Complex Systems, Complexity, Chaos Theory,Complex Adaptive Systems,Complexity and Strategy,Organisational Change,Self Organisation,Complex Systems and Knowledge Creation,Brain,Mind,Complex Systems Resources,Complexity and Chaos Resources,Organisational Form, Complexity Theory,Consultancy
Complexity In Practise

Humberside Training and Enterprise Council (TEC)

This paper describes the way in which one organisation has applied concepts of complexity without organisational members necessarily having to learn the associated jargon. The approach involves a set of organisational design principles which are based on various aspects of complexity and act as reference points for all members of the organisation. These principles are: 1 Make connections; 2 Learn continuously and 3 Make processes ongoing. The links to complexity and the application of the principles are described. The paper also explores the characteristics of phase transition and whether Humberside TEC occupies this space for creativity.

The majority of people working in organisations are not interested in understanding theories of complexity or the associated jargon. Yet, applying these concepts requires people to apply an alternative frame of reference and a different set of assumptions to those which most of us have learned over a number of years working in organisations. Humberside Training and Enterprise Council (TEC) has set out a framework for operationalising the concepts of complexity. The framework consists of a number of organisational design principles: make connections; learn continuously and make processes ongoing. This framework is detailed below in terms of its links to complexity and its application. It will be argued that such a framework allows organisation members to utilise complexity theory in a language they understand. The paper also explores the characteristics of phase transition or edge of chaos and discusses how does one know when an organisation occupies this space for creativity and whether Humberside TEC is at the edge of chaos.

The organisational design principles are a way of conveying some key concepts in a language that is meaningful to people. All new staff are introduced to the principles as part of their induction and their relevance is reinforced in various situations such as in MD Update which is a quarterly meeting of all staff with the Managing Director. The principles are based on various aspects of complexity and act as reference point for everyone in the organisation. These principles are:

2.1 Make connections
Everyone can talk to everyone and should
Everyone is responsible
Network extensively
To survive and thrive the organisation needs to be highly interconnected and this principle tells all staff that networking both internally and externally is a part of their job. Rich interconnections enable knowledge to flow around the organisation and this facilitates the emergence of strategies and innovations which enable the system to continually adjust its behaviour with reference to its environment. Interconnections also facilitate the exploration of the possibility space and help to create the requisite variety from which effective strategies can emerge. With each new connection new knowledge is created, enabling the system to improve its fitness level. Richness of connectivity is one of the five parameters which must reach a critical point if the system is to operate at the edge of chaos (Stacey 1996). Stacey considers them to be control parameters as they determine the dynamics of the organisation, defining whether it is operating at the edge of chaos or in the stable or unstable zone. In section 4 this idea is explored in more detail to determine whether Humberside TEC has achieved the critical level of interconnectivity to operate at the edge of chaos.

2.2 Learn continuously
Love mistakes to death
Respond to the environment
Learn by doing
A key feature of a complex adaptive system is its capacity for both single loop learning and double loop learning. In other words it can adapt its behaviour to respond to its environment and it can also change its schema or the rules by which it operates. This design principle communicates the importance of learning to all members of the organisation and it is central to building the organisations capacity to deal with the next unknown. It also communicates the importance of responding to the environment, on the assumption that we exist in a co-evolving and rapidly deforming landscape.

One of the characteristics of non linear systems is that cause and effect are removed in both time and space. The TEC has placed importance on its members having quite sophisticated thinking skills to better enable them to learn and operate in a complex environment. Examples of this will be described later.

2.3 Make processes ongoing
Learning, planning and evaluating are a continuous cycle
Processes and systems are based on:
· our best people
· outcomes
Structures and systems should follow not lead
Self organising teams
Self responsibility
Many accepted practices in organisation are born out of a Newtonian frame of reference where the emphasis is on things rather than the relations between things. Plans and Budgets are based on the reductionist principle that the whole is equal to the sum of the parts. They assume that one controls the organisation from the top and many policies and practices in organisations eg appraisal systems, HR policies, work procedures etc are based on controlling the behaviour of individuals. This third design principle works on the assumption that the organisation is a self organising system and control is dispersed around the organisation even to the extent of strategy being an emergent phenomenon rather than prescribed from the top of the organisation. This principle attempts to reverse the practice of reifying processes such as planning and evaluation. It is the process of planning and evaluation which is important rather than the sophisticated written plan or evaluation report. The long term future is unknowable and the landscape is continually deforming so planning and evaluation have to be iterative. The most challenging aspect of this principle is that one has to trust others and to trust the system. The TEC's experience of this is described in the next section.

