Chapter 2: Development of the Perry Approach to Evaporating Clouds

The Mountain Top

It's 2005, and I'm sitting in a conference room perched on a hill in Huntly, New Zealand. While not a towering peak, the hill's isolation creates a perfect environment for uninterrupted learning. Outside, mist rolls across the landscape, creating an otherworldly sense of separation from the everyday world. Inside, twenty-three of us are deep into day four of the Black Belt in Thinking course—a seven-day Theory of Constraints intensive that's pushing every boundary of how I think about problems and solutions.

I don't know it yet, but what I'm learning in this room will transform my entire practice.

The facilitator draws a simple diagram on the whiteboard: five boxes connected by arrows. "This," he says, "is the Evaporating Cloud. It's how we make conflicts disappear."

I'm sceptical. After fifteen years working in industrial relations and organisational development, I've seen plenty of conflict. The idea that it could simply evaporate feels naïve.

Then he walks us through the logic. And something shifts.

The Grandfather of Constraint Thinking

To understand where the Perry Approach comes from, we need to meet Dr. Eliyahu Goldratt.

Goldratt was an Israeli physicist who became fascinated by a question: Why do organisations struggle so much to improve? His insight was deceptively simple: every system is limited by its constraint—the one factor that most restricts its performance.

In a factory, the constraint might be a single slow machine that creates a bottleneck. In a sales team, it might be lead generation. Fix the constraint, and the whole system flows better.

But Goldratt went further. He realised that many constraints aren't physical at all—they're policy constraints. Rules, procedures, and assumptions that made sense once but now hold organisations back. And the most stubborn constraints of all? Thinking constraints. The assumptions we don't even know we're holding.

In the 1980s and 90s, Goldratt developed a suite of "Thinking Processes"—logical tools for identifying and challenging these hidden constraints. The Evaporating Cloud was one of them.

The Original Evaporating Cloud

Goldratt's Evaporating Cloud (EC)—sometimes called the Conflict Resolution Diagram—was elegant in its simplicity. It consisted of five elements:

• A: The common objective both sides of the conflict share
• B: One need or requirement
• C: A different need or requirement
• D: An action or position that satisfies B
• D′: A conflicting action or position that satisfies C

The logic runs like this: To achieve A, we need B. To have B, we must do D. But to achieve A, we also need C. And to have C, we must do D′. Since D and D′ conflict, we're stuck.

The breakthrough insight? Most conflicts aren't real. They're sustained by assumptions we believe are true but aren't. Make those assumptions visible, challenge them, and the conflict evaporates.

Goldratt used this primarily for business conflicts: production versus quality, centralisation versus local autonomy, standardisation versus customisation, big batch versus small batch. The results were remarkable. Intractable dilemmas that had paralysed organisations for years would dissolve once the hidden assumptions were surfaced.

But something was missing.

The Psychological Turn

In 1994, something significant happened. In Chapter 17 of his novel It's Not Luck, Goldratt demonstrated how the Evaporating Cloud could be applied to personal conflicts—not just business problems.

This was revolutionary. The same logical structure underlying manufacturing bottlenecks also existed in our personal struggles. Whether we're torn between work and family, security and growth, or control and trust, the cloud could map these tensions with the same clarity it brought to operational problems.

Goldratt's daughter, Efrat Goldratt-Ashlag, took this further. In 1995, she articulated an insight that would prove foundational to my work: All human conflicts stem from the tension between our need for security and our need for satisfaction.

Efrat's own definitions are precise. Satisfaction is "a sense of achievement" — the feeling we get when we arrive at a desired objective despite uncertainty about success. Security is "a person's confidence in the reliability of his/her predictions" — the conviction that what we expect to happen will actually happen. We want both: satisfaction, which requires change, and security, which resists it. That isn't a flaw. It's the human condition.

In everyday terms:

• Security: predictability, safety, control, stability.
• Satisfaction: achievement, growth, fulfilment, meaning.

We need both. But they often seem to pull in opposite directions. The job that offers security might crush our satisfaction. The relationship that provides safety might limit our growth. The habits that keep us stable might prevent us from becoming who we want to be.

This wasn't just a business insight anymore. This was a map of the human condition.

And it prompted a thought that would reshape everything: if an organisation was a system, and an organisation was made of people, then... what if people themselves are systems? What if the same constraint logic that Goldratt applied to factories — find the constraint, surface the assumptions, unlock the flow — applied to human beings?

My Own Conflict

Back in that New Zealand conference room, something personal was happening. As I learned the Evaporating Cloud method, I found myself thinking about my own internal conflicts.

