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  • Writer's pictureAlan Sieler

Innovative Leadership and Second Order Learning

by Alan Sieler

"The job of leadership is precisely the crafting of creative responses to competitive conditions that build competence, capability, and commitment in people and avoid destroying organisational memory, wisdom and loyalty." J.Pfeffer, The Human Equation


It is now widely accepted that the contemporary business world is one of increasing chaos, complexity and uncertainty, generated by accelerating change and more intense global competition. These are now permanent features of the business landscape, necessitating rapid response and adaptation to ever-changing and unpredictable circumstances. Consequently, leaders are continually dealing with the issue of how to redesign their organisations to ensure that they remain competitive. Innovation and transformation are an integral part of this process.

Perhaps the biggest challenge facing leaders is how they can be sufficiently influential to generate an organisational environment, which continually produces creative responses to competitive conditions. This requires them to be more innovative in their thinking about the global circumstances in which their organisation is doing business. It also requires them to be innovative in how they can stimulate innovative thinking in their people. In short, leaders and other organisational personnel are faced with a challenge of continually being in a creative and innovative mind set - one that generates appropriate responses to novel circumstances.

An excellent example of the development of such a mind set is the story of the transformation of the Brazilian corporation Semco, told in Ricardo Semler's book Maverick. As the company CEO, Semler stepped outside the conventional wisdom of how a corporation should be run.

He did not allow himself to be trapped in the thinking associated ways of doing business that had resulted in a severe downturn in corporate activity and success. The story of Semco is an excellent example of what Jeffrey Pfeffer, in The Human Equation, expresses as success that comes to those organisations that have the wisdom and the courage to find their own path.

How can such a can a creative and innovative mind set, as an integral feature of organisational culture, be developed? The short answer is ... learning. The work of well-respected authors Chris Argyris and Peter Senge has highlighted the vital importance of continual learning by all organisational personnel. This series of papers can be seen as a continuation of their emphasis on the importance of developing a genuine learning organisation, where there is a culture of continuous improvement and the development of practices which are creative responses to competitive conditions. As such, the papers offer an approach to learning, which facilitates the development of an innovative mind-set.

The approach to learning, which will be outlined and discussed in these papers, is second order learning. The central component of this form of learning is the notion of the observer. To observe means to look at things in a particular way, and changing the way they are viewed can throw a different and often more productive light on how to deal with them. Like the rest of us, leaders are observers of the different circumstances that confront them in their daily personal and professional living. Second order learning is about developing more insightful and creative ways of observing, which produce more effective responses to problematic circumstances. To cite Pfeffer in The Human Equation:

"How we look at things affects how they look and what we do."

Based on the notion of observing, the main premises of second order learning are:

  • the way anyone observes determines what they come to regard as a problem,

  • the way anyone observes determines what ideas become apparent to them as solutions to problems,

  • becoming aware of the way things are being observed enables the development of different and more productive ways of observing them, and

  • innovative thinking, and generating creative responses, is a result of observing problematic circumstances in different ways.

Second order learning provides an opportunity for leaders to not only be aware of the specifics of how they view circumstances within and outside of their organisations, but also how they can become different and more powerful observers. In this context the term"power" is meant as "the capacity for effective action". Thus, becoming a different and more powerful observer is seen as a foundation for the crafting of creative responses to competitive conditions.

In the first of this series of papers, the concept of observing will be explored in detail, and this will provide a foundation for beginning to take a closer look at second order learning, and the link between this form of learning and innovative thinking. Subsequent papers will outline in more detail the specifics of second order learning, as well as the relationship between paradigms and innovative thinking.

The Phenomenon of Observing

Leaders and managers are observers of events, circumstances and people. To be successful they need to be keen observers of what is happening not only in their own organisation, but also with other organisations, as well as key forces and trends impacting on the business world. One of the major tenets of second order learning is that the way leaders observe will determine both what they observe and how they act. In other words, the response to a

situation is shaped by how it is observed in the first place.

What are we saying here? Let's spell this out in a bit more detail using a common everyday household occurrence. Most people are probably familiar with the term "domestic blindness", which seems to be a particular affliction of the male of the species in domestic situations! Typically the male has gone to the cupboard, often in a rush, to look for something, and it has not "jumped out at him". Claiming that he cannot see it he calls out to his partner and coming to his assistance she is able to find it immediately and somewhat scornfully directs his attention to its presence!

So what is going on here? Some might say that all we have here is another example of the superiority of the female of the species! Perhaps, but how come something was there in front of someone but one person did not see it and it was glaringly apparent to someone else? In addressing this question we are at the heart of the notion of the observer. The essence of this notion is that what we observe, or do not observe, depends on the observer him- or herself. What do we mean by this statement "depends on the observer him- or herself"? We can explore this question through another example.