The focus in Humberside TEC is on removing policies and practices which do not take account of the reality of organisations as non linear feedback systems whilst simultaneously supporting people to cope with the world as it really is. For each of the design principles there are a number of illustrative mechanisms and two of these (360 degree appraisal and self managing teams) are described in greater detail as they cut across all of the design principles.

3.1 Make connections
This design principle indicates a responsibility to know ones role and actions as part of an interconnected whole and to seek and disseminate information accordingly. Where possible problem solving and implementation are addressed in a way which will bring people from disparate parts of the TEC into contact with each other. For example the process of moving into new premises was planned by a cross TEC group, 360 degree appraisal has been developed by an action research group of volunteers from across the organisation and training people to use the email system was done by volunteer users mentoring other users rather than the systems team running training courses.

Two clear indications of the priority given to connecting people are firstly that there is now a role in the TEC which is about networking and capacity building. The individual concerned has a remit to explore how networking can be developed to increase the organisations capacity to deal with the next unknown. Secondly, a TEC conference is held once a year for all staff. Although it is called a conference the structure of the day is designed to encourage experiential learning. The most recent one was on the subject of resourcefulness, how people can be resourceful as individuals and also make use of the resources around them such as other people. People set their own agenda and it was described as playful, challenging, uncomfortable and unstructured.

New staff often comment on the informality of the organisation and the accessibility of managers at all levels especially the MD. They suggest that the principle of "everyone can talk to everyone" does seem to be being enacted. Whilst these activities focus on the number of connections across the organisation there is also some work going on related to the nature of those connections. A number of attempts have been made to explore the potential of dialogue (Senge 1990; Dixon 1996 ) as a method of identifying and removing some of what Argyris refers to as defensive routines (Argyris 1990). These are the customary ways of acting in organisations which serve to avoid conflict or embarrassment but also prevent learning. Bohm (1996) distinguishes between discussion and dialogue. In discussion each person is usually trying to have his or her arguments accepted by others. You might accept part of another person's point of view if it helps to strengthen your own view, but fundamentally you want your view to win. In dialogue different views are presented and assumptions explored as a means to discovering a new view. A number of groups have experimented with dialogue in the TEC and found that it resulted in more active listening to each other and a disruption of the usual patterns of communication in meetings and the usual power relations.

So far this section has described connections between people but connections also need to be made between ideas, in other words learning.

3.2 Learn continuously
There are a number of ways in which people in the TEC are encouraged to learn continuously. Some of these are about developing the skills of thinking and learning, for example Thinking Skills Modules (teaching people to use a number of thinking tools and apply them to real problems they have in their team), Serious Thinking Workshops (lunchtime sessions run by the Managing Director to help people find new ways of looking at TEC issues) and How to be Brilliant at Learning modules. All staff are introduced to the Hermann Whole Brain Model and the accompanying training focuses on seeing multiple realities and the dynamic nature of behaviour. The organisation invests in learning in a variety of contexts beyond conventional training. For example team awaydays, cross TEC networking events, coaching and mentoring and even mentoring young people who are underachieving at school. The payback is not always immediate but looks towards the next fitness peak.

Other methods of encouraging learning are about the way in which systems are designed. For example management information systems exert a powerful influence on behaviour in organisations on the basis of "what gets measured gets done" and members generally believe that the organisation values what is measured. In an attempt to measure what is valued, all staff are asked to complete a monthly proforma on what they have learned during that period. These are passed to the Managing Director who reads them and frequently follows up on comments by talking to individuals.

Two frequently used phrases in the organisation are "be comfortable with the uncomfortable" and "think out of the box", indicating that it normal and expected of people to stretch themselves and to feel uncertain about it but the fact that they are learning is highly valuable.

3.3 Make processes ongoing
In an attempt to base systems and processes on our best people rather than the one or two people who might abuse the system policies have now been re written and simplified, placing the emphasis on trusting people to use their judgement. For example the expenses policy is that any reasonable expense incurred on TEC business will be reimbursed and the policy for special leave eg in a case of a bereavement, is that the individual and their team leader use their judgement about the amount of time required.

