Organisational designs, organisational climate and innovative force

PhD Student Robert Schønrock Nielsen

The purpose of my research is to investigate how practices of self-organising and value-based leadership affect innovation and knowledge generation in the insurance company RSA Scandinavia (e.g. Codan in Denmark & Trygg-Hansa in Sweden). The project is based on two main perspectives, one organisational and one individual perspective on innovation and knowledge creation, respectively. The focus of the analysis of the organisational level is to identify and recommend which kind of organisational form that best improves the innovative power in the insurance company. This part of the project seeks to answer how the organisation can increase the exchange of knowledge and skills between development and operational units.

The focus of the analysis concerned with the individual level deals with what we define as the tacit dimension of innovation. The tacit dimension of innovation contains both tacit knowledge and tacit values. The international literature of innovation and knowledge management has still not fully understood the tacit aspects of the processes of product development, and there is a need for deeper research on this specific subject. I use the ideas of value-based leadership to develop a perspective on knowledge leadership that contradicts to the more well-known term knowledge management.

Research Nexus Verner C. Petersen

Professor Verner C. Petersen

Two large topics have been underlying my research activities and most of my teaching:

• One was to understand the limits to what might be called intelligent design, plan­ning, and management of society and of organisations, looking instead at the possibilities and potentials of self-organisation, self-regulation and self-control of society, markets, organisations and groups.
• The other was to gain a better understanding of the importance of the hidden or ineffable dimensions of preferences, values, and tacit knowledge for problem solving, innovation, decision-making and action in organisations as well as individuals. In order to use this to develop new theories of leadership and organisation, especially of course value-based leadership and self-organisation.

My first and one of the most comprehensive attempts to analyse and understand the first topic, is to be found in my doctoral dissertation, the three volume "Planlægning og samfundsudvikling – fra 30'erne til idag" (Planning and societal development – from the 30s to the present) published 1985. In this research I showed how the idea of a kind of intelli­gent planning and management of society came about and how the belief in this kind of intelligent planning and management waned in the eighties.

The idea of leaving more to market mechanisms, of deregulation and of new public management in the late eighties, led to my research into business ethics and the role of values in the self-regulation of business and society. The result of this work is to be found in publications such as the book Etik [Ethics] on ethics and business published in 1991, book chapters such as Upholding or Breaking Ethical Rules? - Responses to Ethi­cal Problems (1994). It also led to participation as an external expert in a government supported study of the possi­bilities of establishing ethical investment funds in Danish Banks, invitation to join The Ministry of Business Affairs' committee on regelforenkling [Rule simplification], and later an invitation to join a Vision group set up by the Danish government to look into the social responsibil­ity of business. In 1995 the Danish Consumer's Ombudsman published my preliminary thoughts on self-regulation in Du har et ansvar - et anderledes oplæg til diskussion af etik i din virksomhed (1995) [You have a responsibility – a different proposal for discussing ethics in your business] and a decade later a more recent version advocating the self-regulation of business, translated into English as Self-regulating Responsibility Instead of Public Intervention. Ethics-Dialogue-Responsibility: Self-regulation in Business and Trade (2006).

This research was used in teaching and later evolved into a graduate course on CSR and business ethics. It also established part of the foundation for my later studies of the values part of value-based leadership and my ongoing studies of self-organisation.

The study of the other main topic, the tacit dimensions of preferences, values, knowl­edge, decision-making and action in organisations as well as individuals, began very early in my career, with attempts to analyse the hidden dimensions of individual preferences in location choices and buying behaviour, using advanced statistical tools like principal com­ponent analysis, multidimensional scaling and paired comparisons. This later led to the study of the importance of strong tacit values for the behaviour of individuals and organi­sations. Some of the preliminary results of this research can be found in the working paper Tacit Ethics - creation and change (1994 and 1998). More comprehensive studies of ethics, values and their relevance for business ethics were presented in the book: Etik (1991) [Ethics], and in an invited book chapter Habits of the heart – Arguments for an ineffable, social grammar (2002).

These studies established a foundation for the values part of value-based leadership, which makes it very different in concept and in practical implementation from the vision, mission and value statements, so popular with today's companies and organisations. Instead I coined the expression social grammar to characterise the view of the values found in my theory. The most important values are to be seen as analogous to the grammar of a language. Just as the grammar, values are mostly ineffable, we show them in our actions, but most of us cannot make them explicit. Just as a language grammar, the social grammar is generative, making it possible to construct an indefinite series of concrete value judgments. Thus I see the more fundamental part of our values as inef­fable and shared. The values expressed in a variety of concrete decisions and actions must be seen as the concrete expressions of these tacit values, as "sentences" based upon the social grammar.

Accompanying this research effort was the study of the tacit dimensions of knowl­edge. How tacit knowledge is created, how it might be transmitted from one to another, and its role in concrete problem solving and innovation. Results of these studies are found for instance in: Thinking with our hands – the importance of tacit, non-algorithmic knowledge (1999) and Judging with our guts – the importance of an ineffable, social grammar (1999). These working papers constituted preliminary work that was later used in the book Beyond Rules in Society and Business (2002 and 2004) published by Edward Elgar.

