BUILDING LEARNING ORGANIZATIONS:
IMPLEMENTING ORGANIZATIONAL LEARNING PROCESSES,
AND THE THEORY OF SELF-REFERENTIAL SYSTEMS
Rddiger Reinhardt & Ulrich Schwelker
Radiger Reinhardt
Consultant
MainstraBe 3
D 6806 Viernhelm
+6204 / 72465
‘Abstract: This paper refers to the assumption that the major paradigm of Systems Dynamics, General Systems Theory, is
not able to provide adequate models of organizational leaming processes. It is shown that the theory of self-referential
systems is able to overcome current theoretical weaknesses: Considering the difference between communication, the basic
operation of social systems, and thoughts, the basic operation of psychic systems, a framework for organizational learning
is proposed. Consequences for the management of organizations, especially their strategic change resp. the building of
learning organizations, are discussed.
INTRODUCTION: THE LEARNING ORGANIZATION - VISION OR FICTION?
The idea of "Leaming Organizations" (LOs) has grown during the last few years: There seems to
be an agreement between managers and management consultants what the characteristics of a LO
should be: “... an organization which facilitates the learning of all its members and continually
transforms itself" (GARRATT, 1990, p. 77) or *... an organization that is continually expanding its
capacity to create its future" (SENGE, 1990, p. 14). These abilities finally are the prerequisites of
the “only sustainable competitive advantage companies will have" (STATA, 1989, p. 64). The
reason for the attractivity of the LO idea seems to be clear: Management is faced increasingly with -
partly - new problems, the cause of which is attributed to the turbulence and lacking predictability
of the companies’ environment. "Traditional" solutions based on strategic management and / or
organizational development concepts could not solve these problems in a satisfying way - conse-
quently the idea of a LO had to be invented. Meanwhile conferences were held (e.g. London,
November 1990; Munich, November 1991), and books were published (e.9. SENGE, 1990; SAT-
TELBERGER, 1991), both with the goal to satisfy this ambitious demand - to develop and provide
successful concepts and interventions for “the art of building learning organizations".
A closer look to this scene makes clear that most of these concepts and methods were tried to put
into practice without having a fundamental theoretical understanding what a learning organization
could mean. The reason for this is that research was not able to develop a widely accepted model
of organizational learning (OL) - the fundamental processes of a LO - as FIOL & LYLES stated
already in 1985, and no real progress has been made in the theoretical domain until today.
Considering that the vision of LOs should not become a fiction or fairy tale because of its advan-
tages in contrast to current change management concepts we want to propose a theoretical
framework which helps to conceptualize OL processes as much as LOs and is able (1) to overcome
current theoretical weaknesses and problems, and (2) to provide an overview which empirical
Processes may or may not be subsumed under the OL concept.
1. ORGANIZATIONS AS OPEN SYSTEMS
General Systems Theory (GST): Traditional management concepts can be described in terms of
General Systems Theory (VON BERTALANFFY, 1968) as KATZ & KAHN showed in 1978. The
basic ideas of GST can be summarized as follows (e.g. LUHMANN, 1984, pp. 24): (1) The relation
between system and environment is described by an input-output relation: input of material, energy,
information etc. from environment into the system, transformation of this input by the system, which
constitutes the output of the system, (2) the structure of the system constitutes the rules of the
transformation, (3) the function of the system is identical with the transformation. (4) Differentiation
of the system can be described in terms of the system's operation of distinguishing system and
environment within itself. (5) This process constitutes subsystems, the behavior of which can be
controlled by a higher order system by controlling the input into the subsystem. (6) Thus trans-
formation processes can be controlled by changing the system's structure, which leads to the
consequence that (7) the systems survival is dependent on its degree of fitness to its environment
(adaptability), which is caused by the environment’s demands on the system's output: the higher the
goodness of fit between demand and generation of output, the higher the probability to survive. This
leads to the pressure that the system must be able to predict changes in environment’s demands.
