The Innovator’s Tale of the Phoenix and Dragon

(Illustration by Aldilla Laras)

Among the challenges social sector leaders face today, three areas stand out as particularly difficult to navigate: the sheer enormity of social and environmental problems, the volatility and unpredictability of the contexts in which they work, and the difficulty of managing workplace complexity. In our work leading and advising social purpose organizations over the past few decades, we’ve seen leaders working on a wide range of issues in different regions of the world struggle against these forces.

First, we know that no single entity can substantially move the needle on issues like poverty, climate change, income disparity, and racial inequality, even if their geographical scopes are relatively narrow. And while collective impact and systems change efforts are promising, they are difficult to execute. 

Second, the world is rapidly changing across many dimensions. In recent years, acronyms like VUCA (volatile, unpredictable, complex, and ambiguous) and BANI (brittle, anxious, nonlinear, and incomprehensible) have emerged to help us describe the layers of transformation happening around us. In the social innovation field, this translates to things like economic recessions drying up funding for nonprofits just as bodies of water evaporate in pockets of Africa and Asia. Pandemics completely shake up the implementation processes of on-the-ground service providers. Models that worked last year often don’t work the next. The hurdles and stakes are high for social purpose organizations tasked with achieving both social impact and financial sustainability. 

Finally, leaders aren’t equipped to navigate this compounding level of complexity. Over the last two decades, the research institution Lectica, a nonprofit based in Massachusetts, has been developing evidence-based learning tools grounded in cognitive developmental theory. Its research, including a study of several hundred employees in a large federal agency to understand how leaders make decisions under VUCA conditions, consistently shows a significant gap between the complexity of the workplace and the leadership capacity to manage that complexity.

It’s common for organizations to have a gap between the complexity of the workplace and the actual capacity of hired employees. (Image adapted from Developmental Testing Service, LLC)

Many management tools, such as logic models and business model canvasses that help communicate ideas in visual ways, oversimplify the realities surrounding nonprofits and social businesses. At best, they cut down the noise and narrow organizations’ focus so that they can survive. At worst, they create myopia both in time and scale. To make progress against these formidable challenges, nonprofits and social businesses need to think about, analyze, and manage their work in a different way.

A New Exploratory Approach

As an alternative pathway, we propose an approach that can help social innovators step out of a purely problem-fixing mode (what we call the “dragon” mode) and engage in exploration, learning, and value creation (what we call the “phoenix” mode). While the dragon and phoenix figures have different meanings in different cultural contexts, they are occasionally portrayed as a pair in the Sino-Japanese traditions to represent a yin-yang balance. This representation of balance between contrasting modes of thinking and acting can often help organizations move beyond the often-limiting frameworks described above.

The following table contrasts the two modes by looking at the why, how, what, and who of organizational management.

 

The dragon mode is highly effective at problem-solving and delivering results when the parameters of the work are well-defined and resources are available. The phoenix mode empowers organizations to rediscover their values and strategic direction when their work becomes overly complicated. This is because it accepts and embraces complexity, rather than trying to control it. The phoenix’s exploratory and agile nature shares similarities with approaches such as Otto Scharmer’s Theory U, lean experimentation, and the emergence lens in non-linear evaluations. It’s a humbler outlook on social change that comes to terms with the overwhelmingly challenging context in which social innovators operate and the limitations of what they can achieve. 

The phoenix mode helps social innovators bridge three important gaps that are common to dragon-heavy organizations: the complexity, integrity, and wholeness gaps. The complexity gap, discussed above, describes the mismatch between workplace complexity and capacity. The integrity gap derives from inconsistencies between what organizations say and do—whether leaders and managers practice what they preach. The wholeness gap refers to the limitations of organizations to recognize and appreciate the full value of employees and team members.

Here is a look at the differences between the dragon and phoenix modes in more detail, with case studies, and how leaders can find a balance between the two.

Reframing the Why

In dragon mode, an organization must clearly identify a social problem and its root causes, and then demonstrate how an innovative solution can address them. Succinctly communicating the organization’s laser focus becomes critical, and a focus on results and performance fuels the organization to achieve this specific mission. 

But while this approach works well in certain settings, some social innovators are reframing their reasons for existence by leaning into their inquisitive, exploratory side. This transition from dragon to hybrid mode often occurs some years after an organization launches, at a time when leaders reflect on major challenges and aim to enter a new phase that builds on initial successes. 

In 2010, the Indonesia-based social enterprise Kopernik set out to deliver innovative technologies like solar lights, water filters, and clean cookstoves to some of the most remote corners of the developing world. After demonstrating robust impact and gaining the support of major funders like USAID and JP Morgan Foundation to fuel expansion, however, it realized the enormous challenges of scaling delivery and reflected on its core strengths. The complexity gap loomed large, especially in low-resource settings with limited market and infrastructure. 

This reflective process resulted in a newfound, more abstract mission. Rather than “serve the last mile,” it aimed to “find what works in poverty reduction.” Instead of focusing on scaling innovation (downstream work), the organization realized its unique strengths lay in generating innovation (upstream work), and thus positioned itself as a research and development lab for social impact. Last year, Kopernik launched an online “solutions catalog” to openly share the results of experiments (including positive, negative, and inconclusive findings) designed to develop solutions to unaddressed challenges. 

