Many of us know the history relating to the introduction of screw top wine closures. If you don’t let us share some history with you.
Until consumer acceptance of screw tops approximately 15 years ago, nearly 10% of all bottled wine was “corked”. Imagine being a major wine producer knowing that 1 in 10 of your bottles will be defective due to tainted corks. That’s more than a bottle in each case of a dozen! Cork taint is a natural feature of cork and it can at times be hard to detect. On occasions it is subtle, removing the richness in the flavor of a wine, whereas sometimes it leaves a pungent smell like wet cardboard.
The wine producers, distributors and retailers knew that the average consumer didn’t know what cork taint was and blamed the producer for the poor quality of their product. Often people would take their first sip of a new wine and be forever convinced (when cork affected), that the taste was a peculiar attribute that the producer desired causing them to avoid future purchases of the label again.
There had been previous attempts by producers to use alternatives to cork, but these failed due to the perception that they were inferior, cheap and not worthy of quality wine. It seemed that the industry was caught in a belief system that non-cork closures would always be rejected by consumers.
So what did the Australian industry do? It realised that the answer required a rethink of non-cork closures and the need to adopt a whole of system approach to solving the difficult problem of grower, wholesaler, retailer and consumer attitudes to the tradition of cork.
In what was an elegantly simple solution, the industry tackled the issue from a whole of system perspective causing a counter intuitive response. They retested non-cork closures in the market by placing them on their premium wines first. Consumers at these price points have a strong emotional connection to the product and their belief system informed them that high quality producers would only ever use high quality closures on their premium wine.
This caused a shift in the mental model of an entire industry, from grower to consumer. When consumers of medium priced product saw this feature on quality wines they sought the same treatment for their lower priced brands driving the implementation of screw tops across all price points in the industry. The rest as they say is history.
The 10% cork taint experience is a useful parable for our experience as organisation leaders which we will return to later in this paper. We know that the majority of our leadership, organisation development and change interventions either fail or are only partially successful but we continue to do the same things expecting different results. Why? Because many of us have not found the organisation equivalent to non-cork closures.
In this paper we explore this issue and describe a powerful framework that can guide you to developing lasting solutions.
We conducted twelve in depth interviews with people from senior Consulting, Organisation Development and Human Resources roles across a range of industries to discover their perspectives on the long and short term impacts of a rich sample of organisation development programs and interventions for which they were responsible.
What we found:
1. Interventions seeking to create a lasting legacy through culture change, leadership development, organisation change, talent development or capability building were at best only partially successful in creating sustainable value. In some cases, no value was created.
2. Tactical interventions supporting changes to systems and processes, projects or programs of work, were perceived to have been more successful.
The results of the interviews emphasise the need to find an effective way of looking at and evaluating organisation activities differently to what we have done over the last 100 years.
1. The capacity to diagnose needs and design programs or initiatives using a ‘whole of systems’ approach.
2. An understanding of how other organisation activities complement or inhibit the changes sought and seek to optimise, eliminate or reduce their impact.
The interviews confirm that the broader perspectives offered by utilising an Integral Framework approach to the diagnosis and design of organisation development interventions could have significantly enhanced the desired outcomes for these programs.
The Integral Framework enables a purposeful and balanced approach to diagnosing, designing and implementing organisation interventions. Skillfully enacted this approach supports a desire for Organisational Mastery - the pre-condition for long term sustainable success desired by all critical stakeholders.
These conclusions are elaborated in the body of this paper.
Context behind this work
According to a study by Towers Watson, 75% of organisational change interventions fail.
In an IBM Global CEO study:
· 83% of CEOs said that “Substantial Change” was their biggest challenge but less than 50% felt their leaders were capable of leading change.
· 28% of CEOs that got fired by their board, got fired because they “mismanaged change”
These statistics will not surprise many of you as we have known for many years that we often fail to effectively implement sustainable change and other organisation development initiatives.
We sought to enrich our understanding of this research by engaging in interviews with industry experts responsible for developing, implementing or providing stewardship for organisation development programs.