Managerial Consequences of GST: Based on GST the following well known managerial imperati-
ves can be described easily: (1) organizing principles have to be installed in organizations in order
to avoid chaos and to achieve order; (2) order can only be achieved if there is a single idea or a top
value in the system, which is the mental basis of the order. (3) order has to be implemented in
systems in a hierarchical way: The top has to decide, knows the truth and takes responsibility. The
“only” problems that theoretically could occur are (1) not to get enough information from the
environment, e.g. from the market that lies outside of the organization, and (2) that the employees
have their own ideas/goals which means they do not belief in the total wisdom of the top.
Characteristics of LOs: Summarizing the ideas about the characteristics of LOs leads to the
following list of capabilities of LOs (e.g. PEDLER, BOYDELL & BURGOYNE, 1989; SENGE, 1990;
SATTELBERGER, 1991): LOs (1) should be able to increase their adaptibility to the environment
in order to increase the probability to survive, and (2) to increase their ability to learn in order to
teach the ability of continuous self-transformation. (3) LOs enable their members to learn and
develop themselves continuously, which leads to (4) new ways of thinking and to new insights about
the “real nature of things”. (5) Furthermore in LOs human resources and customers become the real
core of the enterprise, and (6) trust is the basic modus operandi of interaction and communication,
(7) managers become coaches of their employees, (8) the most important task of the leaders of
today’s company is to build LOs, (9) the number of hierarchical levels in LOs is reduced and (10)
the company’s structure is more flexible .... and so forth.
LOs as Open Systems: Without going more deeply into detail it should become clear that in the
current conceptualizations of OL resp. LO (1) organizations are treated as open systems - without
this assumption the arguments in the context of adaptability make no sense (see below), (2) leaders
can control the relevant organizational processes in order to build LOs, and (3) environmental
changes must be predicted in order to be able to increase adaptation.
Some Problems of the Application of Open Systems Approach to OL
Before the problems of applying GST to the field of OL can be made clear, the notion of a “scientific
method” must be explicated, which provides an appropriate frame which can be referred to in order
to show the weaknesses of the open systems approach outlined above.
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The Scientific Method: MATURANA (1978, p. 27) describes the scientific method on the basis of
four steps: "(1) Observation of a phenomenon that henceforth is taken as a problem to be ex-
plained. (2) Proposition of an explanatory hypothesis in the form of a deterministic system that can
generate a phenomenon isomorphic with the observed one. (3) Proposition of a computed state or
process in the system specified by the hypothesis as a predicted phenomenon to be observed. (4)
Observation of the predicted phenomenon".
This paper deals only with the first two steps. First it is shown that the phenomenon of OL cannot
be generated appropriately on the basis of GST while treating the characteristics of LO as the
phenomena to be observed. Following this critique an overview over theories of self-referential
systems is given on the basis of which a theoretical framework of OL can be provided which fits the
criteria above and therefore overcomes current weaknesses of OL concepts.
Problems Caused by GST
Maintenance of the System’s Borders: Boundary maintenance is the necessary prerequisite for
the survival of the system. GST is not able to describe and explain the processes constituting the
ability of the system to maintain its borders and therefore guarantee its survival. The notion
“adaptation” does not solve this problems as will be shown now.
Adaptation: GST describes survival of systems by the metaphor of adaptation, which is borrowed
from evolution theory. Evolution can be explained by two interlinked processes “selection” and
“genetic variation”: Selection is the description of the process by which a species (class of living
systems), whose adaptation is optimal, survives ("survival of the fittest"). Variation describes the
species inherent processes, on the basis of which a species is able to survive. Unfortunately
selection describes the process the result of which is the survival of already adopted systems. Thus
the term "selection" does not refer to the ability/behavior of the system which survives - survival
means having been able to adopt. Consequently it makes no sense at all that changes in the
environment cause activities within the system which enable it to start processes in order to
increase its probability to survive (for a more detailed discussion of the epistemological problems of
the use of evolutionary concepts see VON GLASERSFELD, 1987, pp. 81; HEIJL (1984, pp. 65)
shows the inappropriateness of this notion even within the biological domain).
