Participative Modelling To Facilitate
Organizational Change: A Case Study
Henk Akkermans Jac Vennix Etiénne Rouwette
Eindhoven University of Nijmegen University » Utrecht University
Technology Department of Policy Dept. of Social Sciences
Graduate School of Industrial ‘ Sciences, P.O.Box 80140
Engineering and Management P.O.Box 9108, 3508 TC Utrecht, The
Science 6500 HK Nijmegen, Netherlands
P.O.Box 513, 5600 MB The Netherlands
Eindhoven, The Netherlands
ABSTRACT
The main objective of most system dynamics modelling projects is to support some kind of strategic
decision making activity. This paper describes a modelling project where the primary goal was to
establish an organizational platform for change. The project was conducted with a group of mid-level
managers of a company at the eve of a period of organizational change. This group of managers engaged
in a series of participative modelling sessions, facilitated by the authors. Extensive evaluation of the
project results indicates that such a platform for change has been established.
INTRODUCTION
Over the past decades system dynamics modelling has evolved as a well-accepted method to support
strategic decision making (De Geus 1988, Morecroft and Sterman 1992). In system dynamics modelling
this support is provided by construction of a model of the issue or issues at stake. This model is then
translated into simulation equations. Next various policy options and scenarios are explored with a
computer simulation model (cf. Forrester 1961, Richardson and Pugh 1981). In this manner a solid
conceptual and quantified base for taking a particular decision is provided.
However, sometimes the main objective in strategic processes is not just to take a sound decision.
Often the primary objective of strategic discussions is to achieve commitment from the stakeholders to
help make the realization of this decision into a success. Often strategic decisions have a profound impact
on the organization. For such a decision to become really implemented, it is necessary that the main
stakeholders, in particular managers, change some of their attitudes and beliefs..In short, what needs to
be established is an organizational platform for change (Beer 1971).
In the past few years an emerging trend in the system dynamics community has been to employ
a mixture of system dynamics modelling techniques, brainstorming tools and process facilitation insights
in achieving precisely such an organizational platform for change (Senge 1990, Kim 1990, Kreutzer
1992). At the core of all these new approaches lies the thought that if real commitment and consensus
regarding policy recommendation is to be achieved, a high level of ownership for the model upon which
these policy recommendations are based is required. That means that this model will have to be
understood by the decision makers. For this to occur, the decision makers will have to engage actively
in the modelling process. The modelling will have to be “participative”.
In this paper a case study is described in which such a participative modelling approach was
employed to establish the necessary ingredients of a platform for change amongst a group of mid-level
managers in a multinational company entering a period of organizational change. In this case study
SYSTEM DYNAMICS '93 1
considerable effort has been spent in trying to evaluate if such an organizational platform for change has
indeed been established.
PARTICIPATIVE MODELLING FOR ORGANIZATIONAL CHANGE
At the core of participative modelling lies the following notion: Models, both conceptual and quantitative,
can be very helpful in supporting strategic decision making. However, if one wants managers to act upon
the policy recommendations these models provide, these managers will have to understand and belief
these models. For this there is only one way, which is to involve these managers as much as possible in
the modelling process. This is what is called participative modelling.
Participative modelling supports two aspects of strategic discussions. It structures the strategic
discussion process and it structures the strategic ‘problem itself. For these two purposes an impressive
library of techniques has been built up in recent years (see e.g. Senge 1990, Kim 1990, Vennix et al.
1990, Morecroft and Sterman 1992). In this particular case study only a small subset of these techniques
has been used. Most of these are listed in Table 1. As one can see, some of these techniques stem directly
from the field of system dynamics proper. However, many of them originate from other areas, such.as
from organizational development or operations strategy.
TECHNIQUES EMPLOYED FOR TECHNIQUES EMPLOYED FOR
STRUCTURING THE PROCESS STRUCTURING THE PROBLEM
. Semi-structured interviews . Mind mapping.
