Item 1  08-SEP-2003 19:25 Susan Doherty, Group Jazz

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Who Really Matters: The Core Group Theory of Power, Privilege and Success, to be published by Doubleday in October 2003. Read and excerpt from Chapter 1 "The customer comes first" is one of the three great lies of the modern corporation. The other two are: "We make our decisions in the interests of our shareholders," and "employees are our most important asset." Underneath the mission statements and organizational charts, there is a more genuine purpose and structure representing the fundamental nature of organizations. All of them, from multinational corporations to political parties, exist to satisfy the collective will of some key group of people who comprise The Core Group, the people "who really matter." The makeup of this Core Group varies from organization to organization; but those who understand their Core Groups can foster organizational greatness. Art Kleiner offers his new theory along with a gift for telling stories of all kinds of organizations, gleaned from his years as a management consultant, journalist, educator, and historian. For more information, see his website at http://www.well.com/user/art. In a breakthrough Organization Man for the twenty-first century, bestselling author Art Kleiner reveals that every organization is driven by a desire to satisfy a Core Group of influential individuals and explains why understanding this group’s expectations is the key to success. When corporate leaders announce, with seeming sincerity, "We make our decisions on behalf of our shareholders," their words are taken at face value. But as recent news stories prove, this imperative is routinely violated. In Who Really Matters, Art Kleiner argues that the dissonance between a declared mission and actual operation can be seen at organizations large and small. All organizations have one motive in common. Every decision—which projects to back, who to promote, or how to spend money—is affected by the perceived wants and needs of a core group of people "who really matter." The composition of the group can differ from organization to organization. Often, the most senior people in the hierarchy are members—but not always. Sometimes, the people who "matter" can extend far down the corporate ladder, or even reach outside the company to include key customers, labor union leaders, and stockholders. Kleiner gives readers clues about how to identify a core group’s real mission by observing its day-to-day actions, listening to the fundamental message it sends employees, examining its management of new members; understanding the ideas that shape its policies about management, money, and the way the world works; and avoiding the taboos governing the way it operates. Whether you’re a member of the Core Group—or want to be—this deft, engaging blend of argument and observation, anecdotes and advice, is the one guide you’ll need to achieve your career goals and aspirations by navigating the hidden pathways in any organization, large or small.

You mention on your web site, that you became a watcher of a new entity - the modern organization - and the result was <b>Who Really Matters</b>. What were you seeing that caused you to develop the Core Group theory?

My question is a simple one:  

How do you know or can you tell if you matter?

Seriously, what's behind the question? That would make a big difference in the way I tried to answer it.  

Yours, ArtK

Then I knew I was on to something.  

What was I seeing? I was seeing inexplicable pain. I saw people rejected by organizations that once embraced them; or people seeing their ideas and efforts unrecognized; or finding barriers that they couldn't break. I saw this happening at large corporations but also at small start-ups. I saw it in myself when I worked for organizations. I saw it in non-profits and government agencies. It was so common, this inexplicable pain, that I couldn't believe it was purely situational. I felt there had to be some common dynamic at work. And I went to search for it.  

One of those painful episodes made it into the book as the "Lothar" story -- story of a man who was in the Core Group of a subsidiary before it went independent -- and then found himself ejected without any formal ejection. Things just stopped going "his way," and no one was willing to own up to it or take responsibility for it.

The Core Group members may not have formal authority (though they often do), but they have something more important, when it comes to influencing the direction of the organization: Legitimacy.

What do we need to get there (a healthy organization) from here, ( the dysfunctions of the core group hi-jacking the enterprise ) ?  

Feel free to re-contextualize the question :-)

Denham's question to me is interesting, because, I believe "who matters" is a very important question to hold.  In your  book you offer numerous case studies of how what mattered in reality were only the members of the core group that led the company, etc.  

I love you reminding me of Frank's comment, this is dangerous stuff. I remember when I first read Age of Heretic how my view was that so many of us talk in virtual community of collaboration and we have not learned that and often in a corporation or a a virtual community trying to find away to do business together, what happens is the heretic emerges to lead and push it through.  Often they own the technology platform and people there as their guest are guests for the purpose of what drove the development of the platform. So you wonder who matters here.  

I don't wish to sidetrack this discussion and focus on collaboration or virtual community. What I do wish to learn and discuss here are Art's wonderful methods for shifting dialogue and the patterns of the core group.  

Before I stop yammering, I wonder who here has read the book and what did they find or learn as valuable from it?  

(Note:  I will give a buzz to Gordon Cook, who I know has read it.  Anyone else?)

Art, I think Denham's question has to do with how do you know if you are "core"?  Or is it, as I suspect, something that you only realize in retrospect, when it is lost and gone.  

Those of you who have journeyed with me in the past know that I am always talking about "senior management" -- what makes them tick, when I can and can't sell to them, how I figure out how to get to them, and listened to my stories about struggling for "creditability", which I think is akin to your "legitimacy".  In fact, I wrote on the subject of the "in crowd" myself earlier in the year in a rather whimsical piece of SNA fluff that I sent to KM World titled "Aliens Among Us"....

I first met Art back in the summer of 1980 when i got an ID on the Electronic Infomation Exchange System.  

I have read the april 2003 PDF version that Art emailed me on Thursday.  

a few disconnected reactions;  

For a short book its scope is cosmic....  a combination of management self help and political moral philosophy.  

He writes very good introduction and in this one, as the scope was grand, i wondered how he could possibly deliver, but he does pretty well.    

many many unanswered questions.....    

I don't know the organization or management literature, but I certainly think you are on to something.  If nothing else it seems like a very signifficant way for everyone to think about his role or position in an organization,  Once the hypothesis is stated it seems pretty obvious.  I am mildly surpised.  No one has really ever broached this kind of hypothesis before?  

Art doesn't stop however with counselling thought about the role of the oganization that is our employer.  he opens things up to a universality of scope that intrigues me.  

Part of what he asks is what we expect from public and political organizations.  public pupose, and (the horror) public interest.  On what level if any can technology tools be useful in allowing us to choose organizational participation?  I have felt for a long time that public life and indeed society in general is badly broken in the USA.  I have been intensely curious to understand what is broken and how it got that way.  