Overhauling the How and What

Stepping out of dragon mode entails making significant changes to an organization’s inner workings. This involves extensive conversations around how the organization manages its work, and prioritizes its relationships and partnerships. At times when it makes sense to shift to the phoenix mode of experimentation and exploration, leaders must keep the teams agile and flexible, and encourage the sharing of lessons instead of micro-managing processes. 

Founded in 1993, the Japan-based social enterprise accelerator Entrepreneurial Training for Innovative Communities (ETIC) has mentored more than 1,600 social innovators and trained more than 10,000 students and professionals. After nearly two decades of trailblazing work, however, its team started to struggle with an integrity gap between the entrepreneurial spirit ETIC was fostering and a lack of entrepreneurial spirit and freedom in its own processes.

The timing of this coincided with the publication of the seminal book Reinventing Organizations by Frederic Laloux and the emergence of worker self-management as an organizational theory. To incorporate elements of higher consciousness—referred to as “teal” by Laloux—into ETIC, Founder and President Haruo Miyagi and a group of employees encouraged staff to reflect on and formally discuss the book’s concepts. Rather than dramatically dismantling the hierarchical structure, they aimed to bring change from within in an organic way. 

In 2021, Miyagi decided to step down to complete the organizational transformation. Before and after his resignation, ETIC introduced a series of major reforms to its strategy, management, and decision-making processes, intending to minimize the integrity gap and maximize the evolutionary design of the organization. While the organization doesn’t claim to have cracked the secret code of self-management, it has been running effectively since the process began—with some intermittent hurdles—and continues to constructively evolve.

Opening Up the Who

Stepping out of the dragon approach also involves embracing the wholeness of every organizational member. Traditional management practices expect workers to operate in the most efficient, emotion-free way possible within fixed job descriptions. Being “professional” often means brushing aside everything unrelated to the workplace—things that make us human, including our weaknesses and insecurities. We call this worker-reductionist view the wholeness gap—the third and final gap that the phoenix mode helps to overcome. 

While weaknesses and insecurities may impede worker productivity in the short term, acknowledging and accepting them helps build employee job satisfaction, engagement, and potential over the longer term. Among other things, it can encourage workers to take risks and even fail—an important recipe for innovation. Indeed, the famous Project Aristotle study by Google found that psychological safety, where individuals feel they can show their vulnerabilities, was an important component of successful teams. A sense of safety and trust is critical to organizational evolution, in part because it helps bridge the complexity and integrity gaps discussed above. In practical terms, this means encouraging leaders and managers to bring their whole selves to the workplace by inviting them to share about their family and hobbies, and spending a few minutes before and after meetings genuinely and attentively asking people how they are doing. These relationship fundamentals are often missing in workplaces, especially in remote work environments.

Addressing the wholeness gap can have other organizational benefits as well. Many workers in the current labor market juggle multiple jobs and projects, and the reductionist approach fails to leverage the networks and partnerships that workers themselves create through their colorful careers. Embracing team members’ participation in activities and networks outside the workplace can lead to new audiences and business opportunities. 

Finding the Balance

The intent of juxtaposing the dragon and phoenix is not to portray the former as bad and the latter as better. Rather, occasionally switching from dragon to phoenix mode can help organizations gain strategic perspectives and overcome major management gaps, and organizations should work to balance the two. Each side complements the other to create a coherent, integrated whole.  

One specific way social sector leaders can begin to embrace complexity and develop new perspectives is to start with themselves. As Jonathan Raymond of the Stuart Foundation put it, “There’s no systems change without organizational change and no organizational change without individual change.” Systems coaching, mindfulness, and resources from Lectica, the Long Now Foundation, and the Work that Reconnects offer different ways of understanding the nature of human behavior. A common thread in these perspective-expanding training approaches is the understanding that many factors and contexts drive human behavior. People are complex animals, often irrational and emotional, hence the need to accept and engage with them across many dimensions.

Just as going to the gym builds our muscles and makes us more flexible, leadership training can build our capacity to deal with complexity. Training based on the Lectica model, for example, helped Keita Yamamoto, one of the co-authors of this piece, begin to see more solutions to complex situations by understanding different dimensions of relationships and other forces at play. One result was that during his work on a project in rural Japan, where the departure of an influential leader had undermined the spirit and momentum of the team, he suggested that multiple people share leadership responsibilities, rather than replace the leadership vacuum with a single successor.

Another concrete way to move forward is to create roles and functions that push the organization beyond its dragon comfort zones. Archetypical phoenix leadership positions, such as a chief learning officer to help make sense of new insights and a chief teaming officer to stay agile and collaborative, can be assigned internally or designed as external functions. Alternately, they can be something in between, in the form of perspective-stretching trustees or advisors.

As an example, Earth Company, an organization founded by Tomohiro Hamakawa, the other co-author of this piece, originally split management responsibilities between him, his co-founder and wife, and other directors. In 2022, Hamakawa became a chief exploration officer with limited management responsibilities. One of the immediate effects of this shift was that he established a healthy distance from daily activities, enabling him to develop and pursue new, out-of-the-box ideas that helped the organization evolve.

In conclusion, social innovators face formidable challenges in their work, compounded by the increasingly volatile and complex contexts of today’s world. While the dragon approach can certainly help address these challenges, it isn’t always sufficient and can eventually lead to burnout. It’s important to find a balance, and as the saying goes, when the fire burns, the phoenix flies.

Read more stories by Tomohiro Hamakawa & Keita Yamamoto.