. Nominal group technique (NGT) | * Hexagon brainstorming
i Inter-session workbooks - Causal diagrams
. Questionnaires ss Behaviour over time diagrams
s Evaluation interviews Systems archetypes
: Strategic fit matrices
° Propositions 8 a |
— __|
Table: 1: Techniques employed in the case study for structuring both process and problem
THE CASE STUDY
The client company was a multinational company that was just entering a period of organizational change.
In the past the company had been very successful in a particular market, in what we will call its "Old
Business". Partly this success could be attributed to the company’s particular organizational structure.
Traditionally, this structure had been a decentralized one, with highly autonomous business units
operating on-a regional basis. The management style in these business units was entrepreneurial and was
perhaps best typified as "healthy egoism". In this structure, each business unit tried to serve as best as
it could its own particular corner of the market. This structure had provided the company with a highly
flexible and dedicated work force. close to the customer base. This clearly was an asset for the “old
business".
However, the market appeared to be changing. A trend could be distinguished towards what we
will call the "new business". In the "new business" it appeared that the autonomous organizational
structure seemed less well fitted to serve the market optimally. In this "new business" units would need
to collaborate closely if the company were to remain competitive. And inter-business-unit collaboration
was not a forte of the company at that time, due to the attitude of "healthy egoism" mentioned above.
Clearly the ruling attitude of most BU management teams would have to change into a more collaborative
2 SYSTEM DYNAMICS '93
attitude. But how could this be achieved? The existing attitude had been carefully created and nurtured
by management over a number of years.
On the request of the company’s top management a pilot study was conducted by the authors with
a group of BU managers. The primary goal of the pilot study was to evaluate if participative modelling
could indeed achieve, in a time efficient manner, the kind of change in management attitude that was
considered necessary. A secondary goal of the project was to come up. with a sound analysis of the
problem at hand and, possibly, with some good suggestions as to how the problem should best be
handled.
PROJECT PHASING
Project Set-Up
Five managers were selected from one particular geographical region. In this region, several disputes over
‘collaboration had occurred in the recent past. With these managers a total of five sessions of two hours
each were conducted. Between each session a workbook was constructed and sent to the participants. In
these workbooks the main results (e.g. diagrams) of the previous session were recapitulated and questions
leading up to the next session were provided. In several instances responses to these questions were
collected before the session, to enable the project team to better focus the actual session itself. This way
an optimal use was made of scarce management time.
The project team consisted of the three
authors. Each project team member
had a particular role in the sessions
(ef. Richardson et al. 1992). The es
+ gy eAPerience old
protirs trom
"process coach" facilitated the group
and monitored group dynamics. The
“model coach" focused on the models
that were being produced and did most
of the analysis. The “recorder” noted
‘old hase
—
old Business
old business
prices
sales ett
old business
+
+ Va business N-
‘narketpestion
ld business
continuity
eo a
down what happened during the education =
sessions and took care of the | “SS wating, mS!
questionnaires and © evaluation { veanncean este
interviews. _ or cieving Bulge
capiyes —
Prepatory Interviews: More +, ls
Consensus Than Expected Me ew business
Prepatory interviews were conducted ates GN se
‘with the managers involved in the ss
project. The results of these interviews ia ea
were noted using a “mind mapping"
technique (Eden 1989). Two aspects of
these interviews are particularly. worth
mentioning: The first aspect was the
relatively low awareness of the urgency
of the problem with several
interviewees. The second aspect was
the surprisingly high level of consensus regarding the main causes of the collaboration problem. Although.
these managers were supposed to disagree frequently regarding collaboration issues, they seemed to
Figure 1: A causal diagram from the intermediate report, showing how the
Success-To-The-Successful archetype prevented the company from acquiri
a_good position in the new market
SYSTEM DYNAMICS '93 3
agree considerably in their analysis of why collaboration was necessary in theory and: failed often in
practice.
Session 1: Explanations For Company Growth
The authors felt that many of the explanations the interviewees had given had their roots in the way in
which the company had operated in the past-and the way it had been organized. Therefore in the first
session the question was addressed how the client company had grown in the past. This surprised several
of the participants, since they did not see the relation with inter-BU collaboration. On the spot a causal
diagram was created by the group that explained the company’s rapid growth and success in the past
decades. To a large part, this was considered to be due to the company’s particular highly decentralized
organizational structure.
