There were two lectures on management and innovation that I wanted to go to on Tuesday (as well as one on who was to blame for the financial crisis) – one at the LSE, the other at Gresham College; I plumped for the talk at Gresham, if only because I thought it might be easier to get in!
Gill Ringland was talking on Beyond Crisis, and walking through the model she and her colleagues at SAMI Consulting have developed for managing in an environment that is full of change. The status quo – the world in which most organisations developed – is subject to several trends; six were seen to be game-changing by Ringland:
- the economic crisis, especially the crippling bank bailouts in USA and Europe; USA used to be the world economic powerhouse (largely using borrowed money – hence the crisis), a role increasingly taken up by India and China
- demographic changes, with continuing population growth in Asia, Africa and Latin America balanced with falling populations in Europe and North America and a world population stabilising at c. 9 billion in 2025, coupled with the aging populations of Europe, North America, China (large as a result of its “one child policy ” of the last thirty years) and Japan
- concomitant with this, an increasingly well-educated world population, with 90% of those 9 billion people educated successfully to secondary level (this compares to only 80% of UK school students completing secondary education to a satisfactory level)
- a changing palette of moral values among the increasing population, with those in faster growing, “more traditional” cultures less concerned wellbeing (or minimising harm) and fairness and more concerned purity, authority and affiliation; this shows itself as a decreasing belief in the rule of law – in “traditional” cultures, there is an increasing preponderance to punish those who enforce the law, whilst in rich nations there is a preponderance to punish those who break it. [It is not clear to me how this stacks up with an increasing belief in authority.]
- continuing environmental pressures, where Ringland painted a more bleak picture than I had heard before (although she reckoned that our ingenuity would pull through in the end!)
- continuing technological change
This, RIngland believes, will result in a dramatically different business environment, one in which business adapted to working in the previous environment will suffer: management styles attuned to the historical “great moderation” will fail and those able to adapt flexibly will flourish.
The model that SAMI have come up with to describe those adaptable, flexible organisations goes by the acronym of PSRO – “purposefully self-renewing organisations”. Pictured as two cones, one representing the rigid hierarchy of an organisation and it’s employees, processes, customers and partners – focused on organisational efficiency – balanced on another of ad hoc strategic activities focused on renewal and the present and future operating environment. The connection between these two cones in asset allocation, set against a background of values to create narrative, “machinery” (communication, processes and governance rather than physical machinery) to create options, and insight – taken together, what might be considered the organisation’s culture.
The difficulty is getting through that bottleneck of asset allocation. New ideas in organisations – innovation – come from employees, customers and business partners: all part of the traditional hierarchy. It is hard for ideas to work through the hierarchy into the area of renewal, lower cone, not least because employees, customers and business partners are busy concentrating with business as usual activities. So resources don’t get effectively allocated to any innovative ideas they might have.
What makes the difference, according to Ringland, is leadership. Quoting a McKinsey survey, successful business performance depends on employees being clear in their purpose, the organisation having a sense of direction and an environment of openness, trust and challenge: all characteristics which can be set by business leaders, within the organisation’s culture. If you get the culture right – largely down to communication and being open to change and transformation (Senge’s “learning organisation” – innovative ideas can pass through the bottleneck.
SAMI use a pretty standard change model – a cycle involving leadership to provide direction and the sense of narrative, environmental scanning and scenario planning, and the creation of innovation and options – which can be used to plan interventions to help move organisations to being PSROs.
None of this felt new, but it was interesting to be reminded of these ideas – a good refresher. The key seemed to be organisational culture. The focus on leadership – the top down creation of culture – didn’t necessarily feel right. Flexible, adaptable organisations seem to be the key – a message we have been hearing a while, I think. Modern, flat organisations (good for open communications and the ease of flow of ideas) are supposedly more nimble and innovative. “Virtual” organisations could be most nimble of all.