SENCORP is a privately owned corporation with businesses in a number of worldwide markets and a long and successful track record. Since the early 1980s, it has been developing and implementing a unique management model. This report explains the background to the development of the model and its distinctive characteristics, which include:

1. Analyses of the behaviour of individuals as the basis for creating a management model applicable to the whole organisation. The SENCORP model does this by building on the logic, structure and dynamic characteristics of the concepts of autopoiesis and complex adaptive systems, which are being explored in the LSE Complexity Seminars.

2. Integration of the management of knowledge development in the organisation with the management of everyday operations. This offers a capability for the simultaneous handling of 'advancement' and 'survival' activities. Advancement processes revolve around the development of knowledge and future options, while survival focuses on continuously enhancing the implementation of routine operations. These are balanced through a network of dialogues, decision-making, and implementation at all organisational scales, from strategic long-term thinking to specific detailed work schedules.

3. Allocation of adequate resources for thinking before decisions are made. This is central to the continuing dialogue process, which is the primary mechanism for organisational knowledge development. It enables all employees to contribute their individual knowledge on a wide range of subjects to assist the evolution of effective business practices and expertise.

Kenneth R. Slocum is Senior Vice President of SENCORP, where he has had responsibility for the company's research, development and implementation of the new management concepts discussed in this report. His business experience includes executive management positions in private and public multinational companies, including being Managing Director of a chemical manufacturing joint venture in Africa. He has also worked for the US Government.

D. Scott Frondorf is Manager of Strategic Systems and Technologies at SENCORP. He is also actively involved in the research, development and implementation of the company's management model. His current focus is on developing a variety of mechanisms for facilitating dialogue about the model within the organization. He has previously worked as an information technology consultant and as a project engineer for an international chemical process equipment manufacturer.

This report was edited by London-based Editorial Consultant Malcolm Peltu.

SENCORP: A brief history

In 1997, SENCORP employed about 2,000 people in North America and Europe, with the majority located in Cincinnati, Ohio. Most employees work in three operating companies:

* SENCO, which designs, makes and sells pneumatic fastening systems such as air-powered nailers and staplers. This oldest SENCORP company started in the late 1940s. Its roots were in the automotive industry but it now has customers in a multitude of industries around the world.

* SENMED, developers of a range of technologies, companies and services in the medical industry. This grew from a successful joint venture in the late 1970s between SENCO and Johnson & Johnson, which applied SENCO's fastening expertise to mechanical wound-closing systems. In 1986, Johnson & Johnson bought SENCO's production part of the business. SENCO kept the people who had engendered the new knowledge base in medical technology. They became the foundation for establishing SENMED.

* SENSTAR, a financial service company. It was formed in 1987 and operates primarily in specialized long-term industrial leasing activities.

The company has remained a private business from its inception after the Second World War. A consistent corporate culture and set of management processes has underpinned the company's continuing evolution, although it now operates in three apparently disconnected businesses. In the late 1970s, in common with other companies, it was faced with the difficult challenges posed by uncertainties and severe constraints in the global economic environment.

While the company had enjoyed relatively strong growth over the years, management felt that they did not really understand what key ingredients had contributed to that success, the connections between these factors, and how they interacted with the external environment. Sustainable success in the future, therefore, depended on creating a process that would allow the company to gain a better insight into these crucial underlying issues.

The SENCORP management model emerged from this process after many years of discussion, analysis and reflection. The process still continues through the company's continuous dialogues and research into finding ways to adapt continuously in an ever-changing business environment.

Searching for the ideal management process

SENCORP's private ownership gave the company a little more time and space than a public company to experiment with new management ideas as we searched for something appropriate to drive the company forward. When our exploration began in the early 1980s, we actually started by going backwards in order to go forwards. Management spent much time discussing and mapping the company's history, including the exchange of stories about experiences in the company which had never been discussed before in management meetings.

This period of introspection helped us to gain a better appreciation of our own history. That gave us a basis for trying to find out how we could connect the reasons for past success to the future. At these early meetings, we frequently addressed an important question: 'What would be the ideal process for understanding and managing our businesses?'

We did not want to copy an existing management model. We had to be sure any new process would enable the company to manage on-going change, taking into account our history, culture, value in the economy, and the other characteristics that create the unique make-up of an organisation. In any case, the models existing then were generally based on outdated approaches. We also deliberately avoided employing any outside consultants to advise us because we wanted knowledge developed in researching the new management approach to be retained within the company.

