Improving Customer Value Creation By Enhancing The ...gsblibrary.uct.ac.za/ResearchReports/EMBA 9/Steenkamp.pdf · ENHANCING THE RELATIONSHIP BANKING MODEL WITHIN ABSA CORPORATE AND

Name: Stonie Steenkamp

Student no: STNTJA001

Date: 16 March 2009

Course: EMBA9

IMPROVING CUSTOMER VALUE CREATION BY

ENHANCING THE RELATIONSHIP BANKING

MODEL WITHIN ABSA CORPORATE AND

BUSINESS BANK

Presented to

The Graduate School of Business

University of Cape Town

In partial fulfilment of the Executive MBA degree

by

Stonie Steenkamp

2

UNIVERSITY OF CAPE TOWN

GRADUATE SCHOOL OF BUSINESS

DATE: 16 March 2009

DECLARATION

1. I know that plagiarism is wrong. Plagiarism is to use another’s

work and pretend that it is your own.

2. I have used a recognized convention for citation and referencing. Each significant contribution and quotation from the works of other people has been attributed, cited and referenced.

3. I certify that this submission is all my own work.

4. I have not allowed and will not allow anyone to copy this

essay with the intention of passing it off as his or her own

work.

Signature:…………………..………………… Date: 16 March 2009

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EXECUTIVE SUMMARY This research was motivated by the understanding, based on Thakor in Ryan (2000) that organisations succeed to the extent in which they engage in value creation. In the financial industry in South Africa, maintaining a high

level of distinctive competencies results in a competitive advantage through high quality service and value creation to customers, resulting in business

viability and - more importantly - sustainability. As this industry is currently

undergoing a dramatic transformation it was therefore of value to investigate the key drivers and how behaviour could possibly be influenced to ensure the continuous creation of value to customers. From past managerial experience it is the researcher’s perception that the biggest threat to the viability and

sustainability of the business lies in the following:

The current financial success is a direct result of the very strong relationships with customers and the level of distinctive competencies of employees, as there is currently a lack of new and innovative products and services that can be delivered.

To be sustainable, a business’ value creation strategy must therefore encompass retaining and maintaining a high level of distinctive competencies in order to deliver a value creating products and services to customers and in

terms of Soft Systems Methodology, the key variable for this research could be defined as:

Improving customer value creation within Absa Corporate and Business Bank Centre in Bloemfontein by enhancing the Relationship Banking Model.

Creative Holism was used in parallel and integrated with the Grounded Theory process to diagnose a complex organisational problem and to develop a theory of knowledge on this phenomenon. The aim was to regard the

problem situation from the broadest critical perspective and to gradually focus on the most pertinent critical aspects.

To successfully address perceptions, the researcher made use of the SCQARE framework as this framework gave the opportunity to develop an answer in a way that promotes relevance, utility, validity and ethics. Through this the

researcher was able to link the concern to a set of questions and a clear answer, all to be achieved in an ethical way.

SITUATION AND CONCERN Before the turn of the century, customers banked with a bank for a specific reason. If you were a farmer you would most likely bank with Volkskas, businesses

primarily banked with Standard Bank, home loans were mainly taken out at

4

United or Allied and investments were the forte of Saambou. For these reasons, customer loyalty was seen as the only important issue within relationship banking, with meeting their service requirements not necessarily receiving the same attention. These paradigms have, however, changed with

the arrival of the new economical standards and requirements. It was for this reason that the South African Banking industry needed to change the way in which business has been done in order to become sustainable and remain viable.

“Change has to change to keep up with change!”

Absa needed to change to keep up with the changing environment and therefore new business structures were brought in to place to keep up with changed needs and requirements of customers. In designing the new strategic direction and structure for the Absa Group in 1998, the business

market was identified as a key future focus area and Absa Corporate and

Business Bank was formally established as an integral part of the new Absa Group Operating Model.

I am currently employed as General Manager in the Absa Corporate and Business Bank Centre in Bloemfontein. The majority of my time is spent leading the Management team in recursion level R0, which is deemed to be

an Innovation Domain. One of my most important functions as part of the Management team is to ensure that an organisational culture is established

that creates customer value by adhering to the five Absa values.

Through action research learning and by integrating a combination of the different systems methodologies, it was possible to address the key variable

and thereby improve customer value creation within a complex work system. In the context of the stated goal, the Business Centre was analysed, the situation observed and a concern C-CLD developed.

Based on the abovementioned facts, the correlation of variables and future expectations - with no change to the current situation or in the expected

future environment - the outcome of the current strategy, policies and procedures within the Business Centre will be that the strategic intention of

the Added-Value Domain will not be met, due to the following:

Value creation to customers will be limited as innovative solutions will not be delivered in an effective and efficient service delivery process, with numerous existing customers either changing to a new financial institution or exercising the option of split banking. This will result in

the return on investment for all stakeholders not being optimised since sustainable growth in net income will not be achieved.

My hypothesis is thus depicted in the Concern Behaviour over Time (C-BOT)

below as the ability of the Business Centre to continuously improve on the creation of value for customers to ensure long term viability and

sustainability of the Business Centre.

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C - BOT

Desired situation

Level of customer value creationwithin the Business Centre

Time

Current situation

Outcome without

intervention

Concern Behaviour over Time (C – BOT)

The aim is to change the current direction of the C-BOT to improve customer value creation and this will be achieved by changing the behaviour of the key

drivers of obstruction. These key drivers were integrated into an interrelationship diagram (ID) with the aim of establishing the route causes

and outcomes that are manifested in the concern. An analysis of the interaction of the drivers reveals that the ability of employees to align themselves with the organisational culture in the Business

Centre stands out as the Root Cause, while the level of customer value creation emerges as the Outcome. By reformulating the abovementioned

key value drivers into variables and integrating them into a CLD (alongside the C-BOT developed above) a causal loop diagram emerges, as depicted in

the figure below.

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Concern CLD

Level of distinctivecompetencies within the

Business Centre

Sustainablity andviability of the Business

Centre

Resource allocation andquality thereof in the

Business Centre

Level of autonomy andauthority of employees

Level of employee ability tohandle variety in the

Business Centre

Ability for adaptationwithin the Business

Centre

Silo Mentality - Level ofshared identity within the

Business Centre

Cohesion within theBusiness Centre

Level of customer valuecreation within the

Business Centre

S

S

S

S

S

S

Degree of policycentralization

O

O

S

S

S

S

S

S

S

S

S

Level of understanding ofcustomer needs and

requirements within theBusiness Centre

Level of relevant marketinformation and

intelligence

Level of new strategyimplementation within the

Business Centre

S

Frequency ofcustomer contact

Level of employee ability toalign to the Business

Centre's culture

S

SS

Leadershipquality

S

S

S

Level of servicedelivery to customers

S

Level of MutualTrust

S

S

S

Level of employeemorale in the Business

Centre

S

S

Concern CLD

This concern is significant and warrants attention as the business banking

model in South Africa is essentially a relationship driven model with customers receiving personal attention. The degree of personal attention varies and is usually determined in correlation with the potential income for the business.

QUESTION Analysing the abovementioned concern gave rise to a number of potential

questions, in that I could possibly consider how to change any one of the identified variables in order to favourably influence the level of effective

customer value creation within the work system. Through a rigorous exploration of the variables in the C-CLD, and finding ways in which an

intervention can be made to change the behaviour of the C-BOT, a powerful question on how the concern can be dealt with was constructed:

What can be done to improve the alignment of existing employees in the Business Centre to the current organisational culture and what can be done differently during the process of recruiting new employees to

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achieve this goal, whilst adhering to Absa policies and procedures at all times and by respecting the rights of all stakeholders involved?

Organisational culture can be interpreted to cover almost everything within

an organisation and in today’s rapidly changing world, issues such as: globalisation, advanced information technology and intense competition, organisations are often forced to restructure on a continuous basis to ensure viability. Regulations and procedures have been reduced to stimulate

creativity and flexibility and these issues and their consequences break down the sense of cohesion within an organisation. Organisational culture is

therefore seen as an important force and source of competitive advantage to counter this loss of sense of cohesion. In light of the abovementioned comments and as employees are regarded as

the most important and valuable resource within the Business Centre,

organisational culture can be seen as an advantage when it points the behaviour of these employees in the right direction to enhance customer

value creation.

ANSWER The answer focuses on existing employees and recruiting new employees,

whom are regarded as the most important and valuable resource within the Business Centre, who are aligned to the organisational culture within the

Business Centre. The following answer was apparent from my research done using the Grounded Theory process: By clearly defining the current organisational culture it will be possible to

identify existing employees who are truly aligned to this culture. Their retention level and organisation commitment will be improved as their anxiety and frustration levels will be lowered, since these individuals will feel that they are treated fairly and supported and also that their contribution is

valued. Employees who are not compatible to the organisational culture will be given a fair opportunity to change their behaviour. Should the required

change not take place, the working relationship may be terminated. All this will be done within policies and procedures with the rights of all individuals being respected.

New employees, with the necessary level of skills, knowledge and experience and who are aligned to the current organisational culture, will be recruited through a newly designed and rigorous interview process. As stated by Liker (2004), a successful business is built by using a three-stage process

to select the best employees that will compliment the existing business culture. Cooper (2008) identified a recruitment process which consists of six stages with the last stage focusing on the personality, character traits and

disposition of new recruits as this is required to build and develop a high-performing team.

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RATIONALE AND EVALUATION Absa Corporate and Business Bank Exco have made their expectations clear of what role and function should be fulfilled by the employees within the Business Centre to achieve the set strategic intention, but this is however

currently not happening given the abovementioned concern and the impact thereof on sustainability. In order to deal with the rationale of the answer,

each causal link has been dealt with as a claim.

80 / 20 Answer CLD


Business Centre


Centre

Resource quality andallocation thereof in the

Business Centre


Business Centre


CentreSilo Mentality - Level ofshared identity within the

Business Centre



Business Centre

S

S

SS

S

S



S


Centre's culture

SS


S

S

S

Implementation of a new strategyaimed at aligning existing employeesand new recruitments to the current

organisational culture

2.

R

1.

3.

5.

4.

6.

6.

7.

8.

9.

12.

11.

10.

80 / 20 Answer CLD

By defining the current organisational culture and aligning existing employees thereto and by only recruiting new employees who are aligned to the organisational culture through a newly designed, rigorous interview

process, the level of skills, knowledge and experience within the Business Centre will be maintained and increased over time. The level of resource

quality is likely to be improved as suitable employees, who are regarded as the most important and valuable resource within the Business Centre, will either be retained or recruited.

The ability of employees to align and function within the current organisational culture will therefore increase. This will lead to a supportive culture and environment within the Business Centre in which all existing

9

employees and new recruitments will be able to fulfil their personal goals, thereby experiencing satisfaction on a personal and work level. The level of identity alignment within the Business Centre will ultimately improve, since each primary activity will now have sufficient resources to

fulfil their respective roles effectively and efficiently, thereby eradicating internal competition and any silo behaviour. This will improve the level of distinctive competencies, resulting in improved

levels of adaptation and cohesion within the Business Centre. Ultimately service delivery and customer value creation will improve as the

value chain within the Business Centre will be redesigned to find effective and efficient ways to provide customers with value-add, using significantly fewer resources than competitors, thereby developing an unassailable competitive advantage and improving sustainable profitability in the long run.

ETHICS By ethically managing the abovementioned concern, within an envelope of acceptable parameters and displaying good corporate governance at all

times, the researcher will be able to meet the set strategic intention. Regardless of leadership style, the Absa values have to be at the core of

leadership and behaviour must be demonstrated that supports these values on a daily basis. The continuous ethical behaviour and actions will be

rewarded as:

• Organizational loyalty and resource allocation will improve. • Employees will show more commitment, leading to higher levels of productivity and thus sustainable profitability.

All stakeholders that will be impacted by the behaviour and actions will be

identified to ensure that all expectations are met. By applying the Velasquez 4-question model and Critical Systems Heuristics (CSH), the ethical

implications of the answer in the situation will be also explored.

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TABLE OF CONTENTS

PLAGIARISM STATEMENT 2 EXCECUTIVE SUMMARY 3

LIST OF FIGURES 15

ACKNOWLEDGEMENTS 16

PART 1: INTRODUCTION AND OVERVIEW

1. ESTABLISHING RELEVANCE 17

1.1 The Current Scenario (S) 17 1.1.1 Absa Corporate and Business Bank in Context 17

1.1.2 Introduction - Business as Usual 19 1.1.3 Systems Analysis 21

1.1.3.1 Soft Systems Methodology 21 1.1.3.2 Viable Systems Model 23

1.1.3.3 Interactive Management and Planning 25 1.1.4 Obstruction Analysis 26

1.1.4.1 Organisational Culture 26 1.1.4.2 Distinctive Competencies 27 1.1.4.3 Shared Identity 28 1.1.4.4 Mutual Trust 28

1.1.5 Reference Projection 28 1.1.6 Reference Scenario 29

1.2 Concern (C) 31

2. ESTABLISHING UTILITY 33

2.1 Question (Q) 33

2.1.1 Introduction 33 2.1.2 Why is change necessary? 33

2.1.3 What needs to be changed? 34 2.1.4 Using Meadows’s 12 Leverage Points 35

2.1.5 Selected question 35 2.1.6 Avoiding the Mitroff error 37

2.2 Answer (A) 39 2.2.1 Introduction 39 2.2.2 The Answer (A) to the Question (Q) 39 2.2.3 Implementation plan for the idealized design 40

2.2.4 The role of the three cybernetic laws in the answer 43

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3. ESTABLISHING VALIDITY 45

3.1 Rationale (r) 45

4. THE ETHICAL IMPLICATIONS 46

4.1 Velasquez model and Critical Systems Heuristics 46

5. CONCLUSION - The link between C > Q > A 47

PART 2: LITERATURE REVIEW 1. INTRODUCTION 48

2. STAGE 2: CUSTOMER VALUE CREATION 53

2.1 Business Banking Model in South Africa 49 2.2 Customer Expectation in Service Quality and Delivery 50

3. STAGE 1: DRIVERS OF IMPROVED SERVICE DELIVERY 53

3.1 Organisational Culture 53

3.1.1 Introduction to Organisational Culture 53 3.1.2 Defining Organisational Culture 54

3.1.3 The Role of Organisational Culture 55 3.1.3.1 Culture as an Advantage 55

3.1.3.2 Culture as a Liability 57 3.1.4 Aspects of Organisational Culture 57

3.1.4.1 Organisational Culture Types 57 3.1.4.2 Organisational Culture Models 58

3.1.4.2.1 Schein’s Model 58 3.1.4.2.2 Kotter and Heskett’s Model 60

3.1.5 Measuring Organisational Culture 61 3.2 Identity Alignment 61

3.3 Leadership quality 63 3.3.1 What is Leadership? 63

3.3.2 Leadership and Management 64 3.3.3 Leadership and Organisational Culture 65

3.4 Mutual Trust 66 4. CONCLUSION 69

PART 3: A SYSTEMIC RESEARCH FRAMEWORK 1. INTRODUCTION 70

2. BACKGROUND TO THE RESEARCH PROBLEM 71

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3. AN ANALYTICAL APPROACH 72 3.1 Qualitative Research 73 3.2 The Benefits of Qualitative Research 73

4. CONSTRUCTING MY WORLD VIEW 74

4.1 Introduction 74

4.2 Theoretical Research Paradigms 75 4.2.1 Postpositivism (Critical Realism) 76

4.2.2 Positivism 76 4.3 The Nature of the World 76

5. DEVELOPING A THEORY OF KNOWLEDGE 77

5.1 Defining a Theory of Knowledge or Epistemology 77 5.2 Using Creative Holism to constitute a Theory of Knowledge 77

6. RESEARCH PARADIGMS AND CHOICE OF SYSTEMS METHODOLOGIES 79

6.1 Choice of System of Systems Methodology 79 6.2 Selecting the applicable Methodologies 81

6.2.1 Type A: Goal Seeking and Viability 81 (i) Viable Systems Model 81

6.2.2 Type B: Exploring Purpose 81 (i) SAST 82

(ii) Interactive Management and Planning 82 (iii) Soft Systems Methodology 82

6.2.3 Type C: Ensuring Fairness 83 (i) Critical Systems Heuristics 83

6.2.4 Type D: Promoting Diversity 84

7. GROUNDED THEORY IN INTERACTION WITH SYSTEMS METHODOLOGIES 84

7.1 Introduction 84

7.2 Data Collection 86 7.2.1 Participant Observation 87 7.2.2 Conversational Interviews 87 7.3 Grounded Theory Results 87

7.4 Integration 87 7.5 Issues of Validity 87 7.5.1 Triangulation 88 7.5.2 Verifications Strategies 88

8. DEVELOPING A CONCERN CLD USING THE THEORY OF KNOWLEDGE

88

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9. DEVELOPING AN QUESTION AND ANSWER TO THE CONCERN USING MEADOWS’S 12 LEVERAGE POINTS 89 9.1 Introduction 89

9.2 Using Meadows’s 12 Leverage points 89 10. TURNING KNOWLEDGE INTO ACTIONABLE KNOWLEDGE 90

10.1 Defining a Theory of Action 90 10.2 Actionable Knowledge 91

10.2.1 Small Wins 91 10.2.2 Actionable Knowledge 91 10.2.3 PDCA Cycle 92

11. THE THEORY OF VALUES AND ACTION KNOWLEDGE 92

11.1 Defining a Theory of Values 92

11.2 The Velasquez 4-Question Model 93 11.3 Critical Systems Heuristics 93

12. CONCLUSION 94

PART 4: RESEARCH RESULTS 1. INTRODUCTION - BACKGROUND TO THE RESEARCH 95

2. ACTION RESEARCH LEARNING 96

2.1 Viable Systems Model Analysis 97

2.1.1 Introduction 97 2.1.2 Combining Beer and Hoebecke’s Perspectives 97

2.1.3 Addressing Customer Value Creation using the Viable Systems Model 98 2.1.4 Viable Systems Model diagnosis of the Added-Value Domain 99

2.2 Interactive Management and Planning Process 100 2.2.1 Introduction 100

2.2.2 Formulating the “Mess” 100 2.2.2.1 System Analysis – Current Situation 100 2.2.2.2 Obstruction Analysis 101

3. ABSA CUSTOMER SATISFACTION SURVEY 101

4. DATA COLLECTION THROUGH CONVERSATIONAL INTERVIEWS 101

4.1 What can be defined as Customer Value Creation? 103 4.2 What is required to establish and maintain a sound Customer

Relationship? 103

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4.3 What Distinctive Competencies are required to be successful within a Relationship Model Environment? 104 4.4 What are the Cultural requirements within a Relationship Model? 105

5. GROUNDED THEORY RESULTS 105 6. CONCLUSION 107

PART 5: EVALUATION AND CONCLUSION 1. ESTABLISHING VALIDITY - Rationale (R) 108 2. RELEVANCE – Are the Concerns raised relevant in the Situation? 123

3. UTILITY - Will the Answer deal with the Concern? 124 4. TRUSTWORTHINESS 125

4.1 Credibility and Dependability 125

4.2 Confirmability 126 4.3 Transferability 126

5. ETHICS – Is the Answer Ethical in the Situation? 127

5.1 Utilitarianism 127 5.2 Human Rights 128

5.3 Justice 128 5.4 Caring 129

6. CRITICAL SYSTEMS HEURISTICS 130

7. TOPICS FOR FUTURE RESEARCH? 130 8. CONCLUSION 131

REFERENCES 132

APPENDICES 140 Appendix A - CATWOE 140 Appendix B – Theory E and Theory O 141

Appendix C – Absa Customer Satisfaction Survey 142 Appendix D - First Categorization of Surfaced Data 144 Appendix E - Ulrich’s Twelve Boundary Questions 147

Appendix F: Glossary 148 Appendix G: Interview Log 150

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List of Figures Figure 1: Organizational structure: AC & BB Bloemfontein Centre 20 Figure 2: Key influencing and Influenced Stakeholders 22 Figure 3: Recursion level R0 – The Business Centre as a Whole 24

Figure 4: Financial Performance since 2005 26 Figure 5: Rich Picture of the current situation 30

Figure 6: Concern Behaviour over Time (C – BOT) 31

Figure 7: Interrelationship Diagram (ID) 31 Figure 8: Concern CLD 32 Figure 9: Organisational Culture within the Business Centre 41 Figure 10: New recruitment strategy within the Business Centre 42

Figure 11: Answer CLD 43 Figure 12: Schein’s Three-Level Organisational Model 59

Figure 13: Kotter and Heskett’s Culture Model 60 Figure 14: TASCOI Mnemonic of the Business Centre 62 Figure 15: Identity Statement of the Business Centre 62 Figure 16: Charles Hardy’s Wheel of Learning 68

Figure 17: Systemic Management Research Framework 70 Figure 18: Conceptual framework - Initial Concern CLD 72 Figure 19: Theoretical Research Paradigms 73 Figure 20: The interaction of the Seven Components of a World View 75

Figure 21: System Approaches related to problem contexts in the System of System Methodology 79

Figure 22: The four main Strands of applied Systems Thinking and applicable SOSM 81 Figure 23: The SSM process 83 Figure 24: The Boundary Categories of Critical Systems Heuristics 84

Figure 25: The four stages of the Grounded Theory Analysis 86 Figure 26: The Argyris and Schön Single and Double-loop Learning 91 Figure 27: Grounded Theory Methodology 95 Figure 28: Concern Behaviour over Time (C – BOT) 96

Figure 29: Recursion level R1 – The Team of Relationship Executives 98 Figure 30: 2 x 2 What to Fix Matrix 102

Figure 31 Emergent Data Categories 106 Figure 32: Resultant coding and densification 106 Figure 33: 80 / 20 Answer CLD 108 Figure 34: A Virtuous Spiral 111

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ACKNOWLEDGEMENTS I would like to thank the individuals who have made a contribution to the completion of this study.

My Father in heaven, without whom this would not have been possible.

My wife, Madeleen, for her unconditional love through very difficult and

testing times and for creating the space, time and environment needed to complete this course. My lovely children, Elri, Anine and Johann, who are an absolute source of joy,

motivation and inspiration - thanks for understanding.

My EMBA9 classmates and especially Derek la Marque, Graham Dawes and Birgit Andrag, without whose constant support, mentorship and friendship this journey would not have been possible.

I am very grateful to Tom Ryan Ailsa Stewart-Smith for their contribution to this life changing experience as well as the support staff namely Julie Nel and Sherry Walklett.

The management of ABSA Corporate and Business Bank, in particular the Management Team and employees in Bloemfontein, for allowing me to do

this programme and their support. Lastly, to mother, Colleen, and my late father, without whose dedicated support to me and to my family in my absence, this would not have been

possible.

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Part 1: INTRODUCTION AND OVERVIEW

1. ESTABLISHING RELEVANCE This section of the dissertation sketches the Absa Corporate and Business

Bank organisational context - specifically Bloemfontein - within which the research study was conducted. It also provides the context within which the thinking in formulating the problem and the answer to the research question was shaped.

To successfully address this purpose the researcher will make use of the

SCQARE framework, since this framework gives the opportunity to develop an answer to a concern in such a way that it promotes relevance, utility,

validity and ethics. Through this the researcher will be able to causally link the concern to a set

of questions and a clear answer which will all be achieved in an ethical way. The Grounded Theory process will be used to surface and test the data from the environment to arrive at a theoretical proposition. In the context of the

stated goal the Business Centre was analysed, the situation observed and an initial conceptual framework, Concern-CLD, developed. This is shown in

figure 18 of Part 3 of this dissertation. The Conversational Interview technique was employed to collect data from a

wide range of stakeholders and the data collected was used to revise the initial conceptual Concern-CLD.

Creative Holism was used in parallel and integrated with the Grounded Theory process to diagnose a complex organisational problem and to develop a theory of knowledge on this phenomenon. The aim was to regard the

problem situation from the broadest critical perspective and to gradually focus on the most pertinent critical aspects.

From this theory of knowledge (Context <> Theory), a hypothesis can be developed and this can be depicted as a Concern Behaviour over Time (C-

BOT), which will be used in the sense-making process to develop a Concern-CLD.

The decision-making process (Theory<>Practice) to formulate a powerful

question and answer will follow to address this concern. This should lead to a change in the behaviour, which ultimately changes the direction of the

Concern Behaviour over Time (C-BOT), that will improve the sustainability and viability of the work system.

1.1 The Current Scenario (S)

1.1.1 Absa Corporate and Business Bank (AC & BB) in Context Before the turn of the century, customers banked with a bank for a specific

reason.

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If you were a farmer you would most likely bank with Volkskas, businesses primarily banked with Standard Bank, home loans were mainly taken out at United or Allied and investments were the forte of Saambou. For these reasons, customer loyalty was seen as the only important issue within

relationship banking, with meeting their service requirements not necessarily receiving the same attention. These paradigms have, however, changed with the arrival of the new economical standards and requirements. It was for this reason that the South African Banking industry needed to change the way in

which business has been done in order to become sustainable and remain viable.

“Change has to change to keep up with change!” Absa needed to change to keep up with the changing environment and therefore new business structures were brought in to place to keep up with

changed needs and requirements of customers. In designing the new

strategic direction and structure for the Absa Group in 1998, the business market was identified as a key future focus area and Absa Corporate and

Business Bank was formally established as an integral part of the new Absa Group Operating Model. Robert Emslie, the Managing Executive: Business Banking Services at that

time, stated the following:

“We conducted an in-depth investigation into how Absa should be providing financial

services to the business market – before forming a multi-talented and highly professional executive team to manage the new business unit. We aim to offer a

quality of service that is competitively unique in many respects. There is great potential for Absa to retain its leadership in markets like the public sector and

agriculture, and to profitably grow its share across the small, medium and large

business sectors. However, the challenge is for us to provide a level of understanding, service and financial expertise that clearly differentiates us from our major

competitors in the business market, and visibly expresses our commitment to providing our business customers with the most appropriate solution the Group has to

offer.”

Over the past couple of years Absa Corporate and Business Bank gained a strong differentiated position in the market through a relationship banking

model, deep sector specialisation and commercial product capability and this specialised unit initially consisted of three primary segments, namely:

Small Business that catered for business entities in the turnover category of up to R2,5 million per annum. These businesses are highly reliant on banks, and make up the largest number of customers in the

Business Bank. They have basic financial needs that can be adequately met with standard products at a standard price.

Medium Business that catered for business entities in the turnover

category of R2,5 to R50,0 million per annum. These businesses have more complex financial needs and require individual attention and

advice on specialised financial matters. They use a greater variety of

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products than small businesses and make greater use of electronic banking.

Large Business that catered for business entities in the turnover

category of above R50,0 million per annum. Given the complex needs of customers within this segment, business centres with specialised skills were established in Sandton, Eastgate, Pretoria, Durban and Cape Town. By the end of 2000, Tygerberg and Bloemfontein also

boasted their own centres.

The intention of implementing this new business model was to increase shareholder value by:

• Improving alignment of value propositions, sales and service

delivery to customer needs.

• Enhancing flexibility and speed to identify and capture opportunities.

• Isolating investments in broadly defined market and product segments to ensure adequate returns.

To achieve its objective, the new business model provided a relationship

specialised business unit that used customer knowledge and insight to develop, sell and service solutions tailored to customers’ needs.

