Using the Socio-Economic Equation to stimulate the global economy.

ABSTRACT

The authors explore the development of the Socio-Economic Equation employing an action research approach and discuss practice in four different settings. The use of the Socio-Economic Equation activates new learning on leadership, network building, large-scale change and Presencing [Learning from the Future]. Understanding of the newly developed Socio-Economic Equation [2001] is achieved in light of the relevant literature review. Four innovative applications are discussed in light of the importance of first developing the social interactive behavioral factors [[S.sub.ib.sup.3]] involved, before multiplying them by the business economic factors [[E.sup.2]] to gain innovative results--so needed to stimulate the global economy. Finally, the paper concludes with the ramifications of using the Socio-Economic Equation in stimulating the global economy.

1. INTRODUCTION

Information and knowledge on building relationships and networks in and between people in organizations stimulating economic development in a desired direction has been available for some time. Yet understanding of the dynamics associated with a democratized process of stimulation is a necessity for successful strategic development of the social and economic sectors not only in the United States, but beyond influencing the global economy. This new understanding is particularly important as America attempts to provide leadership in many parts of the world. However, understanding is sparse and is only slowly emerging. Ackoff (1984: p.1) points out that:

One can survive without understanding, but not thrive. Without understanding one cannot control causes; only treat effect, suppress symptoms. With understanding one can design and create the future ... people in an age of accelerating change, increasing uncertainty, and growing complexity often respond by acquiring more information and knowledge, but not understanding. [Italics added]

Within this context, the aim of the paper is threefold. First, our goal is to develop a fuller understanding of employing an action research approach exploring the important links between the micro sociological processes and the desired macro change to build transformed and sustainable socially stimulated economies in the U S. Undoubtedly, this aim activates new learning about the learning process itself, and about managing large scale change bridging sub cultures across systems.. Based on these ideas, our second objective is to present the Socio--Economic Equation as a comprehensive implementation model to transform the use of human potential for innovative results in the U S economy, and beyond. As part of this discussion, the third objective is to present some examples of mini attempts involving different systems transforming their human potential to stimulate the economy and gain innovative results. Developing human potential in the socio-economic equation focuses the micro-sociological processes most evident in communication, leadership and relationship building developing social capital and trust to achieve an innovatingly transformed socio-economic sector, capable of interacting successfully on a local/global dimension never before experienced.

2. UNDERSTANDING THE CONTRIBUTION OF THE SOCIO--ECONOMIC EQUATION

The Socio--Economic Equation, developed by Marilyn Harris [2001] focuses and prioritizes the development of social capital prior to the development of the economic business behaviors to achieve "innovative results." Innovative results are most critical in the global economy of the 21st century where wealth flows directly from innovation--no longer from optimization. The Socio-Economic Equation [see "THE SOCIO-ECONOMIC EQUATION"] places a new emphasis on the importance of developing the social interactive behaviors [S.sub.ib.sup.3] of people. In this case, the human potential of people is unleashed by developing new leadership, who in turn may develop the social capital in the general population. Leadership development is basic to unleashing human potential. Developing leadership to recognize the true value of social capital in any interactive situation. When the combined forces of new leadership and released human potential are available, considerable new energy in the form of [S.sub.ib3] to interact with [E.sup.2] [current economic-business model] to achieve innovative results. Actually, the freed up energy is seen in imagination, creativeness, purposeful behavior, a new level of hope, willingness to persist on a purpose--all creating a whole new positive climate for managing complexity in large scale change supporting innovation.

In contrast, in the past emphasis has been largely on people [employees] advancing the technological aspects of business. This focus has left employees bereft of true input--in many cases, employees felt they were replaced by technology--and had no real input. In the past, there has only been "lip service" stating "employees are our most important resource." Whereas, in the Socio-Economic Equation new leadership has the privilege of making it possible for employees to develop a new resource, freeing significant social capital to actively initiate new energy input in participation in the global workplace. This new human resource is multiplied by capitalizing on current economic-business models to get innovative results. It must be remembered that innovation only comes from people. Gary Hamel (2000) says only people can imagine--that imagination is critical for innovation. Recognizing how important imagination is to innovation focuses even more the need for leadership development to unleash human potential and to consistently accumulate significant social capital in the global society. Further, a confirming reality is that in the new global economy that wealth flows directly from innovation, not optimization [Kelly, 1998]--underscoring once again, the importance of innovation in our time.

The Socio-Economic Equation provides a framework for consideration of micro sociological processes linked to the desired macro change discussed in this paper. The micro sociological processes focussed here are in the two factors [[S.sub.ib.3] and [E.sup.2]], which are multiplied to get the innovative results. The social interactive behaviors [[S.sub.ib.sup.3]] to consider in releasing human potential are defined in the human interactions in network building where creativity, trust building, shared values, and mutual understanding may be developed through listening, languaging, and leadership practice. Whereas, the micro sociological processes of [E.sup.2], are in the structure of the business strategy, the management tools used, and business processes defined to achieve the goal function of the business involved. Commonly, there are many models used: For example, the case method, the Business Scorecard, the Socio-Economic Approach to Management [SEAM] and Swarm Intelligence. The focus in this paper will be on the micro-sociological processes associated with [S.sub.ib.sup.3], while managing the complexity of large-scale change.