Jihad vs McWorld (1996) author was Barber?  said quite a lot.  

i wrote on metanet over the weekend: our lives are being taken away from us by political, technical and economic forces that seem beyond our control.   

I asked  and ask here is there any hope of intelligent organization that will allow us to regain them??    

mighty...mighty questions    

I suspect Art may have had similar thoughts.  

The organizational dynamics recounted by Art are one thing.  But Art your efforts to universalize tthese in the last chapters were what i found most interesting...   Where one could go with that is what i am most curious about.  

Can one in any useful or possibly productive way  think about what membership (citizen) in an organization called USA means or should mean?  

What is leadership all about and where does tthat come from?  how and through whom is leadership expressed in the US?  

Are there any bedrock pincipals down there some where that we all agree on...principals that are CORE...that are not for sale and generally immutable?  

I am always intrigued by when people assert a hypothesis in the context of Senior Management.  I have recently been engaging my clients to examine what they mean behind that term and what they perceive. Often what is in this examination is a hidden assumption:  Oh, oh...senior management, I am stuck in a hierachy and unless I gain control at the top and become a senior manager, I can not have any impact through my work or collect a salary that is livable. This then translates to a hidden belief that the idea of Senior Management implies resignation and no possibility of change, since Senior management is hierarchical and rarely part of any learning community.  

Gordon, I appreciate your reflection. First I must share with people here, you and I have been discussing the book all weekend.  However in that discussion we were somewhat prescriptive and investigating the book from our own experiences to explain situations we share perspective on or no perspective.  

What I like about your reflection are the question you are left with as a result of reading this book. You point to opportunities and filters to design new conversations and break apart conversations that are habitual and merely sharin of information rather than dialogue and deep inquiry?  

You have opened from reading the book, the opportunity of what I call an environmental scan, which so few corporate managers I have worked with are willing to explore.  An environmental scan always opens a discusison with respect to
how do things work around here and what is working and what do we want to change?  

Imagine if you sat in a budget and strategy meeting and examined public interests, political agendas as they exist or from the perspective of influencing change?  

The question of what is leadership all about and how can it manifest changes that society and individuals so badly want in their lives brought me to Art's door years ago.  It's at the core of all his inquiry he shares in his community.  

Art, perhaps you can acquaint people here with some of the tools you offer in the book to look at these questions.  

Gordon, I also know you have thought a lot about the application of these concepts to institutions that matter to you, perhaps you can say more about that here. I find your contribution here very reflective and thoughtful, as if you have opened to new thinking and are coming to this conversation putting aside thoughts and perspective you have been entrenched in for years.

but now that you have gotten me to divulge this little nugget I am afraid i may not have a lot else to say....  Your discussion of Knowledge management is as foreign to me as an interview i did last night on whether the FFC is poperly using telric and other decisions to find broadband to be an inomation service as opposed to common carrier and therefore tariffed would be to you all.  

I am a miserable two fingered hunt and peck typist so my input will likely be a lot of luking until art can connect.  I kind of wonder why we didn't do this in october?

I've been to Tunis and back, am now heading to Portland and Denver, and then to Rome. All work related. It sounds exciting, but actually I'd rather be... home... I'll try to make my posts here as current as I can. This is the first chance I've had today.  

Thanks for the good spiritedness here. I guess what I should try to do is answer the questions without being abstract... And if there is a sense that it seems mysterious without the book being available, then I could try making the preliminary version (which Lavinia and Gordon saw) available to others. Or just try to give a flavor of it...

(I wrote that and subsequently got some confirmation on this from two of the most thorough researchers in management today: Alfred D. Chandler, Jr. and Jim Collins. Both said that in every successful company they have studied, the Core Group was visible and active; and when companies shifted, it was generally because the Core Group shifted.... )  

So how do we get from dysfunction to greatness? Depends on where you are. If you're a corporate leader (or Core Group member) you have a set of decisions to make about the whole, and about how you communicate your thinking (which will almost always be amplified.) If you're an employee, you have other kinds of decisions to make -- particularly  if you want to avoid the fate of being a "Core Group enabler." (I.e., a person who contributes to keeping a dysfunctional Core Group in place), then a lot of the strategy is personal: Building the kinds of "equity" that guarantee you a successful career within the organization.  

If you're interested in long-term change from within, and you're not in the Core Group... well, then you have your work cut out for you. And I would start by thinking seriously about what you're trying to do, why, and what timeframe it would require.  

There's a lot more to say, but that's a start.

My own view is that there are a zillion methods. I think the critical issue is cultivating the judgment to know when to use them. I agree with Clayton Christensen's article in the current HBR about the viability of theory and learning to use theory effectively. And I think the same is true of method.  

I'm not a really skilled practitioner. I know some very skilled practitioners and I realize that method is the least of it. What matters is their ability to take the organization's structure and make themselves, and their own personal growth, into a microcosm of the type of growth that the organization needs.  

This is all very vague because I don't think you can generalize too much about this stuff. The Core Group is (in my view) a universal phenomenon, but one of its aspects is that it has a different "look and feel" in different situations.

Here's a diagnostic I included in the book:  

Are you visible to the organization? Do you feel that the organization sees and values you?  

If you say something significant, good or bad, do you hear it repeated until it makes its way back to you?  

Do you find the organization giving you raises, credits, promotions, and perqs before you ask for them? Have you ever been surprised by someone saying, “We thought you’d be pleased,” and giving you – a  set of car keys? A trip? A much larger office?  

Did you receive those gestures when you were being “courted” for a job – and then have them drop away when the organization was able to take you for granted? (Maybe you’re not in the Core Group after all.)  

Do you have a basic sense of well-being about where the organization is going, and why? When you think about the ideal kind of organization that you would most like to work for – is it similar to the organization where you currently work?  

Do you get hints from people throughout the organization that they would like to know what you think – but few people actually ask you?  

Is the organization in love with you? What does it find in you to love?  

