A unified approach to identifying and solving the fundamental problems that prevent colleges and universities from responding effectively to new demands is presented. It demonstrates the underlying causes of institutional problems using case study examples of administrators and faculty members in their institutions. Chapter 1, "Current Approaches to Individual and Institutional Development," suggests that the primary goal of any change effort should be to provide administrators and faculty members with the skills they need to identify and solve their own problems without continuous help from outside. Chapter 2, "Ineffective Institutional Problem Solving: A Case Study," uses a small institution, dubbed "Liberal College," to solve the problem of reduced enrollment in particular departments with a high proportion of tenured faculty at a time of increased financial pressure. In chapter 3, "The Theory-of-Action Approach to Development," Argyris and Schon's "theory-of-action" is presented as a tool for identifying and changing the characteristics of an institution that cause resistance to change and recurrence of problems. "Theory-of-action" is further used in chapter 4, "Analyzing Sources of Ineffectiveness," to identify the causes of the continued conflict and ineffectiveness that characterized the change effort described in chapter 2. Chapter 5, "Increasing Effectiveness by Changing Theories-in-Use," follows a group of university administrators through a seminar in which they learn how to identify and solve basic institutional problems by interrupting the ineffective problem-solving strategies they use automatically and substituting strategies designed to reveal important, previously withheld information and to maximize individuals' internal commitment to policy decisions. Chapter 6, covers the uses and limitations of the theory-of-action approach, and the final chapter stresses that effective change must deal with problem-solving strategies as well as specific problems. (LC)