Transforming Organizations

Engaging the 4Cs for Powerful Organizational Learning and Change

Michael Anderson, Miranda Jefferson

• Publisher: Bloomsbury Business
• Year: 2018
• ISBN:
  9781472949332
• Edition: 1
• Topic: Business
• Subtopic: Leadership
• Index: Business

In a world where current political climates and management cultures make risk aversion commonplace, Transforming Organizations shows how all organizations, including large and cumbersome institutions, can transform to suit the needs of our rapidly evolving economic and social realities. This book looks at how organizations and their leaders can adapt to an increasingly volatile and uncertain operating environment through the 4Cs: Creativity
Critical reflection
Communication
Collaboration Based on extensive research in the education, organizational and business sectors, Michael Anderson and Miranda Jefferson show how the 4Cs can be embedded, embodied and enacted in many different types of organizations to make them more responsive to emerging challenges, threats and opportunities. Transforming Organizations highlights clear links between leading and learning – because leadership is no longer (if it ever was) just a role for CEOs, CFOs and senior managers. For organizations to be flexible and agile in the 21st century, all employees must have the opportunity to exercise leadership. But this can only happen if deep learning is a standard feature of a leadership approach that actively and deliberately incorporates key 21st-century skills – the 4Cs themselves. There is a substantial gap between companies knowing what they should do to be flexible, creative and have clear channels of communication, and how to make that a reality. Transforming Organizations provides the evidence and inspiration necessary for doing business differently. Written for those who have become disillusioned or frustrated with business practices that cannot meet the fast-moving demands of the 21st century, the book provides strategies and approaches developed from the authors' work in real organizations in order to implement change and see organizations transform for the better.

1

Transforming organizations

Introduction: jumping the rhetoric reality gap

On 5 October 1979,¹ stuntman Kenny Powers (Figure 1.1) attempted to jump his rocket powered Lincoln Continental from Canada to the USA 1 mile (1.61 kilometres) across the St. Lawrence River. The preparation took more than four years, it was costly (more than one million dollars), methodical and exacting. When the day finally came for the jump the car flew 50 feet (15.24 metres) and plunged into the river seriously injuring the stuntman. In the end, no matter how careful the preparation of the equipment or how experienced the team or highly trained the stuntman, they fell woefully short of the required goal. Fast forward to today and our organizations face a similar jump. We have spent years preparing ourselves, learning, restructuring, harmonizing, recruiting and developing the ‘right’ people. In our view, we currently do not have the capacity to make the jump. We need to bridge the gap between old ways of thinking and doing in organizations, to approaches that are going to help us move from rhetoric (creativity, innovation, effective and authentic collaboration, perceptive critical reflection and incisive communication) to the realities (complex problems, fixed mindsets and outmoded practices) facing us in an uncertain world. In this book we want to offer some preparations and processes for organizations to attempt this jump.

FIGURE 1.1 Stuntman Kenny Powers before the ‘big jump’.

The rhetoric reality gap

There is a growing chorus from governments, shareholders, governors, business councils and academics about the need for our organizations to change. They variously argue (as we do later in the book) that changes in technology, work practices, the environment and society are creating an irresistible momentum for transformation. We will discuss transformation later in this chapter but in short, we are referring to the process of shifting practices and approaches to make them relevant to current realities. The problem is the ‘rhetoric’ hardly ever engages with the reality of organizations and transformation. In the end, this can lead to some organizations groping in the dark for how to transform or falling back on old practices. These approaches are often unsuited to new challenges and can lead to the decline and demise of some organizations. This book aims to begin closing that gap between the rhetoric of transformation and the action of transformation.

We will provide approaches and frameworks that make explicit the capacities required for organizations not only to survive but to thrive in circumstances that present new and dynamic challenges. Now more than ever we need organizations that can look over the incoming waves of compliance and administration to see a way forward, in a sometimes confusing, complex and chaotic world and construct a vision for change.

The 4Cs (creativity, critical reflection, collaboration and communication) form the basis of these approaches and are critical in moving our organizations away from being museums of outmoded practice. These 4Cs have the potential to make organizations energetic, flexible and resilient places that directly meet the needs of a world in flux. Like Kenny Powers (our stuntman) we are staring at a chasm between rhetoric (the what) and reality (the how). This book aims to bridge that chasm by offering tangible strategies, approaches and frameworks.

We believe it is time for a fundamental reconsideration of the way we do organizations. In all of our organizations, irrespective of their size, shape or motivation, we need to embed the capabilities that make them inherently wise, flexible, productive, innovative and resilient so we can ready them for an uncertain future and contribute to a world that is focused on human thriving and not disintegration. While we do not claim we have all the answers to this major challenge, we argue a renewed focus on the 4Cs is a critical part of making organizations equipped for the present and the future.

This chapter outlines our approach to transformation through learning and re-imagined practices. In most chapters of this book we begin with a case study of an organization that has engaged with transformation and has not only survived but thrived in the process. In this chapter, we tell the story of Lego’s transformation to demonstrate how the 4Cs can work deeply in an organization to bring about transformation. Lego’s transformation was enabled by learning and reflections on their practices. The application of effective and focused creativity, critical reflection, communication and collaboration was the difference between success and financial decline.

