The previous chapter considered ways you can combine values, rationality, and power within an organization to act effectively. This chapter explores ways similar themes at the level of the group. As you read this chapter, you may feel that implementing many of these concepts require the authority of a manager or senior executive. Sure, there’s some truth to this–the more authority you have in an organization, the higher the scope of activities you can influence. Everyone, however, has some power to act. Therefore, everyone has some power to affect their organization regardless of their job title.

As with other subjects covered in this book, this textbook does not present this content as the “one best way” to do things. Instead, it seeks to provide you with some ideas to address age-old problems. Other cultures, and even other scholars within Western educational paradigms, have different insights and learnings. Add the ideas presented here to your toolbox, recognizing that there are many other tools out there that you may find better suited to your specific situation.

Incorporating Value Alignment in Recruitment Processes

Values guide wise action. Stakeholders create organizations to pursue a certain combination of values. A government, for example, may establish a publicly funded hospital to pursue the value of public interest through administering healthcare. Shareholders may establish an oil exploration company to pursue the value of productivity, as expressed through maximizing profits. A manager may assemble a team tasked with pursuing the value innovation in an attempt to solve a problem. Values drive activities at all levels of the organization.^[1]

Chapter 10 discussed the importance of champions to drive action. It is their values that motivate champions. When these personal values align with organizational values, champions can become a powerful force of effective action. It, thus, makes sense to incorporate values into an organization’s recruitment efforts.^[2]

The following paragraphs present an example of how organizations might do this. When you think of recruiting in an organization, you may have in mind the hiring practices of a large corporation. Remember, though, an organization may be large or small and may contain sub-organizations. A for-profit multi-national company is an organization, as is a neighborhood soccer club. Regardless of the size or scope of the organization, recruiting members is required.

Recruiting for values first requires that the organization possess a strong sense of what its values are. The organization’s leaders play a crucial role in establishing and communicating these values. Developing organizational wisdom requires the organization to create a culture of values that balance the organization’s success with the needs of customers, employees, and other stakeholders.^[3]

When recruiting personnel, organizations frequently rank the skills of applicants from best to worst and then select the top candidate. Often, though, the difference in ability between the first and second-ranked applicant is marginal and may have no meaningful impact on performance. Rather than ranking applicants top to bottom, you might create categories of performance (say, for example, high, medium, low). The skills of individuals within each group are similar enough that you could select anyone from it and expect the same level of performance.

Now, since you have categories in which individuals have similar skills, you look within the group of the highest skilled individuals. You may then apply another criterion, such as the alignment between individual and organizational values, to choose which person in that category you wish to recruit. In this way, you create an organization populated with highly skilled individuals who share the company’s values. This process creates a pool of champions that will drive the organization’s mission forward.^[4][5]

Building Teams Capable of Wise Action

Organizational action is a group activity. Thus, to develop organizational wisdom, organizations must create teams capable of acting wisely. Several criteria will allow teams to achieve this.^[6][7]

Leaders must identify the team’s scope of activities. To do this, leaders must identify expectations, project boundaries, available resources, and duration of activities. In many organizations, a team may have multiple projects on which it works. In these situations, managers must identify how the team will prioritize numerous deliverables.

Leaders need to ensure teams have the required information and resources to do their job. The team must be interdependent. That is, individuals within the group can only achieve success if they collaborate with the other team members. Organizations can accomplish this by creating teams where members share responsibility, and all are focused on delivering the same outcome.

Teams need to have stable membership. Thus, leaders need to avoid cycling people in and out of the group. Every member of the team must have a role. When creating teams, leaders should select members with requisite skills. In addition to skills, though, members of a capable team should also possess self-awareness of their strengths and weaknesses. They need to have strong communication skills. Importantly, the people on the team need to have the authority within the organization to take the necessary actions to achieve success.

Effective teams create norms of openly discussing issues, such as competing priorities, disagreements, and so on. For best results, when teams are working on innovative solutions to difficult challenges, managers need to shield their team from political turmoil within the organization.

Creating an Organization That Can Tackle The Unknown

Knowledge is required but insufficient for wise action. To act wisely, we must understand the context in which we operate. Our understanding, however, is often limited and flawed. How do we create organizations capable of managing uncertainty well?

The following sections present some ideas to begin answering this question. It first explores means through which to develop an organization’s capacity to engage in collective reasoning. It then introduces an approach called appreciative inquiry, whose intent is to provide a framework for organizations to address exceptionally challenging problems. It then discusses the importance for organizations to adopt an experimental mindset when dealing with situations with no clear solution.

Let’s kick things off by returning to the concept of collective reasoning.