The social behaviors are focussed in the development of human potential which takes two forms: 1) in the individual, and by 2) newly developed leadership. Before detailing these factors in the micro sociological processes required for innovative results the importance of considering the context in terms of managing complexity in large scale change is briefly focused. It must be understood that different results in the desired change are necessary to be made to happen, for previous results have not been successful.

3. STIMULATING DEVELOPMENT OF HUMAN POTENTIAL

Many may reply that developing the human aspect is the last frontier, and that human capability now needs to be stimulated to improve the economy. The authors believe that " true people utilization as a meaningful new resource" has not been explored. Most consistently, human development has been left to the individual to accomplish or not accomplish at his own interest level and/or need. The authors believe that organizations have a new role and responsibility for system members [their employees]: that is, to create opportunities for them to be creative in developing trusting relationships between each other and between management and the employee. That individual choice should be highly respected and be constant throughout the work experience. This must be choice within new limits; limits that provide for creativeness and doing things differently than in the past. Limits that include interdependent activities self organized by members, not management. This may most easily accomplished through developing new leadership at all levels of the organization that are committed to developing human potential first, but in concert with the economic business approach of the firm.

It is important to recognize that people in organizations have the "intangible" resources necessary for success. For example: knowledge, creativeness, trust, imagination, innovative capability, adaptability and flexibility that are not located anywhere else but within the members themselves. That these intangibles are measurable, negotiable, and deliverable. Furthermore, intangibles are important in the marketplace. Intangibles are at the heart of all human activity. Intangibles are the very foundation of value creation in organizations. And undoubtedly, that developing human potential in organizations is strategic.

Human potential is unleashed in human interactions. To unleash human potential systems must be changed. And most importantly changing or creating new systems is an ongoing task. For as Scharmer (2000) notes change in organizations must become like breathing in and breathing out--just that constant as the human breathing process. Change is not static, it is not a destination, but a life long journey. The focus in systemic change is on supporting interdependency, self organization, and choice.

The people in the system deserve as a member of that organization, a true opportunity to initiate, to stimulate from their own perspective their development in the context of the relevant whole, and that creativeness be fully encouraged to achieve innovative new results. To accomplish this goal considerable organizational learning must be accomplished. Organizational learning and unlearning includes dismantling dysfunctional assumptions that worked in the past, but not in the present. These dysfunctional assumptions are blocking innovative performance in the present and future.

In summarizing the contribution of the socio-economic equation, it is easily seen that it is considerable. First, the Socio-Economic Equation examines the whole, it links the social and the business behaviors creating potentially significant outcomes; specifying the development of human potential in two areas (new leadership behaviors and new individual interactive responses) required to get innovative results overall as the desired macro change. Many times failure or ineffectiveness may be traced to the lack of specificity in the development of the key micro sociological processes linked to the desired macro change. Most importantly, failure may be in not utilizing a high level of social learning and unlearning; unlearning of "assumptions from the past, no longer functional--that are currently blocking successful performance in the culture.

Likewise, when employing an AR strategy in the socio-economic equation, both the consultant and the client must make explicit the many tacit assumptions and knowledge that they are working with as related to:

* the systemic variables involved in what are inevitably unique contexts;

* tensions in developing democratic relationships based on trust building;

* the need for cooperative efforts to truly identify transformative results; and

* the appropriate use of negotiated self-interest for success in the environment.

An AR strategy embodies a comprehensive approach. It is not to be casually applied--as sometimes observed and concluded--from observing only high-level interactions between ARer and client. Numerous adjustments must be made in context and in real time. While employing this type of an approach is time consuming, requiring new learning and openness, an AR strategy can take large-system change to "a continual change process similar to breathing in and breathing out" (Arthur, 1996).

There are many types of understanding required by action researchers and the local problem owner in their attempts at creating sustainable political networks in developing countries. It is important, for example, for both to be able to:

* Incorporate a systemic approach in their interventions that respects the whole, increasing the visibility and true recognition of the participants;

* Deepen understanding of the need for deepening "purpose," and in identifying transformative results early in the project, through developing human potential that capitalizes on increasing people's value to the network;

* Experience and articulate the power of failure, seeing and perceiving it as an opportunity to redesign the intervention in real time.

In reality, this latter point is especially important, that is to consider the value of "powerful failure" in the context of emerging political networks in the democratization process. In retrospect, much of failure is experienced as a result of not considering "failure" as potential in advance, and further not considering failure from a positive perspective. Many successful networks emerge from "failures," particularly in multi-phased, long-term change projects. It is important to anticipate failure in different activities, to recognize it as soon as possible, and to act accordingly to achieve ultimate success. Anticipation does not cause failure, but alerts one to the possibility. In many cases, the recognition of failure in the early part of the project may make a significant difference in the final outcome. Recognizing failure may point to needed changes in the control dynamics, evidenced in the actions of the local problem owners--although "owning the problem" was also a significant omission. There may be other opportunities created to legitimize, on a local--global basis, the role and need of a democratization network. Recognizing failure in early phases can provide other opportunities to intervene, facilitating the long-term success of any project.

