them. Human and knowledge capital are interdependent, they reinforce and amplify each other.

Nature shows us that as with any major evolutionary change, some learn and develop new capabilities while others resist and eventually die out. Some will achieve the high peaks of the new “fitness landscape” while others will sink into a deep valley where the old industrial age command-and-control methods simply do not work anymore.

The Revolution is here.

The Organic Organization is an end-to-end, living, complex adaptive system. This 21st Century Superstructure calls for fully distributed management and leadership and fully distributed decision rights. It forges new, real-time relationships between people, technology, and  processes. The advantages of this new architecture are unprecedented. These include:

Agility and Speed: In today’s dynamic, turn on a dime business ecosystem, more important decision making occurs at the edges of the organization than at the top. Because demand at the edge is ultimately unpredictable, effective response requires new levels of adapatbility and speed. Decision support networks self-organize through a common environment and set of shared objectives to achieve operational results, at the point of need.

End-to-End Visibility: Because the Organic Organization is a distributed model, end to end visibility is finally possible. Not only does this ‘shared situational awareness’ leverage the intellectual capital of entire workforces, but greater transparency is the result, which leads to more intelligent decisions, more adaptive logistics support and supply systems, and more engaged and committed people.

One Seamless System: By recasting the organization as an integrated collection of vital organs with aligned incentives and reward systems – sharing one common aim – optimization can naturally occur. Cooperation and collaboration across the entire value chain is transformed as the friction of traditionally competitive and sub-optimizing cultural behaviors is eliminated.

Knowing Sooner: In today’s fast-moving world of work, even the slightest edge can become a huge advantage. Because operations are integrated and real-time networks are transparent, anticipatory knowledge is possible, leading to competitive advantage and enhanced decision making.

Exposed Sub-Optimizing Behavior: Just as the human immune system auto-reacts to combat damaging agents, so does the Organic Organization.

Flexibility: In traditional mechanistic organizations, a change in strategy is disruptive and inefficient, because it means turning the entire ship—restructuring—with all the attendant functional breakage and relearning costs. Because an organic Superstructure is modular, changes can be made as emergent needs arise, sourcing any needed resources locally – from the cellular level. This unprecedented elasticity is continuous and maximizes responses to discontinuity in the environment.

Unlocked Intrinsic Motivation: The critical mass of new energy that arises from emergent social systems brings people into the equation in a way that for most organizations has never before been possible. By unlocking the intrinsic motivation of distributed managers and leaders everywhere organizations can reach and sustain true Enterprise 2.0 productivity levels.

Continuous Innovation: In the organic organization, creativity and innovation is neither singular nor linear, but a systemic property. It arises from complex and nonlinear interactions between individuals, groups and environmental factors.  An organic superstructure is not divisible – it does not seek out win-lose, but win-win as a truly fundamental operating principle. This provides the organization a new capacity for generating and realizing the full returns from its technologies and innovations – by matching them with complementary expertise in other areas of their business, such as manufacturing, finance, human resources, marketing, and customer relationships.

Super Platform: Finally, adopting an Organic Organization architecture sets the stage for Superperformance. The natural installation of this 21st century optimization strategy as the overarching business aim is the self-evident next step. By establishing the DNA of “process times culture” across the entire value chain, organizations can be recast as living, complex adaptive systems, and management and leadership can be redefined for all time, leading to Superperformance and the long-term sustainability of the organization.

An organic Superstructure will provide the most effective platform for Superperformance and its future sustainability. An organic framework is an Agile framework, delivering information faster, more accurately, and ubiquitously, allowing an organization to gain deeper insights into the activities and events that occur at the very edges of their operations. This architecture will enable an organization to execute against new knowledge autonomically, virtually, and collaboratively, without the friction of traditional management systems.