And do you love it in return?

I don’t think people choose their bosses; but I DO think people choose how much legitimacy their bosses have. To the extent we’re not conscious of this, we tend to collude with the Core Group. Which, in a great company, can lead to great results. But when the Core Group is dysfunctional….  

Carol, I’m curious to know more about the “Aliens…”  

Re #10: Gordon, the reason there are so “many many unanswered questions” is that this whole way of looking at organizations is (for me at least) relatively new. I started out (as I framed it in the last Chautauqua I did on this subject) thinking that all organizations had three basic purposes:  

1. - to make life wonderful for the Core Group;
2. - - to “do things” (fulfill a creative imperative)
3. - and to “make a better world.”  

I had to admit that there were too many counterexamples to #2 and #3, so I gave them up. But what was the Core Group really about – what gave it its power? I spent about a year trying to work that out in my mind. The answer I gradually came to – that decision-makers need to have some kind of Core Group in mind or the complexity of decisions would be overwhelming, and that the aggregate drive of decision-making ultimately leads the organization in the Core Group’s perceived desired direction, even if no individuals want to go there – seems sort of obvious in retrospect. But it didn’t seem obvious at the time.  

Once I had accepted it, though, then the corollaries were obvious – at least to the point where I was able to take them. I never felt a mandate or desire, for that matter, to work out all the details. And I suspect that there are some chapters  -- perhaps the one on Labor Unions or Schools – where I got too many of the details wrong. Some chapters, like one on Media, were obviously too complex to handle, and I just threw up my hands and backed away.  

Has nobody ever broached this hypothesis before? I’ve looked. I haven’t looked exhaustively, but I am still waiting for someone to step up and say, “This is just a rehash of X.” There are echoes of Chester Barnard, Thorsten Veblen, and probably others…  there’s a bit of Arie de Geus that I think I internalized and didn’t realize how much I had borrowed from him (his “we” of the organization is very similar to my “Core Group.”) But no, I haven’t found any real antecedents.  

Robert Monks, the Corporate Governance expert, when he read the draft, said that he felt the United States had an implicit “Core Group” and he had been struggling against its dominance for years. My own view is that the “body politic” is much more complex than that. There are hundreds of Core Groups in a civil society like ours. If “society is badly broken,” then that brokenness has to do with the disenfranchisement people feel when they have no influence on the Core Groups of the organizations they struggle with.  

But is that Society being broken? Or is it the individual’s situation vis-à-vis an unfortunate dynamic from a particular organization or venue?  

Or is it both?  

Is there any hope of intelligent organizations? Lots of them, I think. But they do require great Core Groups to have great organizations.  

Are there immutable bedrock principles for leadership? I admire that question, Gordon, and I don’t quite know how to answer it. You might as well ask, Is there a way of looking at the world that will make any Core Group great?  

Jim Collins says, basically, yes there is. He calls it Level Five Leadership.  

Me, I’m not so sure. A.  

Re #11: Lavinia, thanks for this.
The book is full of diagnostic exercises – mostly lists of questions that (I hope) will help people map the attitudes and assumptions that the Core Group (or the people acting on its behalf) make manifest in their decisions.  

It is very flattering to hear that you have been discussing this book all weekend.  

The attitude that, “Unless I’m senior management I don’t matter” is one of the attitudes I’m trying to con front. I have seen people be bruised by this. And in part, it’s true. Unless they’re in the Core Group, they don’t matter to the organization. The deeper question, though, is: Are you in your own Core Group? (Bill Isaacs of Dialogos framed this question; it’s a very difficult one for me personally and I think I gave too short shrift to it in the book.)  

Re #13: I grew up about 30 miles from West Point, and have visited there several times. Actually, I grew up in the town where Benedict Arnold’s British-spy partner – Major John Andre – was tried (by General Washington) and hung. So West Point, to me, has always stood (a bit) for betrayal as well as for its role as a military university  

Why we didn’t do this in October – as I said, Who Really Matters was originally supposed to come out in August and then Doubleday pushed back the publication date… Just goes to show that I’m not in the Core Group at Doubleday. (They wouldn’t push back John Grisham’s publication date…).

excerpt from Core Group Therapy  

"In business, there are many discernible flavors of folly. There is the one-big-ad-campaign-to-build-mind-share flavor of folly; the let-quality-slip-to-save-costs flavor; the protect-the-executives-from-bad-news flavor; the expand-and-merge-beyond-our-capabilities flavor; the not-invented-here flavor; the jump-on-the-industry-bandwagon flavor; the perennial hide-losses-by-borrowing-from-future-profits flavor; and the ever-popular addiction-to-downsizing flavor. Wayne Cascio, a professor of management and international business at the University of Colorado, identifies the organizationally debilitating spiral in which downsizing cuts back a company’s capability, which leads to lower profits, which leads to a perceived need to downsize again."  

This strikes me as eerily connected to systems archetypes.
Is there systemic shortcomings built in our culture that makes it necessary with core groups to steer clear of follies and systems adversities, and if so, I'm interested in two things :  

- How to go from Core Groups to a more healthy distribution of power and responsiblity among all stakeholders ?  

- Which are the sufficient and necessary personal characteristics of individuals making for a good Core Group ?  

Here was my situation:  I was hired as an interim General Director of a mid-sized regional opera company.  I was asked to replace a General Director who was on a long-term disability due to stress related health problems.  In his absence I was to restructure the company from a flat-line organizational chart where the GD had 16 direct reports into a structure with 3 to 5 departments who reported to the GD through department heads.  

I remind you this was an opera company! (smile)  

Working with a Board of Directors committee we came up with a perfectly logical plan, based on objective criteria. . . which blew up spectacularly!  

Why?  Because there was an official power structure and a Core Group --the real power-- and the two groups were not in synch.  By acting with the official power structure to develop my plan, in fact I staged a coup and de-railed the Core Group, although that was not really my intention.  In the end the results were positive if costly.  The almost equal forces that had existed previously were draining on the resources of the company: it was like trying to drive a car with the parking break on.  