After the workshop I sat down with a blank piece of paper and started listing everything that bothered me, frustrated me, or created dissatisfaction in my life:

• My energy levels were variable throughout each week
• I experienced recurring guilt regardless of which choice I made
• My professional development progressed erratically
• Resentment accumulated in my relationships
• My decision-making process was consistently delayed
• I was frequently absent from family commitments
• My income fluctuated unpredictably

These weren't minor irritations—they were significantly impacting my experience of life.

Using the method I'd just learned, I began to map the conflict these symptoms pointed toward. The structure that emerged was deceptively simple:

A (My Goal): Continually improving my experience of life

B (Benefits of helping others):

• Contributing to others
• Making a difference
• Feeling connected and valuable

D (Future State): Help others

C (Benefits of helping myself):

• Security through knowledge
• Being able to give the right advice
• Personal growth and development
• Building my capabilities

D′ (Current State): Help myself

As I built out the benefits, the deeper pattern became clear:

I was caught between self-development and service to others. Every hour spent learning was an hour not spent helping. Every hour helping was an hour not developing my own capability. I oscillated constantly, satisfying neither need fully.

The cloud didn't just describe my conflict. It explained it.

And the breakthrough came not from choosing between the two, but from recognising they were mutually inclusive, not mutually exclusive. The more I developed myself, the more I had to give others. The more I helped others, the more I learned and grew. It wasn't either/or — it was both/and.

This was my first personal experience of what I would later call transcendence. The conflict didn't resolve through compromise or sacrifice. It evaporated once I saw that the two sides weren't opponents — they were partners in the same project.

The Recognition

Four years later, in 2009, I read How the Way We Talk Can Change the Way We Work by Robert Kegan and Lisa Laskow Lahey from Harvard's Graduate School of Education.

As I studied their "Immunity to Change" process, I was struck by a profound recognition: I could see the structure of the Evaporating Cloud embedded in their immunity map.

Their "competing commitments" were essentially the B and C needs in the cloud. Their "big assumptions" were the beliefs holding the conflict in place. Kegan and Lahey described the mechanism vividly: we have one foot on the gas (our improvement goal) and one foot on the brake (our hidden competing commitment). Both pedals are pressed by Big Assumptions — deeply held beliefs about how the world works. Until we surface and test those assumptions, the car goes nowhere no matter how hard we press either pedal.

They had independently discovered the same structure through psychological research that Goldratt had discovered through constraint analysis.

This wasn't coincidence. This was convergent evolution—two completely different disciplines arriving at the same fundamental truth about how human conflicts work.

And once I knew I was on to something, I started experimenting with it on human problems. First my own. Then, carefully, in service of others. The cloud wasn't just a business tool adapted for personal use—it was revealing a universal structure of human psychology.

The Third Insight

A year later, in 2010, the final piece arrived — and it came from a discipline I hadn't expected.

Goldratt had taught me that when applying the Thinking Processes, we always needed to start with the observable. That’s harder than it sounds when you’ve been trained in psychological tools. In organisational performance, personality profiling and categorisations are everywhere — but they’re still interpretations: assumptions about the human condition.

The one thing you can actually observe is behaviour. And I was about to discover a tool that gave us a shared language for describing it.

I was becoming accredited as a practitioner with Human Synergistics International, learning to work with the Circumplex: the measurement framework, developed by Clayton Lafferty and Robert A. Cooke, that maps how our thinking styles drive our behaviour. The Circumplex arranges twelve styles around a circle, gathered into two broad families — constructive styles oriented towards achievement, growth, and connection, and defensive styles oriented towards safety, approval, and self-protection.

I sat with the Circumplex in front of me, and I thought of Efrat's cloud. The link was unmistakable.

Efrat had named the tension: security against satisfaction. Kegan and Lahey had shown the mechanism: competing commitments held in place by big assumptions. And here, in front of me, was the map — an empirical, measurable picture of that same tension playing out in how a person actually thinks and behaves. The defensive styles were security in operation: the approval-seeking, the avoidance, the perfectionism, each one quietly protecting against the risk of change. The constructive styles were satisfaction in operation: the achievement, the self-actualising, the genuine connection that only becomes available once we stop defending.

What Efrat had described as a tension, and Goldratt had structured as a cloud, the Circumplex could measure. It showed not only where a person was caught, but the direction growth would need to travel — from defensive towards constructive, from security held too tightly towards satisfaction.