The purpose of these interviews was to test the perspective that we can improve the success oforganisation development programs and initiatives through the use of a more enriched and accessible method of diagnosing needs and designing programs and initiatives.
The problem described through the eyes of those interviewed
We interviewed twelve senior people from consulting, organisation development and human resources across a range of industries to ascertain their perspectives of what worked and did not work in organisation development interventions they developed, implemented and/or provided stewardship for.
The insights were captured from individuals with an intimate connection with these activities.
We explored the effectiveness of their organisation development interventions by asking two questions:
· Did the program meet its intended objectives as described at the time?
· What residual impact has the program had since it was implemented?
We used a 10-point scale for measurement. 1 meaning failure and 10 describing a result delivering more than the original objectives.
The results will not surprise many of us who have been developing and delivering programs for some time.
In the graph below the common sentiment was that at the time of delivery programs were either partially or fully successful at delivering what was expected.
We tested this by asking:
With the passage of time however we see a shift in the perspectives of the success of these programs when we asked the question:
The interviews highlighted that:
· The highest scores were related to programs supporting specific business projects and reflected the immediate and ultimate success of these projects. (eg. An intervention supporting the introduction of a business ERP system).
· Initiatives aspiring to shift the cultural, leadership or behavioural performance within organisations were deemed to be less successful, particularly with the passage of time.
So what is this telling us?
Our first response is what we call the Optimism Effect.
Many Organisation Development professionals have experienced this. They have been tasked to respond to an immediate or felt organisational need and done so with a well-designed leadership program, cultural intervention, capability framework or vision and values initiative. After months of great stakeholder involvement and hours of work, they deliver the initiative and receive great participant and stakeholder feedback. It’s not surprising they think, “big tick, this program’s really hit the mark”.
The second effect is the Partially True effect.
The truth is most interventions are only ever partially effective. They create a residual effect in the minds of the participants and an organisation’s memory. Over time however as these two effects coalesce, the developer and host organisation come to the realisation that the program has not been able to sustain its delivery results and while the immediate impressions are powerful, with the benefit of hindsight we see that the original sense of optimism was just that, optimism.
This is observed by the experience that not one of the interviewees felt their program had achieved the long lasting benefit sought, desired or expected at the time of delivery.
How do we change this outcome?
To answer this question, we used the Integral Framework to review and interpret the results.
The framework is based on the work of Ken Wilbur and applies an evidence based approach to describing four perspectives that are always present in organisational activity.
These perspectives are:
• Personal Mastery - The perspective of individuals connected to the organisation.
• Cultural Mastery - The perspectives of groups connected to the organisation.
• Capability Mastery - The capability of individuals within the organisation.
• Systems Mastery - The systems, processes, structures and strategies of the organisation and the environment it operates within.
The Integral Framework enables a purposeful and balanced approach to diagnosing, designing and implementing organisation interventions. Skillfully enacted this approach supports a desire for Organisational Mastery. The pre-condition for long term sustainable success desired by all critical stakeholders.
Often disruptors relating to increased complexity, political behaviour and market volatility affect an organisation’s ability to successfully deliver outcomes.
Disruptors are often described through the phenomenon of VUCA. The experience of Volatility, Uncertainty, Complexity and Ambiguity ever present in our world.
APPLYING THE SOLUTION FRAMEWORK
We think a useful way to explore how the Integral Framework can contribute to successful change interventions is through two case studies captured during the interviews.
(We are not using real names or organisation titles – the events however are based on fact)
CASE STUDY 1. HORIZON CABLES
Horizon is an Australian based organisation, manufacturing and selling patented products globally.
Horizon employees 500 people in its main Australian based manufacturing plant and is currently building operations in Europe and Latin America using stock feed from the Australian plant. Highly regarded for its innovative products, protected by global patents, international competitors have now developed alternative products and Horizon know they must lift their performance to ensure the support of their customers.
In 2011, Susan Smith the HR Director was tasked by her then new Managing Director to implement a suite of initiatives to build a high performance culture with collaboration and quality being areas of key focus. The following initiatives were introduced:
· A vision, a values statement, and agreed behaviours to support this change.