4. MANAGING THE COMPLEXITY OF LARGE-SCALE CHANGE

Leaders around the world are facing a new kind of challenge; coping with the various waves of disruptive, revolutionary change that redefine the context of business, in the past, the public sector has managed to stand apart in not facing new challenges in the business world context. This is not so now. Increasingly, in the new, fast developing global economy public sectors around-the-globe are faced with these various waves of change.

One wave has to do with the rise of the Internet based "new" economy and its driving force, the process of digitization [Castells, 1998, Kelly, 1998]. A second wave has to do with the rise of new relational patterns and their underlying driving forces: the processes of globalization [of markets, institutions, products], individualization [of products, people, and their careers], and increasingly networked structures and web shaped relationship patterns [Castells, 1996]. A third and more subtle dimension of change has to do with the increasing relevance of experience, awareness and consciousness and their underlying driving force, the process of spiritualization [Conlin, 1999]. For example in the recent growth in interest in topics like "flow" or personal mastery [Senge, 1990] both inside and outside the world of business. These three contextual changes present today's leaders with a fundamentally new world in which they must be innovators and radical revolutionaries rather than agents improving the status quo [Hamel 1997, 2000]. In order to operate successfully in this new business environment, business leaders as well as public sector leadership, will need to master a new capacity to sense, enact and embody the future as it emerges [Jaworski and Scharmer, 2000].

Large-scale change, particularly transformational change required in action research, always play out on multiple levels. Figure 1. Five Levels of Behavior in Response to Change depicts five levels of organizational reality and, accordingly of coping with change. The levels are mapped along the lines of the classical Lewinian insight that change is situated in a pre-stage ["unfreezing"] and a later stage that puts respective changes into behaviorally embodied routines and practices ["refreezing"] Until today, most approaches to managing change have followed that basic sequence [Lewin, 1952, Schein, 1989]--using different names and numbers of steps, the underlying logic has remained the same. The five levels of organizational reality and, accordingly, of coping with change depicted in Figure 1. Are similar to an iceberg, in which most reorganization takes place "below the waterline." The action [at level 0] is "above the waterline" and is embedded in four underlying or contextual levels of reorganization and change. The four underlying levels of reorganizing are: restructuring [level 1], redesigning core processes [level 2], reframing mental models [level 3], and regenerating common will [level 4].

[FIGURE 1 OMITTED]

According to the Lewin-Schein model, the highest leverage point is located at the stage of unfreezing [Schein, 1989]. The key challenge to leaders at this stage of the change cycle is how to enable teams and organizations to uncover the layers of organizational reality that will move them from the level 3 [new mental models and cultural assumptions] to level 4 [deep purpose and common will]. Shifting from level 3 to level 4 involves shifting from reflective learning [learning from experiences of the past] to generative learning [learning from emerging futures]. The primary issue at this stage is the need for a sound methodology that takes a team from the reflective space [level 3] to the space of deep intention of will [level 4] Change: Regenerating.

Many change initiatives based on culture and learning fail. One explanation is that the rhetoric of change was in disconnection to what really matters most to local line leaders and business managers--public servants, in this case. Scharmer (2000) suggests a new approach to coping with change by focusing deep intention, purpose and will. In this approach, the responses of levels 0,1,2, and 3 [action, structure, process, and mental models] become part of an even more subtle set of contextual variables which are referred to as purpose, shared vision, or common will [Scharmer, 2000]. Focusing on purpose and principles allows local problem solvers to be more flexible in situating action, structure, processes, and mental models according to local conditions.

Therefore, level 4 regenerating means allowing for flexibility in action, structure, processes, and mental models [levels 0,1,2, and 3] by focusing on redefining purpose and uncovering common will. This is an important step in getting to the management of complexity in large-scale change conceptualized in an organizational breathing cycle.

Understanding of the organizational breathing cycle focuses the horizontal axis in Figure 1 which depicts the process of unfreezing-change-refreezing, equivalent to a less static terminology of uncovering-redefining-enacting. When an organization is conceptualized as a living system, uncovering or unfreezing may be thought of as the organization inhaling: taking the current reality into its consciousness by "breathing in." Likewise, enacting or re-freezing may be thought of as an interior-out process of converting a changed consciousness into practices and actions in "breathing out." Accordingly, the Lewin-Schein model of unfreezing-change-refreezing can be seen as one sequence within an ongoing process of organizational breathing. This is a very critical concept for action researchers and local problem owners alike to become familiar with in practice when change initiatives involve cultural change and learning. Thus, an intermediate goal may be to shift from a common shallow breathing cycle accessing only the first two levels [reacting and restructuring] to breathing deeply; primarily engaging in level 3 and 4 [redesigning and reframing]; developing an ongoing process of deep breathing throughout the whole organization. Developing the organizational deep breathing cycle significantly aids the management of complexity in large-scale change efforts. It becomes second nature to enhanced life of the system in change.

