Implementing Requisite Principles in the Not-for-Profit Sector

Judith McMorland - from start to minute 42   Currently I'm a management consultant but my first career was in the not for profit sector. I spent 20 years with the Canadian Red Cross Society doing all manner of jobs starting in their youth services program in Saskatchewan to ending as the National Director of Field Services, which was accountable for the national programs and implementing them in terms of program grams and standards for water safety, emergency services, all the domestic programs including fundraising and volunteer services. That was a very challenging job. And I did not, in those areas, did not at that time have the Ro principles. And I sure would have liked to have understood, especially the Turs and the Tars. And that kind of a situation where you're trying to implement programs across the country but don't have the accountability or indeed the authority to be able to drive those programs from there. Worked with the International Red Cross and Ron had already mentioned this in terms of being in charge of a project to look at the reorganization of the International Red Cross. Ron was the external consultant doing the organization design work and I was the internal project manager. So that was a very good training ground for me in terms of management consulting, but also in understanding these principles and how you can apply them in a very complex situation. And with the success there, we knew that there was an ability to use these in the not-for-profit sector. In Canada. We have, as Ron mentioned, done the consulting and it does show you some of the perils of working in the not-for-profit sector because after I presented my report as a consultant to UNICEF Canada, I was so impressed with the said, you know, if you need any volunteer help in the future, let me know. So the President stood up and followed me out into the hallway, found myself in the next couple of years on the board and now chairing the board. So that is very good for me though because it does keep me linked to the not-for-profit sector which is close to my heart and keeps the link and the bridge between the experiences we have in consulting in the private sector and passing those things on back and forth. And there is a very great overlap because at the end of the day, whether you're in the not-for-profit or public sector or private sector, you are about organization performance and if you're an executive there you do want to get the best value. So in the private sector, it's profit and how can you increase shareholder value in the not-for-profit sector it's how can you excuse me, it's how can you have to do that? In the not-for-profit sector, you're much more interested in how you use stakeholder value and use donated dollars to ensure that you're using them in the best way possible. I hate frogs. So with that I'd like to pass it on to you. Judith, thank you for you to introduce. You have your speaker, you're wired. And we do have a handout for you as well on this one.

Speaker B Well, good morning. I'll tell you a little bit about my background and explain a little bit about the handout, which is not really congruent to the session as it's now configured. So I wrote this for a different configuration for the session that I was invited to participate in. So there has been a slight sea change between the first iteration of the program and the the last.

Speaker A This is for four weeks.

Speaker B Thank you. Basically, I'm an academic. I've been at the university 33 years and counting down. But throughout that yeah, throughout that time, I've had an absolute relationship with the not-for-profit sector. I started my academic career at Auckland, mandated to train social activists in the not-for-profit area to provide training programs. Now, we would never get away with the stuff that we did under the rubric of the university because we were unashamedly subversive, and there's no way the government would nowadays fund anything that was like this. So it's a little mark of delight that one actually did put out into the public brochures that said, this is for social activists only. So I was involved, and I did that through the frame of continuing education. So though there were credit courses, the people who came were all mature adults with passion both to learn and to do. And I think that that's a really important part. And so started this really long love affair with working in collaboration with people in the field. So the story I want to talk about this morning is really an extension of that because I think that as both academics and consultants, that it's always a collaborative relationship. And how that works out is an interesting question. At the end of the university got restructured and the academics got chucked out of continuing education, academic guidance no longer being seen to be important. And so I moved into the business school as finding it was the only place within the university that was actually a friendly home. Now it seems unlikely, but it gave me the scope to do the sort of work to continue the work that I was doing. And I had by then moved into the personnel management and human relations field particularly. So when I originally put in an abstract for this, we were talking about the barriers to learning and dissemination. So that really is the flavor of what this approach is. And I called my talk Disseminating and Applying Ro Concepts in New Zealand. And I was interested originally as a sort of research question to say, well, okay, I've been teaching change management all this time, and I've been teaching Ro Concepts for the last about eight years. What have the people who've come through the courses, what have they done with it? Where have they gone with it and how does this affect society? Because I'm not really interested in how it's gone into big business. I am interested in social change. I'm interested in can these ideas be used for social justice? And are there also some questions that we need to be alert to about possibly the uses and abuses of this in relation to a social justice human rights context? And so that's another part of my story is having been very involved with the homosexual law reform in New Zealand and with human rights organizations. I'm currently on the executive of the Human Rights Foundation and the Action for Children and Youth in Artairoa, which are all advocacy groups, in order to change the law. But I have a profound dissatisfaction with that sort of advocacy group because so much of it is level one work. And the work that I think we need to be doing is at quite a different level of advocacy. But the issues of social action are that it's very much level one work because it's got to be here and now and responsive and very often dominated by the lawyers who are great level one workers. Okay, so in the handout, I'm going to just skip several pages because the context of the situation is not any longer relevant. And Dwight, can you give me a time frame? I got 20 minutes.

Speaker A I'd say about 20 minutes.