· A climate survey
· A team destination program enabling teams to agree their supporting behavioural do's and don'ts
· A new performance management system which balanced the focus on performance and values.
· Annual workshops were conducted to support and maintain these initiatives.
By any measure this is a comprehensive piece of work. Well-conceived and competently delivered over three years. Quite rightly, Susan was proud of her work and felt that the program’s level of effectiveness increased over the implementation period 2011 to 2013.
Susan’s realistic outlook caused her to rate the early years of the program as a 5 “it just fell short of meeting our goals” but shifted her score to a 7 for the delivery of the 2013 programs when she argued that, “it hit most of the objectives, especially when we delivered it in Latin America.”
So how does she now rate the residual effect of the program with the passage of 3 years? Sadly, she explained that the wheels fell off the program about 18 months ago causing her to re-evaluate the long term benefits of the work. Curious to understand more, we asked her to explain what had occurred. She elaborated on two critical factors, both linked to the same series of events:
1. In hindsight she argued, the company’s change effort had ignored how their overly complex and confusing work instructions, (Systems Mastery quadrant), detrimentally affected the mindset and behaviour of the shop floor staff (Personal Mastery and Capability Mastery quadrants). She felt that these factors often encouraged employees to ignore work procedures in order to get through their work creating a culture of noncompliance within the operations group. (Cultural Mastery quadrant).
2. This lead to an endemic behaviour of ignoring many work instructions to enable production but caused major quality issues for their customers. She explained, “In the last 12 months we have invested in a new quality team, and now our systems will be more robust.” She added “We seem to working away from the cultural stuff to seek more control over the shop floor.”
Why did this occur when the initial program was comprehensive and seemed to be successful?
She told us that:
· One of her lead team peers, who never supported the cultural change program, had blamed her for the production issues due to the more inclusive cultural shift she was seeking to introduce.
· A new Managing Director had been appointed and he didn’t seek to understand the purpose and outcomes of the cultural change program.
Susan explained the company was now shifting back to a more siloed and internally competitive culture fostering a reliance upon procedural and administrative controls. Both of these were present in the culture the previous Managing Director was seeking to change as it was stifling innovation, continuous improvement and wasting resources. These were issues that needed to be addressed if Horizon is to compete successfully with the entry of new competition into the market. Susan is now contemplating whether she should stay or leave the organisation.
Our comments on this case study
Susan designed and implemented a deliberate and well considered approach to building Cultural Mastery at Horizon. This was a strategic imperative given the entrance of a new competitor to the international market. An examination of the case study through the Integral Framework explains the possible reasons why the initiative fell away 18 months ago. Developing Cultural Mastery takes significant enthusiasm, belief and effort to support and sustain. Most organisations struggle here and often it is seen to be just too hard. The organisation’s focus on a cultural change program however missed two critical factors:
Critical Factor 1:
The complex and confusing work instructions requiring non-compliant behaviour to achieve work outcomes and ultimately causing quality issues for the customers.
When we examine this through the Integral Framework we observe:
· The impact of unproductive and poorly constructed work instructions (Systems Mastery),
· Leading to a belief that work instructions inhibit efficient work (Personal Mastery),
· Causing behaviour that ignores work instructions in order to get the job done (Capability Mastery),
· Bringing about a frequency of low quality product delivered to customers (Cultural Mastery and Systems Mastery).
Critical Factor 2:
The lack of genuine support reflected in the attitude (Personal Mastery quadrant) and behaviour (Capability Mastery quadrant), of one of the HR Director’s peers, was not dealt with by the previous Managing Director who was aware that this senior executive was not on board.
The initial optimism around the culture work was undermined because of the unintended effects of the other three quadrants negatively feeding back into the Cultural Mastery quadrant.
Had an Integral Framework approach been applied to the design and implementation of this initiative it may have delivered successful and sustainable results.