We decided that, if we could start afresh, we would design our management processes around the ways in which individuals would like to manage themselves. This led us to inquire into the factors that motivate an individual to work well and feel good about making and implementing decisions. The first step towards achieving this was to articulate what people do at work within their normal behaviour and responsibilities to accomplish their own goals and those of the organisation as a whole. We then sought to represent this by a model, which wasn't too complex to describe clearly, yet wasn't so simple that it didn't mean very much.

The basic SENCORP model

After much debate and experimentation, we evolved a basic model consisting of three interacting 'realms' (see Figure 1):

1. A (Decision). In the A realm, managers make choices and communicate requirements to the next level of implementation process. The A realm is also concerned with allocating resources in a way which maintains a healthy balance between the other two realms, without involving any kind of control mechanism.

2. B (Think). This is the 'advancement' realm, which is concerned with developing new knowledge and options through discussion, analysis and communication.

3. C (Do). The C 'survival' realm encompasses management's implementation responsibility to meet requirements communicated from the options chosen in the B-realm. The implementation processes used to achieve this are chosen by the person who takes on this 'doing' responsibility.

The C realm has been given the most prominence in the past, as traditional hierarchical organisational models drawn from the Industrial Revolution emphasise tangible and quantifiable performance results. In such a model, each person expects to be given a set of quantifiable goals by a superior authority. The authority uses only tangible measurements to monitor progress and outcomes.

During discussions of our new management approach, we identified the significance of the way in which people feel better about decisions if they have had adequate resources and time to think about options from a higher-scale perspective before a direction is set. Yet the B realm of thinking had been generally neglected as a legitimate responsibility within organisations. Our management approach had to rectify this imbalance to ensure that the B and C realms are given equal stature, with the responsibility for maintaining a balance between them being located in the A realm. If the A realm fails to ensure that thinking processes are given as much consideration as doing activities, the urgencies of survival in the C realm are likely to dominate.

We worked through many alternatives shapes before the triangle in Figure 1 emerged as the basis for a powerful symbolic language which we can use throughout the organisation. It illustrates the integrated and balanced nature of its three responsibilities, with neither doing nor thinking taking precedence. Despite its apparent simplicity, the basic model fully characterises what individuals already look for to gain a sense of achievement. Our key management task was then to make sure the model could be made to work in an organisational setting.

Integration of thinking and doing

SENCORP distinguishes between what we call the 'project' basis of thinking and the 'operational' nature of implementation. The manager of a thinking project does not expect to have a clear idea of how things will turn out before going ahead. Experimentation is encouraged, with project efforts started and stopped, resources changed dynamically and efforts designed and redesigned around non-routine processes. Being effective in the thinking process is more important than being efficient. This rationale is very different to 'project management' as defined in most organisations.

A project typically begins when a person with responsibility for a particular decision feels that additional knowledge development is required before that decision can be made. Opinions will be sounded out from a number of people with relevant knowledge. If the project still seems feasible, individuals who could make a valuable contribution will be asked to participate. It is up to the people approached to decide if they want to take part. The person who originated the process might become its project manager, although someone else may be asked to take this responsibility.

Much work and substantial resources are needed for successful thinking processes, which must involve a critical mass of people who are all comfortable with the project's dialogue process. A well-managed dialogue should study relationships within the organisation and with the outside world. The performance of other companies in an industry must be examined in terms of the prevailing cycles and patterns affecting product life times, customer changes and technological shifts.

This variety and breadth of thinking should result in better decisions and more realistic expectations, following the exploration of many alternatives. The decision revealed is usually such a clearly logical outcome that participants rarely suggest later that something else should have been recommended. As decisions can't always be perfect, the SENCORP model ensures people participate in making so many that disgruntlements about any one is soon forgotten.

No value is gained through a lot of grand thinking if its results are unusable, or by implementing things without thinking about what is being done. Therefore, we do not divide people into clearly demarcated groups of 'thinkers' and 'doers'; instead, we expect everybody to think, decide and do. At the same time, we recognise that different skills and ways of behaving are required in B and C realms.

