A Conversation with Dr. Peter Senge
(The complete Flip interview, with only minor edits, not found in the book)

Peter Senge, Ph.D. (www.solonline.org) is a senior lecturer at the Massachusetts Institute of Technology. His is also founding chair of the Society for Organizational Learning (SoL), a global community of corporations, researchers, and consultants committed to increasing our capacity to collectively realize our highest aspirations through the mutual development of people and institutions.

Mr. Senge is the author of several books, including the widely acclaimed The Fifth Discipline: The Art and Practice of the Learning Organization (1990). This book, which provides the knowledge for organizations to transform rigid hierarchies into more fluid and responsive systems, is widely credited with creating a revolution in the business world. Since its publication, more than a million copies have been sold, and in 1997, Harvard Business Review identified it as one of the seminal management books of the past seventy-five years.

We first asked Peter about how major organizations have made the transformation from a traditional paradigm to a whole-system perspective. “It comes about, usually, in one of a couple of different ways,” Peter observes. “A lot of people come to this perspective more from an internal viewpoint. They just believe there’s got to be a better way to manage and lead. Typically, for example, maybe somebody was part of a very innovative team or organization setting early in their career but then found that most of the rest of the bosses were Attila the Hun; you know, people who just slammed their fist on the table and demanded results and really didn’t give a damn what effect it had on people. The contrast to those two perspectives often leaves a lot of people going, ‘I know there’s a better way. I know there’s a better way to both achieve results and do it in a way that people really grow.’ I think that’s one of the core premises that we find again and again – that you can grow a business through growing people, and the two are not at odds with one another. So that’s what I would characterize as sort of an internal perspective.

“Increasingly, there’s also an external perspective. People are looking at the impact of a business on communities in larger living systems and saying, ‘This can’t continue.’ Basically, most of the whole Industrial Age has been about harvesting natural and social capital in order to produce financial capital. We can’t do that forever. Years ago people had to learn to live on our energy income, not our energy capital. Today, we’re digging up stuff that was put down under the earth hundreds of millions of years ago. We can’t keep that up. So, there’s also an external perspective that says that we have to find a different way of running businesses that produces social and environmental well-being, not just destroys those in order to make a buck.

“Today those two different sets of forces are converging.”

Does Peter believe that our primary traditional institutions are poised for a breakdown? “I think you can see all of these changes as basically arising from a kind of progressive breakdown in the traditional order of things. Dee Hock, who was the founding CEO of Visa and our advisor in creating SoL, says we live in ‘an era of massive institutional failure.’ It’s hard to find any institutions, whether they’re in business or education, social services or government, that are really performing well. You could say the healthiest institution is hardly healthy if you look at the well-being of most of its members.

“Things are getting better, and things are getting worse. Large corporations are not monolithic. They contain all kinds of contradictions, because they’re like small nations. On the negative side, we’re seeing more top-down control. More people are trying to grab power in order to make money. More people are willing to exploit the resources of an enterprise for their own personal gain. On the positive side, we’re also seeing many examples of people innovating in order to keep their enterprises healthy in a very uncertain and rapidly changing business context. These people are thinking holistically and letting that thinking inform their actions. They are discovering ways to grow people rather than just using them – or using them up.

“Innovation never occurs among majorities; it always occurs in minorities on the periphery. That periphery can include people in big corporations or entrepreneurs creating new organizations.

“But even if you take this idea of massive institutional breakdown seriously, it’s not like everyone wakes up one morning and says, ‘Ah, we’ve got it all wrong. We need to change.’ Quite the opposite. What you see is most of the resources of these institutions, most of the resources of society, desperately trying to preserve the status quo. In a time of breakdown, it’s a time of great fear. And in this state of fear, people revert to what’s most habitual. That’s a basic human instinct wired into our neuro-anatomy and psychology.

“On the other hand, there are also innovators who say, ‘Ah, this is a great space to create something new.’ So in times of great change, you see cross-currents and a clash of forces, and I don’t expect that to get any easier.

“Just look at the behavior of our own country. It’s extraordinarily hard for Americans to wake up and realize that we live in a very different world today. The twenty-first century is probably going to be the Chinese century, not the American century. Rapid shifts are occurring around the world in power and influence, and yet we’re still acting like everybody wants to be an American, and we have the answer to all the world’s problems, and all we have to do is help those poor people do it like we do it.

“That’s a classic response to these kinds of cross currents. In a state of fear, just as individuals revert to what’s most habitual, societies try to go back to their core traditions, and so what you see is a turn to fundamentalism – people who have the answer and the answer is the old way, whether its Christian fundamentalism, Islamic fundamentalism, or U.S. democratic fundamentalism.

“You see fundamentalists within business just as you see fundamentalists within societies, who say that the old way is the right way and we’re going to seize power and keep power and traditional ways of doing things. While most businesses cannot deny that their markets are changing, they may still try to cope by reasserting top-down control.”

