Rethinking Strategic and Cultural Change—Part II

Introduction

Today’s post is the second part of our two-part article on rethinking strategic and cultural change, an article first published exactly 35 years ago but which has stood the test of time. Last time we focused on strategy; in today’s post we turn our attention to corporate culture.

First we define what we mean by “culture” in a way that is actually of practical value if you are interested, as we are, in transforming the culture of an organization swiftly and surely through the smallest possible executive actions, and without the need for large-scale change programs, “change management” or any other such big deal. 

We then turn our attention to the very fundamental nature of the rethinking involved in making culture change quick and easy.  Here we begin by pointing out in some detail the sweeping extent of general agreement in the intellectual world over the past half-century, and from every quarter, that the way we have all been looking at things for the past four hundred years desperately needs an upgrade.  

Next we give the briefest sketch of our own alternative view of how things work, which has been at the heart of our research since we started decades ago.

Finally, we sketch out the alternative approach to culture change that follows from this, and show how strategic and cultural change can be undertaken in sync.

—The Editors

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Rethinking Strategic and Cultural Change—Part II

An Approach to Corporate Culture

We usually get to know the culture of an organization the hard way. We come to learn what is culturally acceptable behaviour by inadvertently behaving in ways that are not culturally acceptable. 

We are awarded our Company MBA (My Behaviour’s Acceptable) from the University of Gaffes and Clangers. It is in explaining why certain avenues of approach are not open to them, why certain things just won’t wash, that managers most often cite “the culture of the place.” 

The culture is demarcated by specifying what would be countercultural. “There’s no rule that says you can’t, but it’s just not done here. Try and you’ll see, if you’re lucky it’ll just get you ignored.”  

There may be no formal rules proscribing certain modes of conduct, yet people in the organization quickly learn to follow unwritten rules to the extent that certain patterns of behaviour become ubiquitous in the organization, and, furthermore, serve to mark it out from other organizations, giving it a distinct identity as well as a distinct flavour or feel. Once you learn the culture of an organization, you know how to conduct yourself wherever you may venture within it.

Anyone who has spent much time in or around large multinational corporations must be struck by the extent to which knowledge of the curious ways and apparent idiosyncrasies of one part of the organization can provide one with an inordinate amount of insight into the workings of the rest. More often than not, patterns found to obtain in one part of the organization will be found to operate in all the others.

In an earlier post (“Organizational Culture as Hologram”) I described the holographic nature of corporate culture: not only is the culture of the organization as a whole encoded in each of the parts, not only do the same cultural patterns of behaviour occur everywhere throughout the organization, but, curiously, when a shift in the pattern is found to be occurring in one part of the organization, a similar shift will mysteriously appear in numerous other parts that are apparently only remotely connected. 

Knowing what one can expect to find in a remote corner of the company of which one has no direct knowledge, the phenomenon of “Don’t tell me, let me guess,” seems to be central to managers’ everyday intuitive sense of corporate culture.

In our own approach to culture at Interchange Research, we define the culture of an organization as:

1. the invariant patterns of organizational behaviour, considered as a whole,

2. that connect, inform, and provide a context for even the most diverse actions of individual managers right across an organization,

3. that help to distinguish behaviour in that organization from behaviour in others,

4. and that are not deliberately encoded in the organization’s formal rules.

Rules that are not (formal) rules are of course quite immune to change in the formal rules.  Human beings tend to behave in rigidly patterned ways anyway, thank goodness. If they did not need formal rules in the first place to get them to do that, then, more often than not, no amount of tinkering with formal rules will make one iota of difference. 

The pattern of anything is whatever is invariant from one occurrence to the next.  

It is the rigid patterning of organizations that allows them to be workable at all. The rules that define the cultural patterns of organizational behaviour are not prescriptive rules but descriptive rules, introduced by an observer (i.e. by us) to encapsulate the observed invariance in behavior—that which stays the same, descriptively, however much other aspects of things may change.

An alternative to the “rules” metaphor for looking at pattern is the (not unrelated) concept of constraint. Patterned behaviour is said to be invariant, but what this means is that the behaviour does indeed vary but only within certain clearly describable, clearly definable limits or constraints. Even when things change, they change within the bounds of those selfsame constraints, hence, as we remarked last time, “plus ça change, plus c’est la même chose.”

The patterns constituting the organization’s culture are thus the ultimate source of corporate stability, for better—as it usually is—or for worse, as when agreed changes stubbornly refuse to happen.

You cannot not have an organizational culture. 

As a company’s culture has evolved organically over time, and as it is almost impossible—no, I would say strictly impossible—for another organization to precisely replicate it, and, furthermore, as the culture has its own unique coherence that contributes in a positive way to making the organization what it is, a company’s existing corporate culture can often be its single most untapped major source of exploitable uniqueness. 

Construct and co-construct with your customers an ecological niche that is based on precisely fitting that culture in ways that precisely meet the needs of customers, and the result will be an almost limitless source of strategic cooperative and competitive advantage. Design the configuration of tumblers in the customer-lock so that they line up only for a key with your company’s unique cultural pattern of notches on it, and you are creating a door with a lock that only your company can open, a door opening into an enchanted kingdom that only your company may enter.

But then again… ah, here’s the rub. You might be thinking, “You wouldn’t be saying that if you could see the dog of a culture that our company’s stuck with. The only door that rusty old key will ever open is the door to the room where they’ll be holding the liquidators’ meeting.” 

