I wrote about three types of organizational change in my book, Re-create Your Life, many years ago. Let me draw from several passages in that book because the business applications of this distinction should make the personal applications I wrote about last week even clearer.

Organizations, as well as individuals, require all three types of change to be successful.

First order change in an organization consists of improving on what already is. It usually consists of finding ways to do things a little better, faster or easier. It results in incremental improvements consistent with the existing culture of the organization (which is a function of the organization’s beliefs).  You can make a lot of money doing this well.

Second order change consists of creating something totally new. It is characterized by behavior change that requires a new culture.  In other words, the desired behavior is inconsistent with the existing set of beliefs and requires a new set in order to open up the possibility for the desired new behaviors.

An example of this would be a company where certain employees see themselves as “Service Technicians,” for whom fixing and installing equipment is their “real” job and for whom taking care of customers is an imposition. Giving such employees information about the importance of taking care of customers would be useless.  Such information is inconsistent with their existing beliefs about themselves.  They would need to change those beliefs so that they saw themselves as “Customer Satisfiers,” at which point taking care of customers would be natural and normal behavior.

Whereas first order change is incremental and consists of improving what already is, second order change is more fundamental and consists of creating a new set of beliefs that make possible behavior that had been impossible before.

 

One way to distinguish between a second and third order change organization is that the former creates a new and better culture in which to operate; the latter creates a culture that recognizes that there is no ”right” culture for all times.

A third order organization is always operating from questions rather than answers, such as, What makes sense today?  It is an organization that is willing to question and change its beliefs and culture at all times.

As Eric Hoffer, the San Francisco longshoremen philosopher, once stated: “In a time of drastic change

[such as the world is currently experiencing], it is the learners who inherit the future.  The learned find themselves equipped to live in a world that no longer remains.” (Emphasis added.)

Continuous improvement is, by definition, a process, not merely a state change.  Second order change substitutes one state for a better one.  An organization committed to continuous improvement requires third order change, which is a process, not merely a state change.

A third order organization would welcome change because change would be its biggest competitive advantage.  First and second order change organizations initially wouldn’t even see changes in the environment as they occurred.  Eventually they would acknowledge the environmental changes and try to deal with them.  They’d start with some first order change.  Eventually some of them might make second order changes.  By then what would have happened to the environment?  It would have changed even more.  Such organizations would never be dealing with the world as it is, moment by moment.  A third order organization would.

No limitations

When I lead workshops to help an organization create itself as a “third order” organization—in other words, an organization that creates third order change on a regular basis—I frequently ask participants: What limitations would a third order organization have?  The answer is always the same: “There wouldn’t be any limitations.”

This is exactly the same experience that individuals have when they distinguish themselves as the “creator” and not merely a “creation.”

 

Examples of second and third order organizations

It is relatively easy to identify a second order change organization. It usually is doing something totally different from what everyone else in its industry is doing.  Often it is something that everyone else says is impossible.

A good example of such a company is Southwest Airlines, founded by Herb Kelleher.  At a time when everyone in the airline business knew that you couldn’t possibly fly from point to point profitably and that the only way to run an airline was to fly in and out of major “hubs,” Kelleher decided that the conventional wisdom was wrong and created what has become the most profitable and successful airline in the U.S.

He challenged the existing industry beliefs and created a new set of beliefs about running an airline.

It is much harder to identify a third order change organization because it must be watched over time to see if one major challenge to conventional wisdom is followed by another.  In other words, because third order change consists of repeating second order change over and over as the environment demands, you need to observe a company over time to see if it makes fundamental change repeatedly.

One such company appears to be Amazon.  Jeff Bezos started by challenging the notion of retail as requiring physical locations and decided to sell retail over the Internet.  He started with offering a larger selection of books than even the super-sized bookstores with physical locations, such as Barnes and Noble and Border’s, at a substantial discount.

But his next second order change was even bigger than adding a lot more products, it was deciding that if a lot of people were interested in buying digital books, he would manufacture the Kindle, a digital book reader.  Whether he succeeds in the long run or whether the iPad or similar products defeat him is beside the point.  He and Amazon have observed the environment and continued to change as new opportunities arose.  They have created second order change at least twice, which probably makes it a third order change organization.

The relevance of change in business to personal life

How is the distinction between three types of business organizations relevant to personal growth and transformation?  I think the distinction between a second and third order organization is directly applicable to individuals: It is important to not only get rid of existing fears and barriers to action—so as to become a happier, more successful individual—but also to be constantly willing to grow, to learn, to change, to expand as your environment and experience require.

An individual who knows deep within that he is not his creation at any given moment, but the creator of any creation—in other words, someone who does not identify with his creation—would be willing to give up the creation he thinks he is at any given moment when he realizes it doesn’t serve him and create another one.

Second order change is reaching a better destination.  There is nothing at all wrong with that.  Run, don’t walk, to any opportunity to experience second order change.

