Localness Senge Chapter 14 THE FIFTH DISCIPLINE How

Localness Senge: Chapter 14 THE FIFTH DISCIPLINE

How to achieve control without controlling u LOCALNESS--extending authority and power as far from the top or corporate center as possible u More akin to the word EMPOWERMENT u Learning organizations are ones in which thinking and acting are merged for every participant u Localness is especially needed in times of rapid change

Two new challenges emerge u How to get senior managers to give up control to local managers u How to make local control work

Giving up control: u Will this make senior managers dispensable? u Senior managers must assume responsibility for continually enhancing the organization’s capacity for learning--THEIR NEW ROLE

Other questions about localness: u How can locally controlled organizations achieve coordination? u Synergy between business units? u Collaborative efforts toward common corporate-wide objectives? u How can the local organization be something other than just a holding company

What experience has shown: u Rigid authoritarian hierarchies thward learning u Hierarchies fail to harness the spirit, enthusiasm, and knowledge of people throughout the orgnization and to be responsibe for shifting business conditions u Failure has sprung up from not being able to relinquish control

Learning organizations: u do less controlling of people’s behavior u invest in improving the quality of people’s thinking u invest in improving the capacity for reflextion and learning u develop shared visions u develop shared understandings

The illusion of being in control u Most senior managers would rather give up anything than control u Senge illustrates the illusion of control from the top with rollerskates connected by springs u Even though senior managers think they are in control, they are not

Vacillation u When business is going well, localness prevails u When business is not going well, control gets returned to central management u Such vacillation is a testament to a deep lack of confidence u Is an example of a “shifting the burden” archetype

Beliefs u Unless senior management believes: – that the quality of learning – the ability to adapt – the excitement and enthusiasm – the human growth – ARE WORTH THE RISK, they will never choose to build a locally controlled organization

Today: Expediency u Many organizations are cutting management levels u Becoming more locally controlled, to cut costs u But these arrangements do not last a business downturn, usually

Control without controlling u Local decision making may not be wise u Local decisions can be myopic, failing to appreciate the impacts of decisions u Just because noone is in control does not mean that there is no control u Central control is too slow and too unaware of what is happening locally

The Tragedy of the Commons Archetype u What is right for each part is wrong for the whole u This is also called “suboptimization” in the context of quality management u Each individual focuses only on his own needs, not on the needs of the whole

Tragedy of the Commons Archetype, Continued u Occur frequently in businesses where localness is valued u When several divisions share a common support group Prepared by James R. Burns

Corporations’ Depletable Commons u financial capital, productive capital, technology u community reputation, good-will of customers and suppliers, morale of employees u When a company decentralizes, local divisions compete with each other for those limited resources

The experience u Breaking business into smaller pieces is supposed to encourage local initiative and risk taking u IN FACT, IT DOES JUST THE OPPOSITE

The experience, Continued u Divisionalization and autonomy has created more short-term oriented managers, managers who are more driven by the botttom line u These aggressive division managers are driven by short-term profits only Prepared by James R. Burns

Managing COMMONS structures u Who will manage the commons? u Depletion of the commons will work to everyone’s disadvantage u Establish signals that will alert local actors that a commons is in danger u Do not take “below the waterline risks” as was the case for the Titanic

The new role of central management u Identifying and managing the COMMONS u Become a researcher and designer – Test new structures in a simulative environment, and recommend those that succeed u Encourage organizational learning u Encourage risk-taking

Forgiveness u Localness must encourage risk taking u To do so is to practice forgiveness u “If you are making mistakes, that means you are making decisions and taking risks-and we won’t grow unless you take risks u “Making the mistake is punishment enough”

Copyright C 2000 by James R. Burns u All rights reserved world-wide. CLEAR Project Steering Committee members have a right to use these slides in their presentations. However, they do not have the right to remove this copyright or to remove the “prepared by…. ” footnote that appears at the bottom of each slide. Prepared by James R. Burns