And this is where you would be wrong. 

For this is where the Utilization Approach and the third kind of strategic reframing I referred to in Part I comes in, and this is where, I am afraid, we must let go of a large number of our most cherished fundamental assumptions, not only as managers, but as human beings living in the 21^st Century. 

This is where we need to pause a moment, if you will bear with me for a bit.  We need to talk epistemology.

A Muddled but Widespread Awareness of the Failings of the Old Epistemology

Why, for goodness’ sake, in the middle of an article about strategic and cultural change, are we about to take so much time out to talk about epistemology?  Well, our title suggests rethinking strategic and cultural change, and the rethinking required turns out to be at the level of epistemology.  

Epistemology, as a branch of philosophy, is concerned with the justifiability of claims to know. When speaking of ‘an epistemology’, however, we are speaking of the whole set of tacit assumptions on which our knowledge rests. 

Most so-called ‘paradigm shifts’ in the history of science have left the underlying epistemology undisturbed. 

In fact, for most of the past two millennia, despite innumerable paradigm shifts in every field of knowledge, virtually all human knowledge in the Western world has rested upon a single, very particular, well-circumscribed epistemology—a lineal epistemology of power and energy, substance and forces, cause and effect. 

But we are not abandoning this time-honoured traditional view just for the sake of making sense of strategic and cultural change in organizations.  Far from it!

The man and woman in the street may think that our current epistemology must, after all, have served us well enough through the centuries, judging by how far we seem to have come.  Surely, far from hemming us in, the thick, sturdy perimeter walls of the prevailing scientific epistemology have long kept the City of Truth safe against error, groundless speculation, pseudoscience and religious dogma, ensuring steady scientific and technological progress, have they not?

But as we shall see, we are by no means alone in feeling the need to jettison this venerable way of thinking.  In fact, in the scientific world itself, the need for a radically new epistemology has long been beyond doubt. 

For the once impregnable citadel we are abandoning for good is already in ruins.

Over the course of the 20^th Century, this ancient epistemology, which in its modern form is roughly 400 years old and which for short I have long called “E1,” began to show more and more cracks. In fact, it’s fair to say it began to crumble.  

New empirical discoveries and theoretical developments in all fields of science, from physics and chemistry to biology, psychoanalysis and cybernetics, simply could not be accounted for in terms of the old Galilean-Cartesian epistemology that had been dreamt up before the dawn of modern science. 

The old epistemology, as philosopher and historian of science Stephen Toulmin argued, had been, in the first place, as much a visceral reaction to the horrors of the Thirty Years’ War as anything else, and had little to do with the progress that would be made in the sciences over the succeeding four centuries.¹

Indeed, the familiar, fundamental tenets of E1 were hardly hot off the press and up on the shelves in the early 1600s before it was already viewed as deeply suspect and superannuated by Galileo’s and Descartes’s older contemporary Francis Bacon, the founder of modern science and technology, in the early 17^th Century, and E1 was likewise rejected holus bolus by Newton and the Newtonians later in the 17^th Century, who nearly put paid to it once and for all. 

And yet, somehow, E1 managed to make an astonishing comeback before the 18^th Century was out.  

E1 has stuck around ever since, but ultimately it could not stick. It could not “save the appearances” in Plato’s terms, that is, it could not make sense of empirical observations without self-contradiction or violating what was already known.

By the 1920s in Central Europe and by the 1940s and 1950s in the anglophone world and beyond, it was clear that a new epistemology was called for. The problem was that no one could quite agree on what it would be.  

And so began the “Epistemology Wars,” transcending numerous scientific fields, along with the familiar phenomenon, prevalent throughout the 1980s especially in the psychotherapy field, of what my colleague Bill O’Hanlon and I used to call “duelling epistemologies,” typically without the duelling authors having a clue that they were arguing from incompatible tacit epistemological assumptions at the most fundamental level. 

The same phenomenon of duelling epistemologies plagued cybernetics and the systems sciences from the 1970s onwards, and was prevalent in many other scientific fields as well, continuing to this day.

Worse still, other practitioners and investigators were trying to mix and match as best they could, throwing in a bit of this and a bit of that, and the 1980s in particular witnessed bizarre combinations of logically incompatible, in fact often directly contradictory foundational ideas, various would-be epistemologies, each of them patchwork-quilted together by well-meaning individuals trying to make sense of their own observations, knowing that the prevailing epistemology, if it had ever made any sense (which I personally doubt), certainly by the mid-20th Century no longer made any sense at all.

The French science journalist, Pierre de Latil, in his 1956-57 book Thinking by Machine, made it clear that the information sciences of the 1940s and 1950s inevitably heralded a new age in philosophy—for the old epistemology simply couldn’t pass muster any longer.  

Two other French journalists, de Latil’s contemporaries Louis Pauwels and Jacques Bergier, a few years later in 1960 (in 1962 in German and 1963 in English translation), published their best-selling book, The Morning of the Magicians, which became a worldwide cult classic amongst the hippie generation of the 1960s, one of the foundational texts helping to set the agenda for the New Age movement. 

Focusing more on advances in nuclear physics (Bergier’s own discipline) than in the psychological, biological or information sciences, Pauwels and Bergier hailed the scientists who were “the direct heirs of the great seekers of the first quarter of [the 20^th] century: the Curies, Langevin, Perrin, Planck, Einstein, etc.,” who “had had to wage war against the inertia of the human spirit, and had been violent in their campaigns.” 