Allocation of Cofmpstence at the Top of the System: Even though systems dynamics have made
clear that the idea to be able to control complex systems mechanistically (e.g. S. BEER, 1981) is
not appropriate, the differentiation between leaders (who know the real truth, for example the
principles of building LOs) and followers (which belief this real truth and act in relation to this, for
example they are told to learn in order to be an element of a LO) has not been given up. Trans-
formation processes have to be controlled in order to ensure adaptability, this leads to the sharing
of responsibilities: Management has the competence to decide, employees have to follow.
Predictability of Environment: Since adaptability is crucial for the system within GST, it is
essential for the system to predict future environmental changes. This seems also to be true in the
case of OL: “How quickly an organization can adapt to the changes dictated by its environment or
initiate changes of its own is largely dictated by the organization's ability to learn" (KIM, 1990, p.
543). Even though it is already known that the behavior of complex systems cannot be predicted,
the idea to be able to predict environmental changes has not been given up, despite that the
environmental complexity per definition is larger than the complexity of a complex system.
These arguments make clear that (1) the first characteristic of LOs (increasing adaptability) does not
lead to any fruitful insight into the problems, especially within GST which is not able to describe and
explain the processes constituting the systems "adaptability". Considering the second characteristic
of LOs (ability of self-transformation and facilitating learning of its members) this means to use
models / concepts which are able to describe the processes within the system. Stressing the
importance of environment while simultaneously neglecting internal processes GST cannot adequa-
tely model OL processes.
Problems of Current OL Concepts
According to literature two problems have not been solved appropriately until today. The first
problem is related to the differentiation between individual learning (IL) and OL.
Relations between IL and OL: Because of a lacking theory of OL the problems of the relation
between IL and OL is described mainly phenemenologically. So ARGYRIS & SCHON (1978. p. 9)
said, that "... OL is not merely IL, yet organizations learn only through the experience and actions
of individuals". SENGE (1990, p. 25) points out, that "Individual learning is, in some sense, irrele-
vant to organizational learning. For many critical organizational issues, the fundamental learning unit
is not the individual but the team of managers who need one another to take new actions". The
latter means that a new process must be explained: the relation between OL, IL dnd team learning,
which seems not to be very helpful at all.
The second problem arising results from an anthropocentric understanding of current OL concepts:
There seems to be common sense that the processes of OL can only be described in terms of
metaphors (e.g. MORGAN, 1986) or as analogies in relation to IL.
OL as Metaphor / Analogy: Despite the epistemological problems of using metaphors for building
theories in a different domain, doing this adequately means that there must be at least clarity within
the "source science” the metaphors are derived from. Unfortunately this. seems not to be the case
as actual research of cognition makes clear through the following examples.
Individual’s memory neither can be localized at special areas in the brain (e.g. ROSENFIELD, 1988;
ROTH, 1992) nor can it be conceptualized as storage including knowledge which represents reality
(e.g. MATURANA, 1982; VON FOERSTER, 1985; MATURANA & VARELA, 1987). According to this
findings the question about the learning unit of OL does not make sense even within the metaphori-
cal point of view. Additionally the ideas about organizational memory or knowledge base must be
reconceptualized and re-adapted to the latest findings of human memory research, which concep-
tualizes memory as a function which is spread over the whole brain (VON FOERSTER, 1992). Even
if metaphorical arguments are used the idea that the learning of organizations mainly depends on
the learning of managers (e.g. STATA, 1989; DE GEUS, 1988) can never be adequate from a
theoretical point of view.
The arguments outlined above make clear that LOs cannot be modelled on the basis of input-output
concepts appropriately. Relating this insight to MATURANA's criteria of scientific method it becomes
clear that GST cannot meet these criteria, especially not the second one. Consequently the
theoretical framework to describe and to explain OL processes resp. the building of LOs must be
provided with a theoretical basis which is at least able (1) to explain the relation between the
internal processes which constitute the system's borders resp. leads to its survival. Furthermore (2)
the differentiation between IL and OL has to be taken into account appropriately, and (3) the term
OL / LO may not be treated as a metaphor or an analogy only.