CASE STUDY 2. MOVE IT QUICKLY LOGISTICS
Move It Quickly was once a division of a top 50 ASX listed company with a significant global reach. The division (Oceania), is now owned by an overseas private equity group located in Singapore and the group’s aspiration is to list on the Singapore Stock Exchange. The division is run out of Melbourne and currently employs a mix of 2000 employees and sub-contractors. Operating in a highly competitive market Move It Quickly Logistics has developed a reputation for providing effective solutions to customers with complex logistics requirements.
Frank Gazotto the Divisional GM HR, was tasked by both corporate head office and his division’s Managing Director to build capability and explore some cultural issues that had emerged from their regular climate surveys. The purpose being to continue to grow the Division using its human capability as a competitive advantage.
This is Frank’s story.
“The business was in turn around mode. Our cultural surveys over 8 years showed we had issues with communication, engagement and cross functional relationships. We ran an 18-month program for about 4 years with 15 ‘Hi potential’ participants in each program. The objectives of the program were to understand how to engage and motivate people, improve decision making and create an environment to enable people to prosper. We called it ‘thinking below the line’. The program was targeted at the Hi Potential group sitting below the executive team. The program was part of our leadership development frame work and participants were identified in our talent management process.”
At the time of delivery Frank felt the program was ‘partially successful’ in its delivery over the four years from 2008 to 2011. However, in hindsight, he told us it had delivered little if any residual impact on the company, even after the investment of $500,000 in the program.
So what happened?
Let’s hear Frank’s explanation…
“The ongoing health of the program was affected by not having a system or process to actively engage and utilise the participants during and after their participation in the program. Furthermore, the leadership team did not know how to embrace the cultural change initiatives resulting from the program, and due to their lack of understanding about the ROI on the program they stopped it part way through the fourth group.”
In hindsight Frank now realises that the lack of a ‘system or process’ (Systems Mastery quadrant) and the leadership team’s lack of understanding and commitment to the program (Personal Mastery quadrant), ultimately led to its demise.
We asked Frank “What support do you think OD/HR professionals need to create more value in their support of change, leadership and OD initiatives?”, he responded by saying he didn’t know. His response is not uncommon. Most, if not all, of the people interviewed said they don’t know what else to do.
Our comments on this case study:
In respect of Move It Quickly Logistics the focus was to build Capability Mastery, (top right hand quadrant) with a focus on High Potential employees. Once again examining this case study through the Integral Framework invites us to consider two important areas.
1. The method of selecting and integrating projects for participants to ensure they are valued by both the Leadership Team and the participants is important. Similarly, the need to ensure the organisation was able to value and use the skills of the participants on graduation was important to success. There were no systematic approaches to secure these outcomes and the participants and some senior leaders lost their enthusiasm for the program. (These explanations demonstrate how a stronger focus on the Systems Mastery quadrant could have driven a positive result in the Personal Mastery quadrant).
2. Testing and aligning the program against the values, beliefs and motivation of the Managing Director and lead team would have enabled Frank to ensure that its delivery was congruent with their aspirations. (Personal Mastery quadrant).
If these two areas had been considered in the life of the program it may have continued building the capability of the Division’s future leaders.
WHY THE CORK TAINT COMPARISON?
There are two important lessons to be learnt from the cork taint parable.
· Firstly, the industry drove the change because it no longer accepted a 10% failure rate.
· Secondly, when consumers and producers became aware of the alternative they demanded it.
In the parable of the wine industry, it’s as if our organisation leaders are the cork suppliers tasked with the responsibility to fix the problem of taint in the cork without looking outside the use of cork as a solution.
The answer for the wine industry however lay in the realisation that it was not a supplier only issue. They decided to own the problem and adopted a whole of industry approach; linking growers, producers, suppliers, retailers, and wholesalers to the belief that an alternative existed to traditional cork closures.
They responded by removing the problem and implementing a cleverly crafted and authentic cultural and behavioural response for the final arbiters - the wine consumers. Once the consumer believed that screw tops secured the quality of their wine they shifted preferences quickly purchasing screw topped wine and the rest as they say is now history.
