Change and engagement, part one

The way we are changing is changing. The predominant approach to change has been to mandate it. An elite, at the top of the organisation, perceive a need for change and direct others to implement it. They will anticipate some resistance and have some strategies ready to overcome it. Often this change will involve some type of restructuring.

There is mounting evidence that this type of change doesn’t work very well and may actually deplete rather than add value. For some organisations, the frequency of this type of change results in a series of self-inflicted, debilitating injuries.

A recent Bain & Company study of 57 major reorganizations found that fewer than one third produced any meaningful improvement in performance. Some actually destroyed value.

Mandated change, bold strokes and long marches

Twenty years ago, in her book The Challenge of Organizational Change, Rosabeth Moss Kanter and her co-authors identified two types of change, bold strokes and long marches. Bold strokes are big strategic moves, such as buying another company, generating a large capital investment, or developing a new product. Bold strokes are usually mandated by the actions of “one or a few people”.

(Tom Peters’ take on mergers)

Long marches are more operational initiatives such as merging departments, transforming quality or customer relationships. According to Rosabeth Moss Kanter, “they require the support of many people and cannot be mandated in practice”

Of course we will continue to need a degree of mandated change, and other stakeholders such as government will mandate external change. We just need to hope that the skill and ability to design and manage change will improve.

Too frequent use of restructuring will come to be seen as the  corporate equivalent of the old medical practice of blood-letting and a sure symptom of dysfunction.

According to Rosabeth Moss Kanter, long march change will have more dependable long term results and is more likely to change culture and habits. She then elaborates on the enduring foundation of sustainable organisational change – decision making.

Every large and complex organisation has many thousands of people who have each day the opportunity, or are literally required, to take action on something. We think of these as “choice points.” For an organisation to succeed in any long-run sense, these millions of choices must be more or less appropriate and constructive day in and day out. But this is an immensely difficult problem, because it requires the ultimate in decentralisation – literally to the individual level – along with centralisation in the sense that those individual choices must be coordinated and coherent.[1]

This same theme is echoed two decades later by Marcia Blenko in the Harvard Business Review:

In reality, a company’s structure results in better performance only if it improves the organisation’s ability to make and execute decisions better and faster than its competitors.[2]

Her she is elaborating on the centrality of decision effectiveness in sustaining effective change.

The engagement connection

Marcia Blenko’s establishes a link between decision effectiveness and employee engagement. Rosabeth Moss Kanter emphasised the importance of “choice points” throughout the organisation. And while the focus is on big business, even small businesses manifest thousands of choice points if we consider all employees and stakeholders.

Embedding a stakeholder ethos (including employee engagement) throughout the organisation will build resilience and adaptive capacity. Over time, it is more likely that those highly engaged staff will be making decisions and choices aligned with the best interests of the company. And over time there will be less need for mandated change.


[1] Rosabeth Moss Kanter, Barry Stein and Tod Jick. The Challenge of Organizational Change: How Companies Experience It and Leaders Guide It. New York: Free Press, 1992, page 492, 495

[2] The Decision-Driven Organisation, by Marcia Blenko, Michael Mankins and Paul Rogers In Harvard Business Review June 2010, page 57

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Learning as a foundation for engagement (part one)

Four organisational capabilities support internal and external stakeholder engagement – leadership, organisational learning, communication and adaptive capacity (or change). This post examines the strong links between organisational learning and engagement.

The discipline of organisational learning has been around for a long time, but does not appear to have gained much traction. I suspect, as engagement practices become more mainstream, organisational learning will receive renewed interest.

The emergence of organisational learning

Bob Garratt, in his book The Learning Organisation provides a “personal history of the development of the learning organisation concept“. He traces its beginnings back to thinkers such as Reg Revans, Fritz Schumacher (author of Small is Beautiful) and Jacob Bronowski (author of the BBC Series The Ascent of Man) at the end of the Second World War. Bob Garratt positions organisational learning as part of the softer side of management theory, paralleling the more hard-edged analytical management theory. 

(image of Bob Garratt from http://geniusmethods.com/about/panel-of-specialists)

The concept of organisational learning is hard to pin down, but should never be over-complicated. I regard it as the ability of an organisation to create a culture to enable it to learn from its stakeholders.

Key ideas

Learning about organisational learning theory in the absence of practical application can make it unnecessarily complex. So here, we will look at a few more key ideas about the learning organisation. These will make more sense as you apply them to your experience. The ideas here are adapted from Bob Garratt’s The Learning Organisation. Note that he first wrote this in 1987. I am impressed that the ideas he expressed align nicely with Rosabeth Moss Kanter’s research described in Supercorps (more about this later).