1: Histoncal development 2: Limits to-growth Model ce
Session 2: Collaboration And
The Limits To Growth
In the second session it became
apparent why the project team
had-chosen. to model the client
company’s growth in the past
first. Now the limits to. that
very same growth were |
modelled as well. And here the — se t
variable "willingness to wee
collaborate" suddenly appeared A i
in the centre of the new causal t 7 0 e 2
diagram that was created. What Time (years)
was striking, was that the same
mechanisms that had produced — Figure 2: Limits to company growth, historical and’simulated
rapid growth for the company in .
the past, were apparently now working against further growth in the future. Truly, yesterday’s solutions
had become today’s problem causes!
so
1:2: # business units
Intermediate Reporting: Process And Content Results
After the second session an intermediate report was produced for top fiahagements In this report both
content results and process results obtained so far were fed back. As far as content results were
concerned, a.o. the causal diagrams that had been constructed during the sessions was explained step by
step. Here several archetypes that were mentioned by the managers during the second session were
explained in detail’. In order to establish process results, a questionnaire was filled in by the managers
that tried to measure these. These results were also positive (see Figure 3). As it turned. out, this
intermediate report did have a considerable impact on the company as a whole. Several extra copies were
requested, including a set of copies for all of top management. People throughout the company felt that
the essence of the problem was very well captured in the analysis.
Session 3: Changes In The Market And Collaboration
In the third session the project team wanted to start with looking at factors that were mentioned earlier
on as reducing the "willingness to cooperate". The group members, however, objected. What they wanted
to know was why collaboration was presented as a goal in itself. Why should they collaborate in the.first
place? This then became the focus of the discussion. At the end of the session it had become clear why
‘Figure 1 shows a causal diagram of one of these archetypes. Here the “success-to-the-successful archetype provides
one explanation why the company found it difficult to establish a good position in the market for "new business".
4 SYSTEM DYNAMICS '93
collaboration was essential: the market was changing. More and more the market was indeed asking for
products that could only be delivered by collaboration between business units.
Session 4: Market Characteristics And Organizational Fit
In the fourth session the characteristics of this new market were explored. In particular, the group looked
at the kinds of demands that "new business" placed upon the company’s organization. In matrices
differences in characteristics between “old business" and "new business" were noted down. Table one
gives an expample of such a matrix’. Here the participants found that, apparently, the original
decentralized structure was still the ideal structure for the "old business", which would probably remain
the main money maker for the company for several years to come. The group discovered that it was for
the "new business" that changes to the current organizational set-up might be in order,
MARKET CHARACTERISTICS "OLD BUSINESS" "NEW BUSINESS"
duration of ordering process short long
size average order small large
customer-supplier relationship business-like co-makership-like
decision making level mid-level top-level
number of competitors large small
ORGANIZATIONAL REQUIREMENTS
investment level low. high
skills sales management medium senior
number of business units involved one. several
short-term flexibility required high low,
|_geographical orientation local - international
Table 2: Selected differences between market characteristics and organizational requirements for two types of business
Session 5: Recapitulation And Solutions
The final session was to serve as a consolidation of the findings so far. The project team felt that by now
much statements had been made by the group that would be hard to capture in a diagram. The team
therefore decided to present the managers with a number of propositions which would partly summarize
the discussions so far, partly feed the discussion in the last session. From the forty-two propositions that
were presented, only six gave cause to disagreements among the group. It was around these few disputed
propositions that the final session centred. However, in the end the group could not reach a consensus
regarding what actual changes should be implemented in the organizational structure.
2This procedure was adapted from Terry Hill's work on Order Winning Criteria and Process Choive (ef. Hill 1985).
SYSTEM DYNAMICS '93 5
CONTENT RESULTS: PROJECT FINDINGS
What were the main findings of the team? In a project like this it is perhaps better to speak of “lessons”,
rather than findings. Lessons there have been many in this project. The six lessons that are listed below
are among the most important.
