ldrs481_paper_08_25_2013 chris dorow

The Impact of Mindset and Behaviors on

Conflict Management and Culture Development

By Christopher Dorow

Northwestern University

Leaders 481

August 25, 2013

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Table of Contents

Page

Executive Summary 3

How Cultures Develop 4

Formation of Tradition 5

A Choice to be Made 6

Neurological Influences 6

Choices in Tension 8

Behaviors that Work 9

BASF’s Journey 10

2010 Change Agent Training 11

Techniques 12

Emotional Intelligence Applications 15

Establishment of Tradition 16

Reflection 17

Endnotes 19

Bibliography 21

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Executive Summary

Conflict within any organization is inevitable. The key choice that leadership makes is

how an organization choses to deal with that conflict. When leaders chose to deal with conflict in

a positive and constructive manner, the behaviors that can result are original thinking, creativity,

and innovation. These behaviors make organizations more competitive and profitable. By not

choosing to deal with conflicts positively, or by choosing to deal with conflicts inappropriately,

bureaucratic infighting and internal politics dominate, resulting in organizational inefficiencies.

To choose positive conflict management means to willfully shape the culture and traditions

of the organization. Choosing this route means to understand the neurological roles in conflict, the

behaviors that deal with conflict positively, and to balance the need to embrace reality while re-

taining an optimistic, creative outlook. These leadership choices are necessary to develop a sus-

tainable culture, as presented in Roberson’s wisdom to tradition model.

This paper will review the implementation measures undertaken to establish rules for con-

flict management and interactions, the specific language and techniques developed, and the mea-

sures undertaken to ensure sustainability. The impact of this effort is that the three BASF sites

that have implemented this training have realized over $100M of savings over the last three years,

and this training is being spread across BASF sites in North America.

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How Cultures Develop

In 1985, John P. Kotter, the Konosuke Matsushita Professor of Leadership, Emeritus1

published the book Power and Influence - Beyond Formal Authority. Within this book, a chapter

entitled ‘The Leadership Challenge: Making Social Complexity Work for Us, Not Against Us,’

outlines his assertion that the primary critical question that all organizations must answer, either

informally or formally, is how to handle conflict. From this choice, the culture of the organization

is determined. Within the referenced text, Kotter summarizes this theory with the inputs,

decisions, and outputs summarized in the flow chart below.2

Figure 1. Conflict Management and Outcomes, figure 3-1 from Power and

Influence - Beyond Formal Authority.

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In this chart, the third box from states ‘Conflicts and Potential Conflicts’, and the two paths are

available. The path to the right states ‘Which if Handled Well, Can Lead to More…’ and the path

identifies organizational behaviors such as original thinking, creativity solutions to problems, and

innovative products and services. Further down that path, these organizational behaviors lead to

increased organizational competitiveness, greater adaptability, more responsiveness, and a more

exciting organizational life. This path eliminates unproductive and unnecessary interdependencies

in the organization.

On the other side of the chart, the path to the left states ‘Which if Not Managed Carefully, Can

Lead to More’, and the path identifies organizational behaviors such as bureaucratic infighting,

parochial politics, and destructive power struggles. Further down that path, these organizational

behaviors lead to reduced efficiency, increased costs, low innovation, and alienated employees.

This path becomes reinforcing and magnifying the unproductive interdependencies.

Formation of Tradition

This flow chart is similar to the reinforcing cycle present by Russell Roberson in Quality:

Tenets on Leadership. The cycles of the model start with the traditions which embody the culture

of the organization. From those traditions, the organization cultivates its collective wisdom

from its collective knowledge and experience. From this wisdom, strategy is developed to deal

with the challenges facing the organization. In order for the strategy to work, accountability for all

members of the organization must be maintained to insure execution. This accountability drives

the traditions for the future. 3

Traditions and culture represent the sum of the habits of the organizations. Quoting from

Charles Duhigg, in The Power of Habit, ‘Routines and truces represent a type of rough

organizational justice, and because of them, conflict within companies usually “follows largely

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predictable paths and stays within predictable bounds that are consistent with the ongoing

routine...’4

A Choice to be Made

Unless the leadership of an organization makes a conscious choice to instill the desired

behavior by exercising its positional and personal power bases, the organization will be adrift and

conflict is managed unintentionally. However, when the leadership chooses a proactive and

definite path, positive results can occur. The Kotter model indicates that the key decision to

determining the organizational health is how conflicts and potential conflicts are handled.