Speaker B Okay, so we'll just well, I'll just show you these in terms of also being real about the context that New Zealand comes from. I mean, we are small and we are in the middle of the sea, and it's easy for people here to think there are people around, but 4 million people. And the demographics are important because we are very much an aging society and small business and largely being disaggregated. So, as we all see, some of the issues that come out that are relevant to the commercial context are also relevant to the wider societal issues. Of what capability, what capacity do we have within the organizations that we're supporting? Excuse me, Judith SME. What is that? A small to medium enterprise? Okay, so I'll just go back to that. No, sorry. Just in the commercial context, I believe that these are some of the big issues that New Zealand faces. And I also think that these are issues that are not for profit and public sector issues face. So that's the association I'm making with those ideas. And since I am an educationalist, I wanted to understand better what the Educative interventions are that could be made for societal benefit and how and where we need to address that approach. But it also requires a commitment to hold in for the very long term. So, part of my strategy about ro is to, despite retirement coming up, to be around for a long time and to build up this critical mass of people that we're trying to seed into some key organizations like the hospital sector, like the public health sector, like key organizations who are provider agencies in order to build up a mosaic of people who are starting to require of government some changes in policy. Yeah. So as a dissemination process, I tried to understand a little bit about what my role has been. And I think what I've been doing in New Zealand is kind of holding the space of Ro for a number of years talking about it profligately and unashamedly when anybody lets me. Building partnerships, which I'll talk about more specifically and using the context of the formal teaching situation to be able to engage students in projects that have these sorts of impacts. So in the last MBA project that we did, for example, one major group took on the transport system in Auckland at a regional level. One of them was working as the Chief Operating Officer in that context and by challenging them to design some organizational interventions to build the business over the next three to five years. What were the policy issues, what were the wider issues that were required in that not for profit and government based or local government based organization? Part of the approach we've also used is to put on short executive courses of two days which we do twice a year on capacity, capability and challenge as a public course that people come to. And we're just about in September to go into the 6th iteration of that. So the course, because of its context in the business school, has some credibility. There's quite a lot of manipulation and influencing you can do in the background by getting key people to come on the courses in order that they get to understand some of these concepts. And so we've been quite unashamedly targeting, particularly in the health sector to get key decision makers to come in so that they understand the framework of the decision. So that just really summarizes some of the outcomes that have happened. And in my consulting practice I have worked particularly I want to tell the story of one relationship, but I have been working closely with World Vision, which is very similarly related to Red Cross and in the not-for-profit area and the public sector area, this gives you, again, some idea of the different sorts of engagements. You can see that my consultancy doesn't get involved with a lot of high-paying clients. It's a pity really, but one lives in hope, actually. I need some coaching on how to actually charge not for profits, some money. Anybody? Yes, they all want it for pro bono and it's a bit hard when it's only half your job. Yeah. So a nice spread of different ways and involving some Maori organizations and grappling with some of those deep issues of justice that come right the way through. Now, our experience of presenting material to people is that it is very easily understood regardless of who you're talking to. And that except, I have to say, people in the financial sector who are at level two. It's really interesting that sometimes in these public courses you get people who are coming in and the level of their ability is not where the course is pitched. And so the evaluations are awful. They think you're dreadful. But for the people for whom these concepts just light them up, there's a great deal of excitement. So there are some high risks in this public education process. But what we're also learning is that people don't read anything other than what you give them because they're all in a hurry. They come to learn some skills, they want to get some ideas, they want to rush off and implement them themselves. And so a major concern about the Educative process is that we only have very small windows to put these ideas in. And so how do we hold the integrity of that when chances are that few people will go away and actually deepen their understanding through reading and expansion of the concepts for themselves? Our maximum leverage, as everybody would understand, is for those people who are working at level four. And if we can find those people, then we can seed some quite fundamental change. What about the maximum blockage experience? Oh, well, that's a bit like the woman in the level too. When we were doing a major project in the Public Health Directorate, you some of them, because of the work and the lack of differentiation between levels three and four in the actual organizational structure, they were doing both levels of work within their jobs. The people who had the capacity to understand what level four work was could change hats between strategy and operations. Those who couldn't see level four absolutely tried to destabilize the total program.

Speaker C Ron, a comment which is also a question. Two observations. One is in our work, if the head of the organization, whether it be.

Speaker D A four or five or six thank you.

Speaker C In our work, if the head of the organization, whether it's a four or five or six, gets it and leads it, then quite frankly it doesn't matter as much what the threes think or people down below. So that'd be one observation. Second observation would be that in our research what we found is that the most unclear level is three. The stratum two professionals are fairly clear and the stratum four general managers are very clear. We usually find that stratum three is at least unclear and as often as not you've got two levels at three, neither of which is a real three. You often have kind of a two and a half professional managing two professionals. So unless that mess at three gets cleaned up, it's unlikely it's going to move further. Yes, that's some of our experience that might be related to this.

Speaker B Absolutely. And the difficulty with government type projects is that they're very loath to fund adequate diagnosis anyhow. They want a quick fix and they say, come and do a leadership program or a management development program and they simply don't provide adequate resources to do the level of diagnosis that one knows is required. I've had some real strife in relation to, say, working with the Customs Department because what the chief executive said of the capability of his staff was totally different from what I actually found. And that becomes a problem.