Lesson 1: The World Is Changing
The first lesson for several of the managers was that, indeed, the market was changing, even though they
had not noticed it yet. And, indeed, even though this change did not affect them seriously at this point,
it would probably affect them considerably in the near future. The importance of "new business" would
continue to grow over the importance of "old business". And this new business would place quite
different demands on their units frok what old business had been doing. Collaboration was one of those
demands.
Lesson 2: Yesterday’s Success Story, Tomorrow’s Problem Cause
This second lesson was far more profound. Through the causal diagramming exercises, the managers
found that precisely those mechanisms which had proved to be so successful in the past, now appeared.
to be blocking success in the future. The original characteristics of the company’s organizational structure
promoted entrepreneurial behaviour, promoted closeness to the regional customer base, promoted “healthy
egoism". This was perfect for the "old business", but not at all fit for the "new business". Yesterday’s
strength had become today’s weakness.
Lesson 3: Put Your Money Where Your Mouth Is
The behaviour and attitudes of the managers were partly the result of a closely balanced mix of selection
processes, ‘reward systems and value statements by top management of the company. If the desired
behaviour was to change (i.e. if collaboration were to be sought instead of avoided) then this mix of top
management policies would also have to change. At this time top management did indicate that it wanted
attitudes to change. What the BU managers told them was that top management would have to back these
statements up with changes in reward systems as well.
Lesson 4: Never Change A Winning Team
Although the importance of "new business” was rising quickly, "old business" was still the main money
maker in the company, and was bound to stay that for several years to come. The organizational structure
best fit to serve the market for "old business" still was the original structure. Now the problem became
how to adapt the organization to the "new business" without this adaptation resulting in an organization
which would no longer be fit to serve the “old business". This tumed out to be very difficult indeed.
Lesson 5: The Captain Has To Set The Course
The group of mid-level maagers achieved almost perfect consensus regarding the analysis of the problem
of collaboration and its causes. At the same time they could not agree on a concrete action program to
promote inter-BU collaboration. This, they said in retrospect, was because any change immediately cut
into the roots of the old organizational structure, into what had made the company successful in the "old
business". So designing such an action program would mean redesigning the entire organizational
structure. And that, they indicated, was not their job. "A company needs a philosophy, a clear course",
they indicated. And this course has to be set by top management. Only the captain can set the course,
or redesign the ship.
Lesson 6: Improve The World, Start With Yourself
What our managers céuld change was themselves. And themselves they certainly changed. Over the
course of the project the issue of the changing market and collaboration gradually shifted from being a
far-away, external issue into being a very tangible, internal issue. The managers discovered that perhaps
6 SYSTEM DYNAMICS '93
——
/
i
|
the best action to be taken to promote collaboration was just to change their own personal attitudes
towards collaboration and their own way of working with other managers. In the true entrepreneurial
spirit of the company the mood became somewhat like: "We don’t need top management to tell us we
we should collaborate. We can deal with this issue very well ourselves." Probably, this spirit was just
what top management hoped to achieve with the pilot study in the first place...
PROCESS RESULTS: ORGANIZATIONAL CHANGE IMPACT
Requirements For Organizational Change
Top management of the client company realized that the company would have to change. And for a
company to change, its employees will have to change. Of those employees, it is first of all management
that has to change. But changing attitudes is hard. In any organization there is always a natural "resistance
to change". Therefore an organizational platform for change (Beer 1971) will have to be created first,
before any real organizational change can occur. A platform for change implies that each manager:
1. is aware that there is a problem and that something has to be done;
2. has obtained insight into the nature of the problem, what is causing it and how something could
be done to solve it; ;
3. has developed a shared vision of the problem together with his peers; some degree of consensus
has developed;
4. is fully committed to actually change something about the situation and make this change into a
success.
These four conditions: awareness, insight, shared vision and commitment, seem obvious conditions for
organizational change. As will be shown in this section, this project has achieved both awareness, shared
vision and commitment regarding the issue of inter-business unit collaboration.
In addition, two more process results were evaluated. These are related to the efficiency of the method
employed. For if a method is to achieve the four goals mentioned above, it will have to ensure:
5. good communication between the participants.
6. fast and efficient decision making.
