Introduction
The "Titanic syndrome"
How organizations change over time
Succumbing to the "Titanic syndrome"
The roots of the evolutionary organization
Principles of the evolutionary organization
The evolutionary organization-- an operational perspective
The evolutionary organization-- a management perspective
The evolutionary organization-- a new science perspective
>>A practical experience in building an evolutionary organization
Summary

(continued from The evolutionary organization -- a new science perspective)

A practical experience in building an evolutionary organization

Our case study on fashioning an EVO is based on an unlikely example. In 1990, when work commenced, our study candidate was a large (over 30,000 employees), traditional, highly successful, diversified bank with its hierarchical structures, control and rules-driven culture. At the time, some of the bank’s business could indeed be characterized as late-life KRO. We will show that such an organization, despite its bulk, can successfully turn around when it detects looming icebergs and learn to sail even more successfully in new ways.

The Canadian Imperial Bank of Commerce (CIBC) had always been "the bank that service built", but the new vision it articulated in the early 1990s of becoming a customer-obsessed company, close to the customer, and with every-strengthening relationships with the customers, went far beyond tradition. Donald Fullerton, the bank’s chairman at that time, is quoted [94] as having announced his intention to "…relentlessly and unceasingly push toward achieving a performance driven culture".

A concept with captures the spirit of CIBC’s vision is "individuals going the extra mile". CIBC believed that when such discretionary effort became so ingrained that is was commonplace, CIBC would truly be a customer-obsessed company. To assist in realizing this vision the bank adopted a new approach to its business, based on the well-known "inverted pyramid". This in turn demanded new mechanisms for operationalizing the strategy. Al Flood, Fullerton’s successor and CIBC’s current chairman said, "We really are moving from an organization that is the traditional hierarchy to one that is driven by vision and values".

We have commented earlier on the need for management to exercise leadership; for creation of a meaningful vision and strategy so that employees can see that they are making a contribution. We have also stressed the need for management to emphasize that the business environment is manageable, and control in the face of complex change is possible. CIBC’s management addressed these various concerns through its in-house communications, including face-to-face executive-employee "bear pits". In addition, the bank’s executives underlined their dedication and support for this effort through special strategic direction issues of their in-house journal [95,96]. These issues set out and explored statements of CIBC’s new goal, vision and key performance drivers for "Winning customer loyalty through service excellence".

The learning organization concept appeared to offer the most promise as a blueprint for the kind of organizational journey CIBC was determined to undertake. However, from the beginning it was realized that strong emphasis initially on learning would be counter-productive in an organization struggling to redesign its rule-based environment, and where highest priority was being placed on becoming "customer obsessed". Rather, the culture needed to become on that was "…about people learning to adapt and change as a result of intense competition" (our italics) [97]. In addressing the Canadian Payments Association, Al Flood said "The point here is not to have the organization force employees to learn, but to create a context in which they will want to learn" [98].

CIBC’s approach conforms with Revan’s conditions for successful development of an autonomous learning system [99] such as the EVO, where the organization’s most precious asset is "…its capability to build upon its lived experience, to learn from its challenges and to turn in a better performance by inviting all and sundry to work out for themselves what that performance ought to be". One of us (Saint-Onge), the vice-president responsible for CIBC’s leadership development, commenting on CIBC’s early EVO work, said, "We never discuss ‘learning organizations’ at the bank, but talk about enhancing organizational capability" [100]. In this spirit, the simple, systemic, three-element performance model reproduced in Figure 3 was introduced. This model had been used by one of us (Smith) previously; and details of the model and examples of its use are given elsewhere [8,101]. The way the model’s three elements of performance (focus, will and capability) drove CIBC’s learning efforts has also been presented on many occasions [100,102].

The simplicity and power of the performance model ensured that it would become widely distributed across the bank and would be rapidly adopted at all levels. It paved the way for the introduction of an EVO approach by emphasizing the fundamentals of excellent performance in pursuit of business outcomes, e.g. activities and tools related to customer service. Although it identified the necessary concurrent learning, it also helped de-emphasize it by making it more transparent at a practical level; that is, learning content and processes were designed, but learning was "by doing". We previously quoted Fritz [66] that "structure determines behaviour". In developing an EVO the designers must ponder this statement, and ask themselves "What structure should we adopt to create the results we want to create?" For example, at CIBC this meant "learning by serving". CIBC had been moving along a path of least resistance, but a change in structure changed that path in spite of the company’s size.

