Rugby, Transformation and Competitiveness
A role for Business Education in the African Renaissance
Used with permission of the author:
Author: Andrew Hofmeyr
Business Education Design (Pty.) Ltd.
30 April 2007
1. AFRICAN RENAISSANCE – THE ECONOMIC IMPERATIVE
If there is going to be an African Renaissance, it will be founded on an economic one, and will be led by South Africa. Without economic strength, socio-political survival, let alone renaissance, is impossible. And no other African economy really has the capacity to lead Africa into the future.
In pursuit of taking on this challenge, South African business is currently awash with an unprecedented range of new initiatives – some borrowed, some home-grown, as we try to find the key that will unlock our competitive potential – transformation, Ubuntu, restructuring, downsizing, restyling, rightsizing, rightstyling? The list is seemingly endless and apparently diverse, yet whatever the initiatives call themselves most have organisational restructuring as their central focus and cost-cutting as their central goal.
Perhaps this is understandable. On re-entering the global village and its economy, South African corporations face two simultaneous – and at first glance conflicting – pressures. We face internal, socio-political pressure to transform, while trying to meet external, competitive pressures to perform. The challenge lies in how we have interpreted these pressures and reacted to them. I will argue that in most instances we have missed the boat and that many transformation interventions will have at best limited and short-term impact, at worst leave their architects worse off than before. I will also argue that business education should form the core logic and foundation of transformation, and present findings of this approach in a range of SA corporations.
2. TRANSFORMATION PRESSURES AND RESPONSES
The pressure to transform is largely being seen as a socio-political and cultural imperative. It should, in fact, be seen first and foremost as a business one. It is not that our organisational structures and processes are somehow un-PC. It is that they are ill-suited to business in the new international game. Unfortunately, with a predominantly socio-political agenda, transformation is widely viewed as a process, usually somewhat resentfully undertaken, of restructuring the organisation and making some affirmative action appointments. And, very often, that’s it.
So we have changed some of the positions in the team, and some of the players. And now we wait for the results, too, to change. It just doesn’t work that way. Organisations - like rugby teams - do not improve simply because new people are in new positions.
3. COMPETITIVE PRESSURES AND RESPONSES
So we find ourselves uncompetitive. Not surprisingly. After years of isolation we have re-entered the global game, only to find that the game itself has changed – leaving most of us behind. Most critically, what makes an organisation competitive is no longer merely a question of differentiating on the basis of quality and price – low price, high quality products and services are now taken as given. Our international competitors are producing great products at low variable cost. Technology has ensured that. And what has been our response? As our shareholders clamour for increased profitability, we have taken the short-term (and short-sighted) option – bring in the consultants and cut fixed costs (particularly in the form of staff). Profits go up, fast, and we look okay for a while. The likelihood of sustaining these profits, though, is questionable. Heavy-handed cost-cutting has to have an impact on productivity at some stage and our competitors will simply keep reducing their prices until our margins have disappeared, so that no amount of fixed costs cutting will make a jot of difference.
The real tragedy is that it is not only individual corporate profits that will suffer. At a macro-economic level society itself will feel the impact – from reduced profitability, to a shrinking tax base and increased unemployment. Our markets will become more unstable, investment less likely and a downward, self-regenerating spiral inevitable.
4. THE RELATIONSHIP BETWEEN COMPETITIVENESS AND TRANSFORMATION
Transformation should be driven by our need to be competitive. And competitive advantage today, with technology as a given, is essentially a function of two inter-related variables – a good product or service, delivered with the combined, business-focused energy of all the members of an organisation. We have some reasonable products and services, but very limited business-focused energy. Our energy tends to be focused elsewhere (typically on internal fighting).
It is the combined, business-focused energy in an organisation that delivers the product or service at low cost, to a customer who is delighted at the way he or she receives it. That is what will determine one’s competitive advantage. And the only way we are going to achieve this competitiveness is through transformation of an entirely different kind – transformation of the way all staff in our organisations see themselves – in relation to the customer, to each other, vertically and horizontally, and to the business itself, particularly in terms of each individual’s value-adding role in that business.