Transforming an organization through learning and wisdom

Perhaps like you, one of my² fondest memories of childhood was playing in a seemingly bottomless bucket of Lego (Figure 1.2). I remember the almost endless combinations I tried to build depending on what had caught my imagination that week, from superheroes to racing cars and castles. Lego as a product was and still is a standard part of a kid’s first experience of play and innovation. Yet Lego (the company and the product) had a near death experience at the turn of the last century. Like so many other companies, new competitors and innovations in the toy market were threatening to displace a brand that for so many years had been a standard part of childhood play. The legendary Lego, which had a steady and successful history, was now facing sales losses of 26 per cent in 2003 and 20 per cent in 2004.³ Lego was looking at almost certain annihilation. The situation was summed up dramatically by the CEO Jørgen Vig Knudstorp at the time: ‘We are on a burning platform, losing money with negative cash flow, and a real risk of debt default which could lead to a break-up of the company.’⁴

FIGURE 1.2 A bucket of Lego.

In part these problems were being created by an overly complicated product line with over 12,500 different components in stock, hundreds of different colours and 11,000 suppliers. In 2004 Lego acted. It created a diverse team of internal and external specialists⁵ to collaborate and re-imagine the organization and head off catastrophe. The collaborators considered all aspects of the organization from supply chain to deliveries and customer satisfaction. In 2005 the team created a ‘war room’ to enact the ‘shared vision’ strategy with drastic effect. The company reduced the colours by half, and the stock units from 12,500 to 6,500. The company also communicated directly with its customers to critically reflect on its assumptions about the business. Discussions with the top twenty clients revealed 24-hour delivery was not essential. This change alone brought significant cost savings to the business. In 2015, although some of the product options were reduced, customers saw on-time delivery improve markedly. Because of these changes between 2005 and 2008, sales increased by 35 per cent and fixed costs reduced from 75 per cent to 33 per cent. In 2016, the company reported record revenue largely due to their investment in digital products and innovation. Lego’s CEO said of this transformation in 2016:

Innovation is critical to our success and each year around 60 per cent of our portfolio is new products. We are constantly challenging ourselves to engage and inspire children with the most relevant, exciting and fun play experiences. This year we have strengthened our efforts around digital engagement and found new ways to connect with children online and through a range of digital platforms.⁶

In addition, Lego is now participating in partnerships with UNICEF to protect the rights of the child, and developing programmes for cyber safety and refugee education initiatives. In 2016 Lego’s employees organized play experiences for more than 100,000 children⁷ around the world in partnership with local children’s charities.

Lego as a learning organization

The story of Lego’s transformation is probably familiar to many. The key feature of this story for us is that this company learnt. It learnt through focused processes that built capacities in what are called the 4Cs: collaboration, creativity, critical reflection and communication. By learning we are referring to the ability of an entity to change and reshape in response to understanding the issues facing that organization. We will go into detail about how these processes can be enacted in organizations throughout this book. Briefly this is how these capacities were built and implemented in Lego’s transformation.

Critical reflection

Critical reflection is the ability to perceive and analyse situations and then formulate wise responses to complex problems. Inherent to critical reflection is an individual’s analysis of their agency. Agency is each individual’s ability to develop insight and exercise control within a context, situation or organization. In Lego’s case, critical reflection helped them to understand how their complex management structures and the sometimes confusing decision-making processes led to the slow decline of the organization. They were then able to act creatively to devise a strategy for transformation. Of course, reflection is not a new term to many of us, but reflection that analyses and prompts action in our experience of organizations is atypical. We discuss the uses of critical reflection in more depth in Chapter 6.

Creativity

Creativity is the innovation literacy as we argue in Chapter 5. Often when trouble arises, organizations tend to cut innovation and creativity rather than investing more heavily in them. In Lego’s case the opposite occurred. They innovated their way out of trouble, relying on the capacities (creativity and innovation) to identify new products and markets that led to improvements in revenue. Companies that faced similar challenges to Lego, such as Kodak, did not act creatively enough in the face of rapid change.⁸ These businesses have become cautionary tales demonstrating what happens when organizations cannot reorganize and have confidence in their creativity in the face of rapidly shifting business and societal realities. Organizations who cannot build creative capacity are unlikely to connect deeply with innovation. Lego’s history of creativity, innovation and play may have been one of the deep cultural factors that allowed it to survive and is enabling it to thrive almost two decades later. Another capacity that made its transformation successful was communication.

Communication

The first instinct in Lego’s case was not to talk but to listen. Interviewing its clients and being alert to their messages about deliveries provided them with the evidence they needed to streamline their processes. Once the organization listened it shared the vision and involved their community in the discussion. This might seem simple in hindsight but there are numerous organizational examples where communication is misunderstood as a one-way process. In Chapter 7 we expand and explain how organizations can build effectiveness by understanding and enacting effective communication strategies.

Collaboration

Instead of appointing a hero leader who swept in and slashed the organization, Lego trusted in collaborative processes. They developed a team who had wide-ranging expertise within the organization and worked together to make the changes. The establishment of the ‘war room’ and the ‘shared vision’ strategy situated the issue in Lego as a shared problem with a shared solution. In the implementation of the solution, divisions within Lego collaborated across functional areas to make systems and approaches more efficient. They also worked with their suppliers, retailers and customers to understand them more comprehensively. This kind of transformation occurs when true collaboration occ...

Table of contents

• Cover
• Half-Title Page
• Dedication
• Title Page
• Contents
• List of figures
• List of tables
• Foreword
• Acknowledgements
• Introduction
• 1 Transforming organizations
• 2 Understanding the big picture
• 3 Preparing the ground: preconditions for transformation
• 4 Making transformation happen
• 5 Creativity
• 6 Critical reflection
• 7 Communication
• 8 Collaboration
• 9 How 4Cs can close the rhetoric reality gap: some implications
• Notes
• Index
• Copyright