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INTRODUCTION
For the past two years we have been charged with
catalysing Process Review in a company which was achieving fundamental improvements
in its business performance, through changing, and through seeking to become
a learning organisation. We have observed similar processes in other benchmark
organisations and institutions and have sought to find new ways of sharing
best practice across, into and out from our own company. In this work we
have seen and talked with practitioners of many of the models and theories
for organisational change and learning that abound in today's business literature.
We have come to see change and learning as dynamic and individualised process.
As such we find metaphors from biology and geology particularly appropriate
to capture the essence of the learning organisation.
Learning from experience and analogy is as powerful for organisations
as it is for individuals. We have been fortunate to spend two years in a
team environment where we were freed from organisational constraints on
innovation and experimentation in pursuit of improved business performance
through change. We aim here to share the insights thus gained and to suggest
how they can be turned into foresight.
We suggest that the process of organic evolution in a dynamic ecosystem
provides the paradigm with which to understand organisational adaptation,
both in general and in the specific case of our own experience. Contrary
to popular misconception evolution is not a process of gradual steady state
change but is instead the organic response to punctuation of a normal equilibrium.
Similar dynamics can be observed in organisations. We explain here the
concept of punctuated equilibrium, as derived from geology and biology,
and why it is important for managers to understand. By creating punctuated
equilibria in organisations managers can sustain and accelerate improved
performance through faster adaptation.
We begin with illustrations from our experience and follow with a comparison of organic and organisational evolution. We are encouraged by the capacity of the comparison to explain organisational change and yield pointers for action and we would welcome contact with others who would like to share in the exploration of the potential of this model. To aid that debate we suggest, at the end of the paper, some sources drawn not only from business literature but also from the fields of geology and biology.
OUR EXPERIENCE
Our company, BP Exploration is in the business of finding and producing
oil and gas. A programme of change instigated in 1989 has yielded us significant
improvements in performance through improved operating margins, and through
reducing the capital cost of major projects. Changed behaviours, re-engineered
processes and changed assumptions on project engineering. have all played
a part. This is not the place to describe the details, nor, as a central
'head-office' team is it our right so to do. All the bottom line achievements
were delivered by local operating units discovering their own solutions
to a common strategic challenge to increase profitability. How this was
done varied from centre to centre. The common thread is that each unit challenged
its own assumptions as to how to do its business and created its own solutions.
The change process was started by a 'big bang'; a management conference
and follow ups designed to puncture organisational norms and begin the empowerment
of local business units. Creative tension in the company was raised then
aligned to very clearly enunciated commercial targets.
Many corporate initiatives were started following the big-bang. New systems
were designed for our Human Resource management processes. Virtually all
of them did not last. Having signalled that a change was permissible they
could not then drive it. Innovation in pursuit of performance began at the
coal face. It could not be mandated from the centre.
Our own team was created early in the change process with a remit to
encourage process review in the organisation but no mandate to proscribe
how that should be achieved. Further, we started within a constraint of
not forcing ourselves on operating units and were free to encourage and
foster innovative approaches to process improvement and to catalyse the
sharing of best practices around and into the company. Lack of formal authority
to act within a conventional structure, a perceived source of weakness when
we started two years ago, became a source of strength in that it triggered
our own innovation in learning from the experience of business units undergoing
change and in discovering means to energise that process. As we did so our
paradigms shifted from a primary focus on the formal business process of
how things are done to an understanding of the need to integrate business
and human processes if lasting results are to be achieved. The integration
of the physical how things are done with the human how things are done is
what we have come to describe under the collective name of Process
Review.
Our experience validates many of the observations made in the business
literature on the failure of many corporate change programmes to produce
lasting change [see Sources Below for examples]. Our organic model for the
corporation, which we set out in the following sections predicts exactly
that.. What corporate programmes can do is to signal that rules have
changed and permit the punctuation of equilibria that is needed for innovation
to happen.
ORGANISATIONS AND ORGANISMS
Successful species throughout the history of life on earth have survived
through adapting to changes in their environment in ways that enhance the
prospects of survival for the members of that species and of continuity
for their genes; hence our organic metaphor for the learning organisation.
Organisations must emulate successful species or fall victim to history.