1. Organisations are complex adaptive human systems – not mindless machines. 

“It is first essential to break the predominant managerial and directorial mindset that human organisations are rational emotionless data-logic driven machines which stay resolutely on carefully planned and pre-determined tracks regardless of the changing environment…” (page 12)

While the physical sciences accepted Einstein’s relativism as representing a more complete picture of our universe, the management mindset seems to stick with a more clockwork Newtonian view of the world. Perhaps it is because rational systems are easier to manage than human dynamics. Bob Garratt refers to biology’s complex adaptive systems as a guide for working with people and organisations. Peter Senge reinforces this, stating that we need to “stop thinking like mechanics and start acting like gardeners”.

2. Organisations driven more by processes than structures. 

The hierarchical structures developed to facilitate production in the industrial age often hinder information age companies. Departmental structures often become silos that hinder necessary organisational processes, especially flows of communication and knowledge.

3. Learn from your learning and understand our learning processes

Often we are so busy that we fail to integrate reflection and learning into the process. Managers that do this often implement knee-jerk actions in their desperation to fix things. Another trap that organisations fall into is making universal changes, that, of necessity, require a huge investment in their success. Bob Garratt advocates taking small steps and learning from those actions. This is the basis of “action learning” – we will look at that in more depth later. As with other organisational learning writer’s, Bob Garratt acknowledges the importance of double loop learning articulated by Chris Argyris. This website provides a clear explanation of the concept.

4. Creating a learning culture 

In a culture that encourages learning, people feel safe about sharing information, confident there will not be unfair retaliation. And it goes further than that – people know that their ideas are valued, and they, when they make suggestions, they are truly heard, not just being patronised. The culture has specific practices to foster learning and to guard against undue defensiveness.

5. External adaptation

Edgar Schein identifies that how organisations adapt to the external environment, shapes the culture. Organisations that learn effectively are highly adaptive and rather than develop a siege mentality, are actively engaged with stakeholders. Thus, threats can quickly be reframed as opportunities.

6. Embracing lifelong learning 

Learning has to be encultured at all levels of the organisation, from new hires right through to the board. Bob Garratt (also the author of The Fish Rots From the Head) emphasises the need for board members to engage in learning, rather than seeing themselves as a “completed work”. A “humble posture of learning” is required at all levels.

The link between organisational learning and stakeholder engagement

By now, the link between organisational learning and stakeholder engagement will be very clear to you. Contrast an organisation who has a defensive leader, who even struggles to trust his closest advisers, to an organisation that strives to have clear lines of communication from its “central nervous system” out to an ever-expanding network of stakeholders. A metaphor might be the difference between a fence post in the ground (treated with chemicals to resist decomposing organisms, and, on the other hand, the root system of a vigorously growing tree, whose rootlets are weaving its way ever-more deeply and broadly into the soil (see the post Fence post or tree – a metaphor for engagement).

The concepts of organisational learning, first articulated over half a century ago, diverge beautifully with many other aspirations for effective organisations that honour their stakeholders. Organisational learning therefore, shouldn’t be regarded as a narrow discipline, but rather, should be regarded as a set of principles that integrate into expressions of good practice.

To conclude this topic, here is a video of Rosabeth Moss Kanter, talking about her book Supercorp. While it does not specifically talk about organisational learning, how do you think it relates to some of the concepts discussed here?

Peter Bruce

Stakeholder engagement drivers – Part 5: altruism

In earlier blogs in this series we looked at self-interest and enlightened self-interest as sustainability and stakeholder engagement drivers. This post explores altruism as a driver.

It seems natural that business leaders who prosper seek ways to give back to the community. The survival imperative driving the earlier days of their careers may have prompted self-interested behaviours. As survival needs are met we move up the needs hierarchy. Maslow talked about self-actualisation – is altruism a manifestation of self-actualisation? Anthony Robbins includes contribution as one of six human needs.

We all have a deep need to go beyond ourselves and to live a life that serves the greater good.  It is in the moments that we do this that we experience true joy and fulfillment.  (Anthony Robbins from Personal Power II)

Altruistic enterprises come in various guises. They include:

  • philanthropic ventures initiated by the wealthy
  • not-for-profit organisations
  • profit generating organisations with an altruistic mission
  • social business.

