[Published in Chartered Secretary, Journal of Institute of Company Secretaries of India, Nov 2012]
One of the most debated and discussed subject in the current management literature is the idea or concept of “change” and how to manage change. It is said, “change is the only constant,” and effective management of change will be one of the primary success-factors of the future world. The company secretary of the future must take note of this factor of change and incorporate it in his professional makeup. The new company secretary is trying to reinvent himself as the administrator of corporate governance and management of change will be an important part of governance in the future world. Another factor which the company secretary will be called upon to deal with in the future is sustainability. Here again the new company secretary must lean to view sustainability in a wider perspective interms of how to steer sustainable change in the organisation, reconciling factors of change and with that of stability. So apart from his traditional roles like portfolio management and legal compliance, the company secretary must understand the implications of a changing and learning organisation in discharging his profession.
In the future, companies have to cope with two types of change: first is the change within the organisation and the other is the change in the external environment. In this article, we will examine the problem of coping with changes within the organisation, based on some important questions raised by the well-known strategy consultant and business writer, Roward Gibson, in a book edited by him. This article explores these questions in the light of emerging perspectives and an integral approach to management.
Changing Mental Models
How do we go about changing our mental models into one that are more systemic in nature, so that we can learn to look at the whole and not just at some part of it that needs to be fixed?
“Mental Model” is a term coined by the well-known management Guru Peter Senge, a leading exponent of the concept of “Learning Organisations.” Senge defines a mental model as, “constructions, internal pictures that we continually use to interpret and make sense of the world.” When we examine carefully our mental construction and images we will find most of them are narrow, fragmented and self-centred. We tend to focus on a single part as if it is the whole and refer everything to our own self-interest. But such thinking is not favourable to success in the future world which is becoming increasingly interconnected and interdependent. To be successful in the future we have to think holistically which means as Peter Senge describes: “We have to develop a sense of connectedness, a sense of working together as part of a system, where each part of the system is affecting and being affected by the others and where the whole is greater than the sum of its parts.” (1) How to build this holistic mindset in the individual and the organisation? It requires a system of training, education and mentoring with the following objectives:
a) Each individual is trained to think she is part of a larger group which in turn is part of a still larger whole and so on.
b) Making each individual aware of her mutual interdependence and connectivity with other individuals and understand the consequences of her actions and decisions on others and the larger whole.
c) Each group or division in the organisation has to be made aware of its mutual connectivity and interdependence with other groups.
d) Awakening each individual and the group to the idea that their wellbeing, progress and effectiveness depends on the wellbeing, progress and effectiveness of the larger whole.
For the leaders of the organisation, this awareness of the connectedness, interdependence, wholeness has to extend beyond the boundaries of the organisation to the other stakeholders like the customer, suppliers, community and the natural environment. Many of us who work in organisation as members, managers or leaders may be vaguely or subconsciously aware of this connectedness or interdependence. The aim of a holistic education is to make this awareness fully conscious and concrete and make people aware of its practical consequences for decision-making and action.
However to fully internalize the holistic perspective it should not remain merely as an abstract idea in the upper layers of the mind; it must percolate into our feelings and sensations. The faculty of Imagination can be a great help in making the abstract idea concrete to the mental sensation, which inturn can evoke the corresponding emotions. We must learn to project, expand and widen our heart and mind into the larger whole and feel our own small self disappearing into it or feel it as a part of our own higher and larger self beyond our ego.
The Role of Technology
What kind of role will technology play in the business transformation process?
First of all we have to define what we mean by technology. In a broader perspective it includes not only what is traditionally called as technology but also management techniques like TQM or Six Sigma and also every form of innovation which leads to improvement in efficiency, productivity or speed. In business, what is equally or even more important than scientific and technological break-through in R&D laboratories, is how technology is used for enhancing organisational effectiveness or serving the changing customer needs.
