Innovation Models

Business leaders are being forced to learn
new leadership skills we all could use

One of the articles in Living Business (IC#11)
Originally published in Autumn 1985 on page 35
Copyright (c)1985, 1997 by Context Institute

John Scherer went from being the Lutheran Chaplain at Cornell to his present work as a management consultant. He can be reached at John Scherer & Associates, West 201 Sumner Ave, Spokane, WA 99204, or 5O9/838-8167.

THERE ARE THOSE who say that Lee Iacocca could be the next President of the United States if he decided to run, the first business person to be elected since Herbert Hoover. And the unprecedented popularity of books like In Search of Excellence and The One Minute Manager may be indicators of subtle but sweeping positive changes in the average American’s interest in the world of business.

Long the villain in the drama of life, it may be that business, not science or the academic community as in the past, is emerging as a popular source of hope. Is it possible that business leaders represent – perhaps in spite of themselves – a new paradigm for the rest of us?


As a consultant, I have had an opportunity to "look behind the curtain" at the Wizards of Oz at work in many industries, from hi-tech to health care, the church to construction, the military to manufacturing, from accounting to attorneys. The truth is that the Wizards in each of those industries, despite their public front, are a lot like their namesake in Oz, making loud confident noises, giving directions with bravado. But deep down inside they are scared, or at least nervous about what they are doing. Because what used to work isn’t working anymore.

The need for deep change is being forced on those in the business world with an impersonal and inexorable pressure which threatens, Darwin-style, to eliminate those who are unable or unwilling to adapt to the changing situation which presents itself. Some industries, like Steel and, according to some observers, Health Care, have even gotten on the "backside of the power curve" as they say in flying, where adding more power is not likely to keep the plane in the air, and only something drastically different can save the situation.

Behavioral scientists call this "Second Order Change," as distinct from "First Order Change," which is like rearranging the deck chairs on the Titanic. Second Order Change is a transformation in the way people in a situation "hold" their experience. It is a radical change in the way they perceive the situation. The path of action would have been hard to predict from the immediate past. The issues may stay the same, the apparent circumstances unchanged, but what they mean is entirely different.

I have called this phenomenon "breakthrough" since it usually feels like a tearing or punching through an almost tangible membrane, like a paper bag, into a new attitudinal "space."


Reluctantly, perhaps, business leaders are being pressured by the economy into learning and practicing what I believe are some of the skills and processes we ALL need to master in the decade ahead. Producing breakthroughs or being a catalyst for Second Order Change is as critical a life skill today as handling an axe and a rifle was two hundred years ago. Effective managers now realize that, "Whatever got us to this point in our development is going to take us over the curve. We need to start a new curve, while we keep the old show rolling along."

This creates a significant challenge for managers. They must direct some of their best and brightest people and substantial amounts of capital toward creating the next curve, developing an embryonic business area, complete with all the ambiguity, chaos, confusion, losses, and lack of predictability which were present when the old business started way back when. And all this at a time when stockholders are screaming for sustained profits. The real leaders are those who pull it off by making sure certain things are going on in the organization’s culture which create a "climate for breakthrough," while keeping enough of the old thing going to pay the bills.

Toffler, Fuller and other futurists have described the need for more adaptive and responsive social systems. Perhaps what follows can be a modest contribution about how to do this, drawn from experience in working with business leaders.


I’ve found a set of observable ingredients in breakthrough situations. These factors of themselves do not produce breakthroughs, but whenever breakthroughs occur, they seem to be present. They are, in other words, "necessary, but not sufficient." I will describe what I think the critical catalyst is a little later, but first, the ingredients.

1) Clear Vision or Purpose. Every breakthrough I have seen in a business environment happened where there was either a re-defining or reiterating of the organization’s basic purpose or mission. The leaders articulated purposes which had a deeper, almost spiritual cast to them, which tapped into core human desires or emotions, much more profound than greed or selfishness. People seem to have a built-in need to believe in SOMETHING BIGGER THAN THEMSELVES, and, once they "own" it, will invest incredible amounts of energy to bring it about. I have seen union members working on weekends – voluntarily – to construct a new employee recreation area and to modernize their facility. I have seen senior executives working in jeans and tee shirts side by side with employees to change the physical environment in a plant. Only a compelling sense of purpose could create those scenes.

Remember the story about the medieval stone cutters working on a church? When asked what they were doing, one said, "I’m cutting stone." The second said, "I’m feeding my family." The third said, "I’m praising God by building a cathedral." All three had a mission or purpose, but the last one had more of a handle on a purpose which could take him through tough times.

Effective business leaders also know that there are at least four "vectors" of organizational purpose:

  • Manifest – What we SAY we’re all about.
  • Operational – What we actually DO with our money, things and people.
  • Latent – Some HIDDEN reasons we exist, usually a little embarrassing, or questionable.
  • Extant – What other people THINK we are all about.

The more congruent these vectors are, the greater the resulting force in the world, and the less the organization resists its own success.

2) Alignment. Once the vision is articulated and understood, there needs to be a high level of alignment in the system around that purpose. It is not enough just to "have a purpose." For the vision to work, people must buy into it, make it their own.

When alignment is fractured, as is usually the case, there are organizational sub-units aligned around other purposes, which may or may not be headed in the same general direction as that of the larger system. Occasionally there are two or more units in the system whose purpose is to "beat the other group." This can happen between managers and employees (union vs. management), between departments (engineering and sales), between levels (regional vs. national), and between functions (line vs. staff), etc. The variations are limitless. When this happens it becomes a matter of pure chance if either group is aligned with the overall purpose of the system. The irony is that alignment and, consequently morale within these units, can be quite high, since they have developed their OWN purpose and adhere to it strongly. Since their alignment is not congruent with the larger system’s, however, that morale can be misguided and ultimately a possible restraining force to breakthrough.