This is consistent with the wisdom to tradition model, which depends on the influx of wisdom

from either internal or external sources to improve the cultural health of the organization. In the

example by Duhigg, predictable interpersonal interactions define organizational behavior, and the

leadership of the organization must direct those interactions if they are to benefit the organization

as a whole, as opposed to the individuals with the greatest powers of persuasion.

In all three models, conflicts or potential conflicts must be engaged in a positive, inquisitive

manner to improve the organization. The key decision point is the method that the organization

defines the process and expectations well, and then communicate those expectations for conflict

management effectively.

Neurological Influences

To define what dealing with conflict should be, it is important to understand how the brain

responds to threats and conflicts from a neurological perspective. Neurologically, individuals are

wired with three distinct parts to our brains, and this road map has remained unchanged from an

evolutionary perspective. The Reptilian brain is associated with our automatic responses, reflexes

and survival and is mature at birth. The second part of our brain is the Limbic system, where our

emotions and emotional memories reside. This portion of our brains comes to full maturity at ages

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7 to 9 years old. The last portion of our brains is the neo-cortex, where the rational and logical

functions occur. This portion of the brain matures in the early 20’s. Within the Limbic system we

have 2 small glands, the Amygdala. All signals from the brain go through the thalamus through

the amygdala, and if the signal represents anything that matches a threat profile, the flight, fight, or

freeze response becomes engaged before a full assessment of the situation can occur.5 Daniel

Goleman describes this situation as an ‘amygdala hijack’ in his book Emotional Intelligence: Why

it Can Matter More Than IQ. 6

While this was useful when dealing with threats from the environment or animals, the

amygdala response can confuse threats to our personal or professional reputations with physical

harm, thereby engaging the flight, fight or freeze response. These responses are likely to create an

adverse response or increased resentment to the source of the threat, leading to unhealthy conflict

resolution methods. This leads to the path on the left side of the Kotter’s chart presented earlier in

this paper.

The other phenomenon that occurs is what Daniel Kahneman describes as the battle between

what he labels System 1 versus System 2 within our brains. ‘System 1 operates automatically and

quickly, with little or no effort and no sense of voluntary control. System 2 allocates attention to

the effortful mental activities that demand it, including complex computations.’ 7 This comes into

play in interpersonal interactions as System 1 is likely to create associations and causal

relationships that may, or may not, exist. This is comparable to judging a movie by watching just

a few frames and comparing to past experience.

Additionally, the left side of Kotter’s chart occurs when the lack of recognition in non-routine

events occurs. In the book The Invisible Gorilla, Chabris and Simons typify this lack of important

event recognition by the typical motorcycle accident, which is often the result when the

automobile drivers do not recognizing the threat posed by the motorcycle in traffic, even though

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the motorcycle is in plain sight. This is because motorcycles represent a small minority of

vehicular traffic, and in most drivers do not recognize motorcycle traffic on the road. Quoting

Chabris, ‘...drivers often fail to notice unexpected events, even ones that are important.’8 The

authors call this concept selective attention, another illustration of the battles between System 1

and System 2. This tendency also pushes the organizational behavior to the left side of Kotter’s

chart as the associations with individuals or situations are likely to limit the range of outcomes, as

unanticipated conflicts will not be dealt with appropriately.

The choice to counter those instinctive behaviors was presented by Daniel Goleman, who

created the term Emotional Intelligence in describing how the best leaders dealt with co-workers

and potential conflicts. These Emotional Intelligence skills are self-awareness, self-regulation,

motivation, empathy, and social skill. According to Goleman, social skill, the building of rapport

to influence others in desired direction, self-regulation, controlling impulsive behaviors, and

empathy, understanding other’s emotional makeup, are key to dealing with followers in a

constructive manner.9

Choices in Tension

While a leader must provide vision and drive to achieve the goals of the organization, they

must also deal with the facts of the situation at hand. This tension is captured by the Stockdale

Paradox, and also demonstrated by the perspective presented by Victor Frankl. Interactions must

be logical and deal with the world as it is, but with a sense of optimism. This choice, to be

creative and choose one’s attitude is represented by the right side of the flow chart created by

Kotter.