Brian Arthur [1996, 2000] emphasizes that in order to do well in the new economy managers have to deepen their ways of knowledge creation and knowing. Many managers and leaders fail because they cannot access the deep levels of knowing [level 4] as depicted in Figure 2. entitled Four Levels of Cognition and Social Reality Formation. The first half of the cycle in Figure 2 concerns "the process of becoming aware." The second half of the cycle is about following the flow and enacting that what wants to emerge. The insights received during the stages of sensing and presencing are only fully realized when embodied in action. In Figure 2 the first half of the cycle involves processing experience and becoming aware, and the second half of the cycle involves forming, inspiring, and enacting will.

[FIGURE 2 OMITTED]

To enhance understanding three aspects of will formation are described:

* Envisioning: Enhancing the quality of aspiration, vision, and intention has always been at the heart of entrepreneurial leadership and Senge's (1990) disciplines of Personal Mastery and Shared Vision. The capacity to develop a clear vision and a "laser focus" for implementing this vision involves operating from a cognitive space that is different from the three spaces of seeing, sensing, and presencing.

* Enacting: The existence of the social reality is only when people act, thus actually enacting. Seeing, sensing, presencing, and envisioning will not make a difference unless they translate into action. Brian Arthur sees the way to operate as a sequence of: [1] observe, observe, observe, [2] allow inner knowing to emerge, and [3] act in an instant. This is acting from the inner self.

* Embodying: In an age dominated by globally acting organizations and institutions, social changes become sustainable only as they become institutionally embodied in organizational routines.

In managing the complexity of large-scale change it is important for all participants to be comfortable with moving through cycle depicted in Figure 2. This can only be accomplished through development of new leadership committed to unleashing human potential.

5. UNDERSTANDING LEADERSHIP DEVELOPMENT TO UNLEASH HUMAN POTENTIAL

Generally, people in organizational cultures are at a loss when it comes to being considered as possessing energy potential to be used in developing the enterprise.. People, that is, employees, members of a society, and a culture are energy resources never ever considered in reaching developmental goals, in planning or in implementation because in the past they have not been considered as a resource. This is a huge loss of resources and energized input, that could be accessed with purposeful leadership caring about these ordinary people [Ackoff, 1974, Kotter, 1995, Hamel, 2000 and Scharmer, 2000 et al]. However, developing purposeful leadership to unleash human potential leading change is not easy.

Further, John Kotter (1995) says the most general lesson to be learned from the more successful cases is that the change process goes through a series of phases that, in total, usually requires a considerable length of time. Skipping steps creates only the illusion of speed and never produces a satisfying result. A second very general lesson is that critical mistakes in any of the phases can have a devastating impact, slowing momentum and negating hard-won gains. Perhaps because we have relatively little experience in transforming organizations, even very capable people often make at least one big error.

Kotter (1995) has defined Eight Steps to Transforming Your Organization that may be reviewed in Figure 3. He developed these steps after noting the errors made at each stage. Since action researchers are consistently involved in transformation, many informative points may exist for them in this framework. For example, the first error is not establishing a great enough sense of urgency. Further, It is critical to consider the whole change process over a long period of time in managing complexity in large scale change. Clearly the leadership needs to get a sense of the complexity that must be managed over a long period of time--it may be ten or more years to take into account. This perspective is crucial--it is not one shot, quick fix change.

FIGURE 3. EIGHT STEPS TO TRANSFORMING YOUR ORGANIZATION [c] JOHN P.
KOTTER, 1995

Eight Steps to Transforming Your Organization

1. Establishing a Sense of Urgency
*    Examining markets and competitive realities
*    Identifying and discussing crises, potential crisis, or major
       opportunities

2. Forming a Powerful Guiding Coalition
*    Assembling a group with enough power to lead the change effort
*    Encouraging the group to work together as a team

3. Creating a Vision
*    Creating a Vision to help direct the change effort
*    Developing Strategies for achieving that vision

4. Communicating the Vision
*    Using every vehicle possible to communicate the new vision and
       strategies
*    Teaching new behaviors by the example of the guiding coalition

5. Empowering others to Act on the Vision
*    Getting rid of obstacles to Change
*    Changing systems or structures that seriously undermine the vision
*    Encouraging risk taking and non-traditional ideas, activities, and
       actions

6. Planning for and Creating short-term Wins
*    Planning for Visible performance Improvements
*    Creating those improvements
*    Recognizing and rewarding employees involved in the improvements

7. Consolidating Improvements and Producing Still more Change
*    Using increased credibility to change systems, structures, &
       policies that don't fit the vision
*    Hiring, promoting, and developing employees who can implement
       the vision
*    Reinvigorating the process with new projects, themes, and change
       agents

8. Institutionalizing New Approaches
*    Articulating the connections between the new behaviors and
       corporate success
*    Developing the means to ensure leadership development and
       succession

Beyond this long time perspective in managing complexity in large scale change, Scharmer [2000] points out that leaders in development for this task may use three specific tools in developing: listening, languaging, and leadership practice that will aid development.

6. UNDERSTANDING THE TOOLS TO UNLEASH HUMAN POTENTIAL THROUGH LEADERSHIP

To better situate and integrate the principles three tools are described as they are used in the process of presencing. These tools map some different qualities of attention on the individual level in Tool 1: Listening; on the collective level in Tool 2: Languaging; and Tool 3 on the organizational level: Leadership Practice. Incorporating the use of these tools is valuable in developing human potential in both leaders and in individuals involved.