1.1.2 Introduction - Business as Usual

I am currently employed as General Manager in the Absa Corporate and Business Bank Centre in Bloemfontein (organisational structure shown in figure 1) and it is my team’s responsibility to ensure that this Business

Centre achieves the set strategic intention in order to meet with the Absa Group initiative for this specific business area. In the financial industry in South Africa, maintaining a high level of

distinctive competencies results in a competitive advantage through high quality service and value creation to customers, which results in business

viability - and more importantly - sustainability. It was therefore imperative to investigate the value drivers and how they could possibly be influenced to ensure the continuous creation of customer value within the Business Centre. From past managerial experience my

perceived biggest threat to the viability and sustainability of the Business Centre lies in the following:

The current financial success is a direct result of the very strong

relationships with our customers and the level of distinctive competencies of employees, as there is currently a lack of new and

innovative products that can be delivered. This might lead to

20

customers not being serviced at acceptable levels as the correct solutions may be lacking.

STONIE STEENKAMP GENERAL MANAGER

BEN van derWESTHUIZEN MANAGER:

RE’S

SHANE DICKS MANAGER:

OPS BANKERS

AMANDA GELDART MANAGER:

OPERATIONS

13 X OPERATIONAL BANKERS (OB’s)

CAS BADENHORST

CREDIT MANAGER

13 X RELATIONSHIP EXECUTIVES

(RE’s)

10 X CREDIT ANALYSTS

SAKKIE WANNENBURG MANAGER:

COMPLIANCE

6 X COMPLIANCE OFFICERS

4 X CLIENT SERVICES

CLERKS (CSC’S)

3 X CLIENT SERVICE

CONSULTANTS (CSO’s)

Figure 1: Organisational structure: AC & BB Bloemfontein Centre Through action research learning and by integrating a combination of the different systems methodologies, it is possible to address the key variable of

this research and thereby improve customer value creation within a complex work system. This will ensure that the derived answer will lead to a more effective idealised plan as the design process can now be redesigned on a

continuous basis. The following thought process was used:

System analysis - This indicates how the current system operates. The first step is to do a stakeholder analysis and this process is then

completed by describing the competitive environment. The below mentioned systems methodologies were used by the researcher to

formulate the current work system:

• Soft Systems Methodology was used to identify the relevant stakeholders as it attempts to formulate different

conceptual models which represent different viewpoints. These are then used as the basis of a debate - leading to feasible and desirable change.

• The Viable Systems Model was used as a diagnostic tool to model the Business Centre’s structure in an attempt to

determine viability through organisational problem solving. An organisational chart was used to determine on which

level of recursion within the Business Centre a Viable Systems Model diagnosis was to be performed.

21

• To gain an in-depth understanding of the current work system and viable organisational practices, the Interactive Management and Planning process was

used to formulate the “mess” (Ackoff) as it is based on the fact that the future is created between now and then. It therefore avoids the problem of being able to predict the future accurately, which is extremely difficult within an

ever changing financial environment.

Obstruction Analysis - This identifies the factors, both internally and externally, that obstructs or weakens the progress of the organisation and causal loop diagrams can be used to describe the interdependency between the variables.

Reference Projections – These are assumptions based on the correlation of variables and past trends which are done to predict the

future. They are based on the organisation’s future with no change to the current situation or in the expected future environment.

1.1.3 Systems Analysis

1.1.3.1 Soft Systems Methodology

Soft Systems Methodology was developed by Peter Checkland in the early

1970’s and attempts to foster an organisational learning system and appreciation of the complex problem situation between groups of

stakeholders, rather than set out to solve a predefined problem. A key feature of Soft Systems Methodology is that it portrays the problem more vaguely and wide ranging for as long as possible by not jumping to any conclusions, not ignoring the current situation and concentrating on some

idealised future.

Initial work involved interviews and observations to gain an understanding of the current situation within the work systems by using the systems thinking

concepts of hierarchy, communication, control and emergent properties. These relevant systems were logically defined by constructing root

definitions, which were used to generate conceptual models of the selected work systems. Different conceptual models representing different viewpoints were then used as the basis of debate, which through an appreciative process, lead to feasible and desirable change and ultimately to action.

By using Soft Systems Methodology the following stakeholders were identified that are directly involved in, or impacted by, the key variables within the current work system:

22

Internally (S – Suppliers)

1. Employees of the Business Centre 2. The Management Team within the Business Centre

3. Senior Management within Absa Corporate and Business Bank Externally (C – Clients)

4. New and Existing Customers 5. Competitors

6. Absa Shareholders 7. Government / Regulator / Reserve Bank 8. Community

To ensure the Business Centre can positively contribute to the customer

value creation convictions, a CATWOE (Appendix A) was used to develop the root definitions for only the employees and the customers of the Business

Centre, given the outcome shown in figure 2. Root definitions are a statement that describes a system of interest

and mnemonics can be used to help in this process. One such mnemonic is a CATWOE. The CATWOE procedure is used to check that all necessary

elements are included in the root definition before proceeding to a conceptual modelling phase.

Influence

Influenced

5

8

2

4

1

37

6

Figure 2: Key Influencing and Influenced Stakeholders Employees (root definition) – This is a system in which the Management Team strives for profitable, value creating customer service and solutions by

meeting all customer needs on time and using adequate processes and products to be delivered by the skilled, experienced and knowledgeable

employees within the Business Centre.

23

Customers (root definition) – This is a system in which the employees and the Management Team of the Business Centre strives to turn the financial needs, requirements and expectations of customers into workable products and solutions using the team members’ skills, knowledge and experience

within the current market cycle and conditions. Conceptual models were devised to represent a purposeful activity system through a set of logical actions as implied by the description of the system or

root definition. A conceptual model can be seen as an activity sequence diagram which is clearly aimed at representing a conceptual system as

defined by the root definition and not just a set of activities. The following conceptual models were therefore developed for the abovementioned two stakeholders:

Employees:

1. Identify and determine customer needs

2. Develop profitable solutions using the required products 3. Deliver service and products punctually

Customers:

1. Express financial needs and requirements

2. Develop the required solution using the necessary products 3. Receive the required service and product on time

1.1.3.2 Viable Systems Model

Although the majority of my time as General Manager is spent leading the Management Team in recursion level R0 (figure 3), which is deemed to be an Innovation Domain, one of my most important functions as part of the

Management team is to ensure that an organisational culture is established by adhering to the following five ABSA values:

• Value our employees and treat them with fairness.

• Demonstrate integrity in all our actions. • Strive to exceed the needs of our customers.

• Take responsibility for the quality of our work. • Display leadership in all we do.

24

-

S1 Management(Amanda Geldart)

S1 – OB’s

S1 – RE’s

S1 – Ops

S1 Management(Ben v/d Westhuizen

S1 Management(Shane Dicks)

S5 –GM (Stonie Steenkamp)

S4

S3 – Credit & Compliance (Cas Badenhorst)

S2

S3* - Audit

Environment

Figure 3: Recursion Level R0 – The Business Centre as a Whole

One of the extended purposes of the Management Team is to enable our

customers to achieve their own ambitions and goals and by doing so, to deliver superior benefits to all our stakeholders. Thus, the following propositions form the basis of the current value creation strategy:

Vision It is our vision to become the best corporate and business bank in the central

region of South Africa, with regards to both market share and income generation. Mission

By placing the customer at the centre of everything we do, it is our intention

to deliver high quality and innovative solutions. We intend to achieve this through our in-depth understanding of the customers’ needs and by

leveraging from the diversity of skills and competitive products within our business environment, which will likely result in the Business Centre meeting

the set strategic intention. The Business Centre defines value-add and value creation as follows:

• Delivering sustainable earnings growth to all shareholders.

• Creating mutually beneficial relationships with all our customers.

• Creating a positive, forgiving and diversity friendly environment for our employees in which they are able to achieve their own personal goals.

25

• Developing a culture of positive corporate citizenry towards our community.

• Building a better South Africa, and ultimately Africa, by supporting

transformation and the continued development of financial markets. All five definitions are of equal importance to achieve sustainable growth and to ensure that the Business Centre can positively contribute to these

convictions, the following business identity was formalised:

To become the best and most profitable Business Centre within our region (Free State and Northern Cape) by the creation of sustainable and profitable customer relationships through superior, value adding customer services by highly motivated individuals within a team

environment. This will be achieved by meeting all our customers’

needs on time and by pro-actively providing the appropriate solutions.

1.1.3.3 Interactive Management and Planning In terms of the operating model for the large business segment, redefined in June 2007, a team consisting of a Relationship Executive, Operational

Banker, Credit Analyst, Compliance Officer and a Services Consultant are responsible to deliver a service to a portfolio up until a maximum of 40

customer groups. This service would include the following functions and tasks:

• Maintaining existing and building new customer relationships. The

performance of the team will be measured by the financial added value of each relationship - both the bank and the customer.

• Punctuality, quality service and products through innovative solutions that meet the needs, requirements and expectations of the customer - thereby creating value.

Given the level of focus on people and performances, the Business Centre can theoretically be described as a People-Driven World Class Performance Organisation of which the following is said:

This is an organisation where all the pieces of performance and people

fit and the culture of the organisation is aligned to it. It is characterised by purposeful leadership with heart, where performance

has become a passion at every level. There is responsiveness by the employees to the targets, which are set by the competitors and

customers. An atmosphere of democracy exists, which allows freedom within the rules of performances and is a total integration of the theories E and O working together.

26

The financial performance of the Business Centre since December 2006 is shown in figure 4 and it indicates that that the year-on-year growth has exceeded normal expectations. It should also be taken into consideration that these results have been achieved without increasing employee numbers with

more than 10%, which has put the existing work force under tremendous pressure and stress.

3Absa Corporate & Business Bank

Financial Performance since 2006

Income Statement

Net interest income

Non-interest income

Top-line income

Impairments

Operating income

Expenses

Net income before tax

Balance Sheet

Deposits

Advances

31/12/07

Actual

Rm.

R149.98

R50.94

R200.92

R6.79

R207.71

R56.72

R150.99

(32.1%)

R2,490.5

R3,061.9

31/12/08

Actual

Rm.

R167.6

R58.96

R226.56

R5.55

R232.11

R54.73

R177.38

(17.47%)

R2,810.0

R3,310.0

31/12/06

Actual

Rm.

R126.3

R41.3

R167.6

(R4.5)

R163.1

R48.7

R114.3

(25.09%)

R2,793.7

R2,149.3

Figure 4: Financial Performance since 2005

1.1.4 Obstruction Analysis By using the Grounded Theory process, all the collected data was categorised (as shown in Appendix D) into the relevant categories. The four key value

drivers (behaviours) of obstruction were identified in Part 4 of this dissertation that needs to be changed to improve customer value creation

within the Business Centre. These are described below:

1.1.4.1 Organisational Culture International research has shown that talent is becoming scarcer in the new

world and that organisations are entering a war for talent to attract and retain the right people. In the new economy, employees want their

organisations to learn to speak to them in a new way: honestly and humanely. If companies fail to learn to do this, employees are likely to resign. Studies

show that organisations that are most responsive to employees’ needs, have a lower staff turnover figure. In the war for talent, the Business Centre has adapted a number of strategies that would make it the premier employer within the area. The most important strategy is the following:

27

• Engage employees in the business, create a supportive and inclusive organisational culture and enable people to achieve a healthy balance between their work and the other parts of their life.

It is therefore essential for organisations to understand the current culture and one of the key actions is to measure the organisation’s culture before embarking on any strategic change or efficiency improvements. This is

currently not happening as the majority of time is spent managing within a perceived idealised culture in which management is not willing to address or

admit failures and deficiencies within the existing organisational culture. This ultimately results in declining service delivery and value creation, with numerous existing customers either changing to a new financial institution or exercising the option of split banking (this is where a customer makes use of

more than one financial institution to meet their financial requirements).

1.1.4.2 Distinctive Competencies

The business banking model in South Africa is essentially a relationship driven model in which customers receive personal attention and service of a high quality. The degree of personal attention varies and is usually

determined in correlation with the potential income to be generated from this relationship. The levels of distinctive competencies of employees are,

however, naturally decreasing due to limited self development which negatively impacts on any value creation. This concern is significant and

warrants attention for the following reasons:

• The maintaining of existing and building of new customer relationships, which are financially mutually beneficial to both the

customer and Business Centre, will not take place.

• Customers place a premium on the availability and accessibility of employees and for this reason turnaround times are an important

factor. Should service delivery therefore be below standard, the close working relationship which allows employees to meet their customers’ service expectations and at the same time facilitate rapid decision making, based on an understanding of the needs

and risks of the business, will be compromised.

• The needs of the Business Centre’s customers are more complex than retail customers and they require a wider range of product

solutions and services. In addition to meeting these core requirements, employees need to possess a degree of industry

knowledge, which is valued by customers and allows them to provide appropriate solutions. Should this not be the case the needs, requirements and expectations of customers will not be met.

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1.1.4.3 Shared Identity A critical factor in ensuring the viability and sustainability of the Business Centre is the establishment of a shared identity. The lack of shared identity

will result in a loss of responsibility, accountability and discretion - thereby weakening the levels of authority and autonomy, within pre-set boundaries in the Business Centre. A lack of shared identity is a result of 1) the non-alignment of the shared identity of all the primary activities within the

Business Centre and 2) that of all the primary activities with the identity of Management and Absa Corporate and Business Bank EXCO as the roles and

values of all primary activities have not been clarified. An example of this is the following: Failure from management to implement any new strategy successfully due to an inadequate understanding of the

resistance to change and a lack of vision regarding the relationships between

employees, processes and technology. There is also limited employee incentive to embrace any new strategy due to insufficient information sharing

as a result of poor communication, which leads to failure to obtain employee commitment within the Added-Value Domain. 1.1.4.4 Mutual Trust

Awareness and self knowledge increase trust and enable an employee to

manage higher levels of complexity and diversity and thereby equips him/her to operate successfully within a team environment. Stakeholders (with the

inclusion of customers) trust leadership skills, loyalty and caring. This leads to sustainability with trust and facilitates the flow of information and

feedback within a team, thereby increasing any system’s self regulating forces and ultimately value creation. Mutual trust is also influenced by the age and years of services, as customers

tend to use this in determining the level of experience since there is a direct correlation within the financial industry between the age, the years of service

and the skill level, knowledge and experience of an employee.

1.1.5 Reference Projection

Based on the abovementioned facts, the correlation of variables and future expectations - with no change to the current situation or in the expected future environment - the outcome of the current strategy, policies and procedures within the Business Centre will be that the strategic intention of

the Added-Value Domain will not be met, due to the following:

Value creation to customers will be limited as innovative solutions will not be delivered in an effective and efficient service delivery process,

with numerous existing customers either changing to a new financial institution or exercising the option of split banking. This will result in

29

the return on investment for all stakeholders not being optimised since sustainable growth in net income will not be achieved.

1.1.6 Reference Scenario

Idealised design state - The future scenario that is to be developed has to be credible and compelling and it has to show that the current behaviour has to change to meet future expectations and therefore the idealised design

state of the Business Centre can be described as a work system that will:

• Optimise the return on investment for all stakeholders.

• Add value to all customers by providing innovative solutions in an effective and efficient service delivery process.

• Attract new customers through ongoing superior service.

• Enhance self development to a level that will exceed stakeholders’

expectations.

• Establish a sound business relationship to the benefit of all stakeholders.

The situation and current circumstances can be extrapolated and shows that

the following challenges will occur in the not too distant future:

• The Business Centre is still the smallest Corporate and Business Bank in our area, in terms of NPBT share, and we therefore need

to drive strategies that will allow us to grow faster than the competition on a continued basis in order to achieve a number one position by 2011.

• The Business Centre’s book and customer portfolio is too concentrated on agricultural business and we are driving several strategies to diversify our business. Although we have made

headway since 2007, we will continue to focus on products and sectors where we see opportunities for diversification.

• The Business Centre non-interest income growth is unsatisfactory

and we will focus on strategies that will drive non-interest income.

• To support prudent capital management, the Business Centre wants to become self-funded. However, the Business Centre currently has a negative funding gap which will only be closed

with a focused strategy to gain more deposits.

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• The Business Centre needs to constantly focus on strategies to manage risk more effectively. These actions vary from credit risk strategies tailored to the requirements of the economic cycle we are in to operational risk and compliance.

• The Business Centre must be able to implement contingency plans quickly and more effectively, should negative scenario’s impact the business.

A Rich Picture, which Jackson (2005) describes as “actual drawings that

allow the various features of a problem situation, as it is perceived to be set down pictorially for all to see” is used to show the customer and employee environment within the financial industry in South Africa. The different systems within recursion level R0, in terms of the Viable Systems Models

mentioned below, are also indicated in the picture:

System 1: Value chain activities

System 2: Coordination activities System 3: Control activities System 4: Planning, strategising and intelligence activities System 5: Policy making activities

AC & BB Exco(S4 & S5)

Ethic & Corporate Governance (S3*)

Purpose: Growth in NPBT

Resource quality and allocation (S2)

Technology & processes (S2)

Market information & intelligence (S4)

Community responsibility (S4)

Globalisation (S4)

Customer needs and requirements (S4) Absa shareholders (S4)

Government/Regulator/

Reserve Bank (S3)

Employees delivering value adding services

and products

Punctual delivery of products and services

(S1)

Management team (S5)

Organisational Culture (R0)

Audit (S3*)

Competitors (S4)

Authority (S1)

Coordination (S2)

Products and services (S1 & S4)

Policy and procedure (S5)

Figure 5: Rich Picture of the current situation

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1.2 Concern (C) The researcher’s hypothesis is thus depicted in the Concern Behaviour over Time (C-BOT) (figure 6) as the ability of the Business Centre to continuously

improve on the creation of value for customers to ensure long term viability and sustainability of the Business Centre.

C - BOT

Desired situation


Time

Current situation

Outcome without

intervention

Figure 6: Concern Behaviour over Time (C – BOT) The aim is to change the current direction of the C-BOT in figure 6 to

improve customer value creation and this will be achieved by changing the behaviour of the four key value drivers of obstruction, as mentioned in section 1.1.4. These value drivers were integrated into an interrelationship diagram (ID) with the aim of establishing the route causes and outcomes

that are manifested in my concern.

ID

Distinctive Competencies

Shared Identity

Mutual Trust

Alignment to the

OrganisationalCulture

Level of Customer Value

Creation

Figure 7: Interrelationship Diagram (ID)

32

An analysis of the interaction of the drivers reveals that the ability of employees to align themselves with the organisational culture in the Business Centre stands out as the Root Cause, while the level of customer value creation emerges as the Outcome. By reformulating the abovementioned

key value drivers into variables and integrating them into a CLD (alongside the C-BOT developed above) a causal loop diagram emerges, as depicted in figure 8.

Concern CLD


Business Centre


Centre

Resource allocation andquality thereof in the

Business Centre



Business Centre


Centre


Business Centre



Business Centre

S

S

S

S

S

S


O

O

S

S

S

S

S

S

S

S

S




intelligence


Business Centre

S



Centre's culture

S

SS

Leadershipquality

S

S

S


S


S

S

S


Centre

S

S

Figure 8: Concern CLD

Conclusion: This concern is significant and warrants attention as the

business banking model in South Africa is essentially a relationship driven model with customers receiving personal attention. The degree of personal attention varies and is usually determined in correlation with the potential

income for the business.

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2. ESTABLISHING UTILITY - Developing a Question

(Q) and Answer (A) to the Concern (C) 2.1 Question (Q) 2.1.1 Introduction

From the information available, a decision can be made as to where and how

to intervene in the mess (theory<>practice) in an attempt to develop a possible answer (A-CLD) to the concern in the C-CLD. Subsequently, this

section deals with the formulation of the research question for this study which is intended to either explain the behaviour of the C-BOT or change the

direction of the behaviour resulting in the C-BOT. 2.1.2 Why is change necessary?

The new economy has not only brought great business opportunities, but great turmoil at the same time and not since the Industrial Revolution has

the stakes of dealing with change been so high. Despite some individual successes, however, change remains difficult to effect and few organisations

manage the process successfully. The reason for some of those failures is that in their feverish efforts to change their organisations, management often end up immersing themselves in numerous initiatives. The result is that

most change efforts exert a heavy toll - both human and economic - and although every business’s change initiative is unique, research done by Beer

and Nohria (2000) suggest that there exist two theories of change:

Theory E is change based on economic value and it is usually the one that is prevalent in news headlines. In this harsh approach to change,

shareholders’ value is the only legitimate measure of organisational success. Change usually involves excessive use of economic incentives, drastic lay-offs, downsizing and restructuring.

Managers who subscribe to Theory O believe that if they were to focus exclusively on the price of their stock, they might harm their

organisation. In this flexible approach to change, the goal is to develop corporate culture and human capability through individual and

organisational learning – the process of changing, obtaining feedback, reflecting and making further changes.

To understand the express differences between theories E and O, they can be compared across several key dimensions of corporate change, namely: goals, leadership, focus, process, reward systems, and use of consultants.

The results are shown in Appendix B. Clearly, if the objective is to build an organisation that will be sustainable and

viable over the years, Theory E strategies must to some extent be combined with Theory O strategies.

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2.1.3 What needs to be changed? Purpose: Sustainable and viable growth in net income before tax is deducted from the Business Centre in Bloemfontein to meet the strategic

intention of the Absa Group.

Concern: Decreasing levels of customer value creation within the Business Centre in Bloemfontein.

By investigating the formulated research question thoroughly, it will possibly

produce a solution that will answer the question and deal with the concern within the current context of the Business Centre. Through a rigorous exploration of the variables in the initial conceptual framework, Concern-CLD, (figure 18 of Part 3) and finding ways in which an intervention can be made

to change the behaviour of the C-BOT (figure 6), a powerful question on

how the concern can be dealt with was constructed. To be more specific, only consideration to the following powerful questions that I exercise direct

control or influence was given: Powerful Questions

1. How will the general manager be able to improve the levels of distinctive competencies of employees in the Business Centre to

ensure they have the ability to handle variety and complexity and adapt within a highly regulated and changing financial environment?

2. What can be done to improve the alignment of existing employees in

the Business Centre to the current organisational culture and what can be done differently during the process of recruiting new employees to

achieve this goal, whilst adhering to the Absa policies and procedures at all times and by respecting the rights of all stakeholders involved?

3. What can I do to improve the level of shared identity within the

Business Centre to improve the level of effective and efficient teamwork as well as cohesion and coordination?

4. How will I improve the resource allocation and the quality thereof in

the Business Centre to ensure it is fairly based on what is actually required and not only on financial performance?

5. How can I ensure that existing employees - with the necessary level of

skills, knowledge and experience - are retained within the Business Centre to decrease the negative impact of increased global competition

on the financial performance of the Business Centre?

35

2.1.4 Using Meadows’s 12 Leverage Points To select the most effective and efficient question, the different leverage points within the work system was identified. The one where a small shift in

one variable can produce the biggest change, was selected. The twelve leverage points to intervene in a work system were proposed by Donella

Meadows and given the authority and autonomy I have within the Business Centre, I focused my attention on possibly changing resources. Resources (the employees in the Business Centre) are usually stocks

referring to the state of the work system that is impacted by either inflows or outflows. As resources are leading indicators, this is usually the area where intervention will result in the most efficient and effective change. Therefore, I will intervene at the following place within the work system to improve the

retention and the recruiting of new employees, whom are aligned to the organisational culture, within the guidelines of the existing Absa policies and

procedures:

• The power to add, change, evolve or self-organise system

structure.

2.1.5 Selected question

Question: What can be done to improve the alignment of existing employees in the Business Centre to the current organisational culture and what can be done differently during the process of recruiting new employees to achieve this goal, whilst adhering to Absa policies and procedures at all

times and by respecting the rights of all stakeholders involved?

Importance of this question: As discussed more comprehensively in Part 2, organisational culture can be interpreted to cover almost everything within

an organisation, such as: basic assumptions and beliefs, values, models of behaviour, rituals, practices, symbols and technology.

In today’s rapidly changing world issues such as globalisation, advanced information technology and intense competition, force organisations to restructure on a continual basis to ensure viability. Regulations and

procedures have thus been reduced to stimulate creativity and flexibility and these issues and their consequences deconstructs the sense of cohesion in an

organisation. Organisational culture is therefore seen as an important force and source of competitive advantage to counter this loss of sense of

cohesion.

In light of the abovementioned comments and as employees are regarded as the most important and valuable resource within the Business Centre, organisational culture can be seen as an advantage when it directs the behaviour of these employees to the favourable course. The functions of a

supportive organisational culture could be described as follows:

36

• Boundary-defining role: This function distinguishes one organisation from another.

• Conveyance of sense of identity: Based on the premise that a sense of identity exists within the organisation.

• Facilitation of commitment: Facilitates commitment to

something larger than individual self-interest.

• Enhancement of social system stability: Culture is the social glue that helps to bind the organisation together by providing appropriate standards for what employees should say and do.

• Control mechanism: Culture serves as a control mechanism to

guide and shape the attitudes and behaviours of employees.

By improving the level of alignment to organisational culture within the Business Centre, the following behavioural change will be achieved:

Existing employees: Existing employees with the necessary level of

skills, knowledge and experience, will be retained within the Business Centre since the supportive culture and environment will enable these

employees to fulfil their personal goals, thereby enabling employees to experience satisfaction on both a personal and work level.

Employees will now be motivated to excel as their contribution will be valued and they will be treated with fairness. Those who do excel will

furthermore be motivated to remain in this line of business as they will be rewarded appropriately, on both a monetary and non-monetary basis.

Due to the higher skills levels being retained, employees will have the ability to handle a wider range and higher levels of variety. This will

then improve the ability of employees to adapt to a changing environment as they will now have a clearer understanding of

applicable policies and procedures as well as the boundaries of their own discretion. The cohesion between all primary activities in the

Business Centre will also be improved as all these activities will now share the same common identity. With accountability and responsibility being clarified, autonomy and authority will be improved, which will result in the whole work system becoming part of the

customer solution process and ultimately additional and sustainable value creation.

New employees: Only individuals with the necessary level of skills,

knowledge and experience will be appointed in terms of job specifications, policies and procedures. By seeking individuals whom

are aligned to organisational culture, the effectiveness and efficiency

37

of the whole work system will be improved as all employees will be focused on value creation within an environment in which they will be supported, respected and trusted.

To ensure that the right question was formulated which, when answered, will adequately solve the concern above, it was checked against the three dimensions to powerful questions namely: Construction, Assumptions and Scope.

Construction: The question begins with an interrogative ”What?”, hence it is

quite robust. Assumptions: The question does not introduce any unconscious assumptions to the situation but it assumes that by retaining employees or

recruiting new employees, whom are aligned to the current organisational

culture, will improve customer value creation and therefore the viability and sustainability of the Business Centre will ultimately be enhanced.

Scope: The question is clearly within my capacity to take effective action as I already have buy-in from the Absa Corporate and Business Bank Exco (Executive Committee), and therefore my business management experiences

is more than adequate to influence the situation.

2.1.6 Avoiding the Mitroff error

Another aspect that was investigated to ensure the richness of the question, was to explore questions from a multiple perspective approach. Mitroff

(1998) offers a five category strategy to ensure managers do not solve the wrong problem precisely and that their interventions are consequently ineffective, even if the wrong problem has been solved. The following guidelines for problem formulation are proposed:

Picking the right stakeholder: A stakeholder is defined as any person that

has a vested interest in a common situation and there are three types of stakeholders:

• Those that hold power in situations regarding resources and policies.

• Those that benefit or suffer as a consequence of the situation.

