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Reality-Based Leadership
in a Complex World
Victor Newman and Graham Williams
Mind Fit Ltd
July 2015
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or
transmitted, in any form or by means, without the prior permission in writing of Mind Fit Ltd.

Reality-Based Leadership in a Complex World
Victor Newman is a founding EAB member for the Journal of Knowledge Management, an Industrial
Fellow to the Centre of Innovation, Imagination & Inspiration at the University of Greenwich’s
Faculty of Business, visiting professor in knowledge management & innovation to several business
schools, and a practitioner specializing in agile innovation leadership. Victor is Director of Innovation
with Mind Fit Ltd.
Graham Williams is the architect of the Mind Fit Process and Director of R&D with Mind Fit Ltd.
Previously he operated at both tactical and strategic levels in two police forces. He led major
operations and initiated changes within the police that had a national impact. He has in-depth
personal experience of training, coaching and developing high performing individuals, teams and
leaders. He worked as a performance coach with Performance Consultants International that led to
exploring the impact of knowledge training and coaching in organisations.
Outline
The failure to integrate 2 models, the formal Purpose–Systems (P-S) and the informal but inferred
Behaviour-Meaning (B-M) models, leads to expensive dissonance and alienation. This paper
proposes that by connecting both models at a Convergence Point will enable leaders to operate
effectively within the current context and for employees to work productively by engaging their
behaviours.
The world of organisations is complex, fast-moving and unpredictable with customers who keep
changing. To provide an illusion of control in complex environments, organisations demand
compliance through relatively inflexible systems and processes in order to serve their purpose
(Purpose-Systems model). Rigid organisational models that align performance to goals (Purpose-
Systems) tend to lag behind current reality. Input behavioural activities are ignored and focus
remains on outputs and ignore the connection between behaviours and personal meaning (B-M).
The inability to negotiate outputs leads to ‘gaming’ by employees that adopt wasteful (defensive/
helpless) behaviours. Ultimately, employees become disconnected from personal meaning and play
behavioural games that are beneficial in the short term but which become an end in themselves.
The key is to connect and integrate (Purpose-Systems) with (Behaviour-Meaning) at the point of
convergence (Mind Fit Convergent Point™) in order to understand current realities (to integrate both
frontline and top-table in a shared reality). This Convergence Point requires Reality-Based Leaders
able to ask necessary, difficult questions to synchronise and re-connect the two models (P-S and B-
M).

Introduction
Leadership involves managing attention and making timely decisions in a complex and confusing
environment where the only fixed constant is change itself.
The classic problem for leaders is all about change: knowing when to change, what to change and
how to change. Whilst lip-service is paid to environmental scanning and customer intimacy, shifts in
customer value and expectation tend to be a surprise for organisations: outlier events are
continuous, which can only be rationalised in retrospect and which often kill or maim organisations.
A key problem for organisations lies in the models they use, especially their business model, or the
way that an organisation is configured to deliver its purpose and therefore value. Business models
tend to become fixed over time even when customers are changing, and it is this inflexibility that
makes organisations vulnerable.
The fixed business model becomes the first filter in how they do business. For example, an
organisation’s innovation process, whereby new ideas tend to be acceptable only when they fit the
legacy business model, and discarded if they don’t, implies that the model fits the current and
changing reality. This inflexibility means that when customers change their requirements more
investment is required in the old model instead of adapting to the customer change.
This doesn’t just apply to the private sector, but also to the public sector. It's only relatively recently
that observers of the NHS1
have realised that the increased demand in A&E service is not primarily
due to cuts or inefficiencies, but is the result of a change in customer behaviour where customers
see the GP intermediary as an irrelevance and A&E as the equivalent of a health Tesco, Sainsbury,
ASDA or Morrison’s. The emerging reality is that A&E hasn't been failing (in spite of the statistics),
but that the customer has decided to commoditise the service as though it was a supermarket,
resulting in A&E becoming an ‘Anything and Everything’ service.
In a world of complexity where customer expectations and legislation keep changing, and classical
ways of working that emphasise control, compliance and rigidity are imposed in an attempt to
reduce waste or risk, it is possible for systems and processes that support compliance to become an
end in themselves. The risk for leaders is that they become dependent upon those compliance levers
that they believe they can use to impose control from the centre whilst ignoring the frontline reality.
This misplaced focus on compliance through systems ignores how employees actually manage what
can seem like infinite and complex volumes of customer demand. In such a situation, reliance on
control through systems and processes becomes self-destructive. It can lead to leaders and
management applying systems which whilst connected directly or indirectly with purpose, lead to
alienation with those on the front line of delivery. These control systems are always out of step with
the current and moving reality and prove expensive in terms of time, effort and money to maintain.
The dependency upon legacy models within the context of complexity, contrasts with the real need
for constant innovation, and highlights the problem of using and depending upon a restricted
collection of inflexible models as tools for thinking about reality in a world where customers will
keep changing their minds.
1
Ward, V. A&E crisis: What is responsible for the pressure? Daily Telegraph, 7
th
January 2015.