Evolve or perish as the world around you changes is as true for organisations
as it has always been for organisms. The parallels between the two go further
however.
An organic species is a distinct type of organism whose particular form
allows its members to successfully occupy a particular niche, or set of
niches, in a complex ecological system, of which they are an interdependent
part. Each successful species is able to find and exploit particular sources
of food and energy so that its members can grow and reproduce thereby perpetuating
the species and enabling the survival of a successful gene.
An organisation is an equally complex system, whose particular paradigms,
and processes allow it to survive and grow in a complex economic system.
More and more organisations are now discovering that their place in their
market place also depends on managing their interdependency with other stakeholders
in a particular economic system. An organisation is thus the economic equivalent
of an organic species; It is also an ecosystem in which human stake-holders
- organisms themselves - seek to enhance their own genetic advantage.
The form of a species is determined by its genetic code; information
chemically coded in molecules of DNA. The paradigms of an organisation represents
the equivalent genetic code; the basis of the organisations ability to survive
and reproduce itself. These paradigms may be competencies, they may be technology
or information or they may be perceptions held as the generally perceived
wisdom about how to do things in a particular organisation. The equivalent
roles of organic information encoded as DNA and corporate paradigms often
encoded as collective mindsets, are crucial to understanding the organic
model of the learning organisation. The parallels have been explored in
more depth in Michael Rothschild's Bionomics [1991] but, unlike Rothschild,
we extend them to the whole mindset of an organisation, not merely its information
ORGANIC EVOLUTION
A natural eco-system is a complex system of interlocking and interdependent
interactions between its component organisms and their physical environment.
At the level of individual populations of particular species, it is dynamic
and unstable. At a higher level, the system is stable. Foxes prey on rabbits
but if the rabbit population falls too far foxes starve. Fewer foxes allows
a rabbit population to expand enabling the system to once again support
a larger fox population and so on and so on.
However, any eco-system is also ultimately controlled by external physical
factors, such as terrain or climate which are themselves the product of
changing geological conditions. We do not have space here to divert into
a discussion of the nature of geological processes. Their net effect has
been a produce a history of the physical earth which has been most vividly
characterised as resembling the life of a soldier - long periods of boredom
and short periods of terror; geologically rapid changes to the physical
conditions in which biological species have to survive.
Changing physical conditions force biological change. Either what it
takes to survive changes, or new niches become available to whichever species
can best develop the organic competence to exploit them. For example, some
5 million years ago geologic processes caused the relatively rapid rise
of what is now East Africa from an elevation near sea-level to a plateau
several thousand feet high. Tropical jungle gave way to a more open vegetation
interspersing grassland and small isolated forest areas; a new niche for
a group of apes able to exploit both the security of the woodland and the
new possibility of scavenging for food in the open. The evolution of those
apes became, quite literally history.
The biological and geological evidence of evolution was first recognised
in Charles Darwin's publication of The Origin of the Species in 1858.
Despite subsequent and even continuing controversy his observations have
found general acceptance. Evolution has passed into our language as a by-word
for gradual change. Evolution not revolution is also the plea of many a
manager faced with deciding how to manage a transition in her or his organisation.
In fact, language does us a disservice. On the human or historical time
scale evolution is indeed gradual; on the scale of geological time it is
now recognised as almost instantaneous.
Darwin's greatest challenge in publishing his ideas was to supply a feasible
mechanism to explain his overwhelming wealth of evidence for the fact of
evolution. His answer was the theory of natural selection; the gradual re-enforcement
through hundreds of generations of small differences between members of
a species until gradually species were transmuted into new forms. Darwin
postulated that small mutations which enhanced an individual organism would
give it advantage in the search for food and hence mutations would be gradually
re-enforced by the process of selective reproduction, or as it has become
mis-interpreted since, by the survival of the fittest
Darwin himself recognised a great obstacle to his theory in the lack
of evidence in the fossil record for the gradual change implied by his theory.
His only answer was to point out how incomplete that record was.
The subsequent discoveries of the science of genetics gradually revealed
the processes by which organisms reproduce and replicate themselves, but
only deepened the problem of explaining the evolutionary process. It became
clear that small genetic differences in a large population faces every risk
of being diluted, not reinforced by the reproductive process. A small mutation
faces an infinitesimal chance of breeding through the number of generations
required for natural selection. Under normal conditions the genetic code
of a species works to prevent, rather than encourage adaptation.