However, with the re-structuring, the company sustained some definite losses of donors, clout and took some pr hits from annoyed stakeholders.  Although objective observer credit me with accomplishing well what I set out to do,  I have often wondered if there was a way that I could have moved the power structures together into alignment, taken off the parking break, without such pyrotechnics.

By the very nature of who I am and what I do, I stir the pot and work to open thinking.  In my studies and research on virtual work practices, I learned from a skilled research and practice team at NYU Stern School of Management that virtual practices are so new (really only about 20 years of life) that there is very little research other than ethnographic story. The trust that emerges, emerges out of a core group, and in a virtual space it is often difficult to have the dialogue and inquiry in depth that you can have in person and through design to create openings for self generative individuals to be heard or influence change.  Real trust is often only extended to members of the core group.  

I bring this up, because it is similar to the dilemna we speak of in corporations or other institutions, e.g. nonprofits.  Two years ago, I did research on the distinctions between how leading change emerges in institutional environments (structured) and what can emerge in selfgenerating grassroots groups, which are often faith based. These groups are faith based not out of a common religion. They are faith based out of faith in a mission and vision. They take enormous investment.  

In reading Art's book, I was struck by how he did not prescribe interventions he outlines questions, analysis and opportunities for dialogue that can be open between individuals who have become set in a pattern they define as trust.  There can be no change if there is no opening to this pattern of conversation.  

So what I also found interesting were the stories of core groups that did encourage success from others outside the core group.   I am going to go back to the book and look at some of the cases that struck that cord with me.  

Linda, I am glad you joined up and it would be very interesting to reflect with you as we all move forward with our learning and discussion here.  I will be curious to learn what insight you gain from how you would approach an institutional leadership for change initiative like the one you led with different thoughts.  

The other part that was unique is how Art has defined and differentiated different forms of equity (that are not just about money).  He does it in way that is not information share. In the book, he gives you an architecture where you could actually do a business valuation of your own career and see the interplay of the various forms of equity where you may be out of balance.  

It could be that your core group has a dominant form of equity that does not lend or welcome other contributions that would contribute other forms of equity.  Art, maybe you can speak a bit about this.  

What I find interesting about this architecture is that conversing about these forms of equity opens a discussion that values cross functional work teams and the emergence of effective work between people of a diversity of skill, science and expert history.  

I'm curious, though -- most of us won't be in the Core Group of the place where we work, and you (probably rightfully) give low odds of changing the organization if we aren't in the core.  Some of us get lucky enough to find a place where the values of the core align with our values.  

Do you think there are enough such places to go around?  What's a good personal strategy if we're in a place where we're not core and we're not satisfied?

FWIIW!

John's other two questions are:  

- How to go from Core Groups to a more healthy distribution of power and responsiblity among all stakeholders ?    

I'm not sure that a broader distribution IS more healthy. Core Groups emerge in stakeholder-driven organizations. Clay Shirky argues that they show up in online communities. I think that organizations are healthy to the extent that they have healthy Core Groups, and healthy Core Groups are not necessarily broad. They CAN be broad; but to be broad, they have to have structures that support that breadth. Like the structure of Jack Stack's SRC Corporation (Springfield Remanufacturing).  

- Which are the sufficient and necessary personal characteristics of individuals making for a good Core Group ?    

Not to be flip, but I think they have to Care and be Competent. Which mean different things in different organizations. They have to have a good sense of direction and communicate it well.  

A good question for me is: Are Great Core Groups accidental? Or can they be created or fostered?  

I don't know the answer.

But, as you note, unnecessarily painful.  

Could it have been avoided? Without knowing the details, I don't feel confident of my reply, but one place to start would be with a map of the Core Group and one-on-one conversations with each of its members, asking the question the organization has been unwilling to ask them to their faces: What do they really want next?

As I said, Clay Shirky has been linking virtual communities and Core Groups. His thesis is that, as in organizatoins, the virtual community goes where the Core Group is perceived to want it to go. The reason is the same as with organizations: Cognitive complexity overwhelms people.  

---  

Thank you, Lavinia, for noting that I don't prescribe interventions. I don't think there are any one-size-fits-all interventions. Interventions should start with extended diagnosis. That's why I put all the diagnostic exercises in the book. It remains to be seen whether people will find them useful. (I had a lot of help with them from intervention/graphics designer Kelvy Bird.)  

The forms of equity that I identified (and there are lots more, I imagine), just for the record, are:  

• Fungible financial equity
• Rainmaking equity
• Ownership equity (stock or other ownership in the organizations where you work)
• Reputation equity
• Relationship equity
• Credential equity
• Capability equity
• Health and fitness
• Family and love
• Awareness, sensitivity, and spirit.  

Do you think there are enough such places (where the values of the Core Group align with our own values) to go around?   

Probably not, but that's only partly because of the caliber of organizations. It's also because of the context of many peoples' personal lives, where it's easy to drift along without very explicit values. Organizations will fill in that gap for Core Group members sometimes, but they won't do it for anyone else. So waiting for an organization to give you recognition and reward may FEEL like you're out of step with its values (or vice versa), when in reality it simply means you haven't started figuring out where you are a really good fit yet.  

What's a good personal strategy if we're in a place where we're not core and we're not satisfied?  

Well, the equity piece is part of it. And another part of it is embodied in the question: Who's in your own personal Core Group? Who "really matters" for you when you make a decision? Is that conscious?  

Making decisions on behalf of other peoples' priorities is one of the highest-leverage capabilities we have, if we're consistent about it.  

It doesn't sound like much, I know. I personally think I'll probably always be out of synch, even though I like all the organizations I work for (Dialogos, NYU, Strategy & Business, Shambhala Institute, Across the Board, the Fieldbook Project). I probably really won't feel good until I start an organization of my own. But I've resisted thus far because I don't want the responsibility of being that kind of rainmaker, and I don't think I can do it reliably.

Again, I don't know the details, but I wonder how many of these women were actually in the Core Group of that organization? I bet some were. The one who stopped speaking to you, though -- could it be that somehow she saw YOU as a member of the Core Group, and then realized you weren't? Or that she saw you as blocking her ability to advance? Or that she simply was offended that you treated her like a Core Group member, when (from her perspective) she so clearly wasn't?  

