#156 Living Systems View of Growth

green leaf plant sprout

Article: “Scaling Culture in Fast Growing Companies” posted on HBR in June 2019 by Jordana Vale




Zac: WELCOME back to Business Second Opinion Podcast. We’re always excited to bring you another episode: 

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Business Second Opinion Podcast digs deep to explore questions about business and business practice. In the process of examining them, we give you a second opinion, usually a contrarian opinion, but one that is well tested and proven to give the outcomes you really want without the side effects. And by the way, if you want to learn more about how to work more closely with us, stay tuned at the end of the show.

I am Zac Swartout, and always with me is Carol Sanford, our inhouse positive contrarian. Who responds to big and hard questions with a radically different take. 

Hey Carol

Carol: Hi Zac, What did you think about our article today? Maybe also give people the reference for it and who got us into the briar patch we are about to explore. 

Zac: Okie doke well, Karryn Olson-Ramanujan runs Regenepreneurs which engages with entrepreneurs working with them to be innovators. She sent us this doozy of an article entitled Scaling Culture in Fast Growing Companies posted on HBR in June 2019 by Jordana Valencia. So Karryn’s question is the following: “I would love to hear your take on the ever present topic du jour: scaling. It seems to be a byproduct of a constant growth mentality that doesn’t align with the reality of the planet and its finite resources. I keep wondering, is there a framework that Carol would use to help us expand our impact?” Specifically here Karryn pointed to this article as the author examines how they believe culture plays a role in supporting what she calls hyper growth organizations.

To your question Carol, my first hit on this article was that it was born almost entirely from the behaviorist worldview. But maybe I hand this off to you for a moment so you can give our listeners a prognosis on the full scope of the injuries here.

Carol: There are 9 betrayals of life and living systems I counted in this article. We can’t cover all in our 25 minutes or so. But let me list them and see what you think about we might focus on. 

  1. Manages behaviors from commodifying behavior
  2. Scalable vs Nodal Definitions of Growth are outdated.
  3. Direct vs Indirect. Hidden Variables are what really move things. Going direct by trying to redefine them as a cue ball, can’t happen. See last episode, #155
  4. Collapsing culture to a direct idea and lose the understanding of how work rather than what it is and not see a better path. By using values as the basis of culture “exhibited in observable actions.” Value is the regard that something is held to deserve; the importance, worth, or usefulness of something. “Your support is of great value,” rather than a living process that is happening through rituals, symbols, status which creates a womb.
  5. Growth as financial only. Come back to that 
  6. Assumes that hypergrowth can only happen at the startup phase versus can happen at any time by shifting to working with the hidden variables of quantum
  7. Leaves out indirect that make this ongoing and repeatable. e.g. consciousness
  8. Simultaneous actualizing and potentializing. One person at a time.
  9. Behavioral model from external vs self-managing culture. 

Zac, What jumps out at you about this list? And why is it a problem from your perspective? And did I miss something….. 

Zac: Well if our listeners will recall from our last episode, we can see again the billiard ball theory of change, or Newtonian view of life at work, which is a worldview that’s embedded in behaviorism. In other words, what the author is encouraging us to do here is basically tell people how we think they should behave and train them to do so until we get them to do what we want. Change only comes from external impetus rather than as an internal process. As a small business owner I can see how this approach is tempting. With so much at stake and so much growth happening with new people coming on, how can I possibly maintain control of everything?! Fortunately we know that a direct approach to behavior change not only rarely works but it continues to reinforce the current societal ditch we seem to be unable to get out of. Although you know Carol, with all of these behaviorism sourced articles, I do feel like I am getting some great training manuals for how to help my husky, Juni, be better behaved.

Carol: I see three crazy ideas I want us to rebut. First, the paradigm of the particular culture they are creating (which is toxic to humans). The definition of growth (toxic to ecosystems health); the method to achieve cultural continuity is antithetical to innovation (bad for the business and real growth). Three strikes.

Zac, what paradigm do you see in this article and the effect of promoting that?

Zac: I think this teetering somewhere near arrest disorder and extract value. Think about the human beings in this situation and the effect this will have on them. This is really about treating humans like machines and being able to program them to do what you want. Some might call this brainwashing and they wouldn’t be far off. How is one supposed to innovate when everyone in the organization thinks the same way? Just craziness!

Carol: The summary is that, first, the paradigm of behavioral culture is toxic to humans. Behavioral paradigm which means externally designed, managed and evaluated. Externally determined, direct in guiding people. 