Figure 4 maps four different places from which any system can operate. In listening 1 the place of attention is within myself [I-in-me]. What I hear is what I already know. Thus, listening 1 is simply the activity of downloading and reconfirming my old mental models and prejudices. In listening 2 the focus of attention moves from myself to the periphery [I-in-it]. I pay attention to every word that is said. I pay attention to everything that might differ from my expectations and mental models.

[FIGURE 4 OMITTED]

I know that I am operating using my listening 2 skills when I hear something that surprises me, when I am discovering something new "out there." In listening 3 the experience of the other person shifts from being an "it," a thing, to being a "you," a human being [I-in-you]. All dialogue experiences include this subtle switch from seeing the world through my own eyes to suddenly seeing the world through somebody else's eyes [Isaacs, 1999]. I know when I am operating using my listening 3 skills when I have gone outside the boundaries of my organization and become one with another person. In listening 4 the source of attention moves yet another step upstream to the ultimate source through which the self and you [thou] come into being [I-in-now]. At this level, the separation between I and you fully collapses into the self-transcending experience of flow and spherical expansion. I know that I am using my listening 4 skills when the "boundaries between myself and the other person have collapsed," and when my locus of listening has shifted towards listening from the whole. For example, after the conversation I have, I become a different person--becoming more who I truly am.

While most organizations and individuals are pretty good at listening 1 [downloading], and man companies have mastered listening 2, few organizations and groups are really skilled at listening [inquiry] and rarely reach listening 4 [presencing]. The more we move into an innovation-driven economy the more the capacity to operate at levels 3 and 4 will become a major source of competitive advantage.

The third tool: leadership practice provides leaders with an opportunity to explore and nurture four interrelated and interwoven spaces of thought and action:

* SEEING and SENSING outside the boundaries of their organization

* RETREATING and REFLECTING in an elevated space for thinking, to enhance the quality of thinking together, specifically to advance SENSING and PRESENCING

* INCUBATING and DESIGNING BUSINESS SOLUTIONS helping entrepreneurs turn their ideas into powerful innovations and embodied actions.

* INSTITUTING HIGH LEVEL SOCIAL LEARNING and UNLEARNING to discover and interpret "assumptions" that are blocking successful performance--otherwise, the culture may not be changed.

Finally, there are three factors that leaders need to cultivate to act successfully: Persistence, Imagination, and Hope. In terms of persistence, perseverance and resolve are 90% of the battle if you want to accomplish anything of worth. Imagination is necessary to innovate. Albert Einstein said: "Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world." Hope is especially critical in uncertain times, for hope arouses as nothing else can arouse, a passion for the possible. Leaders need to practice using these factors in their organizational and system efforts.

[FIGURE 5 OMITTED]

7. STIMULATING LEADERSHIP TO "UNLEASH" HUMAN POTENTIAL

There are several factors that contribute to stimulating leadership to unleash human potential, in addition to thinking in terms of the whole, the whole organization or system involved, a clear difference must be recognized between "management" and "leadership" functions and positions in the organization. Kotter (1990) noted that leadership complements management, it doesn't replace it. Further, that the difference between management and leadership is substantial. Management is about coping with complexity. Its practices and procedures are largely a response to one of the most significant developments of the twentieth century: the emergence of large organizations. Without good management, complex organizations tend to become chaotic in ways that threaten their very existence. Good management brings a degree of order and consistency to key dimensions like the quality and profitability of products.

Leadership, by contrast, is about coping with change. Part of the reason, leadership has become so important in recent years is that the business world has become more competitive and more volatile. The net result is that doing what was done yesterday or doing it 5% better is no longer a formula for success. Major changes are more and more necessary to survive and compete effectively in this new environment. More change always demands more leadership.

These different functions--coping with complexity and coping with change--shape the characteristic activities of management and leadership. Each system of action involves deciding what needs to be done, creating networks of people and relationships that can accomplish an agenda, and then trying to ensure that those people actually do the job. But each accomplishes these three tasks in different ways. Leaders set direction, align people, and an inspire people to reach the goals--while managers plan and budget, organize and staff, control and problem solve. Management controls people by pushing them in the right direction; leadership inspires members by satisfying basic human needs to be trusted, understood and respected for their individuality.

8. UNDERSTANDING INTERACTIVE NETWORK DYNAMICS

Our understanding of network dynamics is enhanced by Allee's (2003: p.78) work in which she defines networks as:

a pattern of organization that is a set of nonlinear, non-hierarchical relationships that nest with other networks. Networks consist of just two elements: nodes and connectors that are self-organizing. The value and capability of a network expands with the number of connections. When a certain level of connectivity is reached in a complex system, the capabilities that are being unleashed may be far greater than the sum of the parts.

This view suggests that networks can be thought of as living systems, in essence a series of nodes and connectors that constantly change and develop. While Kelly (1998) points out that there are several types of connection--"object-to-object," "human-to-human," "object-to-human"--the focus of our work is on human-to-human, social connections and object to human. Ackoff (1984) points out that management is "managing the interactions," not the person to get results.