Or none of the above...  

I agree that Social Network Analysis (and Core Group Theory too, for that matter) don't explain everything going on in organizations. David Kantor's "Boundary Profile" stuff identifies about seven or eight levels of analysis of human roles in organizations and other social systems, and you could probably add another 18 or so from other sources (Sandra Seagal, Charles Hampden-Turner, and so on). It's would be pretty difficult to weld all of that incompatible framework-creation into a comprehensive theory...

I also have some stuff coming up in the Denver/Boulder area on Oct 21-22. Email me if you're interested: art@well.com.  

And I'll be doing a Core Group talk at the Systems THinking in Action Conference in Boston, Weds evening Oct 8.

Hi John.

Thanks for taking the time to participate here. Let me say that I have not read your book and will surely catch up with it.  

One question:  

How does one (internal or external to the organization) determine whether the Core Group is functional or dysfunctional?  

Here's my scenario:  

I have worked in State Government for 2 years. In the unit of 20 consultants that I was a part of until reorganization and retirements a couple of months ago, we clearly had a "Core Group" of 4 people who held all the key strings. The rest were not just out of the Core Group but many were on a "shit list" (pardon the expression). Much of this was actively perpetuated by the manager.  

Nationally, our work was presented as a model and there is a lot of truth to that. Within the larger state government, our unit stayed out of trouble. However, within the statewide community of programs and internally within our offices, there were mixed feelings.  

So, to repeat the question, how do you determine whether the core group is functional or dysfunctional?  

I was somewhat disappointed to read in #19 that you have given up on the purpose of the organization to “make a better world.”  

Thanks again,
Ajit  

In this particular corporation, it was somewhat of a merger situation.  Two community companies had merged to become a regional opera and there was a corporate plan to expand to a 3 or 4 community company.  The merger had been in place for about 5 years when I joined the company but the two cultures were still different and warring.  

Opera is the most expensive of the traditional art forms, but also the only one with a substantially growing marketshare in North America.  A word about the regional model:  by producing an opera and taking that production to communities only an hour or two away there we gain access to new markets, donors and corporate funders, while realizing considerable savings in production costs.  The resulting product is of a higher artistic and production quality than a single community could afford on its own. At the same time, it is superior to importing an international touring company in results for the local economy as more local jobs are involved.  In addition a regional company provides education and community outreach in the arts. There are mutually advantages partnerships with local businesses and corporations. A touring company by comparison puts on a show and leaves.  

One of the two founding community companies in this $3 M. regional company was much older and larger than the other but the smaller company's community was where the growth potential and the new wealth resided. The older company was pretty much maxed out on its audience and donor base.  

Any reasonable manager would want to put resources into the new community. Right?  But this took away from the dazzle, clout and social resources of the established Board members.  In addition, there were ethnic and artistic taste differences between the clusters of power.  The older company was more Italian and located in a city with heavy industry. This group favoured traditional repertoire of Verdi, Puccini.  The newer community company was from a heavily German community with a lot of high tech companies, research intensive university campuses.  That community, while interested in German rep, Richard Strauss, Mozart, Wagner,  also was more supportive of new opera and education activities for students.  The differences between the two corporate cultures was not as clear as German and Italian.  Indeed there were only a handful of Board members with those ethnicities in their ancestry.  

The Board as an official group had endorsed long range goals to develop the new market, grow to new communities,  foster educational initiatives and develop a "second stage" for experimental new works.  Most of these goals were then communicated to government and foundation funders, endorsed by them and became comittments to achieve over time.  Somehow none of this seemed able to happen. I came in to the situation of fighting funding cuts that were the result of failures to meet strategic goals.  

The Board would have long range planning sessions give directions to the General Director and a year later... a traditional season of great artistic merit, heavy on Italian repertoire would emerge...not a terrible outcome... however the second stage, expanded education programs never happened, nor did much development in the new community take place, which remained resource starved.  Goals were not reached and the Board as a whole demanded answers.  

The poor guy who was General Director was getting ill in the middle.  Enter me.  

I quickly saw the mechanism in the organization which was causing all planning that was not inline with the interests/preferences of the larger/more established company to be derailed.  It was a fairly simple process, working with a Board Human Resources Committee,  to short- circuit this mechanism during the re-structuring by routing communications and authority around the roadblock. Since we were establishing department heads we made it a simple part of the selection criterion that those department heads were to have certain skill sets and have a demonstrated committment to work in both communities and towards the long range goals of the company.  That left the roadblocks out in the cold.  

It took awhile for the implications of the changes to sink in.  The Core Group was suddenly cut off from their ability to influence the direction of the organization unofficially while officially going along with the Board as a whole. They then realized what had hit them.  

That's when all hell broke loose.  

Several established Board members left the company taking money and contacts with them.  Stories in the press ran that were almost totally false, in some cases laughably so,  but the local influence of monied families persuaded the local press to print these tales without checking sources.  

So those were the issues in a nutshell.  

A question that comes to my mind around this intriguing notion of the Core Group is whether people aspire to be IN the Core Group and engage in proactive tactics to enter it?  Is being in the Core Group something that people can aspire to and plan for or is it something that just 'happens' for a variety of reasons (including lots of the usual reasons that some people are IN and others are OUT)?

Kelvy Bird is a wonderful designer and my field work in California High tech and with Accenture was very much around the assessments you briefly described. They often take 3-6 month of process time to build the trust for change.  

I have read David Kantor's family therapy work and he has a very deep spiritual process that is actually not traditional therapy. I valued alot from his thinking.  I have always wanted to me him.  I know David  has been thinking alot about issues that close off systems.  I had a discussion with a consultant that he works with about about a desire to work with him on discovering a path that embraces the women's way of synergizing and sparking leadership.  I am working to collect stories on how women bring change to corporations through leadership and have just joined the Sloan Management School Women's Alumnae Association to find ways to collect these stories.  