These heirs, the investigators who, they said, had valiantly pursued truth for truth’s sake in the shadow of the Nazi holocaust and Hiroshima, became “the ‘new-look’ scientists who have linked their destiny with that of the world itself.” 

In consequence, “the present generation,” they declared, writing during the Algerian conflict and at the height of the Cold War,

everywhere and in all circumstances, is made aware that the scientist is closely connected with world affairs. Almost all human knowledge is concentrated in his hands, and very soon all power will be too. He is the key figure in the adventure on which humanity has embarked. Enmeshed by politics, harassed by the police and information services, supervised by the military, he has about an equal chance of ending his career with the Nobel Prize or facing a firing squad. At the same time his work leads him to scorn the trivialities of the individual and the particular, and enables him to think on a planetary, even cosmic level. 

For “[t]he ideas on which this modern civilization of ours is founded,” emerging “from the welter of ideas circulating in Western Europe in the eighteenth century, [which] reached its highest development in the nineteenth and spread its benefits throughout the world in the first half of the twentieth, [are] becoming more and more remote from us,” they declared, and, clearly, now “are outworn.” 

Pauwels and Bergier, in their lively, long-researched and deliberately provocative book, which they emphasized was nonetheless sure to contain “a lot of silliness,” explicitly sought merely to open readers’ minds as wide as possible, and to stimulate new thinking about science and its place in the world, about what we know and don’t know, and to make it all-but-impossible to go back to our old, “out-of-date modern” ways of pursuing knowledge. But what the new epistemology that was plainly heralded by all the new discoveries might in time turn out to be, they left as an open question, and hazarded no guesses themselves.

Meanwhile, many efforts at proposing replacement epistemologies were being made. 

Among the earliest and better known, beginning in the 1950s and 1960s, the anthropologist and naturalist Gregory Bateson proposed an epistemology based around “circular causality” as opposed to lineal cause-and-effect, laid great stress on Bertrand Russell’s 1903 logical Theory of Types, and brought information to the fore where matter and energy had previously ruled the roost, drawing heavily on the information theory of Claude Shannon and other ideas Bateson had picked up at the seminal Macy Conferences on cybernetics (1947-53).  

A host of others, all of whom were once names to conjure with, all with very different and, to varying degrees, mutually contradictory epistemological offerings, contended, with widely varying degrees of conceptual sophistication, for the Successor Epistemology cup.  

For starters, just off the top of my head, in addition to Gregory Bateson (amongst those who were likewise quite widely read beyond their own field), there was Humberto Maturana, Francisco Varela, Heinz von Foerster, Stephen Toulmin, Stafford Beer, Ilya Prigogine, David Bohm, Peter Russell, Gareth Morgan, Reg Revans, Rupert Sheldrake, Rom Harré, Ernst von Glasersfeld, Paul Watzlawick, Paul Dell, Anthony Wilden, William T. Powers, Ranulph Glanville, Fritjof Capra, and the list goes on and on.

I’ve mentioned only a handful of them, but scores of the epistemological dissidents were very well known for a while in the scientific world and beyond, and a number of them were extremely interesting as thinkers in their own right. But as for what they were each tentatively putting forward as an alternative to the old epistemology, none of it really made a whole lot of sense. 

Not to me, anyway, and, for the most part, not to one another either.  There was little if any agreement on what a successor epistemology might look like.

At best, for my purposes, the work of each contained one or two pieces of the puzzle I thought worth hanging on to, but certainly their epistemological offerings proved at best suggestive here and there, yet more than somewhat disappointing when it came to trying to apply them to scientific and clinical practice.

This unholy epistemological cacophony prevailed in the anglophone world right through the 1980s; indeed it continues today.  And that’s without yet venturing onto the Continent to mention the unholy mess of the often confused and confusing contemporaneous work, rooted in literary criticism and, to a lesser extent, in the social sciences and francophone philosophy, of the various competing schools of postmodernism and post-structuralism, suddenly trending anew in North America in the 1980s, whose thinking, despite their pretensions, was in virtually every case even more firmly mired in the errors of E1 than any of the alternatives rooted in the hard sciences, amongst those I have listed above.  

The same can be said of the “critical theory” revenants who began re-emerging from the woodwork and haunting numerous fields through the 1970s and 1980s, sowing yet more epistemological confusion still.  But at least, to their credit, the critical theorists, postmodernists and post-structuralists all knew that something, somewhere, was very wrong with the old epistemology.

As if the confusion wasn’t bad enough, rising to prominence at the same time, and jumping onto the anti-old-epistemology bandwagon by the mid-to-late 1980s, were the then prominent Santa Fe Institute theorists, the various bitterly contending schools of systems theorists, the constructivists, the social constructionists, the chaos theorists, and the complexity theorists, who, as far as I was concerned (and I had made it my business to study these things), added nothing but still more complexity and still more chaos.

All of the thinkers and schools of thought I’ve mentioned by name or adverted to above, tended to miss the wood for the trees, as far as I could see, and generally seemed to get hung up on a single central idea or small cluster of ideas that became their hobbyhorse. 

