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What is really going on beneath the surface? What is the nature of the bifurcation that is unfolding? That's what interests me.

How will Universities Cope?

 We live today in one of those periodic times, when shifts in beliefs and in communication technology drive a fundamental change in how power is defined and exercised. What are these trends and how do they manifest themselves in the lives of universities? How can universities, with their unique cultures and management processes, cope and even prosper in this type of environment?
What is going on? What are these trends and what do they mean for managing a University? In particular, what do they mean for the social and human aspects that HR will have to plan for?
  • A revolution in demography - By 2020, most people in the developed world will be over 50. This is a unique demographic event in the history of nature. This aging of society will affect all aspects of the social and work world. It will be especially challenging for organizations that rely on a stream of young customers or those who rely on the young to replace the old as participants. Universities are vulnerable in both ends of the age spectrum. Who will teach? Who will be the students? How will we attract and retain staff and students? Our previous assumptions about the answers to these questions will have to be revisited.
  • A revolution in values. There is a pronounced shift in organizational values in the developed world. The shift is from an acceptance in organizations of a top down and process driven approach toward a new set of values that built on self-expression and dialogue. This values' shift is proving a challenge to all organizations In particular, all "customer" interfaces in every field of service delivery are being challenged by this new values set. There is no reason why institutions of learning should be exempt from this shift. where the managerial culture is authoritarian. For academia, the shift is especially challenging as it demands also a shift in pedagogy from where the teacher and content is the centre piece to where the student and dialogue is the centre piece. What is meant by this shift? What is the right course to take? How will we get there? Our current approach to delivery and to teaching itself has to re-evaluated.
  • A revolution in technology - It is not an illusion, the pace of technological change is accelerating in a non-linear manner. The web revolution has however only just begun. The impact on society will be similar to the advent of the railway which radically changed how and where people lived and worked in the 19th century. We can expect no less of a revolution today. While the new design for society is not yet clear, the new design for service delivery is emerging with some clarity. New technology enables the customer to access the service provider on his terms and at times that suit the customer. The new manufacturing process, as developed by Dell, has turned the Ford model of make and sell on its head. The adversarial customer relationship of the transaction economy, is being replaced by a community and relationship based model as exemplified by eBay and Amazon. How will this affect education? Many say that education is different. This may be a dangerous assumption. These technological and cultural forces are located already on the edge of the Academic world and are becoming ubiquitous. They fit the new values and they fit the new service/cost criteria as we are seeing in the airline industry. They will bear down on how universities operate. What will happen to high cost, place and content based universities when an educational equivalent of Southwest Airlines or EBay emerges? Other organizations in other sectors that have not thought about this threat now face extinction. 
  • A revolution in educational costs and service expectations - A generation ago, post secondary education was an elite process. Now it is expected to be accessible to most young people. This has lead to a massive expansion in the scale of universities and to a new and challenging relationship with government. Governments, in many parts of the developed world, see universities as engines of economic and social development. As Governments pay many of the bills, their social and economic expectations are becoming important parts of the university agenda. In response, Universities have had little choice but to adopt many of the features of the industrial workplace. Mass production of content and mass processing of students has enabled student participation to rise but at the cost of a significant increase in infrastructure costs and a corresponding reduction in organizational flexibility. Development and fund raising have become critical skills of the President. Coping with Unions and labour relations has become an important Presidential skill. As a result, the culture of business is seeping though the academic world. Paradoxically, as more students participate and as the direct and indirect costs of education rise for the student, the value of a BA is devalued in the work place. The average student can no longer afford a 4 year term at university away from home. Something in the cost mix will have to break. The current system cannot deliver the price and the quality that the student can afford and that the staff can tolerate. The result is a growing conflict between the internal stakeholders. All the stakeholders intuitively sense that something has to give but have circled their own wagons to defend themselves. How can Universities break the deadlock between their constituent parts? Is it likely that the conventional process of fighting this out at the bargaining table will work? What new process would give us the chance of reconciling the fears of the competing groups?
What operational issues will be exposed by these trends? -
  • Bearing in mind, a very small pool and a huge demand, how will we attract and retain the key academic and specialist staff that we need? Rank this issue in importance? Is this a survival issue or just a tough one to deal with? What are the financial implications of getting this wrong? What are the reputational issues of getting this wrong? 
  • How important will dealing with the subset issues such as pay and work place culture be to the attraction and retention issues? Is money the only issue? What can you afford bearing mind the pressure on the cost front?