• Those that maintain the current situation. A cross section of stakeholders, identified by using Soft Systems Methodology, was involved in the problem formulation process during the

Grounded Theory process. This process surfaces views from primary data through interviews with the relevant stakeholders to avoid that the research

is based on the researcher’s own pre-set views and assumptions.

38

Expanding the options: Two very different formulations of the problem should be formulated by the researcher by means of looking at problems from four different perspectives. These perspectives correspond to the social systems paradigms as mentioned below:

• Scientific / Technical = Functional • Existential = Interpretive • Interpersonal / Social = Critical / Emancipatory

• Systemic = Postmodern

The above result in the identification of the different dynamics of the problem – Management ownership and accountability (Systemic), understanding customer needs with ethical solutions (Interpersonal), legitimacy and efficiency demands (Functional) and purpose of the Business Centre

(Existential). I thereby avoided framing the problem to narrow.

Phrasing the problem correctly: By not only formulating the problem in

terms of technical and human variables I respect the ethical threshold of all stakeholders involved. The tension between individual and collective rights therefore emerges and issues regarding utilitarianism, fairness, care and justice are prevalent and have to be dealt with.

Expanding the problem boundaries: I moved beyond my comfort zone

by expanding the boundaries of the research by not only including the industry view, but by expanding the research to social and cultural systems

that surrounds the financial industry. The core variable that is being examined -namely customer value creation - is influenced by the

organisational culture, human relations, and perceptions. Being prepared to manage paradox: The problem formulation reflects that the researcher has respected the complexity and interrelatedness of

systems as well as the resulting paradox, which is inherent in problems of this complexity. The illustration of the problem formulation in the Concern-

CLD indicates that the variables of the concern are interlinked and that a change in one variable will affect the behaviour of the others. The following

paradoxes will need to be managed:

1. Financial performance is very important but it must be driven by an acceptable level of behaviour at all times, which includes respecting the values of all stakeholders.

2. By entering new markets or opportunities ethics, morality and good corporate governance will or should be questioned.

3. Existing employees may not be able to meet the requirements of the

changing financial environment due to a lack of skills and may possibly decide to leave the company. Continuous self development is therefore

paramount to ensure that this does not happen.

39

2.2 Answer (A) 2.2.1 Introduction

This section describes the answer to the research question and it describes the framework developed in the form of an answer CLD that was developed from the data gathered. This research answer will indicate how the concern previously raised can be addressed and how the behaviour can particularly

be modified as described in the C-BOT (figure 6).

2.2.2 The Answer (A) to the Question (Q) The answer focuses on existing employees and the recruitment of new employees, who are regarded as the most important and valuable resource

within the Business Centre, to ensure alignment to the organisational culture within the Business Centre. The following answer was apparent from the research done using the Grounded Theory process:

Answer: Lawler (2003) states that “a value proposition is truly the beginning of treating people right, because it establishes the initial set of practices that

ensures the organisation will employ people who are aligned with its values and goals.”

It is therefore critical that an organisational culture must be identified and defined using the vision, mission and values of the organisation to ensure that only employees who are aligned to this culture, are either retained or

recruited. This statement is, however, both supported and contradicted by Collins (2000) where he states that organisations should first get “the right

people on the bus” and the “wrong people off” and then “we’ll figure out how to take it someplace great”. By clearly defining the current organisational culture it will be possible to

identify existing employees who are truly aligned to this culture. Their retention level and organisation commitment will be improved as their anxiety and frustration levels will be lowered, since these individuals will feel that they are treated fairly and supported and also that their contribution is

valued. Employees who are not compatible to the organisational culture will be given a fair opportunity to change their behaviour. Should the required

change not take place, the working relationship may be terminated. All this will be done within policies and procedures with the rights of all individuals being respected.

New employees, with the necessary level of skills, knowledge and experience and who are aligned to the current organisational culture, will be recruited through a newly designed and rigorous interview process. As stated by Liker (2004), a successful business is built by using a three-stage process

to select the best employees that will compliment the existing business culture. Cooper (2008) identified a recruitment process which consists of six

stages with the last stage focusing on the personality, character traits and

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disposition of new recruits as this is required to build and develop a high-performing team. 2.2.3 Implementation plan for the idealised design

As seen in figure 11, the newly formulated strategy will be transferred and implemented successfully by the Management Team (Innovation Domain) by using Strategic Assumption Surfacing and Testing (SAST). The reason for this

being that it focuses on the relationship between participants involved in a problem context and not on the characteristics of the system that constitutes

the problem context. Therefore organisational structures become irrelevant with improved levels of employee commitment through open and honest communication and involvement by sufficient and effective information sharing – a process in which no-one will be excluded. The following principles

are incorporated in this process:

Adversarial –based on the belief that the best way to test an

assumption is to oppose it. Participative –based on the belief that the knowledge and resources necessary to solve and implement the solution to a complex problem is

distributed among a group of individuals.

Integrative –based on the belief that a unified set of assumptions and action plan are needed to guide decision making, and that what

comes out of the adversarial and participative elements can be unified.

Managerial mind supporting –based on the belief that exposure to assumption deepens the manager's insight into an organisation and its policy, planning and strategic problems.

The newly formed strategy will be implemented by using the following process:

Step 1: Management will initially define the organisational culture (figure 9)

within the Business Centre.

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Business Culture in the Bloemfontein Business Centre

The Bloemfontein Business Centre offers a learning environment with an energetic and positive vibe where there is a considerate attitude, and respect for all forms of diversity and values. Although structured on a hierarchical basis, and operating within a heavily regulated banking framework, we nonetheless have a high regard for teamwork and the ability of individuals to innovate. We strive to provide a transparent workplace where information is freely available, and we attempt to see and explain the “bigger picture” at all times. We strongly encourage the challenging of existing paradigms, provided that alternatives form part of the solution. Our ultimate goal is to provide our valued customers with customised financial solutions which meet and even exceed their expectations, in order, ultimately, to realise our financial and other objectives.

Figure 9: Organisational Culture within the Business Centre Step 2: An open session which advocates free discussion will be held with all

the employees in the Business Centre in which the newly defined organisational culture as well as the management assumptions, on which the culture is based, will be discussed. This will be done to ensure that an actual scenario is described and not an idealised scenario.

Step 3: Management and employees will also identify at least two individuals

within each operational area who they feel is aligned to the current organisational culture. These employees will now form part of the new interview process to ensure that the individuals who are successfully recruited, are better aligned to the current organisational culture.

Step 4 (1): Existing employees will be benchmarked against the organisational cultural and should there be the least or no alignment, these employees will be given the opportunity to change their behaviour or have

their employment terminated.

Step 4 (2): Recruiting new employees will now be done in terms of the strategy mentioned in figure 10 below, within the existing Absa Human Resources policies and guidelines.

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Strategy regarding new recruitment process

• Step 1 – Interview which must include relevant Management member, Team

member of the particular business area and HR.

A, B, C and T levels:

• Step 2 – Informal interview with at least a further two Management members

• Step 3 – Informal interview with at least a further two Team members from

different operational areas

M & P Levels:

• Step 2 - Informal interview with at least a further three Management members as well as the General manager

• Step 3 – Informal interview with at least a further two Team members from different operational areas

Figure 10: New recruitment strategy within the Business Centre As shown in figure 11 below, the result of this will be that as the level of

organisational culture alignment is improved, the level of shared identity within the Business Centre will improve. This will likely cause both cohesion

and adaptation to improve and the level of distinctive competencies of the employees ultimately also improving. Due to this, employees in the Business Centre will find effective and efficient ways to provide customers with improved value creation solutions, using significantly fewer resources than

competitors, thereby developing an unassailable competitive advantage.

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Answer CLD


Business Centre


Centre


Business Centre



Business Centre


Centre


Business Centre



Business Centre

S

S

S

S

S

S


O

O

S

S

S

S

S

S

S

S

S




intelligence


Business Centre

S



Centre's culture

S

SS

Leadershipquality

S

S

S


S


S

S

S


Centre

S

S



Figure 11: Answer CLD

2.2.4 The role of the three cybernetic laws in the answer By retaining existing employees with the necessary level of skills, knowledge

and experience, who are aligned to the current organisational culture and by only recruiting new employees who are aligned to the organisational culture through a newly designed, rigorous interview process the following will be achieved in terms of the three cybernetic principles:

1. Self-organising systems law (the principle of homeostasis) –

Due to the structural and behavioural patterns and the interaction between the work system’s parts, the retention of existing employees and the recruitment of organisational culture aligned individuals will lead to increased cohesion and stability within the work system. The

reason being that complex work systems have the ability to organise themselves as the characteristic structural and behavioural patterns in this system and are primarily a result of the interaction between the work system’s parts. It expresses the fact that the base goal of control

is homeostasis and this principle represents the laws of conservation.

Example: By applying the self-organising systems law to the Business Centre making use of the lean system, the management process will only contribute by establishing an environment for all primary activities to operate in. Within this environment it will then be possible

to implement the lean system successfully as it is essential to

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structure the Business Centre around the flow of value, with each department being responsible for helping the customer to extract value from the organisation.

2. Feedback – Feedback is one of the basic notions of cybernetics and from a philosophical point of view, feedback is the concretisation of the most important type of causal connection, the mutual activity, where every process behaves as both the cause and the conclusion. As only

the output (sustainable net profit before tax) will be managed, the input is irrelevant in achieving this output. This reinforcing feedback

loop will possibly lead to instability, but it will ensure continuous growth towards the purpose, namely sustainable growth in net profit before tax over time.

Example: By initially applying the cybernetic law of feedback the

defining of value within a lean system should be done from the perspective of the customer, in terms of a specific product, with

specific capabilities, offered at a specific price and time. The self-organising systems law will now be applied as the volume requirement will be determinable and everything else that does not add direct value could thus be seen as a futile waste.

3. The law of requisite variety – The whole system will be regulated

by the ability of a subsystem to handle variety and it expresses the fact that the regulator power cannot be bigger than the capacity of the

transmitting channel. By increasing the ability to handle the variety of the primary activities by increasing discretion, accountability and

responsibility, the ability for adaptation in the Business Centre will be increased - resulting in improved customer value creation and ultimately leading to sustainable profitability. One of the most important results of this principle is the assertion that it is impossible

to create behaviour. Should a simple control system for the effective control of the complex system.

Example: In lean organisations traditional structures give way to new

team-orientated structures which are centred on the flow of value and not functional expertise. By applying the law of requisite variety to the

strategic information process, interdependent management decisions can now be made, of which the outcome must support the shared purpose of all domains. The relation between the four domains is not that of management and control, but creating conditions for viability.

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3. Establishing Validity - Rationale and Ethics

3.1 Rationale (r) In order to deal with the rationale of the answer revealed in Figure 11, the

researcher has dealt with each causal link as a claim, with the reasons and evidence to be provided in Part 5 of this paper:

By defining the current organisational culture and aligning existing

employees thereto and by only recruiting new employees who are aligned to the organisational culture through a newly designed, rigorous interview

process, the level of skills, knowledge and experience within the Business Centre will be maintained and increased over time. The level of resource quality is likely to be improved as suitable employees, who are regarded as the most important and valuable resource within the Business Centre, will

either be retained or recruited. The ability of employees to align and function within the current

organisational culture will therefore increase. This will lead to a supportive culture and environment within the Business Centre in which all existing employees and new recruitments will be able to fulfil their personal goals, thereby experiencing satisfaction on a personal and work level.

The level of identity alignment within the Business Centre will ultimately improve, since each primary activity will now have sufficient resources to

fulfil their respective roles effectively and efficiently, thereby eradicating internal competition and any silo behaviour.

This will improve the level of distinctive competencies, resulting in improved

levels of adaptation and cohesion within the Business Centre. Ultimately service delivery and customer value creation will improve as the value chain within the Business Centre will be redesigned to find effective and efficient ways to provide customers with value-add, using significantly

fewer resources than competitors, thereby developing an unassailable competitive advantage and improving sustainable profitability in the long run.

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4. ESTABLISHING THE ETHICAL IMPLICATIONS

4.1 Velasquez model and Critical Systems Heuristics By applying the Velasquez 4-question model and Critical Systems Heuristics

the researcher will explore the ethical implications of his answer in the situation in more detail in Part 5 of this paper and by answering the

following four questions and considerations positively, he will confirm that his behaviour and actions already are and will remain ethical:

1. Utilitarianism – Will my behaviour and actions maximise social

benefits and minimise social injuries? All the consequences, benefits and costs of any behaviour must be determined and the correct behaviour will be the factor that generates the

biggest surplus of benefits for the majority of the stakeholders. 2. Human Rights - Is my behaviour and actions consistent with the

moral rights of those whom it will affect? I have a moral obligation to ensure that my behaviour at all times respects and protects every stakeholder’s moral rights that they have become entitled

to, by just being a human being.

3. Justice - Will my behaviour and actions lead to a just distribution of benefits and burdens?

To have the support of all stakeholders, I have to ensure that all

stakeholders are treated justly, without overriding their moral rights. The three main kind of justice that I take into consideration in determining my actions are distributive, retributive and compensatory justice.

4. Caring – Will my behaviour and actions exhibit appropriate care for the well-being of those who are closely related to or

dependent on me?

To be successful in life, a person is dependent on the people within his/her direct environment and therefore I have an obligation to show special care

towards those people on whom I depend and have a valuable and close relationship, based on their own perspective of caring.

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5. Conclusion - The link between C > Q > A: This section of the dissertation attempted to address the key variable of this research and thereby improve customer value creation within a complex work system through action research learning and by integrating a

combination of the different systems methodologies. As indicated below a decision can now be made from the information obtained as to where and

how to intervene in the mess (theory<>practice) in an attempt to develop a

possible answer (A-CLD) to address the concern in the C-CLD. This will ensure that the answer which is derived will address the concern adequately and lead to a more effective idealised plan as the design process can now be redesigned on a continuous basis.

Purpose: Sustainable and viable growth in net income before tax is

deducted from the Business Centre in Bloemfontein to meet the strategic intention of the Absa Group. Concern: Decreasing levels of customer value creation within the Business

Centre in Bloemfontein. Question: What can be done to improve the alignment of existing employees in the Business Centre to the current organisational culture and

what can be done differently during the process of recruiting new employees to achieve this goal, whilst adhering to Absa policies and procedures at all

times and by respecting the rights of all stakeholders involved?

Answer: By clearly defining the current organisational culture and aligning existing employees thereto in order to improve employee retention levels and

by only recruiting new employees who are aligned to the organisational culture through a newly designed, rigorous interview process.

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Part 2: LITERATURE REVIEW

1. Introduction This section of the dissertation will carry out an extensive review of the

literature relevant to customer value creation and concepts relevant to research into improved customer service, which were identified in Part 4. It has been an iterative process, and therefore the use of relevant literature is integrated into the entire dissertation. The section below outlines and

critically judges a range of literary sources by recognised experts and is done in two stages:

• Stage 1: This stage will focus on the concepts driving improved

service delivery through increasing the distinctive competencies of employees.

• Stage 2: This stage focuses on customer value creation and explores the wider issues around my research goals and seeks to find where my research lies within the broader body of

knowledge. As this stage will attempt to position my research relevant to management practices, it will be covered first within

this section.

2. Stage 2: Customer Value Creation The most important concept driving this research is the introduction of an

intelligence function as stipulated by Stafford Beer (1974) where he states that “if an organization is to match the variety of the environment it faces, it needs a model of the environment that enables predictions to be made about

the it’s likely future state”. This is very relevant in that the Business Centre must understand how external circumstances will change, which will impact on the needs and requirements of customers.

My starting point with this research was with the concept of customer value. World renowned professor of marketing, Kotler (1972), defines customer

value by stating “the essential activity of marketing is the creation and offering of value” and can be summarized as follows:

Customer benefit = f (v, b, r, -c, -t)

Whereby:

• v is Value of Market value

• b is Value of Brand • r is Value of Relationship

• -c is Cost of Market Offering • -t is cost of time

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With this understanding, my focus was then turned to literature that would enhance my understanding of the identified customer value creation drivers in general and for the financial industry in particular. To this end a number of articles, reports and textbooks were consulted. While a comprehensive list of

literature consulted can be found in the References Section, the following are some of the key reviews which influenced my research.

2.1 Business Banking Model in South Africa The business banking model in South Africa is essentially a relationship

driven model, driven by a Relationship Executives and their team, with customers receiving personal attention. The concept of partnerships in the area of business banking in South Africa was pioneered by Nedbank in the early 1990’s. The degree of personal attention varies and is usually

determined in correlation with the potential income for the business and it is driven by the ability to maintain existing relationships and the building of new customer relationships.

The majority of models in South Africa are decentralised business units which consist of regional offices and customer service teams, each with a high

degree of autonomy and authority. Being decentralised allows business units to gain a deeper understanding of the local economy, industry and business.

As the needs of Business Bank customers are more complex, customers therefore place a premium on the availability and accessibility of their

Relationship Executive. This close working relationship, which allows the Relationship Executives to meet their customers’ service expectations and at

the same time facilitate rapid decision making, is based on an understanding of the needs and risks of the customers’ business, which will then result in the required standard of service delivery and value creation.

This relationship is best described in an article by Peter Gilbert where he affirms that a customer is king by stating that “a world-class sales organisation focuses on the needs of the customer and that it is capable of satisfying those needs in a manner that meets or exceeds the customer’s

buying expectations”. This is achieved by continuously redesigning existing strategies and in order to implement any new strategy successfully, he is of

opinion that management bears the following responsibilities:

• To select and develop a clear strategy: one per business unit or revenue stream.

• To get the core people on board early within the process. • Creating urgency around the new strategy.

• Clearly communication on the what, how and why of the new

strategy.

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• Removing any obstacles and disconnects as soon as possible.

• Looking for and creating visibility and recognition for wins in the early stages of implementation.

• Learning from early efforts and incorporating learning as quickly as possible.

Driving an integrated and aligned strategy is difficult and implementing any new strategy across any organisation is not different. None of this should be surprising and it is only a reminder of what management is signing up for if

they really want to reap the benefits of a fully aligned new strategy.

2.2 Customer Expectation in Service Quality and Delivery Over the last decade a number of fundamental changes have taken place in the financial and banking industry in South Africa. These changes were

driven by advances in technology, particularly the internet, changes in customer profiles and demands and most importantly globalisation. Due to increased competition, both locally and internationally, the importance of service quality and customer value creation increased to ensure

sustainability.

The understanding of quality in products and services became a pivotal concern in the 1980’s with the quality of products in the goods sector being

well defined in the Japanese philosophy where quality is “zero defect – doing it right the first time”. Crosby (1979) defines quality as “the conformance to

requirements” and Garvin (1983) measures quality by counting the confidence of internal failures (before leaving the factory) and external failures (those incurred in the field after the unit is installed).

The knowledge of goods quality is insufficient to understand service quality and there are three well defined characteristics of services quality:

• Services are intangible (Berry, 1980) because they are performances rather than objects and it is usually difficult to precisely define specifications to uniform quality. It is also not possible for services to be counted, tested and verified in

advance.

• The consistency of service varies from day to day and it is thus difficult to measure as a result of the difference in perception of the organisation and customer.

• In many services the producing and consuming processes are inseparable (Gronroos, 1978). For labour intensive services the

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quality occurs during delivery, when there is interaction between the customer and employees.

A limited amount of research has been done on quality service and the

important dimensions of service quality but in most research there are three underlying themes (Parasuraman, Zeithaml and Berry, 1985) namely:

• Service quality is more difficult to evaluate than the quality of

goods.

• Service quality perceptions result from comparison of customer expectations and actual service performance.

• The quality evaluations are not only made on the outcome of the

service but it also includes the evaluation of the process of

service delivery.

Parasuraman, Zeithaml and Berry (1985) also developed a model which, regardless of the type of service, uses similar criteria to measure service quality. These ten criteria are reliability, responsiveness, competence, access, communication, credibility, security, understanding the customer and

tangibles. Parasuraman, Zeithaml and Berry (1988 and 1990) also developed a tool for assessing consumers’ perceived quality called SERVQUAL, a multi-

item scale which captures how customers perceive quality from five distinct dimensions as stipulated below:

• Tangibles which refers to the appearance of the physical facilities,

equipment, personnel and communication equipment. • Reliability which refers to the ability to perform the promised service

dependably and accurately.

• Responsive which refers to the willingness to help and provide

customers a prompt service.

• Assurance which refers the competence of the system and it’s credibility in providing a courteous and secure service.

• Empathy which covers approachability, ease of access and effort taken

to understand customers needs.

Cauchick Miguel, Terra da Silva, Chiosini and Schützer in a study applied SERVQUAL for assessing service quality in a chain of car repair shops. The main objective was to assess quality service dimensions that were delivered through the perspectives of customers and managers. This work was

performed in a multinational company service chain including one hundred shops located throughout the country. The results of this study showed the

quality dimensions and characteristics that they called managerial attention.

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Responsiveness and assurance were found the most relevant to both shop managers and customers, respectively. Quality improvement initiatives were proposed to enhance the service rendered by the car repair shops with the differences among the perspectives of customers and managers, with

regards to quality dimensions, referred for further research work. However, there are still some criticisms towards the instrument in a detailed review done on SERVQUAL by Llosa, Chandon and Orsinger (1998), as the

five factor structure does not seem to fit in all settings.

According to Bowen (1997) there is another view to quality where a distinction is made between technical and functional quality. Technical quality refers to what the customer is left with after the customer-employee interaction has been completed and functional quality is the process of

delivering the service or product (Gronroos, 1982). Excellent functional

quality may make up for a product that is not quite up to standard, but bad functional quality will not necessarily be made by a quality product.

Ho and Zheng (2003) use the gap model of service quality to study how a business may choose a delivery-time commitment to influence its customer expectation and delivery quality in order to maximize its market share. A

market share model is developed to capture:

1. The impact of delivery-time commitment and delivery quality on the business’ market share

2. The impact of the business’ market share and process variability on

delivery quality when there is a congestion effect. This showed that the choice of the delivery-time commitment requires a proper balance between the level of service capacity and customer

sensitivities to delivery-time expectation and delivery quality.

A study by Robledo (2001) covered a comprehensive multi-company examination of and comparison of the different service quality models,

relationships between service quality and expectations in a comprehensive way. This research was done with the collaboration of three commercial

airlines and the results were as follows:

• Three dimensions of service quality were identified namely tangibles, reliability and a new factor customer care, which

consists of responsiveness, empathy and assurance. Assurance relates to the ability of employees to provide personalised service in a courteous, efficient and secure manner.

• The models tested show a high degree of reliability, provided all the elements of the model were used.

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• All customers have a uniformly high expectation across al dimensions and this highlights the diagnostic utility of the expectation measurement.

• Models measuring service quality, which considered customer expectations, where found to be superior to those that measure service on performance perceptions only.

• Expectations management can be instituted if a good knowledge is gained of the perceived service quality, level of expectations

and sources of expectation. It is quite evident from this literature review that although a large amount of research has been done in the field of service quality, a specific model has

not been investigated to identify the dimensions of service quality and

customer value creation of a relationship banking model within the financial industry. As stipulated by Robledo (2001) it is important to have and

maintain an integrated approach to customer value creation management and the national culture in which the business operates.

3. Stage 1: Drivers of Improved Service Delivery

By creating an organisational culture of exceptional service delivery and distilling it into a form which every employee can understand, measure and

talk about, is not only a hugely unifying force but also a requirement for sustainable customer value creation. By aligning all primary activities within the work system to the organisational culture, it will ultimately improve identity alignment, leadership quality and mutual trust as the whole work

system will be supporting the business’ strategic intention. From the majority of literature reviewed it was however clear that success within business would not be possible without changing the day-to-day behaviour of employees.

Therefore, the most important concept that is driving this research was the

introduction of a possible solution to change employee behaviour to ensure alignment to the organisational culture to improve the distinctive competencies of employees, customer service delivery and thus ultimately customer value creation.

3.1 Organisational Culture 3.1.1 Introduction to Organisational Culture

For decades economists have been trying to determine the elements

embedded in truly great companies and have found the answers not in the hard economic facts but rather in the nature of the relationships within these

organisations (Goffee & Jones, 1998). Collins (2000) also states that “it is not the quality of leadership that separates the visionary companies from the

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comparison companies. It is the continuity of leadership that matters – continuity that preserves the core.” Therefore the functions of an organizational culture can be described as follows:

• Boundary-defining role: This function distinguishes one organisation from another.

• Conveyance of sense of identity: Thus sense of identity with the organisation exists.

• Facilitation of commitment: Facilitates commitment to something larger than individual self-interest.

• Enhancement of social system stability: Culture is the social

glue that helps to bind the organisation together by providing

appropriate standards for what employees should say and do.

• Control mechanism: Culture serves as a control mechanism to guide and shape the attitudes and behaviours of employees.

3.1.2 Defining Organisational Culture

There is no shortage of definitions for the concept of organisational culture,

with Edgar Schein (1990), one of the leaders in analysing and understanding business culture, seeing the concept of culture being ambiguous and defining

it as follows:

“The pattern of basic assumptions that a given group has invented, discovered, or

developed in learning to cope with its problems of external adaptation and internal integration, and that have worked well enough to be considered valid, and, therefore

to be taught to new members as the correct way to perceive, think and feel in relation to those problems.”

Although there are many definitions and explanations to unlock the concept of organisational culture, it is clear that most contemporary definitions of culture embrace one or more elements of what Pettigrew (1979) describes as

“a family of concepts”. It includes elements such as common values, beliefs, assumptions, myths, rituals and symbols shared by employees and which

guide their everyday survival. Therefore organisational culture can be interpreted to cover almost everything in an organisation: basic assumptions and beliefs, values, models of behaviour, rituals, practices, symbols, heroes and technology.

Barney (1996) views culture as a complex set of values, beliefs, assumptions and symbols that define the way in which an organisation conducts its business and it follows that the culture of an organisation can be a source of

sustained competitive advantage if it is valuable and rare. Denison (1996) holds that culture is the “deep structure of organisations, which is rooted in

the values, beliefs and assumptions held by organisational members.” Owing

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to the differences in the conceptualisation of culture, many studies have emphasised shared meaning as the common thread. Schein (1990) also points out that the problem of defining organisational

culture derives from the fact that the concept of organisation itself is ambiguous and that the existence of cultural phenomena is evidence for the existence of a group. He states that any social unit with some kind of shared history will have evolved a culture, with the strength of that culture

dependent of the length of its existence, the stability of the group’s membership and the emotional intensity of the actual historical experiences

they have shared. He points out that with the concept of culture to groups, organisations and occupations, conceptual and semantic confusion is almost certain, because such social units are themselves difficult to define explicitly.

3.1.3 The Role of Organisational Culture

In today’s rapidly changing world, issues such as globalisation, advanced

information technology and intense competition have often forced organisations to restructure. As a result, the concept of hierarchy has changed dramatically within organisations - moving to less hierarchical structures and the new “social career contract”, where the emphasis is no

longer on employment but on employability (Goffee and Jones, 1998). Rules and regulations have been reduced to stimulate creativity, innovation and

flexibility but these issues and their consequences break down the sense of cohesion in an organisation. Organisational culture can thus be seen as an

important force to counter this loss of sense of cohesion, However, some argue that an organisation’s culture can also be a liability,

because shared beliefs, values and assumptions can interfere with the needs of a business and lead people to think and act in inappropriate ways. This aspect will be explored further by looking at the functions of organisational culture as both an advantage and a liability.