This brings me to Carol's story. Carol you really have become a fabulous and creative writer. There are numerous issues in your story that reflect how women succeed in the  finance and banking industry.  I would encourage you to really learn how about women who are creating innovation.  I had this sense as I read you, you were focused on explaining the past and the behavior of your network that you have created through your jobs. I was wondering if in your seeking to emerge in  a KM role in banking, if you have sought to identify networks of women who have had success in banking and finance in companies that innovate.  

Your article from my past experience reflects writing in many of the gender circles that addressed issues re: the core group of white male domination.  In this analysis it became very common for women to take on a role defined by their male senior leadership where promotion and attention was given to people who did not rock the value scheme of the male dominated core group of senior managers.  

I have learned from all my years of research that innovation and emergence of core groups in systems that need change do not emerge unless a core group forms thoughtfully to structure that change and pattern.  Art's remark about HP is a real good example.  

In the context of the old HP, when Carly Fiorna first came she thrived and was a heroine in the old model.  Now the economy is challenged so differently and the report card is still out if she is right or if vesting in saving the old HP way is going to serve the company.  I would refernce this phase a necessary phase of chaos. As to whether it turns out to be the Lucent story, time will tell.  What I do know is that like NASA, HP is dominated by a large population of people simply waiting to retire.  This is not an environemnt in which innovation typically happens.  The only case study I know of for this not being the case is Whirlpool and British Petroleum, where the CEO's scared the living daylights out of their core group of managers and by saying what we did in the past is not going to work now.  Sir John Brown invited people to save their own job and gave the the resources and invested in the attention space to do so.
They beat Shell in terms of reinventing themselves as a renewable energy company. Another example is Phillip Morris.
The current CEO of the US operation is organizing to phase out tobacco as its primary business by 2025 and set a realistic date for that imho.  

Art, I am unable to attend the Systems Thinking Conference. I have to invest money now in professional association meetings with leaders who can provide me research. Let me know if it would be possible to come meet you briefly for a drink or join you with a group of people for some social gathering. Coincidentally, I sent you an other email about this group.
I can share more with you if you are interested.  

This is an interesting dialogue, in some respects it doesn't even feel like you're leading it.  Are you sure you're part of the "core group?"  Just Kidding.  

I have several comments I would like to express to you and the community.  First, I found it interesting how your recent book evolved - from a previous chautauqua if I'm not mistaken.  I co-authored the book Inside Out and was on the helm in May of this year and had a similar experience.  I too struggled with some of the challenges thrown into the discussion which really forced me to sit back - examine - and then try to make meaning out of it all.  Now I'm working on "Level 5 Communication."  Fantastastic start - yet still a ways to go before completion.  So here are my questions to you and the group.
1. Do you feel there is a core communication pattern that pulls the core group together, and keeps it in place?
2. In general, do you feel core groups can express themselves adequately to the people outside of their core?
3. Do you feel core groups tend to wall themselves in, further enhancing their power structure and dominance?  

As I went back and explored communication patterns, I now believe there is an innate desire to form communities, and subsequently core groups within these communities.  Some people find their core group in a non-profit setting, some in a religeous text, others in a corporate setting.  Once a person has a foundational role in a core group, it would appear that their desire to find a similar setting elsewhere would be diminished.  Any thoughts?  

A few people have what it takes to play in the core group, most people don't and some are disinterested. In what way is your book of use to anybody? Does it offer tactics to improve performance of Core players? Does it explain the necessary strategies for moving from non-core to core?    

Actually, it explains that for many people, it may be a better strategy NOT to try to move to the Core. There are great careers to be carved out as "employees of mutual consent" provided you don't fall into the trap of feeling you need to be a Core Group member to have any dignity --or feeling that you need the organization to take care of you as if you were a Core Group member.  

My definition of the Core Group may also be a bit counter-intuitive. It's the people with legitimacy, and legitimacy is defined by decision-makers. In other words, we have a lot more leverage over who's in the Core Group than we may think. Especially over time, especially collectively, through the quality of our decisions.  

I don't pretend this is anything new. But I WAS surprised to see how, once you start to take the concept and run with it, it takes you into territory where few people have really written. For example:  

Should society, as a whole, operate on behalf of Core Groups? Or on behalf of everyone within them?  

How do we create a "body politic" that permits organizations to exist on behalf of Core Groups, with the resulting power and capability that this gives to organizations, without running roughshod over democratic decision-making?  

As an individual, on whose behalf do you make decisions? Are you in your own Core Group?  

And are you enabling dysfunctional Core Groups? Or unconsciously reacting to the Core Group dynamics of the last organization you worked at, expecting the new organization to operate the same way?  

These are the kinds of questions that this raises for me.

Til later... ArtK

I thought I was a member of the Core Group in an organization that I belonged to because I was close to the artistic/creative decision-making power and significantly enabled that leadership. Indeed I probably temporarily was a Core Group member.  However I was quite alienated in that organization from the financial/business-decision making power.  As a result  I didn't really have tenure in the Core Group because the two halves of the organization were ultimately going to close ranks and only protect and nurture those accepted by both.  I learned a lot from that experience.  

It has enabled me to go on and be a Core Group member and leader in other organizations.

I realize by nature of the skill set I have as an evaluator and person who organizes evaluations for learning community,
that when I take on a job well, I am by the nature of the job not part of a core group.  

Years ago, I had a core group of women in my life that I had dinner with once a month. I derived something from this group that gave me a sense of belonging.  

I also had two managers/leaders in my careers that extended me a level of trust out of aligned core values. We disagreed, we yacked and ultimately they honored my flow and respected my work and championed me to succeed.  

At the present time in my career phase, I am interested to recover this because I have lost it and so far I am having progress just from my intention.  

I think it's important to distinguish intention from goals.  

I keep noticing more and more that alignment of values is ulimtately what brings me to work of meaning and people I respect.

We outsiders can be a pretty potent brew!  