This is exemplified by the Stockdale paradox, named after United States Navy Admiral

Jim Stockdale. He was held captive and tortured for eight years during the Vietnam War. He

maintained his determination to return to his family and embraced that difficult experience. He

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had faith in his eventual return, but adapted to the harsh reality of his situation. The most

optimistic of his prison mates did not survive, as they did not deal with the realities of the

situation. 10 A parallel to the experience of Stockdale during World War II was Victor Frankl.

Frankl was an Austrian neurologist and psychologist who survived three Nazi concentration camps

in World War II. After his liberation from the concentration camps, Frankl summarized how some

of his prison mates survived. ‘Everything can be taken from a man but one thing: the last of

human freedoms - to choose one's attitude in any given set of circumstances, to choose one's own

way.’11 It was the choice of one’s attitude that allowed Frankl and Stockdale to survive their

experiences.

Following the examples from Stockdale and Frankl, a leader must be optimistic, but that

leader must follow the fifth characteristic of a quality leader presented by Roberson, which states

that ‘A quality leader must not make decisions on over-simplified information.’12 The full context

of the information and situation must be considered, and the information must be accurate, not

overly pessimistic or optimistic. As an example, Winston Churchill was one of the first leaders to

use statistical information as an integral part of his decisions making process by creating the

British Office of Central Statistics, and avoid his subordinates from providing him slanted data

and interpretation that would not accurately reflect the conditions of World War II.13

Frankl and Stockdale were leaders who embraced both optimism and reality, choosing the

path defined on the right side of the Kotter flow chart. They dealt with the conflicts around them

in a direct and positive manner, and provided leadership to those around them. Stockdale

provided leadership for his fellow prisoners and Frankl by providing leadership in the Nazi

concentration camps, despite incredible difficulties. Both leaders made the chose their own way

and create their futures, and in doing so, engaged in the conflicts and struggles in a positive way,

creating a positive environment necessary for effective leadership.

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Behaviors that work

In the study Leadership that Gets Results by Goleman, leadership behaviors and their

measured impact on climate were studied. The leadership behaviors that had the strongest positive

correlations were authoritative, with the theme being ‘come with me’, democratic, with theme

being ‘what do you think,’ affiliative, theme being ‘people come first,’ and coaching, with the

theme ‘try this.’14 These behaviors are dealing with interpersonal relationships, conflicts, and

potential conflicts in a positive manner.

The leadership behaviors that had the negative statistical correlations were pacesetting,

with the theme of ‘do as I do, now,’ and coercive, where the theme is ‘do what I tell you.’15 In

particular, pacesetting leaders tend to take over when things are not going according to plan, and

damage the organizational climate.16 Furthermore, the coercive style is described by Goleman as

creating ‘a reign of terror.’17 Both of these behaviors push the organizational behavior negatively

based upon the dealing with conflicts in a negative manner.

BASF’s Journey

Shortly after the economic crisis of 2008, BASF commissioned McKinsey & Company

Consultants to evaluate the cost optimization opportunities for BASF operating sites. This

acquisition of wisdom was a decision by BASF North American leadership based upon business

crisis, and acted by positional power through the use of legitimate authority. The study found that

the cost structures at the largest sites were excessive when compared to the medium and smaller

sites at BASF. This same study indicated that the technical skills at these facilities were strong,

the procedures and policies were robust, but there was a cultural problem at the larger sites.

In investigating the cultural problem at the larger sites, McKinsey identified six themes for

change emerged at BASF’s largest manufacturing sites at Freeport, Texas and Geismar, Louisiana.

First, communication of the site vision and linkage to employees was lacking. Second, site

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synergies were not being captured effectively as competition was overtaking cooperation. Next,

organizational silos were present, preventing cross business unit cooperation. The fourth change

theme that needed to be addressed was that calculated risk taking was not encouraged. Another

concern identified was that effective and supportive performance dialogs were not being done.

Last, capabilities of the organization were not being promoted and developed.18

Of those six themes, four of these themes dealt with the effectiveness of interpersonal

relationships and dealing with conflict in a positive manner. As a strategy, it was determined that

to tackle the issues associated with organizational silos, capturing site synergies, calculated risk

taking, the execution of supportive performance reviews involved shifting these interactions and

conflicts to a positive direction, all of these concerns involved creating a common language

around mindsets and behaviors, called change agent training.