Therefore, we will also show'that the managers have that they felt that this particular method has helped
them in communicating effectively and fast. Evaluation results on all six factors just mentioned will be
discussed. First some remarks should be made on the evaluation procedure.
Evaluation Procedure
The purpose of this pilot project was to see if indeed.a platform for change could be established.
Therefore ‘special attention has been paid to evaluating these "soft results" as accurately and fully as
possible. For this purpose four categories of evaluation material were used:
- A pre- and post-test that the participants filled in at the start and at the end of the project. This
test asked about causes and solutions for insufficient collaboration between units.
* A more elaborate questionnaire directly aimed at measuring awareness, insight, shared vision and
commitment’.
a Semi-structured evaluation interviews will the participants at the end of the project.
. A post-project analysis of the minutes of the sessions and interviews.
3This questionnaire was developed by Jac Vennix (Vennix et al. 1993) In it participants are asked to give their
opinion to a number of propositions regarding their perception of the process. This is done on a five-point scale, ranging from
very bad to very good. This questionnaire was filled in by the participants on two occasions: after session 2 and after session
5. The main results of that questionnaire are shown in Figure 3.
SYSTEM DYNAMICS '93 7
Cis TELE EE EEE
Le Yl ile
2 z — Zia Commitment
-]
é Consensus
5 -
: Insight
3 HH))),4y4
ZZ Bh Cornmusicaton
Fe
io) 1 = 3 Mm 5
Scores
(0: strongly disagree, 5: strongly agree)
Figure 3: The Main Results Of The Questionnaire Evaluati ss Result
1. Awareness
At the outset of the project several managers indicated that they did not think that inter-BU collaboration
was really a problem to them. It might be a problem for other business units, but they had not
encountered it often. This perception certainly changed over the course of the project. Some selected
remarks from managers were:
- (in session 3, when asked why collaboration was important:)
"Why? Because else we will be bankrupt in a couple of years.”
- {after the project, when asked what the best characteristic of the project had been:)
“Becoming convinced of a new future. In short: the problem exists.” and:
"This subject is a critical success factor for the whole company".
: (at the end of the project, when asked what the main benefits were to him as a manager:
"I now have a different view on collaboration. I will now search more for collaboration. If that does not happen the
‘company will go down.”
2. Insight
It is also safe to say that the participants have gained considerable insight in the problem.
From a comparison of the kinds of solutions to the problems that were filled in before and after the
project it becomes apparent that before the project the emphasis was on measures to be taken for the
whole of the company and after the project the emphasis was on measures that could be taken at the
business unit level. One anecdote in that respect:
In Session 5 the group came up with the idea that a specialized BU for "new business" might be in order. Then the question came
up who should pay for such a BU. Here one of the managers said that he would be willing to allocate say 8 % of his revenues for
such a unit. Then a second manager made a higher bid: 10%! "I bid 12%!" said a third. No one suggested that the holding should
provide this money. For who needs top management, anyway?
As one of the managers indicated at the end of the project: “It has increased my insight. I realize I am
working on a problem with which my colleagues are struggling just as hard as I am.”
3. Shared Vision
After session 4, 44 propositions were formulated that summarized the main findings up to that point. Of
those 44 proposition, responses to 38 of them were almost unanimous. So certainly quite some common
8 SYSTEM DYNAMICS '93
ground had been established. Some selected statements from managers made in the post-project interviews
indicate the same:
% “This method is a way to bring participants on one line, to achieve convergence”
- (when asked what were the main benefits for him as manager:)
“Convergence of opinions in the our region”
- (when asked what were the main benefits of the project for the company as a whole)
“The main benefit of this project is convergence af opinions. It is part of the whole change process.”
4, Commitment
Commitment to change is hardest to achieve in this kind of process. And also, incidentally, hardest to
measure. However, the scores in the evaluation questionnaire regarding commitment were the highest
ones of all: 4.03 and 3.92 on a scale of 5. So it is safe to say that the participants feel that yes,
commitment. for the conclusions and recommendations ‘of the sessions has been achieved‘. With
“commitment”, one of the managers indicated, was meant: "Now everyone is convinced that something
has to change". .