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2. ORGANIZATIONAL LEARNING AND THE THEORY OF SELF-REFERENTIAL SYSTEMS
Since in the early Sixties the concept of "self organization" was introduced into systems dynamics
(e.g. VON FOERSTER, 1962), several theoretical concepts were developed which can be summari-
zed under the headline of “theory of self-referential systems". There are different schools of thought
which constitute this new paradigm of systems dynamics, such as: second order cybernetics
approach (VON FOERSTER, 1985); radical constructivism (VON GLASERSFELD, 1987); theory of
autopolesis (MATURANA & VARELA, 1987); self-referential theory of social systems (LUHMANN,
1984, 1990).
ROTH (1981) developed further theories of self-organization (e.g. VON FOERSTER & ZOPF, 1962)
and of autopoiesis (MATURANA, 1970; MATURANA & VARELA, 1987) and distinguished between
self-organizing, self-maintaining, and self-referential systems:
Self-Organizating Systems (SOS) arise spontaneous as specific states or as sequences of states
due to certain initial and limiting conditions. A self-organizing system is not self-maintaining by itself,
because its components decompose or are consumed in the process of self-organization.
Additionally the system itself has no possibility to resynthesize or to replace its components.
Self-Maintaining Systems (SMS) consist of cyclical concatenations of SOSs so that the first SOS
produces exactly the conditions for a second SOS ... and so forth the last SOS in the cycle
produces the initial conditions for the first system in the cycle, which means that self-maintaining
systems are operationally closed. Hence, self maintaining systems are systems whose compo-
nents maintain each other, and by maintaining each other uphold the whole cycle.
Self-Referentlal Systems (SRS) are systems which organize the states of their components in an
operationally closed manner.
Consequently self-maintaining systems are self-referential, but not every self-referential system is
self-maintaining. The brain for example is self-referential, because neuronal activity !eads to neural
activity, but the brain is not self-maintaining, because it dependens on the organs of the body to
which it belongs to.
Principles of thé Theory of Self-Referential Systems
The following remarks belong to those aspects of the theory of self referential systems which are
important to the area of OL (for further discussion see HEIJL, 1982; LUHMANN, 1984, 1991).
(1) Every component of and every relation within the system is subordinated to the goal of the system's maintenance.
(2) The system's maintenance is dependent on the maintenance of the circular organization ofits basic operations. Hence,
the term “organization* of a system defines the class of the system, e.g. the class of SRS.
(8) The maintenance of the circular organization of SRS can be realized by different structures of the system. The
structure of a system is constituted by concrete components and relations of an element of this class. E.g. living
systems can be described in terms of an autopoietic (self-maintaining) organization, the realization of this organization
depends on the species, such as animals or humans.
(4) The basic operation of a system is an operation which cannot be decomposed without destroying the system's
character.
(8) The border of a system is an operation of an observer on the system's behavior. Hence, a system can have different
borders - in relation to different observers, but cannot experience its own borders itself.
(6) The maintenance of the circular structure is the criterion of selection which determines that selections of activity are
chosen only in such a way, that the circular structure is maintained.
(7) Asystem’s activity is related to the interactions of its own components or to the interactions with its environment. Every
interaction with the environment leads to an interaction with its own components.
(8) The circular organization of SRS defines the border of the system: all entities which do not belong to the structure of the
system constitute the system's environment.
(9) The system's imperative is the maintenance of its organization. Hence, the environment is defined by those entities the
system can interact with. Consequently, the environment of the system is dependent on the system: The concrete state
of the system defines its environment.
(10) The environment of a SRS cannot determine the system's behavior. The environment “only” constitutes a source of
pertuberations for the processes which constitute the system. The result of a given pertuberation depends on the state
Of the system (or subsystem), this means that the structure of the system determines its behavior (structural determi
nism).
(11) The circular organization of a SRS implies the preciction that an interaction which happened once will happen again.
(12) The circular organization of a SRS implies that SRS operate on inductive reasoning. This reasoning depends on the
‘success of prior experiences. This means that the behavior of SRS can be described with the term “conservative*.
(18) Every observer is a SRS. Because of the SR character of each observer every criterion of ébserving / describing is
caused finally by the observer himself.
