This article is republished courtesy of MIT Industrial Liaison Program's MIT technology insider, where it originally appeared. The article was written by Eric Brown.
As the business world has been turned upside down by technology and globalization, corporate executives have increasingly been asked to “think outside the box.” Yet, while brainstorming can add value, what's really needed are ideas that are not only brilliant but appropriate, taking into account increasingly complex market scenarios laden with potential disruptors. What's often found wanting in executive brainstorming is the ability to devise creative solutions that also connect with a clear understanding of emerging future possibilities. In some cases, expert systems software or scenario planning methodologies can help divine the near future, but these approaches are limited in the sort of fast-emerging, often unpredictable scenarios that are typical of the technology market.
Into this vacuum come some new ideas that are based on some very old ideas, namely Zen-Buddhism and other related Eastern philosophies. One of the leading proponents of bringing transcendental techniques into the boardroom is Dr. Otto Scharmer, a senior lecturer at MIT. Scharmer is a founding codirector of ELIAS, a joint leadership development initiative of MIT, the UN Global Compact, and the Society for Organizational Learning, which works with global companies to develop learning laboratories that help leaders address emerging sustainability challenges by creating profound systems innovations. He's the coauthor of Presence: Human Purpose and the Field of the Future (2004), with Peter Senge, Joseph Jaworski and Betty Sue Flowers, and he will soon publish Theory U: Leading Profound Innovation by Presencing Emerging Futures. Scharmer will discuss his work at the ILP's Innovations in Management Conference on May 10-11.
Theory U is the result of eight years of research and interviews with 150 “thought leaders” on innovation and leadership. In the course of interviewing leaders who are particularly adept at future-looking decision-making involving great complexity, Scharmer found that they all shared a number of attributes. These included the traditional leadership skills of being able to absorb and correlate large amounts of diverse information and then to act quickly once a good idea was developed. Yet in between these stages, their methods were often highly unconventional. These leaders practiced the art of what Scharmer calls “presencing”: creating the proper mental environment conducive to creativity and profound insight while sensing the hidden sources of idea generation. Recently Tech Insider spoke with Scharmer about Theory U and presencing and their application in today's organization.
TECH INSIDER: Are presencing and Theory U applicable to all types of future-oriented problems that involve a lot of change?
SCHARMER: All institutions are dealing with change in one way or the other. The way they differ is the level of response. Level one is reacting, which is appropriate in many situations, but if the same problem keeps coming up you need to move to level two and redesign, for example, re-engineering a system or a process. About 70 percent of redesigning efforts fail, however, because they only focus on process and structure. They miss the people dimension, not allowing for the fact that people behave differently. So we move to this reframing level, where the thinking and behavioral processes of social complexity come into the picture.
The fourth level deals with the level of will, the sources from which thinking and behavior is generated, what I refer to as presencing. We know more or less how to deal with the first three levels, but we are just learning how to access the fourth level in a methodical way. It's not that presencing is the only good approach; in each situation you have to ask yourself which response is most appropriate. But it's a big waste of resources when an organization tries to force an issue on level one or two when it requires a response on level three or four.
TECH INSIDER: How do you know which approach is best in any given situation?
SCHARMER: We see three types of complexity challenges: dynamic, social, and generative. In dynamic complexity, the uncertainty is usually caused by something long ago or far away. If it's high, we need a whole-system approach that deals with all the interdependencies. If it's low, we do a piece by piece approach. For systems dynamics we can use system simulations and expert models. But it's limited to the object level, and doesn't take into account social complexity and behavioral issues, where different views, values and strategic interests are at play. When social complexity is low, we can work with expert solutions. If it's high, they don't work; we need to engage the stakeholders in problem-definition and solution-generating activities and apply scenario planning methodologies.
A third type of complexity that we call generative complexity deals with disruptive patterns of innovation and change. You don't know what the solution is and you may not even know exactly what the problem is, because it's still evolving. Most importantly, you don't know who the key players are with whom you need to get involved. This is what many leaders are wrestling with.
TECH INSIDER: What types of situations typically lead to generative complexity?
SCHARMER: There might be a change in the marketplace, when the space in which you operate is going through an inflection point, a point of profound change. You know it's going to be different, but you don't know how. So how will you position yourself today to be in the right spot to compete effectively in the future? This is where presencing comes into play.
TECH INSIDER: Are your theories aimed at leaders as individuals or can companies implement these ideas in a more structural way?
SCHARMER: Both. If it was only for individuals, it would not be very relevant for real leadership. The U process is to apply these principles to management leadership and large-scale institutional change. Leaders need to create these spaces where people can reflect, sense, and then prototype and implement.
TECH INSIDER: What are some of the specific steps involved?
SCHARMER: We go into organizations and help them apply the U-process principles in innovation projects and action-learning leadership development programs. It's a seven-step process, starting with intention, where you bring the key players together, and then develop strategic intent. Secondly, you form a small core group that is 100% committed to the project. The group goes on “deep-dive” journeys, immersing themselves in all the relevant contexts in order to cope with a challenge or opportunity. Then everyone comes together for a one-week retreat, where key insights from the journeys are synthesized. This is followed by deep personal reflection and presencing work. In some cases we take people for one- to three-day solos in nature. This leads to the sharing and closing of the experience. Then you get back to the base camp to identify the key prototyping initiatives. You'll see that the team begins to operate from a different place, a different level of energy and inspiration. The next two months are spent in rapid prototyping. You present a version to the key stakeholders and then you get feedback and you iterate, iterate, iterate, until you come up with the tested prototype. The outcome is not only the innovation, but the people, who have learned a process that they can apply to other issues.
TECH INSIDER: So where does presencing come in during this process?
SCHARMER: Some elements of the Theory-U process is based on traditional organizational learning principles in which you reflect on the experiences of the past and then act. All the great organizational methodologies go back to this same model: the Kolb experiential learning cycle, moving back and forth between action and reflection.
Yet, leaders often face situations which they cannot effectively address by relying on this traditional cycle. Brian Arthur of the Santa Fe Institute explains that there are two types of cognition, the first is downloading, which is what institutions of higher education refer to as learning. Downloading is taking an existing framework and applying it onto a situation in a certain context. That's appropriate in some situations, but any example of profound innovation is based on a second process.
The first part of this process is to observe, observe, observe, which means stop the downloading and open up into a full immersion into the context. Then you retreat and reflect, allowing the inner knowing to emerge. You access your own source. So you go from the chaos of observation to the still, inner place where knowing comes to the surface.
You must ask yourself who is my self and what is my work? Your self doesn't mean your ego, but your highest future possibility. By “work” we mean 'what is your purpose?' The more profound changes usually include a change of identity, an evolution in who you are and what you are here for. It requires a letting go of your old self in order to find your emerging authentic self.
When the spark comes to the surface, you move into action quickly. You act in an instant, which is what many companies do in prototyping.
TECH INSIDER: Are there proven pay-offs of Theory U in terms of profitability?
SCHARMER: This can have very high payoffs. Profits are one valid criteria, but I don't think it's the only one. At the end of the day business is not talking about figures or profitability rates, but about creating value and innovating. Presencing sits at the heart of this process, intimately linking to a future possibility that wants to emerge.