Philanthropic ventures

Successful business leaders such as Bill Gates, Richard Branson and Warren Buffet have given millions. Bill Gates has set up the Bill and Melinda Gates Foundation, “dedicated to bringing innovations in health, development, and learning to the global community”. As these ventures typically target the disadvantaged, dealing with social issues, they are sustainable in intention.

Not-for-profit organisations

These are the most numerous of the “altruistic” sector. Many are strongly aligned with environmental or social sustainability issues. Most have strong survival instincts and devote significant effort to self-interest.

Profit generating organisations with an altruistic mission

Along with social businesses, these organisations have emerged relatively recently and have a clear sustainability agenda. The Grameen family of businesses established by Nobel Prize winner Muhammad Yunus is a clear example. Founded in 1983 the Grameen Bank now has over 8 million members. The mission of the bank is “to eradicate poverty”. The bank spawned several other innovative enterprises that raise the quality of life and well-being for the people of Bangladesh.  Muhummad Yunus’s letter to members, on the eve of his forced departure from the bank, beautifully summarises the Grameen story. This video about Grameen Shakti illustrates the multiple benefits generated by a brilliant altruistic business.

Social Businesses

Grameen Danone was launched in 2006. This social business was inspired by Muhummad Yunus and is a partnership between Gameen and the French company Danone. It stands alongside Danone’s for-profit businesses as a “no loss, no dividend” company. Any profits are returned to grow the business. Social businesses exist to deliver social good. Grameen Danone produces nutrient fortified yoghurt at a very low price to relieve malnutrition in Bangladesh. Muhummad Yunus also drove an environmental agenda, asking Danone to produce a biodegradable, and then edible yoghurt container! Several other social businesses have followed. Here is Muhammad Yunus explaining the social business concept.

The recent development of organisations such as the Grameen Bank and Grameen Danone are, I believe, indicative of a shift in human consciousness to a more empathetic business model that looks beyond self-interest and recognises our interdependence. These are the early days – it is exciting to imagine what will emerge as more businesses learn to transcend the drivers of self-interest. Tell us about where you have seen these businesses emerging.

Stakeholder engagement drivers – Part 4: enlightened self-interest

In the last post in this series we looked at enlightened self-interest, illustrating the concepts with examples of Walmart’s sustainability initiatives. This blog explores McDonald’s journey towards sustainability.

McDonalds is one of the many companies that have embarked on a journey towards sustainability following negative publicity. In 1990 a group of protestors in London distributed What’s wrong with McDonalds? pamphlets leading to the “McLibel” case that was finally resolved in 2005. Over the last two decades McDonalds has been criticised for contributing to obesity, destruction of the rain forest, animal cruelty and human rights abuses.

Towards sustainability

McDonalds philanthropic initiatives started well before the McLibel days, with the establishment of Ronald McDonald House charities in the 1970s. In the last decade, the company has moved from philanthropy to broader sustainability aspirations. Two initiatives of note are the Weight Watcher’s partnership and Rainforest Alliance coffee.

McDonalds now offer meals that have WeightWatcher’s point ratings, providing customers with choices other than their traditional fare. They have taken other initiatives to improve the health of their offerings – sugar levels in buns have been reduced and healthier oils are used for deep-frying.

Promoting and selling Rain Forest Alliance coffee is a sustainability initiative that has multiple benefits. Growers are guaranteed better prices for product. Their families benefit through the provisions of social initiatives such as schools, and growing systems are more sustainable and environmentally friendly. As companies like McDonalds make products such as certified coffee available, they enable consumers to help contribute directly to the well-being of those that grow the product, thus creating virtue and connection throughout the value chain.

 Local engagement

The McDonalds store near where I live has been frequently upgraded and provides an attractive, clean and comfortable environment for customers. Free wi-fi is available. With its sustainability initiatives and in-store experience, McDonalds positions itself for improved customer engagement.

Any large company is easy prey for criticism and if you want to find fault, you will find it. But I believe that it is important to acknowledge their good efforts and encourage more.

When I look at McDonalds through the three drivers lens, there is sufficient evidence that they are operating in the enlightened self-interest zone. Another way to check perceptions is to compare them to other fast food chains. Where I live, I don’t see much evidence any of McDonalds competitors moving into this zone. What do you see?

This three level model is a useful tool for a broad assessment of a company’s engagement and sustainability drivers.