Implementation should focus on continuous improvements to the repetitive efficiency of routinised processes, using feedback from the operational environment to tune and enhance the process. This emphasis on following well-worn tracks is in stark contrast to what is desirable behaviour when thinking in the B realm, where breaking new ground is a prime motivation.

As we have already discussed, the person responsible for implementation is likely to start by setting up a project to think about process options. This highlights the assumption in the SENCORP model that even those most comfortable with implementation must also be good at thinking. That means we aim to have sufficient organisational flexibility to allow individuals to find the balance between thinking and doing which they are most comfortable with. Everyone can then contribute to the organisation in the areas most suited to their personal knowledge and competencies.

Managing multiple organisational scales through fractal replication

A, B and C responsibilities focus on different scales in the organisation, with lower scales concentrating on increasingly more detail and narrower time frames. The C realm is the most well known and reliable scale. It covers the anchoring scale of real-world operations, where day-to-day survival is managed. The B realm is at a higher scale. It looks at broader and longer-term areas while including, and remaining relevant to, C realm implementation activities. The A realm helps to maintain a balance by providing the decision maker with knowledge over a wider time frame than at the B scale. Its allocation of appropriate resources to each realm helps to anticipate events in order to ensure continuing implementation success.

This basic SENCORP model is replicated at every scale through a fractal structure encompassing different levels of the organisation, from a strategic corporate view to specific local implementations (see Figure 2). For instance, a company's President in a decision-making mode could set a new direction on something. The decision will be communicated to someone who has accepted responsibility for implementing it at the next scale down. Unless there is a known effective method to achieve what is required, the person with implementation responsibility will create a project to think about the best process to employ. This could lead to a decision to use a specific process. Or, it could trigger a new project at the next scale down if further thinking is needed, which in turn could trigger fresh iterations.

In this way, the basic model works its way reflexively throughout the company. It functions well for the individual and the organisation as a whole as it sets up many overlapping project interconnections in which everyone is aware of having multiple responsibilities. A person could act, simultaneously, as: a project manager for knowledge development towards a particular decision; support to another decision maker to think through a different issue; and the person responsible for implementing a different activity. A 'responsibility chart', which maps these relationships, is completely different from a traditional organisation chart based on job descriptions, where there is one person per box on the chart.

On a typical day, each person in the company is likely to be involved with activities related to several projects at different levels and scales. This enables these individuals to accumulate knowledge about what is going on in many parts of the organisation through the information gathered in the normal course of carrying out their responsibilities. A decision-maker at one scale can take responsibility for implementing the decision at the next scale, or someone else more suited to the position could take that role.

Knowledge about what is happening in the company is no longer constrained to the exchange of information through the narrow channels of an organisational hierarchy. When dialogues get going properly, information just slings through the scales. Otherwise, the information dies at the level where it originated.

Scales of knowledge comparison

The 'survival' time frame at each scale of the fractal organisation is a critical factor. In broad terms, the C realm could be regarded as being concerned with short-term 'survival today', the B realm with medium-term 'survival tomorrow', and the A realm with longer-term 'survival the day after tomorrow' as well as scaling the entire process to a higher perspective. Thinking in the B realm should always be one scale higher than its related 'doing'. For example, if operational C-realm survival is determined to be three years, we should think ahead for at least twice as long.

The first thing to decide in a new project is how far into the future it should be collecting information, linking it together and making knowledge out of it. Results from this knowledge development process will not be very helpful if the survival time for that scale is misjudged. Thinking must have a broader focus than implementation in order to anticipate the future well.

These vital scales of knowledge comparison define the boundary of thinking for each project or group. When responsibility is passed to the next lower scale, another boundary-setting process needs to establish the context for a new, more detailed knowledge development process. The fractal structure also allows strategic thinking to be distributed across subsets of meaningful time frames, rather than trying to do it as one process covering an unmanageably long period.

At SENCORP, we therefore do not have a strategic planning function as such. The future direction of the company is being shaped continuously through the ongoing dialogues that drive our model. These scaled thinking responsibilities are always linked to implementation, so individual and organisational knowledge bases are being developed continuously to reflect both the thinking behind decisions and feedback from implementations of those decisions.

Our model accepts that the environment is continuously changing, so it provides processes and structures which encourage a perceptive anticipation of the future and successful adaptation through improvements determined by interconnected incremental shifts at each scale, in a ratio appropriate to that scale. It does not expect sudden spectacular touchdowns or breakthroughs, just a continuing process of doing things a bit better each time because the thinking behind the decision to implement is a little better and more coherent each time.