That was the moment the three insights locked together:

• Goldratt and Efrat gave me the structure of conflict and the security-satisfaction tension beneath it.
• Kegan and Lahey gave me the developmental mechanism — why understanding alone doesn't move us, and how big assumptions hold us in place.
• Lafferty and Cooke's Circumplex gave me the map — an empirical picture of that tension, and the direction transformation has to take.

The Perry Approach was born from getting these three insights to work together. Not any one of them alone, but the synthesis of all three. The cloud surfaces the assumption. The developmental lens explains why it holds. The Circumplex shows which way is up.

I had to adapt and codify the application of the cloud to make it work. That eventually became the Perry Approach you are about to learn.

Where Traditional Approaches Hit the Wall

Over the following years, I applied the Evaporating Cloud to literally thousands of behavioural conflicts. I noticed patterns in where it worked brilliantly—and where it fell short.

The Dilemma Problem

The traditional Evaporating Cloud Method excelled at resolving dilemmas—situations where you have two viable options and need to choose between them. Should we centralise or decentralise? Standardise or customise? The cloud would reveal hidden assumptions, and a clear solution would emerge.

But many human conflicts weren't dilemmas. They were paradoxes—situations where you need seemingly incompatible things simultaneously. The leader who needs to be both decisive AND collaborative. The organisation that must be both efficient AND innovative. The professional who wants both security AND satisfaction.

Paradoxes don't resolve by choosing. They resolve by transcending—finding a way to honour both needs at a higher level.

My mentor Dr. Kelvyn Youngman helped me see that, regardless of the many labels people give clouds (day-to-day, chronic, UDE clouds, Efrat's cloud, and dozens more), there are fundamentally three types:

• Dilemma — a local/local conflict. Characterised by frustration. "I'm struggling to choose."
• Paradox — a systemic cloud. Characterised by anxiety. "I'm stuck."
• Chronic Conflict — a hybrid of dilemma and paradox, where the struggle has become the pattern of a life or an organisation.

The diagnostic is often this simple: Is my primary emotion frustration or anxiety? Am I struggling to choose between options, or do I feel fundamentally stuck? That question alone can reveal which kind of cloud you're actually in — and which kind of work it will need.

The Understanding-Action Gap

I also noticed something frustrating: people could understand their conflict perfectly and still remain stuck.

"I see it," they'd say, looking at their completed cloud. "I understand exactly why I'm caught. But I still don't know how to change."

Understanding the prison doesn't open the door. It's like knowing exactly why you're afraid of public speaking — the knowledge alone doesn't stop your hands from shaking.

The traditional Evaporating Cloud Method could show you the structure of your stuckness with brilliant clarity. But knowing you're stuck and becoming unstuck are very different things.

The Missing Dimensions

What was missing? Three things:

1. Current state acknowledgment: The traditional Evaporating Cloud Method often started with the desired future state. But transformation begins where you actually are, not where you want to be.
2. Psychological integration: Business conflicts resolve through better decisions. Personal conflicts resolve through becoming a different person—someone who no longer needs the conflict.
3. Implementation pathways: Even when the cloud revealed a breakthrough possibility, there was no systematic way to translate insight into lasting behavioural change.

The Perry Approach Evolution

These gaps drove the evolution of what became the Perry Approach to the Evaporating Cloud.

Around this time, I was also reading papers by Professor Vicky Mabin on resisting change and personal productivity — practical applications of TOC that brought the human side of change into sharper focus. They helped me see that the real work wasn’t just building better logic. It was helping people move through the inertia that keeps good logic trapped on paper.

Starting Where You Are

The first evolution: always position the current state (D′) at the bottom of the cloud.

Start where you are. The Life Styles Inventory™ gives us a picture of where you are on the Circumplex — an observable snapshot of the patterns you’re living inside. And when change happens, it gives us a picture of the new state too. It becomes a measure of personal change, not just a language for describing the present.

This same principle applies beyond the individual. At a team level and an organisational level, tools like the Group Styles Inventory™ and the Organizational Culture Inventory® (OCI®) give us equivalent maps — observable measures of collective patterns and collective change.

This might seem like a minor structural change. It isn't.

When you start with the future state, you're implicitly treating your current reality as a problem to be solved. But our current behaviours exist for good reasons—they're protecting something valuable. Until we honour that protective function, we can't transcend it.

Starting from current state says: "Where I am makes sense. Now let's understand why, so I can choose something different."

Mapping Hidden Benefits

The second evolution: explicit exploration of hidden benefits.