Speaker D I don't know how many of you have seen Luke Hubecker's book Making What Systems Better, but it's on the web, it's on the site now. Luke gave the book to the society, but Luke talks about he draws it like linking rings, like a Venn diagrams know, added value for the present and then added value for the future. And there's a link in there, in that three four boundary, which is really messy. And I know that in discussions with people who've been through the career path appreciation process over many years, that there are a couple of transitions that are deemed to always perceive to be particularly difficult. And one of them is the three four one. There's another one further up, but that three four transition is the one where you stop polishing your system and refining it endlessly and trying to reduce the transactional costs of the system to make it even more able to do what it says on the can. And then at level four, you need to induce disorder, you need to induce destabilization of the level three processes in order to make things go forward. And that's personally threatening if you've actually spent your career building perfection or being perceived to be a builder of perfection if you then become the person who undermines it. So it is a scary one anyway, even for people who are high mode and see it as obvious because quite often they get footfalted in that transition.

Speaker C What is his last name?

Speaker B Jack.

Speaker D Luke hobeka. Which is Hoebeke? And his entire book is downloadable now on the Geo website. He was part of the filming in London. He came over from Belgium to do that. And Maria is here from Belgium, was one of his doctoral students.

Speaker B Anyhow, because we haven't got a lot of time, I want to talk about a particular application that is work in progress. So this hasn't got long term outcomes, but it's a relationship that I have been involved with, with my colleague John Wade. And it's a story of how the evolution of the application of Ro has happened in the mental health sector at the community level. And it also celebrates the relationship that I think can be extremely valuable between partnership between a very experienced practitioner and an academic. And I think that these are precious relationships that can benefit both sides. I first worked with John as his sort of peer coach when he started up Challenged Trust as a mental health provider, agency and then he invited me to coach the senior management team as a group supervision process. So we worked together through the development of Challenge Trust as it started at quite a simple level of two or three types of delivery service deliveries. And as the organization grew in complexity, as different services were developed and different approaches to mental health were introduced, so not only were they changing the complexity of the services, there was a paradigm shift that was growing. So the increasing consumer representation that was being woven into every part of the relationship, the provider consumer relationship, which had become a core to the work that was being done, and also building in the treaty of waitangi basis. So that relationship, which New Zealand is predicated on that treaty relationship, so that we actually lived that the organization was trying to live out that partnership relationship. And so Maori representation and the Maori way of providing services to a largely Maori and Pacific island clientele, because the incidence of mental health were highest in this area. So John and I worked originally out of a learning organization framework and then it became clear as we worked and as the organization developed, that if we put the requisite organization principles into play within Challenge, then that would help to sort out the clarity of roles as they were emerging and changing. And so John was one of the very first participants in our short course. He went away and several of his staff came through courses. Subsequently, he and I worked in being able to articulate how this should look in his organization. And so it was implemented very successfully. The major problem was that the board were not involved with this and the board is totally dysfunctional. So here's a level five CEO working with a board who at best work at level two. And the more John grew, the more the board squashed him down to a point where last year he had to leave.

Speaker D Can I ask a question there?

Speaker B Absolutely.

Speaker D When you say the board best works at level two, and I've experienced that kind of experience, do you think that's to do with the lowest common denominator or actually is it the majority of them are working at that level and therefore they silence those who think otherwise. What do you think is the dynamic there? Because it intrigues me. I was once told by a chap who ran a very, very large organization in South Africa that quote, you can't have a strategy discussion with a level three in the room. And it really shocked me when I heard that that was his clear assertion based on many, many years and a profound understanding of the work, and that was his view. So I'm just wondering, what do you think the dynamic is that makes it a level two board? Because I can't imagine that they're all just level two people.

Speaker B You see in a community organization. They might well indeed be because they may not have had a lot of experience. And I mean, I'm aware that this goes worldwide and really this ought to be confidential because I'm talking about a board levels one through to four mental health consumers. You can't imagine a more disparate and unlikely group to sit through two days of Ro theory and practice. One of the women said, I am so excited, I have to close my eyes and take deep breaths. Now, if you've ever had classes of MBAs, you never get that response.

Speaker C They close their eyes a lot, but.