Thus restructuring alone, without a concomitant transformation of the way people behave and relate to each other within the new structures will prove of little value. It is rather like changing the positions in a rugby team without mentioning that players should occasionally pass the ball to each other. I often get the sense that what managers are hoping is that they can finish with the “transformation thing” and then return to the "good old ways" of doing things – where staff accept management decisions, unquestioningly, and all they need is some skills training and an incentive scheme to get on with the job.
This will not happen. The very rationale behind transformation is that the old ways of doing things simply won’t work any more. We need to get used to the fact that we are going to have to create new business relationships within the organisation – because that is how we will become competitive.
In fact without these changed business understandings and relationships, restructuring and other transformation plans will continue to be seen as yet another management plot and have little more effect than re-arranging the deck-chairs on the Titanic. In fact, badly handled, restructuring could itself become the iceberg that sinks the enterprise. Many current transformation plans are foundering as confused, fearful and resistant staff, quite understandably, white-ant the process.
To revisit the sports metaphor. If we played rugby like we run our organisations we wouldn’t need to go on tour. We would manage to lose the game without needing competitors to beat us – our internal wrangling would see to that. The bottom line is that we don’t function effectively as teams - vertically or interdepartmentally. This would be like a rugby team where the forwards didn’t talk to the backs and the backs didn’t pass the ball to each other. To compete effectively, we need to do what rugby has done – create unified and committed teams, where all players understand the game, understand what is needed to win, and who have the commitment and teamwork that ensures that this is what happens. They win because they pass the ball; we lose because we pass the buck.
5. CREATING ORGANISATION-WIDE TEAMS
How can we achieve in our organisations what we have achieved in rugby? One problem is that in the organisational context achieving commitment and teamwork has always been a daunting task and is currently exacerbated by an ethos of confrontation, fear and anger – often occasioned by the very changes that are supposed to help us succeed.
The answer lies not in fuzzy team-building or ‘empowerment’ programmes, nor in management shouting ever louder about the necessity for change to an audience that does not necessarily understand the underlying logic thereof. Successful change in business must be founded on business principles and this has two fundamental requirements – an organisation-wide understanding of the business rationale for change, and change must go beyond structures, into behaviours and relationships.
In other words if you’re going to move James Dalton to full back you’d better have a good reason for doing so, make sure he buys into that reason and check that he knows how to add value in that position. Once all the players know why transformation is happening, how the new relationships are going to work, what the rules and nature of the game are and what contribution they can make, their ability – and commitment - to perform, will follow.
This requires two fundamental changes in the way we are approaching transformation – the way it is initiated and what, in fact, is changed.
6. INITIATING TRANSFORMATION – NOT AMERICAN FOOTBALL
Our experience of transformation projects has indicated that the majority are top-initiated and top-driven and the degree and form of consultation (if any) is grudging and tokenist. Managers constantly tell me that they do consult with staff – they tell them what the project entails and show them the financials. This is little short of silly, in cases where staff understanding of the rationale for change and the meaning of the financials is limited, or absent entirely.
This would be rather like asking me to play American football – a waste of time. The rationale behind the game completely eludes me. Behemoths with limited fashion sense tackle each other with little evident interest in who has the ball. The game stops every few seconds and the scoreboard (like financials to staff?) makes no sense at all. Yet the Yanks love the game - understandably. They understand its rationale and scoring system.
And yet we complain because our staff are not as excited about our transformation plans as we are. They just don’t seem motivated, in spite of the incentive schemes we drafted with our consultants. Basically, this should come as no surprise. Benchmark research by French and Raven in the 60’s confirmed what we perhaps knew intuitively – that motivation based on external influencers (reward, punishment, authority etc.) was "public dependent" (it only had an impact as long as the influencer was visible) – and therefore difficult to sustain. The only sustainable form of motivation is knowledge – one behaves in a particular way not because one is going to be rewarded or punished for doing so, but because doing so is inherently logical. Our experience has borne out this research in the organisational context. Where there is an organisation-wide understanding of business, and the business of the organisation, the rationale behind the business and the logic of success drives productive behaviour.