As John Maynard Keynes may have said:
“When the facts change, I change my mind. What do you do, Sir?”
Einstein similarly reinforced the need for reasoned agility when he defined madness as the tendency
to keep doing the same thing whilst expecting different results. And yet under pressure, there is a
tendency to stick to routine or familiar models, ignoring the fact that all models (and the theories
they are based upon) have a use or sell-by date. This obsolescence is either by virtue of the fact that
the context they were designed within no longer applies, or because their use has led to “gaming
adaption” by audiences in order to disable them.
Gaming inevitably occurs when people lose sight of the organisation’s purpose because of the drive
to support systems and processes and avoid risk has become a primary drive (often after a serious
misjudgement, disaster or scandal). Their original motivation for work changes, loses personal
meaning as it becomes decontextualized, and they acquire gaming behaviours, and thus work
becomes a job that has lost its meaning.
In a world of “gaming adaption” by workforces, it is important for leaders to remain agile and aware
of the limitations of those models they choose to apply, when situations change.
The purpose of this article is to introduce a new approach to help leaders manage performance in
this complex and changing world by connecting 2 models that tend to operate in isolation.
Unpacking the Disconnect
Traditional methods of maintaining consistent performance across organisations tend to be based
on the idea of ignoring inputs, focusing on outputs, and then using hierarchies to control by policing
performance as a collection of measurable outcomes. This approach largely ignores the reality that
these outcomes are the collective product of individuals’ attitudes and behaviours, yet choosing to
ignore these behaviours. Collective behaviours, good or bad, create our culture and directly impact
on performance and productivity.
Whilst traditional management theory accepts the idea of organisational culture as an abstract
concept that aggregates individual behaviours and can usefully characterise it, it has little functional
ability to influence cultures beyond diagnosing and then attempting to colonise current cultures by
imposing new values.
It is as though we choose to run organisations on a system of blackmail: you either deliver the goods
or you’ll get hurt! This means that discussing culture in organisations is rather like talking about the
weather. We can all describe different states of weather, we may even know a little about the
variables that produce certain types of weather effects, but we are unable to design preferable
weather outcomes or change weather states that we don’t like.
As a result of this inability to influence everyday performance by influencing individual behaviour
across organisations, the second-best approach is taken. The result is the building up collections of
systems for managing performance as a whole, by identifying and measuring desirable outcomes
and policing variations in processes that are undesirable, in order to maintain standard, acceptable

behaviours through compliance. The negative consequences of this enforced approach on the
workforce and their engagement are ignored.
Ironically, since change is a constant, the problem with measuring outcomes and policing variation is
that measures can become transformed into goals that are connected to bonuses in different guises
such as money or promotion. The bonus-focus and goals standard tends to become fixed, and this
leads to a form of social “gaming”. In other words, once employees know what you want in terms of
outcomes (or Key Performance Indicators), which are assumed to be the product of beneficial
behaviours, they rapidly learn how play the games to deliver the outcomes with the minimum of
effort.
The NHS 1997-2010 is a prime example of where after multiple expensive attempts to re-engineer
the NHS to deliver to its potential (in terms of facilities, manpower and investment), failed due to
cultural resistance. Artificial goals or KPIs were constructed that confronted its culture without any
thought of negotiating real change in behaviours and by imposition, attempted to realise its
performance potential through the construction of an artificial market model that rewarded
outputs. It will be interesting to discover what Twitter will do following falling share prices and a
drop in customer use (July 2015). The financial chief Anthony Noto told investors not to expect any
meaningful growth for a considerable amount of time. Will they control or innovate?
The traditional approach used simplistic model 1 thinking (see figure 1) that attempted to align
individual behaviour to organisational purpose through the use of measurement systems and
compliance whilst ignoring the issue of influencing individual behaviour. It was just too difficult to
change a culture in a producer-led system based on medieval craft working practices based on “this
is what we do and this is how you do it”.
Model 1: Purpose – Systems (P-S) Reality World
Figure 1: P-S World Model
Model 1 is a restricted model assumes that purpose (P) is delivered through measures of compliance
with measurement systems and processes that conform to measurable outcomes or goals, that will
drive the necessary behaviours in the workforce. This simplistic model ignores the emergent danger
that people are adaptive.
In order to develop a level of autonomy in a situation where goals are imposed from above and not
negotiated, or when demand is seen to be infinite or unpredictable, and work methods are