When staff compare the TEC with other places they have worked they note a stronger emphasis on being trusted to use ones judgement and also on outcomes as opposed to inputs. For example the number of hours that people work is less important than the outcomes they produce. There are no fixed working hours and it is the culture of the TEC for people to come and go as they please provided the job gets done. Similarly a lot of work has been done with organisations that the TEC contracts with to shift the emphasis from measuring and contracting for inputs eg number of people trained to outcomes eg number of people achieving a qualification or a job at the end of training. This is a complex issue involving politics and history in the working relationships between the TEC and the contracting organisations and Soft Systems Methodology (Checkland and Scholes 1990) was used as a way of understanding such a messy issue. The challenge has been to develop a shared understanding with contractors about what is important so that there is a common aim.

Another policy of the organisation which requires self responsibility is that anyone who attends a meeting has the authority to commit the organisation there and then and if people send a deputy on their behalf then they trust that deputy to use their judgement.

Below are two further examples which illustrate all three design principles: 360 degree appraisal and self managing team.

3.4 360 Degree Appraisal
Traditional appraisal systems have been developed within a paradigm that essentially conceptualises behaviour as measurable, reducible and open to monitoring, with the idea that long term plans can be made and people can be objectively observed. Complexity theories (Wheatley 1993, Stacey 1996, Waldrop 1992) on the other hand suggest that organisational dynamics are much more complex than this paradigm suggests and that behaviour is contextual. Central to this way of thinking is the idea that organisational development is based on learning, on reacting appropriately to ones environment as new challenges arise and on influencing that environment. This can only be achieved by systems which acknowledge the essential dynamism of behaviour and thus in themselves are focused on the learning process and on involving the people who are central to that process.

Traditional ideas about the importance of hierarchy in organisations are being challenged and empowerment is commonly spoken of in relation to modern management style. At the same time most appraisal systems still place the power in the hands of the manager who makes judgements about the behaviour and performance of their team members and allocates ratings as a measure of that behaviour. Upward appraisal and 360 degree appraisal, with their emphasis on collecting multiple viewpoints as part of appraisal, are indicative of a shift towards this new paradigm. The assumptions behind traditional appraisal systems are: the organisation can describe what the ideal employee is like or how they would behave; it is possible to mould employees into this ideal by giving them feedback and setting them goals and managers can objectively assess the performance/behaviour of an individual. One of the assumptions behind 360 degree appraisal systems is that the same behaviour can be perceived in different ways by different people therefore it is impossible to objectively assess performance. However appraisals are often used for purposes which, despite appearances, are intended to gain more knowledge of the individual, impose expectations on them and thus more effectively control them (Townley 1995).

Most 360 degree appraisal systems involve a number of people allocating ratings on several behavioural scales. An average rating for each behavioural scale is calculated and fed back by an independent person to preserve the anonymity of the raters. From the perspective of the new paradigm behaviour is contextual, so feedback is only meaningful when one knows who has said it and can therefore put it into context.

From the outset this 360 degree appraisal system was designed not as a way of monitoring people but as a way of helping people to learn and thereby become more effective. The following principles were defined as a way of ensuring that the appraisal process would be consistent with the organisational design principles:
· As far as possible feedback should be given face to face. Appraisal is a conversation rather than a form filling exercise (Henriques et all 1984). This clearly makes it impossible to preserve anonymity for the people giving feedback and the issue of whether people would be honest was debated repeatedly. It was believed that, in keeping with self responsibility, people should be prepared to own the feedback they give to others. It also helps to make the organisation more highly interconnected.
· The appraisal should be owned by the appraisee. The appraisee is responsible therefore for initiating the process, deciding who to invite to appraise them and co-ordinating it. The results of the appraisal are the property of the appraisee and nobody else has any written record of the results of the appraisal. This is consistent with the organisations design principle of self responsibility. It is also indicative of a high level of trust in the appraisee and is consistent with the principle of "systems and processes are based on our best people".
· Paperwork should be minimal. The appraisal should be "skills led rather than forms led" (Randall 1989) Again this is based on the assumption that appraisal is essentially a conversation between people and ratings on a number of scales cannot give the same depth of understanding that comes from a conversation in which the participants develop a shared understanding . This is also consistent with the design principle of systems and processes should follow not lead.
· Appraisal is about learning rather than measurement. (Design principle - Learn continuously)
· There is no such thing as the perfect system. This is based on the design principle of Learn continuously in that people will learn about the process and how to make it work effectively. It also relates to the third design principle in that it is not the system itself that it is important but the process of learning and systems should follow not lead.