Speaker B Not necessarily absolutely so this was truly facilitating the maximizing of potential through liberating structures. They caught this even though most of them were functioning at level one and two in order to give proper time to the others. I want to sort of skip through this quite quickly because you've got them in front of you, but you can see that what we were trying to develop is on the far left hand side, the level of complexity within the provision. There's our developmental aims and saying to them, look, the work at level one and two on the right hand columns is going to be phased out. These are not going to be funded. You've got to position yourselves clearly in order to be able to sustain yourselves as organizations. So even having that sort of a complexity model which enabled them to see what the future might look like and what the services might look like was vastly exciting as well. Now, you may not be familiar with all of the terms, but that in a sense doesn't really matter. Then I was asked to say, well, how does all of this fit with policy? What do we do in relation to that? And help us understand. So one of the things that came out of the workshop was to actually show how we could put different levels of policy that they were familiar with into a context that showed if you're writing daily and weekly plans for consumers, how does that fit into and what are the steps between actual Ministry of Health policy? What's the logic of the relationships between them? And so we've tried to flesh out the practices that constitute the work at the different levels and there's a lot more work that we need to do in terms of articulating that's. As a research project. I want to take this much further because I think what we're starting to develop here are some templates for other public sector provider agency relationships that can articulate different types of work at different types of purchasing provision and certainly there's been a lot of interest from other parts like the housing sector and so on. That's perhaps where we're going forward and that's probably I should probably stop at this stage. But what I think are the barriers to taking this further forward is that we need to be much clearer about how we can build these really effective partnership relationships. I don't think academics can do a very good fist, necessarily, of developing it into practice. The practitioners benefit greatly by the dialogue and the reflection. So that seems to me something that is a really important way forward. I would love to see the tasking tending and trusting dimensions in this sector worked out and translated for the not for profit public sector because the work is quite different from the commercial thing. And I think that there are ways in which we can try and flesh out and make this their own experience. And I think that this really is the agency's work themselves, is to try and turn these levels, these terms bi levels, into concepts that they understand. Okay. So that we can read and we'll just finish here. These seem to me to be some of the real critical concerns in terms of societal concerns. I would like to see some serious critique of the applications of these models. I hope that other people will join in, Dwight, like yourself, into some of the debate about whether there are uses and abuses in terms of social justice. Because I could see that there could be a tyranny of too rigid an application of something that becomes ideological or cultish rather than really sustaining the liberation. That's part of it. And I'm delighted that things are going to be on the web because that will give the sorts of people we're working with free access to stuff that they're not going to be able to get hold of. It's all yours.

Speaker A Thank you very much. We have almost a half an hour left.

Speaker B I really would like to have Jack come and finish his material that he didn't finish before.

Speaker A Can we just ask a question?

Speaker B Absolutely.

Speaker D Well, I've got some questions from some comments on your thing, Juden. Sorry. One is that although you're talking about Ro and you're referring to RO's reputation, which I guess is the translation of some of the things that went wrong in Australia and New Zealand with a overzealous implementation, perhaps you're actually using the levels of work model and the matrix of work and relationships to introduce that discussion. And you are not finding that that's difficult for people to embrace? Which is exactly my experience as well. That when you talk to people about those work themes about the importance of getting this right, then this one, then this one, it's just so natural and nonthreatening that there is no difficulty in getting people to at least understand the first principles of it. Is that your experience?

Speaker B Absolutely is my experience. And it's a huge relief because they see that their work is valuable and how it fits. Yes.

Speaker D Okay.

Speaker C What about when you move to levels of capability? Do you find the same openness? So one level is levels of work. So I got to do this level.

Speaker D And this level and this level.

Speaker C The other is each one of those levels has a different capability attached to it. What's your experience when you move to the second?

Speaker D Is it the same openness?

Speaker B I've approached it through different levels of different modes of thinking. So given the context within which we work, we haven't been doing so much the CPA type approach. But what I have been working on is the communication implications of different ways of thinking, so that people can readily accept that at different levels of work, they do think and configure their own work in a different way from the level above or the level below. So in terms of those things, not a problem.

Speaker C Jack, what's been your experience with that.

Speaker D With the levels of capability? Well, I've both done CPAs and had informal discussions, and I don't do CPA anymore because I'm not part of the official bias community. And the approach I've used regularly is when I talk to these people, say, which one do you think you're most comfortable in? And can you remember when you did that one? Well, it's not amazing. Quite often they'll say, I'm really interested in that and interestingly, level three, when you call it best practice. And people want to be associated with that concept. And sometimes one of the things we need to do is, well, I'm all about attractors, is make the things at least attractive to people. And there's an intuitive thing that I think people at five and above have, which is they don't want to introduce so much tight order that they're inviting a level of entropy which they may not be able to manage. They're actually not going to be able to sustain the organization if they overorder it. So they'll take a bit of it, they'll take a bit of the theory, they'll have a bit of, say, capacity work, or they'll maybe put in an intervention at the three four boundary, which is what we did in British Gas. When we reorganized our 92 districts, all I did was clarify the three four boundary never explained three or four. I spoke about Formula One racing. We had 92 managers and we spoke about who's the car driver, who designs the car, who changes the car every year, et cetera, et cetera, and got them to work out the behaviors of the person who's in charge of driving the car faster and faster around the corners, doing all that stuff. And we just used that as a boundary thing. For you're not in charge of planning the future. Your job is to do best practice and achieve excellence with what you've been given. Although you're allowed to complain about it, comment on it, you are the most expert commentator on the lived experience of driving the car. Now, it may sound incredibly superficial, it was massively effective. They hadn't a clue that we were talking about a theoretical construct rooted in 50 years of research. They just thought we were talking about driving cars. And making certainly didn't mess up. The job.

Speaker B We talk about the CC rating and the driver skill capability. So have you got the skills and the capability to handle the vehicle under your hands? And that seems to be an analogy that works very well.

