The Fifth Discipline

The Fifth Discipline

In the autumn of 1973, a young Shell planning analyst named Pierre Wack sat in a quiet office in London and tried to convince his colleagues that the world was about to change in a way no one was ready for. He had been running scenarios -- careful, story-based projections of alternative futures -- since the late 1960s, and what he kept seeing disturbed him. The global oil system was fragile. Arab nations controlled the supply. Western governments had built no serious reserves. The price mechanisms were rigid. He could construct a future in which a single political event would break all of it at once.

In October 1973, the Arab members of OPEC imposed an oil embargo on nations that had supported Israel during the Yom Kippur War. Oil prices quadrupled in weeks. Every major oil company in the world scrambled, cutting budgets, abandoning projects, repricing assumptions built over decades. Every major oil company except one: Royal Dutch Shell. Shell had lived through Pierre Wack's scenarios in their heads. They had already argued about what they would do. They had already confronted the uncomfortable possibility that the world they had built their strategy around might simply cease to exist. When the crisis hit, they moved faster and with more confidence than any competitor. Within a decade, Shell rose from one of the weakest of the Seven Sisters oil companies to one of the strongest. They had not predicted the future. They had learned to think about it differently.

This story sits near the heart of Peter Senge's argument in The Fifth Discipline, published in 1990 and revised substantially in 2006. Senge, a researcher and lecturer at MIT's Sloan School of Management and later the founding chair of the Society for Organizational Learning, spent years studying why some organizations learn and adapt while others, despite enormous intelligence and resources, keep making the same mistakes in the same ways, decade after decade. His conclusion: the problem is not the people. The problem is the way we think. More precisely, it is our inability to see the systems we live inside -- the feedback loops, the time delays, the structural dynamics that generate the behavior we then blame on individuals and external forces.