Developing an Organization’s Capacity to Engage in Collective Reasoning

Chapter 10 discussed the power of collective reasoning to bring multiple perspectives together to create a more vibrant picture of our operating environment and develop innovative solutions. Doing this well requires more than putting a diverse group of people in the room and letting them debate. Indeed, merely putting a diverse group of people in the room and shutting the door may well lead to bitter arguments and animosity.

To tap into the power of collective reasoning, an organization must develop certain structural elements and foster appropriate actions and attitudes. The following sections describe these structures, actions & attitudes in more detail.

Structural Elements of a Group Engaged in Collective Reasoning

There exist various structures that facilitate an organization’s ability to use and integrate the knowledge distributed across its members. Once you have established these structures, you then use them to:

• Deepen an assessment of the operating environment in which your organization exists.
• Develop innovations or integrate knowledge to exploit.
• Implement and spread innovations throughout your organization and beyond.

These structures include the following five elements.^[8]

1. Creating Credibility

To engage in collective reasoning, individuals must consider the other people they are working with as credible participants in the process. They must also find the task they are working together on as credible use of their efforts. The following steps are ways to achieve credibility

• As discussed in Chapter 10, you can achieve this credibility by using the form of rationality the organization considers legitimate (e.g. bankers favoreconomic rationality, scientists technocratic rationality).
• A person’s credentials are also an important signal of credibility. We would, for example, consider a chartered accountant a more credible source for tax information than a registered nurse.
• A group leader can give the process of collective reasoning credibility through the creation of clear strategic mandates and action agendas for people entering the group.

2. Stimulating Diversity of Thought

Collective reasoning’s ability to tackle complex issues comes from the confrontation and a combination of different forms of knowledge and rationality. By putting different rationalities in dialogue, people can challenge each others’ unquestioned assumptions and broaden perspectives. By finding creative ways to link different knowledge together, we develop innovations. Some approaches to achieve this include:

• Group leaders can stimulate diversity by increasing the breadth of categories into which the organization categorizes knowledge–that is, bringing together a broader array of people with different perspectives and rationality.
• Then, the leader can focus the group on finding links between these different perspectives. For example, a group might look for connections between an engineer’s technical knowledge and the sales person’s knowledge of customers to enhance the attractiveness of a company’s products.

3. Investing in Communication

Collective reasoning occurs when people with different perspectives engage in dialogue. Facilitating this discussion requires investing in communication. Though the challenges to communicating are prevalent when participants work in different locations, even people working in the same building may have difficulty coming together to engage in fruitful discussions of the topic at hand. The following steps provide ideas to manage these challenges.

• Identify specific people to whom you will assign the responsibility of fostering the development of your working group. These people will liaise with and build the network of individuals participating in the collective reasoning process.
• These people you identify will have the responsibility to use their contextual (cultural) rationality of the organization to develop appropriate mechanisms and tools to support communication within your collective reasoning team
• These people you identify will also have the responsibility to use their social and emotional intelligence to close the differences between different group members and create a unified vision of the team’s goals.

4. Developing an Extended Network

Collective reasoning requires that you have a network of individuals possessing different perspectives and knowledge willing to work with you on a task. Thus, to create an organization proficient in collective reasoning requires the development of these networks. When creating this network, consider these four sources of participants.

• Local internal include people from within your organization in your geographic area.
• Local external include people outside your organization in your geographic area.
• International internal may only exist in geographically disperse organizations (e.g., multi-national organizations, governments, etc.). This network includes people from within your organization but working in a different geographic location from you.
• International external include people outside your organization working in a different geographic location from you.

5. Providing Appropriate Tools for Communication

Facilitating dialogue between people with diverse backgrounds who might work in different areas of the organization and, possibly, the world requires the use of appropriate communication tools. Even if the team is close together and meeting face-to-face, you need to think about how you will capture the key insights from those meetings and make them accessible to everyone involved. The following considerations are essential for developing effective communication systems.

• What are the communication needs of your group?
  • You will need to facilitate dialogue between people. Will this be done face-to-face? Online? Video conferencing? Others?
  • What tools will people need to have this discussion? Will you need projectors to display data charts? Whiteboards to write down ideas? Others?
• How will you record the insights developed through your discussions and then make those insights available to the team?
  • When dealing with complex problems, the ideas generated through collective reasoning can quickly become numerous. When you consider where you will store these insights for the team, you also need to consider creating a system that will allow people to navigate your repository of information so they can find what they are looking for.
• What communications and IT resources does your organization possess? Some organizations may already maintain sophisticated IT systems with knowledge management capabilities. Other organizations may have no resources at all. You will need to consider what tools already exist that you can use and how you will fill any deficits.
• What communication tools does your team have the ability and comfort to use? You may have the most sophisticated IT system in the world, but if people on your team lack the training to use it, then the system is useless. How will you close the gap between the tools you have available and the tools your team can use?
• How will you facilitate the exchange of knowledge between different areas? For example, the accounting department of a company knows certain things about the organization. The human resources department knows different things about the company. What system can you create that will allow human resources to know what the accountants know and vise versa?