  • Is transforming our costs merely about finding new cuts or will they come from a redesign of how we do things? How will conventional cuts affect the ability of the university to deliver? What will happen to morale and to students? What will increasing risk of more internal conflict mean?
  • Will finding more effective and ways of teaching more for less be about the application of new technology or is it about finding a way to change our mindsets about how to do this differently?
  • Is affecting change itself an issue of power or is it an issue of understanding how we change from a psycho-social perspective. How important is being able to change?
  • How important is it to reduce the centrifugal forces that are affecting our university? Can this be done as a matter of power or are there social and organizational design issues involved?
  • How can we reduce the inertial and complexity drag of our union environment? How important is this in a rapidly changing world? Can we use power to do this?
  • Our health and benefits costs are growing at a non linear rate. How substantive is the threat to our financial health? Is solving this issue a matter of power or design?
The reaction to these trends by the key players.  Many universities have no process to engage the interests of the entire university but have highly developed processes to defend the interests of particular parts. The centrifugal forces are building. Like Canada itself, the position of the centre is under siege at a time when the strategic issues are so complex and challenging that they can neither be solved in the President's office nor by each faculty acting alone. Simplistic thinking tells us that we should centralize or that we should decentralize.. Our national discourse is full of these ideas. Is there a better way?
What is at the heart of the challenge? The core issues are social and cultural. They are about core beliefs and identity. The risk is to assume that our current process of adjudication can solve tensions of this nature when the stakes are survival and the issues are shaped as paradoxes.
Imposing a the central will of the president will work no better for a university that for Canada. Nor will balkanization work. Our management process has been designed fro a more simple time. We need a new way of solving complex problems.
What are the principles of a process that has a good chance of coping with these challenges?
  • Sharing the Burden - The core principle is to shift the burden of solving these many challenges and paradoxes from the office of the President on to the leaders of all the key stakeholders at a university. When all the stakeholders are at the table, and when they are collectively responsible, then there is a chance that as a group they may act responsibly.
  • Shifting the organizational metaphor from machine to network - So long as we use the machine as our organizational metaphor, we tend to seek autonomy as the solution. This sets up an irreconcilable tension between the centre and the parts. There is no way that the issues confronting universities today can be solved in an environment of power tension. It is no coincidence that our new organizational metaphor is the web - a network. Networks have at their centre not an office or a person but a set of protocols. There is no ebb and flow of power from the centre to the parts and no waste of energy in this type of fruitless conflict. If a university was configured as a network, the primary role of the governing body would be to set the principles or protocols that provide the value and the connecting rules of the network. Who would be the Governing body? The empowered representatives of the owners of the network.
  • Making the shift from Interest to Principle - In a diverse environment with many stakeholders, there is no way of reconciling competing interests. But it is possible to raise the strategic debate at the University level to that of principle. At the level of principle, agreement is possible in a diverse society that has many interests such as a modern university. Once there is agreement on principle, the needs of diversity can be met by a subsequent process of design.  In networks, significant local diversity is possible once the protocols for membership have been defined. Visa International or Interac are good examples of a model in practice. What would a set of principles be that could support a shift to a network and solve the competing differences between the stakeholders? Would they be mainly technical or social and cultural?
  • Intellectual heavy lifting - access to the distributed intelligence of the university is required - The issues are so complex that no single person or perspective can solve them. It will be essential for the governing body for the university will have to tap into the broad intellectual capital of the organization. It is ironic that the concept of a learning organization has largely escaped the world of the university that has so much latent talent. In a world that is defined by barriers and silos, how do we create the essential horizontal linkages? What practice can we draw on to help us do this?
  • Facilitation is the lubricant of cultural change and of learning breakthroughs. - While some truly exceptional intellects do achieve breakthroughs on their own, most of us have had the benefit of mentors or supervisors - especially in the early stage of our intellectual career. In addition to our intellectual development, no one who has made a significant lifestyle change has made this on their own without the support of peers. No organization has transformed itself without the agency of facilitation. What are the skills of facilitation? What best practice can we rely on to help us acquire these skills?
What do these principles imply? They imply conceiving the university as a network. It implies that having diverse parts is not only legitimate but desirable.
How could we do this? A set of models that have been proven to work - All organizations are struggling to shift to a an organizational metaphor of the network and to a management process that draws on the collective intelligence of the entire organization. There is no clear winner in this shift but we can look at some organizations that have made progress along this trajectory and learn from them. We will look at first at CIBC's management process and see how the principles for Management Process outlined above have been realized in practice. We will then look at how the US Army and BP have broken through the silos and created strong horizontal channels and also channels where information can move from point to point rather than only up and down the vertical hierarchy.