In support of the "inverted pyramid" strategy, people management was early identified as one of the bank’s key performance drivers [95]. The goal was to give employees the support, direction and skills needed to provide customers with the best possible service. This involved changing the traditional roles of employees, managers and the HR function to reflect the new approach. Employees were asked to take responsibility for their performance, the service they delivered and the development of their own skills and careers. Managers would be less controlling and would focus on helping employees in their new role, and on removing barriers. HR would evolve from hands-on management to developing and delivering the necessary tools.

The critical impact that management mindsets would have on the successful introduction of CIBC’s new strategy including people management, and the development of an EVO, was realized from the beginning. It was also understood that having highly skilled managers in periods when new beliefs and strategies were being introduced could not be overvalued. [40]

However, consistent with the concept of the EVO, such managers did not need to be superhuman; rather they needed to understand what was expected of them and to have the skills to behave as required.

Structuring learning for the EVO was based on four key premises:

1. The approach must be systemic.
2. The influence of management was so critical that their needs must be addressed first.
3. Behaviours and habits must be changed to change thinking and learning, not the other way around.
4. The effort must be focused on performance and it must be business "outcomes" driven.

A major consideration for CIBC was where to make a start. The first step was to examine the contribution of traditional training to the bank’s capabilities. It quickly became apparent that CIBC had been dedicating significant resources to formal training, and that it was one of the leaders in the banking industry in this regard. Unfortunately, it was equally clear that this effort had been ill-focused and had become largely ineffective. It also became clear that any attempt to design a more efficient training strategy would be outdated with respect to CIBC’s emerging needs, although training itself would continue to have a key role to play.

One of the first major structural changes involved replacing the training-oriented staff college with a central leadership centre [95] and a distributed national network of seven (since increased to 14) employee development centres [103]. The leadership centre’s goal is to enhance the leadership qualities of the bank’s managers; a key requirement for a successful EVO. The centre offers programmes and workshops designed to reinforce CIBC’s business strategies and contribute to their renewal through management involvement. The development centres help employees across Canada to develop new skills for winning customer loyalty in current and future jobs. These centres utilize self-directed learning products as well as workshops, self-assessment tools and individual consultations in support of career planning and development.

Concurrent with setting up the above centres, extensive competence modelling was undertaking to identify business outcomes and link them with new roles and competences to achieve them. These models were then applied to career streams and resourcing across 3,500 jobs within the bank. For example, outcomes were defined to ensure that desirable business-and people-management related behaviours would be demonstrated. Based on the three-element performance model described above, a new role for the manager was defined. This role identified those behavioural requirements for mangers which were deemed necessary to deliver the desired business outcomes. When consensus for the new role of the manager had been reached, the model provided the means to identify the required core competences, and flesh out a relevant learning framework. A learning curriculum was then designed by the leadership centre to develop the managerial and leadership behaviours described in the role of the manager.

However, in the spirit of the EVO, one of us (Saint-Onge), the vice-president responsible for the leadership centre, has said " The bank’s leadership centre is not about competencies and skills. It’s about mindsets. The Centre becomes a place of sharing; a forum for the exchange of information. A place where assumptions are constantly probed and pushed and tested; new ways designed; new strategies formulated." [100] Saint-Onge also said, "The role of CIBC’s Leadership Centre is to provide the organization with systematic practices for the generation and renewal of our capabilities as an organization" [104]. CIBC has now put 3,000 managers through its foundation programme that is based on changing mindsets from "If I give them half a chance they’ll do something wrong" to "If I give them half a chance they’ll do something right" [104]. The result "…demonstrates how huge strides can be made in bottom-line results when the assumptions that shape the business are aligned with the new realities of the business environment" [104].

