The role of the elementary school principal is critical in determining school effectiveness. This study analyzes the thinking and language of 22 "effective change" elementary school principals to discover common patterns in decisionmaking processes. The method of grounded theory delineates implicit theories principals use to make strategic decisions. Data were collected over a 3-year period from interviews and observations. Schools were selected that featured a self-directive improvement program with minimal resources and with principals who had participated for more than 4 years. From interviews, the principals' language was transformed to theoretical categories through comparison analysis and content analysis. Investigation revealed a common knowledge base used to create improvement. First, principals believe that they develop an organizational capacity for change. Second, the effective principal is skilled at "sensemaking"--creating an interactive fabric of thought with others, thereby accomplishing objectives. And third, effective principals use four frames in strategic dialogs: (1) a "criterion of effectiveness" to achieve improvement; (2) the relationship between principal-teachers-parents-students; (3) setting professional and school standards; and (4) establishing an equitable discipline code. To understand how schools become effective, researchers should study the collaborative activity that emerges from the knowledge of these effective change practitioners. Thirty references are appended. (CJH)