(14) The description of learning of a system is constructed by an observer through comparing two different behaviors of a
system.
(15) SRS develop the criteria themselves on which they evaluate their own activity, based on prior evaluations of their own
activity. Hence, leaming can only mean learning by success and failure of the own activity, in doing 0 the criteria of
success are also related to the learning by former success.
(16) Leaming of SRS can be defined as the modification of their structures, which leads to the change of the coupling to its
environment, whereby the structure can be defined as a modificable/plastic net of relations of cooperating/competing
elements. This means that the ability of learning in SRS is - compared to controlled systems - increased in an
extraordinary way because of the usage of the principles of self-reference (ROTH, 1892, p. 148).
(17) Leaming of SRS can described by two different classes of operations (cf. VARELA, 1992): (1) the changing of the~
relations between the components of a system or (2) the changing of the components. The first class can be subdivided
into (1a) the change which results on the reinforcement of the active units which have been activily involved in prior
coupling events (success), and (1b) the change which is caused by the feedback of a failure. The second class can be
divided into (2a) the change which is caused by little modifications of active elements, and (2b) the change which is.
‘caused by the exchange of old elements for new elements.
Soclal Systems as Self-Referentlal Systems
LUHMANN (1984) generalized the theory of SRS, which was introduced by MATURANA (1970) in
order to describe living systems, to social systems. This implies that individuals may not constitute
the components of a self-referential social system, because in this case the maintenance of the
system is dependent on the physical reproduction of individuals. Hence, LUHMANN defined
communications as the components of social systems: Social systems reproduce themselves on the
basis of communication - without communication there are no processes that can be called "social".
‘Thus the basic operation of social systems are communications the difference between system and
environment is constituted by meaning. Meaning has the function of a selective mechanism:
Meaning selects on the basis of different opportunities of communications and therefore constitutes
the border of a social system. Meaning is able to reduce the complexity of the environment into an
amount of complexity the system is capable to process.
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Linking Individuals to Social Systems
Communication is dependent on individuals. Individuals can be described as living systems (cf.
MATURANA, 1982), dependent on cognitive and psychic processes. Hence, LUHMANN distingui-
shes in his theory three different classes of SRS: (1) cognitive systems, reproducing their states by
the electric activity of neurons; (2) psychic systems, reproducing their states by the activity of
mind/consclousness, and (3) social systems, reproducing themselves by communication.
Psychic systems are as well operationally closed as social systems: Mind cannot operate on the
basis of its operations (thoughts, feelings etc.) into communication - and not into mind of other
individuals: Neither a powerful thought nor an enlightening vision or insight is communication. The
opposite is also true: Communication cannot operate on the basis of its operation into mind. Neither
an empathic communication nor a fascinating message or information are thoughts. There is no
input from mind into communication or vice versa: Both systems are operationally, that is informatio-
nally closed. There are only links between thoughts and thoughts or between communication and
communication.
Because of the SR character of these systems, an adequate description and explanation of the
relation between them must be found, because OL Is a phenomenon which relates as well to
individuals as to organizations resp. to a social systems.
Hence, the social system and the psychic system are not totally independent in so far, that the first
one constitutes a part of the environment of the second one as well as the second one constitutes
a part of the environment of the first one. LUHMANN coined the term “interpenetration” to describe
this linking phenomenon: Interpenetration means that each of the systems makes Its complexity
available to the other system, which influences the structure of both systems, but this does not
mean that there exists a common supersystem.
Applying the Theory of SRS to Organizational Learning
According to the theoretical framework outlined above it becomes clear that learning of SRS relates
to changes within the system's structure. Hence, the learning of individuals and organizations
(organizations can be treated as an element of the class of social systems) can be described and
separated againstseach other on the basis of their basic operations and on the basis of their
interpenetration.
Individual learning: IL is dependent on the structural changes of the individual's cognitive system
which was extensively described by. PIAGET (1970), MATURANA (1982), VON GLASERSFELD
(1987) and others and needs not to be outlined here.