The experimentation encouraged in thinking projects can be seen as a way of getting better at implementing (understanding) the next idea, which helps the organisation to live the future as realistically as possible while being aware that the future cannot be predicted fully. If something happens which hasn't been predicted, another iterative 'thinking, deciding, doing' process is triggered. This keeps the whole organisation in a continuous state of adaptive evolution and should avoid the need for the kind of sudden and radical step-function changes that have been forced on many inflexible organisations with poor sensitivity to their environments.

Moving away from hierarchical structures of authority

Delegation of responsibility in the SENCORP model from one scale to the next respects the distinctive knowledge base and autonomy at each scale. This breaks from hierarchical power structures, where a senior authority expects all subordinates to know the same thing and continuously checks their performance. Although a higher scale thinks across a bigger domain, the concept of layered scales is very different to hierarchical structures because people are involved in multiple responsibilities at different scales. The value of individuals in a fractal structure therefore lies in their effectiveness at thinking, deciding and doing in different contexts at different times, not in their position in a formal organisational chart.

In a non-authority paradigm, like the SENCORP model, nobody on high (no rank authority) can order change to happen, dictate by how much things must change, or demand where the change must occur. Instead, change occurs naturally as part of the process of thinking ahead further than the next scale of doing. Individuals continuously communicate with others as members of a variety of projects and sub-organisations, which means the company as a whole learns to sustain successful operations through the chain of dialogue and feedback from experience. In this way, the successful running of the organisation no longer depends on a few people at the top of a hierarchy having an overview of everything going on.

The resilience of this structure should enable it to withstand even dramatic changes in the environment, such as the discontinuities caused by the oil price increases of the 1970s. We have concentrated at SENCORP on improving our sensitivity to the environment, which we realise we cannot control. This is done through our interconnected and scaled thinking projects and by gathering as much information as possible about the environment. We also seek to be as inventive as possible in describing what we find using pictures, telling stories, and a variety of other creative methods of comparing what is happening in the outside world to our own history and ways of managing and working.

Being sensitive to the environment can help to avoid decisions that carry a high potential risk. For example, we are very careful when thinking through the implications of any new dimension through which SENCORP might pursue its interests. If the logic of such deliberations point to unacceptable levels of uncertainty, we would not choose to go in that direction.

The mind and body of an organisation

Another way of looking at SENCORP's model is in terms of a mind/body metaphor. We know the mind of a person is valuable. But as we can't see it or assess it easily against any tangible measure, we often pay insufficient attention to it. Yet, we also know that a person's mind can have a strong influence over the health of the body.

Knowledge that is internal to a person's mind can never be known completely by someone else. However, what is going on in someone's mind can form the basis of information output to other people, in the form of words and sentences which are of meaning and value to recipients. Such outputs cannot impart an individual's total knowledge on a subject to someone else through some kind of 'mind downloading' process.

Similar mind/body relationships exist when the B realm is seen as being equivalent to an organisational 'mind' and the C realm its physical manifestation as a 'body'. For instance, our model recognises that communications between the A. B and C responsibilities can never transfer knowledge directly between peoples' minds. The model, therefore, exchanges and shares information at many scales to ensure decisions are communicated effectively. This should help to make routinised processes in the C realm so efficient that people feel comfortable about spending more time and resources on building the strength of the organisational mind, which should then remain effective in looking ahead to build sustainable corporate success.

Just as the knowledge in an individual's mind is private, an organisation's B realm is a sanctuary out of reach of others. The B realm is where the organisation can think imaginatively about any idea, laugh about it, and enjoy playing around with possibilities without fear of reproach or penalty. Once a decision is made and the organisation implements it in the external environment, everyone will logically concentrate on implementing that decision and then start thinking about the next decision. Through their B realm participation, they will know how the decision was made and why it makes sense at that time.

The notion of a healthy organisational mind and body is reflected in the health of the people within it. If people are anxious, lack confidence, can't sleep and are fearful of the future, the organisation is likely to suffer deteriorating performance and have poor foresight. This will seriously impair the organisation's ability to cope successfully with continuous change in its environment.