Imagine you are standing outside on a clear night looking at the night sky and marvelling at the beauty of the heavens. Then a stranger comes up to you and you strike up a conversation and in the course of talking he or she says that they work as an astronomer. As the conversation proceeds they begin to point out different features of the planets, which enable you to look at the sky differently. It is the same sky, but now you see things, which were there but you did not see before, so there is a slightly different sky available to you. You are now able to observe the night sky differently. Similarly if an astrologer we to join yourself and the astronomer, he or she would then point out other features of the sky which were previously not apparent to you. So again, you have become a different observer of the night sky and are able to become aware of different features. Despite being a different observer, you still retain your sense of being you.

How does anything in the world become apparent to anyone in the first place? The expression "the world" means not just physical entities (cars, computers, people, etc), but also people's behaviour and communication, as well as ideas and abstract concepts. Of course, the latter is the territory of innovative thinking. It is clear from the two examples that observing is not just something we do with our senses, otherwise our eyes would see what was in front of us. What becomes apparent to our senses, is shaped by our very way of being at any point in time. This has been repeatedly demonstrated by the pioneering Chilean biologists Humberto Maturana and Francesco Varela. They have shown that the biological structure of all organisms, including humans, determines the way they observe, which, in turn, determines what they observe. (In Part II the composition of this structure as the continual interplay between language, emotions and body will be outlined)

However, in the tradition of thinking of Western civilisation, the way we have been directly and indirectly taught to think about observing and perceiving, is that what we observe exists "out there", independently of us as observers. Whilst the research of Maturana and Varela has made this perspective apparent in the last thirty years, it is interesting to note that an expression of their ideas was, and is, contained in the ancient ways of knowing of the Jewish religion. The expression is:

"We don't see things as they are, we see them as we are."

The ideas of Maturana and Varela are a major shift in our understanding of what it means to observe and make sense of things. Major shifts of this kind are often referred to as the development of new paradigms. (In Part III the relevance of paradigms to observing will be discussed.)

As humans our way of being - of observing the world around us - has been shaped by the background mixture of our cultural, historical, family, personal, social and professional experiences. These experiences have provided us with a set of learnings about how to observe. A summary way of encapsulating these learnings is through the term "distinctions": we have learned how to distinguish objects, people, their behaviour as well as abstract concepts and ideas. The distinctions act as a set of blinkers, enabling us to both see and be blind, at the same time, to the existence of physical and abstract phenomena.

Through these experiences, and associated distinctions, each of us has developed habitual ways of observing and of responding to the situations that confront us. However, when confronted with novel, unusual and unexpected circumstances, our distinctions do not provide us with readily available effective ways of responding.

This is beautifully demonstrated in the following extract from David Malouf's novel Remembering Babylon, in which one of the novel's characters is reflecting about the experiences of English settlers in the early days of the white settlement of Australia.

"We have been wrong to see this continent as hostile and infelicitous, so that only by the fiercest stoicism, a supreme resolution and a force of will, and by felling, clearing, sowing with the seeds we have brought with us, and importing sheep, cattle, rabbits, and even the birds of the air, can it be shaped and made habitable. It is habitable already. I think of our early settlers, starving on these shores in the midst of plenty they did not recognise, in a blessed nature of flesh, fowl, fruit that was all around them and which they could not, with their English eyes, perceive, since the very habit and faculty that makes apprehensible to us what is known and expected dulls our sensitivity to other forms, even the most obvious. We must rub our eyes and look again, clear our minds of what we are looking for to see what is there. Is it not strange, this history of ours, in which explorers, men on the track of the unknown, fall dry-mouthed and exhausted in country where natives ... are living as they have done for centuries, off the land? Is there not a kind of refractory pride in it, an insistence that if the land will not present itself to us in terms that we know, we would rather die than take it as it is?"

Malouf has eloquently expressed this different interpretation of observing - the world is not "out there", obvious for all to understand; it does not present itself to us, but rather, we make a particular world appear for us.

The world of business today is probably not a lot unlike the continent the early white settlers were dealing with. There was a familiarity about this new world, but also a lack of familiarity. Their accepted practices, which provided a set of distinctions for how to observe and go about dealing with things, lacked a lot of relevance, and in many ways were obsolete, for the circumstances that confronted them. However, they were not only blind to what was before them, but blind to how they were observing in the first place. They needed to generate new and different ways of observing the land, to come up with new and different ideas, to be innovative in dealing with what was confronting them. However, they were unknowingly trapped in their habitual ways of observing. The blindness of observing, seen in the three examples of domestic blindness, the night sky and the early white settlers, has been delightfully captured in the following by the psychiatrist R. D. Laing.

"The range of what we think and do is limited by what we fail to notice. And because we fail to notice that we fail to notice, there is little we can do to change until we notice how failing to notice shapes our thoughts and deeds."