My boss -- EVP/COO eventually -- used to chide me when I talked longly about wanting to be an officer of the bank.  "It is not a club," he would gripe.  "You make it sound like you need the secret handshake to be admitted."  He objected to "being an officer" as a measure of success.  I never quite listened to him on that score.  What he said made sense -- but I knew that he was a member from the day he was recruited, and felt therefore, that he didn't know the color of the grass on the other side!  

Now, four years and two jobs later, he is becoming tired and is still trying to comprehend why he no longer is the golden boy.  I told him that he transmutted from alien to human -- he has read my story -- you would say he is not a member of the core group in the new organization.  There are many changes needed, but he is currently pondering whether the cost is worth the it -- being an agent of change from the outside is tough, hard on the body and spirit.  

the questions troubling me that I wanted my story to convey:  

is a core group a kind of super-powered CoP?  

Membership is fluid, neh?  People who were in are suddenly out, but I have not observed many people who were out suddenly becoming in!  It is far easier to come to an organization from the outside than to move internally from out to in!  

is wanting to matter a viable, sustainable, and realistic ambition?  

do core groups actually form or do they just kinda happen?  Can you deliberately create an effective core group?  

Lavinia, thank you for the compliment on my ability to scribble! Don't know how good I am at interpreting Denham, though.  I still tend to try and get him to expound on boundary objects....

Sitting on the outside while wanting to be in can be really hard - like talking and noboby is listening, like presenting (what you perceive) to be great ideas only to have them tossed aside, like playing without being told the rules, like aspiring to contribute, but never being invited.  

Knowing if you matter is a very tacit / intuitive feeling, you can 'matter' without an expense account, a role, budget, title, parking space, or business card.  

You 'matter' when:
* others listen
* you are asked for advice
* you are included in tacit conversations
* you have a say in unwritten assumptions
* your memes are propagated
* you help shape / direct / influence the real purpose  

Adding another dynamic

From my experience consulting executives,
I would guess the Core Group, are the ones tying together the formal business organization, with the networks of practice that gets the work done.  

If this observation holds water, Art's book is vitally important for a lot of stuff that a great many good-intentioned consultants are trying to do right now.  

The whole field of online social networking, communities of practice, open space, corporate social responsibility, and a plethora of other worthy attempts out there, could be catalyzed into being more effective if they tied/translated their language to incorporate Core Group Thinking.

Social Capital
Unlike the other forms of IC, social capital points to the value of relationships between people in firms, and between firms and other firms. Trust, reciprocity, shared values, networking, and norms are all things that, according to social capital theory, add value in a firm, or between firms, by speeding the transfer of information and the development of new knowledge. In a sense, what Edvinsson refers to as customer capital is merely a form of social capital by another name, albeit only between a company and its customers.
But social capital can take other forms, the combination of which unquestionably adds value to a firm; is intangible; and clearly warrants a prominent place in the taxonomy of IC.  

Turning to the realm of social capital theory, then, we find two major schools of thought.
The first is the so-called ‘egocentric’ perspective, in which social capital is seen as the value of an individual’s relationships with other individuals in helping to get things done in a firm. The other is the ‘sociocentric’ model in which social capital is still held by individuals, but has more to do with the added value of their position in the structure of a firm than with their interpersonal relationships, per se.

I agree.  I also think that we tend to bring our expectations about whether we will be a member of the Core Group or an Outsider with us from workplace to workplace and to some extent that helps to position us.  Given the right set of circumstances we can "walk on water" right into the Core Group, to the astonishment of observers or we can close off communications and networks when we don't acknowledge or utilize those connections.  

I brought my Core Group status through a couple of work situations and when I lost it, I internalized some negative messages and began to feel comfortable as an Outsider.  I took that Outsider role to another position where, in an atmosphere of organizational stability, good management, healthy work conditions I was able to restore focus, achieve, etc. but I couldn't get into the Core Group there and talking to my one mentor/friend in the organization I was advised it would probably take 3 years following the strategy I was pursuing.  Instead I left to a leadership position elsewhere.

At heart, I think I'm less concerned about "fixing" or "solving" organizations. I'm more interested in "playing with them..." as if they were an artistic medium.  

Anyway, let me go back to comment #35 and try to respond...

I tried to answer that question in my chapter on Enron. Enron was clearly not just a company with a dysfunctional Core Group, but a company which deliberately tried to create the impression that everyone who worked there (or most people) were in the Core Group. They all had stock options, didn't they? But when push came to shove, only a few had the freedom to sell them in time to cash in.  

So what would you look for in another company that might provide clues that it, too, is going down the Enron path -- or some other dsfunctional path?  

You offer one good clue. A Core Group that actively seeks to denigrate or harm some of its organization's own members seems like it could  be dysfunctional.  

I borrowed Arie de Geus' word for this type of Core Group: "Parasite." They could also be seen as gigolos. The organization is in love with them, and they take advantage of that infatuation for their own gain at the expense of the organization. That, to me, is the critical distinguishing factor of a parasite Core Group.  

And it's so easy to be one. Many Silicon Valley start-ups assumed that a parasite operation was just business as usual.... Start a company, take it public, sell it out, cash in and leave. Jim Collins called this, "Built to Flip."

At least, that's how I read your remark.  

Let me be more precise. I gave up on the idea that Every Organization, know it or not, is trying to "make a better world."  

But I still believe that every organization has a kind of calling, which the Core Group may or may not see. And thus everybody else may or may not see.  In the book, I refer to this as the "Noble Purpose," named after an episode in a learning history of an oil company where a division of the company set out to create a "noble purpose" for themselves.  

Have I mentioned that the organization watches closely what the Core Group pays attention to? A Core Group that pays attention to long-term results will shift everyone's attention in that direction. And that's the first step toward moving toward a more noble purpose, or a purpose of "making a better world."  

There's a lot more on that in the book, especially toward the end. I just didn't want to propose (once I found too many counter-examples) that organizations had unconsciously entered that particular garden path.

Or maybe they see it as "consolidating their power base," but I tend to have a more optimistic view of human nature.  

Would it have been possible, by raising the right questions with the right individuals, to have forestalled "all hell breaking loose?" I suspect that you suspect the answer is yes.  