Organisational thinking processes should also learn from the way that human minds are built to devour information as a staple diet. We love to gather more and more information, analyse it to try to make sense of it, compare it to other information, link it together, and advance information structures. All this helps to improve the results of our thinking, which in turn makes us feel more confident and under less stress. It then becomes easier for us to communicate the outcomes of our thinking to others, helping to create an impetus for improvements elsewhere in the organisation.

A desire to make comparisons is another characteristic of the human mind. Our neural systems have a natural tendency to search for patterns and make distinctions through comparisons. An organisation should, therefore, encourage the making of comparisons constantly, at all scales. Options played out in thinking projects, before coming to a decision, offer a valuable mechanism for making a comparison with what actually takes place. Over time, this should help individuals and the organisation to become better at anticipating outcomes from decisions.

Learning to think with the help of autopoiesis

Most of SENCORP's research and innovation in developing its model concentrated on issues related to organisational thinking, as this was the area which had received least attention in the past. We were greatly assisted in doing this by the work of Maturana and Varela (1980, 1988) on autopoiesis, particularly by their understanding of complexity and scale and the way in which information accumulates into knowledge. This led us to experiment and explore the use of dialogue to help people in the company to share their thinking.

One of the hardest things we did was to establish the idea that people could hold a meeting where the main objective is to think and not to do. From school onwards, our society emphasises the teaching of how to do things. As the skills needed to think well are rarely taught, we had to start virtually from scratch to establish a new culture and capability focused on thinking processes.

A radical departure from traditional approaches is the way thinking meetings must be free from notions of hierarchical authority and coercion. If anyone feels uncomfortable at a meeting about saying something just because their boss or another senior corporate manager is in the room, valuable knowledge will be lost to both the group and the individual. The overall result will be less effective than it should have been. In our model, a person gains value by generating meaningful information in a specific context, not by organisational rank. In order to achieve this, managers of higher organisational status must themselves decide to act in a non-authoritarian manner.

One of the principles we have established to nurture a new culture is that there is no 'right' or 'wrong' way of thinking and that nothing said during a thinking dialogue will be associated in any way to an individual's career progression or rewards. This has meant scotching the concept of authority and eliminating even the slightest hint of intimidation by the presence of a person with a 'higher' official status. As a result, we have been able to create an environment in which everyone feels comfortable and confident about volunteering their best and most original thoughts and knowledge, without the fear that they will be penalised for anything they say.

Behaviour based on the existence of a hierarchical chain of authority has been ingrained historically in human behaviour. Moving to a non-authoritarian culture is a delicate and difficult process to achieve successfully. A manager who wishes to introduce this approach "must practice what they preach" and refrain from imposing it in an authoritarian manner. The only way to do this is to set aside time to talk about why it makes logical sense to have people feeling good about volunteering their own knowledge and expertise. This approach takes time to inculcate in an organisation and cannot be an overnight transformation.

Emergence through continuous dialogue

Our process of open dialogue is critically important to the organization's long-term survival and advancement. This also requires long-term stability allied to a healthy, but not unbridled, growth rate because getting bigger doesn't necessarily mean getting better. The prime management responsibility in making this happen is to create an environment in which the open dialogues can flourish, drawing on the knowledge and competencies of a network of people operating at multiple scales throughout the organisation.

Placing an emphasis on thinking could cause some people to fear that people might talk more and do less. This has not happened at SENCORP because our organisational culture ensures everyone is aware of their simultaneous thinking and doing roles as a normal part of their everyday responsibilities. The thinking process itself never reaches closure, although thinking dialogues must at some point contribute towards making a decision.

New information is continuously being added, such as feedback from implementing previous decisions. Thinking cannot be judged in terms of efficient outputs because you don't know what results to expect when you start on the open-ended journey.

The only things worth thinking about are those areas that haven't been thought through to completion. Otherwise, the thinking process will be too predictable and boring to motivate those involved. Everyone in the organisation should embrace the idea that knowledge development in the B realm is always at the boundary of what has never been done before. Novel outcomes will emerge only through engagement in the open dialogues that are the fabric of the thinking process.

Encouraging effective communication

To make the dialogue as effective as possible, attention must be paid to honing communication processes and skills in the organisation. For instance, SENCORP has paid much attention to defining the language we use to communicate. This has evolved, group by group, as ideas are discussed and described. The aim is to build a precise vocabulary which avoids ambiguities and blurrings of meaning that inhibit real progress being made.