Organizational Learning: As outlined above, OL can be described in terms of change of its basic
operation, that are communications. As far as meaning constitutes the border of communication, at
least three levels of OL can be distinguished by an observer: (1) An observer can describe changes
of communication according to descriptions of objects, individuals, or their relations. This can be
caused by the exchange of these objects or individuals, or by the change of the meaning of these
objects or individuals. (2) An observer can observe the change in the process how an organization
communicates about communication (from “no communication about communication" to “increasing
number of communications about communications"). (3) An observer can observe that an organiza-
tion communicates about the tacit assumptions of communication, which enables it to take the SR
character serious and to act on the assumptions of the SR character. In terms of VON FOERSTER
(1985) this means that as well social as psychic systems re-discover their - meanwhile forgotten -
non-trivial character.
Comparing these arguments with current OL approaches (ci. ARGYRIS & SCHON, 1978) it will
become clear that the first level (1) refers to single-loop- or double-loop learning (communication
about organizational prerequistes in order to achieve goals), that the second level (2) refers to
deutero-learning: getting insight into the own communication practices in order to be able to change
them. The third level was not considered appropriately in theory until today. This process we will call
triple-loop-learning (TLL), in order to make clear that the system observes its own communication
with the goal to change its basic assumptions on communication (which means on itself and the
participating individuals).
Individual vs. Organizational Learning: Current OL concepts are not able to distinguish precisely
between IL and OL. Applying the theory of SRS helps to make this difference clear: IL happens, if
changes occur in the individual's cognitive system. That does not necessarily lead to OL. OL thus
only occurs if there is a change in communication. This also means that IL may occur without OL.
The Learning Organization - A Vision: The discussion above should have made clear, that an
adequate model of LOs must consider the SR character of social, psychic and cognitive systems.
Hence, building LOs can only mean, that the acceptance of this SR character of social systems /
communication and the own cognitive / psychic system is a prerequisite to be able to achieve this
goal. Hence, a LO must be defined as an organization in which TLL occurs.
3. CONSEQUENCES FOR MANAGERS ¢
According to the SR character of organizations the following conclusions can be drawn:
* Considering that organizations cannot be controlled from outside the system, and that instructive
communication is impossible, has far reaching consequences for the design, control, and
development of organizations. Especially planning of strategic changes can only have the
function to give a context for meaning, but may not constitute the explicit goals which absolutely
have to be achieved. The term “strategic intent" (HAMEL & PRAHALAD, 1989) gives an
orientation what can be meant by “context of meaning".
* Communication is not dependent on the content of the transmission, but is dependent on that
what happens within the receiver: and this cannot be called “transmission of information". This
is also true in the case of reading: information is nothing which can be transmitted. Hence,
change management and leadership cannot be based on instruction but on extensive use of
feedback processes in order to exchange and adjust the realities of all parties.
* OL implies change of communication, which also implies change of meaning. Paying attention to
and understanding of organizational culture and subcultures is a necessity to implement
change processes successfully. Trust is the basis on which communication processes can be
changed most appropriately, because of its higher degree of fitting connections to others in
comparison to power or distrust.
* Neither organizations nor individuals show any resistance to change, the term “resistance”
belongs to the observer, and describes the differences between the system’s environment and
the image of the observer what the environment of the system should be. Considering this leads
to the insight that strategic change must be implemented differently than usually, especially the
observing of "strong resistance" indicates the inappropriateness of the change process.
* Management of meaning is crucial to any intended change of an organization. Hence, human
resources management cannot mean only to make strategic concessions to humanistic ideas, but
has to be taken serious.
* Communication does not mean giving and taking or exchanging, but to give each other opportu-
nities to cognitive change, to selecting and constructing information which is dependent on
ourselves. Communication can fail, if one partner regards the message of the other as irrelevant,
the content as wrong, and the demand for attention as impertinent. Communication makes clear
the close interdependencies between (a) cognition as the psychic process of constructing
realities, (b) interaction as the process of adjusting the own constructions of realities with those
of others, and (c) organizations / institutions which organize interactions. This leads to the
consequence that implementations of Ol processes must be based on extensive applications of
the “sharing mental model" approach (e.g. VENNIX & SCHEPER, 1990).
