Relationships and Strategies - David Hawk - June 3, 2003, 9:35 a.m.

Symposium: "A New Base for Corporate Relations: From Strategic Deceit to Trustworthy Action", Nokia House, Espoo Finland, Tuesday, June 3, 2003.

This digest was created in real-time during the meeting, based on the speaker's presentation(s) and comments from the audience. These should not be viewed as official transcripts of the meeting, but only as an interpretation by a single individual. Lapses, grammatical errors, and typing mistakes may not have been corrected. Questions about content should be directed to the originator. These notes have been contributed by David Ing (daviding@systemicbusiness.org) at the IBM Advanced Business Institute ( http://www.ibm.com/abi ).

[David Hawk]

Within the next 1-1/2 days, a little more emphasis on stories and storytelling, rather than Powerpoint

• In Federal work, discovered that no matter now much they do Powerpoint, they never get money unless they tell stories.
• Believe that this event will have a lot of stories.
• Appreciate the candid nature of storytelling

History:

• How been working 9 months with Marianne, and informally over the past few years with David Ing
• Working on the idea of the relationship alignment
• Value left on the table, with relationships
• Simple, but advanced, and difficult to explain
• Terminology comes and goes, needs to be formalized, then to get to something deeper.

Links back to a longer history with other companies which have been less interesting and informative.

• Had worked with a major New Jersey company that decided strategic alliances were their futures.
• Decided that they would have four customers that would be their supplier, as opposed to multitude suggested by Adam Smith.
• Pre-screen, and 4 was the magic number - as rational.
• Previous professors - the one he like always had threes, the one he didn't always had fours
• Asked to give a keynote presentation, on strategic alliances, which David didn't know he was going to give.
• Said that they would have four companies for a while, but then it make sense to destroy one of the relationships
• The four would get sleepy, and non-competitive.
• Would they get rid of one of the four rationally (e.g. low cost), or randomly, without telling them.
• Company wasn't happy about this, since it was counter to the $10M study.
• Also Norwegian jokes about Finns - sensitivities
• Simple Finnish problem solving:  3 three Finns and a cabinet.  One Finn goes it the cabinet, and two have to decide who's in the cabinet
• Complex problem solving:  two Finns, each in a cabinet.  The third needs to figure out who is in the cabinet.
• Finns don't talk much, whereas Swedes talk a lot
• Finns are stymied by those who talk too much, Swedes by those who don't

Relationship issues, different dimensions

• Satu will deal with the cultural dimension:  the tragic story underlying.
• Marianne will address the IBM Global Services perspective
• Last morning, Minna will bring some of these ideas together
• One of the directors of TEKES will make some sense of what TEKES is trying to do, in relationships between universities and companies, and between companies, to the larger set.
• Most companies go from openness (eating a lot of pizza), then arthritis sets in
• Successful because they're successful, don't know what to do otherwise.
• Become secretive
• This secretive takes care of the organization that practices it:  companies can't continue with secrets
• Countervailing forces, such as this meeting
• Need to find a better way
• Strategic approach:  tell stories but lie
• May be a partial lie, or a wholesale lie.

Those who have been in class have heard say not very happy with the concept of strategy

• Argue strategy is best thought of as deceit
• Associated with warfare, Clauswitz On Warfare, 2 pages on strategy as deceit
• Sometimes the comments we make are strategic
• U.S. Department of Defense:
  • 2 years ago, Secretary of Defense decided to create the Department of Strategic Information
  • The organization that lies to allies, because they can't be trusted
  • He was clear that strategy meant deceit.
  • 2 weeks later, the office was disbanded
  • Then said won't formally have an office, but will lie to each other anyway.
• Should try to be candid.
• Last time did this, had 60 executives come together to discuss the formation of a new industry.
  • For each CEO to come, they were asked to each make 20 minute presentations
  • Honest, open, not marketing, but heartfelt
  • If they didn't do that, the other 59 would shout them down.
  • Successful meeting, because of candor
  • Hope that we will speak to the same candor.
• Had an earlier agenda, where the director of the IIB would speak on strategic relations, mother-daughter relationships
  • Thought it would be good to link these ideas in.
  • He cancelled on Friday, his board is having a meeting today, his organization may not be around in 2 to 3 years
  • Mess:  successful, wealthy organization
  • Mother organization wants to take it over, and distribute the wealth the other.
  • The board members, associated with the Wallenbergs, had decided that they should abandon the baby for the other weaker organizations
  • Pieter Haagstrom
  • He'll be working on survival.
    • Their organization was similar to Exima - Ph.D. not for teaching, but for working in companies.
  • This model doesn't exist in the U.S.

