Excerpts Organizational Intelligence The World of Theory Intelligence by Design The Learning Loop Hearts and Minds New Attributes of Behavior Preludes Questions Sections

Excerpts from Chapter 2 of The Intelligence Advantage Excerpts: Next | Previous Prelude THE WORLD OF THEORY A GENERAL VIEW OF THEORY In order to pursue organizational intelligence, our operational definition of theory is "a group of statements, taken as a related whole, that is used as our basis for design, judgment, and guidance of action." Theory provides flexibility and information. Absence of theory leaves us with either chaos or being limited by experience. Theories are guiding the activities of our life long before we understand the nature of theories. We all make sense of the world using the theories we have inherited from the culture around us. We are socialized into the fundamental theories and the prevailing cosmology, before we can become aware of such things as theories. Underlying corporate failure is the seemingly complicated nature of a business. This is not a result of wrong theory but, rather, a lack of thinking at the level of theory. Developing theory results in coordinated and reliable operations, as well as allowing management to work on continuous improvement (by developing more theories). With theory as the source, management is accomplished with minimal effort or intervention. There's no need for tight control on those doing the work when theory is what guides the work. THEORY AND INFORMATION At this point in the game it should be easy to see that theory is the source of information. We interpret data "through the lens" of our theories. Said another way, data becomes information (patterned data, meaningful data) via theory. Without a theory, we cannot interpret data, so we either become lost in chaos or look for aid by helplessly grasping old structures no longer adequate for the task. A specialty chemical company, having recently spun off from a larger company, realized that its future depended on creating new processes. The hurdle it needed to leap was not one of science or manufacturing processes; it needed to build production facilities for a cost that would meet the capital return requirements.The market was wide open for the company's products -- the price just needed to be in the right area. When the engineering division realized how important it was in the success of the process, it declared its commitment to reducing the costs of designing and building by 50%. After an heroic attempt and a failure to deliver, the engineering department sent up the white flag and agreed that it needed to do a thorough review of its theories of engineering, contracting and construction. Throughout the process of a couple of workshops, it transformed one of its slogans, "minimalist engineering," to the level of theory. The department began to put it into use everywhere. Although the phrase had been around for some time, the department discovered that it had been using it as an excuse to set aside the ideas of others and to justify everything that it already had in place. Aided by the rigor of a new theory, the chemical company reviewed all the procedures that affected the final cost of the process. The company reduced the cost of capital projects by 50% in four months. Questions to this chapter Excerpts: Next | Previous