A third order organization has a culture that holds there is no right way of operating at all times and under all circumstances, and is always open to change.

A third order individual distinguishes himself as the creator who creates his experience of life, minute by minute, always knowing that he is the creator of his creation, not any specific creation.

Please share below any comments you have on first, second, and third order change and my ideas on transformation in business.

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If you haven’t yet eliminated at least one of your limiting self-esteem beliefs using the Lefkoe Belief Process, go to http://www.recreateyourlife.com/free where you can eliminate one limiting belief free.

To purchase a DVD program that I guarantee to help you significantly improve your confidence and also eliminate the major day-to-day problems that most people face, check out http://recreateyourlife.com/naturalconfidence.

copyright © 2010 Morty Lefkoe

21 Comments

  1. Morty Lefkoe December 1, 2010 at 4:49 pm - Reply

    Hi Joy,

    Without a lot more information, I have no idea how much time or money would be involved.

    How many administrators? How many teachers? How many schools?

    I normally get $5000 a day plus all out of pocket expenses. Without knowing how many people and the current situation I’d have a hard time making a guess how long it would take.

    Also, if there was some real interest and excitement at the top I’d be willing to work for less in order to have the opportunity to transform a school district.

    Is there a top administrator who would really to open to a real transformation of education in their district?

    Thanks so much for your commitment to transform education.

    Love, Morty

  2. Joy Croel December 1, 2010 at 4:14 pm - Reply

    Morty I think I will start working on getting you to come and do a workshop for the teachers and administrators in our district. Send me cost information. Budgets are put together by March 1st so send information as soon as possible please.
    yours in the pursuit of excellence,
    Joy

  3. Joy Croel December 1, 2010 at 8:00 am - Reply

    Morty, do you think it is possible to change a school, or school system. I work with 5-10th grade students and will be sharing your information with them but I also need to get parents to change and I will use Shellys system for that but what about the school system it self. the school system in my area is horrible. (17 falure factories have been identified). I want to do something about this. Is it possible?

    • Morty Lefkoe December 1, 2010 at 1:55 pm - Reply

      Hi Joy,

      I’ve been thinking about how to transform the school system since my first child was born 28 years ago. Most public schools and many private schools are toxic environments for children.

      If I could lead a workshop for the administration and teachers of a school or a school district, I think I could make a difference, but unfortunately I have no advice I can give you.

      Just talk to individual teachers and hopefully some of them will listen.

      Love, Morty

  4. Sean October 29, 2010 at 7:07 am - Reply

    Morty,
    I find your ideas fascinating and powerful. I work in government where change is extremely difficult. In the US it often seems popular to berate our government, but without good government, our economic and judicial systems would collapse (see Russia). I think there’s a real risk to our long-term economic health by adopting beliefs that our government can’t do anything right. So how would this sort of third-order capability manifest iteslf in a government agency? could it?

    • Jackie Mackay October 29, 2010 at 6:10 pm - Reply

      Sean
      I have always held a belief (inculcated by my idealist parents) that the police are guardians of the people’s liberty. This has resulted in me having no resentment or fear underlying my actions and hence no problems or dramas even though I have been in trouble through naughty driving sometimes. Even very fierce looking US police have been as respectful to me (in the process of setting me right) as I have been to them.

      Regarding government – people want an organised crew of people to get group matters handled while they get on with their own lives – that’s why they keep on voting. However the respect goes when individuals within the government act for their own benefit – forgetting the good of the whole. However complicated it seems it is actually very simple. When governments (and individuals within them) obey the Law (I mean THE law rather than spurious rules & regulations often put in place as revenue streams) and treat others with respect, then they are much loved even when in political opposition. It’s a fact.

      I agree that the press (ie public opinion) make out that nothing’s right – good news does not sell papers – and cynicism is rife especially now. But what is cynicism? Beliefs of course!

      AS Morty has pioneered, it is irrefutable that spurious and harmful beliefs can be easily dealt with. Group beliefs can also be changed very easily and very fast though it is a sad fact that advertising and PR are a science used to make profits mainly.

      However I believe that Morty’s work is already making a difference and that there are many good decent honest loving people and only a few heartless corrupt (brutish) self serving ones. And this applies to individuals both inside governments as well as to the governed.

      That change is difficult is, thank goodness, a belief that can be put to rest….. can’t it Morty ? :-). I can attest to this.

      A government agency is individual people remember.
      Thanks for your post Sean.

      love, Jackie

    • Morty Lefkoe October 31, 2010 at 1:41 pm - Reply

      Hi Sean,

      Theoretically it would be possible for a government agency to operate as a third order organization. There are very few business organizations operating that way to my knowledge at this point.

      Love, Morty

  5. Mike October 24, 2010 at 11:00 am - Reply

    A simple and effective message. thank you

  6. Jackie Mackay October 24, 2010 at 2:36 am - Reply

    I love what you way Morty and how you say it –
    I found it very settling or grounding.