I felt like this was such a good example of a severe paradigm problem. It exhibits the most extreme case I have seen. The reason that matters is that it assumes empty inner beings who are shells as human workers, who are to be impressed with the right behaviors from managers and supervisors. And given the specific behaviors they need to be approved of. And an example of not questioning and understanding the source

Zac: We have covered this in previous episodes but for those unfamiliar go look up John Watson and his student BF Skinner who created and popularized the so called scientific approach to behaviorism. This essentially took in depth research on rat behavior and training methods, turned around and attempted to apply them to humans. Certain large industrialists loved the idea of being able to control their workforces and this methodology was also deeply employed by the US military by the later part of WWII. From there it bled into many of our social systems including education, economic theory, ecology…and even parenting.

Carol: I almost named this episode Toxic to humans, becoming more discerning about borrowing ideas. Or: Anti-Innovative for business program

Zac: So let’s take each step and examine the advice the author gives us. It seems important to describe what the guidance is and its source in a behavioral paradigm. Ok so the first point she makes: she is imploring us as readers to “Define culture in terms of clear, observable behaviors.” As she says “Employees can live our values based on their own personal understandings, rather than what the company intends.” This feels like the old industrial model that hasn’t skipped a beat since the 1940s! As Watson used to say, “as a worker, you only need to pay attention to the man above you!”

Carol: The next advice is based on a lack of living systems understanding as a definition of growth. And 95% of people are convinced of that definition of growth. Zac, what is their assumed meaning of growth and what does that lead to?

Zac: Well they clearly just mean economic and financial growth. In other words, how many customers, at what rate, and how many staff do we need to handle all of that? It’s all reactive and if you sense that it has a cancerous tone to it…you wouldn’t be far off. This kind of growth comes from the extract value paradigm we’ve discussed before.

Carol: There are two other definitions of growth, and they are more ecosystems friendly, especially evolutionary growth. This is based on displacing offerings that are not good for all stakeholders. Not as an alternative with less functionality, quality and design, but as more.

Zac: Consider that for a minute folks. The idea that not only does a regenerative approach offer new design insights but also the possibility of displacing other offerings in the market that actually degrade life and the vitality of stakeholders.

Carol: People can’t conceive of this, who see people as rats in a maze, empty sells to be filled up with behaviors to mimic, be corrected by managers and trained, conditioned.

Zac: Right, you have to see people as guides to one’s own intention and contribution. This means you design work systems where people are called on to evolve all offerings not just their narrow slice.

Carol: This requires infrastructure; they show the path to innovate. They are shown the innovation framework to take on new endeavors. Like Seventh Generation did with a new baby diaper that worked better than other diapers, was disposable and healthy for a babies butt. They took out all the toxins but did not stop there. They evolved the offering of the whole industry to a whole new standard.

Zac: That is what happens when you go from an arrest disorder paradigm of less bad to regenerate life where one seeks to displace certain products and processes thereby disrupting the whole industry with something better than what currently exists. You Regenerate Life. That process takes bad products out that are unhealthy for some or maybe even all stakeholders. You have to do Essence thinking to do that. 

Carol: You have to see what the essence of the product is, what role it really serves like, in the case of a Seventh Generation, ensuring the health and comfort of baby and parents with diapers. “That is what I am trying to do with a Developmental Work Design, which everyone participates in. The first version started 70 years ago at P&G, where my early inspiration was. But it’s way beyond arrest disorder. It’s not about setting people up in a certain behavior that they have to follow, which is what this whole article is about, but putting in place a whole new paradigm where everyone becomes innovative.

In this article they are promoting 40% growth as a steep growth curve. But if you want to compare financials, I have done 35-65% per annum for the first five years consistently and none of it had to do with programming people like rats.

Zac: The third overarching shortfall in this article, also sourced from behaviorism, comes from the suggestion to have the training you offer for your staff not only happen offline and online, but also be coupled with a library where you can find all the answers you need. These two points here really bely how the author thinks about people – empty vessels that need constant external behavioral reinforcement regardless of whether it’s about the work or not.

Carol: Like dogs going to training camp. Plus, it is antithetical to innovation which is bad of the business and evolutionary growth. May work for expansion growth, but in a limited way. That is training as a way to manage culture. Plus they do it as a conditioning process where individuals get online and have more stuffed into them

Zac: That’s a good call by the way: I should probably send Juni to that camp. But seriously, they are missing so many of the core ideas that are embedded in a Regenerate Life Paradigm. The source of innovation is ‘all the minds of people’ who touch products, processes and customers every day. And what’s more, that source of innovation is often your business’s customers. 

Carol: It is how Kingsford invented a whole line of products. It was people on the line, in the sales channel, who sought our R&D as partners. You see all those options on the shelf with closed systems production, that did not exist when we began. One product that was not great and highly polluting. 

Zac: As I recall, they transformed the industry and grew 65% in revenue per year the whole time Will Lynn led them to make BBQing more ecologically sound, all the while forcing others to follow since it was also a better product. And Kingsford did the same things for Hidden Valley Ranch. 