Or else, in the case of a number of them, like the best-selling Fritjof Capra as perhaps the paradigm case, in their laudable efforts at syncretism, often ended up instead with a veritable casserole of eclecticism with many well-selected ingredients, making a fascinating mishmash still boiling over with internal epistemological conflicts and managing to miss the point altogether. 

To further compound this already bewildering hodgepodge, the postmodernist and post-structuralist ideas along with bits and pieces of critical theory and similar threads started getting horribly tangled up with all the rest of the other contending, dissident epistemologies drawn from the hard sciences—particularly in the hands of many of those who were not trained professional philosophers at all, or even amateur philosophers, but hardworking, practicing clinicians or working scientists just trying their level best to get on and do their work.

The practitioners were frantically searching for new epistemological foundations because they were insightful enough to realize that their work, or the world, desperately needed new epistemological foundations, even if it meant clutching at straws, and even if the ideas they were mixing and matching were, unbeknownst to them, strange bedfellows if not mutually contradictory outright.

Of the thinkers I’ve specifically mentioned by name above (picked more or less at random), virtually all contributed valuable ideas. More important, however, from every conceivable angle, all those individuals and schools of thought I’ve rattled off were valiantly and wisely flagging the bankruptcy of what I’ve called “E1,” and even if all that arose in place of E1 was at best a Tower of Babel, the aforementioned were all on the side of the angels insofar as they were painfully aware of, and drew widespread attention to, the woeful inadequacies of what remains even in 2024 the prevailing, antediluvian epistemology.  

Together they were immensely influential in publicizing the pressing need felt throughout the sciences and the wider intellectual world, even by the mid-1980s stretching as far as management, for radically new thinking on these fundamental matters. And after more than 400 years of doing our best with a 16^th century epistemology which Bacon considered out of date by the time it was dreamt up, it was high time, they all seemed to agree, that we had a functioning replacement.

By the late 1980s, few serious thinkers doubted the need for a sweeping new epistemology of some kind.  And it was seen to be needed everywhere, not just in management.
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A New Epistemology

Two posts back, in A Predicable Anomaly, I described my own contemporaneous search for a new epistemology, the epistemology I would come to call “E2.”  Dissatisfied with all the efforts at epistemological revision that I could lay my hands on, as one promising-looking book after another appeared on the bookstore shelves only to disappoint, and going back through the older literature, and having long known that a new epistemology was desperately needed to account for the results I was getting in my own pure and applied scientific work, I realized I needed to start from scratch.  

Amongst all the prevailing epistemological confusion that I described above, devising a new epistemology from first principles I knew from the outset would be “a dirty job, but someone had to do it.” 

It certainly helped that I was trained and schooled in multiple, very different scientific fields: physiology, neuroscience, self-organizing complex adaptive systems, psychology, psychoanalysis, sociology, social policy, social intervention, biosemiotics, cybernetics and so on—as well as being an Oxford-trained professional philosopher and a practicing psychiatric clinician.  As far as I was concerned, if I was seeking a new epistemology to replace the defunct E1, if it worked for one field it had to work equally well for all the other fields in which I had qualified and in which I worked, as well as every adjacent field of inquiry with which I was sufficiently familiar to judge.  

For we’re talking fundamentals here!  What’s epistemological sauce for the goose is epistemological sauce for the gander.  I had my work cut out for me.

Above all, it probably helped too, as I related in that earlier post, that I had embarked on my quest for a new epistemology when I was still a schoolboy, not aligned to any particular school of thought whatsoever, rejecting E1 by around the time I started shaving. From Day One I had been labouring away on my own, working from logical first principles. 

What’s more, I was soon having to account for my own heretical, at first all-but-inexplicable empirical findings as they emerged in my Minimalist Intervention work starting in the mid-1970s.  

By the time I had finished my first book in the summer of 1984, I was meanwhile focussing on applying my findings to creating rapid, precise transformations in very large systems with small, carefully pinpointed communications, and for such an ambitious scientific task I certainly knew I needed to go back to first principles.  I needed a new epistemology that was up to the job.

The eventual result, my radical new epistemology E2, sharing little in common with the authors I’ve mentioned, I could at least describe to corporate managers in simple language and yet in some concrete detail by as early as 1986, generating considerable excitement at management conferences.  

What I was describing was a new epistemology “E2”—an epistemology not of substance and forces, cause and effect (as in E1), but one of pattern and context, flux and constraint, doing away altogether with the notion of causality, whether lineal or circular, and much else besides that we have taken for granted unthinkingly for four centuries and more.

Together with my team at Interchange Research, as we developed the technology of Minimalist Intervention, by 1994 I had managed to elaborate the new epistemology E2 which was by then to all intents and purposes complete, though it took me another 20 years to work out more fully all the logical foundations and technical details, and to resolve a few remaining internal contradictions at the theoretical level.

E2, the most important component of our proprietary technology of Minimalist Intervention, at last enabled the maximum desired transformation to be brought about through the most minimal and often unobtrusive interventions. For decades, all of our own work at Interchange Research has been based on applying this new epistemology, E2, to rapidly achieving changes previously dismissed, from the vantage point of E1, as impossible to achieve at all. 

If an epistemology is what provides the basis for how you understand things and how you go about intervening in them when you seek to put them to rights, E2 enables you to understand things in a radically different way and thus opens up new possibilities for effective intervention. 