In this step, the work is to uncover the hidden assumptions by articulating the perceived benefits of the current state or behaviour. What looks irrational on the surface is usually protecting something that matters.

The traditional Evaporating Cloud Method identified needs (B and C) but often stayed abstract. The Perry Approach digs deeper: What specific benefits does your current behaviour provide? What would you lose if you changed?

David from Chapter 1 didn't just have a "need for control." He had specific benefits: confidence that standards would be met, assurance that nothing important would fall through the cracks, the identity validation of being indispensable.

Until he named these precisely, he couldn't find alternatives that honoured them.

The Three Thinking Modes

A further evolution: deliberate integration of three modes of thinking.

This evolution came from watching a video of Dave Snowden talk about complexity, Cynefin, and logic. I recognised the three modes in how the evaporating cloud works.

Deductive thinking builds the cloud. We reason from general principles (the structure of conflict) to specific applications (our particular situation). This gives us clarity about current reality.

Abductive thinking evaporates the cloud. This is the logic of breakthrough—creative leaps that find the best explanation for what we observe. We ask: "What assumptions am I making? What if they're wrong? What possibilities open up? What options doe we have?"

Inductive thinking builds the new reality. Through repeated experience and practice, we develop new patterns. Insight becomes habit. Understanding becomes identity.

Most approaches rely heavily on just one mode. The Perry Approach to the Evaporating Cloud Method integrates all three, which is why it creates lasting transformation rather than temporary insight.

Transcendence Over Compromise

The fourth evolution: focusing on transcendence rather than trade-offs.

Traditional conflict resolution often seeks compromise: give a little on both sides, meet in the middle. This leaves everyone partially dissatisfied.

Aristotle taught that "the whole is greater than the sum of the parts" — a principle at the heart of what we're doing here. Compromise gives you less than either part. Transcendence gives you more than both. It honours thesis and antithesis while creating something greater than either could produce alone.

The Perry Approach seeks transcendence. This means exploring the A-C assumption - the adaptive belief connecting our desired outcome (A) to the benefit of our current behaviour (C). This assumption answers: Why do I believe I need C to achieve A?

This adaptive dimension is often missed in coaching solutions that focus only on technical changes. By surfacing and challenging the A-C assumption, we discover that our current C isn't wrong - it's just too small.

Transcendence means finding a bigger C that can include B. We don't abandon what C was protecting; we take it with us into an expanded understanding that naturally encompasses what both B and C were seeking.

This is why the conflict evaporates rather than being negotiated away. There's nothing left to trade off.

The Complete Methodology

Today, the Perry Approach to the Evaporating Cloud Method integrates these evolutions into a systematic process. Don't worry if this feels like a lot to take in—we'll be working through each step in detail in the chapters ahead.

Step 1. Identify the current state (D′) — What behaviour or situation are you trying to change?

Step 2. Articulate the future state (D) — Anything other than the current state.

Step 3. Surface hidden benefits (B) — What would the future state give you? What needs would it meet?

Step 4. Surface hidden benefits (C) — What does the current state give you? What needs does it meet?

Step 5. Find the unified outcome (A) — What overarching goal do both sets of benefits serve?

Step 6. Read the cloud — Verify the logical structure. Read back the cloud to check it holds before moving on.

Step 7. Identify the Undesirable Effects (UDEs) — What is this conflict actually costing you? The negative consequences that make it worth solving.

Step 8. Challenge the C-D′ assumption (technical) — What options exist to maintain C while replacing D′? The answer will have something to do with B.

Step 9. The adaptive shift (A→C) — Surface the belief connecting your objective (A) to needing C in its current form. Find the bigger C that can include B — enabling transcendence.

Step 10. Create the solution — Combine the new adaptive belief with the relevant technical options to form a coherent way forward.

This isn't just analysis. It's a journey from understanding through possibility to transformation.

Standing on Shoulders

The Perry Approach didn't emerge in isolation. It stands on the shoulders of many giants:

Eli Goldratt and his Theory of Constraints provided the fundamental insight that conflicts are sustained by hidden assumptions, and the elegant structure of the Evaporating Cloud.

Vicky Mabin, Emeritus Professor at Victoria University of Wellington, brought academic rigour to the Thinking Processes, advancing the research and teaching that helped bring Goldratt's tools to a wider audience.

Efrat Goldratt-Ashlag revealed the security-satisfaction tension underlying all human conflicts.

Robert Kegan and Lisa Laskow Lahey demonstrated how immunity to change works psychologically, and why understanding alone doesn't create transformation.

