Serge’s explanation of a ‘learning organization’ model has an advantage in that it explicitly recognizes how individual and team learning, culture and systems thinking contribute to organizational learning. Sedge identifies five discrete process (or disciplines, as he terms them) that combine to form a learning organization.
• Personal mastery is the ‘discipline of continually clarifying and deepening personal vision, of focusing energies, of developing patience, and of seeing reality objectively.
• Shared vision ‘involves the skills of unearthing shared pictures of the future that foster genuine commitment and enrolment rather than compliance... leaders learn the counter productiveness of trying to dictate a vision, no matter how heartfelt’.
• Team learning ‘is the process of aligning and developing the capacity of a team to create the results its members truly desire. It builds on the disciplines of personal mastery and shared vision (for talented teams are made up of talented individuals) and involves mastering the practices of dialogue and discussion.
• Mental models are deeply ingrained assumptions, generalizations, or even pictures or images that influence how we understand the world and how we take action’
• Systems thinking is a ‘conceptual framework, a body of knowledge and tools that has been developer over the last fifty years, to make patterns clearer, and to help us see how to change them effectively.
Serge’s approach to organizational learning, like the others outlined earlier, owes much to related tools, including organization development and socio-technical systems theory. Like organization development, it is a normative construct with fairly weak foundations in positivist research. The consultants who endorse organizational learning would argue that it is an action-oriented tool that becomes fully understood only through application in a concrete situation.
Lean production
The socio-technical systems, organization development and organizational learning approaches to change discussed earlier originated in Europe and the United States. Lean production, sometime known as the Toyota system, comes from Japan. It is said to have originated in a visit by Saki chi Toyota in the early 1950s to a Ford plant in Detroit. Reflecting on US mass production techniques, he decided that a different approach was needed in Japan where shorter production runs dictated the need for flexibility.
What evolved at Toyota was a production system driven by the triple targets of zero defects, zero waste, Zero defects and waste were to be achieved by the integration of people and technology into a Kazan, or continuous improvement system, operated by teams of multiskilled employees. Zero inventory was to be gained from just-in-time supply chain management-a system that was extended to both internal inventory control (bedtween departments and work stations) and external suppliers. Just-in-time is sometimes know as a ‘pull’ production system because downstream customers (internal or external) pull production through the systems with their orders deterring production upstream. Rather than manrgacture for stock filled immediately. This method of invertor management is a high-risk system exposed to stop-start disruption of context, employees will not understand how to perform in their re-designed jobs. So how can he know if employees have engaged with his vision? By asking them and meas¬uring the responses. Suncorp Metway is big on metrics. The company reviews product quality and design by surveying other people’s customers as well as its own. Suncorp Metway also surveys its employees every year to measure their engagement, job satis¬faction, and their understanding of accountability, responsibility and the group perspective. The results provide feedback at team level. But they can also be compared with international benchmarks to check if the organisation as a whole is on track.
Mulcahy has described himself saying ‘I am a catalyst and a driver, but I don’t replace local leadership’.1 If Mulcahy is to succeed in his role, he has to know how his local leaders are performing in theirs. That is the attribute that Suncorp Metway measures.
Source: Adapted from Andrew Cornell 2004, 'Sorting Suncorp', AFR BOSS, October, pp. 48-51.
Introduction
There is a saying: ‘If you can’t measure it, you can’t manage it.’ But how do managers measure and evaluate organisational change? As we shall see, managers can always find data to measure change. But is that data good enough to show whether their change program has worked? That result from data is a much greater challenge.
Measuring change
Managers measure change using many different statistics. By monitoring performance for a range of variables critical to the business, the Suncorp Metway case shows this point clearly. At the top of the list are organisation-wide financial measures such as earnings, pre-tax profits, dividends and share prices. There are also product division measures such as profits and cost reduction targets. Accountability is monitored closely at all levels of the organisation, with performance measures cascading right down to the basic level of the team. Suncorp Metway also measures staff attitudes. In a context of rapid change, it is essential for employee attitudes to be aligned with the organisation’s vision. From team level to organisation level, Suncorp Metway measures the ‘intangible asset’ of employee engagement with its vision and mission.
Evaluating the effects of change programs
Managers find it difficult to demonstrate what results their change programs deliver. The Suncorp Metway case indicates where the problem lies. In 2003-2004, the business enjoyed strong performance on all its financial measures. But how far was this perfor¬mance attributable to a change program in which 8000 jobs were re-designed to create high-performance work teams? Suncorp Metway's financial success cannot be proven to be a performance outcome of high-performance work teams because the impact of that change cannot be isolated from the effects of other changes occurring at the same time. Throughout 2003-2004, Suncorp Metway overhauled many aspects of the business including marketing and product design as well as job design and teamwork. So much change took place that the organisation was transformed, bearing little resemblance to the situation just three or four years earlier. In such a context, it is hard to separate those gains caused by high-performance teams from gains produced by other causes. Not least, did improved performance simply reflect improved market conditions? These questions are tough to answer.
This is the ‘causality problem’. Managers, unlike many natural scientists, cannot perform a control experiment in which they identify the effects on performance of a single variable (the change program) by repeating the experiment while holding all other variables constant. In the real world, everything changes simultaneously and experiments cannot be repeated and controlled under laboratory conditions. Managers are unable to separate and measure the effects of the many ‘input’ or ‘causal’ variables that influence performance, or to quantify the gains due only to the change program.
If managers can measure overall ‘change’ easily, then why should they worry about estimating the separate contribution of the change programs? Why not just be content to evaluate whether the business as a whole is improving or deteriorating? If objective data show that a business makes a good return on equity or is benchmarked ‘best in class', does it matter what part a change program played in that overall success?
Measuring the effects of particular change interventions, though, is important because only some succeed. The research by Ashkenas in the United States shows that only 25—30 per cent of change efforts succeed.2 Similarly, Champy claims that business process re-engineering succeeds in only 25-33 per cent of cases.3 Change interventions are not guaranteed to succeed, partly because there is a human dimension to managing change. Human fallibility gives rise to the one-eighth rule, which says that:
• one-half of the people will not believe the connection between the way in which busi¬ness manages people and profit
• one-half of those who do believe will try a single, one-shot solution rather than a sys¬temic approach
• one-half of firms that do make systemic changes will persist long enough to see the difference.
Given that this element is known as the ‘one-eighth rule’.