2010 change agent training

To enact this strategy, BASF started training on mindsets and behaviors within the organi-

zation in 2010. The targeted changes were to breakdown organizational silos and the establishment

of common expectations for communication and interpersonal behaviors. The purposes of these

changes were to improve employee engagement and recognize cost efficiencies. The first phase of

implementation was accomplished through selecting and presenting 120 employees with 7 days of

rigorous training on self leadership and change management at the two largest sites US sites. In-

formal leaders were identified and approached to participate in this program. The initial partici-

pants were selected as they were recognized as informal, non-traditional leaders in their respective

areas. The managers that presented these participants with this opportunity used referential au-

thority to present this opportunity, as coercive power could have limited the perspective of the par-

ticipant, and started the mindsets and behaviors training in a negative perspective.19

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After the initial phase, the breadth of training was increased. The training was modified

and incorporated in the Operational Excellence effort within BASF North America, to further cre-

ate a habit and tradition in the new practices around mindsets and behaviors effort. The training

and facilitation skills for this material were brought in house, and now BASF facilitators are train-

ing additional BASF personnel throughout North America, not just the two largest manufacturing

sites. BASF labor cost and consulting fees of over $2M were spent on the consultants to imple-

ment this effort. As a result, a common language of self leadership has become institutionalized.

Active change agents have contributed to over $100M in cost savings implemented from

2010 to 2012.20 Even with this support; more than 50% of the trained change agents did not ac-

tively contribute. To date, BASF remains committed to this mindset and behavior effort. To en-

hance accountability, many of the leaders who embraced this effort were presented greater oppor-

tunities in other parts of the organization, and part of those responsibilities were to model and in-

fluence the new expectations around mindsets and behaviors. Without broad support to embolden

the individuals involved, this effort could have failed quickly.

Techniques

One of the major topics of this training was the recognition and control of the amygdala

hijack described earlier. A common language was distributed from this training that describes

what was termed personal accountability. The chart below is used to develop and describe the

impacts of the amygdala hijack and the need to control and resist the temptation to allow the fight,

flight, freeze reaction from being engaged.

To develop the common language, participants are asked what feelings are associated with

dysfunctional engagements with others. The participants were asked not to include physical threat

experiences. The behaviors are described as below the line, and undesirable. The actions typ-

ically identified are yelling, inappropriate language, accusations, and the other behaviors listed as

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below the line at the far right of the chart. The feelings are anger, rage, betrayed and other nega-

tive emotions. The situations that engage these feelings and actions are associated with reactive

behaviors in a survival mode. There is fear, victimization and blame. Judgment and mistrust are

present, as the fight, flight, freeze response is engaged. All of these behaviors and conditions are

represented by the left side of the Kotter chart, and create more distrust and negative organiza-

tional behaviors when members of the organization engage in these undesirable, unproductive

ways.

To compare a positive path, participants are later asked what feelings are associated with

functional engagements with others. These behaviors are described as above the line, and de-

sirable. The some of the actions identified are dedicated, supported, and appreciated, and are iden-

tified as above the line at the far right of the chart. The feelings described are rewarding, power-

ful, enthusiastic and other positive emotions. The situations that engage these feelings and ac-

tions are associated with creative behaviors in a thriving mode. There is courage, mastery, and

ownership. Acceptance and trust are present, as the fight, flight, freeze response is not engaged,

and creativity is embraced. All of these behaviors and conditions are represented by the right side

of the Kotter chart, and create more trust and positive organizational behaviors when members of

the organization engage in these desirable, productive ways. 20

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Figure 2. Diagram of Above and Below the Line Behaviors.

Figure 3. Amygdala Hijack Schematic.

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To transition from below the line to above the line behaviors, the habit of asking oneself

three key questions is to occur – what other choice can I make, what can I learn from this, and why

have I created this. By developing this habit, the neo-cortex is engaged, and the amygdala hijack

response is deferred, delayed, and reduced. This habit is called pushing the pause button.22 The

idea is to pause seven to ten seconds so that the neo-cortex engages and the situation is fully as -

sessed. Techniques that can be used to push the pause button are to take deep breaths, temporarily

remove oneself from the situation by walking, and drafting an e-mail and reading it again before

distribution.