Speaker A Any other specific questions?

Speaker B You thank you. Thank you.

Speaker E The challenges I've had in this area have had more to do with role relationships and accountability discussions than they have explicitly with levels. I mean, if if you take the Girl Guides example, the question I always pose to my clients is who's allowed to do what to whom, in what circumstances? Or alternatively, what entitles me to interfere in what you're doing? And in response to that kind of questioning, I've found that in not for profits, because I do work with boards of not for profits too. The response doesn't fit the standard accountability relationships. I mean, the Tars and tours stuff, clearly there is either implicitly or explicitly, there's a command spine to every organization, whatever they pretend their corporate culture to be. But I think there's a fair room for some imagination about how to negotiate, especially tours relationships. And I found this also with the Equality and Accountability Office, which was deliberately designed by the person who led it from the beginning not to be pyramidal. I mean, she insisted, for example, on having the vast majority of the people on the payroll not belong to the organization, but be seconded in or hired on contract or whatever. And so there was a lot of argy bargy about the terms on which these various people would collaborate with the people who were on the payroll to produce the outputs. And I'm just wondering whether, in your experience, these kinds of issues have ever come up or whether people just naturally fall into the accountability hierarchy as defined by Elliot. And all the issues are about levels of work and cognitive complexity.

Speaker B I don't think they naturally fall in the sense that I think design is an important part of that's. I have to say those aren't the issues that we've addressed. To be honest, that hasn't come up really in the same way, because it still seems to me that it's the theory of work that answers all of those questions. Unless you actually make explicit that there is a theory underpinning these relationships, it's very hard to explain to people why the logic should be apparent. But once you even pose the question of what is the theory that underpins, then they actually see that there needs to be something that holds the relationships together. And that, for me, is what's so exciting. And Jack's got a wonderful element of this theory, which I would really like you to come, Jack, and to share, because it seems to me that also ties very much into your question. Yes, please.

Speaker D I have a question, Alan. I don't know whether this helps or not, but I have a question that I use with people because hierarchy is these days a kind of pejorative term. And certainly in government public sector people, I usually have to spend half an hour talking about hierarchy and what hierarchy is about, what it means and so on. And for many of them, revealing to them that the heroes was the priest and that a hierarchy only works if it is a common belief system and value system. It has no other validity. If the people in the organization don't believe the same things or are not there for the same purposes, then get out of there. You don't need a hierarchy. You can have anything. You can have a dictatorship, you can have anarchy, you can have a whole load of things, but hierarchy won't work. So for the leaders, operating on the value system at whatever level they can is just fundamental. And mind you, these are the people who are, in a sense, in charge of that. But it's a very threatening discussion to say that to them. And then, of course, there are the people who need to be threatened by it.

Speaker A Followers.

Speaker D Need to buy in. Oh, yeah, sorry.

Speaker E I'm thinking of the story we heard yesterday about the people who didn't think they had a boss in the context that you were talking about.

Speaker A And governors, which are part of the governance. And often people wearing both hats and helping them to understand which hat they're wearing and when they do have to take instruction from staff and when they can contribute to policy is a real issue.

Speaker B The New Zealand AIDS Foundation that I work sign into a contractual relationship which clarifies those issues.

Speaker D Absolutely right. I'm going to very quickly go through something which I've already been through, and I did 15 minutes session the other day there and got some of it covered, but I won't do too much of the history of it. But this is really a story about coming up with a notion of why there are levels of organization and then discovering that it actually maps onto Elliot's levels very coherently. Now, I can't claim thinking and Jillian Stamp's thinking had been part of my life for a long time at this point. I do promise you. This came up entirely through another route. Isabel was present. We were in the Courtyard Hotel in Johannesburg, in the foyer, and suddenly left hand click. Safe now. Okay, so I'm going to go through this. Let me start from a different place. A model based on attractor patterns from complexity theory, which basically says at the first level of complexity sorry, I don't want to dump to anything wireless network things, organize and focus around a point, a single incident, episode, whatever. And in the work translation, that's a task, a job, a measurable output at level one. The second level of complexity is the notion of a limit cycle attractor, which is basically bound when you put bindings around the number of tasks going on in an organization. And I'm sorry, I'm going to flip between the two things because we don't have time to have one discussion, then the other one quite in parallel, so I'll duck in and out of them. So here we've got somebody at level two managing a bunch of people, doing tasks. It could be a management accountant controlling the behaviors of the managers at three and four by insisting that the standards and precedents that they have to impose are held true. At the third level. And I'm sorry, although it's a brilliant graphic, it's not quite the full accurate graphic because the first one is a single dimension, the second level is two dimensional, the third level is three dimensional. Now, what's going on in here is that the tasks within the bounded subprocesses or processes are there are flipping around and there's energies going around in the system, tasks, processes and whatever. And the manager is valiantly trying inside this thing. By the way, Taurus is just a name for a ring. And yesterday I had the benefit of a couple of bagels to show the three dimensional shape that we're talking about. And actually what you're trying to do is create a perfect bagel, know, make everything really neat, make all the energy flows go easily. So that my part of the sub process and my transition. I hand it over to Judith, who takes the next part exactly the right moment, and she passes it on and there's no loss of energy in the system. And I dedicate my life to that.