In keeping with the aim of making space for collaborative learning (Reason 1994) the initial design was undertaken by a group of volunteers from across the organisation who all committed to pilot the process on themselves and to carry it out as an action research project. The group started with the principles stated above and developed a number of approaches which they piloted. The pilots have varied in relation to whether and how to use a facilitator, sizes of groups, who to involve, how and whether to involve external customers, whether a preparation meeting is needed or can one condense it into one meeting. What they have in common is that they all involve a group of people, chosen by the appraisee, having a conversation.

At the end of this pilot it was clear that there were still some unanswered questions, the key ones being: how does this process work for people who do administrative jobs (there were no such volunteers in the first pilot) and what support do people need throughout the process. Pilot phase 2 was launched therefore with more volunteers, many of whom did administrative jobs. The sources of support for these volunteers were: a 2 hour workshop explaining the rationale of the process and answering their questions; a worksheet with key questions for appraisees to consider such as What is the purpose of the appraisal/what do they want out of it? Who should they invite ? What are the possible problems ?; a buddy (someone else who was having a 360 degree appraisal) and a facilitator who would help them to plan the appraisal to meet their needs and would facilitate the actual discussion;

Initial feedback suggests that appraisees have found it to be a useful process that has given them new insights into their working relationships. They believe it to be more useful than an appraisal which gives them feedback from just one person and they particularly liked the lack of form filling. The appraisal discussion is frequently a process of making sense - the feedback is discussed and clarified until a shared understanding is achieved. For some time the TEC had placed importance on feedback skills and high level communication skills. These are important skills in making these appraisals effective. One of the implications of this process is the need to create a facilitator resource and a number of volunteers are receiving coaching as in-house facilitators. Benefits of this approach are the transferable skills that these facilitators develop as well as increasing the interconnectivity of the TEC

The aim is that giving and receiving feedback should be a normal part of ones job and every job holder will be expected to seek feedback on their performance. The process of developing the system and the system itself are both based on a process of learning together or collaborative inquiry. In fact some of the issues which emerge in appraisal discussions are team or organisational issues and learning is happening at a number of levels in these discussions.

3.5 Self managing team
The second example which is described in more depth as it cuts across all three of the design principles is the self managed team. Whilst self responsibility had been encouraged for some time there is still a team structure in place with team leaders. One particular team in the organisation has taken a lead in working as a self managed team without any team leader. So all team members are involved in defining the business plan for their team and they are jointly responsible for managing the performance of the team. The team in question has approximately thirty people. Many of them do jobs which require them to operate as consultants and advisors with local businesses and there is also a group who provide administrative support. Eight months down the line team members suggest that one of the advantages of this approach is that they are thinking more strategically. Individuals now have more involvement in planning, they feel they have wider horizons and they are more likely to consider the broader implications of different courses of action. The team decide together what needs to be done and who will do what. There is a much stronger sense of shared responsibility and a possible down side for some is that there is "no place to hide". Team members are positive about their new way of operating in their team although they varied in the extent to which they welcomed the change initially. On the one hand it is stimulating, has led to them being involved in new areas of work and required them to develop new skills. On the other hand the increased responsibility has also increased their workload and this inevitable causes tensions.

The process of adjustment over the eight month period has involved a high level of learning and for many team members it has also provoked high levels of anxiety. For example they have learned through experience that everyone cannot be involved in making all decisions. Early attempts at decision making by consensus resulted in some very long frustrating discussions and there is acceptance now of the need to trust colleagues and the importance of cross team communication. At first people were tentative about volunteering in case they should be seen by colleagues as vying for a leadership role. As time progressed though individuals have become more ready to offer their strengths to the team and many leaders emerge for different subjects or contexts.