An Important Note: The alignment is around purpose, not method – where we’re headed, not how we get there. When a bee discovers a source of pollen it flies back to the hive, steps inside and starts doing a dance. The other bees watch carefully, because the dance tells them the exact direction of the pollen, and the frequency of the beeps the bee makes tells them the exact distance. Then the bee says, "Everybody got it?" and all the bees say, "We got it!" and they all take off out of the hive. Then, every single time, a most amazing thing happens: only 85% of the bees follow the directions!

Fifteen percent of the bees (and it’s a different group each time) say, "Nah . . . I think I’ll go over here and nose around a little bit . . . " Nature seems to have built in those 15%- ers, because they are ensuring the survival of the hive. They are locating sources of future honey, and are in complete alignment with the overall purpose of the hive, even though a casual observer might not recognize it.

Peters and Waterman in Excellence talk about "skunk works" in organizations where informal groups of people work semi-secretly on far-out ideas, which are then fed into the planning and decision-making process. These groups can frequently work out solutions to tough problems which the regular groups can’t, precisely because of their avant garde mindset. So, high alignment about the mission, but some diversity (15% is a good target) about methods is the goal.

3) Integrity: A Passion for the Truth. Breakthroughs are always accompanied, maybe even mid- wifed, by a bone-deep desire to know the truth. What is really going on here? There is a zeal for contacting the reality of a situation, even if it hurts or embarrasses. People are rewarded for this search in clear tangible ways, and no one need be afraid to tell the truth.

This passion for the truth manifests itself in relationships with customers/clients, vendors, potential customers, as well as those inside the system. The breakthrough-oriented leaders are much more interested in finding out why someone didn’t use their product or service than they are in defending their own position, in looking at the hard truth implicit in "the numbers" rather than in fudging them to look better. Integrity, starting at the top, creates the foundation for true breakthrough to stand on.

4) Responsibility. Breakthroughs are never set in motion by people blaming someone else or waiting for another person or group to change. Whenever you wait for or blame someone else, you also give them all the power to create change. You surrender responsibility, and with it, your power. Non-breakthrough-oriented people choose to be blameless but helpless victims, rather than responsible and powerful creators. Second Order Change is always initiated by people who act as if they are at least a cause in the situation as it now stands, and 100% responsible for making the breakthrough happen.

In breakthrough-oriented systems, everyone from the floor- sweeper to the Chief Executive Officer acts as if the mission is theirs, not someone else’s, and that a lot depends on them and what they do. My late futurist friend and colleague, Ed Lindaman, was Planning Director for NASA’s Apollo Program. He found a way to get each worker seeing their responsibility and their contribution to the mission in unique ways. Even the maintenance workers, for instance, were not "doing maintenance"; they were "putting a man on the moon by 1970."

5) Commitment: Seeing to it, No Matter What. Finally, breakthroughs are actually produced by at least one person taking it on as a commitment, and declaring that what needs to happen will happen, no matter what comes up. There are always good reasons why the breakthrough hasn’t happened naturally. If it were going to be easy, it would have already taken place. So the breakthrough-oriented leader realizes that it is going to take some tough actions in the face of "the circumstances," which usually include a great deal of history, reasons-why-it-won’t work, and obstacles.

Lee Iacocca has been able to get people in Chrysler (and elsewhere, it seems) to believe again. The company still has management fights, occasional problems with quality, labor disputes, communications difficulties, but what those things mean has changed. They used to be: Yet another example of how screwed up and bad things are around here. Now they mean something like: Yet another example of things we need to understand better to make this company the best in the world. Commitment. Successful business leaders of today have to have it.


These five characteristics don’t just turn up by accident. What breakthrough-oriented managers have developed, which the rest of us need to learn, is how to make these five things happen in their organizations.

The key ability is what my Canadian colleague, Art McNeil, calls "signalling skills." They know how to send a clear signal which convinces people of their integrity and responsibility and their commitment to the vision, no matter what.

Annheiser-Busch’s new boss, August Busch III, saw something coming down the line at one of their plants. "Stop the line!" he shouted. "See that?!" he said to those around him. "See what?" said one hapless employee. "That dent!" said Busch. With that he stripped off his coat and vest, grabbed a tool box, and crawled under the machine. Fifteen minutes later he emerged, greasy and disheveled, to a cheering crowd of employees, and said, "We don’t put out dented cans of Budweiser beer around here! We produce the best you can buy!"

He could have sent out a memo, calling a meeting to talk about quality, yelled at his Production Manager. Instead, he sent a signal that reverberated throughout the system – and beyond, obviously – and you can bet created a readiness for Second Order Change in the minds of those who heard about it.

The best leaders send signals which integrate all five of the necessary ingredients in breakthroughs in a holographic fashion. An observer of the communication or action could read off the vision, experience the leader’s integrity, responsibility, and commitment to that vision. At the same time the action would increase alignment in those who were there.

The question managers need to ask is: What could I DO which would send a signal which was a clear manifestation of the vision we profess?

That’s a question that needs to be asked throughout the society as well, since the pressure for breakthroughs is hardly limited to the business world. Maybe the new wave of leaders the society needs will not be politicians in the old model, but emerge from business leaders with a Second Order Change orientation and highly-developed signaling skills. Life is training a large group of them right now.

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