CIBC has successfully travelled from its traditional hierarchical KRO environment to the "inverted pyramid" in only three-and-a-half years, and already the bank is considering customer-partnership structures [104]. This has been possible so quickly because, as we noted in our discussion of EVOs, when the basic environment has been properly designed and created, other organizational development approaches [7,11-13] can be introduced and will take hold. CIBC has usually adopted a "middle up-down" approach; first targeting a middle-management segment in a strategically important non-mainstream part of the company. These managers then influence their supervisors and their subordinates. Now that the EVO effort has matured, the accent is more specifically placed on learning. For example, Al Flood, CIBC’s current chairman, now talks openly about CIBC as a learning organization [105], and learn-to-learn skills [106] and traditional action learning [107] form part of the curriculum.

The bank has also undergone large-scale restructuring to provide a more decentralized organization, and within some of its business units self-directed teams have been introduced [108, 109]. Introduction of these advanced EVO approaches encouraged a more entrepreneurial atmosphere, and was consistent with recommendations to try to enter and maintain the organization within the normative-formative zone.

With regard to ensuring good communications and dialogue, CIBC operates local employee forums on a regular basis involving employees and their managers. Cross-company open forums have been conducted each year since 1989 to track such questions as "Is CIBC’s strategy getting through?" and "Can employment experience be improved?". Compared to 1992 and 1993, the latest survey [110] shows that employees maintain a positive outlook despite all the turbulence going on within the bank. From the perspective of the three-element performance model discussed earlier, the overall results indicate that CIBC has done an excellent job with respect to focus and capability, but that there is still some distance to go around "will", where concern for how work gets doen and job security need improvement.

One of the most recent example of how far CIBC has travelled from its KRO normative days towards an EVO philosophy can be cited as follows:

• During the last year the bank piloted a completely new approach to banking, which entailed major reorganization of its people and facilities. This is a fine example of EVO philosophy where entirely new and revolutionary ideas not only gain an audience but are supported and implemented in the face of the prevailing mindset;
• The principals in this effort have all since been interviewed individually to ascertain their learning with respect to how the project went, and how improvements could be made in future roll-outs and similar large-scale projects. The results of these interviews have been compiled in a report for debriefing and are being included in future offerings at the leadership centre. The degree of openness, trust and courage that this entails would have been unthinkable at CIBC five years ago.

That CIBC is not a perfect example of the EVO in action, or perhaps ever will be, does not vitiate the lessons to be drawn from the bank’s successful efforts to-date. If an organizational "vessel" of this size and tradition can apply EVO principles and turn aside from the competitive icebergs which loomed around it, then other KROs can do the same.

Summary

In this paper we have examined evidence from many sources to support our contention that in times of complex change, the critical step for organizational effectiveness, and ultimately for organizational survival, is to deal with managers’ mindsets. Furthermore, we expanded on the two simple notions on which we have based our EVO approach: first, that the best way to deal with mindsets is to keep them from hardening; second, that by changing activities and tools we can change habits of thinking and learning.

We explained how the EVO can flourish continuously in the region of disequilibrium between an organization’s formative and normative operating stages. We indicated how new ideas and innovative genotypes are forever being generated so that minds have no opportunity to become set. We further showed how the EVO is structured to ensure disequilibrium by being specifically designed to promote creativity, learning and responsiveness to its environment. We emphasized that the judicious exercise of leadership and strategy are critical in ensuring that the balance point does not slip too far into the high-risk formative mode or the diehard normative mode.

We then reviewed and discussed literature relevant to the EVO and its practical development. We described various systemic initiatives designed to renew mindsets and confer high potential for company competitiveness and longevity. We showed that these initiatives are capable of incremental implementation and are founded on familiar practical behavioural enablers.

The case study we cited exemplified many of the initiatives that we associated with an EVO in this article. Furthermore, the case showed that large organizational size is not detrimental to successful introduction of an EVO approach—that a big ship can be successfully steered through dangerous seas.

Unfortunately, the attitude of the Canadian Imperial Bank of Commerce is atypical of KROs in general, large or small. However, the authors hope that CIBC’s success story, and the theoretical discussions in the preceding sections, will encourage others to undertake the EVO make-over, and to avoid a Titanic fate.