Although we have not got time in this post to describe E2 in any great detail—we have already been devoting many of the pages of Change to mapping out many of its features and showing some practical applications to your own work in numerous previous posts—it will be helpful to describe some of the main features that are more immediately relevant to our present discussion of culture change.
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Change Does Not Occur in Time

How much physical space does it take for a seventeen minute delay to occur, for example? An odd question indeed. A delay does not take space because it does not occur in space. Any schoolchild knows that. But in an analogous way, from the vantage point of E2, and borne out in actual managerial practice by the catalytic interventions to which it gives rise, change does not take time to occur because it does not occur in time; change is not a process at all.  In E2, change is literally instantaneous, and occurs as a stepwise quantum leap rather than by incremental alteration. 

Moreover, the sought-after changes do not have to be achieved gradually because they are already available immanently and can be realized immediately, imminently. Irrespective of the amount of time a situation has persisted, irrespective of the scale or scope of the problem, one can arrange for the desired transformation to occur instantaneously, discontinuously, in all-or- none fashion, in response to a well-placed but very tiny and insignificant-seeming intervention. Whether a clock has been stopped for ten minutes or ten years, it may simply be necessary to plug it in.

I have discussed the nature of change in many previous posts here in Change (See, for example, “The Concept of Change”), but the important point for us here is that one of the ways in which E2 makes such an extraordinary-sounding feat seem genuinely easy and obvious, is that E2 is an epistemology of flux-and-constraint rather than substance-and-forces, all change is seen as pattern change, and pattern-change is by its very nature all-or-none; you cannot slightly change a pattern any more than you can draw a shape that is slightly hexagonal. 

Pattern-change is always a matter of flipping from one pattern to another. In E2 one looks at the constraints that are keeping the existing pattern from being anything other than it is, and one seeks judiciously to intervene in the most unobtrusive way possible to cancel out the effect of those constraints and so enable the desired pattern-flip to occur—not just a flip to anything random, but specifically a flip to the new, desired pattern.

E2 explanation is thus always backwards in form, not “what has made X the way it is?” (a colleague of mine was driving through North Wales and stopped to ask a local, “How can I get to Portmeirion from here?” to which the local man asked by way of reply, “Where have you come from?”) but instead, “what is stopping X from being anything else but what it currently is?” Not “what is Y there to do?” but “what does Y stop from happening?” or “what would happen if Y weren’t there?” 

From this backwards, E2 way of looking at things, as Dr D. J. Stewart once put it, salt is the stuff that makes potatoes taste horrible if you don’t put any in. In E2, rather than asking “How has this (undesired) situation come about?” one is more likely to ask instead, say, “What are the constraints on us getting from here to where we want to be (the desired situation)?”

The notion of pattern-and-constraint entirely replaces the notion of cause-and-effect which simply does not exist in E2. In E2 it is always fallacious to say anything of the form ‘Y causes X’.  In E2 it is thus simply never the case that one must deal with the cause (let alone the “root cause”!) in order to properly deal with the effect; there is no cause to deal with. In E2 the pattern is always just a pattern, an observable regularity distinguished by an observer, not evidence of something else.

In fact, in general, all interpretations or ‘readings’ of events are regarded in E2 as arbitrary and either helpful or unhelpful, and are replaced by meticulous observation of uninterpreted pattern. Explanation likewise gives way in E2 to an emphasis on neutral description—description as neutral as possible between competing or potentially competing explanations. 

As there is no notion of cause-and-effect in E2, and a studied avoidance of explanation and interpretation, the past is only of interest to an E2 change-agent in two ways: first, as a source of evidence of what undeniably is possible (because it has actually happened), and second as a source of clues regarding what not to try because it has already been tried and has not worked. In other words, the past is of interest in looking for the pattern of past successes (including the all-important exceptions to the problem) and for identifying ineffective prior interventions so that we avoid going in for more of the same.

Where E1 is centred around the concept of energy, E2 is centred around the concept of information, defined as a difference that makes a difference.  The key concept is that of something that can be distinguished as a difference by an observer, that makes a difference to that observer.

The old energy-based epistemology, E1, leads one naturally to conceive of the change process in terms of such notions as energy, force, and impact, more-or-less dressed up [in a metaphor] to suit the occasion. One tries to make an impact, to force the other side’s hand, to redirect energies, and so on.  In the new epistemology E2 none of this is even conceivable.

Instead one has an implicit picture that looks something like this. Any object, person, organism, system, iPad, or what have you, responds the way it responds to anything because it’s the kind of person or animal or thing that it happens to be. One thinks of the assembly one is trying to influence—be it a manager, a department, a child, a recalcitrant computer or whatever—almost as if it contained within it a complete set of rules dictating precisely how it was going to respond to any conceivable disturbance from the environment. The assembly is autonomous—the perturbations do not cause the assembly to do anything at all, rather they are of significance only communicationally so to speak, triggering whatever type of response an assembly so configured would respond with, given such a perturbation from the environment.

Rather than it now becoming a matter of forcing the issue which would be to no avail, it becomes a matter of taking careful note of what kind of communication brings forth the kind of response one wants to get from that assembly, and then delivering that very communication. Keys don’t open locks; locks open themselves once we supply the key that fits. Fit, not force,² is what gets the response we want.

In E2, there is a shift from a focus on individuals or aggregates of individuals to a focus on interactions. Rather than artificially (as it appears from an E2 vantage point) cutting an interaction in two and attributing enduring characteristics to one half of the interaction, E2 confines itself to looking at the interactional patterns themselves. 