The wine industry stepped back and looked at the issue quite broadly. Closer examination of this parable shows that the industry’s solution showed that it weaved its way through all of the quadrants of the Integral Framework. Wine is an extremely personal and evocative product for many stakeholders and the industry had to successfully win the hearts and minds of the suppliers, producers, wholesalers, retailers and ultimately the consumers. This shift (Personal Mastery and Cultural Mastery quadrants), could not have occurred without a significant focus on the beliefs, culture, systems and capability of individuals within the industry to bring this change to fruition, (all of the Mastery quadrants).
What this white paper suggests is that the organisation development and leadership development environment is much like the Australian wine industry prior to screw tops. We know we have a problem, and unless we embrace a more holistic approach our solutions will only ever be like Susan’s and Frank’s - partial and not enduring. The story sub text however is even more telling.
The wine industry said we will no longer accept a failure rate of 10%. Our evidence supports the conclusions of the recent Australian Industry Group’s Enterprise Leadership study, and the Study of Australian Leadership by the Australian Leadership Centre of Workplace Leadership, Melbourne University which confirm the need to radically enhance the way our organisational leaders deal with complexity and change.
Australia’s economic security and our society at large is at risk unless we deliver more effective organisation capability building initiatives.
When will we finally say ‘organisation taint’ is no longer acceptable?
The problem faced by many of us is that we keep introducing initiatives that are partially successful or fail with the passage of time. We now expect a premium wine protected by a screw top to successfully achieve its nominated shelf life free of the risk of taint. Our expectations for organisation development interventions needs to be the same.
Using the Integral Framework to diagnose needs and design effective solutions is akin to the approach adopted by the wine industry. The first step however requires us to shift our perspective by no longer accepting the ‘inevitability’ of partially effective solutions when more enduring options are available. We should no longer accept solutions which enable ‘organisation taint’, just as our wine industry colleagues no longer accept ‘wine taint’.
By insightfully applying the lens of the Integral Framework, leaders with accountability for building enduring and effective solutions will significantly enhance the diagnosis and implementation of solutions - the first important step in reducing the risk of organisation taint.
We would not go into a merger or acquisition without doing our due diligence and doing it extremely well so we get the return on investment we expect.
The use of the Integral Framework as a due diligence exercise for our internal interventions makes business sense. All areas are examined (Systems, Capability, Culture and Personal Mastery) in detail to optimise our success and deliver an appropriate return on investment.
The exercise may also mean we have to focus on another quadrant before we can tackle our major objective located in a different quadrant.
Major benefits of doing this well are:
· Achieving organisation strategy and objectives through well planned and thorough interventions
· Improving productivity, employee engagement, individual and group capability and business processes
· Real return on investment
All of which is reflected in the bottom line.
IF YOU ARE INTERESTED IN EXPLORING THE ISSUES RAISED IN THIS PAPER
Call or email the authors:
Mark Keily +61 401 142 114
Michael Griffiths +61 418 320 151
John Eklund +61 418 300 184
Gratitude and thanks:
We wish to thank those willing participants who gave up their valuable time to enable us to carry out this study. They represented industries in the following sectors:
· Health Services
· Engineering Services
· Marketing and Sales
· Emergency Services
· Supply Chain
· Civil Construction
Mark Keily has graduate and post graduate qualifications in Organisation Development and Human Resource Development. He has over 30 years of corporate experience including more than 20 years’ experience designing and delivering Leadership and Organisation Development interventions within several large blue chip Australian organisations.
Michael Griffiths is a consulting Psychologist with qualifications in Organisation and Performance Psychology. Michael has over 30 years’ experience designing and implementing Leadership and Organisation Development interventions within Australia and North America.
John Eklund has post graduate qualifications in Organisation Behaviour. He has over 40 years learning experience in designing and delivering Leadership and Organisation Development interventions in Australia, North America, New Zealand, India and Europe.
Mark, Michael and John are shareholders in the consulting company, Cornerstone Integral Solutions.
1. ‘Addressing Enterprise Leadership in Australia’ - Australian Industry Group June 2015
2. ‘Study of Australian Leadership’ - Centre of Workplace Leadership, Melbourne University May 2016