Exciting new attributes of this Superstructure include:

• A High Degree of Openness
• Dramatically Increased Agility
• New Levels of Adaptability
• New Organic Degrees of Freedom
• Fully Integrated Operations
• Speed vs. Mass
• Distributed Decision Rights
• Revolutionary Culture
• Self-Organizing Catalytic Sets of Synchronization
• Nonlinear Peer to Peer Relationships
• Anticipatory vs Reactive Decision Making
• Tailored and Precise Responsiveness
• Maximum Flexibility
• Autonomic Functioning

This is accomplished through the design and implementation of a new approach to an organization’s primary system of work, along with the rigorous integration of the business processes that make up an organization’s driver, mainstay and support processes.  Such integration is an important step toward consolidated process controls across platforms and functions. Integrating critical processes is necessary, but more importantly, selecting the appropriate processes for automation and redesigning others based on the functionality requirements of the business owners is a vital step.

Another important step toward achieving an Organic architecture is leveraging advanced technologies that today allow intelligence to be embedded at the very edges of the system.  Through an Organic Superstructure, organizations can now understand and weed through opportunities to construct an efficient portfolio for their businesses. This includes understanding system requirements, as well as constructing detailed designs and selection of appropriate software. Across the information technology space a new generation of tools is emerging. From the latest advancements in network infrastructure to the newest social networking applications, a forward view is called for.

It is important to note, however, that a critical success factor for instituting Organic architectures is an organizational commitment to nothing less then a cultural revolution. The “next generation” characteristics of a truly intelligent operation require an evolution in management and leadership thinking, as new understanding will drive new behaviors. Within the new optimization aim of the organization (i.e. Superperformance)  it is necessary to provoke the change experience from the inside out, and institute new organizational and governance structures that effectively align business, technology and knowledge processes.  Ultimately, the intelligent operation becomes the new definition for operational excellence, as primary value levers are improved and the financial measures of gross margin, cost and asset productivity are positively impacted.

Distributing Decision Rights, Management and Leadership

A life science of management and leadership exposes the obsolete industrial age Taylor paradigm that still to this day is limiting so much individual and organizational performance. The Taylor model is based on Descartes’ 400 year old clockwork universe and does not  integrate new science discoveries of the last 100 years, especially quantum mechanics and complexity science. By recasting organizations as  living, complex-adaptive systems, an organization’s full capacity for Superperformance can finally be unleashed.

The traditional view of organization—woven together through a systematic framework of production, decision support,  knowledge, and information systems— is based on the model of a well-oiled machine engineered to deliver maximum performance derived from pre-defined parameters and specifications. This industrial age model considers performance a derivative of external controls defined by the designers of organizational systems. They have given only marginal importance to the self-adaptive and emergent nature of organizational systems and the dynamic environments they inhabit. In other words, they are still far from operating with an immune system of distributed decision rights and with management and leadership capacity distributed everywhere, to the very edge of organizations. These bottom-up, agile characteristics of living, complex adaptive systems are precisely what is needed during times of rapid changing operating and knowledge environments, such as those that exist today.

Nested Hierarchies are Natural

From Organism View the self-referencing fractal pattern of system inside of system is apparent. The parts and their environments are continually co-evolving. From this view there is perfect parallel between organization and organism, which present as a set of nested structures, each inside of the next, like Russian dolls.

Organization                                 Organism

Economy                                             Ecosystem
↓
Industry                                              Species
↓
Organization                                       Organism
↓
Function                                              Organ
↓
Department                                         Tissue
↓
Work Team                                        Cell
↓
Individual                                           Organelle

From Organism View the entire global economy can be seen as a gigantic ecology of interdependent and continually interacting (work) cells, organs, and organizations engaged in the production, buying and selling of goods and services. And like any ecology it is self-organizing, not centrally controlled or coordinated.

Regardless of scale or level of complexity, there is a corresponding compartment at every tier of the organization/organism hierarchy. This is not just a novel coincidence—it is the natural expression of order that pervades all of life, from ecosystem to economy. It is simply the most efficient way to organize.

In fact, throughout the entire text of  Darwin’s Origin of Species, the only illustration called for was the picture of a nested hierarchy.