Carol: We unconditioned people in the developmental process. We evolved a culture, not preserved one. Set a challenging new direction that requires culture shift to deliver; and into one that was where people innovate by their promises to the customers across EVERY ROLE and job title in the company. They still own 70% of the market. Will has been gone for a while now and they now have a few behaviorists in place and leading. But it is still hard to displace them in the market.

Zac: So the Problem starts with scaling, or an expansion oriented view of growth; which is more of the same but with more people. So what the author is saying here is we need to focus on the behaviors which means managing people like rats in a maze by training them with knowledge. What you are left with has no potential for evolutionary growth – the being is dropped out of it completely. Plus imagine a library with stuff to be given to them that just keeps getting updated. That way you can train all current members, and new ones as they come in. Honestly Carol, I’m getting exhausted and bummed out just saying all this. 

Carol: Alternatively, a Regenerative Work Design is designed in a way that is good for humans, ecosystems, AND the business. Growth happens from innovation, not scaling more of the same.

Zac: You might be asking yourself but why don’t more people adopt the regenerate life paradigm? I know it takes a switch in how they see the world and a lot of education. But if I look at my own experience of shifting paradigms, it is so easy to collapse to lower paradigms, or not even realize I am working from a lower one. I have to watch me constantly, especially when I am feeling righteous because I see myself as ‘doing good.’

Carol: People can’t conceive of this new paradigm from a behavioral world view. They don’t know they have to work at it, and it is not a new list of doing, but of how to think, by learning to see how our mind is working. Because restraints you see are all from the behavioral paradigm and the beliefs it is based on. E.g. holders of behavioral paradigm believe people can’t be self-managing because the behavioral paradigm says we are externally determined, fixed in intelligence, must import the right people. Have to let go of that older paradigm and it is not easily given up. Plus, you can’t mix them. They are incompatible. A little of this and a little of that won’t work.

Zac: So you can’t have incentives, rewards and role modeling, etc., because that is direct, behavioral, and sourced from an arrest disorder paradigm, and requires external people to manage and change all of it. Meanwhile all this is contrary to innovation. 

Carol: When a person becomes fixated on training, they miss the whole idea of simultaneous innovating and developing people. This means, you do no work activity, without doing development. Design the framework , the process to be new and force even better thinking. The indirect mode. Perpetually in development, pushing how we can think and having people applying it. Versus think of what needs doing then training to the test/activity needed. It is the faster, deeper understanding and higher effects beyond the moment. 

Zac: So, Culture is not behavioral, like the author is trying to make it. And they are locking in a set of behavioral processes, which undermine the possibility for all innovation and evolutionary growth. A Regenerate life culture is based on constantly shifting rituals to be more self-managing, more developmental, ….and examining also what’s taboo in the culture as well.

Carol: An innovative culture, a Regenerative life one, is where humans as self-managing, (not necessarily flattening the hierarchy that is behavioral; i.e. just changing structure). Regenerative is about constantly evolving work and the way it is done. Switches to internal self-directed tied to and inspired by customers, stakeholders and the market. 

Zac: Pretty funny but I guess we are full circle back to last episode?

Carol: With working indirectly on. Capability, culture and consciousness which bring conscience and conscientiousness into play. 



Zac: Carol Sanford Institute has been offering development communities for forty years with online versions for a decade, so we are pretty good at it. What we’re offering is a set of FREE Morning Meetings where we look at how to Transform Uncertainty into Action based on Living Systems Thinking approach, to inform our live in times of crisis, your daily decisions and action, and how you help others. Search on Facebook for The Regenerative Life Communities Group, answer the questions and listen. Join Carol’s newsletter at CarolSanford.com. to get more information on upcoming events.

Carol: We have a new community. The Regenerative Educator Community. For development roles for anyone who considers themselves an educator in institutions, organizations or professions . The community is established to enable members to work with a Developmental Epistemology, that is how they want to educate: Move from expert view to- Experientially, Developmentally, based in 7 First Principles of Regeneration. Check out SEED-communities.com to learn more. Look under Regenerative Life offerings. We have extended the Founder’s Fee by out to Oct. 15th. Which grandmother’s you into a lower rate forever.

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Carol: and keep listening to Business Second Opinion for more ideas on working from Regenerative Paradigms and Practices. And my new book is out The Regenerative Life with an extensive workbook and Book Club materials, which Carol supports with live online Workshops for Free. More at carolsanford.com.

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Zac: This has been Business Second Opinion


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Business Second Opinion Podcast digs deep to answer questions about business and business practice, you may not know you need to ask. But we believe you should be asking for the benefit of your understanding and your businesses ethics and practice. In the process of answering them, we give you a second opinion, usually a contrarian opinion, but that is well tested and proven to give the outcomes you really want without the side effects. 

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