In the realm of business leadership, it is suggested that one of the questions for leaders to be addressed is: "How can I continually have a world 'show up' for me that will enable me to position my business to survive and flourish in an increasingly uncertain business environment?" And, of course, the world that leaders want to have show up for them is one of new and different ideas. This is the world of possibilities. As people charged with the responsibility not only to respond to present circumstances, but also to take their organisations into the future, the generation of a world of possibilities is an indispensable feature of the work of leaders.

Given our focus on innovative thinking in leadership, this is an especially relevant question when we look at the world of ideas. Part of our unique world consists of the ideas we live in and the ideas we generate. How is it that some ideas "show up" for some and not others? How is it that some people seem to continually generate novel ways of conceiving situations and responses to them and not others. Part of our world is the world of the future - the world of possibilities - and this is a critical realm for leaders.

Introducing Second Order Learning

The key claim of this paper is:

What leaders observe will be determined by how they observe, and developing an awareness of how they observe will place them in a more powerful position to engage in innovative thinking to generate "creative responses to competitive conditions.

In other words, second order learning is about observing the observational process itself, which has the enormous potential to not remain trapped in habitual, and possibly, outdated ways of observing.

Let's explore what we are saying here in a little more detail. The expression "no two people are the same" implies that we are all different observers. As observers we perceive what is going on around us and we respond accordingly. The uniqueness of humans means that we each have our different ways of observing, and thus what we perceive is rarely exactly the same. Certainly we observe many things in common, for this is what allows us to relate and cooperate with each other. However, we often have different responses when confronted with the same circumstances. Some common examples are the different opinions friends have of a film or a play or a piece of music, and the widely varying accounts witnesses have offered of events such as bank hold-ups and road accidents. As well, there are often different views of others' behaviours and the ways they conduct themselves in different settings.

Second order learning is based on recent and related, developments in the diverse areas of

physical sciences, biological sciences, and humanistic studies, (particularly philosophy and the philosophy of language). Over many years, research in physics, biology, philosophy and sociology has resulted in the claim that we observe is always going to be an interpretation. The complexity of the world means that we do not observe everything that is going on. Each of us, in our own way, is selective about not only what we pay attention to, but also the sense and significance we make of it. Thus, a core concept at the heart of second order learning is that we are all different observers of the world, continually generating and living in different interpretations.

Why are our observations - our interpretations, our perceptions - so important? Simply, and very profoundly, because they form the foundation from which we act to take care of important issues and concerns in our personal and professional lives. The quality of our life, how positively and negatively we feel about things, springs from our interpretations. In our personal and professional worlds we are continually living in the issue of "How well do my interpretations serve me in developing the quality of living I want for myself and others?" This question is always in the background for leaders as they go about scanning the business environment and constantly being on the alert for effective ways to respond to unexpected circumstances and thus ensure continued organisational competitiveness.

The actions that leaders take, the moves they initiate, are based wholly and solely on their perceptions. All our behaviour is driven by our ways of observing. Because they drive our behaviour, we can conceive of ourselves as being at the mercy of our perceptions. Why would we say that "we are at the mercy of our perceptions?" Because if we do not observe, that is, we are not aware of, the very perceptions we act from, we limit the choices we have over the ways we respond to what is going on. In addition, if we do not observe the processes that generate our perceptions in the first place, we are even more impoverished in how we can begin to observe differently. This leaves us limited in ways that begin to open up new perspectives, which are the source of innovative thinking.

So this is the promise of second order learning: an opportunity for leaders to be observers of the very process by which they develop their interpretations, and become active and intervene in this process, enabling them to generate more constructive interpretations, which result in more creative and productive responses.

This promise includes the observations that leaders make of others in their organisation. As no leader operates in isolation, much of their work is about continually interacting with others in their organisation. Becoming an acute and astute observer of how others are observing is a key part of the application of second order learning to leadership. By this is meant:

  • identifying the fundamental interpretations others are living in, especially by being skilful listener,

  • understanding the key factors shaping these interpretations,

  • how to tap into the wisdom of interpretations, and

  • how to influence others to develop different interpretations.

Let's summarise what has been presented so far in this section. To be human is to live continuously in a world of interpretation, and the effectiveness of our actions - our responses to the circumstances and events that confront us - is shaped by how we perceive them in the first place. With the responsibility of guiding their organisations to appropriate responses to highly unpredictable and continually changing circumstances, the observer role of leaders is crucial.

Second order learning opens up a different approach to learning, one that does not focus on behaviour per se, but on how the observational process determines behaviour. Organisations do not just behave, the people in the organisations observe and behave. By having "mental models" as one of his five disciplines, Peter Senge indirectly acknowledged the role of the observer, however he did not consider the biological processes, which undermine the nature of the human observer. Being aware of these processes provides specific ways of not only understanding how interpretations are generated, but also how different interpretations can be generated, ones which contain the kernels for innovative thinking. This is what will be considered in detail in Part II.