Understanding the network perspective makes it abundantly clear that success in today's changing world depends on relationships. Thus the role of people in developing human potential is in developing relationships. The foundation of good business relationships has been, and always will be, based on trust. Character counts. There is a new ethical underpinning for success in business that requires higher levels of integrity and honesty than ever before. While companies themselves are becoming increasingly transparent, networks are much more transparent than companies. Relationships and linkages are visible to everyone. Questionable business deals play out on an increasingly public stage, as witnessed recently by the likes of Enron and Worldcom. Technologies may dazzle people in what they enable people to do, but the bottom line of any business is about the exchanges and transactions that take place between human beings. Even when people never see each other or speak directly--operating in virtual contexts--only real people can make decisions and initiate action. Thus, understanding the role and importance of the human dimension is critical in developing an understanding of networks and network building in developing human potential.

Kent and Anderson (2002: p,3) clarify the importance of people in relation to technology by suggesting that "technology is only a satisfier ... but technology, even the best, will take any organization only half as far as it needs to go." They stress that it is the organizational members themselves that will take their firms all the way to success. A core mission of leaders, therefore, is to tap into the energy of people, creating the impetus for it to carry the organization to new heights.

Coleman (1988) argues that "social capital" is the foundation of economic progress. As suggested by Cohen and Prusak (2001: p. 4), such social capital consists of "... the stock of active connections among people, the trust, mutual understanding and shared values and behaviors that bind the members of human networks and communities and make cooperative action possible. Social capital depends on trust." Similarly, Fukyama (1995: p.271) notes "... the most important lesson we can learn from an examination of economic life is that a nation's well being, as well as its ability to compete, is conditioned by a single, pervasive cultural characteristic: the level of trust inherent in the society." Social capital, in essence, emerges from human relationships and human networks.

Tom Isgar, in his book: The Ten Minute Team, Developing High Performing Teams (1989) says that trust may be developed when team members or leaders address its development directly. That is, that the team needs to talk about "trust." They need to talk about the meaning of trust, what does it look like in practice, what does one do when trust is lost or broken, after once having had it. Developing trust takes time. It is the demonstration of competence over time. Trust is important as social capital in all societies and critical for development. Further understanding of the Socio-Economic Equation is enhanced by examining examples in practice where human potential has been unleashed to significantly enhance the global economy. The next section identifies four examples.

10. DEMONSTRATING THE UNLEASHING OF HUMAN POTENTIAL

Understanding often comes from practice. In that light, the authors share a few practical experiences where the Socio-Economic Equation has been put into practice to shed some light on the potential stimulation of the US economy. In that light, there will be three mini attempts sited here. The first is the Boeing Leadership Center's attempt unleash human potential in leadership development. Secondly, the grassroots leadership of Royal Dutch/Shell is visited. And lastly, an attempt in international education in the realms of higher education is reviewed. In each case the authors briefly describe the socio-economic intervention focusing on the unleashing of human potential in leadership and in individuals. An assessment of the success of the intervention is made in each case that lead to the conclusions made in the final section.

10.1 The Boeing Leadership Center [BLC]

The BLC developed by Steve Mercer focuses leadership competencies of the Socio-Economic Equation in four distinct ways: In developing people leadership and in developing personal leadership, the leader is focusing the [S.sub.ib.sup.3] component of the equation. In the same way developing business leadership and operational leadership focuses the [B.sup.2] component. The social behaviors [[S.sub.ib.sup.3]] are unleashed through "coaching" leaders while at BLC. Thus the focus in this description is on coaching as a social behavioral intervention in stimulating change in the economy.

Briefly, coaching at BLC is introduced to the executive during the first of a series of mandatory 12 day residential leadership development programs over a 3 year period. Each executive is assigned a professional coach when they arrive at the BLC. One-on-one coaching sessions: during the 12 days, each executive typically meets with their coach for 3 one-hour sessions: in the initial session, the executive and coach review a battery of instruments that the executive has executed prior to his/her attendance. These instruments include the MBTI, 360 feedback from direct reports, bosses, peers and customers/suppliers, leadership experience inventory; and the FIRO-B. The coach works with the executive to determine their level of 1) understanding of the data and its validity; 2) rating its importance; 3) deciding whether or not it matters, that is, do they want to do anything differently (change) as a result of the data.

At this point, the coach and executive create a development plan for the next 12 days: principles of appreciative inquiry (David Cooperrider) are employed, and executives are encouraged to build on their passions, their strengths and their areas of previous success. In the process of setting short-term goals, coaches encourage executives to discuss the challenges and goals of their current job assignments, how their current job fits into their longer-term career goals/strategy, and ultimately, what is the nature of their life goals. Often, it is at this point in the confidential conversation, that the executive reveals the state of the health of their overall life: how satisfied are they with the way their life is unfolding. When this juncture in the coaching conversation is reached, the door opens to exploration of the executive's life purpose (who am I?) and his/her mission in life (why am on the planet?).

The 12-day development plan is mutually designed to accomplish two things: 1) deepen the executive's awareness about the impact of a specific behavioral change they want to make, and 2) forward their action in making those specified changes.