defective, fractured or obsolete, people will learn how to “game” or go through the motions of
delivering the measures in order to survive. This gaming is the product of defensive (Won’t do) and
helpless (Can’t do) behaviours in the face of imposed demands. This means that leaders who
depend upon measurement systems and policing compliance can become trapped within an
alternative organisational world where purpose and measures appear to be aligned, but over a
period of time become increasingly dissociated from reality as with the NHS, or major corporates
who lost sight of customer behavioural shifts.
Compliance can also become very expensive, evolve into a career function and the behaviour of
compliance functions can itself become subject to gaming (or defensive/ helpless behaviours). When
compliance functions are swamped with a sheer volume of non-compliance, it can lead to selectivity
about what is policed and measured. Those things they choose to ignore are then assumed to be
irrelevant by those whom they police: which in turn, leads to contradictory behaviour which can
escalate and become criminal by default as happened in the Mid-Staffs NHS scandal which was
replicated in PCTs.
Another unexpected outcome of compliance measurement and inspection is the second type of
gaming where those being inspected adopt defensive/helpless behaviours and stop taking
responsibility for the nature of the outcomes as this becomes seen as belonging to the inspectors of
the working process.
In the mid-1990s, an automotive plant was implementing lean manufacturing where the official DPV
(number of defects per vehicle) rate was proudly touted at no more than 11, (many of which were
only discernible to technical experts under special conditions). Observing the line over 2 hours, it
became clear to external consultants that the real number of defects was actually much higher.
When this was pointed out informally to management, the reply was to “keep quiet” otherwise the
plant’s relative ranking in the global corporate might be affected and individual promotion prospects
and bonuses for stars within the current leadership team might be reduced as a result. The
consultants were reassured that this gaming approach to DPVs was universal and that the high cost
of warranty rework was treated as an inevitable part of the corporate efficiency game.
An important principle from lean methods and systemic thinking is GIGO (or garbage-in means
garbage-out), or the idea that the reduction of unwanted outcomes from a system requires the
ability to control, influence and to “read” or interpret the nature of the inputs to that system. In
other words we need to understand both the nature of the outputs we are getting from our system
as well as the nature of the inputs that are driving those outputs, as well as the process for
converting inputs to outputs. Our problem is that management thinking tends to assume that
behaviour is not an input that can be managed or designed because the current cultural models
whilst informing us, don’t help.
Here’s another example. An aerospace manufacturer was having problems with systems defects
appearing in aircraft being tested for airworthiness. It turned out that particular subsystems were
failing, being removed and replaced and then subsequently in turn refitted into new aircraft in order
to meet productivity goals, where they were rediscovered again. The solution simply involved pre-
testing discrete systems before they were fitted into the aircraft and refusing to accept failing
components identified into the assembly process in the first place.