If we view ourselves as being involved in an interaction with those whose behavior we wish to change, rather than typecasting those individuals we transform the interaction (and thus their behaviour) by behaving differently ourselves. 

The rule of thumb is “if what you’re doing is not getting the response you want, do something different.” E2 confines itself to dealing with behavior, regarding the intentions behind that behavior as irrelevant. We deal descriptively with the patterns of behavior and the constraints on it relative to the desired outcome. “In E2, the only time we may interest ourselves in people’s intentions is when we are looking for a way to [tactically] link those intentions to the behavior we are seeking, and thereby utilize them positively.” 

Likewise, the ideal in E2 approaches to change is to bring about major transformations through minimal, unobtrusive interventions, without any understanding or even consciousness of why things are now different, except on the part of those co-designing and implementing the intervention.

Now as Epictetus expressed it, “It is not things themselves that trouble us, but the opinions we have about those things.” In E2 there is a shift of focus from the reality or facts of the situation which are regarded as never posing any insurmountable obstacle in and of themselves, to the way those facts are construed or framed. Deframing a situation and then reframing it thus becomes a central theme in E2 approaches to change.
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A Third Way of Doing Strategy

Having made the case for the widely recognized need for an entirely new kind of jigsaw puzzle, and having now laid out most of the pieces of the jigsaw that we shall need, we can begin putting them together.
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The Third Kind of Reframing
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We said in Part I of this article, our preceding post, that effective strategic change requires three kinds of reframing, of which the first two must be undertaken simultaneously: namely, the reframing of the nature of one’s corporate uniqueness (mission reframing), and the reframing of the configuration of customers’ (and potential customers’) “scenarios of satisfaction”³ (market reframing). 

We also said, somewhat tantalizingly, that there was a third kind of reframing that we would be returning to, which was by far the most important to the success of strategic change although it was rarely understood fully or undertaken consciously, if it was even undertaken at all. This third kind of reframing is the reframing of the organization’s culture.

A corporate culture is not so much something a company has as something it does. The account we have put forward of corporate culture (that is in fact an E2 account, although we didn’t highlight that), is that “organizational culture” refers to the invariant patterns by which things are done, patterns that are not encoded in formal rules and so appear rather impervious to change by formal rule-driven means, and that are found throughout the organization. 

From an E2 viewpoint, pattern change is pattern change, and to change a company-wide pattern is no more difficult than changing a strictly localized pattern, nor does it take any longer. But more than this. If we can let go of some of our E1 assumptions, we realize that the patterns we are dealing with are just patterns. There is no single correct way to characterize them—they don’t mean anything in particular. 

If we can break our description of those patterns down into detailed, neutral descriptions of the meticulously observed, minute particulars of those patterns, we can find new ways for reframing them and thus new ways for utilizing those patterns positively. In other words, you may ‘know’ your company’s culture insofar as you are sufficiently streetwise to it to find your way about without mishap, but you don’t really know your company’s culture. You only know it in the way that you and others have so far chosen to frame it.

In the process of reframing, which I have described in greater detail elsewhere, one moves from the more specific pattern to a potentially useful class of patterns (at a higher level of abstraction) of which the specific pattern is a member. 

For example, if it is part of the culture that there is a highly developed grapevine connecting regional managers that is used by them as an early warning system for communicating rumors and gossip about what senior management might have up its sleeve (and even if in the past this has been largely destructive), this can be reframed usefully as the existence of well-developed channels for lateral communication across the organization. Small, catalytic, minimalist interventions can then be devised, for instance, for utilizing this ‘inter-regional network’ for spreading innovations rapidly and informally across the company. 

If there is, culturally, a time-honoured tradition amongst the front-line workforce of complaining and finding fault with everything that they can, and of “always knowing better than management,” this can be usefully reframed as the well-developed capacity of the front-line operators for being “critics of the system,” and minimalist interventions can be designed for utilizing this capacity as the backbone of a worker-driven quality management program. And so on. 

In my experience over the past four decades, there is virtually no aspect of a company’s corporate culture that is so negative that it cannot readily and rapidly be turned to positive advantage in the service of strategy. A pattern which is highly negative can readily be flipped to one which is highly positive, given the right frame. In this business, the line between “utilizing the culture” on the one hand and “changing the culture” on the other hand is often a very fine line indeed. 

So far we have looked mainly at moving from undesirable to more desirable patterns, starting with the former and putting them to use. Perhaps even more important in practice is beginning with a description of the desirable patterns we believe we need for strategic or tactical purposes, and then identifying the existing patterns that we can swiftly transform into the needed ones. 

The essence of this process lies in the E2 epistemological principle discussed earlier, of specifying clearly (and at the correct level of abstraction) the behaviour desired, identifying the contexts in which it (exceptionally) already occurs, and devising the smallest possible catalytic interventions for instantly “cloning” that exceptional context. Now we could go on to write a handbook of encyclopedic length on this whole topic of reframing, utilizing, and changing corporate culture, but we have more pressing matters at hand, beginning with an obvious question.

So What?

What implications does this have for how we do strategy? This third type of reframing makes possible the Utilization Approach to doing strategy. In common with the Requisition Approach, the Utilization Approach to strategy makes extensive use of the hierarchy and of the command structure, with the main difference that commands in the Utilization Approach are predominantly negative, or—on a neurophysiological analogy—inhibitory. 

