LA PERSPECTIVA NARRATIVA

In 2012 the Kunshan factory faced an abrupt credit squeeze by China’s Central Bank and experienced a steep decline in sales. The 10 loyal families were keen to boost the company’s sustainable competitive advantage and, after the introduction of learning organisation paradigm at the end of that year, all believed that a business alliance with external parties was the best option to escape the challenging situation. Uniquely, the Kunshan factory comprised 10 founding families and three founding directors including myself. There was no trace of a Taylorist model (Kanigel, 2005, pp. 100-115) and the line of authority was neither clear-cut nor concrete. Co-operation and mutual

consensus were usual in routine operations and the situation was akin to that of the Brazilian Semco Corporation (Stockport, 2010, pp. 68-70). This unique and fluid organisational structure provided a sound foundation to build up the learning organisation routines in the Kunshan factory.

Upon adopting the learning organisation paradigm in late 2012, the management team undertook an investigative exercise on the transformation with all staff, exploring the

opportunity for divestment from the digital textile printing factory into several new and diversified spin-off businesses, including private party sales in Shanghai, internet development in Guangzhou, information technology services with IBM Hong Kong and Russian petroleum imports. The exercise was extended to early 2013 so that the three founding directors and six newly-appointed minority shareholders could devise a common approach to exploit the creative and innovative ideas received from staff and their personal connections. Numerous sessions were scheduled with the management team to speak to company members over several consecutive weekends when they could express their concerns, report complaints and grievances, and inform

management of potential business risks or new ideas for growth and sustainability. The rich pictures and CATWOE tools of SSM were shared with all factory members early in 2013. The key learning organisation components such as personal mastery, team learning, a shared vision, a shared mental model and system thinking were promoted at all SSM discussions. An off-site brainstorming session was held in spring with the new management team and key staff representatives, first to identify the current competitive landscape and next to detail the following phases of company growth (Figure 4-1).

Figure 4-1: Corporate restructure brainstorming

The new management team was well versed in quality management tools and

improvement methodology, including brainstorming, charting, issue logs and parking, and problem-solving technology, so I strongly suggested that they shared their

concerns about external threats, internal conflicts, governmental policy and economic concerns. Internally, these included the forces of the bank’s credit squeeze, weak local

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sales, high prices for electricity and the dominance of large local factories, family potential, staff attrition and the demand for unique skills training; these challenges dominated the session. All the brainstorming sessions were summarised for the benefit of the off-site teams in the form of a rich picture describing problems and challenges in the Kunshan factory (Figure 4-2).

Figure 4-2: Rich picture of external and internal threats and concerns

The aim was to describe the business situation in my factory and it was appropriate to use the CATWOE acronym to perform this fundamental investigation. Here are the CATWOE interpretations of SSM’s rich picture of the Kunshan factory:

• [C] Clients are key customers able to provide business continuously and willing to be engaged for sufficient long periods, such as two years or more. They are the core revenue providers of the Kunshan factory.

• [A] Actors are company members who are employees and minority

shareholders. They are service and product providers fulfilling all customer requests from all industries for which company members possess expertise and experience.

• [T] Transformation takes place to switch customers from one particular industry to another so that a long-term relationship of five years or more may be built.

Services relationships shall become the core competence of my company in future.

• [W] Weltanschauung enables the Kunshan factory to move from value-added contract manufacturing to service industries such as research and retailing. The service industry is noticed by investors as they believe that manufacturers are unable to generate sufficient profit margins for survival and that services dominate the world economy.

• [O] Owner of this transformation should be the management team, that is, myself and two chief partners. We provide the feasibility and seed-funding for all new ideas, and monitor progress and achievement.

• [E] Environmental constraints are the current Chinese economy, with the experience of ad hoc Beijing central government policies such as tightening bank credit for manufacturing. Another issue is the stability of electricity prices for manufacturing, related to the carbon footprint and fossil fuel consumption. Moreover, environment includes foreign investors hoping to tap the wealthy consumer market. Finally, fewer and fewer mainland Chinese are now willing to work in a factory.

There were critical issues detected in my Kunshan factory’s CATWOE statement: a) declining net profits to fund company growth; d) falling sales in the local Chinese garment market; c) new governmental policies; d) bank credit tightening; e) restrictions on official government spending; f) new types of business tax; and g) competitors moving into the Kunshan area.

The primary task of the Kunshan factory was to develop a unique intellectual capacity to undertake innovative problem-solving relating to machinery, information technology, logistics and retailing of products and services to support key customers’ business operations and expansion. To this end, in the rich picture (Figure 4.2) a new conceptual model evolved to guide the management team to design and execute the next

development, and the core driver for growth and sustainability was the strong sense of ownership and staff commitment. The off-site team strongly believed in the possibility of creating autonomous units so all participants could enjoy shareholder interests. Innovative ideas were suggested to inform management of details of opportunities such as the funding cycle, anticipated profit margins, business risks, resources and impact on existing operations, inventories, logistics, technology, product design and cash flow. Another discovery in creating the rich picture (Figure 4.2) was the possibility of

centralising the research, innovation and production functions to optimise resources for effectiveness and efficiency and could serve to avoid internal confrontation when

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harmonisation would be enhanced. Staff members were encouraged to use personal networks to explore new business opportunities through relatives, former classmates and other Chinese community relationships.

Nonetheless, the rich picture (Figure 4.2) and CATWOE exercises provided only the background to drastic company change. Next, a more detailed exploration of

management’s shared mental model needed to be carried out through unstructured qualitative interviews to understand how a learning organisation framework was perceived, building up a unified line of thought regarding the direction of corporate change in the Kunshan factory.