  • CIBC's Management Process. CIBC is exceptionally complex. There are over 35 separate businesses in CIBC operating in about 5 major service groups, each with a distinct operational culture. CIBC also operates in many distinct national cultures as well. 90% of the retail transactions occur outside of the branch physical system using a number of electronic channels. Many time-consuming customer/product processes, such as a mortgage applications, that used to take weeks to approve, now take minutes. Customers are in control of many of the key services and processes which are available to them at times that are most convenient for them. There has been an internal revolution as well. The relative size of head office is only 30% of what it had been 20 years ago.Bureaucratic inertia has been reduced, decision-making speed and accuracy has been increased. Power has been given back to the line. Staff, not HR, are in charge of their own careers and an open market is available for job changes. Most time consuming internal head office HR and reporting processes have been eliminated or automated, freeing up professionals to focus on customers and freeing up managers to manage their people. Pay is linked to individual contribution combined with team performance and to individual skills. Health is a shared responsibility.  CIBC has the lowest health costs of any organization in Canada at a time when most with a middle-aged workforce are seeing their health costs rise exponentially. In summary, CIBC has gone a long way to making a cultural shift from a parental and unified culture that looked mainly inward on itself to an externally-based organization made up of a diverse groups of adults who have largely taken charge of their own lives. How did this happen and what might be the lessons for a university?
    • HR - the Driver for Change - This revolution, for that is what is was, was begun by Don Fullerton when he became chairman in the late 1980's. His great insight was to see that the issues of adaptation and change are social before they are technical. He knew that he had to change how people saw themselves and how they saw their world before he could change what they did. His strategy was to use HR as the lever and to change all the critical HR processes. To do this he needed a special person and a good process. The person was John Ellsworth.(JE)
      • Fullerton's CIBC's Strategic HR Management Process. - To begin this work, JE recognized that he had to find a way of getting the real needs of the system up to a body that would be able to represent the entire system. Such a body would have to be able to take a systems perspective and to focus on identifying the right questions and the right principles rather than going for the first solution that came to mind. It would have to have real power - not just the name of the Chairman - it would have to represent the key stakeholders. If the committee said yes to a project the whole system would have to know that they had had a say and that this was partly their call. The issue was ownership. Direct links were made therefore to the HR Committees that sat around each key business leader. This business leader sat as chair of his or her own committee and sat as a member of the Bank Committee. JE also recognized that processes do not manage themselves and appointed a SVP to support the process. The SVP role was architectural. His work was to set up the requirements and to work to build frameworks of understanding about the requirements throughout the system. The concept of a framework was very helpful. Working from the perspective of a framework enabled projects to be conceived at the Bank level at the level of principle and thus enabled a wide range of interests to be accommodated. By working through the framework, the committee would agree on a direction and set of principles for the work. The committee did not do design work. Once the principles had been agreed on, the SVP would work with the stakeholders on operational design. Once this was approved, it would be built by a special unit who only built the new. This was headed by the by  Project Manager who would also report to the committee. He and the SVP architect would work to ensure that the work met the principles. When built, the new system would be tested and then accepted by the operational environment. The approval and consultative process may look slow and bureaucratic on the surface but was in fact very fast. Most of the effort was up front in ensuring that the correct design had been made for the correct problem. As a result, implementation went quickly, with few problems and redesign issues. In 5 years every aspect of pay, benefits, pension and health was overhauled. A new workplace flex system installed. A career management system that gave the role to the employee with a supporting career management and job posting system was delivered. The performance management system was overhauled and an employee feedback system installed. An entire learning system was developed for both leadership and for the technical aspects of the bank. Whilst all of this was going on the total size of HR was halved and its capability doubled. A key to this part of the work was that every support system that could be automated such as pay, benefits administration etc was. This was so successful that this group has since been outsourced as a complete unit and now serves a number of companies. Few organizations have completed such an aggressive rebuild of their core HR systems and hence culture so quickly and effectively.