The management hierarchy is highly valued in our Utilization Approach for a number of good, scientific, cybernetic reasons, of which perhaps the following are most important to our present discussion: 

1. If used as a recursive structure of relationships, the hierarchy enables the scope of changes in response to single interventions to be correspondingly greater. 

2. Organizational learning and change is accelerated by enabling ‘local’ innovations to be rapidly extended across an entire level of recursion at a stroke.

3. The necessary management of complexity can most effectively be carried out through particular ways of using a hierarchy—this is the “variety”-handling problem on which Ross Ashby, Stafford Beer and others have written extensively.

4. Interventions of the sort we have been discussing, central to the Utilization Approach, can most effectively be made from above, or at the very least from outside: in either case, from a position “meta-” to the assembly being influenced. 

5. The hierarchy provides the ideal layering of filters for keeping the wrong sort of information from filtering upwards, thus avoiding information overload above, and unnecessary preemption of autonomy below.

6. The hierarchy with its various communication channels, is often the fastest way to broadcast some of the key context-markers to be used in transforming the culture. In some ways, the Utilization Approach is more hierarchical than most versions of the Requisition Approach, in so far as the “requisitions” presented by managers at one level of the organization to managers at the level immediately below, are less likely to reflect what is required by the “issuing” manager to meet his own targets, than it is to reflect needs coming down from higher up the organization but not immediately relevant to the “issuing” manager. These requisitions will often form part of wider interventions (such as culture-shifting interventions) of which those impacted can remain blissfully unaware without diminishing the impact one iota.

In spite of these aspects in which it shares the best features of the Requisition Approach, the Utilization Approach is in many ways nearer to the Indirection Approach (and in a small company would be virtually indistinguishable at first, though virtually all of our own experience has been with C-level executives of large multinational corporations, so we can only presume on a theoretical basis how things would play out in a smaller entity, and from our very limited experience there). 

In common with the Indirection Approach, the Utilization Approach is designed to maximize the scope for individuals at all levels to flexibly use their own initiative in pursuit of well-understood strategic and tactical goals, starting with those individuals at the coal-face. If you have a methodology for constructing the right “Seize and hold Nepal” type orders, you can virtually do away with the sort of commands or requisitions familiar to the Requisition Approach. 

If you tell all the individual leaves of a tree to seek the maximum light for themselves, you will get a very well-planned looking tree. The Utilization Approach operates on a principle not dissimilar to the antagonistic workings of the sympathetic and parasympathetic nervous systems, the former turning everything on and the latter selectively inhibiting where necessary. “Seize-and-hold-Nepalmanship” damped down by inhibitory instructions that we like to call “the curb stones” or “design constraints” form two key classes of downward communications in this approach.

Like the Indirection Approach, the Utilization Approach to formulating and implementing corporate strategy designs the system for minimum intervention: it “runs itself” at each level subject only to corrective steers from the level above. In contrast to the Requisition Approach, the Utilization Approach does not use the crude method of progressively breaking down tasks into subtasks and sub-subtasks, but uses the hierarchy instead as a means of steering (by means of curb stones and corrective nudges) the initiatives generated at the level below, and of channelling the requisite resources. 

The other main sort of downward communication in the Utilization Approach comprises the minimalist interventions for rapidly and unobtrusively transforming the culture in the desired way.

Perhaps even more important than the downward communications in this approach are the upward communications essential to the operation of the organization as a sensing, learning, adaptive system. The front-line workforce—sales reps, service engineers, drivers, what have you—are the sensory nerve endings, and the hierarchy conducts and processes afferent signals, relaying and analyzing information up to the central nervous system, the most senior business decision-makers. 

We have already referred in passing to the importance of lateral information channels for spreading innovations, subject only to inhibitory damping from above. The name of the game in corporate strategy is the evolution of ever greater fit between the company and its co-created niche; the essential information on the “minute particulars” of this fit, and more importantly, unexpected lack of fit, must be sensed at the periphery and relayed upwards, ideally in real time. 

When “all’s well” the ‘upward-bound’ communication lines are left clear for relaying news from the frontier, viz. the latest reconnaissance reports from the front line about emerging environmental trends; but the lines are humming at all other times with error messages. The zero-error condition is always the goal state, and intervention is needed and made when and only when there is deviation from the zero-error or “perfect fit” condition.

When the next level up, receiving such corrective feedback, finds that despite its efforts it is unable to intervene effectively to return to the zero-error condition, and the lack-of-fit is thus getting out of hand, then and only then does an error message (reporting a failure to error-correct) go up to the next level of the hierarchy that then needs to make the necessary interventions to steer things back on course. And so on up the hierarchy from there, until we reach the Board where the buck ultimately stops. 

When a given level is receiving similar error-messages from a number of reporting units at the level below, intervention is made across the board; whereas when only one unit is relaying error- messages, a safety check is nonetheless made by inquiring if the other units have noticed anything similar. The corrective steers take the form, at the various levels, of the ‘continuous aborting of plans’ described at the beginning of this Part I of this article, along with both more specific corrective nudges and more general interventions aimed at transforming larger patterns. 