It is at this point that an alternative way of thinking needs to be considered, one that encourages the
integration of organisational purpose, systems and behaviour with the individual that is the beating
heart of the organisation. After all, it’s the individual that literally personifies the organisation by the
behaviours they broadcast when they interact with each other and with the customer, every day.
Model 2: Frontline Behaviour-Meaning (B-M) Reality World
Figure 2: B-M World
It may be useful to consider the nature of the behavioural inputs that drive the outputs that
organisations and leaders want to see. When individuals lose sight of the organisation’s purpose in
the context they are working within, they get locked into gaming and operate from different forms
of adaptive defensive/helpless behaviour. They distance themselves from the customer (so that the
customer is always wrong or is seen as the problem) and their work loses meaning. Without a
meaningful context and without a larger purpose the gaming of work becomes a new form of work.
We are probably familiar with the NASA story of the janitor whose dedication was demonstrated in
his low-status work when he explained that if he failed to do his job, astronauts could pick up an
infection from a dirty surface and an expensive launch costing millions of dollars could fail.
It is leadership’s ability to connect and re-connect individuals with the organisation’s purpose and
re-energise those individuals by appropriate timely reminders of the “personal meaning” of their
role within the changing context, that answers the questions: why do you do this job? And, why does
it matter?
It is worth considering Jonathan Ive’s point in 2012 about working under Steve Jobs, that the
purpose wasn’t about making money, it was about making great products.
“Our goal absolutely at Apple is not to make money. This may sound a little
flippant, but it’s the truth,” said the British designer. “Our goal and what gets us
excited is to try to make great products. We trust that if we are successful people
will like them, and if we are operationally competent we will make revenue, but
we are very clear about our goal.”2
It is a key role of leaders to usefully simplify goals and re-connect individuals to purpose by
reminding them of the personal meaning of their work through highlighting the positive behaviours
that are the expression of personal meaning that is aligned with purpose. This reconnection and re-
2
Katherine Rushton, Media, telecoms and technology editor: Daily Telegraph 30 Jul 2012.

animation of personal meaning connected with appropriate behaviours removes the need for much
supervision, builds powerful can-do attitudes and leads to outstanding performance.
In this context, the award of gallantry medals in the military whilst serving as a reflection of
outstanding behaviour under pressure appears to be an individual award; but in reality it serves as a
reminder of behaviours that all service personnel aspire to, under similar conditions, reinforcing the
connection between personal meaning and the appropriate behaviours expected from the individual
(the behavioural aspiration that becomes the standard). It’s not about the medal or the individual:
it’s about the behavioural standard that comes with the role that means that behaviour and
personal meaning are aligned. Whilst the individual outcome is rewarded, the collective behaviour is
praised.
The 2-Tribes Effect and Competing P-S and B-M Models
It is now appropriate to demonstrate the problem of the 2 reality-based models of Purpose-Systems
(Model 1 P-S) and Behaviour-Personal Meaning (Model 2 B-M) operating un-connected and in
parallel. This can create a confusing reality for leaders and alienation among the led within
organisations with shared contexts. In either case a reality-gap is created.
As was said earlier, in a world of complexity where customer expectations keep changing and
legislation means compliance, it can become an end in itself. The risk for leaders is that they become
dependent upon those levers that they believe mean they can impose control from the centre in
order to manage the potential chaos of shifting customer demand and ignore the working reality of
how employees manage what can seem like infinite customer demand.
Figure 3: The Reality Gaps between P-S and B-M Models

This can lead to the means of control also becoming an end in itself, which can result in a reality-gap
where leaders and management apply systems which whilst connected with purpose, lead to
alienation with those on the front line of delivery, as those systems are always out of step with the
current reality.
The strength of the Mind Fit Process™ has always been its focus on the individual and helping
individuals to understand the nature of their personal behavioural portfolio in terms of the relative
ratios of Powerful (P) to Defensive (D) and Helpless (H) behaviours, and their impact on and
contributions to the outcomes delivered as a result. With this insight, it helps to trigger a revolution
in personal change that leads to higher performance through increased engagement by reducing
Behavioural Waste™ (the combination of Defensive and Helpless behaviours). Recent work with
leadership teams has led to the observation that leadership teams and their systems and processes
are often dissociated from the world of their workforces.
Mind Fit calls this dissociation, the "Two Tribes Effect". Mind Fit has noticed that whilst top
management "buy-in" to the new strategies (often a shift from more-for-less to different-for-less),
the frontline workforce, whose reality is different, doesn't understand the MBA/HR language of the
change and is afraid to ask relevant questions about the implications of what is being proposed in
terms of the current approach to delivering results. Mind Fit calls this the WDIHTDDAAR question
(what-do-I-have-to-do-differently-as-a-result) of this message, in other words: what does it mean for
me in terms of how I have to manage myself and the way I work? Part of the problem is frontline
staff ‘have seen it all before’ in different guises often with the same senior staff involved.
As a result of the usual top-down cascade of box-ticked meetings, management and leaders fondly
believe that the activity of communicating the message means it is understood and internalised, and
that the resulting silence from the workforce means assent and compliance. The result is that the
frontline workforce carry on doing what they were doing before the message was communicated in
the hope that it will go away and normality will return.
Leaders’ failure to enter the frontline world of Behaviour-Personal Meaning reinforces confusion. It
leads to higher levels of disengagement and leaders assume the role of a priestly caste that live in
their own isolated reality. They increasingly become perpetually out of touch with the currently
messy nature of work, making demands of inspection and compliance, applying punishments and
rewards that make little difference, but which can lead to preferment and promotion and ultimately,
leads the workforce to start gaming the new reality. In other words, two can play that game and the
victim is performance and productivity as all lose sight of the purpose of the organisation.
Reality-Based Leadership is about connecting and synchronising the current Purpose-Systems (P-S)
world, that is always one or more steps out of synch with reality, to the Behaviour-Personal Meaning
(B-M) world in order to lead organisations to:
a) reduce alienation and Behavioural Waste™ (defensive/ helpless behaviours), and
b) to raise levels of engagement by choosing to gather data and make decisions at the
intersection of the 2 models: at what Mind Fit calls the "Convergent Point".
The Mind Fit Convergent Point™ connects the P-S to the B-M, to solve the problem of engagement
through focusing on leading through managing reality in real time, through understanding what is
happening as opposed to trusting to the P-S machine thinking to make reality go away.

