This is not an Economic failure. It is an Institutional failure. Our Management is Failing us.

It is no longer possible to disregard what is happening to North American institutions. We have witnessed the failure of internal controls in corporations, accounting firms and regulatory agencies. The automotive industry, the technology sector, the airlines and financial services are a shambles. The buckling in intelligence gathering, health care, education and emergency response also has been reported in detail. Although it is an exaggeration to claim that every organization is in crisis, it is clear there is a fundamental flaw in the current approach to management.

There are universal patterns of human behaviour: short-term thinking, weak internal communication, and low levels of innovation, teamwork, and coaching. When these appear, as they will naturally, in an organization, they set in motion a chain reaction that, if unchecked, will cause a breakdown.

By their very definition, jobs are designed and structured to keep attention sharply focused, which erodes interaction and generates an environment where people are isolated from one another.

Executives and managers especially work in isolation from others to solve problems. Regardless of how intelligent they are individually, as change accelerates, the complexity of challenges soon outstrips the reach of the relatively few minds involved. With only about 10 per cent of jobs in an organization in management, a solution is readily at hand: Use the intelligence of the 90 per cent of the minds not in management.

Unfortunately, most leaders view the quality of day-to-day interaction as a soft issue and neglect it, which precludes accessing the problem-solving power needed to keep pace with changes. Instead, they try to influence behaviour with strategic planning retreats, team building and training programs. Because these offsite events leave the internal environment intact, they have no lasting effect.

In unusual cases, however, a new leader arrives, a team jells or a project clicks, and day-to-day behaviour changes. These on-site events improve the quality of interaction and reduce isolation. More minds become engaged in solving problems, and performance improves across the board. With knowledge of the psychological dimension of organizations, it is well within the capability of any firm to transform performance in this way.

There are three psychological ‘Mind Field’ concepts that threaten organizational performance: focus, intensity, and skew. Like a camera, we have a mental focus lens that can expand to take in the richness of the full, broad context of what is happening in our organization, or contract to the minutiae of our roles. Jobs contract our focus, which diminishes our understanding of the organization, contributes to isolation, causes communication breakdowns, and can escalate turf wars. Without a shared context and understanding of where they are, leaders cannot strategize a workable plan to get to where they want to be.

While focus narrows one’s perspective, intensity (due to globalization, technological change, etc.) ensures leaders are too swamped to stay connected to the employees closest to the solutions the organization needs.

Then as focus and intensity egg each other on, skew arrives to crack things up in two ways. One leads to organizations exaggerating the positive and burying issues (think Enron greed and Catholic Church abuse). The other is the negativity of crisis mode. With no good news to share, senior managers huddle behind closed doors; communication plummets, and employees feel isolated and betrayed.

Scramble in the daily problems that never get resolved, an uncertain future, and employee disengagement… and productivity drops faster than Nortel goes bankrupt.

There are five stages involved in correcting the flaw in the current management model.

• The first step is building a shared understanding of the challenge to create a basis for co-ordinated action.
• In the second and third stages, executives and managers create the conditions required to improve interaction in solving problems.
• With the right environment in place, the emphasis in the fourth stage shifts to individual effort.
• In the fifth stage, accountabilities are realigned to create a sustainable change.

It is essential for these stages of implementation to occur in the correct sequence if institutions are to make a qualitative change in speed and flexibility.

With a more comprehensive approach to management, we can power up organizations to meet the challenges of globalization, technological change, national security, health care, and the environment. North America is perched on a precipice ripe with possibility and fraught with danger. Knowledge and targeted action are the foundation from which we will either take flight or continue to fall.

Organizational psychologist Tom Tavares (www.tavaresconsulting.com) has authored The Mind Field, a critical resource for senior leaders who are tired of not being able to take their firms from where they are to where they want to be. He answers the questions no one has dared to ask. Why are so many companies collapsing? Why are traditional management solutions failing to provide long lasting changes?