The name of the game is fit, and everything is utilized in the service of that fit; and it’s what all resourcing, and hence all planning, is ultimately for. When larger transformations are called for, as they often are, these usually come under the heading of “changing the culture,” and require only high-level-originated salvos of precisely targeted catalytic communications designed to instantly flip the culture over into the form required to maximize fit at the periphery. Because these cultural changes involve, by definition, company-wide patterns, these broader pattern-change interventions can only be initiated from on high.

Higher-level intervention of an inhibitory nature is also needed for the same reason that a line of police on crowd control duty need helicopters. If the company, like an army (to change the metaphor slightly), is trying to manoeuvre its way across the countryside, its knowledge of the topography of the terrain will be vital. It needs to get to its chosen destination without falling down a well or coming up against an insurmountable barrier. 

A given manager, within his or her own domain, will take the optimal path with respect to their own knowledge, authority, and objectives. This tactical decision-making, even when indeed optimal from the manager’s point of view, may well be suboptimal from a wider, strategic point of view. The executive’s knowledge will be limited, of course, by—among other things—the extent of the territory he is able to survey from the inevitably none-too-lofty heights of the hill on which he is standing. Hence the need for a helicopter. 

The manager, like the line of police or a platoon of infantrymen, may be taking the path of least resistance, but someone may need to tell them to take what appears to them to be a rather difficult route at the moment in order to makes things easier later. The helicopter is necessary in telling the individual to do things the “wrong” way, to point out the negative strategic consequences of doing what tactically seems to be the best thing to do at the moment. 

Not that the manager’s decision is the wrong one for him to make; rather it is a case of overriding his otherwise correct decision in the interests of the enterprise as a whole. The need for such higher-level strategic steering is thus the need to protect ultimates against the pressure of immediates.

And at the highest corporate level of all, the strategic steer required might be to get out of one business or to enter a new one, or shed some businesses or parts of businesses, or acquire other businesses, or to enter into a strategic alliance or merger.  

Oddly, and sadly for business and industry, it is these very last-mentioned forms of steersmanship, the most blunt-edged strategic instruments of all—required for superordinate-level success only when all other strategic manoeuvres have already been tried and spectacularly failed—that remain to this day the only forms of strategic move that are really understood by the likes of investment bankers. 

No doubt this is because, being financiers, they suffer from the delusion that business is about numbers. Of course, business is not principally about numbers, unless, like bankers, you yourself happen to be in the numbers business.

The Royal Road to Stability and Change

On the view of corporate culture put forward here, it is clear that it is the primary medium of both corporate stability and strategic change. 

Because these patterns are the companywide invariances in ways of doing things that persist despite all other changes (until those patterns are deliberately transformed), it is the primary medium of stability, and as such is to be valued if only for this reason alone. 

At the same time, we have presented a view of strategy based on the concept of fit which therefore reveals that the main determinants of success or failure of strategy will be the minute particulars of these ubiquitous patterns of action that constitute the company’s culture; the culture defines the limits of the organization’s ability to adapt. Equally, if corporate culture is the primary medium of corporate stability, it follows that it must also be the primary medium of strategic change.

What we have only touched upon by implication is that if you can create out of the existing culture one that is tailor-made for developing and evolving ever greater degrees of environmental fit because it embodies a rapidly adaptive inquiring system capable of accelerated corporate learning (as characterized by a Utilization Approach to strategy), then the result is an organization capable of an extraordinary degree of strategic resilience, in which the stability of the whole is derived primarily from the instability and rapidly adaptive characteristics of the parts. 

Richard Pascale, in the Honda article, has referred to this quality of the most successful Japanese companies at the time (1984, when Japanese firms were on numerous measures some of the most successful companies in the world) in terms of “strategic accommodation,” or “adaptive persistence,” and he even goes so far as to define strategy as “all the things necessary for the successful functioning of organization as an adaptive mechanism.”⁴

Be that as it may, I hope I have at least got across the point that above all else, it is the shift from the old epistemology, E1, to the new epistemology, E2, that confers the greatest single advantage in this all-important area of adaptiveness. The ability to transform longstanding, intractable situations at a stroke through judiciously-placed, insignificant-appearing minimalist interventions, with absolute predictive precision, provides the essential basis for strategic management that is capable of the ultimate in rapid, adaptive responsiveness. 

In this sense, then, epistemology too is a primary medium of both corporate stability and strategic change. And in this sense, it is on the green field of epistemology that the most strategically important battles will be won or lost.

As we said at the outset, human beings are planners. Planning is central to our rationality. If good planning is about farsighted, acutely sensitive, rapidly responsive re-adjustment of our present actions and commitments so that the future may be different, then our rationality as agents hinges on the choice of epistemology with which we enter into action.

© Copyright 1989, 2014, 2024 Dr James Wilk
The moral right of the author has been asserted

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1. Stephen Toulmin, Cosmopolis: The Hidden Agenda of Modernity, New York:  The Free Press, 1990

2. Force may have to be applied, of course, to break the glass to get the key; E2 does not mean operating in a world without force and energy, it means not treating everything as if it were a nail just because the only tool you happen to have is an El hammer, to paraphrase Maslow. 

3. Charles Hampden-Turner, Scenario Marketing: Towards a New Concept of Merchandising, London: Centre for Business Strategy Working Paper Series No. 12; London Business School, Centre for Business Strategy, 1986

4. Richard T. Pascale, “Perspectives on Strategy: The Real Story Behind Honda’s Success,” California Management Review, XXVI, No. 3, 1984, pp. 47-72