One cannot remove structures without putting in place support mechanisms and the team has explored a number of ways of ensuring that individuals get the support they need. One approach is the use of mentors. Another has been the emergence of substructures such as small geographical teams.

The learning of this team has provided some challenges for the organisation as a whole. For example there are things that managers commonly do in the TEC and this team has had to rethink every one of them. This process has questioned the value of some usual procedures such as obtaining ones managers signature for expenses claims and annual leave forms. Before they could decide what the alternative practise would be they had to ask the question Why ? ie what was the purpose of the signature. At times it was difficult to conclude anything other than the job holder was not trusted and therefore needed the sanction of the manager. The conclusion was that team members are now trusted to act responsibly and they do not require the signature of a team leader on these forms. The implications of removing such controls means that people have to develop their own judgement and this is by no means a soft option.

Interesting examples of alternative ways of working these may be but does that mean that the TEC is at the edge of chaos or not ? Stacey suggests there are five control parameters which must reach a critical point if the organisation is to operate at the edge of chaos. They are:
(a) Information flow. This parameter is considered to reach a critical point when it becomes impossible for formal systems in the organisation to retain the necessary information about changes in the fitness landscape. The shadow system then comes into play as its informality can retain faster flows of information. Past the critical point of information flow even the shadow system will be unable to retain enough information to cope with competitors moves and the organisation can tip into the unstable zone.
(b) Degree of diversity. A defensive shadow system characterised by conforming members produces stable organisational dynamics. Increasing the degree of diversity among agents can rise to a point at which the organisation falls into anarchy. At some critical point between these extremes the organisation has enough diversity to provoke learning and creativity but not enough to cause anarchy.
(c) Richness of connectivity. Few connections bring stability and many bring instability. Between these extremes there is a critical point where connections are rich enough to produce endless variety in behaviour. The other important dimension is the strength of those connections. Strong ties bind people together making it more likely that behaviour will become repetitive and uniform. Weak ties on the other hand provide bridges to other parts of a network through which variety may be imported. This parameter reaches a critical level at some intermediate point between weak and strong and many and few connections.
(d) Level of contained anxiety. When anxiety is so firmly contained that it is avoided altogether, for example, by strict adherence to the requirements of hierarchy, then an organisations shadow system operates in the stable zone. The critical point of this parameter is when anxiety levels are contained at a relatively high level and members are able to be creative. When the anxiety level becomes too high it is disabling.
(e) Degree of power differential. In the spectrum ranging from concentrated power exercised in an authoritarian manner to equally distributed power hardly exercised at all, a critical point is reached where one can find both containment of anxiety through clear hierarchical structures and directing forms of leadership, on the one hand, and freedom to express opinions and risk subversive, creative activity without fear on the other.

Is Humberside TEC at the critical point of these control parameters and how would one know ? It is by no means black and white but here are some indicators relating to each of the parameters.
(a) Information flow. Organisational members exist in an informational deluge. The TEC is part of a fast changing environment and there is too much information for any one member to be able to hold it. The question of what is the formal system and what is the shadow system is not in itself clear however as the TEC has given legitimacy to what would generally be considered the informal system. The operating assumption is that it is not just managers who have important information. Networking is an explicit part of peoples jobs and systems are set up to support this. For example there is an electronic bulletin board to facilitate cross TEC conversations and this has the facility, in places, to post messages anonymously. Making the conversation so public (all staff can read it) brings elements of the shadow system into the light. The dimension which is missing from Stacey's description of these five parameters is skill. TEC staff report that they become skilled at scanning information and filtering the bits to pay attention to. They are also becoming more skilled as networkers

(b) Degree of diversity. Does the TEC have the requisite variety for innovative solutions to continue to flow ? This really depends on which lens is looked through. In some ways the population of staff is very diverse eg they are from a variety of backgrounds in terms of previous employment and socio-economic status. They are not diverse in terms of ethnic origin but this is representative of the local population. The culture of an organisation is often reflected in its vocabulary and following a TEC conference for all staff two years ago the phrase "valuing the difference" is now firmly embedded in peoples vocabulary. The focus was on peoples thinking styles and the Hermann Whole Brain model (Hermann 1996) was the basis of identifying them. Differences are commonly acknowledged as valuable but observation suggests that in day to day activities this is still a difficult thing to do.