We asked Peter for the antidote to fundamentalism and rigid control. “It sounds strange, but one thing that gets squeezed out of most people’s work lives is the chance to think about and discuss the really difficult, confusing issues confronting their organizations. People have to get off the perpetual treadmill of crisis reaction and set aside the time to ask each other, ‘How is this working? How do we need to adjust it? How do we communicate about this?’

“That process is very risky, and people have to trust each other. It requires the building of quality relationships. People have to keep learning, and learning is difficult, too. To be a learner you have embrace the fact that you don’t have every answer and don’t know how to do everything.

“Fortunately, many organizations are beginning to look at their tougher issues and admit, ‘This is complicated, and we can’t expect to figure it out in one fell swoop. We have to keep trying new things and create a continual adaptive orientation. And we can’t do that without a different quality of relationship and a different valuing of the social environment.’”

Have Europeans been more open to a more holistic model of business? “It depends on the particular issues that you look at. For example, on environmental issues, there has long been a much greater sensitivity in the European societies and the European-based businesses. People who live in relatively small countries have had to deal a long time with the fact that there’s no place to put all the junk. If we pollute our river, it flows into your country.

“So today, the European Union (EU) is leading the world in a whole host of new mandates for business. For example, if you sell an automobile in Europe today, the manufacturer is responsible for taking that automobile back at the end of its lifetime. You can’t just dump it in a hole someplace. This law, in fact, was the result, in part, of a few European companies, particularly BMW, doing pioneering work about fifteen years ago designing cars for what’s called remanufacture and recycle. There are a lot of valuable components in the car, why don’t you design the car so when it has completed its use, you bring it back and reuse them? There’s actually a strong economic case that can be made for that, if you design the car with that in mind.

“However, you have to invest in building the expertise. You have to invest in developing a different approach to manufacturing. You have to invest in developing a very different relationship with your suppliers so they can work together with you to design a car that can be taken apart at the end of its lifetime.

“The same is true in many consumer electronics. Most consumer electronics, particularly the bigger items in Europe today, must be taken back by the producer at the end of the product’s use.

“The EU is also starting to get on top of the toxins in products. It’s not bad luck that so many of us have friends who have cancers in their thirties and forties that nobody ever used to get until they were seventy years old. Undoubtedly, the two primary causes are our food and our manufactured products. Toxins in our personal computers, or in the dyes in our clothes, or in our children’s plastic toys get there because manufacturers traditionally haven’t really paid much attention to these matters. They use materials based on cost and functionality. If the chemicals that were in your kids’ plastic toys or in textile dyes were put into a drug, they would be regulated. But, by and large, if you put it into a toy or a dye for a sweater, nobody regulates it. The EU is starting to change all of that.

“The EU standards are quickly becoming global standards. They are becoming global standards precisely because corporations around the world work globally. If you’re an automobile manufacturer and the EU says, ‘You can’t use mercury switches because they are harmful to the people who assemble and disassemble cars,’ you’re not going to do that just for the cars you sell in Europe. You stop using the switches in any of the cars you manufacture.

“Big multi-national corporations don’t create most of the jobs in the world; most of the jobs in the world are created by smaller enterprises. They’re also not the locus of a lot of technological innovation. That often starts in smaller enterprises. But they do have one really critical impact – when a small number of big global corporations start to say, ‘Well, we have a different quality standard for something,’ that tends to shape an industry’s standards.

“Even the United Nations – where the traditional sentiment has been that business is bad, not good – has realized this and reached out to business by creating the UN Global Compact. For most global initiatives to be successful, business is going to have to play a key role.”

We asked whether Peter sees the flip occurring soon. “This is a change that’s going to take a long time to unfold,” he predicted. “We’re dealing with deep shifts in our whole cultural outlook, which has developed over literally thousands of years. We have to distribute power and authority within our enterprises. We have to recognize all kinds of differences and give people lots of space to innovate, because by the time we figure it all out from the top, it’s much too late. The companies who will excel in the transition to a new kind of business will be the ones that can tap the imagination, spirit, energy, creativity, and capability to innovate in their people. That’s what I mean by learning to grow an enterprise by growing the people.”

###

The Flip, by Jared Rosen and David Rippe, illuminates a clear path to a vibrant enlightened world where millions of people already live and thrive. It describes in vivid detail and real examples evidence of an upside down world in decay and a Right Side Up world of authentic beings bright with possibility.
The Flip is an owner’s manual for the twenty-first century full of insights, conversations with recognized experts, thought leaders, and visionaries, and actionable exercises and tips you can use to begin your own personal flip.

To read more about The Flip and additional interviews from other luminaries, experts and bestselling authors, please visit www.theflip.net

The Flip is available at your local bookstore or online at Amazon.com, Barnes & Noble, Joseph-Beth, and Borders.