Innovative Thinking

What is meant by the expression "innovative thinking"? Being innovative is typically considered to be in the realm of creating and devising new ideas. But what makes them new? Perhaps more to the point - for whom are they new? And where do these ideas come from - what is their source? Let's attempt to address these questions.

The term "innovation" is derived from the Latin "novare", meaning "to renew". As was stated above, innovation is often associated with something that is new, but the original meaning of the word is "renew". Perhaps this captures the notion that there are probably very few genuine ideas in the world, but simply different ways of reworking, reshaping and combining existing ideas, so that they become renewed. They are regarded as being new because they have not occurred to those who become aware of them. However, every innovation is built from a foundation of existing ideas. New ideas do not emerge from nowhere. What makes them seem new is that they are seen in a different light or, they are observed differently. This is why you might occasionally have heard someone say "Why didn't I think of that?", recognising that they were quite capable of having generated the thought(s) someone else did.

This notion of renewing is captured in some approaches to effective communication, which includes teaching, sports coaching and psychotherapy. The underlying premise is that the source of new ideas is "the answer within". By this is meant that the solution to a difficulty does not come from a source external to the person (observer) faced with the difficulty. Through skilful conversation a teacher, a therapist or a coach can facilitate different, and more productive ways, of viewing the difficulty, and so take the person down a different path in their thinking, one that throws up ideas they were not utilising already, but did not access in their old ways of thinking. Within their thinking capability most people have the ideas that contain solutions, but they simply haven't observed things differently to gain access to these


A skilful conversationalist can be a very resourceful servant in facilitating different ways of observing, ways that reveal different, and seemingly new, ways of thinking about a circumstance. The different thinking derives from different ways of perceiving, which can be expressed as follows:

"Making things anew is not my style. Seeing things anew - from an odd angle, in an unexpected light, coloured differently - is more to my liking."- Robert Dessaix

The essence of innovative thinking is about seeing things differently, which results from taking a fresh look at a situation. It is the different way of looking at things that generates new ideas, these ideas being the expression of a different perspective. An idea is a conception, a way of conceiving and perceiving the world. Different ideas themselves may also generate novel perspectives. New possibilities appear, like an unveiling of something that was always there but could not be seen from another vantage point. From this different perspective a range of different, and more productive and constructive, strategies and courses of action become apparent.

Different ways of thinking, and the generation of different and "new" ideas are produced from different ways of being and observing. Personal change and more resourceful and innovative thinking go hand in glove. Different ideas produce different practices, and continually being in the realm of generating different ideas provides the foundation for the development of flexibility in dealing with the ever-changing circumstances that repeatedly confront organisational leaders. Organisational transformation is about putting new ideas into practice, and new practices are about different ways of being.

Probably one of the most significant learning challenges facing leaders can be expressed in the following question. "How can they become different observers, aware not only of their own observing, but also how they can shift from habitual ways of observing which may not serve them or their organisations sufficiently to deal with the vicissitudes of the business world?"

Change and Second Order Learning

The issue of "human beingness" is at the heart of second order learning. An individual's way of being determines how they will perceive the world; ie, the type of observer they are. It is claimed that second order learning is a significant step forward in understanding the learning process. It breaks new ground by going beyond just looking at how people need to behave differently to generate more positive results, and investigating the very process of how humans observe their world. As Peter Senge wrote in The Fifth Discipline: "Real learning gets to the heart of what it means to be human. Through learning we re-create ourselves."

The notion of "re-creating ourselves" does not mean undergoing a personality transfusion or a

frontal lobotomy! It is about gradual shifts in ways of being and observing. Humans live in the delightful paradox of being able to remain the same and simultaneously be different. In other words, they do not lose a sense of who they are, and yet they can be different. Personal change does not mean personality metamorphosis.

Second order learning provides the means for leaders to observe themselves as observers. To observe the distinctions they currently observe from, how these distinctions make a particular world of ideas and possibilities apparent to them, and how they can begin to look at different ways of observing. By gradual shifts in their way of being - by self learning - they can shift their ways of observing, and begin to open up the possibilities for those organisational transformations that will be the required "creative responses to competitive conditions".

In conclusion, this paper has sought to present a perspective that second order learning is highly relevant for leaders. Their ways of being, and of observing their organisations and the business landscape, are inextricably bound up with their ways of thinking and responding. The very essence of their being and ways of observing cannot be divorced from their leadership effectiveness. The generation of "creative responses to competitive conditions" therefore involves self-learning: continual learning and gradual shifts in ways of being and observing. Organisational transformation always involves personal change. Being aware of how they observe and how they can observe differently is rich territory for leaders in the development of innovative thinking.

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