5. Communication
In order to achieve awareness, insight, shared vision and commitment it is essential that communication
between the participants is good. The participants indicated that they felt this had been the case, indicated
by scores of 3.77 and 3.86 on a five point scale regarding the aggregate proposition: "Through this
project effective communication regarding the issue has been achieved."
That communication is essential for insight and shared vision also became apparent in a negative way:
the effects of non-attendance. Most managers indicated as one of the weak points of the project the
changes in actual participants per session. One typical anecdote in this regard:
In Session 5 discussion centred around those propositions where substantial disagreement existed amongst participants. One manager
‘was Very disappointed that the group did not discuss a particular proposition that he didn’t agree at all with. Looking at the answers
to that question, it did indeed turn out that all other participants had answered: “Fully Agree", whereas this particular manager had
answered "Fully Disagree” (sic). This was one of the propositions that had been discussed in the previous two sessions. Typically
enough, this particular manager was the only one who hadn’t attended those two sessions! After some discussion, it turned out that
the whole thing was basically a misunderstanding: The rest of the group had developed a particular understanding of the terminology
used in the proposition that the dissenting manager hadn't picked up, due to his absence...
_ + additional comments by managers:
- “Without this method people would not have let the other one finish speaking”
- “Invall sessions there was an openness that is not “normal” within our company. I-had the strong impression that it was
felt to be a common problem. Everyone went along, there were no hidden agendas.”
6. Efficiency and Effectiveness
The managers were quite enthusiastic about the effectiveness and efficiency of the method employed.
The proposition: "This method gives faster insight than ordinary meetings" scored a 100% "Agree". The
proposition: "This method creates a shared vision quicker" got a 60-80 % score “Agree”.
Selected responses of managers:
- "With little effort a clear image”
- "Quality of the discussions very high, facilitation very good”
- "This is a good method, because every one in our company has no time and this method works efficiently.”
- "This approach very well suited to analyze problem. It gives a clear image. Awareness has been achieved.”
- "Lam very satisfied about this method. Visualization gives an overview, it shows what is growing. In a not too large group
in this way everything is seen and captured. Avoids jumping to conclusions.”
- “Structuring gives a frame of mind. Effective and yet you can put forward everything.
- “W's exiting too".
5 “Lam going to steal this method.”
Please note that people who say that they are committed need not necessarily be committed or remain committed.
Real commitment is shown in actual actions, not just good intentions.
SYSTEM DYNAMICS '93 9
CONCLUSIONS
Organizational Change Or A Platform For Change?
The previous section has shown that this project has resulted in higher levels of awareness, insight, shared
vision and commitment. What the authors. would like to point out is that this is not the same thing as
saying that the project has resulted in organizational change. That is not a matter of academic over-
cautiousness. The authors feel that the project has indeed established a "platform for change". Resistance
to change has been replaced by willingness to change. But the actual changing has only partly taken place.
For this organizational change to take place more will be needed: For one thing, more people will have
to be involved. Also, as indicated in the section on content results, actual changes in reward systems et
cetera will have to back up this willingness to change, or people will soon fall back in their old habits.
Creating a platform for change is not equivalent to organizational change, it is a prerequisite to
organizational change: No platform, no change.
However, a platform for change alone is not enough. If this company really wants to achieve
organizational change, it will have to follow up this first effort with a larger organizational change
program. That participative modelling and other techniques from the system dynamics community, such
as managerial microworlds, can play an important and very effective role in such a program, is evident.
Evaluation helps to improve quality of the consultancy process
Many practitioners still see evaluation as some kind of academic passtime, with little relevance to the
business world. As this project has shown, asking feedback from your client, both during and after the
project, can help one in seeking the best next course of action during the project, and can help one in
improving one’s methods for the next project. That-makes process evaluation fairly relevant to the
business world.
Participative modelling has matured rapidly into established management consultancy
Only a few years ago participative modelling techniques were applied only be a few experts in the world,
in particular in the USA and UK. As projects like this one show, the approach has matured and can be
used by many practitioners and academics for a broad range of problems all over the world. Surely that
is good news for the system dynamics community.
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