The above sections identified structural elements an organization needs to engage in collective reasoning effectively. In addition to structures, people must undertake relevant actions and adopt appropriate attitudes to engage in collective reasoning. The next section identifies these actions and attitudes.

Actions & Attitudes That Enhance Collective Reasoning

Simply placing people with different perspectives together and expecting them to produce miracles may lead to disappointment. Rather than innovate, people may argue. Rather than focus on what the organization needs, people may waste resources solving the wrong problem. Several actions and attitudes described below will help avoid these adverse outcomes.^[9]

Understand how you use power to disempower others in the group. As discussed in Chapter 6, even though social systems may distribute power unequally, everyone has some power. During interactions, consider how your actions might inadvertently disempower others. For example, a vice president may stifle a productive discussion between front-line employees when she voices her opinion. Someone in charge of setting a meeting agenda may only give a speaker five minutes to talk when they need fifteen. An assertive extrovert may speak over a shy colleague. To facilitate collective reasoning, we must be mindful of how our actions may silence others.

Identify the possibilities of teamwork and work to develop the team. Consider what you might accomplish as a group that you are unable to do alone. Set your team to those actions. Take time to develop the lines of communication and bonds that strengthen the team’s cohesion.

Step back from daily pressures to get a broader view of the situation. In many organizations, this may feel like an impossible task. Managers and employees are under intense pressure to manage immediate emergencies, making it difficult to pause and think about how their work fits into the big picture.^[10] Though it may at times feel like life conspires against our ability to do so, we must force the time into our schedule to stop, step away from our work for a moment, and reflect on how our efforts fit into the big picture.

Help the group consider their situation in a new light. It is easy for us to lock ourselves into our perspective. We might call this narrowing of focus ‘tunnel vision.’ Breaking out of our tunnel vision may help us see novel solutions to problems, or give us unique insights into our circumstances. In groups, we might achieve this by taking on the role of devil’s advocate.  A ‘devil’s advocate’ purposefully challenges people’s arguments not because they oppose them, but rather to strengthen them or spur different ways of thinking. Alternatively, you might bring in outside experts who may see your group’s situation differently and then challenge your perspectives.

Know that you cannot control everything. Recall from Chapter 10 how champions possess a realistic sense of what the organization can and cannot do. Also, recall how organizations are open systems, and so forces inside and outside the organization influence our environment. Rather than relying on hopeful idealism, wise action is realistic. Phronesis–practical wisdom–is doing the ethically practical in your specific situation.^[11] You will accomplish more if you acknowledge upfront that there are forces beyond your ability to control and adjust your efforts accordingly.

Understand wisdom has a spiritual aspect of meaning and values. Values guide wise action. As the previous bullet said, phronesis is doing the ethically practical–the keyword being ethical. The pressure of organizational life can cause us to lose sight of the values we work toward as we rush to our next meeting or deal with angry customers. Always remind yourself and your team of the values that guide your action.

Become a life-long learner. Knowledge is required but insufficient for wise action. Our understanding is often flawed or incomplete. Our training indoctrinates us in certain forms of rationality, which may leave us deficient in other ways of knowing. We can never know enough. Always learn more. Ask yourself, “What do I know today that I didn’t know yesterday?” If the answer is nothing, take action to add to your knowledge.

Developing the capacity to engage in collective reasoning is one way to create organizations capable of handling the unknown. There are two other ways to build this capacity that this textbook will discuss: appreciative inquiry and experimentation. The following section explores the process of appreciative inquiry.

Appreciative Inquiry Approaches to Facing “Wicked Problems”

Wisdom is action-oriented. Taking action requires hope and courage. Thus, we need methods to approach complex issues in ways that are hopeful. Though many such methods exist, this textbook will present an approach called appreciative inquiry. Rather than focus on problems, appreciative inquiry focuses on what is working to allow us to strengthen processes that lead to desired outcomes.^[12]

The following paragraphs lay out the mindset through which to approach appreciative inquiry processes followed by a description of the process itself. It then looks at the Seniors Program from Chapter 7 to see an example of how the appreciative inquiry process worked in real life.