Communication is a two-sided process. People must obviously be able to make outputs by talking, writing and drawing. It is equally important that everybody engaged in the dialogue must be capable of listening to what other people say, reflect on it in relation to their own existing structure of knowledge, then respond accordingly. The dialogue will then follow a unique path, dependent on both the composition of people at a meeting and the specific interactions between them.

Everyone participates on an equal footing in the decision-making process. People make up their own minds, drawing on their personal knowledge bases. The immense value of a group process based on this kind of respect for each other comes from the fact that individuals freely and openly contribute their best thoughts and unique personal knowledge bases to assist the organisation as a whole to make incrementally better decisions.

Over the years, we have developed some guidelines on the ideal environment for facilitating effective thinking meetings, such as:

1. A project manager's prime responsibility is to facilitate the thinking process, not just to look for better answers or to try to become better informed personally. The project manager's job is to select people, monitor and adjust the process and ensure something is produced, like diagrams and reports, to make tangible the essentially intangible nature of the thinking process.

2. The number of people at the meeting should be kept within a range of between about four and nine. If there are too few in a project group, there will be insufficient variety and breadth to maintain a stimulating discussion that covers important options. On the other hand, having too many inhibits productive dialogues as some people will feel they are not contributing as much as they would like. This can lead to the emergence of a subset of people with a core interest. They should be allowed to take forward the discussion on their own.

3. Meetings must be held face to face. Physical proximity is essential to maintaining a productive dialogue, which means that meetings must take place in real time. Electronic forums, like those facilitated on the Internet , cannot replace the need to gather people together in the same room to engage in a dialogue.

4. Diversity within the meeting is important. The meeting is likely to be boring and unproductive if everyone is of the same mind or people feel they are discussing things they already know. A project manager should, therefore, select participants on the basis of their area of expertise and the way they have contributed to dialogues in the past.

An organisational culture which emphasises thinking

Certain people are more comfortable than others with the thinking processes involved in a dialogue. This leads to a natural self-selection process as people gravitate towards the kinds of activities they feel most comfortable with. Some will want to work on many projects which reward those who like to think critically and offer innovative suggestions for taking the thinking process forward. Others will prefer to participate in just a few projects in more routine areas.

As individuals know more about their own capabilities than anyone else, these choices must be respected because they are made freely rather than being ordered by a boss. Trying to impose a particular approach is futile because successful performance depends on people having the motivation to get involved in a particular type of process. It soon becomes abundantly clear which people are a help or hindrance on a project.

Everyone in the company must also keep on freshly questioning whether the processes being used make sense. Nothing should be regarded as out of bounds for discussion. Anyone who is dissatisfied about anything should feel comfortable about raising the issue. Options for doing things in a better way in the future can then be discussed and a new approach developed when it is appropriate.

The value of dialogue in knowledge generation usually becomes self-evident to people while they are doing it. The process becomes its own facilitator, especially as it is often an enjoyable experience. Potential disputes, about reconciling how much time should be devoted to thinking and doing, are avoided because the necessary balance is achieved naturally.

Coming together as a group with the prime purpose of thinking openly is the only way of avoiding the continuation of old behaviour patterns that repeat the mistakes of the past. However, this is a new experience for most people, with no authority figure, no limits on what can be said, no ownership by individuals and no compartmentalisation. The freshness of the approach can be both exciting and fraught with uncertainty; therefore, it requires great care from the project manager in creating the right processes, in the right environment, with the right people.

The project manager should ensure the availability of communication media that allow participants to express themselves in the ways they feel most comfortable with, such as drawing diagrams. As the outcome of open dialogue cannot be predicted, it is inappropriate to have a planned agenda and clearly defined goals at the outset of a meeting. The dialogue process should also be sufficiently resilient to withstand the many things that could derail discussions.

For example, anyone who feels that two or three people are ganging up to advocate one point of view should feel no inhibitions about asking the people concerned if that perception is valid. This can lead into an exchange about why it appeared to happen, how it was a hindered progress, and anything else relevant to getting the dialogue back on a productive course. When a new topic grows in significance, it should treated as a separate project in its own right.

Tying the reward system to the management model

The traditional reliance on measuring things in the physical environment fails to assess the valuable intangible factors that take place inside the organisational 'mind'. For example, in evaluating the health and prospects of an organisation, we should be asking questions like: 'How well do communications take place within it?' and 'How comfortable and confident are the people within it?'