Most of us who are part of the corporate world know what technology can do in enhancing efficiency and productivity. However, apart from these wellknown gifts of technology, it can bring two more important benefits to the workplace. First benefit is greater empowerment of the force. Information-technology can be a powerful instrument for empowering the work-force at all levels by its potential for extensive sharing and distribution of knowledge and information to all. By providing the workers at the lower level with the knowledge and information needed to make quick decisions, IT can lead to what some management thinkers called as “distributed leadership.” In otherwords, IT can be a great help in delegation and devolution of power to lower levels of the work-force, provided management is willing to let go some of its powers.
The second benefit is better customer service. The new technology is already revolutionising customer service. It is creating a new phenomenon called by some management pundits as “Mass Customization” which means the ability to serve the specific and unique needs of individual customers in the mass. In the earlier era, if you want to serve the individual needs of the customer, you can only reach only a few people. On the other hand, if you want to serve a large number of customers then it can only be uniform in the mass. But now new technology enables companies to serve the needs of individual customer in a large scale. A customer can now sit in front of a computer terminal and design his own car, fridge, a cycle or an apparel according to his unique tastes or needs and get it delivered in a few days thanks to computerized manufacturing. For example, Japan’s National Bicycle Industrial Co. dealers send the company factory a set of specification based on customers requirements for model, colour, components and personal requirement. And within a day, the cycle, precisely made to fit individual customers requirements, is finished, packed and ready for shipment. Similarly, many retail firms in the West regularly track and analyse the buying patterns, habits and tastes of individual customers through advanced IT systems and device their sales, marketing and customer strategies accordingly.
However in a deeper perspective, technology cannot bring any lasting and enduring transformation to human systems. Interestingly, Peter Senge, the well-known management guru, said in an interview: “Many people seem to believe that technology is the major driver of change—that is a conventional cultural story in industrial societies. Personally, I think that only the most superficial changes are being brought about by technology” and quotes his mentor, Jay Forrester, a pioneer in digital computing, “Technological progress is more or less a production process—if you put more money and good people into a particular area where there is a solid foundation, technological progress is more or less guaranteed. The really big issues facing mankind concern our inability to understand and manage our complex human systems.” (2)
Thus, even technology may get one day “commoditized” and cease to be a factor of competitive advantage. The success-factor of the future lies in understanding and transformation of complex human system. The key of this transformation lies in understanding how to internalize and organise Ideas or Values which lead to a deep and radical transformation in human consciousness. Here comes the importance of the principles and methodology of Indian yoga which can provide a scientific, systematic and practical path for achieving this inner transformation based on a deep understanding of human psychology. For, as Sri Aurobindo points out, yoga is nothing but “practical psychology.” (3)
The Art of Decentralisation
How do we go about creating a radically decentralized network organisation?
Decentralised government is essential for unleashing the creativity of individuals and groups. However, a certain amount of centralized direction or control may also be necessary for effective governance. There are five factors which needs careful attention for effective decentralization:
i) Clear understanding of what has to be centralized and decentralized: Each organisation has to decide what are the factors which need be centralized or kept under the direction and control of top management and what are the factors which can be centralized or delegated to the lower levels of management. For example some companies centralize Human Resource Development (HRD) but there are also companies where HRD is decentralized.
ii) Building uniting principles: Without building factors which unites the organisation and the people around some common principles, decentralization will lead to disintegration of the organisation. These principles can be a mission, vision, a system of shared values or a common goal.
iii) Divisional autonomy: Each division of the organisation has to be given sufficient freedom and autonomy to achieve their goals with minimum interference or control from above.
iv) Borderless connectivity and interaction: There must be a free and vigorous interaction in the form of sharing of ideas or best practices with other pars or divisions of the organisation. Information Technology provides the technological tools for arriving at the highest level of connectivity with the rest of the organisation.
v) Fostering Self-managing teams: Wherever possible, especially in the domain of frontline employees who are in direct contact with customers, self-organising teams have to be formed with maximum freedom to decide, plan, organise their work and achieve their goal with minimum supervision or interference from hierarchical authority. For example, in Ritz Carlton, the frontline team made of the desk manager, chef, janitors, receptionist, stewards, housekeepers, are given full freedom to organise and deliver customer service with only some broad guidelines. However, we must note here that freedom alone is not enough for effective functioning of a self-managing team. The members of the team should be given sufficient training, knowledge, information and skill to do their work.
vi) Enforcing Commitment to Goals: Autonomy, self-management or empowerment becomes effective only when there is strong commitment to achieve well-defined organisational goals. This commitment has to come voluntarily from within the team member who has to achieve the goals and not authoritatively imposed from above. In other words, these goals have to be set or rather evolved through a process of dialogue, discussion and consultation with the team members.