Speaker B Suzanne needs that, obviously.

Speaker D And then along comes somebody at level four saying, you know, that that bagel that you've got just now, that set of processing system is perfect for now. I can see easily for the next year, maybe 18 months, it's going to be okay. But we've been talking to customers and they have a different expectation of what's going to happen in the future, or even we've been talking to the universities, and the kinds of graduates that they're producing don't quite fit the model. So essentially every general manager or every functional head has to deal with the fact that there's an imagined bagel out there, and at the minute he doesn't even know it's going to be a bagel. It's just a mess of ingredients and stuff. But they have to shape it in their head into something that they can internally promote in the organization, that they can internally market and convince people, win confidence, hope aspiration to change what is already working at level three. And one of the ways to talk about hierarchy without it being as threatening and certainly pyramid structures. Alan, I like to ask people who holds the anxiety here when you're all doing this, who is it who's worried about you? Because there's this notion of psychoanalysis about holding the anxiety, and it seems to actually trigger quite useful conversations. But what's happening here is that the old you can't see that the old blue world here. The old bagel is now actually being interfered with by the new one. And essentially what we're trying to do is get the new world to take over the old world. And the real messiness of level four work and why most level four people are cleaned out in mergers and acquisitions is because this is deeply painful. It's deeply painful. It requires long term costs and investment and there is certainly no clear immediate payback. The other thing is, if you're doing the acquisition or the merger or what did we hear this morning? Merge over. If you're doing that, you've almost certainly got these people already having thought about that and that's why you're doing it anyway. So these people tend to be serious casualties in any acquisition. So you've got these people I've spoken about the HR director comes in and in my world I see the HR director as the stakeholder advocate for the employee voice. I see the finance director as the stakeholder advocate for capital, for the shareholders and so on. So the marketing director is stakeholder advocate for the customer. And they come in and they say, yeah, we love your glasses, they're great glasses, but you know what? They get too much lead in them. Sustainability says that the market's not going to want that. Customers are going to look in for something. It needs to be finer on the lip because the quality of Canadian wine is improving all the time and we don't want crude glasses anymore. And plus shape people are getting bigger. So we're going to have to read this taurus doesn't work anymore and I'm telling you from a customer viewpoint. So you got the message. Well, at level five, somebody has to make sense of that, and they have to pull all of that together and weave it together so that I am not only if I'm the CEO dealing with Isabel's concerns about the customer's future agenda, and Suzanne's concerns about capital, and Jim's concerns about the way that the market's going to move and Ron's concerns about load of other stuff it processes systems I somehow have to get my head around. How do I make it all happen? And weave it together so that it is coherent and integrated. And I'm using some of these words because I'm going to show you a values proposition in a minute. Then at levels now, what is level five? In Elliot's theory? It's the quintave of level one. This is the quintave. Well, actually it's a recursion and it happens to be a quintave as well. But Elliot was at Brunel with Stafford Beers, so the idea of a quintave is not a surprising concept. Recursion was a big deal in that kind of thinking that was around at that time. Still is, obviously, and will be forever. So here we've got Quintess, as I've forgotten. Well, just like in an octave and a piano, there are seven notes and then the 8th note is a recursion of the first note quinte of five and four. I actually talk about when I'm talking to audiences about them other than people like us, funny people. When I'm talking to real people, I talk about harmonics or echoes. This is an echo of one at a higher level. It's the twelveTH fret in your guitar, right? If that makes sense to you. So somebody's doing that. So what would the quintave or the recursion or the next fret be for level two? It would be level six, and obviously it would be something like this. So we now got, let's say this is Pearson Fallow Global, right? And within it we have a division in Canada, we have a division in Sweden, we have a division in Cleveland. And these are big chunky businesses that we hold to account on their own. They have full PRL responsibility, et cetera. But you know what, if you want to be part of Pearson and Fallow, we've got some thoughts, some rules, some values. And you don't behave like that, Susan, in Sweden, you stay within our limits. You don't buy from people in that way, you don't procure in that way. We have got boundary conditions. And this is one of the areas where I think we do a great disservice, and certainly Tom Peters did in defining culture as the way we do things around here. Culture is largely, primarily how we don't do things around here. And what's inside that discretionary space is then negotiated to see what's best and that is a permanent negotiation and it evolves and so on. But there are rules in every culture. But why you shouldn't breed with your sister, et cetera. This is the same stuff, especially if you're a woman. Yeah, even less effective. And then the recursion at level seven. If we think about GE, and of course here there is a real debate between the European and the BIOS model that Elliot left behind and what has emerged in terms of the discussions that I hear now here, that there's a kind of difference in perception of what happens at senior levels. I think this for me would be like GE is a level seven organization and inside one of these limit cycles is their healthcare business, their future medical services business. It's a big level six business. There's another one that's maybe their construction, engineering and offshore business. There's another one that's their energy business. And they have their own cultures, they're in diverse cultures across the world and they need managing on their own and somebody has to pull that together. Now it may be that I may not yet have understood all of this stuff fully because we all do reach a limit of our own understanding. That's one of the fundamentals of the theory. But that for me would be typical of something like GE. And I could argue Dwight, ought to be how the International Red Cross is that's another discussion for another day. So that would be my postulation. And I do apologize for the fact that my daughter did produce this for me in 2000, and this is the first time it's been actually shown publicly yesterday and today. So we've been sitting on this stuff for a long time. Well, this plays out that having looked at organizational forms in that shape and saying if this is what's actually going on, I don't know whether it's science or whether it's conceptual or whatever, but anyway, if this is the engine for the creation of levels, what does that mean in terms of what leadership might be like? So, level one, we don't have time. So I'll quickly show you that I've badged each of these with a label which I believe describes the kind of work that's actually going on there. And I was very encouraged to talk to see you writing about transition at level four, and most of you know about transformational and transactional leadership. I have to tell you that to my great sadness in the UK, that discussion is largely transformational good, transactional bad and nasty. Transactional is exploitative and coercive and transformational is loving and kind and transactional is male, and transformational is about being in touch with your female side or being a woman. And I'm struggling with that discussion. We would too, but that is the level of debate going on and teaching people about that. And I think we need people to understand they actually add value at completely different levels in different ways. But the worrying thing is that they're missing out the level in between. The majority of leaders are probably in those bands. There transcultural at level six. For me, it's not level six work if you're doing lots of stuff and making loads of money, doing the same thing in a variety of different places, unless there are cultural differences that make it important that you think differently and apply different mental models to the conditions under which each of these will have sustainable success.