Nested Hierarchy from Darwin's Origin of Species

Superperformance occurs inside of a context. The classic industrial model of command and control underlying traditional management practice is not sustainable in the 21st century. A new organizational model is needed. Advancements in optimization knowledge and information technology—together with a revolution in social capital—provide executives an unprecedented opportunity to put in place a new superstructure and system of support. This new model must be one that creates the context for Superperformance—and its long-term sustainability. To achieve maximum fitness this system and structure must be agile, innovative, and resilient. It must facilitate the merger of process and culture. It must be based on a dynamic, not static view of organization.

This superstructure must be based on a living, complex adaptive systems view of organization—organism not machine.

Goodbye Taylorism, Hello Life Science.

(From: Alive and Well, by David Wayne, Improvement Science Advisor and Senior Partner, Corpus Optima)

Improvement and Problem Solving

There is a good deal of confusion in the field between improvement and problem solving. Although many of the same improvement tools can be used for both, the aim is fundamentally different. It should be noted that the term problem is being used here in a certain way: an unusual circumstance or event that is undesirable. Unusual can best be operationally defined by referring to the Shewhart control chart, points that are out of statistical control, those that have a special cause (Deming’s term). But we can often intuitively identify unusual occurrences without the aid of data and determine the need for corrective action and problem solving whose aim it is to determine the root cause, remove or solve it, and return the process to where it operated prior to the problem’s occurrence.Problem solving by this operational definition can often be done by focusing on a single metric, assuming of course that all was generally stable prior to the occurrence of the “problem.”

Improvement is something different. It is generally accomplished with a stable process or system and requires improvement action that affects all points and has an impact on the overall system—and perhaps more important, an improvement campaign or project that considers all key measures of system performance. Improvement addresses not the root cause but a system of causes.

Sporadic Spike Versus Chronic Loss

This idea was well illustrated by Juran’s chronic loss theory, though in a somewhat narrower context. Juran had noticed that teamwork and collaboration toward a common goal were evident when there was a crisis (Juran,1992). Everyone works together toward the common purpose of resolving the assignable cause or removing it, returning the process performance or system performance to what it was before the problem occurred. Juran observed that in most organizations, there is a level of loss, which he referred to as chronic, that organizations get used to living with, accepting it as part of the cost of doing business. It is loss that is embedded in routine process operation over time. To address it, these interdependent processes must be addressed. If improvement can truly be achieved, the chronic losses will drop over time and stabilize at some new, much lower level.

When generalized, this insight and the concepts underlying it apply quite well to system optimization. Unlike problem solving, where the key question is generally something like, “What went wrong?” the key question in system optimization, considering all aspects of the system, is, “What changes can we make that will result in improvement?”

(From: Alive and Well, by David Wayne, Improvement Science Advisor and Senior Partner, Corpus Optima)

LIKE A FINELY TUNED ATHLETE, optimum fitness (superperformance) comes from measurably understanding the current state of fitness of an organization, monitoring its vital signs, and implementing various improvement strategies to bring about a change in the system’s overall health (its fitness; Guerra, 2005). This requires a way of distinguishing between first- and second order changes to the system, an operational definition for what constitutes an improvement, and the use of a reliable performance improvement method.

(From:  ”Miracle Cure” White Paper, by Richard Dillard, Partner, Corpus Optima)

As much as it is a process challenge, making the transformation to Superperformance is
about unleashing a revolution in culture.

At last count, there are over 400 business management and improvement methods,
models, and theories-in-use today. But when it comes to long-term,
sustainable performance improvement, all of these combined can’t compensate
for a suppressed or untapped corporate culture. In a very real way, corporate culture
determines the efficacy of every method, model or theory-in-use, and by extension, the
performance of every individual, group, and organization that applies them.

Culture is the missing hemisphere, the organizational right-brain that must be liberated
to satisfy the promise of Superperformance. It is co-equal with process as an
optimization success factor, its twin super-partner (if you will), but process has
dominated the partnership since the industrial revolution. No longer. The 21st century
productivity revolution will be about unleashing this imprisoned twin so that the full
potential of individuals, teams, projects and entire organizations can emerge. In
short, culture is the new strategic imperative, while process clearly remains its
operational complement.