3.1.3.1 Culture as an Advantage

Organisational culture can be seen as an advantage when it points the

behaviour of the employees in the right direction. Schein (2004) describes the two basic functions of an organisation as survival in and adaptation to its

external environment and the integration of its internal processes to ensure the capacity to continue to survive and adapt. The issues or problems around external adaptation specify the coping cycle any system should be able to maintain in relation to its changing environment, namely:

• Mission and strategy: This entails obtaining a shared understanding of the core mission, vision and primary functions.

• Goals: Developing consensus on goals, as derived from the core mission.

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• Means: Developing consensus on the means to be used to attain the goals, such as the organisational structure, reward systems and authority systems.

• Measurement: Developing the criteria to be used for measuring the group’s performance in terms of fulfilling its goals, such as the information and control system.

• Correction: Developing consensus on appropriate remedial or repair strategies to be used if goals are not met.

Schein (2004) further describes the internal integration issues that an organization needs to deal with in terms of developing and maintaining a set of internal relationships among its employees, as follows:

• Common language and conceptual categories: If employees cannot communicate with and understand one another, a group

(team) is, by definition, impossible. • Group boundaries and criteria for inclusion and exclusion: One of the most important areas of culture is shared consensus

about included and excluded employees and criteria used to determine “membership”.

• Power status: Every organisation should work out its pecking order and criteria according to which power is gained, maintained and lost. Consensus in this area is crucial to help employees

manage their feelings of aggression. • Intimacy, friendship and love: Every organisation should work out its rules about peer relationships, relationships between the

sexes and for the manner in which intimacy and openness are to be handled in the context of managing the organisation’s tasks.

Consensus in this area is crucial to help employees manage their feelings of affection and love.

• Rewards and punishment: Every organisation should know what its heroic and sinful behaviours are, what gets rewarded with property, status and power, and what gets punished in a form of withdrawal of the rewards and, ultimately, excommunication.

• Ideology and religion: Every organisation, like society, faces unexplained events, which should be given meaning so that employees can respond to them and avoid the anxiety of dealing

with the inexplicable and uncontrollable.

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3.1.3.2 Culture as a Liability According to Simpson and Cacioppe (2001), culture can be a liability when the shared values are not in agreement with what is needed to enhance

organisational effectiveness. Culture is the leading factor for compromised integrity and compliance today, yet many organisations are unable to implement a truly effective ethics and compliance programme because they lack sufficient knowledge of how their culture can create vulnerabilities and

risks (Gebler, 2006). Therefore an organisational culture can be described as being a liability for the following reasons:

• Barrier to change: In a dynamic environment, where change and adaptation is critical in terms of survival, a very strong organisational culture can limit the organisation’s ability to adapt

to these changes.

• Barrier to diversity: Strong cultures put enormous pressure on employees to conform, making it difficult for people who differ from the majority of employees in terms of race, gender or

disability to be accepted.

• Barrier to acquisitions and mergers: One of the important factors when organisations consider acquisitions and mergers is

whether the cultures of the relevant organisations are compatible, since the failure of such acquisitions or mergers in the past have been attributed to conflicting cultures.

3.1.4 Aspects of Organisational Culture

Defining organisational culture is not sufficient to understand the concept and several methods are therefore used to classify organisational culture and

they are outlined below.

3.1.4.1 Organisational Culture Types Handy (quoted in Struwig & Smith, 2002) classified four organisational culture types, namely:

• Person culture: The individual is the central point in this culture. The organisation exists to help the individual rather than the other way around. The key issue is that all individuals

believe themselves to be superior to the organisation. Doctors, dentists and architects are examples of this culture.

• Power culture: This culture depends on power and influence by a central figure. Power is concentrated among a few and control radiates from the centre like a web. There are few rules and

limited bureaucracy, which allow swift decisions.

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• Role culture: In this culture people have clearly delegated authorities within a highly defined structure. These organisations form hierarchical bureaucracies and power derives from a

person’s position. As a rule, creative and innovative behaviours are discouraged and this culture is slow to recognise the need for change and slow to react.

• Task culture: This culture is job-oriented and extremely adaptable, with teams being formed to solve particular problems.

Influence within the organisation is based on expertise rather than personal authority. Power is derived from expertise as long as the team requires expertise. These cultures often feature the multiple reporting lines of a matrix structure.

3.1.4.2 Organisational Culture Models

It is important to explore various models of organisational culture in order to gain a deeper insight into integration of organisational culture concepts and two methods are discussed below which are directly applicable on the current work system.

3.1.4.2.1 Schein’s Organisational Culture Model

As illustrated in figure 12, Schein (1985) defines culture on three levels. He

differentiates between the elements of culture by treating the basic assumptions as the essence or the core of culture and values and behaviour

as observed manifestations of cultural essence. The given levels range from the very tangible overt manifestations that one can see and feel to the deeply embedded, unconscious, basic assumptions with the various espoused beliefs, values, norms and rules of behaviour.

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LEVEL 1: Artefacts and creations

•Art

•Technology

•Visible and audible behaviour patterns

Visible organisationalstructures and processes (hard to decipher)

Level 2: Espoused beliefs and values

•Testable through sociable consensus

•Testable in the physical environment

Strategies, Goals, Philosophies (Espoused justification)

Level 3: Basic underlying assumptions

•Relationship to environment

•Nature of reality, time and space

•Nature of human activity

•Nature of human relations

Unconscious, taken-for-granted beliefs, perceptions, thoughts and feelings (ultimate source of values and actions)

(Source: Schein (1985))

Figure 12: Schein’s Three-Level Organisational Model Level 1 - Artefacts and creations: On entering an organisation a

researcher observes and feels its artefacts and this is the most visible level of culture. These organisational attributes can be seen, felt and heard by the

uninitiated researcher. This category includes everything from physical layout, dress code, the manner in which people address each other, the smell

and feel of the surroundings and other phenomena to the more permanent archival manifestations such as company records, products, philosophy

statements and annual reports (Schein, 1990). Schein (1990) also states that the problem with artefacts is that they are palpable or easy to observe, but hard to make sense of accurately. According to Schein (1990) we know how we react to artefacts, but that it is not necessarily a reliable indicator of

how employees will react.

Level 2 - Espoused beliefs and values: This level deals with the professed culture of an organisation’s employees. At this level company slogans,

mission statements and other operational creeds are often expressed and local and personal values are widely expressed within the organisation.

Organisational behaviour at this level can usually be studied by interviewing employees using questionnaires to gather information about the organisational behaviours and values.

Level 3 - Basic underlying assumptions: At this deepest level, the organisation’s unstated assumptions are found. These are elements of culture that are unseen and not cognitively identified in everyday interaction

between employees and many of these unspoken rules exist without the conscious knowledge. Deeply held assumptions often start out historically as values, but they gradually come to be taken for granted and then take on the character of assumption (Schein, 1990). Basic assumptions can be taken for

granted in such a way that there is little variation within the given cultural

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unit (Schein, 1985). These basic assumptions guide behaviour and direct perceptions, thoughts and feelings about work, performance goals, human relationships and the performance of colleagues (Ivancevich & Matteson, 1996).

3.1.4.2.2 Kotter and Heskett’s Culture Model Kotter & Heskett (1992) describes culture as having two levels which differ in

terms of their visibility and their resistance to change. At the deeper and less visible level, culture refers to values that are shared by employees and that

persist over time, even should employees change. At this level culture may be extremely difficult to change, partly because employees are often unaware of the values that bind them together.

At the more visible level, culture represents the behaviour patterns or style

of an organisation that new employees are automatically encouraged to follow. At this level, culture is still difficult to change, but not as difficult as at

the level of basic values (Kotter & Heskett, 1992). Each level of culture has a natural tendency to influence the other, as illustrated in figure 13. This may be obvious in the case of shared values

influencing a group’s behaviour, such as its responsiveness to customers. Causality can, however, flow in the opposite direction, with behaviour and

practices influencing values. Kotter & Heskett (1992) further assert that culture is not synonymous with an organisation’s strategy, although the

terms are sometimes used interchangeably because of their importance for shaping people’s behaviour. The beliefs and practices called for in a strategy

may or may not be compatible with an organisation’s culture.

Easier to changeVisible

Invisible Harder to change

Shared values:

Important concerns and goals shared by most of the people in a group. These tend to shape group behaviour and often persist over time even during changes in group membership.

Group behaviour norms:

Common or pervasive ways of acting found in a group. These persist because group members tend to behave in ways that teach these practices (as well as their shared values) to new members, rewarding those that fit in and sanctioning those who do not.

(Source: Kotter & Heskett (1992))

Figure 13: Kotter and Heskett’s Culture Model

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3.1.5 Measuring Organisational Culture The early studies of organisational culture relied almost exclusively on qualitative methods and qualitative methods were based on presumed

inaccessibility and depth or unconscious quality of culture. Schein (1985) suggests that the most important level of organisational culture is the basic assumptions which exist at the preconscious level. These preconscious assumptions can be traced through a complex interactive process of joint

inquiry between insiders and outsiders and hence he elevates the possible uniqueness of organisational culture.

Survey Research by Siehl & Martin (1988) indicate that there are good reasons for using qualitative methods in investigating organisational culture, but that the advantages may be bought at a cost as the data collected

usually cannot form the basis of systematic comparisons. Rosseau (1990)

argues that different methods of measurement should be used depending on the element of culture to be examined but highlights that by no means are all

researchers convinced that questionnaires can, and therefore should, be used to measure corporate culture. Schein (1990) echoes that quantitative assessment conducted through surveys is unwise because it reflects conceptual categories and not the respondents’ own perceptions.

The Denison Organisational Culture Survey, developed by Daniel Denison and

William Neale, provides a way to link organisational culture to tangible bottom-line performance measures such as profitability, quality, innovation,

market share, sales growth and employee satisfaction (Denison, 1996). Organisational culture is a complex phenomena that is characterized by

many aspects and organisations need to decide what aspects of the organisation’s culture are important and should therefore give careful consideration to what (aspects) and how (measurement tool) culture should be measured.

3.2 Identity Alignment The business banking model in South Africa is essentially a relationship

driven model, driven by employees, with the necessary level of distinctive competencies, with customers receiving personal attention. One of the

biggest threats to this model is silo behaviour, as customers will not be receiving solutions but only products and services. Stafford Beer was concerned that his Viable System Model would be seen as

hierarchical and this is believed to be the origin of Team Syntegrity, which he saw as a model for an “ideal democracy” (Jackson, 2003). Beer alludes to the importance of paying attention to the design of an organisation or decision making space, in which democratic debate and negotiations can take place. A

crucial ingredient in ensuring the viability of an organisation is therefore the establishment of a shared identity and by using the Business Centre as an

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example, a process called “TASCOI” can be used in this process as shown in figure 14 below.

T = Customer needs and requirements

A = Staff of the Business Centre - Relationship

Executives, Operational Bankers, Customer Service Consultants, Credit Analysts, Compliance Officers, Client Services Clerks

S = Customers, Relationship Executives, Operational Bankers, Customer Service Consultants,

C = Existing and new customers

O = Manager: Relationship Executives, Relationship Executives

I = Management team of the Business Centre, AC & BB EXCO, ABSA Group EXCO, Government Legislation, Shareholders, Competitors

Relationship Executive team (S1 in R1)

Figure 14: TASCOI Mnemonic of the Business Centre

Beer in Jackson (2003) states that the process of establishing an identity is the responsibility of the innovation domain but to ensure this becomes a shared identity, all the primary activities within an organisation must be involved in developing a shared identity statement.

A mutually beneficially system, comprising of highly motivated and trusted advisors

within a team environment, by developing high quality, creative, innovative and value adding financial products, services and

solutions to meet all our clients’ needs and expectations pro-actively and punctually, thereby ensuring sustainable profitability

for all stakeholders over time.

Identity Statement

Figure 15: Identity Statement of the Business Centre

Jackson (2003) concludes that due to a possible lack of shared identity

alignment there is not a clear understanding of what is meant by authority and autonomy within an organisation and the implications thereof on

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discretion and financial performance. By improving the level of shared identity, the level of distinctive competency of employees and ultimately service delivery will be improved due to the following being achieved:

1. Role, values and discretion clarification will take place improving accountability and responsibility, within pre-set boundaries, determined by centralised and rigid policies and this will ultimately improve the leadership and service delivery. Due to this clarification taking place

the ability to handle variety, within pre-set boundaries, will be improved.

2. The cohesion within the organisation will also be improved as all the

primary activities will now share the same common identity clarifying accountability and responsibility thereby improving autonomy and

authority, resulting in whole team becoming part of the customer

solution process.

3.3 Leadership Quality 3.3.1 What is leadership?

Therefore, in today’s business environment management is thus no longer

only about financial efficiencies and being an autocratic leader. Globally there is a new move towards recognising the need for leaders to acknowledge the importance of developing certain “soft skills”, inspiring employees through

rational management and social connectivity.

There are various approaches to the concept of leadership including the trait, behavioural, situational and cognitive approaches. From a systems thinking perspective Jackson (2003) describes leadership as the management of the richly interconnected sets of parts, where the relationships between the parts

are more important than the nature of the parts themselves. The emergent behaviour of a work system is therefore co-produced by the interactions of the behaviours between people that are inevitably at the centre of the stage whenever there is a problem. Stacey (2001) suggest that leadership is the

ability to move away from thinking that one has to manage the whole work system, and instead pay’s attention to one’s own participation in the local

situation in the present. However, Grint (2004) identifies four problems that make consensus on a common definition of leadership highly unlikely, namely:

• Process problem - a lack of agreement on whether leadership is derived from the personal qualities of the leader or whether a leader induces followership through actions?

• Position problem - is the leader in charge through formal

allocated authority or in front through informal influence?

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• Philosophy problem - does the leader exert an intentional, causal influence on the behaviour of followers or are their apparent actions determined by context and situation or even

attributed retrospectively?

• Purity problem - is leadership embodied in individuals or groups and is it a purely human phenomenon?

According to Kellerman (2004), “scholars should remind us that leadership is

not a moral concept. Leaders are like the rest of us: trustworthy and deceitful, cowardly and brave, greedy and generous. To assume that all leaders are good people is to be wilfully blind to the reality of the human condition, and it severely limits our scope for becoming more effective at

leadership”.

3.3.2 Leadership and Management

An understanding of the importance of leadership is fundamental to the management of people within organisations. Of equal importance is the management and control of the organisational processes that contribute to

organisational success. Zalenznik (1977) started the trend of comparing leadership and management by presenting the leader as an artist, who uses

creativity and intuition to navigate through chaos, while the manager is seen as a problem solver, who depends on rationality and control. Since the work

of Zalenznik, the literature has been bombarded with contrasting views. Bryman (1992) argues that the leader is the catalyst focused on strategy

while the manager is the operator concerned with the “here-and-now of operational goal attainment”. Kotter (1990) concludes that “management is about coping with complexity”,

while “leadership, by contrast, is about coping with change”. He proposes that management capability is needed to create a degree of order and

consistency in organisational goals, while leadership is required for dynamic change. Kotter’s distinction between management and leadership encourages

a shift in processes typified as management to a more dynamic and strategic process typified as leadership. He concludes that both are necessary for the

effectiveness of organisations. Kotter (1990) further states that “leadership is not necessarily better than management or a replacement for it: rather, leadership and management are

two distinctive and complementary activities. Both are necessary for the success in an increasingly complex and volatile business environment”. Rost (1991) supports this view, highlighting the need for consistency and predictability in many aspects of management and leadership behaviour; and

concludes that an approach of “down with management” and “up with leadership” is a bad idea.

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3.3.3 Leadership and Organisational Culture Bass and Avolio (1994) holds that an organisation’s culture develops largely from its leadership and that the culture of an organisation can also affect the

development of its leadership. There is a constant interplay between culture and leadership and leadership creates the mechanisms for cultural development and the reinforcement of norms and behaviours expressed within the boundaries of culture. It is therefore clear that when seeking

understanding of the relationship between leaders and organisational culture, one has to understand and conceptualise the concept of culture and

leadership to understand this relationship fully. When reflecting on the literature of leadership and culture, it is clear that the concept of leadership has been studied in much greater detail than the

concept of culture. According to Schein (2004), cultures begin with leaders

who impose their own values and assumptions on a group and if that group is successful and the assumptions come to be taken for granted, it creates a

culture that will define acceptable leadership for later generations of members. Therefore it is imperative for leaders in organisations to understand the culture in which they operate and, even more so, how they influence the development of a culture.

Executives are often heard to say that the organisation needs a culture of

sales or service. This is an indication that there is a view that culture is linked to organisational success. Researchers have reported that cultural strength

or certain kinds of cultures correlate with economic performance (Denison (1990) and Kotter and Hestkett (1992)).

Many researchers have found a link between an organisation’s culture and its financial success (Linn, 2008). In a study that used the results of surveys augmented with observations and interviews at four companies Denison

(1990) found that corporate culture had an impact on financial success. Kotter and Heskett (1992) studied 207 companies using most financially

successful companies using questionnaires, interviews, financial analysis, and observation. They establish that the most financially successful companies

had cultures that strove to serve customers, employees, and stakeholders, instead of just one or two of these. They warned against thinking that one

form of culture is best; demonstrating that the one that will do well in a certain economic environment might do poorly in another. Delving deeper into the relationship between leadership and culture one

cannot ignore the need to understand the nature of organisations. According to Van Tonder (2004) the concept of “organisation” is problematic, and while definitions and descriptions abound, these do not adequately recognise the complexity and dynamic nature of the organisation. Starbuck (2003) traced

organisation theory back to the pre-Christian age. He noted that contributions really accelerated in the late 1950s, and by 1960s “organisation

theory had arrived”.

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According to Schneider (2000) research into the nature of living systems revealed that all living systems, including social organisms (organisations), have certain inalienable and consistent characteristics. When it comes to the true nature of living systems, reality turns out to be a pattern of dynamic

relationships. This pattern explains that dynamic relationships are powerful, so much so that its impact supersedes all other factors when it comes to organisational economic performance (Kotter and Heskett, 1992). From the research of Collins and Porras (1994) it is evident that organisational culture

lies at the centre of what differentiates visionary companies from comparison companies and, parenthetically, ensures significantly greater economic

performance over the long term. Alvesson (2002) echoes that culture is one of the major issues in academic research and education, in organisation theory as well as management

practice since the cultural dimension is central to all aspects of organisational

life. Organisations that could not maintain their success had leaders who personally disciplined the organisation through sheer power. Good to great

organisations had leaders who built an enduring organisational culture of discipline, powered by self-disciplined people who acted in the organisation’s best interest without strict dictums from leadership (Collins, 2001). These disciplined organisations could thrive even after their leaders had departed,

whereas those organisations that practiced discipline only by tyrannical rule could not sustain themselves once the leader departed (Collins, 2001).

For more than half a decade, organisations have been concerned with

identifying the traits or characteristics associated with effective leadership (Kets de Vries, 1993). This search has been underpinned by the belief that

effective leaders deliver effective organisational performance (Goffee and Jones, 2000). Whilst much leadership research has been devoted to proving this relationship, results showing a consistent direct correlation between leadership and culture have been somewhat sparse. Schneider (2000) agrees

that leaders of an organisation create the core culture consciously or unconsciously from their own personal history, nature, socialisation

experiences, and perception of what it takes to succeed in their particular marketplace.

3.4 Mutual Trust

Trust is defined in the Compact Oxford English Dictionary for Students (Oxford University Press, 2006) as:

• The firm belief that someone or something is reliable, true or able to do something.

• The confidence to allow someone to have, use or look after

someone or something.

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Trust is thus a function of both:

• Character (ethics, integrity, motives, intent) and

• Competence (capabilities, skills, knowledge, experience, track record of results).

In assessing an individual’s trustworthiness it therefore requires

consideration of their real intent as well as consideration for their ability to deliver desired results. Stephen Covey and Rebecca Merrill (2006) describes

the objective of trust as optimising the performance of an organisation through developing ethical character, transparent motives and competence in producing sustained and superior results. The reason for pursuing mutual trust is to enhance the competitiveness of an organisation to improve the

speed at which services, products and innovations can be delivered to

customers. New economy management revolves around partnering and relationships, which thrive on trust.

World-class trust is evident in organisations that reflect collaboration, effortless communication, transparency, alignment, innovation, engagement, confidence, effective execution and loyalty. Whilst trusting people can be

risky, not trusting people can present greater risk. Distrust leads to dysfunctional relationships, hostile behaviours, guarded communication,

constant worrying and suspicion, real issues not being dealt with, energy draining interactions, doubt, hidden agendas and regular misunderstandings.

This in turn leads to costly micromanagement and bureaucracy governed by intensive policies and rules, all of which are highly costly and slow down

processes and ultimately service delivery to customers. Covey and Merrill (2006) further states that trust is built upon the following five pillars:

• Self Trust – self-confidence, self-belief, credibility, judgement,

and influence. Do you trust yourself and do you consider yourself to be someone that can be trusted by others?

• Relationship Trust – how we develop trust with others, through consistent and appropriate behaviour.

• Organizational Trust – how leaders develop trust within organizations, through alignment, structures, systems and

symbols of trust.

• Market Trust – reputation, brand, and the extent of trust shared with customers, investors and other stakeholders.

• Societal Trust – creating value for others (society at large) through contribution.

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Building trust through reliability and authenticity can be described as a moral competency which is a moral skill that is directed towards doing good. Given the corporate scandals of the past couple of years, the time has now come to openly acknowledge the contribution of moral skills and intelligence, which

includes mutual trust, to effective leadership, teamwork and ultimately sustainability. From Charles Handy’s Wheel of Learning diagram, as introduced by Tom

Ryan in Module 1, the influence of mutual trust on both leadership and value creation within a changing environment is quite clear. This learning wheel’s

reinforcing feedback dynamics are kicked off by proper selfishness, reframing and negative capability.

Question:How does an employee remain a

sustainable value creator and leader over time?

Theory building:By gaining mutual trust

from all stakeholders involved

Testing:The expectations of all stakeholdersare met

Reflection: Leverage off existing

distinctive competenciesor

developing newcompetencies

R

Figure 16: Charles Hardy’s Wheel of Learning

Awareness and self knowledge increases trust enabling a person to manage

higher levels of complexity and diversity, thereby successfully operating within a team environment. Stakeholders trust leadership skills, loyalty and

caring leading to sustainability with trust facilitating the flow of information and feedback within a team, thereby increasing any system’s self regulating

forces. Espanjo (2003) explains how complexity is unfolded by self regulation when “most of the complexity is managed in locally viable components and only a small residual variety is required to align them with the more global interests”.

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4. Conclusion From the literature review it is clear that although a large amount of research has been carried out in the field of customer value creation and service quality, a specific model has not been identified to investigate their

dimensions within a relationship banking model. It is however important to at all times have an integrative approach to customer value creation and the

organisational culture in which the business operates.

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Part 3: A SYSTEMIC RESEARCH FRAMEWORK

1. Introduction This section covers the framework that was used for carrying out the

management research on the Research Problem and it outlines the rationale for the research approach, methodologies used and the data collection and analysis methods employed. By using an interactive, systemic management research framework (figure 17), context will be turned into theory

(knowledge) and ultimately into practice (actionable knowledge).

Systemic Management Research FrameworkGather in-depth understanding of human behaviour and reasons that governn it

Develop a model of the world

Qualitative Research

PositivismCritical TheoryConstructionism

Critical Realism

Grounded Theory

Ethnography

Narratology

Promoting Diversity

Ensurin

g Fairn

ess

Exploring Purpose

Goal Seeking

Quantitative Research

Scientific investigation of quantitative properties & their

relationships

GoalsConceptual Framework

Research Questions

Methods Validity

VSM

IM/P

CSH

SSM

SAST

Post Mod. Syst. Tnk

(Source: Adapted from Group 4 EMBA9.6 presentation)

Figure 17: Systemic Management Research Framework

The concept of management research refers to the process of obtaining information to answer a research question that solves a problem, which has

an instant and momentous impact on management practice. The research questions that need to be answered in this study are the following:

1. What is currently happening in the work system?

Theory of knowledge (Context <> Theory, which is the sense-making process to formulate a concern and C-BOT).

2. What can be changed to improve the work system?

Theory of action (Theory <> Practice, which is the decision-making process to formulate a powerful question and answer to ultimately

address the concern).

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2. Background to the Research Problem This research was motivated by the understanding, based on Thakor in Ryan (2000) that organisations succeed to the extent in which they engage in value creation. Hoebeke (2000) also states that the basic reason for the

existence of organisations and hence the viability of work systems, resides in mutual appreciation of added value creation which is created for all

stakeholders.

In the financial industry in South Africa, maintaining a high level of distinctive competencies results in a competitive advantage through high quality service and value creation to customers, resulting in business viability

and - more importantly - sustainability. It was therefore of value to investigate the value drivers and how behaviour could possibly be influenced

to ensure the continuous creation of value to customers. From past managerial experience it is the researcher’s perception that the biggest threat to the viability and sustainability of the business lies in the following:

The current financial success of the Business Centre is a direct result of the very strong relationships with the centre’s customers and the level of distinctive competencies of employees, as there is currently a lack of new and innovative products and services that can be

delivered.

To be sustainable, the Business Centre’s value creation strategy must therefore encompass retaining and maintaining a high level of distinctive competencies in order to deliver a value creating products and services to customers and in terms of Soft Systems Methodology, the key variable for

this research could be defined as:

Improving customer value creation within Absa Corporate and Business Bank Centre in Bloemfontein by enhancing the Relationship

Banking Model.

Creative Holism was used in parallel and integrated with the Grounded Theory process to diagnose a complex organisational problem and thereafter to develop a theory of knowledge on this phenomenon. The aim of this was to regard the problem situation from the broadest critical perspective and to

gradually focus on the most pertinent critical aspects. In the context of the stated goal, the Business Centre was analyzed, the situation observed and an initial conceptual framework C-CLD developed as shown in figure 18. The conversational interview technique was employed,

based on predetermined questions, to collect data from a wide range of stakeholders and the data collected was used to revise the initial conceptual C-CLD.

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Initial Concern CLD

S

S


Business Centre

Sustainable profitabilityof the Business Centre

Level ofcompetitiveness of the

Business Centre

Quality resourceallocation in theBusiness Centre

Level of autonomyand authority

Ability to handle varietywithin the Business

Centre Ability for adaptation inthe Business Centre

Level of shared identitywithin within the Business

Centre

Impact of competitionon the Business Centre

Level of functionality ofS4 in the Business Centre

Level of Cohesionwithin the Business

Centre

Level of service deliveryfrom the Business Centre

Level of marketintelligence

S

S

S

S

S

O

O

S

S

S

S


O

S

O

S

S


Business Centre

S

Level of skills, knowledgeand experience in the

Business Centre

S

S

O

Figure 18: Conceptual framework - Initial Concern CLD

To successfully address the perceptions, the SCQARE framework was used in

Part 1 as this framework gives the opportunity to develop an answer in a way that promotes relevance, utility, validity and ethics. By using this framework it was possible to link the concern to a set of questions and a clear answer - all to be achieved in an ethical way.

3. An Analytical Approach

A human system can be described as a system that serves the purpose of the collective entity, all stakeholders and the environment of the larger

system in which it is embedded. As this study aims to provide an insight into a human activity system and lends itself to interpretive enquiry rather than

positivist research, it can therefore be categorised as qualitative rather than quantitative research. Figure 19 depicts the location of qualitative research relative to quantitative research within the framework of research paradigms.