Speaker C Could you say a little bit about.

Speaker D Each of the levels on the left? Yeah, well, formational I've chosen not just because it's a harmonic of transformational that's accidental, I have to say. I love the French notion of formacion for training. I was on the International Gas Union Committee for years and first came upon this formacion and learned to understand. And it's exactly what the old apprenticeship used to be. It's when you take somebody and you form them, you mold them. Yeah. And you don't hold the hammer like that. You won't get enough leverage from it. Or this is very delicate. Hold your hammer like that. And that kind of thing, which actually builds lifetime skill and personal pride and craft and all that kind of stuff. Learning how to write, learning how to construct a sentence when somebody says I had a boss once, said no more than ten words in a sentence. Jack please. And I don't want any adjectives or adverbs at all that really focus you on whether you've got something to say and how clearly you're saying it. Now, I don't always obey that rule now because I'm writing for a different audience, but it's that kind of formacion notion. And that's for me is the essence of level one leadership. And I do profoundly believe that there is a lot of level one leadership and the world entirely depends on it. And if mothers didn't do it, we'd be in absolute chaos then at the next levels, at the transmissional level, this is about the transmission of the boundaries and the concepts that we're working within. This is the principle that we're applying. And if it's leadership, it's not just saying do it that way, it's saying, here's why there's a good reason for this. It's not just that we've got the law, the law does this sort of thing. Transactional is about reducing the energy losses within the bagel, within the ring. Because if you think of it three dimensionally, when you draw it two dimensionally, it's easy to pretend that it's all a linear process in the way that, for example, if you were superficially understanding Deming's work, you could just see it as a simple linear process. But actually a lot of it goes up and down and round about and back again. So I give the task that I think I've completed to Judith. Judith says, hey, it's no good, have it back again. So I have another go at it and I get fed up with her. So I start saying, well, okay, if she accepts one out of ten bad, I'll just give her eleven. And I adopt coping mechanisms that don't really work and are inefficient and massively raise the transactional costs of the system. And really a good level three leader gets in among that, makes it elegant. And elegant is the word I like.

Speaker E Alan, why do you have a matrix? Why isn't that just two columns, side by side?

Speaker D Good reason.

Speaker E Hopefully the transitional management of a point or however.

Speaker D Well, the interesting thing is that an increase in complexity almost always leads to an increase or a movement to the next complexity attractor type. Question is whether the movement and the change that's induced is one that is sustainable and survivable. So it's a complicated discussion and frankly, I don't know enough about it. I'm a skimmer. I don't really get deeply into things. I need to get more deeply into this. But the notion basically is that naturally things get more complicated. And that may be because of entropy. It may be that if you're the manager of a brilliantly run level three system and you go in to run it and you haven't quite got a hold of it because you're new to that organization, to that culture and you make one mistake at the beginning, which is an unintended consequence you don't know that. For example, their normal routine is that if The Boss expresses a concern about something or an interest in something historically they've learned that The Boss has that as their number one priority. You go in and if you're like me and you're a fairly heavy duty extrovert and you don't know what you think until you've heard it and you're talking out there and there's seven people in the rooms and they go, hey, this is important, we've got seven things that we need to do that we've never done before. And all you were doing was saying this is an interesting place. So they rush off and they do stuff, so they actually induce complication, actually, which then leads to solutions which require further energies and so on and so on. Now, sometimes these bifurcations or these changes that happen lead to spin offs and other things emerging. But I don't alan know enough about it and that'd be a good thing for the community to get involved in. And obviously I think the other ones are obvious. I've said enough about them, have I? Right, well, let me just click on so.