Resolution of this paradox, and discovery of geological evidence for
evolution came with the realisation that evolution happens, not as a continuous
steady process but as a response to changed environments and to the isolation
of small populations away from the main gene pool of a species. In 1972
two American palaeontologists Niles Eldredge and Stephen Jay Gould who had
both found geological evidence of evolution happening in this way coined
the term punctuated equilibria. It describes a view of evolution
not as continual gradual change but of long periods of stability intermittently
disturbed by short burst of new species creation.
Evolution's bursts occur when a small population is isolated by whatever
means from its parent genetic gene pool. Beneficial mutations have a chance
of surviving when they are protected from the norms of a larger population.
If subsequently the barriers are removed a successor species may displace
its parent from an ecological niche, or may win the competition to establish
itself in a newly created niche.
ORGANISATIONAL EVOLUTION
Organisms ultimately run on information encoded as DNA. Successful reproduction
of DNA ensures an organisms survival. Organic competition is the struggle
for reproductive success between competing genes
Organisations run on paradigms. Their information, technology, competencies,
product designs and processes are used to add value and secure the competitive
survival of the organisation. Paradigms are to the organisation what genes
are to the organism. They embrace not only the formal knowledge of the organisation
but also the collective perceptions of the organisation's human stakeholders
as to the accepted way of doing their business and of behaving in their
own organisational ecosystem.
The success of the organisation is a source of advantage to the organisms
within it. Human beings are genetically programmed to pursue enlightened
self-interest as much as any other species. Collective vested interests
and assumptions can limit organisational change just as organic interdependencies
preserve the stability of ecosystems.
The cultural norms of an organisation - what it takes for individuals
to prosper - become part of its 'genetic' paradigms: the Unwritten Rules
of the Game which individuals find govern their ability to survive, prosper
and achieve reward and fulfilment in a particular organisational system.
If those rules dictate success for particular behaviours they become self-reinforcing.
Recent work by Peter Scott-Morgan, of Management consultants Arthur D Little,
has shown the power of understanding culture in terms of the Unwritten Rules
and the restraints that 'old' rules can apply on an organisation that is
seeking to change.
Evolution is impossible in a large population because genetic norms re-assert
themselves. Adaptation and major innovation in large organisations is likewise
impossible if the organisational norms resist it. Corporate paradigms risk
outliving their usefulness and becoming a source of inertia resisting -
or limiting tolerable change. The New York Times article (Wed.,Jan.20, 1993,
p.D1) on the biggest annual loss in American corporate history illustrates
this point î ëIBM failed,...because it clung to the wrong business
idea - the idea of one computer industry with one set of management principles.î
The analogy between organisation and organism predicts that innovation,
like evolution will only happen in small isolated populations, stimulated
by need or opportunity; the entrepreneurial start-up, the skunk-works, the
project team or plant that decides, or is given the opportunity to do it
differently. There is abundant evidence in our experience and in the business
literature to support such a view.
A species cannot chose to evolve; its genes prevent it. An organisation
can but only if it chooses to consciously punctuate its equilibrium. To
foster innovation requires that small populations be allowed to be isolated
from the diluting effect of the corporate norms and be freed to respond
to their local environment; their business sharp-end, their customers, their
market.
If a learning organisation is a constantly evolving organisation it must
develop or possess the ability to beneficially isolate its component populations,
allowing them to evolve/adapt/innovate. The larger organisation then has
to ensure an exchange of sufficient ideas to enrich local gene pools without
swamping adaptation under corporate norms.
OTHER EXAMPLES
In addition to our own example, we have seen the same creation of punctuated
equilibria elsewhere. Part of our quest in the last two years has been to
seek to find innovative and powerful ways of transferring insight between
learning organisations in different fields of business.
Much has been written, for example on the extraordinary success of Banc
One in the USA through their creation of a culture that deliberately fosters
"an uncommon partnership" as a basis for operations. The power
to act in pursuit of clearly defined business objectives is left firmly
with local operating units. They are supplied with regular and sufficient
information to generate continuous learning from each other in an atmosphere
of friendly competition or creative tension. All this is happening without
the collective corporate norm of one way of doing things.