Photograph:  Gunnar Hedlund, dissertation so impressed the Wallenburgs, that he was funded to start IIB

• Felt that there was more hope in Finland
• Hope for Sweden

Photograph:  A placid state

• Different environmental states
• Had previously discussed the Emery-Trist argument
• From placid-random, calm state - don't have to worry, just need to keep moving, things work.
  • Like the U.S. in the 1950s, could produce anything and it would sell, because no one else was producing
• Gets complicated, incumberences
  • Then need to understand not only organization, but who owns it
  • Need to develop ways to enter the back door, and seek friends.
  • This gets to the relationship
• Then Geographic
• Then turbulent environment
• Vortex environment:  struck by a tornado or a whirlpool
  • When the ground is shaking, who you know doesn't help much
  • Linkages: need to hold hands, particularly enemies and people you don't like.
• The type of relationship depends on the type of environment
• In a tornado, play dead and hope to survive:  like U.S. companies who go bankrupt - Johns Manville, Texaco

Will reference this theory over the 1-1/2 days

Major conclusion of work:  where does the complexity come from?

• Emery & Trist argue that the complexity comes from the previous actions.
• We are the cause of our own turbulence
• If we're going to get out of the complexity circle, need to get rid of tactical and strategic.
• If there's any there, we'll relate to this.

Photograph:  gold from the storm

• Hope to find the pot of gold at the end of the rainbow - always questionable.

Photograph:  fluid management

• Getting rid of solids, things that are more static:  customers, suppliers
• In the U.S., need to get business cards every year

Photograph:  stakeholder theory

• Back in the 1970s and 1980, mountain walks in Lapland
• Most Scandinavian appreciate this
• How to apply more than two legs
• When crossing a river, need to use a stake.
• Beyond stockholders as the responsible
• In the U.S., in governance, the boards of directors aren't that helpful
• Stakeholder theory has been around a long time, becoming as old as others

Photographs:  Maps are helpful, once you know where you are at

• In the mountains, you often don't know where you're at.

Photograph:  A relationship with unity

• Not sure if we can unify the relationship idea
• Should have a better idea of the dimensions

Photograph:  a modular framework

• To come closer to storytelling, a few images of some company experiences
• An example since 1996, in automobile industry, a new way to align
• Resende factory in Brazil, Volkswagen plant

Photograph:  seeking alignment

• Suppliers not only produce parts, they bring them to the plant, and assemble it.
• A different definition of relationships in the industry
• Upset GM and other North American auto companies, who accused this as communism, socialism.
• Increase in quality, more research and development at the edges, with suppliers

Photograph:  redefining competition

• Changes the sense of competitive
• Five suppliers
• Customers want choice, e.g. what tires, what engines.
  • This is tough, e.g. for Cummins engines
  • If a customer wants a competitor's engine, what do you do?
  • Three types of engines
  • Have to install competitor's engine, and make sure it works.

Photograph:  rising about division of labour

• Beyond Adam Smith
• E.g. specializing in one engine mount
• This changed that conception

Photographs: Rethinking relationships

• Volkswagen didn't worry about this - relationship between suppliers up to suppliers
• Productivity also responsibility of suppliers

Photographs:  rethinking motivation

• Line 7:  everyone gets paid at the end
• Account of the supplier gets immediately paid, upon passing inspection
  • If it doesn't pass inspection, then the supplier with a problem is determined
• That supplier has to pay a penalty to the other suppliers

Photograph:  Just in time relationships may not be timely or just

• Plant designed by Toyota and Masala -- Masala produced 80000 houses per year
• Cardinal rule:  once a part from a supplier enters the envelope of the business, it needs to stay in movement.
• Anything that doesn't move is a mistake.
• Post the name and location of something that doesn't move.
• The problem:  where does the redundancy come, in a just-in-time system?
• At the coffee shop down the street, the truck drivers are waiting for 6 to 8 hours
• This causes pollution, external costs
• Might rethink some of these relationships.

Photograph:  Relations as unity

• U.S. government arguing about living in such small houses

Photograph:  relation as order

• German approach:  the sugar approach, sugar mill in Eastern Germany, $500M
• Open only 3 months per year
• Saudi prince buys three times per year
• Doing the wrong thing, ever more efficiently

Photograph:  Chaos in order

• Construction company that believes that everything should be handy, and it doesn't need to be neat and clean.
• Now bought out by Germans, and cleaned up.

Photograph:  Fear, order in chaos.