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(Source: Schoepp (2003))

Figure 19: Theoretical Research Paradigms

3.1 Qualitative Research Qualitative research aims to gain an in-depth understanding of human behaviour in a particular context and the reasons that govern this behaviour to offer perspectives about situations in the real world, without making

claims about any findings. This form of research is a field of inquiry that cuts across disciplines to make research observations contextual and it is primarily used as the prelude to quantitative research as it defines the problem, generates hypotheses, identifies determinants and then develops

quantitative research designs.

As qualitative research relies on the reasons behind various aspects of human behaviour, it therefore investigates the “why?” and “how?” of decision making and not just “what?”, “where?” and “when?”. Thus, the need arises for smaller but focused samples rather than large random samples, which

can be categorised into patterns as the primary basis for organising and reporting results. Because of the low number of respondents involved, this research method cannot be used to generalise the whole population.

3.2 The Benefits of Qualitative Research

As qualitative research does not attempt to prove the validity of any findings, the concept of trustworthiness is considered to be more compatible as it

allows the researcher to focus on the research findings, rather than internal and external validity (Lincoln and Guba, 1985). By demonstrating

trustworthiness the following is achieved as described in Part 5:

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• Credibility – compatibility between the constructed realities of the research participants and those that are attributed to them.

• Transferability – how findings can be transferred in other

contexts or with other respondents. • Dependability – evidence that the findings can be replicated in

similar contexts with similar respondents.

• Confirmability – evidence that the findings are the product of the

focus of enquiry and not the bias of the researcher. In general, qualitative research generates rich, detailed and valid data that contribute to in-depth understanding of the context to arrive at a theoretical

proposition, as it embraces an ontology that denies the existence of an

external reality as it values the participant’s own interpretations of reality to develop a world view. This will form the ontological basis of the research as

the world view, based on Critical Realism, will be used to model the world and to explain how this model of the world works.

4. Constructing my World View

4.1 Introduction A researcher requires a world view as basis, since it describes a consistent

and integral sense of existence and provides a framework for generating, sustaining and applying knowledge. It can be seen as a coherent collection of concepts and theorems that allows a researcher to construct a global image

of their world. It is, however, much broader than a theory but it is bound by the background of the researcher derived from the interaction of life experiences and value systems. Heylighen (2000) states the following regarding a world view:

“While the wisdom gathered in the past has lost much of its validity, we don't have a clear vision of the future either. As a result, there does not seem to be anything left to

guide our actions. What we need is a framework that ties everything together, that allows us to understand society, the world, and our place in it, and that could help us to make the critical decisions which will shape our future. It would synthesize the wisdom gathered in the different scientific disciplines, philosophies and religions.

Rather than focusing on small sections of reality, it would provide us with a picture of

the whole. In particular, it would help us to understand, and therefore cope with, complexity and change. Such a conceptual framework may be called a ’world view‘.”

According to Leo Apostel, a world view has seven fundamental components, of which the interaction can be seen in the figure below.

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The Interaction of the Seven Components of a World View

6-The ability to inquire into the nature of our world and our role in it.

7-The appropriateness of the sense we make of out world and our role within it

5-The ability to explore our possible futures and to select the an appropriate future

1-Understanding of the nature of our world, how is it structured, how it functions

2-Understanding the way our world is and who we are

4-Understanding how to create and transform our world.

3-Understanding why we feel the way we do about our reality and our role in it

Source: T. Ryan (EMBA 9.6 Handouts)

Figure 20: The Interaction of the Seven Components of a World View

4.2 Theoretical Research Paradigms

A theoretical world view is therefore the identification of the underlying basis, which is used to construct a scientific investigation and the following four theoretical research philosophies are available to construct and broaden any world view:

1. Postpositivism (Critical Realism) 2. Constructivism

3. Critical Theory 4. Positivism

The philosophical assumptions that support these paradigms relate to the

following:

1. Ontology – The study of being or existence through the configuration and characterisation of reality.

2. Epistemology – The study of the way knowledge is obtained by

examining the character and the basis of knowledge or the characteristics of the relationship between reality and the researcher.

3. Methodologies – the procedure carried out to explore reality.

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Prior to making a decision on the research method to be used in the study, it is necessary to obtain a clear understanding of the two extreme research philosophies; postpositivism and positivism.

4.2.1 Postpositivism (Critical Realism) One of the most common forms of postpositivism is critical realism that is a philosophy of science, which has positioned itself between positivism and

postmodernism and it acknowledges that there is an objective, mind-independent reality, while at the same time accepting the role of perception

and cognition in the understanding of events and situations. Bhaskar (1978) argued that realism interprets the world in the following three domains:

1. Empirical – views or actual experience by through direct observations

(it can be observed by humans).

2. Actual – events occur, whether they can be observed or not thus the

empirical domain other people (it exists in time and space). 3. Real – mechanisms or process resulting in an outcome (it goes beyond

facts, perceptions and experiences).

Critical realism is therefore concerned with questions of ontology and a

formulation of an ontology that is capable of describing a world where change is essential. It also emphasises the causal mechanisms which operate in the real world that produces the events and phenomena that we observe and experience in the empirical and the actual domains. Thus, critical realism

refers to any position that maintains that there exists an objectively knowable, mind-independent reality, whilst acknowledging the roles of

perception and cognition. 4.2.2 Positivism

Positivism is the philosophy that the only authentic knowledge is knowledge itself and is based on actual sense experience. Such knowledge can only come from affirmation of theories through strict scientific methods. Data

collection is carried out with the researcher being remote and therefore the use of this paradigm is limited, since it cannot explore complex social phenomena that require working with people and real life experiences.

4.3 The Nature of the World The postpositivist philosophy (critical realism) will be used in this research as

it emphasises the causal mechanisms that operate in the real world and produces the events and phenomena that are observed and experienced in the empirical and the actual domains. These disconnected components of a

world view can be understood as part of an encompassing scheme describing the interaction between a system and its environment. In cybernetics an

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autonomous system is conceptualised as a control system, which tries to achieve its goals by initiating the right actions that compensate for the disturbances produced by the environment. For this it needs to develop a theory of knowledge about the effects of its actions and the effects of the

events happening in the world and, more specifically, it needs to understand how particular events (past) causes other events (future).

5. Developing a Theory of Knowledge

5.1 Defining a Theory of Knowledge or Epistemology

The theory of knowledge or epistemology is a product of doubt as we are naturally led into an examination of knowing, in the hope of being able to distinguish trustworthy beliefs from those that are untrustworthy. Defined narrowly, epistemology is therefore the study of knowledge and

justified belief and it is concerned with the following questions:

• What are the necessary and sufficient conditions of knowledge?

• What are its sources? • What is its structure, and what are its limits?

5.2 Using Creative Holism to constitute a Theory of Knowledge

Creative holism can either be used in parallel with or integrated with grounded theory to diagnose a complex organisational problem and then to develop a theory of knowledge on the phenomenon. The aim of this is to take

the broadest possible critical look at the problem situation and to gradually focus on the aspects deemed the most critical. From this theory of knowledge, a hypothesis can be developed and this can be depicted as a

Concern Behaviour over Time (C-BOT) (figure 6 of Part 1), which will be used in the sense-making process to develop a C-CLD (figure 8 of Part 1). Managers today are expected to cope with increasing complexity, change and

diversity which stems from the nature of the problems present. These problems rarely present themselves individually but exist in relation to other

problems, in richly interconnected problem situations that are described by Ackoff (1999) as “messes”. Change is a product of our era and if managers

are to remain viable, they have to respond quickly to constant shifts in their environments.

The majority of managers fail today since they are not holistic or creative enough and therefore they have to apply systems thinking. A number of significant benefits emerge for managers if they adopt holistic thinking such

as:

• The ability to develop and make use of trans-disciplinary analogies.

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• The capacity to recognise the importance of both process and structure in system development and maintenance and their interdependence.

• It provides a constructive platform for critique.

• The theoretical awareness to which it gives rise.

In an article regarding creative holism Jackson (2006) states the following:

“The purpose of creative holism is to learn about and harness the various systems

methodologies, methods and models so that they can best be used by managers to respond to the complexity, turbulence and heterogeneity of the problem situations

they face today. It shares with critical systems thinking, generally, a basic philosophy that can be described by three commitments - to ‘critical awareness’ (of the strengths

and weaknesses of different systems approaches), ‘pluralism’ (the use in combination of different systems methodologies and methods) and ‘improvement’. The critical

systems practice it embraces is an enhanced version of ‘total systems intervention’ (Flood and Jackson, 1991). It has four phases – ‘creativity’, ‘choice’, ‘implementation’ and ‘reflection’.”

In order to appreciate the complexity of a problem situation, it is essential to

foster radically different views of the world, derived from alternative paradigms. For this reason creative holism suggests that the perspectives of

four paradigms must be considered:

• Functionalist • Interpretive • Emancipatory • Postmodern

In order to achieve this, a researcher can explore the paradigms via the use of appropriate metaphors. The outcome of this process will be a theory of knowledge of the current complex work system and to gain an in-depth

understanding of the current work system and viable organisational practices, Mike Jackson suggests a researcher can also use the following metaphor analysis to broaden or develop alternative options:

1. As a machine – This is a top-down approach designed to achieve

purpose of owners/shareholders. Authority exercises coordination and control to achieve goals through efficiencies. Very rigid and it does not

take any individual into consideration.

2. As an organism with a brain - Open system with different functional parts, all focusing on survival and in balance with the changing environment. Managerial body that is present in the centre to manage business – gaining intelligence on the environment, with a vision on

what is happening in the environment to balance all sub-systems.

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3. As a cultural and political system - Culturally established through alignment of values, beliefs and philosophies of employees. Teamwork must be encouraged with little long term conflict to be eliminated, supporting freedom to encourage thinking and innovation. To be

governed/lead in a sharing, non-conflict and non-power environment to still remain competitive.

6. Research Paradigms and Choice of Systems

Methodologies This section outlines and critiques on the applied systems approaches by

demonstrating how they are holistic and why they are significant from the point of view of the researcher.

6.1 Choice of System of Systems Methodology (SOSM) Over the past 30 years significant developments have taken place with a range of new system methodologies having been developed to be applied to resolving complex managerial problems. This range of methodologies has

been very successfully classified into a framework developed by Jackson and Keys in 1984, called the System of Systems Methodology (SOSM), as depicted in figure 21 below.

(Source: Jackson (2003) [24])

Figure 21: System Approaches related to problem contexts in the System of System Methodology

Increasing Divergence of Values

SIM

PLE HARD

SYSTEMS THINKING

UNITARY PLURALIST

SO

FT

SY

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S T

HIN

KIN

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COERCIVE

EMANCIPATORY

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THINKING

IncreasingCom

plexity

CO

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SYSTEM DYNAMICS ORGANIZATIONAL

CYBERNETICS COMPLEXITY THEORY

POSTMODERN SYSTEMS THINKING

Increasing Divergence of Values

SIM

PLE HARD

SYSTEMS THINKING

UNITARY PLURALIST

SO

FT

SY

ST

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HIN

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COERCIVE

EMANCIPATORY

SYSTEMS

THINKING

IncreasingCom

plexity

CO

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SYSTEM DYNAMICS ORGANIZATIONAL

CYBERNETICS COMPLEXITY THEORY

POSTMODERN SYSTEMS THINKING

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As shown in the above figure, the horizontal axis represents the relationship that exists between stakeholders in complex problem situations as the following three types:

• Unitary – shared values, beliefs and interests between decision makers.

• Pluralist – compatible basic interests with no shared values and beliefs.

• Coercive – few common interests with conflicting values and beliefs.

The “vertical axis expresses a continuum of system types ranging from relative simple to extremely complex” (Jackson, 2003). Within this framework, Jackson defines the following four sociological paradigms that

underlie the different systems approaches:

Functionalist Paradigm - Type A: Goal seeking and viability – (1) Hard

systems Thinking, (2) Systems Dynamics, (3) Organisational Cybernetics (Viable Systems Model (VSM)) and (4) Complexity Theory Interpretive Paradigm - Type B: Exploring Purpose – (1) Strategic

Assumption Surfacing and Testing (SAST), (2) Interactive Management and Planning (IP) and Soft Systems Methodology (SSM)

Emancipatory Paradigm - Type C: Ensuring Fairness – (1) Critical

Systems Heuristics (CSH) and (2) Team Syntegrity

Postmodernist Paradigm - Type D: Promoting Diversity – (1) Postmodern Systems Thinking

(Source: Jackson (2003)) Figure 22: The four main Strands of applied Systems Thinking and applicable SOSM

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6.2 Selecting the applicable Methodologies appropriate to the Research Through action research and by integrating a combination of the different

systems methodologies, it is possible to creatively solve a problem within a complex work system. This will ensure that the answer which is derived will lead to a more effective idealised plan as the design process can now be redesigned on a continuous basis. The most applicable methodology to the

current work system, within each social paradigm, is therefore highlighted below.

6.2.1 Type A: Goal Seeking and Viability (Functionalist Paradigm)

In essence, this paradigm is about improving goal seeking and viability and

includes features such as the exercise of coordination and control within a decentralised environment in order to establish the variety necessary to deal with a complex environment. Tasks are deconstructed into smaller parts and viability depends on the inter-related functioning of these parts. The

metaphors used to emphasise this paradigm, are a machine and an organism with a brain.

(i) Viable Systems Model (VSM)

The viable systems model can be used as a diagnostic tool to model an

organisation’s structure in an attempt to determine viability through organisational problem solving as it assumes the whole organisation is structurally recursive. The model focuses on resources and the relationship necessary to support viability rather than the formal organisational structure

and this is based on the assumption that people will find successful strategies for working together to ensure they perform at the best of their abilities. These strategies will entail mechanisms (people) and will include invention, re-invention, development and maintenance of the organisation over time to

ensure viability. This approach is concerned with producing a model in five steps for people to understand their necessary interactions, rather than with producing a model of the organisation.

6.2.2 Type B: Exploring Purpose (Interpretive Paradigm)

This paradigm seeks to improve organisational performance in a complex

world of differing values, beliefs, philosophies and interests by evaluating different aims and objectives and emphasising effective problem resolution

(Jackson (2003). By clarifying purposes and promoting mutual understanding, sufficient stakeholder agreement is obtained regarding decision making and in that way elegant solutions are formulated with the necessary stakeholder commitment in place.

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(i) Strategic Assumption Surfacing and Testing (SAST) Since this methodology focuses on the relationship between participants involved in a complex problem context and not on the characteristics of the

system that constitutes the problem context, organisational structures become irrelevant. Through dialectic debate and synthesis it aims to achieve a compromise on assumptions from which a new and higher level of solution can be derived and therefore all participants are asked to propose

assumptions to resolve outstanding controversies. If no agreement can be reached on these assumptions, it becomes an issue requiring further

investigation. Each issue and key assumption is subjected to further analysis to adduce the data and warrants that underlie its claim. By combining this methodology with 2x2 matrices, a more effective design

process is achieved due to the following:

1. All assumptions of employees within the organisation will be laid on

the table and therefore no opportunity will be lost to produce plans premised upon other points of view.

2. With top management not being hypercritical or too opposed to any

plan, suggested plans will not disintegrate with no alternative plan to replace it.

(ii) Interactive Management and Planning (IP)

This process is directed at creating the future by forming the current

situation and closing the gaps to achieve the ideal situation in the future. It has two parts, namely idealisation and realisation with six interrelated phases. It can be described as an interactive process based on the assumption that a new system has to be developed from scratch, with the

following requirements:

Decisions must be made on consensus and agreement must only be reached on activities that are worth doing. Agreement will be reached

by testing alternatives or by the manager making an autocratic decision - if all else fails. Before implementation, the design must be

scrutinised by all stakeholders that were not involved in the design for comments, criticism and suggestions and it must be ensured that improvement of the design is continuous in order to ensure sustainable viability.

(iii) Soft Systems Methodology (SSM) Soft systems methodology attempts to foster learning and appreciation of the

complex problem situation between groups of stakeholders, rather than set out to solve a predefined problem. A key feature is keeping the problem

vague and wide ranging for as long as possible by not jumping to any

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conclusions and also not ignoring the current complex situation. Initial work will involve interviews and meetings to gain an understanding of the problem situation and systems thinking use concepts of hierarchy, communication, control and emergent properties to identify relevant systems. These relevant

systems are logically defined by constructing root definitions which are then used to generate conceptual models of the selected systems. Different conceptual models, representing different viewpoints are then used as the basis of a debate, which can lead to feasible and desirable change.

The SSM Methodology – 7 Stages

Conceptual (systems) Thinking

Real World

1. Identify the problem situation – unstructured

(Id PURPOSE as variable)

2. Express the Problem Situation (RICH PICTURE)

3. Formulate Root Definitions

(using CATWOE)

4. Build Conceptual

Models (for each stakeholder)

5. Compare 2 and 4

6. Identify Feasible and Desirable

Changes

7. Take Action to Improve the

Situation

(Source: Tom Ryan (EMBA 9.5 handouts)

Figure 23: The SSM process

6.2.3 Type C: Ensuring Fairness (Emancipatory Paradigm) Respect, feelings, growth and the development of people are central to this

paradigm. The approaches within this paradigm were developed because of the “failure of both the functionalist and interpretive paradigms to give appropriate attention to the proper participation of all stakeholders in taking decisions” (Jackson, 2003).

(i) Critical Systems Heuristics (CSH)

Critical systems heuristics (Ulrich 1983) is a framework for reflective practice

based on practical philosophy and systems thinking and the basic idea is to support boundary critique – a systematic effort of handling boundary

judgements critically. Boundary judgements determine which empirical observations and value considerations count as relevant and which are left out or are considered less important. To test any answer, a critical approach will be required since there is no single right way to decide on such issues as

the answer will depend on personal interests, views and value assumptions.

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This approach will not yield any single right answers either, but it will support processes of reflection and debate about alternative assumptions. Accordingly, the methodological core idea is to support systematic processes

of boundary critique. To this end, it offers a framework of boundary categories, as depicted in figure 24 below, that translates into a checklist of twelve critical boundary questions.

(Source: W. Ulrich (1983), (1996) and (2000))

Figure 24: The Boundary Categories of Critical Systems Heuristics

6.2.4 Type D: Promoting Diversity (Postmodernist Paradigm)

This paradigm stands opposed to the other paradigms as it does not believe that order can be imposed on a world that is inevitably too complex, coercive

and divisive. This approach was developed due to the fact that the previous three paradigms are being seen as suppressing creativity and diversity and it has been suggested that the carnival metaphor be used as a lens through

which “to capture the diversity and creativity called for by postmodern systems thinking” (Jackson, 2003).

7. Grounded Theory in interaction with Systems

Methodologies

7.1 Introduction According to Strauss (1998), “the quality of a theory can be evaluated by the

process by which a theory is constructed”. This is “in contrast to a scientific

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perspective where the quality of the theory is determined by its ability to explain new data”. The Grounded Theory was applied to systematically surface and analyse the theoretically sampled data from the work system to arrive at a theoretical proposition. It is therefore seen as a systematic

qualitative research method which emphasises the generation of a theory of knowledge from data by conducting research. Rather than beginning by researching and developing a hypothesis, a variety of data collection methods were used in the first step.

As developed by Strauss and Corbin (1990), this approach consists of a set

of steps and by careful execution is thought to guarantee a good theory of knowledge as the outcome. Strauss states that the quality of a theory of knowledge can be evaluated by the process by which this theory is constructed and he defines GT as follows:

“A grounded theory is one that is inductively derived from the study of the phenomenon it represents. That is, it is discovered, developed and provisionally verified through systematic data collection and analysis of data pertaining to that phenomenon. Therefore, data collection, analysis and theory stand in reciprocal

relationship to one another.”

The major difference between the Grounded Theory and other research methods is its specific approach to theory of knowledge development as it suggests that there should be a continuous interplay and constant comparison between data collection and analysis through reduction until

saturation is met. Stern (1980) differentiated Grounded Theory from other qualitative methodologies as he specifies the following five distinct

differences:

1. The conceptual framework of Grounded Theory is generated from data

rather than previous studies.

2. Dominant processes are discovered in the social scene, rather than describing the work system under investigation.

3. The researcher compares all data with all other data.

4. The data collection may be modified according to the advancing

theory.

5. The researcher examines the data as it arrives and begins to code, categorise, conceptualise and write the first few thoughts concerning

the research report.

Grounded Theory can therefore be seen as a systematic qualitative research method that emphasises the generation of a theory of knowledge from data by conducting research. Rather than beginning by researching and developing a hypothesis, a variety of data collection methods are used in the

first step. From the data collected in this step, the key points are marked

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with a series of codes, which are extracted from the text. These codes are grouped into similar concepts, in order to make them easier to work with and integrate. From these concepts categories are formed, which are the basis for the creation of a theory of knowledge. This contradicts the

traditional model of research, where the researcher chooses a theoretical framework, and only then applies this model to the studied phenomenon.

Stage Purpose

Codes Identifying anchors that allow the key points of the data to be gathered

Concepts Collections of codes of similar content that allows the data to be grouped

Categories Broad groups of similar concepts that are used to generate a theory of knowledge

Theory A collection of explanations that explain the subject of the research

(Source: Wikipedia)

Figure 25: The four stages of Grounded Theory Analysis

7.2 Data Collection The construction of an emergent theory requires a rigorous engagement with the data and two phases can be used to gather, analyse and categorise the data. Data collection can be seen as the first phase of this approach and the

outcome of the techniques employed must be the following:

Seeing the real world from the perspective of the person being interviewed and therefore the person should be taken up and down

their Ladder of Inference to explain what is happening in their empirical domain (the researcher’s actual domain). By doing this, the

researcher will get their perspective of the real world (what they have seen, done and heard), which is their interpretation of fact. The researcher will use critical realism as philosophy to guide this process and all questions must prompt conversation relating to their possible

C-BOT.

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7.2.1 Participant Observation This will be done by analysing and observing the behaviours of employees and the management team and later in the process, by also contacting

competitors and customers to analyse similar observations. 7.2.2 Conversational Interview

Using the questionnaires described above, semi-structured interviews will be conducted around the concern (C-BOT). The topic must be pursued freely as

circumstances dictated with each interviewee, but it must be ensured that the interview maintains a balance between a free-flowing and a directed conversation. The person that is to be interviewed will be identified in terms of C-BOT and C-BOT will be used to start conversation. The interview will be

used to determine this person’s own empirical domain and to identify a

CATWOE of each person to determine what their perspective is of what is happening in the real world.

7.3 Grounded Theory Results

During the second phase of the approach, the collected data will be categorised into the relevant categories and should the first iteration not

yield saturation, further conversational interviews based on possible new codes will be utilised to gather additional data. Once the stage is reached where it is assumed that data saturation is realised, the categories will be

densified and subjected to a literature review with a view to evolving a substantive theory, which is the answer to the concern.

7.4 Integration As previously mentioned, by integrating a combination of the different systems methodologies, it will be possible to creatively solve a problem

within a complex work system. This will ensure that the answer which is derived, will lead to a more effective idealised plan as the design process can now be redesigned on a continuous basis. Creative Holism can thus either be

used in parallel or integrated with Grounded Theory to diagnose a complex organisational problem and then to develop a theory of knowledge on the

phenomenon.

7.5 Issues of Validity Validity must not be linked to the truth (positivist) but rather to

trustworthiness, since the intention is about persuading people. Therefore, the reliability and validity determines the integrity of qualitative research and can be achieved as follows:

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7.5.1 Triangulation Trustworthiness of data is enhanced by triangulation, which is a way of stepping into multiple perspectives and exercising quality control of the

research. This will be achieved by collecting and reviewing data and information about events and relationships from different stakeholder perspectives using different questions, sources and methods. Literature, document and theory triangulation will further support this sense-making

process and it can be enhanced by referring to the researcher’s own managerial experience and observations.

7.5.2 Verification Strategies These will include methodological coherence to ensure congruence between

the research question and the components of the method. Sampling

sufficiency will be achieved by collecting and analysing data concurrently. Thinking theoretically builds a solid research foundation as theory

development is achieved through a dynamic relationship between sampling, data collection, analysis and thinking theoretically.

8. Developing a Concern CLD (C-CLD) using the Theory

of Knowledge

From the Theory of Knowledge a hypothesis was developed and this was depicted as a Concern Behaviour over Time (C-BOT), which will be used in

the sense-making process to develop a C-CLD. The hypothesis developed, as depicted in figure 6 of Part 1, can be described as the ability of the Business Centre to continuously improve on the creation of value for their customers in order to ensure long term sustainability and viability.

The aim is to change the current direction of the C-BOT to improve customer

value creation and this will be achieved by changing the behaviour of the four key drivers of obstruction, mentioned in Part 1. These value drivers were

integrated into an interrelationship diagram (ID) (figure 7 of Part 1) with the aim of establishing the route causes and outcomes that are manifested in

my concern.

An analysis of the interaction of the drivers in the interrelationship diagram

reveals that the ability of employees to align themselves with the organisational culture in the Business Centre stands out as the Root Cause, while the level of customer value creation emerges as the Outcome. By reformulating the abovementioned drivers into variables and integrating

them into a CLD, alongside the C-BOT developed above, a causal loop diagram emerges as depicted in figure 8 of Part 1.

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9. Developing a question and answer to the concern

using Meadows’s 12 Leverage points

9.1 Introduction From the information available, a decision can be made as to where and how

to intervene in the mess (theory<>practice) in an attempt to develop a possible answer (A-CLD) (figure 11 of Part 1) to the concern in the C-CLD.

This section therefore deals with the formulation of the question for this study, which when investigated thoroughly, will produce a solution that will

answer the question and deal with the concern within the context of the organisation. Through a rigorous exploration of the variables in the initial

conceptual C-CLD (figure 18 of Part 3), and finding ways in which an intervention can be made to change the behaviour of the C-BOT (figure 6 of

Part 1), a powerful question on how the concern can be dealt with, can be constructed. To ensure that the right question, which when answered will adequately solve the concern above, the question must be evaluated against the three dimensions to powerful questions, namely:

Construction: The question must be interrogative and quite robust. Assumptions: The question must not introduce any unconscious

assumptions to the situation.

Scope: The question must be within the capacity of the researcher to take effective action.

9.2 Using Meadows’s 12 Leverage points To formulate the most effective and efficient question, the different leverage points within the work system must be identified. These are the areas where a small shift in one variable can produce substantial changes. The twelve

leverage points to intervene in a work system were proposed by Donella Meadows, a scientist and system analyst focused on environmental limits to

economic growth. Her work distinguishes between the following two variables:

1. Resources which are usually stocks referring to the state of the work

system that is impacted by either inflows or outflows. As resources are leading indicators, this is usually the area where intervention will result in the most efficient and effective change and the above obey the laws of conservation and accumulation.

2. Parameters which are the desired state (goal) of a work system with

the discrepancy being the difference between the desired and

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perceived state. Parameters are important, but very seldom change any behaviour.