The success of, and necessity for, local entrepreneurial approaches in
successful large companies has been documented several times by Tom Peters
in his studies of chosen excellent organisations. We would argue that all
these are cases where collective norms have not been allowed to breed out
sustained adaptation. The punctuated equilibrium theory, applied to organisational
evolution explains why entrepreneurship works, and incidentally why some
organisations are unable to sustain excellence in the long term (see above
on IBM case).
Sustained organisational evolution requires, we believe, support and
encouragement for local innovation free from central rules and norms. Desired
outputs must be agreed and measured, not the processes by which they will
be achieved. Timely feedback on the progress is essential. The central processes
of an organisation must strengthen the adaptive/competitive position of
the edges or they will fail. Continual cross-fertilisation and the learning
between units speeds the evolutionary process. The organisations must remove
unwritten rules that block learning.
Finally, having travelled this far with our exploration of the organic analogy for organisational learning we are encouraged by both its diagnostic capability and its pointers for action. in the spirit of learning, and of this journal in particular we invite contact from readers interested in sharing and widening what we believe to be an exciting dialogue.
SOURCES
Our ideas are drawn from our experience in the fields of geology and
organisational systems and latterly in operational Process Review. They
have been stimulated from, especially the following:.
The literature on business excellence is vast and will be known to most
readers of this journal. Here we have specifically cited Tom Peters' several
books, and the observations by Michael Beer, Russel Eisenstat and Bert Spector
on why Change Programmes Don't Produce Change. [Harvard Business Review,
Nov/Dec 1990 p158]. The frequent failure of centrally mandated change
programmes is also documented in Robert Schaffer and Harvey Thompson's,
Successful Change Programs Begin with Results [Harvard Business Review
Jan/Feb 1992 p.80].
The punctuated nature of the geologic record is brilliantly encapsulated
in Derek Ager's .The Nature of the Stratigraphical Record, [MacMillan
London 1981]
The Punctuated Equilibrium theory of biological evolution was first formulated
by Niles Eldredge and Stephen Jay Gould in 1972 [ Schopf T.J.M. Models
in Palaeobiology, Freeman Couper and Co. p32]. Both writers have developed
it in books and numerous essays.
Biologic analogies for economic and scientific processes have recently
been suggested by, respectively Michael L Rothschild [Bionomics: The
inevitability of Capitalism, Futura 1992] and David Hall [Science
as a process, University of Chicago Press 1991]. Punctuated Equilibria
as a model for organisational change has been suggested by Connie J Gersick
[Academy of management Review 1991 Vol. 16 No 1, p10].
The dynamic and systemic view of organisations and larger economic structures
owes much to the work of Jay Forrester and Peter Senge from MIT [e.g.
The Fifth Discipline: The Art and Practice of the learning Organisation
, Doubleday 1990].
The restraining effect on business of current paradigms about how, for
example technology needs to be applied: the norms set by always having done
it that way are, we believe amply described in literature on change and
improvement and are confirmed by our experience.
The behavioural paradigms of organisations - the Unwritten Rules - usually
stem from formal management policies appropriate to the business environment
and strategy for which they were created. Peter Scott-Morgan of the consultants
Arthur D Little has pioneered and recently published [ Removing the Barriers
to Becoming a High Performing Business, Prism First
Quarter 1992, p75]
Ilfryn [If] Price is a geologist
whose previous career spans lecturing research and petroleum exploration.
in many parts of the world Until creating the Process Review Team described
here he was manager of BP's world-wide Exploration and Production Research
Division. In April 1993 he becomes the head of If Price Associates
[Pewley Fort, Guildford GU1 3SP, UK]; a change agents network dedicated
to helping clients achieve higher business performance through active, team
based learning.
Lilly Evans is an electrical engineer and computer scientist who has over 20 years of experience in the commercial, academic, research, development and consultancy environments. Lilly is an accomplished specialist in management and business development related to re-engineering of business processes. In the Process Review Team, she is the main networker internally and with the outside world, lecturing and acting as inter company consultant (most recently with Bank One, Cleveland). She is also the principal proponent of systems thinking within BPX and is responsible for co-creating a novel approach to introducing it into management practice (used among others by Federal Express).