Exploring the Mind Fit Convergent Point™
What happens at this Convergent Point?
How are the 2 models connected to ensure that leaders don’t build alienation, Behavioural Waste™
and gaming?
Figure 4: Mind Fit Convergent Point™ at the Intersection of the P-S and B-M Models
Exploring the Mind Fit Convergent Point™ involves asking a series of questions to explore both
models in terms of current portfolios of Powerful behaviour (P in the picture) and Behavioural
Waste™ (BW in the picture). Some of these questions are about strategic sense-making whilst others
require the gathering of behavioural data using the Mind Fit Footprint Profile™ to identify the
positive or negative edge that exist within a specific, sample populations:
1. What is new in our reality context internally and externally, what has changed, what seems
to be happening, and what does it mean?
2. Are we
a. reducing current levels of Behavioural Waste™ (Defensive and Helpless behaviours)
and growing Powerful behaviours that prevent gaming or alienation? Or,
b. growing new Behavioural Waste™ in key populations and allowing new forms of
gaming and alienation to take over?
3. Does our purpose still make sense in terms of 1 and 2, or does it need to be redefined?
4. Is our P-S (Purpose-Systems) control model fit for purpose in terms of giving us what we
want or need, or is it building new Defensive or Helpless behaviours amongst our people?
What do we need to change in our P-S model to reinforce Powerful Can-Do behaviours?
What do we stop, start and continue doing and who needs to be doing it and demonstrating

the behavioural message required, and will leaders support those who do the “right thing for
the right reasons” even if it is misunderstood or doesn’t quite work out?
5. Does our B-M model (Behaviour-Personal Meaning) make sense, or do the Behavioural
Waste™ behaviours show that everyday behaviours are leading to gaming and alienation
that are swamping and obliterating their original sense of Personal Meaning (why I chose to
do this work, what it means to me and others)?
This iterative process of enquiry allows us to connect models 1 & 2 and ensure that organisational
reality and frontline reality are synchronised and aligned instead of working against each other and
build new defensive/helpless behaviours that create new forms of gaming to make reality go away.
Conclusions
Producer-led business systems are unsustainable in the long term because of a complex and
changing environment. The systemic weakness of the 2-tribes world where leaders manage
resources and make decisions based on where the organisation has been (old reality) whilst the
customer-facing frontline attempts to mediate current and emerging demand (new reality), simply
does not work. Selling old services based on what the customer used to want, is unsustainable in a
world where currency, or effectiveness is based on what customers believe they want now.
This mismatch between old and new reality encourages ‘gaming’ by people who choose to play the
systems, often for their own gain, rather than deliver the purpose of the organisation and meet
customers changing demands.
The Mind Fit Convergent Point™ is a logical approach to innovate a new way of thinking for leaders,
a reality-based form of leadership in a world where old models of thinking about reality need to take
account of the way customer value changes in real time.
The authors have proposed a robust solution to gaming that is currently manufactured in the world
of the 2-tribes as a substitute form of work that is disconnected from current reality including
changing customer demands.
They suggest this is an opportunity for reconsidering and re-engineering systems and processes in
terms of purpose, rethinking purpose in terms of the emerging context and ensuring alignment and
reinforcement of personal meaning and everyday behaviour to reduce expensive alienation and
contradiction that are assumed to be inevitable.

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Mind Fit Ltd
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