Higher Purpose Beyond the Bottomline
What is it that truly binds a network organisation together? Is it merely information technology? Or does it require something deeper and far more meaningful?
Mere information cannot bind the organisation together. As we have indicated earlier, it requires uniting principles like a vision, mission, values or a purpose. For the higher motivation of employees and long-term effectiveness of the organisation, these principles should have a moral or spiritual element that transcend the economic or monetary aims, interests or needs of the individual or the organisation and related to the wellbeing of the larger community. This is now beginning to be recognised in management. As the eminent British Management thinker, Charles Hardy points out: “If you want to retain people, you’ve got to create a cause” and this cause has to be a “purpose beyond oneself.” (4) Similarly another well-known management thinker, Rosabeth Moss Kanter states in an article in Harvard Business Review: “Articulating a purpose broader than making money can guide strategies and action, open new sources of innovation and help people express corporate and personal values on their every day work.” (5)
Creating New Knowledge
How does a company make the shift from just spreading information around a network to building new knowledge?
In the corporate world, terms like ‘knowledge-economy’ or ‘knowledge-society’ is associated with Information Technology. But IT can only help in efficient or productive organisation or spreading of information but cannot create new knowledge. In the future, advancement in the technology of Artificial Intelligence may create “Thinking Machines” which can do some form of human-like thinking. But still, new ideas which lead to breakthrough innovations or radical changes in the quality of human life have to come from the creative layers of the human mind. So as Peter Drucker once said, success in the future world of business lies not in information technology but in “cognitive sciences” which means understanding, developing and harnessing all the faculties of knowledge within our consciousness.
Our human reason is undoubtedly one of the faculties of knowledge. But our potentialities of knowledge are not confined to reason. In fact the creative potentialities of reason are quite limited. As we have indicated earlier, Artificial Intelligence systems can perhaps do most of our reasoning in the future. This doesn’t means rejecting reason. Our thinking and reasoning mind is an important instrument for expressing and organising knowledge. So development of the thinking intelligence is indispensable for building a culture of knowledge. But for creating new knowledge which goes beyond the capabilities of reason we must also develop the following extra-rational faculties of knowledge:
Power of self-observation or mindfulness which means the ability to observe our cognitive process as a detached witness.
Powers of Concentration which gives us the ability to focus of our attention at a single point or idea or activity.
Faculties of Imagination for visualizing unmanifest and unknown possibilities or converting abstract ideas into concrete images.
Faculty of Intuition which provides direct insight into the deeper, invisible or holistic truths, patterns or forces behind the visible forms, information or appearances.
For building an innovative organisation which constantly creates new knowledge, development of these extrarational faculties has to be incorporated into the training programmes of employees at all levels.
Building the Learning Organisation
How to build a learning organisation and create a learning architecture?
The concept of “learning organisation,” is a new idea in management with a lot of potential for bringing creative change in an organisation. Peter Senge, a leading exponent of the concept, defines learning as “building the capacity to create that which you previously couldn’t create.” (6) This means in a learning organization, knowledge is constantly generated and applied for the betterment or progress of life.
The process of learning has three components: knowledge, skill and progress. In a broader perspective that goes beyond the corporate bottomlines, knowledge means understanding of the laws, principles, aims, values, methods, process and the causative forces of life or the segment of life which is understudy, in other words, Science of Life. The word “Life” includes the life within us, in our own self and the life of the world around us. Skill means the ability to apply this understanding for the progressive improvement, enrichment or transformation of life, Technology of Living. In a modern organization the object of knowledge is the segment of life within the organization and the life of the larger environment-economic, social and natural-of which it is a part. The nature of knowledge depends on the nature of vision, values, goals and needs of the organization.