Twelve places to possibly intervene has been identified and they are, in

increasing order of effectiveness, the following:

• Constants, parameters, numbers (such as subsidies, taxes, standards)

• The sizes of buffers and other stabilising stocks, relative to their flows

• The structure of material stocks and flows (such as transport networks, population age structures)

• The length of delays, relative to the rate of system change • The strength of negative feedback loops, relative to the impacts

they are trying to correct against

• The gain around driving positive feedback loops • The structure of information flows (which persons do and do not

have access to what kinds of information) • The rules of the system (such as incentives, punishments,

constraints) • The power to add, change, evolve, or self-organise system

structure • The goals of the system

• The mindset or paradigm from which the system operates -its goals, structure, rules, delays, parameters-arises

• The power to transcend paradigms

10. Turning knowledge into actionable knowledge

10.1 Defining a Theory of Action As a solution has now been produced that will answer the question and deal with the concern within the context of the organisation, this knowledge must

now be transformed into actionable knowledge through a theory of action.

Action theory is an area in philosophy that is concerned with theories about the processes causing complex and intentional human bodily movements. Basic action theory therefore typically describes action as behaviour caused by an agent in a particular situation. While action theorists generally employ

the language of causality in their theories of what the nature of action is, the issue of what causal determination comes to has been central to controversies about the nature of free will.

Causality denotes a necessary relationship between one event (called cause) and another event (called effect) which is the direct consequence (result) of the first. Though cause and effect are typically related to events, other

candidates include processes, properties, variables and facts, which of these

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comprise the correct causal relationship, and how best to characterise the nature of this relationship between them, has as yet no universally accepted answer.

10.2 Actionable knowledge The following three options are available to make knowledge actionable:

10.2.1 Small wins

A small win by itself is of little importance, but a few small wins combined may have significant implications. Small wins are concrete and controllable opportunities that produce visible results and have the following characteristics:

• Opportunistic – does what is possible in current situation • Controllable – unfolds predictably and comes to a conclusion • Stands alone – the outcome is complete

• Signals - a strategic intent through its actions • Learning process – participants develop in the process

• Detail – participants have to be well versed and focussed

10.2.2 Actionable knowledge For Argyris and Schön (1978) learning involves the detection and correction

of error and where something goes wrong, they suggest that another strategy should be sought that will address the problem and work within the

governing variables. In other words, given/chosen goals, values, plans and rules are operationalised rather than questioned. When the detected and corrected error permits the organisation to carry on within its present policies or achieve its present objectives, then that error-and-correction process is

single-loop learning. Double-loop learning occurs when an error is detected and corrected in ways that involve the modification of an organisation’s underlying norms, policies and objectives, as depicted in the figure below.

(Source: Argyris & Schön (1978))

Figure 26: The Argyris and Schön Single and Double-loop Learning

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The focus of much of Chris Argyris’s intervention research has been to explore how organisations may increase their capacity for double-loop learning. He argues that double-loop learning is necessary if researchers and organisations are to make informed decisions in rapidly changing and often

uncertain contexts and this involves the researcher moving through six phases of work. 10.2.3 PDCA cycle

The PDCA cycle is a checklist of the four stages which a researcher must go

through to get from their C-CLD to A-CLD. The four stages are Plan-Do-Check-Act and a description of each stage follow:

• Plan to improve your operations by first finding out which things

are going wrong and come up with ideas for solving these

problems.

• Do/Implement the changes that were designed to solve the problems on a small or experimental scale first. This minimises disruption to routine activity while testing whether the changes will work or not.

• Check whether the small scale or experimental changes are

achieving the desired result or not. Also, continuously check the nominated key activities to ensure that you know what the

quality of the output is at all times to identify any new problems when they crop up.

• Act to implement changes on a larger scale if the experiment is

successful. This means making the changes a routine part of your activity. Also act to involve other persons (other

departments, suppliers or customers) affected by the changes and whose cooperation you need to implement them on a larger

scale, or those who may simply benefit from what you have learned (you may, of course, already have involved these people

in the Do or trial stage).

The PDCA Cycle can be used to coordinate solutions and it both emphasises and demonstrates that solutions must start with careful planning, result in effective action and move on towards careful planning in a continuous cycle.

11. The theory of values and actionable knowledge

11.1 Defining a Theory of Values Value theory encompasses a range of approaches to understanding how, why

and to what degree humans should or do value things, whether the thing is a person, idea, object or anything else. At a general level, there is a difference

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between moral and natural goods. Moral goods are those that have to do with the conduct of persons, usually leading to praise or blame. Natural goods, on the other hand, have to do with objects, not persons. Ethics tend to be focused on moral goods more than natural goods, while

economics tends to be interested in opposite. However, both moral and natural goods are equally relevant to goodness and value theory, which is more general in scope.

By applying the Velasquez 4-question model and critical systems heuristics the ethical implications of the answer in the situation can be explored.

11.2 The Velasquez 4-Question Model As shown in Part 5, by answering the four questions and considerations

positively, it will confirm that the behaviour and actions of the researcher already are and will remain ethical.

11.3 Critical Systems Heuristics Critical Systems Heuristics (Ulrich (1983)) is a framework for reflective

professional practice based on practical philosophy and systems thinking and the basic idea is to support boundary critique. To test the researchers

answer, a critical approach will be required since there is no single right way to decide on such issues as their answer will depend on personal interests,

views and value assumptions. A critical approach will not yield any single right answers either, but it will support processes of reflection and debate about alternative assumptions.

Boundary judgements reveal the normative implications of systems designs and by asking what the boundaries should be, interrogate systems designs revealing the boundary judgements being made, therefore postulating alternative boundary judgements. Because they condition both facts and

values, boundary judgements play an essential role when it comes to assessing the meaning and merits of a claim. Accordingly, the methodological core idea is to support systematic processes of boundary critique. To this

end, it offers a framework of boundary categories that translates into a checklist of twelve critical boundary questions (Ulrich 1987, 1996, 2000)

shown in figure 24.

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12. Conclusion This section of the dissertation describes the research plan, the choice of Systems Methodologies and the application of these tools in an attempt to clarify the following:

Although knowledge creation, benchmarking and knowledge

management may be important, transforming knowledge into

organisational action is at least as important to organisational success. As the ability to perform successfully is driven by the ability to turn knowledge into action and not knowledge alone, organisations have to identify innovative ways of doing things to become successful.

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PART 4: RESEARCH RESULTS

1. Introduction - Background to the Research According to Mitroff (1998), “real-world problems must be correctly

formulated before they can be solved. The ability to spot the right problems, frame them correctly, and implement appropriate solutions to them is the true competitive edge that will separate the successful individuals, organizations, and societies from the also-rans.” This section of the

dissertation covers the framework that was used for carrying out the research and outlines the rationale for the research approach, methodologies

used and the data collection and analysis methods employed. The ultimate intention is to answer the following research question:

What is currently happening in the work system?

Theory of knowledge (Context <> Theory, which is the sense-making process to formulate a concern and C-BOT).

As shown in figure 27 the Grounded Theory approach is central to

everything in this dissertation, from the initial problem formulation, through data collection and interpretation stages and finally in the creation of the

answer to the research question.

Grounded Theory Methodology

Direct Observations Action Research Interviews Customer Surveys

Figure 27: Grounded Theory Methodology

As the Business Centre can be described as a complex organisation, Creative Holism (action research learning) and the Grounded Theory process was

integrated to diagnose a complex problem and then to develop a theory of knowledge on this phenomenon. The Grounded Theory approach was applied to systematically surface and analyze the theoretically sampled data from the work system to arrive at a theoretical proposition and in this dissertation this

approach is central to everything, from the initial problem formulation,

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through data collection and interpretation stages and finally in the creation of the answer to the research question. In the context of the stated goal, the Business Centre was analyzed, the

situation observed and an initial conceptual framework Concern CLD developed as depicted in figure 18 of Part 3. Conversational interviews were then used to collect data from the relevant stakeholders, whom were identified using Soft Systems Methodology. The topic of customer value

creation was freely pursued as circumstances dictated, but it was ensured that the interview maintained a balance between a free-flowing and a

directed conversation. The data collected was used to revise the initial conceptual Concern CLD and was categorized further for data mining through further conversational interviews with the other stakeholders.

From this theory of knowledge, a hypothesis was developed (depicted in

figure 28 below and figure 6 of Part 1) and this was depicted as a Concern Behaviour over Time (C-BOT), which will be used in the sense-making

process to develop a Concern CLD. The hypothesis developed can be described as the ability of the Business Centre to continuously improve on the creation of value for customers to ensure long term sustainability and viability.

C - BOT

Desired situation


Time

Current situation

Outcome without

intervention

Figure 28: Concern Behaviour over Time (C – BOT)

2. Action Research Learning Over the past two years the researcher, while doing the EMBA, has applied various system methodologies to either analyse the Business Centre as an

organization or to directly solve a specific problem. This section outlines the use of two action research learning techniques, each of which have

contributed to my understanding of the importance of business and behavioural skills at various levels within the organisation and how this affects customer value creation. By using these techniques in triangulation, the trustworthiness of data will be enhanced as this approach allows for

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multiple perspectives from different stakeholders to gain a broader understanding of the problem within a business context.

2.1 Viable Systems Model Analysis 2.1.1 Introduction The Viable Systems Model of Stafford Beer was used as a diagnostic tool to

model the Business Centre’s structure in an attempt to determine viability through organizational problem solving. As the Viable Systems Model

assumes the whole Business Centre is structural recursive, it is therefore expected that every employee will be responsible for developing, formulating and implementing strategies within their own areas of concern. An organizational chart, as depicted in figure 1 of Part 1, was used as a

starting point to determine on which level of recursion within the Business Centre a diagnosis was to be performed. 2.1.2 Combining Beer and Hoebecke’s Perspectives

Beer’s Viable Systems Model for the whole Business Centre, depicted in

figure 3 of Part 1, is an arrangement of five functional systems, interconnected through a complex series of information flows and control

loops. Customer value creation is located in System 1, but it is in System 2 and 3 that the intervention is required to address the level of customer value creation as a concern. Luc Hoebecke’s work builds on the Viable Systems

Model as he describes the flow of information within an organization within various domains. The following four domains, each containing three

successive strata, have been identified: 1. Added-Value domain – these activities have a time span from 1 day to 2 years and are in stratum 1 to 3.

2. Innovative domain – these activities have a time span from 1 to 10 years and are in stratum 3 to 5. The overlapping is a result of relations between the two domains.

3. Value-systems domain – these activities have a time span from 5 to 50

years and are in stratum 5 to 7. The overlapping is a result of relations between the two domains. 4. Spiritual domain - these activities have a time span greater than 20

years and are in stratum 5 to 7. As each domain has its own characteristics, a higher domain will not manage a lower domain but activities of a higher domain can only express themselves

in terms of abstraction. Information is the raw material for creating and conveying meaning and following three fundamental information processes

have been identified:

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Strategic information process – this is information which enables interdependent management decisions to be made of which the outcome must support the shared purpose.

Control information process – is a corrective feedback loop whereby the actual result is compared to the desired outcome on a continuous basis. Keep in mind that all work systems are essentially self-regulating.

Audit information process – results in understanding why certain functions are performed and it is fulfilled by a higher process level.

2.1.3 Addressing Customer Value Creation using the Viable Systems Model

The team of Relationship Executives in recursion level R1 can be seen as a

S1 primary activity within the Business Centre of R0, primary responsible for customer value creation. This research will therefore be focusing the

diagnosis on recursion level R1 to identify and resolve the possible threats to the viability and sustainability of the Business Centre.

Team of Relationship Executives (R1)

-

Business Team

PublicSector Team

Agri Team

Team leaders

Ben v/d WesthuizenManager

Intelligence

Cohesion

Co-ordination

Credit /Compliance

Environment

Figure 29: Recursion level R1 – The Team of Relationship Executives

This domain is called the Added-Value Domain as it encompasses all the human exchange activities in the relationship between the Business Centre

and customer and it is seen as the economic domain par excellence resulting in viability. To make the system manageable the range of requirements must

be limited and these requirements can be expressed as four attributes of the output:

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Throughput time – this is the time between the formulation of the customer requirement until their needs are met and the actual time is related to the work capacity of the employees involved.

Volume requirement – this is the number of items that are seen as a relevant unit or required quantities of a customer. The economic scale of manufacturing is important and the costs of storing, distribution and shaping should be included in the costing process.

Quality requirement – the customer’s requirement are important and

therefore the quality of a product must meet the required standards. Price requirement – This is the amount of money a customer is willing to pay for a specific product needed and it is not necessarily expressed in

monetary terms

2.1.4 Viable Systems Model diagnosis of the Added-Value Domain

From the diagnosis it is clear that this domain will not be able to deliver a high quality and mutually beneficial service and therefore the ability of the Business Centre to continuously improve on the creation of value for

customers will deteriorate. This conclusion is based on the following:

1. Silo behaviour due to a lack of shared identity alignment firstly between all the primary activities within this domain and secondly

between all these primary activities with the identity of the Business Centre. The lack of teamwork, cohesion and co-ordination is prevalent

as customer value-adding service is not a priority of all primary activities.

2. The ability to handle variety is lacking due to very low levels of

discretion with authority being exercised through the adherence to very rigid and centralized policies. This problem also influences the

ability for adaptation negatively within this domain.

3. Leadership problems due to the lack of accountability and responsibility due to roles, values and discretion not being clarified.

Due to the pressure of accountability employees possibly also do not want to be leaders, as they would rather prefer to be part of a team only. As management is operating at the wrong level of work due to their inability to delegate responsibilities, they loose their ability to be

authentic leaders.

4. The natural loss of distinctive competencies as skills is weakening due to a lack of personal development. This is worsened by the lack of

current and applicable as well as limited market information, negatively impacting on the level of functionality within this domain.

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2.2 Interactive Management and Planning Process 2.2.1 Introduction

This process, formulated by Russell Ackoff, is directed at creating the future by forming the current situation and closing the gaps to achieve the ideal situation in the future. According to Ackoff three principles underpin the methodology of interactive planning namely:

• Participation – all stakeholders should participate in the planning process ensuring objectivity.

• Continuity – in a changing environment plans need to be constantly revised.

• Holistic – due to the interaction within a system, planning should include all parts simultaneously and interdependently.

Although the whole interactive planning methodology consists of five phases

in total, only phase one, formulating the mess, was used in this study to gain an in-depth understanding of the Added-Value Domain.

2.2.2 Formulating the “Mess”

This phase involves determining the future the Business Centre would be in should it continue its current strategy, policies and procedures and if the

environment only changed in ways that is expected. It will also clearly show that the Business Centre will need to adapt to the changing environment to remain sustainable and viable. The three types of studies required in this phase are:

2.2.2.1 Systems Analysis – Current Situation In terms of the current operating model, implemented in June 2007, a team

consisting of a Relationship Executive, Operational Banker, Credit analyst, Compliance Officer and a Services Consultant is responsible to deliver a

value-adding service to a portfolio of maximum 40 customer groups. This service will include the following functions:

• Maintaining existing and building new customer relationships and the

performance of the team will be measured by the financial value-add of each the relationship, both to the Business Centre and the

customer. • Punctual and quality service through innovative solutions to meet the needs, requirements and expectations of the customer.

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2.2.2.2 Obstruction Analysis By doing an obstruction analysis all the factors, both internally and externally, were identified that obstructs or weakens the value-adding ability

within the Business Centre. A summary of the obstructions are as follows:

1. Customer needs - Failure to understand the needs and requirements of customers correctly as the level of distinctive competencies of the

employees have naturally decreased, due to very little self development.

2. Silo behaviour - The non-alignment of identity regarding customer

value-adding service within the Business Centre and the ABSA Group as a whole. This is further worsened by a very limited product and

service range.

3. Service delivery - Declining service levels, due to below standard

turnaround times on requests, worsened by limited and restricted resource allocation and increased requirements due to new legislation (FICA and the NCA act).

4. Economy - A possible market slow down but the effect thereof is unknown, given the lack of pro-active market intelligence and

information. Due to a lack of intelligence it is impossible to predict the actions and reactions of competitors regarding the attraction and

retention of customers through strategic pricing initiatives and new product offerings.

5. Resources - Failure to obtain an adequate allocation of resources.

This situation is further worsened due to an over-estimation of the resource competence and poor process coordination within the

Business Centre, resulting in employees and the technology not being able to handle any new strategy implementation.

6. New Strategies - Failure from management to implement any new

strategy successfully due to an inadequate understanding of the resistance to change and a lack of vision regarding the relationships

between employees, processes and technology. There is also limited employee incentive to embrace any new strategy due to insufficient information sharing as a result of poor communication, resulting in a failure to obtain employee commitment within the Added-Value

Domain.

3. Absa Customer Satisfaction Survey

Every six months the level of service delivery within the Business Centre is evaluated to identify potential key drivers that need urgent rectification to ensure the business remains viable and sustainable. This survey is

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outsourced to Consulta Research, with sampling being done proportional to the data available. These interviews were done from the 22nd of May to the 17th of June 2008 with 98 customers (62 in Q4 in 2007). This sample is deemed to be representative as it represents 25% of all customers within the

Business Centre. During the survey information on 21 service attributes were collected of which the top five, worst seven and worsening attributes is summarized in Appendix C1 to C3. By using a 2 x 2 matrix, as depicted below in figure 30, the four most relevant service attributes which requires

urgent fixing were identified, given their negative impact on customer value-add and ultimately on the viability and sustainability of the Business Centre.

They are the following:

1. Inflexible Business Banking solutions that do not suite customer requirements.

2. Relationship Executive not pro-actively providing financial solutions.

3. Relationship Executive not pro-actively looking at the future financial requirements of customers.

4. The low frequency of contact between customers and their

Relationship Executive.

SATISFACTIONMore than 85%Less than 85%

IMP

OR

TA

NC

E

More than 80%

Less than 80%

Contact frequency

Going the extra mile

Trust & confidence

Accessibility

Product range

Product mix

Flexible solutions

Pricing

Turnaround times

No unnecessary referrals

Delivers on promises

Timeous feedback

Pro-active solutions

Pro-active future requirements

1 – Fix urgently 4 - Maintain

3 – Potential differentiator2 – Fix in order to improve

Professionalism

(Source: Consulta Research - Customer Satisfaction Measure Results)

Figure 30: 2 x 2 What to Fix Matrix

Due to a lack of distinctive competencies, Relationship Executives do not understand the needs and requirements of both customers and their

businesses. They are therefore not in a position to adequately and pro-active solution their customers and therefore the low frequency of contact. Based

on these findings a Concern CLD can now be constructed indicating the

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impact of the different variables on the viability and sustainability of the Business Centre.

4. Data collection through Conversational Interviews According to Siedman (1998), interviewing “provides access to the context of people’s behaviour and thereby provides a way for researchers to understand

the meaning of that behaviour.” Through a series of qualitative interviews

with stakeholders data was gathered, which forms the basis for the creation of a theory of knowledge and ultimately a Concern CLD. The questions that were used during the interviews were based on my own managerial experience and knowledge as well as from Gulati’s (2007), the Four C’s of

Customer-Focused Solutions. These questions were primarily aimed at a relationship model within a service providing environment but naturally

expanded as the interview progressed.

4.1 What can be defined as Customer Value Creation?

From all the interviews it was clear that a customer should pro-actively be solutioned in terms of a portfolio approach that includes all products, services and all other relevant issues. Success is achieved by “doing the unexpected” as customers usually know exactly what they require. By evaluating the

business as a whole, employees must be able to give the customer a range of different possible solutions and then be knowledgeable (skilled) enough to

discuss each option. Should the value creation be at an acceptable level, pricing will only play a very small role in this relationship.

4.2 What is required to establish and maintain a sound Customer Relationship? As there is usually little or no difference between the products and services

offered by organizations, the quality of the relationship with the customer will determine the level of success. Customers are very loyal as shown during the

merger to form ABSA in 1992, when very few customers left the bank. The conclusion can therefore be made that customers will only leave an

organization should there be a mismatch between loyalty and the quality of

the relationship.

In terms of the relationship model, the quality of the relationship must be measured with the financial performance of the business ultimately being the outcome. Success is measured by the financial performance of the business and by having one-on-one discussions with customers, to determine the

quality of the relationship. The quality of the relationship can therefore be used as a leading indicator regarding the financial success of the business. A good relationship is established and maintained by building trust through adhering to the following principles:

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• By behaving professional at all times and by reacting quickly and decisively on all requests to ensure value creation.

• By really showing interest in the customer’s business by pro-

actively researching the particular industry and business.

• Open and honest feedback on all requests, which has to be given punctually. “No” is a solution as well as “I do not know”.

Should the line of professionalism be breached, the employee has no value

for both the business and the customer, as they will not be able to objectively add value. A close relationship is however possible but the mutual intention of the parties involved will determine whether these relationships will remain sustainable. Both parties must therefore be emotional mature to

realize this and respect the professional distance at all times.

4.3 What Distinctive Competencies are required to be successful within a Relationship Model Environment? There was consensus that successful employees were those individuals with

enough common sense and industry knowledge to understand the concepts and principles of any business by identifying the possible link between a

particular industry and the business, with the solution to be done accordingly. Specialists would only be drawn into this process when and if

required. It was felt that specialists could possibly become a problem as they lacked the inter-personal skills required to drive this model. To be successful employees therefore need the following distinctive

competencies to work in tandem: Knowledge, Skills and Experience which also includes:

• Industry knowledge gained through years of experience, training and a relevant qualification.

• Business acumen or a “gut” feeling. Common sense to ensure the needs of customers and the requirements of the business can be

matched due to the ability to see opportunities within a bigger picture.

• Understanding the customer’s personal needs and that of his

business, thereby gaining the ability to realistically promote the customers business, when and if required.

Behaviour - The majority of participants felt that this competency was

either missing or neglected resulting in failure and it includes the following:

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• Very good interpersonal skills to establish a sustainable relationship.

• Emotional maturity, mutual trust and respect from all

stakeholders involved, with any form of disagreement never to be seen as criticism.

• High energy levels adhering to the values of the business, driven by a fear of failure.

4.4 What are the Cultural requirements within a Relationship Model?

An environment and corporate culture must be established through mutual

trust and by living, speaking and experiencing the business’ values, in which all employees will be able to meet their personal goals and targets. This will ensure a committed and loyal team to take the business forward to the next level. To achieve this, a culture has to be established, based on the following

principles:

• Employees have to do things themselves with everybody operating on the right level of work. By enhancing teamwork,

complexity will be handled better.

• The business must be driven by profitable performance which must be acknowledged. The behaviour of the performer will become very important with only the performance and not performer being addressed, should anything go wrong.

• Diversity must be respected and cherished at all times.

The outcome of this culture will then be the following:

• Courageousness due to successful teamwork and both employee

commitment and support.

• Competitiveness improving due to a stable environment in

which each employee can reach their own aspirations and goals.

• Consistency with open and honest communication.

• Caring as every employee will be treated fairly and justly.

5. Grounded Theory results All the collected data was categorized as shown in Appendix D into the

relevant categories and as the first iteration did not yield saturation, further conversational interviews, based on possible new codes, were used to gather

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additional data. The emergent data dwelled on the categories of shared identity, distinctive competencies, relationship model and organisational culture as shown in figure 31, becoming the conversational areas for further data surfacing and revised theoretical coding as these can been seen as the

four main types of obstructions that needs to be changed to improve customer value creation within the Business Centre.

2 3 14 16 Shared identity Distinctive competencies Relationship model Organisational culture

Different focus within different divisions but the overall intention is to grow EPS, silo behaviour with everybody not feeling part of the whole, very little financial target integration which includes rewards and goals, bigger picture missed due to a lack of communication, lack of urgency to get things and tasks done, within the small team driven by honest and quick solutions, silo behaviour which is confirmed by customer complaints that shows no alignment, everybody must positively contribute to customer service.

The natural loss of distinctive competencies as skills is weakening due to a lack of personal development leading to procrastination and possible burnout. Behaviour – willingness to do the job, level of skills, qualifications, personal situation regarding finances and family, self confidence to maintain and keep views, Job match – aligned to what job requires, experience at the right level, Qualifications - skills and knowledge is a basic requirement, The right attitude and behaviour – energy Relationship Executives cannot proactively provide financial solutions, Relationship Executives cannot proactively determine future financial requirements of customers.

The value of the customer relationship is never measured with only certain primary activities taking responsibility for the financial performance. There is little or no difference between the different products and services offered by organizations and therefore only the relationship with the customer will determine the level of success. In terms of the relationship model the quality of the relationship must be measured with the financial performance of the business ultimately being the outcome. Success is measured in the financials of the business and by having one-on-one discussions with customers, to determine the quality of the relationship.

Fighting spirit – underdogs in what ever we do, we are doing well but we have to do better as growth is important, participative management wit a top-down approach on certain levels to implement certain strategies, negativity at times due to work load and pressure, fair culture – no pre-conceived ideas about people, equal – communication with no differentiation, Relationship Executives conveying trust and confidence, Not easy doing business with ABSA Business Bank. An environment and corporate culture must be established through trust and living, speaking and experiencing the business’ values, in which all employees will be able to meet their personal goals and targets. This will ensure a committed and loyal team to take the business forward to the next level.

Figure 31: Emergent Data Categories The data was further categorized and theoretically coded into the codes (figure 32), which here to be subjected to a further literature review in Part

2 of this dissertation: Identity alignment, Alignment to the Business’ Culture, Leadership quality and Mutual trust.

Identity Alignment Alignment to the Business’

Culture Leadership quality Mutual trust

Figure 32: Resultant coding and densification

These codes, which are deemed to be the value drivers of the concern, were

integrated into an interrelationship diagram (ID) (figure 7 of Part 1) with the aim of establishing the route causes and outcomes that are manifested in

the concern. By reformulating the these codes into variables and integrating them into a CLD, alongside the C-BOT developed above, a casual loop

diagram emerges as depicted in Figure 8 of Part 1.

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Once this stage had been reached in the Grounded Theory research process, I assumed that data saturation had been realised and the categories were then densified. The four identified codes were subjected to a literature review, shown in Part 2 of this paper, with a view to evolve a substantive

theory which would be the answer to my concern in figure 2 and Concern CLD depicted in Figure 8 of Part 1.

6. Conclusion

This section covered the data collection and analysis portion of the process in which the following was concluded:

The concern identified is significant and warrants attention as the

business banking model in South Africa is essentially a relationship driven model, driven by Relationship Executives and their teams, with

customers receiving personal attention. The degree of personal attention varies and is usually determined in correlation with the potential income for the business.

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Part 5: EVALUATION AND CONCLUSION This section provides an evaluation of the dissertation and covers the rationale, relevance, utility, validity, ethics and comments on the research as well as possible further research that can be undertaken within the current

business context. The ultimate intention is to develop a theory of action by answering the following research question:

What can be changed to improve the work system? Theory <> Practice, which is the decision-making process to formulate a powerful question and answer to ultimately address the concern.

5.1 Establishing Validity - Rationale (R) The viability of the proposed answer can only be confirmed if the research

follows a rigorous process. The Rationale is used to explain the Research Answer loop by loop, integrating results from the literature and document review and the systems tools applications. To simplify the A-CLD illustrated in Figure 11 of Part 1, the researcher has reduced it to those causal loops

critical to the concern, question and answer and refers to this as the 80/20 A-CLD depicted below.

80 / 20 Answer CLD


Business Centre


Centre


Business Centre


Business Centre


CentreSilo Mentality - Level ofshared identity within the

Business Centre



Business Centre

S

S

SS

S

S



S


Centre's culture

SS


S

S

S



2.

R

1.

3.

5.

4.

6.

6.

7.

8.

9.

12.

11.

10.

Figure 33: 80 / 20 Answer CLD

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Arguing the foundations for the casual relationships: In order to deal with the rationale of the answer, the researcher has dealt with each causal link as a claim and provided reasons and evidence for this in the following manner:


Business Centre



1.