Job descriptions have been the traditional mechanism for defining what people are expected to do. Yet these descriptions primarily cover aspects of the job that are most obviously measurable and rarely include anything about thinking. Of course, people are meant to think when they are working. But they are given no formal guidance about what contribution they are expected to make to corporate thinking and knowledge development.

Therefore, it has been critical for SENCORP to connect its reward system to its management model as a means of encouraging the open thinking process at its heart. Traditional measures are applicable mainly to the results and performance aspect of implementation. We created new methods of assessing a person's ability to contribute to productive group dialogue and knowledge development processes. This assessment is largely based on judgements made by others involved in the process.

In order to move away from rewards based on review by a boss higher up a hierarchy, incentives are provided to view jobs as long-term contracts. Everyone is rewarded with good pay and excellent benefits by an organisation that has long-term standard measures and an informed awareness of how people are contributing to knowledge development processes. There will always be greater stability in an organization when the people know that their economic well being is not threatened by what they say at a meeting attended by someone of higher formal status in the organisation. We are sure this approach is transferable to all levels of the company, although at present many of our manufacturing operations are still based mainly on performance and efficiency measurements.

We try to ensure that anyone joining the company is comfortable with the rewards and environment being offered. The relationship between the company and employee often evolves gradually. For instance, someone might start working as an external consultant. If that goes well, the relationship can be changed to a more permanent basis. Once a long-term relationship is established, each person must find their own way through it and choose their own rewards. Only the individual knows what they are able to do in the company, with nobody directly monitoring what has been done or directing what has to be done next. By de-coupling a person's pay from direct association with specific activities occurring at any one time, individuals become more secure about their participation in open dialogue processes.

Making continuous improvement an everyday norm

The incremental and cumulative nature of the SENCORP model's knowledge development process allows major changes to take place relatively smoothly with everyone affected understanding the logic of the change. For example, the company currently has fewer people than ever before. This has been an emergent feature from our dialogues. It didn't come about as a deliberate plan aimed at cutting staff numbers or eliminating a particular category of personnel, like seeking to have more critical thinkers at the expense of production people.

SENCO successfully implemented a new, scaled structure for the organization after considerable time had been spent in B realm dialogues. There are now nine distinct 'clusters'. In contrast to previous functional groupings like Accounting and Engineering, clusters focus on processes covering a mix of functions, such as overall responsibility for all ways in which the company represents itself to customers. Being responsible for a cluster demands great flexibility, versatility, communications expertise and other key process-oriented skills. These skills are very different from the more singular, technical know-how that had been appropriate for the heads of functionally-based groups. This resulted in some people at lower scales moving up to take on a senior cluster role, while some Vice Presidents acknowledged and accepted that they could no longer stay at their previous authority scale.

It is important that the overall corporate performance measures driving the organisation should encourage sustainable growth. This is particularly difficult in publicly owned companies under strain from shareholders to achieve ever-bigger growth rates. Having your 'feet to the fire' in this way makes it impossible to think about the long-term at the same time.

The SENCORP model overcomes this by continuously balancing forward thinking with efficient routinised implementation, thereby creating excess resources which can be made available for more thinking time. Its fractal structure represents a living thought process in which there is a matriculation of information as people in all projects, at different scales, create a network of intangible thoughts forged through feedback from the real external environment.

Our own experience with the model has confirmed its validity. Over time, we have been able to balance our thinking and implementation with increasing effectiveness. This has helped SENCORP to achieve consistently improving corporate results since it started to develop and introduce the new model in the 1980s. The results are excellent by the best industry standards, which gives us great confidence in the value of the management model in both business and human terms. Most importantly, the model allows the organization to sustain itself in an ever-changing environment without being dependent upon specific individuals.

This evidence, combined with the fact that the model is based on describing generalised human-behaviour, has convinced us that it would be appropriate to any size or kind of public or privately-owned company because all organisations depend crucially on their human resources. The only thing that could prevent it from being advantageous would be if a company's history and culture makes the organisation unwilling to change.

References

Maturana Humberto R and Varela Francisco J "Autopoiesis and Cognition" Boston: Reidel, 1980.

Maturana Humberto R and Varela Francisco J "Tree of Knowledge: Biological Roots