1. 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
retaining an optimistic, creative outlook. These leadership choices are necessary to develop a
sustainable culture, as presented in Roberson’s wisdom to tradition model.
This paper will review the implementation measures undertaken to establish rules for
conflict management and interactions, the specific language and techniques developed, and the
measures 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
organization 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. Informal leaders were identified and approached to participate in this
program. The initial participants 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 authority to present this opportunity, as coercive power could
have limited the perspective of the participant, 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
create 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 training 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 implement 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
actively contribute. To date, BASF remains committed to this mindset and behavior effort. To
enhance accountability, many of the leaders who embraced this effort were presented greater
opportunities in other parts of the organization, and part of those responsibilities were to model
and influence 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

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typically identified are yelling, inappropriate language, accusations, and the other behaviors listed
as below the line at the far right of the chart. The feelings are anger, rage, betrayed and other
negative 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 organizational 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
desirable. The some of the actions identified are dedicated, supported, and appreciated, and are
identified as above the line at the far right of the chart. The feelings described are rewarding,
powerful, enthusiastic and other positive emotions. The situations that engage these feelings and
actions 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
assessed. 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
using a safe word, the recipient takes a moment and the neo-cortex becomes engaged, and the
behaviors 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
resisting 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 taking an overly optimistic approach. It means following the previously referenced
leadership characteristic 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 searching for possibilities.

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To engage the neo-cortex in difficult situations is the embodiment of the Stockdale
Paradox. 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 described, ‘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

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environment were cooperation was encouraged. In my experience, my performance reviews
become less formal and involved more coaching, including specific development plans.
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

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motivation by maintaining self-regulation and self-management. The research and effort on this
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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Endnotes
1 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#PhXGgw2W42hUYOV
p.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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