      • The Lessons - CIBC is not a university but there are lessons here for a university. The entire thrust of the Fullerton agenda was to break the hold of a paternal/dependency culture internally so that the bank could be culturally available to change the customer relationship the same way. Fullerton knew that he had to change the internal culture before he could tackle the external culture. HR was the pivot for this cultural change.HR can be the vector for cultural change as it controls the processes that are in effect the cultural DNA of the organization. By changing these you change the operational culture. CIBC gave up trying to reconcile the competing interests of the stakeholders in the office of the CEO. It took them all into the same room and made them collectively responsible. In support of this it deliberately linked the management processes of each distinct group to the Bank's top management process. It made two people responsible for processes that are usually left to themselves - architecture and construction of the new. It relieved HR of the day to day work on the administrative and the mundane by introducing an aggressive automation strategy. Consequently, HR became and engine for design and consultation.  
    • Breaking the silos and improving the vertical relationships - the US Army and BP - If you interview most managers in most organizations, they will complain about all the change that is pouring down upon them. There is a reluctance to acknowledge that this process of change is not only not going to stop but that it is going to accelerate and deepen in impact. Ironically the US Army, one of the original authors of the idea of command and control and BP, an engineering all male culture, are two large organizations that have made the most progress in becoming highly adaptive to change. What can they tell a university?
      • The learning block - True learning comes as a result of a combination of shared experience and of conversation. We try something and talk about it. The most profound learning comes at the edge of our body of knowledge. Someone who was not a potter looked at a pottery wheel and "saw" that it could be put on another plane, attached to a sled and become a wheel. Someone saw a stationary steam engine pumping water from a mine and  "saw" that it could become mobile and pull the carts on the surface. Modern organizations, and Universities are no exception, make it very difficult to share information up and own an organization and across the silos. The US Army command in the 1980's formally recognized that the complexity and the pace of a modern battlefield would overwhelm their top down and siloed approach. They needed to find a way to enable information to pass not only up well abut also across.
        • The AAR - Their first issue was that we have all been accultured to be obedient to those above us and to act as a superior to those below. Such a "parental" culture does not allow for difficult questions to be dealt with. Those below fear that if they do not please, they will be punished. Those above fear that ignorance will cause them to lose respect. These are very challenging barriers. The Army Command introduced a process called the After Action Review, the AAR, to open up the culture and to make it normal for those along the vertical hierarchy to have "collegial" discussions with each other. We attach an appendix that describes this more completely. In short, the AAR is a simple process where at the end of any event where learning can be captured there is a brief time-out. A facilitator, appointed by the group, guides a quick discussion about what really happened, what were the ingoing expectations, what were the variances and what do we now know. There have been two results. Firstly, it is now a norm to have critical discussion up and down the ranks. Much of the vertical block has been removed. The nature of the hierarchy has shifted from parental to collegial. The second result has been an exponential increase in adaptation and learning.
        • The COP - The organization that has best flowed learning across the silos has been BP. We also attach a short appendix that will provide you with more detail. In short, BP's self appointed 25 year mission is not only to win the end game in oil that will demand that they solve the most challenging geological, political and environmental oil related issues but also to win the new energy game such as hydrogen or wind. They have to win one war while winning the next, an unknown field, all at the same time. BP is a bureaucracy of 100,000 consisting mainly of men and engineers. Not a group well known for asking for directions from others. Lord Browne drew on the expertise of the US Army and the AAR in initiating a shift in this tight culture. Concurrently he also initiated a program to enable silos to share horizontally. BP have a highly developed set of Communities of Practice. For instance the Facilities construction groups are linked all around the world. In the first 2 years of being linked, they saved $700 million US Dollars by the shared learning as each new project built on the last one. All major disciplines are linked both electronically and physically in a network with a facilitator. These groups share problems and solutions on a global basis. Below this network is a network of individuals. BP's great insight is that most knowledge is tacit and not explicit. Consequently, they did not attempt to build a formal document driven central idea pool. Instead, they have given every employee a personal web page with their key interests identified. A powerful search engine can enable, a person with a problem to get connected to a person with the expertise.
CIBC, the US Army and BP have one thing in common. They have acknowledged that they inhabit a world that is too complex for their traditional processes. They have acknowledged that they have to access the distributed intelligence of their entire workforce. They have seen that this is impossible so long as the old "parental culture" was the prevailing culture. They have worked in their own way to shift the nature of the hierarchy. They have not tried to eliminate hierarchy, they have changed its nature. They have not tried to eliminate organizational diversity, they have harnessed it as a tool.
What would it be like for a University to unlock its knowledge like this? With the body of talent latent in a university, what could it do with such a flow? Would it not be able to deal well with the challenges that confront it? What would be the relative position of a university that had unlocked its culture like this? 

© Copyright 2003 Robert Paterson. Click here to send an email to the editor of this weblog.
Last update: 10/08/2003; 4:31:36 PM.