Another technique developed, is the use of a safe word to identify when behaviors are

trending below the line. The idea is to prevent another person from saying or doing something

that is undesirable. At the Freeport, Texas plant, the safe word to prevent below the line behaviors

is ‘squirrel.’ At the Geismar, Louisiana plant, the safe word is ‘Yoda.’ At the McIntosh, Alabama

plant, the safe phrase is ‘happy, happy, happy’ from the Duck Dynasty television program. By us-

ing a safe word, the recipient takes a moment and the neo-cortex becomes engaged, and the behav-

iors from that point are evaluated and conscious, as opposed to reactive. This allows the behaviors

to proceed along in a desirable manner on the Kotter flow chart.

Additionally, these methods allow a more accurate assessment of the data being presented

to a leader. This also shifts the tension between Kahneman’s System 1 and System 2. By resist-

ing the temptation to jumping to conclusions, and by being curious and intentional, we engage

thoughtfully in our situations and can chose the course of action. Note that this does not mean tak-

ing an overly optimistic approach. It means following the previously referenced leadership char-

acteristic and dealing with the facts of the situation, not on an overly simplified basis, and filtering

facts based upon past experience and threats. Instead of seeing problems, this mindset is search-

ing for possibilities.

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To engage the neo-cortex in difficult situations is the embodiment of the Stockdale Para-

dox. To be firmly grounded in reality, understand the situation at hand without going below the

line and engaging in blame and victimization is only half of the solution. To create an optimistic

future without ignoring reality and finding opportunities for self-mastery allows one, as Frankl de-

scribed, ‘to choose one’s own way.’ This pattern keeps the desired behaviors on the right side of

the Kotter chart going, and creates a more enjoyable and productive work environment.

Emotional Intelligence Applications

All of these techniques are designed to increase self-regulation, empathy, and self-

awareness. By pausing and allowing the neo-cortex to engage, the emotional intelligence skill of

self-regulation is enhanced, as actions are more purposeful. By asking the three questions about

an individual’s role in conflict, empathy and self-awareness are developed, as one’s role in the

situation is assessed, and other options are identified for current and future application. By

pursuing and developing these skills, this does not eliminate conflicts and potential conflicts, but

rather develops the skills to deal with these situations in a positive manner.

Establishing Tradition

By proceeding down this path, BASF has set forth on the wisdom to tradition model.

New wisdom was acquired from McKinsey and Co-Creation Partners. The strategy to disseminate

and implement new systems was developed, and actions to implement that strategy were

undertaken. Accountability systems have been developed, with those embracing the change in

wisdom rewarded. This accountability is driving the future tradition. However, the concern

remains that once the key sponsors of this effort move in the organization, will this mindset and

behavior effort continue?

This education effort has continued for three years, with customized training occurring at

all levels of the organization, and over 500 BASF personnel trained on this mindset and behavior

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language. To ensure the sustainability of this effort, an influence model was developed. The four

parts of the influence model are role modeling, fostering conviction and understanding, developing

talent and skills, and reinforcing with formal mechanisms.23

Role modeling was to allow the rest of the company to see that managers, leaders, and

trained employees to allow others to see new behaviors. This meant to show respect for all

employees, and it was the responsibility of trained change agents to speak up and share new ideas.

To foster understanding, trained change agents were to be transparent in their decision making,

while being courteous and respectful. To develop talent and skills, the principles of emotional

intelligence were taught throughout the organization, and applied to lean manufacturing principles

to facilitate difficult, but structured conversations. Formal mechanism reinforcement was

accomplished through formal and informal reward structures and involved the human resource

organization. Informal reward systems included a ‘thank you’ database that allowed an employee

to acknowledge the effort from a co-worker, with a copy being sent to the recipient’s supervisor.

Formal reward structures included promotions for key participants and enhanced raises for key

contributors.24 This influence model is consistent with the wisdom to tradition model, particularly

the accountability phase, where formal and informal rewards for performance are recognized.

Reflection

This was one of the most significant leadership efforts in which I have participated. By

developing this common language of leadership interactions and expectations, BASF helped break

down the silos by asking employees to look at each other as beyond just a box on the organization

chart, and encouraged perspective taking. It also created a framework and expectation to engage

other employees in win-win approaches, not win-lose transactions, and help create and

environment were cooperation was encouraged. In my experience, my performance reviews

become less formal and involved more coaching, including specific development plans.