Over the next 12 days, the coach observes the executive in many varied settings. This includes an intensive business simulation where the executive must work with 19 others to "run a competitive business: build teams, make business decisions about all aspects of a business, and be accountable to the CEO of Boeing for the results, as measured by stock price."

Subsequently, at least two additional one-on-one sessions are held: mid-way through the program, and near the end of the 12 days. The mid-term meeting is an opportunity for the coach and executive to discuss what they each have observed about the executive's behavior, about his/her desired behavior, and about the impacts on others that their behavior has had. The coach provides his/her observations, feedback and suggestions for change. In the third session, the coach and executive review the progress that has been made on the development goals. Additionally, a conversation is held about follow-on activity: the coach suggests options for follow-on developmental opportunities and the executive is invited to continue with regular, often weekly, coaching sessions with a professional coach, over the telephone.

This description generally describes the intent of the coaching intervention. The outcome of its practice maybe summarized in reviewing the performance of the executives based on interview data in the company: where awareness, learning and behavior are combined to equal 80% of the responses, and performance itself is only at 20%--considerably lower in the third year than anticipated. Essentially, the BLC cannot demonstrate that its leadership development work with executives is not significantly affecting company performance. This questions the stimulation of the US economy in this example, and begins to recognize a potential oversight for executives is in making a significant improvement in performance on-the-job. This may be due to issues overlooked in the coaching or business experience at BLC. Generally, it may be said that the response does not match the intent, and this must be confronted to gain fuller value and stimulation from the experience.

10.1 Developing Leadership in International Education in Higher Education

Guilan Wang at Central Michigan University has developed a five pronged systemic intervention globalizing the university worlds. First she makes clear the critical facts underscoring the need for international education. She builds international leadership education into the institutional missions, goals and objectives from top down and bottom up, as well as intervening in the curriculum framework. Dr. Wang infuses international leadership education in: courses and class sessions, linkages, including with other institutions at home and abroad, with business as well as with the society in general, and in forums, symposia, training workshops, publications and beyond. An important part of international leadership education is in recognizing the importance of it at all levels: performance evaluation, hiring, awards, and research and study. By taking advantage of these different thrusts she has increased the international student population, both undergraduate and graduate at her university as well as at other universities.

10.2 Royal Dutch/Shell

The example at Royal Dutch/Shell offers a powerful model of what leadership means--a recognition that commitment and creativity come from all parts and all levels of an organization. Steve Miller developed the grassroots approach at Royal Dutch/Shell to give the company an energy transfusion and to remind them that we could play at a more competitive level. Shell has always been a wholesaler. But every service station represents a commercial opportunity that any retailer would envy. The task in grassroots leadership was to tap the potential of that real estate, and the frontline troops were needed to pull it off.

The grassroots program developed was through bringing together six to eight person teams from a half dozen operating companies worldwide in an intense "retailing boot camp." One example, from Malaysia: In an effort to improve service-station revenues along major highways, a cross functional team that included a dealer, a union trucker, and four or five marketing executives were assembled. The first five day workshop introduced the model and the leadership skills the team would need to enlist coworkers back home, and prepared the participants to apply the new tools to a local market opportunity. That could mean improved performance at filling stations on the major roadways in Malaysia, or selling liquefied natural gas elsewhere in Asia.

Then the teams went home--while another group of teams rotated in. For the net sixty days, the first set of teams worked on developing business plans. Then they came back to boot camp for a peer-review challenge. At the end of the third workshop, each team sat with Steve Miller and his team in a "fishbowl" to review its business plan, while the other teams watched. The peer pressure and the learning were intense. At the end of that session, the teams went back for another 60 days to put their ideas into action. Then they came back for a follow-up to analyze both breakdowns and breakthroughs.

Grassroots leadership is working because Royal Dutch/Shell is seeing results around the world. For instance, our business in France was in terrible shape. We were in the red and losing market share. The advent of the hypermarkets had changed the game, and we weren't responding effectively to this new competitive threat. Fifty percent of our retail fuel market disappeared in two years! WE either had to find a way to become profitable and to grow, or we had to exit--because the way we were going, we couldn't stay in the game much longer.

10.3 The S-E Equation Facilitates Development of a Community Leadership Institute

Denise Lucy at Dominican University has taken a year to study different models of leadership in a variety of contexts; identifying models that provide significant community participation, and yet achieve innovative results in community leadership and development. Currently, in San Rafael she is instituting a two pronged approach which involves a rich cooperation with the business school developing faculty partnering with key international consultants to train community leadership in a management consulting program using the Socio Economic Approach to Management [SEAM]. This joint approach unleashes human potential and identifies new leadership in the community to consistently cycle through the unleashing process uncovering new resources for innovation in both academic and community contexts.

It is clear from these few examples that involving people at every level of the organization in learning how to lead, developing and "unleashing" the human potential is key when it is wed with a business model or approach. It is key that it is the road to innovation and success. What appears necessary in many settings is to first change the goal to focus first on the raising the value of the social interactive behaviors networking together prior to using a successful business model in the business to achieve significant innovation--working hard "to make it happen."