Speaker B Let'S be the last slide.

Speaker D These are values that I and I think level seven is probably not right. In fact, I'm confident it's not right. I need to revisit that. No, the level seven one, well, I'll show you what was on there, right? And I think that's a higher level. We'll think about that again. But in terms of this here, I'm postulating that these are core values required by followers before they will offer their discretionary energy to the leader, right? And I'm pretty fed up with the leadership literature because it largely looks at the leader, when in fact the whole notion of leadership for me is about if I'm going to follow somebody. It's a very active process. The word follower has got connotations of accompanying, of suffering, of nurturing, of supporting. Now, what would make me wish to do that for somebody? Well, if I'm at level one, I want them to give me a job accurately. I don't want them messing me around saying 17 tables in here if it's only 16. And regardless of whether you are full of Applehood and mother pie and kind to small dogs, actually, if you mess me around and I don't get the job coherently, accurately described to me, you're not a good leader and I'm going to be fed up with you pretty soon. And that seems to me to be core. All the other things, the behavioral traits and all the other stuff is good as well. But it doesn't seem to me to be the engine that captures me at level one. It's that at level two, it's about consistency, that you fairly and justly apply those limits and boundaries that you don't. Here am I'm a short, fat Scotsman if a tall, blonde, North American gorgeous lady comes in, we don't find that the rules have changed, right? Or if a black person comes in that suddenly there's diminishment that kind of stuff and it's consistency of application, of allocation of resources and a whole bunch of stuff. And when you see that in your leader, then I think that drags something out of you or enables you to offer something which is probably the right way, which the leader can then either reject and squander if they're not any good at it. And that may be a condition for the other personality traits or not, and so on. So if you're at level three and you've been polishing your bagel, you got a very low energy bagel, right? No transactional energy costs there. And along comes the level four leader and they say, you know what, your bagel is really good and you should every right to be completely proud of it, but it ain't going to last. And here's why. If you understand that their motivation for doing that is to do with progress. Now, these words, by the way, are offered. They could be completely wrong. I have no research whatsoever other than my own sort of life history and sort of looking at the so it's all guesswork. But that's what it's about. A level five. It's integrity, it's the integration of all these agendas and these changes. So if the level five individual I drew that very neat little flower there with the four petals on it. Well, if one of them is a giant petal and it's called capital and there's a little shrunken petal that's called workers, another little shrunken one called customers. You don't need to explain to anybody in that organization that that leader has no integrity because what they're doing is they're maximizing their own bonus for their own career and it's nothing to do with the reality of the purposes of the organization. And I ran an organization for a while which actually had a very distorted petal shape because it was run for the employees and the customers and the shareholders actually won out of it. But it was very interesting. I consciously knew that that's what was going on. But it was an employee owned business. So slightly different. So those things now, let me go to show you one sorry, this one. This is it with some example roles. This is it marked on Julian Stamp and John Isaac's notion of work themes, which is the levels of work matrix of working relationship model that Judith is using. And beautifully tuned. I thought that was lovely, Judith. Here's the last bit. So I've come up with this thing, which is actually the second column there, the complexity attractor. This is the Rosebank foyer discussion, right? And then that night, and sadly, and Isabel will confirm this, it was our 25th wedding anniversary and we were going to a special hotel in Cape Town and actually we spent the first night until I don't know how many hours in the morning with me drawing what turned out to be bagels donuts. They were actually right. We didn't know about bagels. We only knew about donuts at that time. And we were very British. So a lot of that night was spent actually drawing these things. And that's the stuff that came out of that night's, thinking that then maps to this in this direction, to thinking about what does that mean in terms of leadership? What is the going onness of leadership at that level? What is actually happening? And then to the establishing of a set of these follower perceived attractive values. What attracts me to you as a leader, for me, is the question not who are you as a leader? Because that's a second order question.

Speaker B What I like about that last column, though, is it exactly fits what we did in the mental health thing, because it says you've got to be ready.

Speaker D To move to the next level. The last two columns are from a book by Kelly and Allison, which I happened to stumble on later. And as soon as I looked at it, I thought, this maps onto my contractors and obviously it maps onto Elliot's. Well, I don't say obviously. I believe it maps onto Elliot's levels. It seems to I haven't yet found it. It maps onto I mean, if you take the point limit cycle, taurus, strange, attractive stuff. Can you see there declarative cumulative serial, absolutely parallel, and then the echo at the level above. So what I'm hoping, and this is my fantasy hope, is that I've actually found the core engine from which we can now elaborate any level's model that we wish, because we understand what is going on in the level, not just that Elliot over many years, observed empirically and described something which appeared to be there. I think I'm talking about why it's there. Now, that may sound very arrogant, but that's my hope. I'm not putting it up. So I offered to you as a way of to think I'd love to have all your critique. It will be up on the site, on the website once I've tidied it up a bit, because I'm still a bit unhappy with one or two bits. But before too long, both models will be up on the website and anything you want to tell me about it or ask about it or improve critique, I would be really delighted.

Speaker A Well, thank you.