But you would have had to have had a theory of the Opera Company akin to Core Group theory (or some other theory that explains these issues) to be able to have those conversations.

Do people aspire to be IN the Core Group and thus enter it that way? Or does membership just "happen?"  

I think that depends on the organization. Some organizations, like GE, are conscious of their Core Group dynamics and deliberately foster the personality and capability of mid-level executives. They promote them and develop them, in part because they know that those who are promoted and developed will have an immense influence. They thus deliberately pull some people in -- and that prevents others from coming in haphazardly.  

Other organizations have much more ad hoc Core Groups. In many organizations, people who look and act like the existing Core Group members get into the Core Group - simply because everyone starts treating them as members, even before they're fully experienced. This phenomenon is the underside, in my view, to the "Glass Ceiling." We all collude in limiting the diversity of the Core Group. Even if we hate the Glass Ceiling, we help to maintain it.  

Some people get in through controlling a key bottleneck. (The head of the Rouge River plant at Ford, for a while...) (Karen Stephenson has a lot to say about this... she calls those people "gatekeepers.") Others get in by having a kind of integrity that draws people to make decisions on their behalf.  

Every organization has its own dynamic, and those dynamics sometimes change over time, so it's difficult to generalize.  

But it is often the case that people desperately want to get IN, and those dynamics are keeping them OUT, and nobody, including the current Core Group, can say why them. Why in? Why out?

David, as you note, was clearly an influence onthis work. I've been privileged to talk with him a few times in depth about this theory and practice. He has a book in him about organizations but he hasn't yet written it.  

There's a lot to unpack in your sentence:  

"Innovation and emergence of core groups in systems that need change do not emerge unless a core group forms thoughtfully to structure that change and pattern."  

I spend some time in the book talking about "Shadow Core Groups" -- where people deliberately set out to create a small group within an organization that will foster a particular change. This often requires them to "shadow" the Core Group, just as a shadow government will pay close attention to the government in power.  

It takes quite a commitment of time and effort, which is why such efforts often falter.  

As for STIA: Sure, I'd love to meet outside of the conference walls.
I'll be there on Weds, Oct 8 (when I have an evening talk) and Thurs, Oct 9. Thursday is probably a better bet because I have fewer things I have to do. But I will have to catch a shuttle flight home that night, so it would have to be at a time that would allow me to do that. Maybe breakfast on Thursday...?  

Or another day. I'm in Boston quite a bit, at least once a month...  

Do virtual communities like this have Core Groups? Lavinia is putting a lot of thought into this. Another person putting a lot of thought into this is Clay Shirky, who wrote an essay that's getting some web attention. He borrows the Core Group idea and says that virtual communities self-organize around Core Groups and we should stop resenting it and just work with that reality.  

I think you can find it at
http://shirky.com/writings/group_enemy.html.  

1. Is there a core communication pattern that pulls the Core Group together?  

Great question. I never thought about it. It seems to make sense; I'd want to read your book before even having an opinion.  

Another question for me would be: "Why does this matter?" And the answer would be: Because until you understand that particular core communication pattern, you can't really reach the Core Group or appreciate it.  

Which is very close to David Kantor's concept of Boundary Profiles, I suspect.  

2. Do I feel core groups can express themselves adequately to people outside the core?  

Charles Hampden-Turner has a concept called "Amplification," and I devote a chapter to it. The chapter is called "Guesswork." The idea is that people are continually trying to guess what the Core Group wants. Generally they're only partially correct.  

3. Do Core Groups tend to wall themselves in?  

Often. Generally unconsciously. They might like the feeling of walling themselves in, but they don't like the results.  

I think others collude in this "walling-in" phenomenon. We all crave some distance between ourselves and those on whose behalf we operate. It makes us feel safe. Have you ever noticed that it's really hard to be a good friend to someone who is in the Core Group of an organization where you're not in the Core Group? Intimacy is difficult across that boundary -- not because of the Core Group member's attitude, but because the other person feels vulnerable.  

I'm in that situation right now, actually, and trying to cope with it. I won't go into the details, except to say that it is much more difficult than I anticipated; and my friend, who keeps trying to BE a friend and a Core Group member, also recognizes that I keep trying to be a friend and an employee.  

Takes a lot of concentration. Much easier to wall them away.  

Finally, if you're in a Core Group in one organization, doesn't it make you less likely to want to be in the Core Group in another. Sure. If you take being in the Core Group seriously. Being in the Core Group takes a lot of attention.  

Which is why it's often ridiculous when managers find out that an employee is, say, deacon of a church or leader of a major volunteer effort. "Why can't they bring that same spirit into THIS organization?" asks the manager. The answer is simple: They're not in the Core Group in your organization. It's just their day job.  

Tragic, sometimes.

(Heh.)  

Do dysfunctional Core Groups exist because structural forces make them happen that way...  

or do they exist (as you put it, Kip) because "some number of people are actively engaged in a personal agenda of acquisition"?  

I avoided this question in my book. Are people corrupt, or do circumstances corrupt them?  

Or do both situations reinforce each other?  

And, implicitly, do big powerful organizations attract corrupt people who hope to exploit all that money and opportunity?  

I certainly agree about the influence Core Group members wield. But have they set out to wield it and dominate it -- in some deliberate and conscious way?  

In some cases, probably. It's always hard to know for sure.  

And in some ways, the effect is the same whether they set out deliberately or not.  

One of the points of Core Group theory is that, in a non-totalitarian state, this kind of domination can only take place when everyone else colludes in it. (In a totalitarian state, you don't really have much choice.)  

Corporations and large organizations are often compared to large totalitarian enterprises. I remember reading in the 1980s that the US had dozens of Soviet enterprises within it -- called Procter & Gamble, General Motors, Dupont, etc.  

On some levels, that argument doesn't hold. But the fear and collusion that people feel -- that is certainly analogous. What can we do to put that fear and collusion in perspective? I'm not entirely sure.  

Finally, Kip, thanks for noticing the point about the outsiders being in the Core Group. I think Warren Buffet is probably in Microsoft's Core Group, even though he owns no Microsoft stock.