Clayton Lafferty and Robert A. Cooke at Human Synergistics International created the Circumplex — a powerful measurement framework showing how thinking styles drive behaviour. Their work on the Life Styles Inventory, Group Styles Inventory, and Organisational Culture Inventory gave me the empirical lens to see how constructive and defensive thinking patterns play out in individuals, teams, and organisations.

Dave Snowden developed the Cynefin framework, which taught me to respect the difference between complicated problems and complex ones. His insistence that complex systems cannot be analysed into submission — only probed, sensed, and responded to — shaped how the Perry Approach holds space for emergence rather than forcing resolution.

Dr. Kelvyn Youngman deepened my understanding of the cloud's different forms — dilemma, paradox, and chronic conflict — and the distinction between local and systemic thinking that underpins so much of this work.

The Socratic tradition contributed the method of questioning assumptions to reveal truth.

Dialectical philosophy provided the framework for understanding how apparent opposites can be transcended rather than merely balanced.

The cloud methodology shows remarkable parallels with:

• Hegelian dialectics — thesis and antithesis leading to synthesis, though we can't confirm Goldratt knew Hegel's work
• Socratic questioning — systematic inquiry to surface hidden assumptions and unexamined beliefs
• Aristotelian logic — the if-then structure follows classical logical necessity
• Talmudic dialectics — holding contradictions in creative tension (Goldratt's stated inspiration)

And so many others — colleagues, clients, practitioners, and thinkers whose conversations, challenges, and insights have shaped this work in ways large and small.

I've taken these threads and woven them into something specifically designed for the messy, beautiful complexity of human transformation in workplace settings.

Why This Matters for You

You're reading this book because conflict—internal or external—is costing you something important.

The Perry Approach offers you more than another framework to understand your stuckness. It offers a pathway from where you are to where you want to be.

In the chapters ahead, you'll learn to:

• Build clouds that reveal the true structure of your conflicts
• Surface the hidden benefits that keep you locked in current patterns
• Challenge the assumptions that make change seem impossible
• Generate breakthrough solutions that honour all your needs
• Implement lasting change through both technical and adaptive approaches

But more than techniques, you'll develop a new way of seeing conflict itself—not as an enemy to be defeated, but as intelligence waiting to be decoded.

The Journey Continues

That conference room in New Zealand was just the beginning. Over the past twenty years, I've applied and refined this methodology across aviation, healthcare, manufacturing, and public sector organisations. I've used it to help leaders resolve team conflicts, navigate career decisions, transform industrial relations, and find their authentic voice.

Every application has taught me something new. The methodology continues to evolve.

But the core insight remains: Your conflicts contain your breakthroughs. The very tension that exhausts you holds the key to your transformation.

In Chapter 3, we'll explore the complete Evaporating Cloud Method in action. You'll meet Sarah, a leader who couldn't find her voice in critical meetings, and watch how the methodology transformed not just her behaviour, but her entire way of being.

Chapter Reflection

Before moving to Chapter 3, take a moment to reflect:

1. What's your relationship with conflict? Do you tend to avoid it, confront it, or try to manage it?
2. Think of a persistent conflict in your life. Can you identify what the current state gives you that makes it hard to change?
3. Where have you experienced the understanding-action gap? When have you known exactly what to do but remained unable to do it?
4. What assumptions might be keeping your conflict in place? What would have to be true for your conflicting needs to be incompatible?

Write your reflections in your workbook or journal. In Chapter 3, you'll learn to map these conflicts systematically using the complete Evaporating Cloud Method.

What's Next

In Chapter 3, you'll see the complete methodology in action — a full walkthrough from mapping the conflict to evaporating it and creating a solution. Everything you need is in the next chapter. You can work through it on your own, at your own pace.

Support for this page

Understanding where the method came from — the convergence of constraint thinking, developmental psychology, and the security–satisfaction tension — is what gives the work ahead its grounding. The intellectual foundations are here so you can trust the process when the later steps feel uncomfortable.

The Rising Above the Clouds - The Course opens this chapter up into a conversation. It gives you the opportunity to discuss the ideas directly with Karl through the author discussion tab, and to chat with RIC — the Rapid Improvement Coach, an AI agent trained on the Perry Approach who can offer deeper insights into the method. As you begin to see the structure of your own conflicts through the lens of this chapter, RIC helps you connect the ideas to the specific tension you are living with — not as theory, but as a first sketch of the cloud you will build in the chapters ahead. The course also includes membership of the Conflict Club.

Rising Above the Clouds - The Course