But herein lies the rub. Understanding of the core principles and causalities of business is typically not well understood in South African corporations - particularly at lower staff levels. This is not because of any lack of ability or interest – it is predominantly the heritage of an education system driven by the needs of ideologues, rather than the needs of our economy, and an economy driven as an authoritarian, rather than participative, enterprise.
7. TACKLING THE BARRIERS
Understanding what the level of business understanding is – and why it is what it is – will help us in drafting a approach to remedying it. The curriculum ideologues of past South African education had little interest in promoting either critical thought or business understanding. Critical thought might have led to criticism and there was little point in teaching business at large, as life and career chances were pretty much predetermined by race. What business education there was (business economics, bookkeeping) was typically touted as an option for the academically less able. The impact of this is now being felt – in our corporations, where understanding is limited, and in our small business sector, sadly characterised by vast over-trading in limited markets.
By the same token the economic ideologues of the past were ultimately into command economics – a form of ethnic socialism. In such an economy, again, broadly held understandings of business were seen as unnecessary.
8. TRANSFORMING UNDERSTANDING
For transformation to succeed, then, in achieving the dictates of both socio-political and competitive pressures, creating organisation-wide understandings of business at a generic level, the business of the organisation itself, the rationale behind change and the nature of that change, are mandatory. And given that our education has failed to produce such understandings, it is our responsibility to do so – not for any philanthropic motives - but because doing so makes good business sense.
And such business education must be serious. Firstly, too many past programmes, seen as paternalistically “nice-to-haves” by management, failed because they were simplistic. Secondly, the education must be organisation-wide. Every staff member is involved in the creation of value and to do so intelligently and energetically must know what the creation of value means, and why it is a good thing. Thirdly, the outcomes of such programmes must be taken seriously by management. Our research has shown that where business education has happened and managers have ignored the outcomes – in the form of ideas from lower level staff and new levels of energy, the result has been justified frustration. Where the outcomes have been taken seriously the results have been more than encouraging.
9. UNDERSTANDING OUTCOMES
Let’s have a look at some of these outcomes. Over the past two years we have been involved in the running of a business education programme for some 16000 staff in small and large companies, in 6 African countries. Outcomes have been tracked in three ways – informal feedback from clients, longitudinal studies by Dr Gillian Godsell and WitsBusiness School and a pre-post study at one large corporation by the National Productivity Institute (NPI).
9.1 Dr Godsell’s findings
Investigating the impact of the programme at 12 corporations, 6-12 months after the event, Dr Godsell’s team found the following:
- Improved understanding of business principles, and a desire to apply these principles to the participant's own job
- Managers reported improved teamwork and willingness to share tasks, as well as increased productivity
- Improved understanding and appreciation of the role of management
- A reduction in conflict in the work situation
- Innovative ideas and efforts to implement cost savings
- A greater sense of ownership of and responsibility for their own work
- Demonstration of an active, "owning", understanding of their work
- A greater sense of responsibility, increased enthusiasm, and improved co-operation
- Greater satisfaction from and a growing sense of competence in their work
Dr Godsell also reported on the critical importance of a receptive context within the organisation, to encourage the changes that take place. Indeed, one of the strongest recommendations, supported by the programme designers, is that managers and supervisors attend the course with participants, increasing the sense of teamwork, providing valuable mentoring opportunities, sharing ideas and increasing understanding and appreciation of each other's roles.
Dr Godsell writes: "It should be noted that changes following training depend not only on changed employee attitude and understanding, but on the company welcoming and facilitating the implementation of change. The Team Business training therefore seems to work best when all levels of employees, including supervisors and managers, attend the training course. These changed perceptions seem to lead to a greater sense of responsibility, increased enthusiasm, and improved co-operation."
