Introduction

I hope your new year is starting the way you hoped and that interesting patterns are beginning to emerge.

The Paradox of the Perverse Proxy

The really important things we do are almost impossible to measure quantitively - how do you measure how well each child in a school is prepared for the future that awaits them, or how many people didn't become ill, or how safe people feel on a housing estate? And even when we can measure these things for an individual they can't be added up in a nice easy way for a group. We therefore look for what we can measure that will give us a good indication of what should happen if jobs are done well, so that we can measure progress and also compare performance between operating units in order that we may all learn from the best. But this means that what we are measuring are at best only outputs and not outcomes, and are always only a proxy measure of what is actually desired.

This presents a huge danger because the more pressure there is to meet the targets the more likelihood there is that individuals and organisations will concentrate on improving the components of the proxy measure, often working directly against what was really intended. For example;
" an important measure in education is five A to Cs at GCSE, this can lead a school identifying which pupils are certain to gain this standard, which have no chance and then concentrating on those who are borderline. This will certainly obtain the performance improvement demanded by the measures but it is surely not what was intended.
" a health centre in the south wrote to parents who had refused to let their children have the MMR jab removing the children from their lists because they had targets for MMR jabs and if they didn't reach them they would lose their bonus and thereby affect the level of care they could offer their other patients.
As more and more effort is put into those things which directly affect the way performance targets are measured the less resource there is available to do what was really intended and so an unhealthy vicious circle ensues.

Most of our measures are proxies and the paradox is that perversely, the harder we try to deliver them the more likely we are to end up doing the opposite of what was intended.

Articles

There was a very insightful article about the organizational thinking and
leadership beliefs of Paul O'Neill, the Treasury Secretary, in Sunday's New
York Times Magazine (January 13, 2002). It's called O'Neill's List and was
written by MICHAEL LEWIS, one of the fine regular writers for the Times
Magazine.

I've pasted a few excerpts from the article below to whet your appetite.

You can access the article through this link to the New York Times website
(you may need to register with the NY Times, it's free though)

http://www.nytimes.com/2002/01/13/magazine/13ONEILL.html

"After several years of depressed earnings in the early 90's, O'Neill took
Alcoa from a profit of $4.8 million in 1993 to a profit of $1.5 billion in
2000. Along the way, he transformed Alcoa's manufacturing process and
grafted his character and his beliefs onto the lives of its workers.
He also created, pretty much by an act of will, a new corporate culture. How
he did this is actually interesting, in view of how he has gone about his
job at the Treasury. He began by making a big pain in the rear of himself.
On his first day, he told Alcoa's executives that they weren't going to talk
people into buying more aluminum and that they weren't going to be able to
raise prices, so the only way to improve the company's fortunes was to lower
its costs. And the only way to do that was with the cooperation of Alcoa's
workers. And the only way to get that was to show them that you actually
cared about them. And the only way to do that was actually to care about
them. And the way to do that was to establish, as the first priority of
Alcoa, the elimination of all job-related injuries. Any executive who didn't
make worker safety his personal fetish -- a higher priority than profits --
would be fired.

.......Well before it became fashionable -- that is, before the Internet
boom -- O'Neill replaced the old corporate hierarchy with a flatter
management structure. It took him several years, and he was forced to fire a
few otherwise useful people who refused to believe he was serious about
worker safety, but he eventually established Alcoa as the world's safest
place to work. (To give you an idea of what he achieved, Treasury Department
employees, most of whom don't do much but sit at desks, missed work because
of injury 20 times as often as Alcoa employees, most of whom work with
molten lava and man-eating machinery.) He proved to the satisfaction of the
people who worked for him that their old ideas of what was possible were
based on artificial limits. What Alcoa achieved with worker safety became a
metaphor that could be applied to attacking any goal, including the goal of
lowering costs. And having persuaded the workers that he was on their side,
they paid him back with greater efficiency.

Pretty much everything O'Neill did at Alcoa reflected his belief that most
hierarchical distinctions were nonsense. (The great exception was the big
money he and other top executives earned.) He created a profit-sharing plan
that was the same for hourly workers and managers. He got rid of the
company's headquarters -- in which senior executives worked on top floors
with lovely views of everything but ordinary workers -- and moved everyone
into a building that he more or less designed to maximize face-to-face
encounters between employees of every level. As a corporate boss, O'Neill
took a wholly original view of an ancient business -- metal making --
imposed on it his idea of how it should work and changed people's lives."

Conferences

"Leading Others the Natural Way: Unleashing the Storyteller Within You."
It will be held March 21-23 in Santa Fe. Serving as faculty for this event are Roger Lewin, Birute Regine, and Stuart Kauffman - quite a special line-up.

Should you have any questions about the plans for Santa Fe, please email Tina Mott (Tina@PlexusInstitute.org) or call them at 609-208-2930.

Web Sites

http://www.stevedenning.com/
This is packed full of information for those of you interested in storytelling.

www.PlexusInstitute.org
The site has been crafted to reflect and advance the work of the Institute.
Its structure is dynamic. It encourages contributions and the sharing of
ideas and knowledge among members of the Plexus community.

Information

A Network of Excellence called 'Exystence' is to be funded by the European Commission starting 1 April 2002. One of the objectives is to hold Thematic Institutes, where researchers in complex systems will come together to do research from 3 weeks to 2 months. Below is the first call for applications. You will also find these details on the LSE Complexity website http://is.lse.ac.uk/complexity

New Member

Wendy Barker

Interest In Complexity: organisational change; making sense of organisational situations using complexity ideas; interdisciplinary themes including psychotherapy, political themes such as diversity

Contact Info: Orlando88@aol.com

Extract from "On Dialogue" by David Bohm

"It is clear that if we are to live in harmony with ourselves and with
nature, we need to be able to communicate freely in a creative movement in
which no one permanently holds to or otherwise defends his own ideas. Why
then is it so difficult actually to bring about such communication?

This is a very complex and subtle question. But it may perhaps be said
that when one comes to do something (and not merely to talk about it or
think about it), one tends to believe that one *already is* listening to
the other person in a proper way. It seems then that the main trouble is
that the other person is the one who is prejudiced and not listening.
After all, it is easy for each one of us to see that other people are
"blocked" about certain questions, so that without being aware of it, they
are avoiding the confrontation of contradictions in certain ideas that may
be extremely dear to them."

And finally - please remember any contributions will be most welcome
.