An Appreciative Inquiry Mindset

Appreciative inquiry is a positive approach. If all we do is study our failures, then the only thing we learn is how to fail. To learn how to succeed, we must research and build on positive examples of success. Focusing on success does not mean that you ignore problems or barriers. Instead, you focus on positive examples of attempts to address those challenges and then work to build on those successes. You ask, Where do our strengths lie? How can we build on those strengths to address the challenges we face?^[13][14]

Appreciative inquiry requires frequent reflection. Through reflection, you think about what you are trying to achieve and how you are trying to achieve it. You consider what is working and how you might leverage those successes.

An appreciative inquiry approach also requires that we remember the interrelated nature of the world. Every social setting is an open system. Our actions affect others, which in turn has a return effect upon us. As you begin taking action, consider thoughtfully how your actions affect others and how that might impact your continuing efforts.

Elements of The Appreciative Inquiry Process

As with all collective reasoning processes, begin the appreciative inquiry by partnering with people and groups who have relevant experience for the problem you have chosen to tackle. Learn what experts already know about the issue you are targetting. Deepen your understanding of the challenges of solving those issues. Learn about the successes people have already achieved.

Then, develop good questions. Big questions. Compelling questions. Organization-changing questions. Society-changing questions. Even if the questions are unanswerable, they still guide us. It is through the pursuit of answers that we act and create change.

Engage with the public. In almost any organizational endeavor, the public is an important stakeholder, be they customers buying your product, taxpayers funding your efforts, suppliers providing you resources, and so on. Learn what they expect. Discover the wisdom and out-of-the-box ideas that might be circulating beyond the boundary of your organization.

Once you have gained insights into appropriate actions to take, build structures supporting those changes. As identified in Chapter 9, do this by using contextual (cultural) and institutional rationality to create bureaucratic rationalities that support the actions you desire.

• Bear in mind, though, that when tackling significant issues, we are often operating in environments of uncertainty and complexity. Thus, create structures that are adaptive and flexible so that people can make adjustments as needed. You generate this adaptability by focusing on minimum specifications (or min specs) rather than maximum rules. Rules constrain choices. By avoiding rules and instead identifying only the minimum specifications that define success, people become free to try different ways to meet those specifications.
• A surprisingly powerful tool to establish new structures is to create a metaphor describing it. Humans conceptualize complex ideas through metaphors.^[15] For example, we often refer to organizations as hierarchical. This metaphor paints the image of an all-powerful ruler at the top with layers of subordinates underneath. If you wanted to shift such an organization to one where power is decentralized, we might adopt the metaphor of an organic organization. This new metaphor paints the image of an organization that is flatter, where the center is, perhaps, stationary while dynamic extremities push out, probing the environment.

Embrace “wicked problem.” These are problems that are complex and defy attempts to reduce them to basic elements. When you meet with experts and the public as previous paragraphs advised, have them discuss the challenges that make these problems so difficult. Why do they remain unsolved? During these meetings, listen, but also ask “wicked questions.” A wicked question is one that challenges people’s underlying assumptions and the status quo.

Identify spectacular examples of success, also known as positive deviants. Then, study those positive deviants to learn what led to their success. Apply what you learn to the problem at hand.

Let’s look at the Seniors Program from Chapter 7 to see how these elements of appreciative inquiry fit together in a real-world project.

In our discussion of creating organizations capable of handling the unknown, the previous two sections have discussed how to create the capacity for collective reasoning and the appreciative inquiry process. The final element that this chapter will address is developing an organization’s ability to experiment.

A Willingness to Experiment

Despite the limitations in our knowledge, we still must act. We will never have enough knowledge to eliminate uncertainty and risk, and so we must learn to live with uncertainty and risk. Action requires us to make choices. Often, those choices involve tradeoffs that we may not fully understand.^[16]

When operating in environments of uncertainty and risk, the most successful groups are those that can proceed with a spirit of experimentation. They can try something, gather feedback, and adapt. Through this approach, groups can deepen their understanding of tradeoffs and move forward during uncertainty.^[17][18][19]

One way to facilitate this spirit of experimentation is through the process of setting minimum specifications (min specs), as the previous section described. By establishing minimum requirements rather than rules that restrict action, people are free to try different ways to achieve goals. Another way to facilitate experimentation is to adopt an action-reflection cycle. Through this process, groups act, reflect on results, reflect on values appropriate for the situation, and then adapt.^[20]

This advice comes with a word of caution, though. Many organizations are risk-averse. They fear failure. People who participate in failed projects can, at times, find their career negatively affected, especially if the failure led to the loss of money or customers. You must use your contextual (cultural) and bureaucratic rationality of your organization to act to protect you and your group from any fallout that might occur if your plans fail. If you are in a leadership position, then it is incumbent upon you to protect your team from the dangers of failure so that they may innovate in safety.