(c) Richness of connectivity. If the TEC is at the critical point on any of these parameters it should be this one as it is discussed explicitly and a considerable degree of energy has been invested in it. The message to all staff is that networking is an important part of their role, there is a job in the TEC which is specifically about networking and once a year all staff spend the day together on a conference which is structured (whatever the theme of the day) to facilitate contacts between people who do not meet normally. These and many other approaches and activities serve to continually bring people into contact and encourage them to network with teach other. In the last year the organisation has increased in size to almost 200 people. People experience seeing faces around the organisation whose names they do not know and a number of measures are being introduced in response such as an intranet with a photograph of each member of staff. This raises the question of whether there is a critical size, above which it is not possible to be highly interconnected ? How does this parameter relate to very large organisations such as multi nationals ? Another challenge for the TEC is maintaining connections when more and more people are becoming remote workers. For example a number of consultants are beginning to work from home.

(d) Level of contained anxiety. In a recent discussion with a group of staff from across the organisation people were listing some of the characteristic vocabulary of the TEC ie words or phrases that are used a lot in the TEC. Many of these were indicative of learning to live with a degree of anxiety, for example "comfortable with the uncomfortable", "thinking outside of the box", "love mistakes to death". The Managing Director talks about this explicitly in various forums including the MD update which all staff attend quarterly. A number of people described the anxiety that comes with the freedom they experience at the TEC. They perceive that they have the freedom and the responsibility to do their job in the way they believe best but when one is used to being told what to do and how to do it this is initially quite frightening. The approach of the TEC has been to take out unnecessary structures, rules and procedures, put in lots of support and trust people to use their judgement and act responsibly. Comments from staff suggest that peoples level of anxiety decreases over time as their capacity to deal with it increases. So in a sense the edge of chaos moves away as ones ability to cope increases and anxiety level falls.

(e) Degree of power differential. There is a hierarchy in place and at the same time a lot of emphasis is placed on giving people freedom to act and "Self responsibility" is one of the design principles. People generally set their own targets and budget authority is dispersed to the people doing the activity and these are at various different levels in the organisation not just management. Working groups form for particular projects and they do not need any senior sanction to do so.

Overall the MD role is vital and plays a key role in pushing the organisation to the edge of chaos. He describes his own role as: Explore the environment; Share feedback; Clear pathways; Support people and Bugger things up ! In other words, to push the organisation into far from equilibrium. He is uniquely placed to set the tone and help people to work with multiple realities. He gives clear messages that mess and confusion are inevitable, even functional and thus helps people to contain the anxiety that can accompany the situation.

The method employed here of answering the question is Humberside TEC at the edge of chaos has been to select evidence which might support the answer "yes". This approach clearly has some inadequacies and the culture of the TEC is not uniform throughout. Maybe a balanced response would require feedback from every member of the TEC. At the same time multiple realities and paradox are present and visible and openly acknowledged in the TEC. There is a mix of stability and instability. Perhaps it is a mistake to only view this in relation to the organisation as a whole. At any one time some parts of the organisation are very chaotic whilst others are relatively stable. These subcultures are themselves a source of tension as people observe other teams and how they operate. Over time the organisation has become accustomed to parts of its whole falling into chaos and re emerging and this is less anxiety provoking than it used to be. The whole is robust enough to tolerate this in its subsystems.

It is important to understand that this has not been a planned or linear journey for Humberside TEC. Various initiatives were introduced because they intuitively felt right and those that worked provided a challenge to other aspects of how the TEC works. Simultaneously a few organisational members came across theory which helped them to understand what had been done, led to reflection and in turn affected subsequently action. Complexity theories do not provide business process solutions in the way that Total Quality Management, Business Process Reengineering and other popular approaches do. It is simply a means of seeing the organisation as a system. It provides a lens through which to view the organisation and, as a metaphor, the authors believe it explains more of reality as they observe it than many other models.
Whilst at one time the TEC was viewed by other organisations as odd, unusual or even zany now it is still viewed as such but there is a clearer rationale for it. The key insight was that outside of work TEC employees are agents in many different complex adaptive systems which do not require them to be managed by someone else or to have written objectives or a formal appraisal, yet they operate effectively. Indeed they live their lives in a number of complex adaptive systems and are blissfully unaware of it.

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