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This effort has allowed me to enjoy my work more fully on a daily basis. I look forward to

my work as I view the challenges not as frustrations, but opportunities to implement or share my

knowledge and help those around me. I have chosen to enjoy every day of my life, because I have

made the choices to be where I am. I acknowledge that I have gifts that I need to share, first for

my fulfillment, then for the fulfillment of others and the organizational goals. I embrace the

duality of the Stockdale paradox, that though I am not in full control of my surroundings, I can

choose my attitude and control my thoughts, feelings and emotions.

Beyond the initial training on mindsets and behaviors, I had the opportunity to become a

facilitator and develop a greater depth and understanding of the techniques and language discussed

earlier. I feel compelled to communicate this material, and share this material among my co-

workers on an ongoing basis. I have used and applied much of this information to my home life,

and helped my teenage daughter engage the world in a more positive manner, and gave her the

tools to deal with the world from the position of creativity. My wife and I use the technique of a

safe word (lemon drop), and my other children have learned to stop and think about their reactions

before acting, which is tough to do for 8 years old twins. I have also engaged my family in a more

positive manner, and learning to understand the drivers behind the behaviors as opposed to just

reacting to the behaviors.

As I prepared this paper, what struck me is how closely this effort did follow the wisdom

to tradition model. The concept of becoming more curious about one’s surroundings has a

tendency to increase empathy and encourage perspective taking and behavioral flexibility. This is

also the first step in creating transformational leadership, as this increased curiosity develops

idealized influence, intellectual stimulation, individualized consideration, and inspirational

motivation by maintaining self-regulation and self-management. The research and effort on this

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document have reinforced to me how important it is for conflict management to be positive and

met directly, in order to create positive results in any organization.

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Endnotes1 http://www.hbs.edu/faculty/Pages/profile.aspx?facId=6495, retrieved August 5, 2013

2 John P. Kotter, Power and Influence: Beyond Formal Authority (New York, NY: The

Free Press, 1985), p. 36.

3 Russell Roberson, Quality: Tenets on Leadership, pp. 14-15.

4 Charles Duhigg, The Power of Habit (New York, NY: Random House), p. 163.

5 Change Catalyst Program - Facilitator Development, presented by Co-Creation Partners to

BASF, December 6 - 8, 2011.

6en.wikipedia.org/wiki/amygdalahijack, retrieved August 9, 2013.

7Daniel Kahneman, Thinking, Fast and Slow (New York, NY: Farrar, Straus and Giroux,

2012), pp. 20-21.

8 Christopher Chabris and Daniel Simons, The Invisible Gorilla: How our Intuitions Deceive

Us (New York, NY: Fine Communications, 2010), p. 15.

9 HBR 10 Must Reads, (Harvard Business Review Paperback Series, 2011) p. 5.

10Jim Collins, “Level 5 Leadership : The Triumph of Humility and Fierce Resolve.” Harvard Business Review, July – August 2005, p. 141.

11http://www.brainyquote.com/quotes/authors/v/

viktor_e_frankl.html#PhXGgw2W42hUYOVp.99 , retrieved August 11, 2013.

12 Roberson, p. 115.

13 http://www.winston-churchill-leadership.com/trait-decisive.html, retrieved August 11, 2013

14Daniel Goleman, “Leadership that Gets Results.” Harvard Business Review, March –April

2000, pp. 82-83.

15Goleman, pp. 82-83.

16Goleman, p. 86.

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Endnotes (continued)

17Goleman, p. 82.

18 Change Agents Forum 1, presented to BASF, June-July 1, 2010

19 Cocreationpartners.com/global.php , retrieved August 12, 2013.

20 Cocreationpartners.com/global.php , retrieved August 12, 2013.

21 Change Catalyst Program - Facilitator Development, presented to BASF, December 6 - 8,

2011.

22 Change Catalyst Program - Facilitator Development Change, presented to BASF,

December 6 - 8, 2011.

23 Change Agents Forum 3, presented to BASF, September 13-14, 2010.

24 Change Agents Forum 3, presented to BASF, September 13-14, 2010.

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