Stakeholder engagement drivers – Part 3: enlightened self-interest

The first part of this series of blogs outlined three three drivers for stakeholder engagement, self-interest, enlightened self-interest and altruism. In this blog we will look at enlightened self-interest using Walmart for illustration. Such companies want to make money and be more sustainable. They attempt to operate in ways that are not just financially sustainable, but also factor in the well-being of others and care of the environment. They look for synergy in these aspirations.

The sweet spot

The emergence of sustainability as a major driver of business decision making is now undeniable. Companies that attempt to privilege their own self-interest over broader societal and environmental concerns will become increasingly irrelevant. Smart companies pursue the “sweet spot”, of synergy between self-interest and creating value for society and the environment. In the sweet spot self-interest becomes meritorious.

 Walmart as an example of enlightened self-interest

First some disclosure: I live in New Zealand – we have no Walmart stores so I rely in the media for my knowledge of Walmart. Much has been written about former CEO Lee Scott’s crucible experience in Hurricane Katrina and the company’s work to rectify negative publicity. Given its sheer size, Walmart still attracts negative publicity, but there is an increasing amount of evidence that they are a great example of enlightened self-interest.

In part one of this series, factors that indicate enlightened self-interest are:

  • engagement focus
  • creating value chains
  • sustainability aspirations
  • values driven decision-making

And as they embed these practices evidence of altruism starts to emerge and the organisation becomes more driven by the greater-good. Here are some examples. They explicitly illustrate the creation of value chains and sustainability aspirations, and we can infer they require an engagement focus and values decision decision-making.

Creating shared value with suppliers

In each trans-pacific journey from China to Walmart, the massive Emma Mersk transports 15,000 containers. With 60,000 suppliers, it must be difficult for Walmart to achieve intimate engagement with each, but the company can have a huge influence in ramping up sustainability expectations. With larger suppliers, such as Peterbilt, Walmart are working closely in pursuit of its sustainability aspirations. Peterbilt recently delivered eight hybrid trucks to help Walmart achieve its goal of 100% increased efficiency by 2015 from a 2005 baseline. In this video Hunter Lovins, of Natural Capitalism Solutions, states “Walmart may now be the centre of environmental responsibility on the planet”. By combining improved aerodynamics, auxiliary power units capturing energy from breaking, improved rolling resistance in tyres and improved load management Walmart has already achieved 60% reductions. Walmart’s aspirations reduce costs and pollution, delivering on self-interest and benefits for customers, suppliers and the environment.

Learning from criticism

If Walmart was motivated solely by self-interest, it would choose suppliers based mainly on cost. In a recently announced initiative, the company revealed plans to double what it buys from businesses owned by women by 2016. The initiative will support women’s economic development both in the U.S. and other supplier nations and promote greater gender and minority presence through the entire value chain. Earlier this year, a class-action lawsuit by some of Walmart’s female workers was dismissed by the US supreme court. Whether or not these issues are linked indicates that Walmart continues to respond to and learn from public perception.

Public health – towards altruism

Walmart’s recent initiative to require suppliers to reduce sugar and sodium in foods, and to eliminate transfats is another great example of enlightened self-interest – the company has been criticised for being part of the American obesity culture. This initiative has potential to generate huge good, as Walmart supplies 25% of the nations food. Those suppliers and others will now be rethinking their role in public health. As Walmart ventures more into this territory, is it on the cusp of altruism? I welcome your thoughts.

image credit: http://www.politicalravings.com/everything-else/677-wal-mart-ship-from-china.html

Stakeholder engagement drivers – Part 2: Self-interested organisations

In the first part of this series of posts we looked at three levels of commitment to stakeholder engagement, self-interest, enlightened self-interest and altruism. This, and the following posts will expand on these and illustrate them with examples.

The antithesis of engagement

Lets start by looking at an extreme level of disengagement – methamphetamine (P) production and distribution. This example shows how the core business impacts negatively on a range of stakeholders.

The classic approach to stakeholder engagement is to look at categories of stakeholder engagement – owners, employees, suppliers, customers and the community. If we consider P production from a suppliers perspective, raw ingredients are sourced either in bulk from unscrupulous suppliers, or from chemists (drug stores). Chemist shops (in New Zealand) have collaborated with Police to restrict this source. As a consequence, medicines, once readily available for genuine consumers are now difficult to access. Chemist shop staff have additional layers of security checking to cope with when selling the product.

People that rent houses that are used to “cook” P are another unwitting supplier and therefore stakeholder. These houses are left drenched in toxic chemicals and require detox processes to prepare them for the next tenant.