Building LOs - Six Commandments: As outlined above change of communication can be caused
by different aspects such as change of content, or change of process, or change of participants.
Despite of the importance of these processes, they will not be discussed here, we only want to
show some implications of the TLL-idea. Based on KRIPPENDORF'’s article (1990) about the self-
referential character of communication the following commandments of building TLL organizations
are proposed:
(1) Construct your own reality In such a way that you are able to percelve It! This means that we have to become
aware of our blindness, our assumptions and finally that our reality is only our construcion and not the only one.
(2) Construct yourself in such a way that you yourself are a part of your own constructions! The application of this
imperative must lead to a re-assessment of the own rules of thoughts and actions.
(3) Give the persons who are constructed by you as much autonomy as you want to have within thelr construc-
tions! This leads to the insight that respect and empathy are superior to authority or power.
(4) Invent as much alternative constructions as you can - but don't forget the degree of thelr viability! This leads to
the ability of constructing several future states, and to be able to assess their ethical and pragmatic consequences.
(8) Communicate In such a way that the area of other individual's decisions will not be decreased! This means that
we have to pay attention about our trivialization tendencies of others, which means to describe them as predictable and
controllable (cf. VON FOERSTER, 1984).
(6) ALO Is an organization in which the first five Imperatives are reallzed. Hence, interventions must be planned and
applicated on the same basis.
4 CONSEQUENCES: SRS AND MODELS OF STRATEGIC CHANGE
There seems to be agreement that the central problem of strategic change of organizations can be
described as follows (e.g. KILMANN & COVIN, 1988; BEER, EISENSTAT & SPECTOR, 1989;
BEER & WALTON, 1990): Achieving commitment by employees is the core of a successful
implementation of strategic changes. Hence, the imperatives are (1) that top managers must first
develop a vision about the future state of the organization, and (2) this vision has to be implemen-
ted on the basis of increasing particIpation of employees.
Several prescriptive models of strategic change were developed which refer to these main assump-
tions. Its empirical evidence could be shown only partly, mainly as case studies but not as field
studies, which means that the effectsizes of several variables is not known. Hence, we do not want
to add another model based on experience with case studies only, but we want to propose some
guldelines for the strategic change of organizations - especially building LOs - based on the
arguments outlined above. These guidelines may help to overcome some weaknesses of current
concepts, especially in the core-area that is achieving commitment throughout the whole organiza-
tion.
Predictabllity, Planning, and the SR Character of Organizations
Planning implies the assumption to be able to control change processes per se in order to achieve
the intended goals - the only question that can be discussed is the degree of control which can be
achieved. Additionally change processes can be implemented by interventions which implies to be
able to predict changes in relation to a specific intervention method.
According to the SR character of social systems it must have become clear, that every plan, and
every intervention is "transformed" by the system resp. its subsystems due to their specific structure.
Hence, change cannot be implemented successfully by the assumption that plans or goals do
maintain their identity in relation to a subsystem or during the implementation process. Or to put it
more simply: Every subsystem constructs its own meaning to any plan or goal.
Commitment and Meaning
Hence, we do not agree with the “traditional” point of view which can be described as (1) visions
apriori can "define the structure, systems, management processes, and skills required in the future"
(BEER & WALTON, 1990, p. 157), and (2) commitment can be achieved when ty majority of the
employees accept the necessity of the changes planned by the top.
The consequence of the SR character of each organizational subsystem in this context is the
specific construction of meaning in relation to the "input" of a vision. Considering that this process
always occurs leads to the insight that implementing visions must imply the explicite consideration
of this process - because of the lacking possibilities of its control and predictability. This means that
methods have to be developed so that the SR processes can contribute constructively to the
achievement of an "intended" goal. Thus, the term "commitment" in the context of SRS must be
treated differently: It must indicate that subsystems (1) have to be involved: into the generation of a
vision in such a way, that they (2) are able to construct specific meanings on the basis of the
proposed vision, which finally can be (3) integrated in a shared vision on the basis of extensive
participation.