A learning organization has to pursue knowledge and skill simultaneously. Seeking truth and knowledge for its own sake has its validity in education, research and philosophy. But in a pragmatic institution like business a mere accumulation of knowledge without result-oriented application is a waste of cognitive energy. On the other hand mere multiplication of skills and techniques without an expanding base of knowledge and an enduring foundation of uplifting values, leads to a soulless mechanization of life.
This learning has to be progressive, which means there must be a constant quest for a deeper, wider and a more holistic understanding of life and its application for a corresponding enrichment of life. The individual or organizational learner must constantly seek to understand the deeper and inner sources and causes of things, events, problems and phenomenon of life. And finally, the learner has to look within himself and try to understand the inner sources of knowledge, skill and action.
This brings us to the question how to create an environment favourable to this constant and continuous learning. According to Peter Senge, effective learning requires a ‘learning architecture’ made of “practical experimentation and testing, capacity building and diffusion and standardisation.” The first requirements are “learning laboratories” where new ideas can be tested and experimented without the daily pressures of the target-oriented corporate environment. The second factor is training programmes which build new skills or capabilities. The third factor is a scrupulous documentation and standardisation of the learning process and makes it accessible to all. The other important factor is a culture of sharing knowledge, teamwork and cooperation where people are genuinely interested in helping one another develop new capacities for action.
Balancing Continuity with Change
How can companies balance the need for radical change with the need for strategic continuity?
The strategic continuity comes from shared Values or guiding Principles and the source of radical change in Innovation. For building an enduring foundation, the guiding principles or values of the organisation should be in harmony with the universal laws of life and the higher nature of human being, which is the source of all nobler aspirations of humanity like truth, beauty, goodness, harmony, unity. But these higher values have to be adopted or modified to fit in with the unique nature of the group or organisation. A business firm which wants to build its culture based on these higher values, has to figure-out what is the meaning of these values or what forms they should take in its organisation, and in the various functions of the organisation like finance, production, marketing. For example, what is the meaning of truth or beauty in finance? On the other hand radical change requires building a culture of creative thinking which leads to break-through innovations. This requires an environment which fosters the following factors:
- Freedom of expression in thought and speech.
- Free and fearless enquiry and questioning of the underlying assumption and the status quo.
- Experimental learning through trial and error, mistakes and failures
- Alert and flexible adaptation to the changing realities of the environment like for example customer needs and tastes, demographic changes.
- Development of creative faculties like intuition, imagination, concentration and mindfulness, which we have discussed earlier.
Thus we can see that strategic continuity through values and radical change by innovation are not contradictory factor but can complement each other. All major strategic decisions on the type or nature of innovations to be pursued have to be guided by organisational values. And an innovative culture can be a great help in implementing values in the corporate life.
- Peter Senge, ‘Thought the Eye of the Needle,’ Rethinking the Future ed. Rowan Gibson, Nicholas Brealey Publishing, London, 1998, p. 122-46
- Peter Senge, ‘Thought the Eye of the Needle,’ Rethinking the Future ed. Rowan Gibson, Nicholas Brealey Publishing, London, 1998, p. 122-46
- Sri Aurobindo, Collected Works, Synthesis of Yoga, Vol. 23-24, p. 44, Sri Aurobindo Ashram, Puducherry, 1972.
- Charles Hardy, ‘Finding Sense in Uncertainty,’ Rethinking the Future ed. Rowan Gibson, Nicholas Brealey Publishing, London, 1998, p.16-33
- Rosabeth Mass Kanter, ‘How Great Companies Think Differently, Harvard Business Review, November, 2011, p. 50-62
- Peter Senge, ‘The Art and Practice of the Learning Organisation’, The New Paradigm in Business, ed. Michael Ray and Alan Rinzler, World Business Academy, 1993, p. 126-34.