A high proportion of users get addicted to P and their behaviour and priorities change. This might include resorting to gambling, stealing from employers, family and others. The families of P addicts often despair at the changes that the drug induces in the addict. The increase in crime, generated by the need to secure funds for the continued supply of the drug, diverts police resources as does the activity required to counter the drug production and distribution. Other crime fighting initiatives may well be under-resourced exposing citizens to more crime.

Without expanding further, we can see that in this case, the “commercial activity” has negatives that cascade through the community. The stakeholders of the illegal drug industry are many and varied and the impacts can reach deep into our communities.

Other examples

Sadly, examples of organisations disregarding the well-being of stakeholders in their pursuit of profit are all too common. Here are some examples:

  • The tourist operators along the Gulf Coast became stakeholders of BP and Halliburton when oil washed on to their beaches.
  • Those of us that carelessly discard plastic waste may well cause marine life to be consumers of the waste, and therefore stakeholders. Albatrosses in the Pacific consume plastic, thinking it to be food. Their gut can fill with plastic, leading to certain death.
  • Alcohol companies and their marketing agents that target young people with promotions help to foster a binge-drinking culture with sometimes devastating social outcomes.

An unwitting stakeholder – a young albatross killed by plastic waste  

While the illegal drug industry is an extreme example, it illustrates that organisations that operate from self-interest, can generate significant unintended misfortune for stakeholders. We can expect that organisations that operate from higher motives can generate significant good, as we shall see in subsequent posts.

image credit: Science News for Kids

Stakeholder engagement – what are the drivers

If you want your organisation to engage better with stakeholders take some time to understand why. This blog explores three levels of commitment to stakeholder engagement – self-interest, enlightened self-interest and altruism. As with any classification system, these levels are arbitrary and could be endlessly debated – they are simply offered to stimulate thinking about your motives and drivers.

Implementing an initiative, such as stakeholder engagement is more likely to be successful if there is congruence between your thoughts and your actions. According to Sue Knight, our behaviours (what we say and do) are driven by the sub-surface factors of purpose, identity, beliefs, values and capabilities (see The heart of sustainability for more detail). So, for example, if you are just desperate to make money, and for your business to survive, your behaviours will reflect this.

Self-interest, enlightened self-interest and altruism

Self-interest: These are businesses that want to make money and survive – and that includes most business. But those who pursue this solely, will use any means within their ethical and legal boundaries (most of the time). Broader considerations are sublimated to the profit motive.

Enlightened self-interest: Businesses that want to make money and be more sustainable attempt to operate in ways that are not just financially sustainable, but also factor in the well-being of others and care of the environment. They look for synergy in these aspirations.

Altruism: These organisations are either established with altruistic missions or develop those as their owners turn from business-success to deeper motivations.

In this diagram, these levels are presented in a matrix. Notice that the self-interested motive persists in the other two levels – all organisations want to survive. And enlightened self-interest is compatible with altruism – successful businesses have more resources to give. Following blogs will look at examples of each of these levels of business and the behaviours they engender.

What drives your organisation?

Here is a series of statements based on the factors in the diagram above. They can be used as discussion starters, or for a quick evaluation of your organisation. If you want to add numbers:

  • 0 = my organisation is not like this
  • 1 = my organisation is a little like this
  • 2 = my organisation is like this
  • 3 = my organisation is a lot like this

Singular focus on profit: Our primary motivation is to contribute to a better world.

Transactional relationships: The success of our organisation depends on our ability to create great relationships with our stakeholders.

Public relations focus: Good public relations are important to us, but more important is open and transparent engagement.

Engagement focus: We see engagement as a core organisational competency that underpins our success.

Value chain:  We work with staff and suppliers to add value for both parties, valuing long-term relationships.

Sustainability aspirations: We are driven to maximise the triple-bottom line, for prosperity, people and the planet.

Values driven decision-making: Our values guide our decision-making – if an opportunity doesn’t sit well with our higher values, we won’t pursue it.

Driven by the greater-good: Our primary motivator is to contribute to the well-being of humanity.

Results:

  • 0 to 8: At the low range, your organisation has a singular focus on profit, if you are at the higher, perhaps your organisation is on the cusp of enlightened self-interest.
  • 8 to 16: Your organisation shows signs of enlightened self-interest and could well be on a trajectory towards sustainability.
  • 16 to 24: Your organisation is manifesting altruism.

There are clear examples of organisations in each of these three categories. We will look at them more closely in following blog posts. And I would love to hear of your organisation’s journey towards altruism.