    I also resonate with Lauren’s response. ‘I am my own program’ too.
    I want to do more and propose to buy the confidence course with the bonuses because, for reasons I understand (but that makes no difference), I am very hung up about money which is holding me up. In the past I have ‘overcome’ it and launched ventures which were taken away from me when they got going… because I am not particularly motivated by money. This time it’s going to be different.

    Jackie

  7. Jason Linder October 20, 2010 at 10:15 pm - Reply

    I love it.

  8. Lauren October 20, 2010 at 2:20 pm - Reply

    Morty,
    I operated in the first order change for most of my life, though I always wanted to learn more and felt that there was something more. The first time I realized that there was something more concerned my father. He was really into the Bible and we followed the World Wide Church of God teachings. Then, that organization started breaking up and Dad began looking elsewhere for guidance. He sent away for literature concerning the Bible and eventually he had a “breakthrough” and announced to our family that it was acceptance of Jesus Christ and not sins and works that counted.
    At that point(I was eighteen and a senior in high school) I questioned the whole Bible concept and began looking in other places for answers. I discovered the Zechariah Sitchin books, then had my own breakthrough.
    When I discovered and used your belief eliminator this year, I felt as if something very important was taking place. And this became my second order change. Nothing missing because everything I need is right here inside me. And the third order….I am living in the moment each day; it’s as if I am “re-creating” myself in every moment. I understand people better because I am not so obssessed with understanding myself. No more looking for the way through other’s step-by-step programs; I am my own program.
    Is a love of learning and having an open heart and mind a pre-requisite for moving through the changes? I’ve always seen myself as a learner.
    Love and Light to all creators,
    Lauren

    • Morty Lefkoe October 23, 2010 at 4:55 pm - Reply

      Hi Lauren,

      Yes, you do need to be open to change and be willing to give up any belief that is unproductive.

      Love, Morty

  9. Dima October 20, 2010 at 2:16 pm - Reply

    Morty,
    I read your book and gone through the course and they are excellent!!! I am still trying to understand whether one is supposed to create new beliefs in place of old ones or just get rid of beliefs and just BE? In some places you say one can’t really create new beliefs, but in this quote you say to create new beliefs. Can you please clarify?

    “Whereas first order change is incremental and consists of improving what already is, second order change is more fundamental and consists of creating a new set of beliefs that make possible behavior that had been impossible before.”
    Thank you

    • Morty Lefkoe October 23, 2010 at 4:53 pm - Reply

      Hi Dima,

      Individuals usually do not need to create new beliefs.

      Organizations do need to create new beliefs, as long as they realize that they are not the truth, but only a truth.

      Love, Morty

      • Dima October 26, 2010 at 9:23 am - Reply

        Thank you Morty. Great answer. I think the key is to know that it is only a truth whether it is an organization or an individual who needs a new belief to overcorrect or overcome.

  10. Camille Cash October 20, 2010 at 1:26 pm - Reply

    Fantastic concepts! Especially the statement: “someone who does not identify with his creation—would be willing to give up the creation he thinks he is at any given moment when he realizes it doesn’t serve him and create another one.” This is very powerful to understand. I hear all the time these days that the law of attraction and manifestation principles require us to “detach from a specific outcome” to allow our creation. Hasn’t exactly made sense to me before – how does one do that without being apathetic about everything they do? Highlights for me the belief I hold about what it means to be “detached from the outcome”. Your statement doesn’t say we shouldn’t care about our creations, or we shouldn’t be committed and determined to create them, or that we shouldn’t really enjoy creating them, and experiencing what we’ve created. But my belief has included those conditions. I understand this in a whole new way now. Thanks for showing me the belief I need to change to allow my own creatorship!

    • Morty Lefkoe October 23, 2010 at 4:52 pm - Reply

      Hi Camille,

      Thanks for joining the conversation.

      I’m glad my post was useful.

      Love, Morty

  11. Lea Sedan October 20, 2010 at 6:22 am - Reply

    Hey Morty Lefkoe.
    I want thethird type of the change .
    Ithink that the better way is to be the cause and not the result of the circumstances of one’s life.

  12. sam October 20, 2010 at 2:58 am - Reply

    One potential problem about running a third level company:
    Won’t there be the risk to be too distracted by looking for change, or losing a lot of time and energy trying to adapt to superficial changes in the environment?

    • Morty Lefkoe October 23, 2010 at 4:50 pm - Reply

      Sam,

      Organizations don’t need to look for change. It shows itself in ways that are pretty easy to notice.

      And although it is possible to mistake superficial changes for fundamental changes, that mistake is better than ignoring all changes.

      Thanks for commenting.
      Love, Morty

      • sam October 24, 2010 at 4:02 am - Reply

        Yeah, the key here probably is: don’t search for change. You just can’t afford to ignore it.
        Thanks.

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