9.2 The NPI study
The findings are based on pre- and post-programme tests with 3 500 staff at a large, traditionally conservative corporation undergoing transformation.
Business knowledge - Pre-post programme shifts:
Climate change – understanding, and accepting, the central tenets of transformation.
These results, recorded in a state of uncertainty and retrenchments, suggest that while total success is unlikely, a critical mass can be achieved within which constructive change is possible. The impact of the programme has been such that an initial target of 6000 participants has been extended to the entire 11500 workforce and levels not originally targeted, including management, are now requesting the programme. The results are extremely promising – not just for the organisation concerned - but for all South African companies grappling with the challenges of getting staff to focus their energy and relationships on the company’s core business – and its success.
9.3 ANECDOTAL FEEDBACK
In addition to formal research, the experience with this approach, of people on the ground, provides an insight into what can be achieved once business understanding is shared.
Understanding how a business runs:
Revlon “Gives guys an understanding of the restraints under which a business operates - a revelation to lower-level employees.” Dave Lowery, Director Operations.
Understanding of business philosophy:
Prochem “… comprehensive insight into the philosophy behind a successful business, to all, in the same language”. Ntsuntsu Mahlangu, Training Manager.
Staff contribution to value adding:
SAB Beer Division “An ideal opportunity … everyone understands the direct contribution they can make to the value-adding process.” Mandy Rossouw, Finance T&D Manager.
Tanzania Breweries. “The programme has had a huge impact – increased productivity, improved relationships, sticking to targets” Malineo Mbegu, Plant Accountant.
Albany Bakeries “a positive attitude amongst our workers …a far better acceptance of our position in the market” Nic Penstone, HR Director.
Boart Longyear. “… our self-directed work teams have learned to be more successful in their departments” Neville Jones, Training Officer.
Albany Bakeries “the TEAM BUSINESS intervention … negotiations of a much higher standard with quicker results” Nic Penstone, HR Director.
Commitment to company’s success:
John Deere “Team Business really teaches employees about the basics of business, and how they can influence the success of their own company” Len Brand, Manager HR and Total Quality.
Creating a common language of business:
WitsBusinessSchool “Team Business provides an overview of how a business works for all levels of employees in the organisation” Jonathan Cook, Director MDU.
TEBA “An extremely beneficial course … to all levels of employees in a team-building environment” Neil Rae, Personnel Manager.
The irony, of course, is that we actually have it all. Minerals, cheap power, good transport and communications infrastructures, great weather, natural beauty and so on. What we haven’t got yet is corporations that really operate as teams – with combined intelligent energy. Transformation is thus not just a fad. It is an absolute essential.
But transformation must not just be about structures and costs. Real transformation is about the way we operate, internally and externally, as businesses. And it is simply inconceivable that this can be achieved unless everyone understands what the rationale, value and ethic of business is. So, we are not going to achieve acceptance of the case for change by shouting louder or offering more palliatives. We will only succeed once all of the people in the organisation have a shared understanding of the logic of business, and therefore the logic of change. Once this happens, the necessity for and shape of change undertaken become understandable, staff acceptance thereof more likely and commitment to it achievable. Once understanding, acceptance and commitment have been achieved, productive behaviour should follow. And if productivity and competitiveness follow, so perhaps will the African Renaissance.
For more results from studies done in collaboration with Business Education Design, click here.
Andrew Hofmeyr (BA, HDE (PG), BEd. Med, MBA) lectured in educational theory at the Johannesburg College of Education and the University of the Witwatersrand from 1977 to 1992. During that time he studied research methodology and educational technology on an international fellowship at the University of Surrey, UK. He is a founder member of Business Education Design, whose training programmes are used by leading corporations and business schools in South Africa and theUSA. He can be contacted at and at the Business Education Design website www.bused.co.za.
Transformation is not just about changing the people in the structures in an organisation to suit the current socio-political environment, but empowering employees and management to understand and align themselves with organisational business strategy and ethics.
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