That said, if you are indeed operating in an environment of uncertainty, then any action you take will, in effect, be an experiment regardless of whether you intended it as such. Rather than pretend you operate with certainty, you will achieve better long-term success if you acknowledge upfront that you are experimenting and explicitly plan that you will learn and adapt as you go.

The previous sections considered ways to create organizations capable of handling the unknown. These ways included developing the ability to engage in collective reasoning, appreciative inquiry, and experimentation. This text now contemplates how to create structures with the organization that facilitates the development of wisdom.

Creating Structures That Facilitate Organizational Wisdom

Developing organizational wisdom requires structures that facilitate adaptability, innovation, and prevention of problems. These structures should be conducive to problem-solving and risk-taking. Such organizations can engender trust, enthusiasm, integrity, and a long-term view.^[21]

Achieving these attributes is a tall order, but there are ways to create such organizations.^{[22][23][24][25]}

Historically, business education focused on the primacy of a company’s owners. Under such a view, a manager’s sole responsibility was to the owners, and the company’s purpose was reduced to the creation of profits. Organizations, however, operate in open systems where they affect and are affected by multiple stakeholders. To develop organizational wisdom, create goals and plans that focus on multiple stakeholders, including customers and employees in addition to owners.

Since wisdom is action-oriented, we want to create organizations capable of action. To achieve this, push decision-making to the sources of expertise within the organization and basing rewards on performance. Distributing decision-making in this way requires trust, which leaders can develop by creating systems that foster the free flow of communication, honoring integrity, and maintaining stability within the organization.

Tapping into the potential of collective reasoning, appreciative inquiry, and experimentation requires the organization to see differences among its members as potential sources of innovation. Translating innovative ideas into actions requires a workforce that is creative and adaptive. An organization can foster creativity and adaptability through training programs that focus on general rather than firm-specific skills. As crucial as firm-specific skills are, focusing exclusively on them to the exclusion of all else narrows people’s focus and creates tunnel vision. Tying compensation to skills and knowledge that employees gain further promotes the development of an organization’s innovative potential.

As Chapter 9 discussed, it is through the creation of appropriate bureaucratic rationalities that organizations produce these types of structures. How do we gain the skills needed to create and shape the bureaucratic rationalities of our organizations? The following section addresses that question.

Develop Bureaucratic, Institutional and Contextual (Cultural) Rationality About Your Operating Environment

Chapter 9 identified that it is through bureaucratic rationality that we reify power. In other words, to create any change in an organization, you must create new bureaucratic structures to administer that new action. How do you gain sufficient insight into the official and unofficial bureaucratic rationality governing an organization to create bureaucratic rationalities that support the action you want? How do you assess which groups might help you, which will resist, and which ones are indifferent?

You learn this through two means: institutional and contextual (cultural) rationalities.

Recall institutional rationality governs what is rational within a sphere of society. So, for example, if you work in healthcare, you need to understand how the average healthcare organization operates. If you work in banking, how does the average bank operate? And so on.

You gain this in part through school. When teachers train you for a profession, they will introduce you to the institutional rationality of that profession. On-the-job experience will then supplement that training. Years working in a sphere of society gives you insight into how it operates.

Understanding the rationality of a specific sphere of society, however, is insufficient because each organization has its unique characteristics. Each organization structures itself slightly differently from others in the industry. Additionally, each organization has different people working in it who have their unique strengths, limitations, and goals. Understanding those unique characteristics requires contextual (cultural) rationality. We gain contextual understanding through experience working with that specific company.

Some people may find it disappointing that a critical component of gaining these insights is work experience.  Gaining experience takes time. The problems we face, however, are happening now. Though there is no substitute for experience, there are things you can do to learn from experience faster. Later chapters discuss this in detail.

This chapter considered ways you can create organizations capable of integrating values, rationality, and power to develop the capacity to act wisely. We have covered a lot in this textbook. You now know many aspects of organizational wisdom. Knowing, however, is not enough. Though knowledge is required, it is insufficient for wise action, after all.

The following two chapters explore ways you can put what you have learned into practice. Chapter 12 discusses practices you can adopt that will develop your ability to act wisely.

Remember, though, that wisdom is action-oriented. It is not knowing the right thing, but doing it. Taking action requires hope and courage. Wisdom requires hope because you must believe we can act to solve our problems. It requires courage because you must be willing to face the risks of failure and the consequences of “rocking the boat.” Chapter 13 closes this textbook with a discussion of how you might find your courage to act.