1. Implementing a new strategy aimed at aligning existing

employees and new recruitments to the current organisational culture.

With the advent and impact of globalisation, the factors that have influenced organisational excellence have challenged traditional business approaches and people management practises. The challenge to create continued

customer value in the future years is hampered by the confluence of knowledge employees becoming eligible for retirement, a greater incidence of the migration of internationally mobile, skilled professionals to developing countries including a higher availability of jobs in the labour market. Against

this background, organisations are compelled to engage in pro-active talent management programmes and activities to retain and attract key talent.

These activities must be integrated with other relevant management practises such as performance development, employee engagement, reward and remuneration and development initiatives to foster a total talent

investment approach. Before embarking on any strategic change or efficiency improvements it is essential for organisations to understand and measure the current business culture and this will be achieved by clearly defining the current organisational culture. As explained below, the retention level of

existing employees will be improved by aligning them to this culture and by only recruiting new employees who are also aligned through a newly

designed, rigorous interview process, the level of skills, knowledge and experience within the Business Centre will be maintained and increased over time.

The level of resource quality and allocation will thus be increased as skilled, knowledgeable and experienced employees (who are regarded as the most important and valuable resource within the Business Centre) will either be

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retained or recruited. The following two options are available to management to have the “right people on the bus” (Collins, 2000):

Existing employees: Existing employees, with the necessary level of

skills, knowledge and experience, will be retained within the Business Centre, as the supportive culture and environment will enable these employees to fulfil their personal goals, thereby experiencing satisfaction on a personal and work level. Employees will now be

motivated to excel as their contribution will be valued and they will be treated with fairness. Those who do excel will further be motivated to

continue working in the business as they will be highly rewarded - on both a monetary and non-monetary basis.


knowledge and experience will be appointed in terms of job

specifications, policies and procedures. By seeking individuals who are also aligned to organisational culture, the effectiveness and efficiency


When recruiting new employees the following six principles, which are self-explanatory, as described by Peter Gilbert in his article, Critical

''world class'' employment selection principles, should be adhered to:

Principle 1: Describing an employee's present skills, traits or characteristics is not a very accurate predictor of future performance.

Principle 2: You cannot train a person for a job they cannot do. Principle 3: Talent based skills are very narrowly applied and do not

generalise to other positions.

Principle 4: In job analysis and identifying selection criteria, less is more.

Principle 5: When recruiting, the famed 80/20 rule in business is the

Kiss of Death to achieve sustainable business growth. Principle 6: Profiling top performers to establish a model for selection or promotion criteria is fatally flawed.

An effective strategy must therefore be developed to ensure that only individuals, who are aligned to the business’s values and goals, after the business culture has clearly been defined, are retained and recruited. The

second key issue is to develop a reward system which will include market related salary packages and performance bonuses that will retain the right

employees and motivate them towards higher performance levels. By

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offering skills- and performance based contracts, employees will be motivated to excel and those who do excel, will be motivated to continue working in the business as they will be highly rewarded. The outcome of the abovementioned statements ultimately results in a virtuous spiral of higher

performance and reward, as depicted in figure 34 below.

Source: Ivey Business Journal, November / December 2003, p. 1

Figure 34: A Virtuous Spiral


Business Centre


Centre's culture

S

2.

2. With the level of resource quality and allocation improving, the ability of employees to align themselves and function within the current organisational culture will therefore increase.

Organisational culture is important for many reasons, such as its link to organisational effectiveness (Denison, 1990). This view is supported by Rashid, Sambasivan & Johari (2003), who state that corporate culture, a

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form of organisational culture, has received much attention in the last two decades because of its effects and potential impact on organisational success. Organisation is the key to organisational excellence, “and the function of leadership is the creation and management of culture” (Schein

(2004)). As the quality and allocation of resources in the Business Centre therefore improves (specifically referring to employees who are deemed to be the most

valuable asset within the business) the level of skills, knowledge and experience will increase as the “right” people will now be employed. This will

ultimately lead to enhancing and strengthening the current supportive culture and environment, in which all existing employees and new recruitments will be able to fulfil their personal goals, thereby experiencing personal and work satisfaction.


Business Centre


Centre's culture

S

3.

3. As the ability of employees to align and function within the current organisational culture increases, the level of shared identity within

the Business Centre will improve.

Organisational culture does more than solve internal and external problems as it also serves the basic role of reducing anxiety that humans experience when they are faced with cognitive uncertainty or overload. It provides the individual with a system to sort important from unimportant information

(Schein (1983)). Cultural assumption can be thought of as a set of filters that helps individuals to focus on and perceive the relevant portions of their environment.

A supportive culture and environment will be established by changing the traditional organisational structures to a new team-orientated structure, with the necessary autonomy and authority, within pre-set boundaries. As each

primary activity within the Business Centre will have sufficient resources to fulfil their respective roles effectively and efficiently, internal competition and

any silo behaviour will be eradicated. This will further be enhanced by clarifying the respective identities, roles, values and discretion of each

primary activity, thereby ensuring every employee has a clear understanding

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of their own responsibility and accountability within their own field of expertise. With all primary activities now centred on the flow of value and not functional

expertise, everything that does not add direct value to the customer will thus be deemed waste. Perfection will be pursued by getting employees to “do things right the first time” (first time quality approach) and taking responsibility for their quality of work. The alignment of identity regarding

customer value-add as well as value creation within the Business Centre and with the Absa Group as a whole, will therefore be achieved.


Business Centre


Business Centre

S4.

4. By improving the level of shared identity within the Business Centre, the level of the ability to handle variety of employees will

increase.

Gulati (2007) states that “to stand out in a commoditized market, companies must understand what customers truly value. The only way to do that is to

break down the traditional, often entrenched, silos and unite resources to focus directly on customer needs.” To escape the perils of commoditisation,

organisations have to solve customer problems from their perspective and product range and not from the customer’s perspective. Solutions - not products - have to be sold, but as the necessary knowledge and expertise is housed within business unit silos, organisations struggle to truly add

customer value for which they are willing to pay. The following actions can be used to breakdown the existence of any silos within the Business Centre:

Coordination by creating new silos organised by customer segments or needs. This creates layer boundary spanning roles over the current structures. More employees can also be placed in the field closer to customers, with all internal groups and

processes focused on customer needs.

Cooperation as the focus of all primary activities will now be on putting the customer at the centre of everything that is done.

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Quality will be defined by customer requirements and leading factors will be used to measure customer performance indicators. “Soft issues” become important and they are to be reinforced by hard issues such as incentives.

Skills development of all employees to give them the ability to work with multiple ranges of products and services, which requires a deep understanding of the customer’s business. There

should be a focus on creating generalists, rather than specialists, as generalists have boundary spanning skills – the ability to

connect across boundaries.

Connection by joining forces with organisations that have complementary offerings to create even higher value solutions,

which command a larger price premium as costs can now be cut

through outsourcing non-core activities.

With all silo behaviours eradicated and although policy and procedural decisions may be centralised, the level of employee discretion within the Business Centre will be increased as their accountability and responsibilities will be clarified. This will improve the autonomy and authority of employees

within pre-set boundaries - and ultimately the ability to handle variety successfully. Information reaching management in the Business Centre will

therefore be filtered and will result in management operating at the right level of work and not becoming trapped in the primary activities.


Business Centre


S

5.

5. By improving the level of shared identity within the Business Centre, the cohesion between all primary activities will also be

improved as the communication channels that constitute the cohesion mechanism now meaningfully interact.

Due to an improved level of shared identity open and honest communication in sessions with free discussion, will be promoted. Jaworski (1996) states that “dialogue does not require people to agree with each other. Instead it

encourages people to participate in a pool of shared meaning that leads to aligned action. In dialogue the goal is to create a special environment in

which a different kind of relationship among parts can come into play – one that reveals both high energy and high intelligence.”

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To achieve cohesion and synthesis in terms of the Viable Systems Model two

successive and autonomous recursion levels have to successfully interact. To gain the optimum benefit from any communication, it must be ensured that

the balance between advocacy and inquiry is maintained as valuable inputs will then be obtained from all participants. The communication channels that

constitute the cohesion mechanism which will meaningfully interact are:

Corporate intervention and monitoring - With all policy decisions being centralised, the primary activities within the

Business Centre have set boundaries within which they can operate. These actions will be monitored by management through reports that are generated as and when required.

Resource bargaining and coordination – Resource bargaining is a process by which the primary activities within the Business

Centre agree to the allocation of resources that is required to achieve certain pre-determined performance targets. Actions within the primary activities, such as centralised planning,

therefore have to coordinate the utilisation of resources to ensure that the targets are met, lowering the complexity of

management.


Business Centre


Centre


S

S

6.

6.

6. As the ability of employees to handle variety increases and the cohesion between all primary activities improves, the ability for employee adaptation to a changing financial environment will

increase due to the mechanisms that constitute adaptation improving. In terms of the Viable Systems Model the mechanism for adaptation is constituted by policy, intelligence and cohesion to ensure that an

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organisation has the capacity to create new possibilities and adapt to new situations within a changing environment.

Policy – All primary activities will now have a clearer

understanding of the pre-set boundaries of policy, thereby improving their autonomy and authority as well as increasing their level of discretion. By doing this the capacity to make decisions regarding the creation and development of new

solutions will be increased, resulting in employees having the ability to adapt better to the changing environment.

Cohesion – Cohesion within all the primary activities of the

Business Centre is required to ensure that the decisions that are taken can be developed and implemented by means of a team

effort.

Intelligence – To ensure that the decisions that are taken can be

created into workable solutions, it is necessary to obtain intelligence regarding the organisation’s external and long term environment to meet all the requirements from this environment and therefore ensure sustainable viability.


Business Centre


Centre

S

7.

7. With the increasing need for the ability to adapt to a changing

financial environment, the level of distinctive competencies of employees within the Business, which are divided into two

categories, will improve. The banking industry is riddled with processes and procedures that require employees to manage sales, service, policies and procedures. The

environment is highly controlled and regulated with employees having clear responsibilities linked to controls. Through a thorough grounded theory process, another of Collins’s (2000) findings about what makes organisations achieve the leap from “good to great” was “Level 5 leaders”. Contrary to

conventional wisdom, they were “self-effacing and reserved” and had a “paradoxical blend between personal humility and professional will’. Level 5

leaders therefore tend to channel their egos away from themselves by focusing on the bigger organisation. Collins is quite clear that they do not by

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any means lack ambition, but they choose to direct their energy at the institution they run and not themselves. The quality of leadership, which is defined as a distinctive competency,

therefore refers to the process whereby one individual influences others towards successfully attaining certain organisational goals in a sustainable manner. This influence is greatly affected by the variables that emerge from specific situations, which in the context of the problem statement relates to

the complexity of human behaviour of those around them and their ability for adaptation. As this ability increases, the level of distinctive competencies of

employees within the Business Centre, which are divided into the following two categories, will therefore improve:

Institutional knowledge

Accountability for financial performance – Employees will be accountable and responsible for the management and control of

the financial performance of each customer portfolio within the Business Centre, ensuring sustainable net profit before tax and “Economic Value” by making informed business decisions within the limits of discretion. To achieve this successfully all primary

activities will be co-coordinated to ensure efficient service delivery to their clients, with the avoidance of any silo behaviour.

The pro-active identification and development of possible new

business opportunities or customer needs within the Business Centre. Once these opportunities or needs have been identified,

employees now has the autonomy, authority and discretion, within pre-set boundaries, to ensure that new competitive solutions and pricing strategies are developed to meet all the expectations of their customers.

Irreversible Investments

Variety absorption – With increasing levels of discretion, S1 will

now take on the accountability and responsibility to absorb as much variety as possible by personally getting involved in the

establishing of value adding client relationships, networking and strategic alliances, both externally and internally, displaying ethics and good corporate governance at all times.

Resource allocation - Management will ensure that only “A”-players are recruited and retained. Employees will be motivated to excel and those who do excel will be motivated to remain in the business as they will be highly rewarded. The retention of highly

skilled, knowledgeable and experienced employee is most definitely a problem as they are very marketable with both

financial competitors and the private sector currently targeting

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high performing employees. A strategy must therefore be implemented, which focuses on the following concepts:

i. Alignment of values and goals of all the relevant

stakeholders.

ii. A reward structure that will retain the right people and motivate them towards higher performance levels.

iii. Non-monetary benefits.

iv. Selective re-appointments.

v. Transferring of skills, knowledge and experience.

vi. Increased self development


Business CentreS



8.

8. As the level of distinctive competencies of employees within the

Business Centre improves, the ability of employees to understand the needs and requirements of customers improves. The business banking model in South Africa is essentially a relationship

driven model, driven by Relationship Executives with the required level of skills, knowledge and experience. The degree of personal attention within each customer relationship varies and is usually determined in correlation with the potential income to be generated from this relationship. The levels

of distinctive competencies of employees are however naturally decreasing due to very little self development, negatively impacting on any customer

value creation. By stopping the natural loss of distinctive competencies through continuous personal development and supported by internal product development and

innovation, the confidence levels of employees will grow as they will now have the ability to understand the needs and requirements of customers’ better. This will lead to higher levels of mutual trust within the relationship and the delivery of innovative products and services will now be punctual and

efficient, with all the needs, requirements and expectations of customers being met.

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S




9.

9. As the ability of employees to understand the needs and requirements of customers improves, the level of services delivery from the Business Centre will improve.

Within the financial industry there is a direct correlation between the years of service and the level of skills, knowledge and experience of an employee.

Working within a team environment it is therefore extremely important that a balance is maintained between these two factors to ensure that the needs

and requirements of customers are fully understood and met. The origin of the imbalance between the two factors may be caused by the following:

The majority of employees in the sales environment are highly

qualified specialists. Given their qualifications and as they are very career orientated, they are marketable. Although they may possibly lack the necessary skills and knowledge, they are seen to be the leaders of the future. The resulting high staff turnover

will also have a negative impact on succession planning within the region.

As the Business Centre is based in a rural area the employees are

generally older and possibly in a comfort zone and therefore they are not willing to be moved to other business centres, given their

quality of life. Work ethics and energy levels may become a problem as these employees may become complacent.

Management therefore has the following options available to mitigate this

risk:

By improving the remuneration packages of the employees whom are aligned to the organisational culture and linking their bonuses

directly to performance, it will be ensured that these employees do not leave the business to pursue other career opportunities.

By retaining the support and back-office staff, with the necessary level of skills, knowledge and experience, as they form the core of the business regarding effective and efficient service delivery

through their knowledge of Absa systems and processes. It will

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therefore be important to maintain a very good balance between the skills, knowledge and experience of these employees and sales specialist to ensure the viability and sustainability of the business.

Self development will become a more important issue as this will ensure employees on all job levels improve their level of skills and knowledge on continuous basis.

As the needs of Business Bank customers are more complex than retail

customers, they require a wider range of product solutions and services. In addition to meeting these core requirements, employees need to possess a degree of industry knowledge, which is valued by customers and allows them to provide appropriate solutions. Should all this be in place, the frequency of

customer contact will increase as employees will have the confidence to

engage with customers more regularly as they will have the ability to pro-actively provide financial solutions by pro-actively evaluating the future

financial requirements of customers. The delivery of innovative products and services will now be punctual and efficient with all the customer needs, requirements and expectations being met.


Business Centre


S10.

10. As the level of services delivery improves from the Business Centre, the level of customer value creation will increase.

Narvar and Slater (1990) stated that “the creation of superior customer value must be the goal of a market-oriented business.” Recently Woodruff and Gardial (1996) defined customer value as the customer’s perception of the

extent to which a product or service allows the customer to achieve their desired purpose or goal. By adhering to the principles of lean thinking in an attempt to improve service delivery and ultimately the value chain, the Business Centre will be able to re-think value creation to find effective and

efficient ways to provide customers with more value. By using significantly fewer resources than competitors, the Business Centre will develop an

unassailable competitive advantage. To implement the lean system successfully it is essential to structure the whole business around the flow of value with each department focusing on

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helping the customer to pull value from the organisation. To avoid potential problems organisations must therefore be structured in such a way that all employees are held responsible for the overall customer and organisational value that is created. Due to this the concept of swift-even-flow becomes

important to identify possible bottlenecks within the current lean system with the idea of balancing the flows through the process. As the idea of flow is fundamental to any lean system and if nothing but

value adding is done, the Business Centre should add the value in as rapid a flow as possible and if this is not the case, waste will be built up. By applying

the principle of “JIDOKA” any waste will immediately become evident and visible and management will have the opportunity to address this issue. It may be assumed that lean systems may be fragile, but the system is quite

robust as long as the Japanese principle for continuous improvement,

“KAIZEN”, is also adopted which states the following:

This principle is applicable in the search for excellence and continuous development within any environment and it implies that even when a point is reached where a business unit is satisfied with the value adding process, this process should continuously be developed and improved.

To improve service delivery even more, perfection must be pursued and by getting employees to “do things right the first time” and taking responsibility for their quality of work, it will ultimately be ensured that value creation will be increased.


Centre


Business CentreS

11.

11. As the level of customer value creation increases, sustainable profitability over time will increase.

It is an accepted fact within the financial industry that as customer value

creation improves the cross selling ratio of a customer, which is defined as the number of products and services utilised per customer, will increase. This will lead to an increase in non-interest income and ultimately profitability will increase. A business unit is deemed to be efficiently managed when non-

interest income is equal to or bigger than operating expenses. An increase in

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non-interest income will thus be achieved by increasing the cross sell ratio in the following three ways:

1. By existing customers utilising more banking products and services

within their existing portfolio. This is considered to be ideal as the growth in non-interest income, derived from existing customers, does not lead to additional credit risk and possible bad debts.

2. By attracting new customers that will utilise new banking products and services.

3. A combination of both of the above. The attraction of new customers

and an increased utilisation of more banking products and services by existing customers will be the ideal scenario. The process of

maintaining existing and building new customer relationships, which

are mutually beneficial, will now not be driven by price only, but by value creation for which the customer is willing to pay a market

related price or compensation. With the Business Centre being able to meet the needs and requirements of customers appropriately, adequately, and punctually in an attempt to

improve the cross sell ratio, the attraction and retention levels of customers will increase – thereby improving the competitiveness of the Business Centre.

With the level of competitiveness improving, the volume of business being done, will increase. Existing customer profitability will therefore be growing

faster than expected and the attraction of new customer groups will be higher than expected - resulting in sustainable growth in profitability over

time.


Centre


Business CentreS

12.

12. As sustainable profitability over time increases, the quality and allocation of resources in the Business Centre will be improved.

As the sustainable profit generated by the Business Centre increases, the

importance of the role the Business Centre plays in achieving the set strategic intention of the Absa Group grows. Due to this the quality and

allocation of all resources will be increased and improved as the allocation will now be based on what is required to ensure that the Business Centre remains sustainable and viable business unit.

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Conclusion: This is a reinforcing feedback loop due to following: As the quality and allocation of resources in the Business Centre improves

(specifically referring to employees who are deemed to be the most valuable asset within the business) the level of skills, knowledge and experience will increase. This will ultimately lead to enhancing and strengthening the current supportive culture and environment, in which all existing employees and new

recruitments will be able to fulfil their personal goals, thereby experiencing personal and work satisfaction.

5.2 Relevance – Are the Concerns raised relevant to the Situation? My concern regarding customer value creation is both significant and

relevant and therefore warrants attention for the following reason:

The employees within the Business Centre are solely responsible to ensure that the business unit achieves the set strategic intention by

adhering to the principles of the business banking model in South Africa, which is essentially a relationship driven model. The degree of attention a customer relationship receives varies and is usually

determined in correlation with the potential income that can be generated for the Business Centre.

Should the level of customer value creation thus deteriorate, the impact will

likely be the following:

• The maintenance of existing and building of new customer relationships, which are mutually beneficial, will not take place.

• Customers place a premium on the availability and accessibility of

employees and should there be a loss of distinctive competencies, the close working relationship which allows employees to meet their

customers’ service expectations and at the same time facilitate rapid decision making, based on an understanding of the needs and risks of the business, will be broken - resulting in below standard service delivery and value creation.

• In meeting customers’ core requirements, employees need to possess a degree of sector or industry knowledge, which is valued by customers and allows them to provide appropriate solutions. Should

this not be the case, punctual and high quality solutions through innovative products to meet the needs, requirements and expectations

of the customers will not be delivered.

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5.3 Utility – Will the Answer deal with the Concern? To select the most effective and efficient point of intervention, the different leverage points within the work system was identified using Meadows’s 12

leverage points. The one selected was within an area where a small shift in one variable would produce the biggest changes and I focused my attention

on possibly changing resources. A further aspect that was used to ensure the richness of the question was to explore questions from a multiple perspective approach using the Mitroff principles.

By also using the Critical Systems Heuristics boundary questions to assess the proposed solution designed in Part 1, I was able to critically assess whether the proposed intervention will serve all the right stakeholders. By clearly defining the current organisational culture it will be possible to identify

existing employees who are aligned to this culture. Their retention level and commitment will be improved as their anxiety and frustration levels will

be lowered since these individuals will feel that they are treated fairly and supported and that their contribution is valued.

Employees who are not compatible to the organisational culture will be given a fair opportunity to change their current behaviour and should the required

change not take place, the working relationship might be terminated. All this will be done within the framework of the formal policies and procedures and the rights of all individuals will be respected.

New employees with the necessary level of skills, knowledge and experience and who are aligned to the current organisational culture, will be

recruited through a newly designed, rigorous interview process. As stated by

Liker (2004), a successful business is built by using a three-stage process to select the best employees that will compliment the existing business culture. Cooper (2008), however, identifies a recruitment process which has six stages with the last stage focusing on the personality, character traits and

disposition of new recruits as this is required to build and develop a high-performing team.

I am confident that the answer addresses the question, which in turn will address the concern. The answer is useful insofar it is relatively easy to implement and will have immediate effects and the result of the strategy will

be that the Business Centre adheres to the five keys of being a sustainable value creator, which are:

• A clear understanding of what value means to both the Business Centre and its customers.

• A clear understanding of which activities creates mutual value.

• A clear understanding of strategy and the role it plays within the value creation process.

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• An appropriate measure of success.

• The necessary speed to complete a task without sacrificing quality and having minimum waste.

5.4 Trustworthiness According to Argyris (1999) the ability to detect and correct errors in a

situation is an indication of the internal validity of the theory proposed. It relates directly to the drivers of the theory and is what he calls “first order

problems”. In contrast, in the case of external validity the action that has to be taken, relies on the implementation and this is what he calls “second

order problems”. Trustworthy research therefore demonstrates truth value, provides a base for applying it, and allows external judgements about the

consistence and neutrality of findings and hypotheses. The criteria for assessing trustworthiness are credibility, dependability, confirmability and transferability.

5.4.1 Credibility and Dependability

Qualitative researchers are challenged to substantiate the trustworthiness of their findings by establishing the validity of their claims. If this is done

effectively, the findings will be more believable and credible. To establish credibility, this study’s answer rationale builds on concepts and theories

which emerged following the Grounded Theory process to back up these claims from the following sources: Dependability - Besides triangulation, three system methodologies were

used to obtain relevant data, namely: Soft Systems Methodology, Viable Systems Diagnosis and the Interactive Management and Planning process. The phenomenon under investigation was also examined within three research paradigms, namely: the Functionalist, Interpretive and

Emancipatory paradigms.

Credibility - Observations within the Business Centre, past managerial experience, the printed press and media. In two recent advertisements the intention of Absa Corporate and Business Bank Exco was clearly stated in the following statements:

“It happened because at Absa Corporate and Business Bank, we offer expert advice through bankers who have an intimate understanding of your business and financial needs.”

“At Absa Corporate and Business Bank, we don’t take anything at face value. We are committed to providing financial

solutions that are designed to turn your business into a more prosperous one tomorrow. With dedicated bankers who are

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experts in your specific field of business, you can be assured of the best financial advice at all times.”

These are two very clear statements showing the expectation of which

role and function should be fulfilled by the employees of the Business Centre to achieve the set strategic intention.

The research findings are also dependable as established and accepted

research paradigms and systems methodologies, as proposed by Checkland (in Jackson, 2003), Ulrich (in Jackson, 2003) and Hoebeke (in Jackson, 2003)

were employed to facilitate rigorous data gathering processes, inquiry methods, conceptual development and the application of theory. I am confident that the appropriate process was followed throughout the research as the relevant research processes were used, the right

stakeholders were identified and interviewed and related literature was

selected and researched in order to develop a pragmatic solution. Avoiding the so-called Mitroff error at the problem formulation stage, also removed

any doubt that the right question had been asked. 5.4.2 Confirmability

I establish confirmability by providing an audit trail of the data I collected and the tools I have applied in my research. Raw data, products of data

analysis, synthesis and work done to demonstrate my research intentions are integrated into the dissertation and the appendices or the researcher’s

portfolio of work done was referenced. The development of the concern, question and answer is supported by demonstrating system dynamics using

Interrelationship Diagraphs and Causal Loop Diagrams. The process of developing the concern and the answer is clearly demonstrated by the Concern-Question-Answer Link in Part 1 and the traceable causal relationships.

5.4.3 Transferability

As General Manager of the Business Centre, I play a key role and hence the

transferability of all my learning and insights are crucial. Fortunately I have the authority to introduce and implement many of the principles I have learnt

and I have done so with some measure of success over the past two years. Having previously been aware of the importance of the need for collaborative leadership style, having been through this process, I now have a much deeper insight into the importance of aligning the Business Centre’s culture,

its vision and employees to ensure sustainability. The answer that is presented in Part 1 is feasible as it explains how internal processes should be changed to optimise stakeholder value. This solution

might also be relevant to both other public and private institutions where challenges associated with the alignment of organisational culture often have

to be contended with.

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5.5 Ethics – Is the Answer Ethical in the Situation? By applying the Velasquez 4-question model I explored the ethical implications for my answer in the situation and therefore the following four

questions and considerations have to be answered positively to confirm that my behaviour and actions are already and will remain ethical: 5.5.1 Utilitarianism – will my behaviour and actions maximize social

benefits and minimize social injuries?

All the consequences, benefits and costs of any behaviour must be determined and the correct behaviour will be the behaviour that generates

the biggest surplus of benefits for the most stakeholders. The problem of using the utilitarianism approach within the financial environment is the

resistance to change and it is not always immediately possible to identify the behaviour and actions that will produce the greatest benefit due to the following:

Given the complexity and specialisation of the applicable information, it is not always possible to clearly identify all the available options to all

stakeholders at any given time and the resistance to change. It is however possible to identify all the stakeholders that will be affected

by the behaviour.

As the impact and implications of certain behaviours are not foreseeable and it will only impact on stakeholders over time, it is therefore not possible to immediately accurately identify, quantify and measure all the costs and benefits of this behaviour for each stakeholder.

I will overcome these problems by implementing a strategy that aligns existing employees and new recruits to the existing organisational culture. By improving the level of alignment to organisational culture the following

behavioural change is likely to be achieved:

Existing employees: Existing employees with the necessary level of

skills, knowledge and experience, will be retained within the Business Centre, as the supportive culture and environment will enable these

employees to fulfil their personal goals, thereby experiencing personal and work satisfaction. Employees will be motivated to excel as their

contribution will be valued and they will be treated with fairness. Those who do excel will be motivated to continue working in the

business as they will be appropriately rewarded, on both a monetary and non-monetary basis.


knowledge and experience, will be appointed in terms of job specifications, policies and procedures. By seeking individuals who are

aligned to the organisational culture, the effectiveness and efficiency

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The results of these actions will then be that the majority of employees will be compensated more, resulting in the maximisation of sustainable benefits of all stakeholders involved.