11. RAMIFICATIONS OF USING THE S-E EQUATION TO STIMULATE THE ECONOMY

Intervening using the Socio-Economic Equation requires developing trustful relationships between the parties involved as a necessary foundation for developing business results. Network relationships require interactions where members can be frank and direct with each other. As evidenced in the cases, without trust it is unlikely that true knowledge and cross-fertilization of ideas will flourish to cause innovative results.

Developing new leadership is also critical. Capitalizing on identified resources in real time during the life of the project can help to focus new learning. Undoubtedly, one such learning was the realization that the tacit knowledge that each participant brought to the table must become explicit before much could be accomplished. Developing the skill to identify what is important at the time, making explicit the relevance to each other and to the larger system is basic to developing "negotiated self interest with consideration of the health and vitality of the entire network" (Allee, 2003: p.237). When employing the Socio-Economic Equation, both the consultant and the client must make explicit the many tacit assumptions and knowledge that they are working with as related to:

* the systemic variables involved in what are inevitably unique contexts;

* tensions in developing democratic relationships which are based on trust building;

* the need for cooperative efforts to truly identify transformative results; and

* the appropriate use of negotiated self-interest to achieve success in the environment.

Using the Socio-Economic Equation embodies a comprehensive approach. It is not to be casually Applied--as sometimes observed and concluded--from high-level interaction between old style leaders. Numerous changes must be made in the context--in systems, structures, processes and policies; and in real time. While employing this type of an approach is time consuming, requiring new learning and openness, using the Socio-Economic Equation can take large-system change [both leaders and employees] to "a continual change process similar to breathing in and breathing out" (Arthur, 1996).

Our experience brought understanding required by leaders in their attempts at innovatingly using the Socio-Economic Equation. It is important, for example, to be able to:

* Incorporate a systemic approach in their interventions that respects the whole, increasing the visibility and true recognition of human potential;

* Deepen understanding of the need for identifying transformative results early in the project, through developing human potential that capitalizes on increasing people's value to the organization; and

* Experience and articulate the power of failure, seeing and perceiving it as an opportunity to redesign the intervention in real time.

The last point is especially important--considering the value of "powerful failure" in the context of leadership to achieve innovative results. In retrospect, much of the failure may be created by net considering "failure" as potential in advance. And, in not considering failure from a positive perspective. Many successful innovations emerge from "failures," particularly in multi-phased, long-term change projects. It is important to anticipate failure in different activities, to recognize it as soon as possible, and to act accordingly to achieve ultimate success. Anticipation does not cause failure, but alerts one to the possibility. In this case, the recognition of failure in the early part of the first phase may have made a significant difference in the final outcome. Recognizing failure in early phases can provide other opportunities to intervene, facilitating the long-term success of the network-building process.

Igniting the human potential constantly available through new leadership; thereby unleashing the "potential of people" remains a comprehensive challenge of the 21st century. Using the Socio-Economic Equation to achieve innovative results provides an important framework emphasizing the value of people throughout the organization for business leaders in the current global milieus, and beyond.

THE SOCIO--ECONOMIC EQUATION

[[S.sub.ib.sup.3]] x [[E.sup.2]] = [I.sub.r.sup.Nth]

The "SOCIO-ECONOMIC EQUATION" is the social interactive behaviors of participating people first cubed through enhancing and capitalizing on people interacting in building trust and strong network relationships; multiplied by the business economic behaviors squared using any one of successful business models to produce INNOVATIVE RESULTS to the Nth power. Broadly stated the Socio-Economic Equation demonstrates that: Too much of a good thing--unleashing human potential--is wonderful to enhance the global economy.

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Dr. Marilyn E Harris earned her Ph.D. at The University of Michigan in Ann Arbor, where she spent a decade in applied action research at the Institute for Social Research. She has balanced her professional life between academia and management consulting, heading her own consulting firm and holding adjunct faculty appointments in the College of Business Administration and College of Extended Learning at Central Michigan University, as well as Visiting Professorships abroad.

Dr. Beverly Jones earned her Ph. D. at The Union Institute and University. She holds an Assistant Professorship in Management at Kettering University in Flint, Michigan. Dr. Jones brings a host of manufacturing experience and knowledge from her work at General Motors Corporation.

Dr. Denise Lucy has 21 years experience in private higher education as an educator and academic administrator. Since 1993 at Dominican University of California, Dr. Lucy has served in the roles of Vice President of Academic Affairs and as Dean of the School of Liberal and Professional Studies, and now developing the Institute for International Leadership Studies.

Sandra L. Sell-lee received her Masters Degree in Communications from the University of Colorado at Boulder, and is a Certified Professional Coach [CPC] serving in Human Resources Organizational Development at Boeing Commercial Airplanes [BCA] in Renton, Washington. She is a professional coach at The Boeing Leadership Center and travels widely consulting and coaching for BCA.

Dr. Guilan Wang is the Director of International Education at Central Michigan University. She has over ten years of progressively responsible experience in the field of international education, with expertise in both academic and non-academic international program development, coordination, administration, research and evaluation; and in teaching Chinese studies, higher education administration, international economics, and English as a Second Language. She has published widely on her application research.