Sharing Mental Models
This idea can be realized by the expanding of the sharing mental model approach over the whole
organization. Briefly described an Individual mental model can be derived from the explication of
individual constructions (in "traditional" language: cognitive maps) of empirical domains such as the
own work, the relations to colleagues, the meaning of strategic change etc. “Sharing mental
models" as a method refers to the phenomenon that the complexity and therefore the validity of an
individual mental model can be increased by sharing it with others in a common process of complex
problem solving (e.g. DORNER, 1989; VENNIX & SCHEPER, 1990).
Achieving Commitment by Participation: Bullding Shared Visions
As shown above, a fundamental change of organizational communication processes is crucial for
the building of LOs. On the other hand the application of the SMM approach leads to quite different
communication processes in groups than in the past because of the explication and exchange of the
participant's cognitive maps. Recognizing this advantage of the SMM approach the question about
the transferability to the transformation of a complex system such as organizations arises. Our
answer to this can be made clear by the application of an "extended" SMM approach to a “traditio-
nal" top-down implementation of strategies. Hence, following guidelines have to be considered:
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(1) Proposing a vision: The vision developed first by top management (the traditional method)
should be treated only as a proposal, as a context - to be developed commonly - in which ine
intended change could talk place.
(2) Organizationwide Feedback: Feedback processes must be implemented in such a way that
every subsystem can explicate the requirements that have to be met prior to resp. during the
implementation of the intended change processes within the specific subsystem. Based on the
collection of this information this diagnosis gives top management the opportunity to consider
further activities in order to achieve the intended change. Additionally this may lead to a
modification of the prior vision: The mental model of the top can be changed on the basis of the
needs of the whole organization according to the intended change. Hence, a shared vision,
based on the integration of the information of the feedback processes, was generated.
(3) Maintaining the ability of self-transformation: Following activities lead to an ongoing self-
transformation resp. learning process within the organization: (a) the change activities based
on the shared vision are implemented, (b) ongoing internal as well as external feedback
processes (customers, benchmarking etc.) generate continuous information about requirements
which have to be met.
Since feedback implies communication it must become clear that the proposed process leads to (1)
fundamental change of communication processes within the organization, based on (2) an ongoing
transformation of the mental models of the organizational members - regardless to their hierarchical
level, which (3) can be interpreted as the first big step into a LO. Additionally this process is based
on (4) extensive participation of employees to the change process, which leads to a higher degree
of identification with the change process and its goals, and hence to (5) an increasing commitment
by all organizational members. (6) Finally this process takes the SR character of organizations resp.
its subsystems serious.
5. REMAINING QUESTIONS: RESPONSIBILITY FOR OWN ACTION
Theory of SRS makes clear that every individual is responsible for his or her own action - and also
for the social cofisequences based on their decisions. Especially the term "power" and its use have
to be changed fundamentally, because power usually means to ignore the SR character of psychic
and social systems.
Instead of answering the introductionary question (LO - vision or fiction?) we even want to add the
following ones, because answering these questions may help to clarify consequences that LOs will
have:
* Do managers really want to build LOs really considering and accepting the far reaching implica-
tions on every social domain - or do they only want to have a new set of tools to make more
profit?
Can managers support changes like this, because society - as a supersystem to organizations -
has a SR character, too: Do they not have to fear too much negative feedback and counteracti-
vities in domains outside “their” organizations?
Consultants usually eam a lot of money. Can they really dare to support managers building LOs,
since this means - idealistically - LOs do not need any support of consultants due to their
acquired ability of self-transtormation?
But we want to put it more optimistically: in one of the OL conferences it was argued that the
problems of world economics and ecology can be solved only if organizations learn, and thus are
able to make more profit. This money can be used to solve social or ecological problems. The ideas
outlined above lead to the same consequences but caused by a different reason: These goals can
be achieved because LOs also imply a fundamental change of society. And these paradigmatic
changes constitute the basis on which urgent problems can be solved. Or to put it briefly: Problems
are solved primarily by changes of meaning and not by making more profit.
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