5.5.2 Human Rights - is my behaviour and actions consistent with the moral rights of those whom it will affect?

I have a moral obligation to ensure that my behaviour respects and protects every stakeholder’s moral rights that they have become entitled to at all times, by merely being a human being. In terms of the South African

Constitution all employees have the following rights that are addressed or

will be influenced by the implementation of the new reward strategy:

1. Equality 2. Human dignity 3. Life 4. Citizenship 5. Freedom of movement and residence which includes property and

housing

6. Freedom of trade, occupation and profession 7. Labour relations 8. Healthcare, food, water and social security 9. Education and access to information

As the number of rights of the employees trump the number of rights of the Business Centre, it is therefore clear that the rights of the majority are influenced positively by the implementation of the new appointment strategy.

5.5.3 Justice - will my behaviour and actions lead to a just

distribution of benefits and burdens?

To have the support of all stakeholders, I have to ensure that all stakeholders are treated justly, without overriding their moral rights. The

three main kinds of justice that I take into consideration in determining my actions are:

• Distributive justice whereby I ensure that all benefits and costs are distributed consistently.

• Retributive justice whereby I ensure that I am consistent and fair in

the punishment of any mistake, after all the necessary information has been obtained.

• Compensatory justice whereby I will ensure that all people are fairly

compensated for any losses, if they were wronged by the system.

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Although it is my intention that my behaviour leads to the just and fair distribution of benefits and burdens to all stakeholders it might not happen, since the majority of benefits of sustainable profitability (due to improved

service delivery and value creation) will go to the Business Centre, shareholders and customers. The burden to achieve this will, however, remain the responsibility of all employees, with their current remuneration (salary and bonuses) not linked directly to their financial performance.

5.5.4 Caring – will my behaviour and actions exhibit appropriate care

for the well-being of those who are closely related to or dependent on me? To be successful in life, a person is dependent on the people within his/her

direct environment and therefore I have an obligation to show special care

towards those people on whom I depend and have a valuable and close relationship, based on their own perspective of caring. My philosophy on

caring follows:

We are interdependent as human beings and therefore I have recognised and promoted certain relationships within my working

environment. By doing this I will ensure that the following takes place:

- Special care is given towards all employees with whom I have a close relationship, possibly even a dependency. These close

relationships most definitely have their benefits, but I must at all times be aware that it could also impede my ability to make

reasonable and fair decisions. - All individuals’ needs are met from their perspective but this could

lead to conflict during reward allocations and possible

retrenchments.

Appropriate care for the well-being of all employees will be achieved by implementing the new appointment strategy and this will improve the ability

of employees to fulfil their personal goals, thereby experiencing personal and work satisfaction - which will ultimately improve the service delivery and

customer value creation. Adequate resource allocation will be done as the drivers thereof will now be based on requirements and financial performance, rather than centralised policy, resulting in improved employee commitment, lower levels of resistance to change, less work pressure (anxiety) and

increasing job satisfaction.

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5.6 Critical Systems Heuristics To test the answer developed in Part 1, a critical approach will be required since there is no single right way to decide on such issues since the answer

will depend on personal interests, views and value assumptions. A critical approach will not yield any single right answer either, but it will support

processes of reflection and debate about alternative assumptions. Critical Systems Heuristics (Ulrich, 1983) is a framework for reflective professional practice based on practical philosophy and systems thinking. The basic idea is to support boundary critique – a systematic effort of handling boundary

judgements critically. Critical Systems Heuristics represents the first systematic attempt at providing both a philosophical foundation and a practical framework for

critical systems thinking. In management science heuristic procedures serve to identify and explore relevant problem aspects, questions or solution

strategies, in distinction to deductive procedures, which serve to solve problems that are logically and mathematically well defined. Professional

practice cannot do without heuristics, as it usually starts from ill-defined and qualitative issues such as: what is the problem to be solved and what kind of

change would represent an improvement. Boundary judgements reveal the normative implications of systems designs and by asking what the boundaries should be, interrogates systems designs

revealing the boundary judgements being made, therefore postulating alternative boundary judgements. Because they condition both "facts" and

"values," boundary judgements play an essential role when it comes to

assessing the meaning and merits of a claim. Accordingly, the methodological core idea of Critical Systems Heuristics is to support systematic processes of boundary critique. To this end, Critical

Systems Heuristics offers a framework of boundary categories, as depicted in figure 24 in Part 3 below, that translates into a checklist of twelve critical

boundary questions (Ulrich, 1987, 1996 and 2000) shown in Appendix E.

5.7 Topics for future research? Despite having explored the topic of value creation extensively and having

developed an answer to ensure the sustainability of the business, I realise that further research may be done to determine the impact the existing

organisational culture within the Absa Group on diversity. The study of diversity will focus much broader than only race and gender as the value of

different perceptions and thought processes, have to be taken into consideration.

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5.8 Conclusion The ultimate intention of this dissertation is to develop a theory of action by determining what can be changed to improve the work system. Theory will be turned into action, which is the decision-making process in which a

powerful question and answer is formulated to ultimately address the concern. This section provides an evaluation of this process and covers the

rationale, relevance, utility and validity of the research. After using the

Critical Systems Heuristics questioning process and by applying the Velasquez 4-question model I am comfortable to accept my answer to the concern as the values and inputs of all stakeholders involved in the decision-making process, has been verified.

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140

APPENDICES

Appendix A - CATWOE Stakeholder C (Customer) A (Actors) T

(Transformation) W

(Weltanschauung) O (Owners) E

(Environment) 1. Employees Customers,

ABSA shareholders

All employees within the Business Centre

Profitable, value adding customer services and solutions by meeting all customer needs on time

Performance driven by high financial targets, Inadequate processes to deliver the required service and solutions

Management team

Inadequate processes, Skills, knowledge and experience of employees

2. Management team

Employees, Customers, Competitors

Members of the Management team

Transforming AC & BB strategy into workable solutions for all employees

Limited and restricted resource allocation to achieve high financial targets

AC & BB Exco

Inadequate process and insufficient allocation of resources

3. Management teams from other Centres

Employees, Customers, Competitors

Members of the Management team

Transforming AC & BB strategy into workable solutions for all employees

Limited and restricted resource allocation to achieve high financial targets

AC & BB Exco

Inadequate process and insufficient allocation of resources

4. AC & BB Exco

Management team, Competitors

Members of AC & BB Exco

Transforming ABSA strategy into workable solutions for all Management teams

Achieving high financial targets governed by regulations and legislation

ABSA shareholders and Regulator

Regulations and legislation

5. Customers All customers Employees of the Business Centre

Financial needs into workable products and solutions

Slow turnaround times resulting in poor service deliver, Inadequate products and solutions result in no value-add

Employees and Management team

Skills, knowledge and experience of employees, Negative economic and market cycles

6. Competitors

Customers, Employees and ABSA shareholders

All financial institutions, both locally and internationally

Financial needs into workable products and solutions for their own customers at the lowest cost

Competitors have better systems and processes and are able to price much lower

AC & BB Exco and Regulator

Skills, knowledge and experience of employees, Current economic and market cycles

7. ABSA shareholders

ABSA shareholders

All employees within the Business Centre, Management team and AC & BB Exco

Turning their investment into the required return

Achieving high financial targets governed by regulations and legislation

Regulator Current economic and market cycles and conditions

8. Regulator All financial institutions within the South African financial environment

Government officials

Regulating the South African financial institutions

Overseeing financial activities within South Africa

National Government

Very burocratic environment and limited capacity

9. Community The local community

Employees, Management team, AC & BB Exco and ABSA shareholders

Turning their social needs into reality

Corporate companies within South Africa is responsible for the well being of the community

National Government

Current economic and market cycles and conditions

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Appendix B – Theory E and Theory O

Dimensions Theory E Theory O

Goals

- Maximising of shareholders values.

- Improving the organization capabilities

in areas such as teamwork and

communication.

Leadership

- Manage change the old fashion way: from

the top down; set goals with little

involvement from their management teams

and certainly without input from lower

levels or unions.

- Get employees emotionally committed

to improving the company’s

performance. Teams drafted value

statements, and even the industry’s

unions were brought into dialogue

Focus

- Typically focus immediately on streamlining

the “hardware” of the organization – the

structures and systems.

- Focus on the building up the “software” of an organization –the culture,

behaviour, and attitudes of employees.

Process

- Predicated on the view that no battle can be won without a clear, comprehensive,

common plan of action that encourage

internal coordination and inspires

confidence among customers, suppliers and

investors.

- Local leaders took responsibility and are helped by top management simply to

encourage experimentation from the

ground up, spread new ideas to other

workers, and transferred managers of

innovative units to lagging ones

Reward

System

- Rewards for managers are primarily

financial. Employee compensation is linked

with financial incentives, mainly stock

options

- Skill-based pay system and a corporate

wide gains-sharing plan were installed

to draw union workers and

management into a community of

purpose.

Use of

Consultants

- Often rely heavily on external consultants who help CEO’s get a fix on urgent issues

and priorities. They also offer much-

needed political and psychological support

to top management who is under fire from

financial markets.

- Rely far less on consultants. They simply led a process of discovery and

learning that was intended to change

the corporate culture in a way that

could not be foreseen at the outset.

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Appendix C – Absa Customer Satisfaction Survey

Appendix C1 - Top 5 Attributes

Q4-07 Bloemfontein

Q2-08 Bloemfontein

Sample (n) = 62 Sample (n) = 94 Service Attributes

Average Score per Attribute


Your Relationship Executive being professional (in appearance and attitude)

84 86

Your Relationship Executive going the extra mile to provide you with superior service

75 81

Your Relationship Executive conveying trust and confidence

81 81

Consistently delivering on promises made to you 77 81

Being accessible for all our business banking needs and requirements by Relationship Executive

77 81

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Appendix C2 - Worst 7 Attributes

Q4-07 Bloemfontein

Q2-08 Bloemfontein




Competitive pricing (Banking cost and interest rates) 62 69

Having quick turnaround times of credit decisions 66 69

The frequency of contact with your Relationship Executive

68 71

Receiving answers on applications, queries and transactions within an acceptable time-frame

70 74

Providing Business Banking solutions that is flexible enough to suit your business requirements

73 75

Your Relationship Executive proactively provides financial solutions

69 75

Your Relationship Executive proactively looking at your future financial requirements

69 75

Appendix C3 -Attributes worsening or not improving

Q4-07 Bloemfontein

Q2-08 Bloemfontein




Your Relationship Executive conveying trust and confidence

81 81

ABSA Business Bank offering an appropriate mix of products that suit your business requirements

79 76

ABSA Business Bank having an extensive range of products that that suit your business requirements

77 77

Addressesing your business banking requirements without unnecessary referrals

77 77

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Appendix D - First Categorization of Surfaced Data

1 2 3 4 5 6 7 8 9 Customer

service Shared identity

Distinctive competencies

Silo behaviour ABSA values

Customer needs

Ability to handle variety

Customer solutions

Competitiveness

Any actions that improves competitive edge, contribution to business growth, quick service and the correct advice, better solutions regarding products and service, improved business expectation & increased profitability, Relationship Executives cannot proactively provide financial solutions, Receiving answers on applications, queries and transactions within an acceptable time-frame, Relationship Executive not going the extra mile to provide superior service, Relationship Executive are not performing all requests accurately, Relationship Executive not showing an understanding of business needs, Poor turnaround times of credit decisions, Addressing business banking requirements without unnecessary referrals

Different focus within different divisions but the overall intention is to grow EPS, silo behaviour with everybody not feeling part of the whole Which is confirmed by customer complaints that shows no alignment, everybody must positively contribute to customer service

The natural loss of distinctive competencies as skills is weakening due to a lack of personal development leading to procrastination and possible burnout. Behaviour – willingness to do the job, level of skills, qualifications, personal situation regarding finances and family, self confidence to maintain and keep views, Job match – aligned to what job requires, experience at the right level, Qualifications - skills and knowledge is a basic requirement, The right attitude and behaviour – energy Relationship Executives cannot proactively provide financial solutions, Relationship Executives cannot proactively determine future financial requirements of customers,

Very little financial target integration which includes rewards and goals, bigger picture missed due to a lack of communication, lack of urgency to get things and tasks done, within the small team driven by honest and quick solutions.

Respect the rights of people, listen to the people, assist and support them, people are not assets – show interest and emotion towards them, value diversity and differences, “We are about the people”

Failure to understand the needs and requirements of customers correctly as the level of distinctive competencies of the Relationship Executives has naturally decreased Inflexible Business Banking solutions that do not suite customer requirements. Relationship Executive not pro-actively providing financial solutions. Relationship Executive not pro-actively looking at the future financial requirements of customers.

This is lacking due to very low levels of discretion and this problem is further compounded by policy centralization and lack of continuous skills development thereby negatively influencing the ability for adaptation within this domain

From all the interviews it was clear that a customer should pro-actively be solutioned in terms of a portfolio approach that includes all products, services and all other relevant issues. Success is achieved by “doing the unexpected” as customers usually know what they require. By evaluating the business as a whole, a sales person must be able to give the customer a range of different options as possible solutions and then be knowledgeable (skilled) enough to discuss each option.

Better skills, right person for the right job, relationships are very important to ensure value creation from skills to the benefit of customers, partner – must understand the business to add value with customer feeling important, service delivery – customer must focus on his business and not be worried by and about banking issues, skills level of staff – right attractions and PD developments, brand – customers are loyal, uniqueness of staff – family unit that becomes part of the business,

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10 11 12 13 14 15 16 17 18 Products and

services Remuneration Leadership Pricing Relationship

model Strategy implementation

Organisational culture

Market information

Professionalism

Not flexible enough to suit the business requirements of customers, ABSA Business Bank offering an appropriate mix of products that suit your business requirements, ABSA Business Bank does not have an extensive range of products that that suit all business requirements

CTC – not market related and contribution not valued and a loyal person that does more than required, normal market related packages, open and fair with both parties contributing Bonuses - bigger contribution not valued, year-on-year growth in bonuses not taken into consideration, discrimination with Top 20% being rewarded with bottom 10% to be managed out, not contracted 12 months in advance to reward performance, fairly awarded in a transparent process (consistency checks)

Relationship Executive taking ownership of customer problems and enquiries. Problems due to the lack of accountability and responsibility due to roles, values and discretion not being clarified. The Relationship Executives are now not making their whole team part of customer solution process due to very low levels of courage, vision and possibly even ethics. Due to the pressure of accountability Relationship Executives possibly also do not want to be leaders as they would rather prefer to be part of a team only.

Uncompetitive pricing (Banking cost and interest rates). Should the value-add be at an acceptable level, pricing will only play a very small role in this relationship.

The value of the customer relationship is never measured with only certain primary activities taking responsibility for the financial performance. There is little or no difference between the different products and services offered by organizations and therefore only the relationship with the customer will determine the level of success. In terms of the relationship model the quality of the relationship must be measured with the financial performance of the business ultimately being the outcome. Success is measured in the financials of the business and by having one-on-one discussions with customers, to determine the quality of the relationship.

Failure from management to implement any new strategy successfully due to an inadequate understanding of the resistance to change and a lack of vision regarding the relationships between employees, processes and technology.

Fighting spirit – underdogs in what ever we do, we are doing well but we have to do better as growth is important, participative management wit a top-down approach on certain levels to implement certain strategies, negativity at times due to work load and pressure, fair culture – no pre-conceived ideas about people, equal – communication with no differentiation, Relationship Executives conveying trust and confidence, Not easy doing business with ABSA Business Bank. An environment and corporate culture must be established through trust and living, speaking and experiencing the business’ values, in which all employees will be able to meet their personal goals and targets. This will ensure a committed and loyal team to take the business forward to the next level.

This is worsened by the lack of current and applicable as well as limited market information, negatively impacting on the level of functionality within this domain. A possible market slow down but the effect thereof is unknown, given the lack of relevant market intelligence and information. Due to a lack of relevant market intelligence it is impossible to predict the actions and reactions of competitors, regarding the attraction and retention of customers through strategic pricing initiatives and new product offerings

Relationship Executives being unprofessional in appearance and attitude, No timeous or clear communication of correct information by Relationship Executive, Inconsistently delivering on promises made to you If professionalism is breached the employee becomes useless for both the business and the customer as they will not be able to objectively add value.

146

19 20 21 22 23 24 25 26 27 Customer value-add

Contact frequency

Resource allocation

Barclays impact Autonomy and

authority

Normative management

Customer feedback

Generalist Mindfulness

The lack of teamwork, cohesion and co-ordination is prevalent as customer value-adding service is not a priority of all primary activities. Failure to understand the needs and requirements of customers correctly as the level of distinctive competencies of the Relationship Executives has naturally decreased, due to very little self development.

Very low frequency of contact with customers, Being accessible for all our business banking needs and requirements by Relationship Executive, Having easy access to information, either through Relationship Executive or through self-service channels The low frequency of contact between customers and their Relationship Executive.

Resource allocation is done in terms of policy and not based on what is required or on the current financial performance of this domain.

Not much, negative – delayed responses as they are driven by results only and not worried about the well-being or current market conditions, not much – market related without any inputs

Very low levels of discretion and this problem is further compounded by policy centralization

Adhering to value systems, valuing people and treating them fairly, doing something without justification, transparent, fair with no hidden agendas

Open and honest feedback on all requests which has to be given punctually. “No” is a solution as well as “I do not know”.

It was felt that specialists could possibly become a problem as they lacked the inter-personal skills required to drive this model. There was consensus that successful employees within a relationship environment were individuals with enough common sense and industry knowledge to understand the concepts and principles of any business by identifying the possible link between a particular industry and the business with the solution to be done accordingly. Specialists would only be drawn into this process when and if required.

A professional and friendship relationship is however possible but the mutual intention of the parties involved will determine whether these relationships will remain sustainable. Both parties must be emotional mature to realize this and respect the distance.

147

Appendix E - Ulrich’s Twelve Critically Heuristic Boundary Questions

Nr Question “Is” mode Question “Ought” mode 1 Who is the actual client of System's design, i.e. who belongs

to the group of those whose purposes (interests and values) are served, in distinction to those who do not benefit but may have to bear the costs or other disadvantages?

Existing employees as well as new recruitments

Who ought to be the client (beneficiary) of the system to be designed or improved?

Customers as serviced by existing and new employees aligned the business’ culture with the necessary skills, knowledge and experience.

2 What is the actual purpose of S's design, as being measured not in terms of declared intentions of the involved but in terms of the actual consequences?

To ensure the viability and sustainability of the Business Centre.

What ought to be the purpose of S, i.e. what goal states ought S be able to achieve so as to serve the customer?

A balance between improved customer value creation and retaining existing employees and recruiting new employees aligned to the business’ culture.

3 What, judged by the design's consequences, is it’s built in measure of success?

Employee retention and attraction and survival.

What ought to be S's measure of success (or improvement)?

Increased customer value creation as well as stakeholder value.

4 Who is actually the decision taker, i.e. who can actually change the measure of success?

Business Centre Management influenced by AC & BB Exco

Who ought to be the decision taker, i.e. have the power to change S's measure of improvement?

Business Centre Management

5 What conditions of successful planning and implementation of S are really controlled by the decision taker?

All implementation with limited input into any planning.

What components (resources and constraints) of S ought to be controlled by the decision taker?

All conditions regarding the planning and oversight over the day-to-day implementation.

6 What conditions are not controlled by the decision taker, i.e. what represents "environment" to him?

Market conditions and cycles, legislation and regulations.

What resources and conditions ought to be part of S's environment, i.e. not be controlled by S's decision taker?

Customer needs and requirements resulting in value creation.

7 Who is actually involved as planner?

AC & BB Exco and HR

Who ought to be involved as designer of S?

Business Centre Management

8 Who is involved as "expert", of what kind is his expertise, what role does he actually play?

HR as leader based on past managerial experience

What kind of expertise ought to flow into the design of S, i.e. who ought to be considered an expert and what should be his role?

The local Business Centre Management inter-facing with customer to determine their expectations regarding employees.

9 Where do the involved see the guarantee that their planning will be successful? Can these assumed guarantors secure the design's success, or are they false guarantors?

The required financial performance but they are struggling wit support as they (HR) very seldom have support due to limited buy-in.

Who ought to be the guarantor of S, i.e. where ought the designer seek the guarantee that his design will be implemented and will prove successful, judged by S's measure of success (or improvement)?

The local Business Centre Management supported by the required financial performance and allocation and quality of resources.

10 Who among the involved witnesses represents the concerns of the affected? Who is or may be affected without being involved?

The local Business Centre Management team.

Who ought to belong to the witnesses representing the concerns of the citizens that will or might be affected by the design of S? That is to say, who among the affected ought to get involved?

Customers requiring improved value creation as well as new and exiting employees.

11 Are the affected given an opportunity to emancipate themselves from the experts and to take their fate into their own hands, or do the experts determine what is right for them, what quality of life means to them, etc? That is to say, are the affected used merely as means for the purposes of others, or are they also treated as "ends in themselves" (Kant), as belonging to the client?

No as employees just have to accept all decisions and policies.

To what degree and in what way ought the affected be given the chance of emancipation from the premises and promises of the involved?

Employees must be given the opportunity to express their views and requirement regarding improved customer value creation.

12 What world view is actually underlying the design of S? Is it the world view of (some of) the involved or of (some of) the affected?

AC & BB Exco and HR

Upon what world views of either the involved or the affected ought S's design be based?

Customers requiring improved value creation.

148

Appendix F: Glossary Level of Abstraction Stakeholder Enhancement

Concept Customer Value Creation

References Difference between the benefits derived from a product or service and the cost of acquiring that product or service for a

customer.

Functional Definition To create enhanced sustainable customer relations and brand loyalty, value creation must add to customer service in such a

way that the customer sees and understands its worth.

Operational Definition By using the 4 horsemen to deliver service (price, efficiency,

quality, flexibility) value creation is assured.

Level of Abstraction A relationship form

Concept Relationship Banking Model

References The business banking model in South Africa is essentially a relationship driven model with customers receiving personal

attention.

Functional Definition The degree of personal attention varies and is usually determined in correlation with the potential income for the

business to achieve both sustainability and viability.

Operational Definition In terms of the refined operating model a team consisting of a

Relationship Executive, Operational Banker, Credit Analyst, Compliance Officer and a Services Consultant is responsible to deliver a service to a portfolio of maximum 40 customer groups.

Level of Abstraction Institutional Ethos

Concept Organisational Culture

References Comprises the attitudes, experiences, beliefs and values of a company and it has been defined as the specific collection of

values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization.

Functional Definition The corporate mindset cultivates the institutional ethos and this defines the “way we do things around here”.

Operational Definition Through open and honest communication by adhering to the

values of the organisation.

Level of Abstraction Personal characteristics

Concept Distinctive competencies

References Unique ability to do something against a set standard.

Functional Definition: The needs of Business Bank customers are more complex than

retail customers as they require a wider range of product solutions and capabilities. In addition to meeting core

requirements, employees need to possess a degree of sector or industry knowledge, which is valued by customers and allows them to provide appropriate solutions.

Operational Definition Existing employees, with the necessary level of skills, knowledge and experience, will be retained within the Business Centre, by

valuing their contribution and treating them with fairness, regarding their remuneration, in terms of their contribution.

149

Level of Abstraction Risk diversification strategy

Concept Split Banking

References Dividing banking options, needs and requirements between

different financial institutions.

Functional Definition This is a form of risk mitigation for both the financial institution and customer.

Operational Definition As customers may possibly not receive the required level of service delivery and value creation, the may move a portion of

their business to another financial institution.

Level of Abstraction Organisational threat

Concept Silo Behaviour

References No or limited cross boundary engagement and support

Functional Definition This is a threat to organisational viability as the shared identity

of an organisation becomes irrelevant as each primary activity

strives only for own survival.

Operational Definition No common shared identity has been enforced. By removing any silo behaviour to ensure the interaction of all the parts within a system.

Level of Abstraction Groups of people with a vested interest

Concept Stakeholders

References Shareholders, employees and customers

Functional Definition All stakeholders have to be identified and their needs have to be met, to be a sustainable value creator over time.

Operational Definition By doing a SWOT and value creation analysis on the existing

business and then implementing value creating processes that will be focusing on the needs of stakeholders.

Level of Abstraction Cybernetic law

Concept Requisite variety

References His, her and my comfort

Functional Definition As all activities within a business cannot be regulated, limited regulatory capabilities must be deployed.

Operational Definition By upskilling employees resulting in them having the ability and skills to ensure the problems and queries can be handled at the

right levels of work.

Level of Abstraction This is one of the five components within the interactive model

of Maxwell that is used in the research design process.

Concept Research Question

References Usually one question that is reworked continuously and relates directly to the viability and sustainability of the business and in this case it relates to customer value.

Functional Definition This question identifies what is to be done, understood or to be

answered by doing this particular study.

Operational Definition The initial research question will be developed by hypothesising

after which data will be collected. The question will now be altered continuously to ensure it remains applicable and relevant

to the current situation.

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Appendix G: Interview Log NAME OF

INTERVIEWEE DATE

LOCATION

RELEVANCE

TO RESEARCH?

INFORMED ABOUT THE AIMS AND

NATURE OF RESEARCH?

INFORMED ABOUT THE POTENTIAL

RISKS OF RESEARCH?

PERMISSION GRANTED FOR

USE OF NAME IN RESEARCH REPORT?

Amanda Geldart 16/10/08 Bloemfontein Part of

Management Team

Yes Yes Yes

Ben van der Westhuizen

16/10/08 Bloemfontein Part of Management Team

Yes Yes Yes

Ilse Hornabrook 12/09/08 Bloemfontein Employee in the Business Centre

Yes Yes Yes

Johan Lombard 12/09/08 Bloemfontein Employee in the Business Centre

Yes Yes Yes

Jurie van Loggerenberg

14/09/08 Bloemfontein Employee in the Business Centre

Yes Yes Yes

Sakkie Wannenburg

17/10/08 Bloemfontein Part of Management Team

Yes Yes Yes

Shane Dicks 17/10/08 Bloemfontein Part of Management Team

Yes Yes Yes

Dudley Davis 07/10/08 Cape Town Retired General Manager and life coach

Yes Yes Yes

Pierre Cilliers 23/10/08 Bloemfontein Psychologist Yes Yes Yes Piet Delport 08/10/08 Cape Town Business Centre

General Manager

Yes Yes Yes

Andre Potgieter 08/10/08 Cape Town Medium Business Regional Manager

Yes Yes Yes

Banie Claasen 05/11/08 Bloemfontein Medium Business Regional Manager

Yes Yes Yes

Dirk Botha 04/11/08 Bloemfontein CEO – SA Truck Bodies Group

Yes Yes Yes

Piet Naude 29/10/08 Johannesburg Business Centre General Manager

Yes Yes Yes

Henk Struwig 03/01/09 Cape Town HR Manager with Investec

Yes Yes Yes

Dudley Davis 23/02/09 Cape Town Retired General Manager and life coach

Yes Yes Yes

Documents

Improving Customer Value Creation By Enhancing The ...gsblibrary.uct.ac.za/ResearchReports/EMBA 9/Steenkamp.pdf · ENHANCING THE RELATIONSHIP BANKING MODEL WITHIN ABSA CORPORATE AND