Research on both of the above topics helped in examining and pinpointing the problems and possible fallacies of traditional management theories. During my research it became apparent that almost all modern management theories emphasise the importance of formal and explicit knowledge, and explicit rules. Knowledge in the shape of algorithms for how to solve certain tasks, according to the scheme, "if a then b or else," and very explicit written rules for how to act in specific situations. As found for instance in ISO-certifications. I tried to show that these approaches to regulation and management lead to irresponsible, unenthusiastic and misdirected behaviour in society as well as organisa­tions, summed up in the saying: more regulation means less respon­sibility. Results of these studies can be found in the working paper Modern Scientific Management - or the attempt to measure everything that counts (1999), in conference papers, in Beyond Rules in Society and Business (2002 and 2004) and in Hinsides regler – selvorganisering og ledelse med holdning (2004 and 2005). Most recently in the working paper Distortions of modern man­agement theory – and an attempt to correct them (2007) and in a conference paper: Through the Distorting Looking Glass of Modern Management Theory (2007).

Pursuing both lines of inquiry was absolutely crucial for my later attempts to develop alternative organisational and leadership theories in an attempt to overcome some of the problems associated with a traditional tool based management approach, and establishing an approach more fitting to a Nordic environment, with a well-educated very homoge­neous work force, and an individualistic and egalitarian society. Combining the under­standing achieved through the study of the large and small scale attempts at intelligent regulation and management with the insights achieved through the studies of ethics, tacit values and tacit knowledge, I came up with the idea of value-based leadership and self-organisation [in Danish Værdibaseret ledelse og selvorganisering].

In the mid 90s this led to the development of a comprehensive theoretical and practical foundation for value-based leadership. At the time with no knowledge of any competing or parallel efforts elsewhere. I thus became the originator of some of the central assumptions and theories of value-based leadership. Realising of course that value-based leadership has today become a very popular concept with many connotations and often very little content.

In the mid 1990s I created the research group called CREDO (Centre for research in Ethics and Decision-making in Organisations), with members from the department and from abroad, and with important projects carried out by the five PhD students who over time have been members of the group. Projects included analysis of differences between traditional management practices and value-based leadership, studies of the practical implementation of value-based leadership in a major Danish bank, and ongoing attempts to study the effects of self-organisation on innovation in an insurance company. The activity of the research group has been financed by grants from the Social Science Coun­cil (together with collaborators at CBS) for PhD fellowships, by grants from The Danish Academy of Technical Sciences, ATV, for two industrial PhD fellowships, by Jyske Bank for studying the implementation of my ideas in the bank, and of course by grants from the Aarhus School of Business.

As self-organisation is regarded as an integral part of my concept of value-based leadership, theories of self-organisation were introduced early on and developed along­side those of value-based leadership. Thus I have shown how self-organisation and value-based leadership may give a much wider scope for individual innovativeness, responsible behaviour, and active participation in both the private and public sector.

The foundations for an alternative to the mainstream views of organisation and man­agement are found in the idea that complex activities are characterised by a high degree of self-or­ganisation. This view may be called the ant-hill view. It is not about the compli­cated structure of a complicated machine, like a fine watch. Instead it is about the com­plexity of an interacting system of elements each of which may be simple, but whose inter­action produces complexity and emergence through complicated positive and nega­tive feedback loops.

Complex­ity and emergence are also characteristics that one would expect to find in modern inno­va­tive organisations. The viability and efficiency of modern organisations is dependent on knowledge being distributed in the heads and minds of the individ­ual mem­bers of the organisation, and neither concentrated in a single manager nor in a col­lection of algorithms. Self-organising organisations delegate power to make decisions to people who have the know-how, and to groups who are responsible for a whole work process. Meaning that the traditional tasks of manage­ment - planning, controlling, organising, and coordinating the work of others - no longer makes sense. Instead it is important to create the conditions that allow people to plan, control, coordinate and organise their own work.

This view of organisation would preclude the use of the all pervasive tool-wielding view of modern management theory. What is needed instead is a new view of leadership. A view compatible with a large degree of self-organisation. Leader­ship that conveys and represents the idea, the meaning, and the direction of the organi­sation, but does not plan, supervise and control in detail the activities of the members of the organi­sation. An organisation based upon the idea of self-organisation and value-based leader­ship would be held together in its efforts by a strong, but mostly ineffable, social grammar. Thus leadership must include the ability to identify, amplify, and make concrete some of the important values and beliefs of the organisation.

The results of this work are to be found in many of my publications. Most importantly in the books Værdibaseret ledelse – et alternativ til styring, regulering og kontrol? (1997) published by The Danish Federation of Industry; Beyond Rules in Society and Business published by Edward Elgar (2002 and 2004), and in Hinsides Regler – selvor­ganisering og ledelse med ansvar (2004 and 2005) [Beyond Rules – self-organisation and leadership with responsibility] published by Børsens Forlag. A much simpler version is found in the invited journal article Bortom regler och instruktioner – självorganisering och ledare med hållning (2003).

In the newest reincarnation the theories developed earlier are being used to analyse and propose new forms of public regulation of societies. Thus I am currently occupied with critical studies of social science theories and problematic tendencies in developed societies. For instance the way in which economic theory and economic assumptions shape our views and practices in other areas. Meaning that a belief in economic theory and in simple economic assumptions in fact makes even unrealistic assump­tions become true. Other topics include the study of implications of tendencies towards individualisa­tion and dissolution in society; management tendencies in the public sector; and the widespread application of meas­urements of quality and their problematic effects on behaviour. Preliminary results of this research are published in working papers such as Distortions of modern management theory – and an attempt to correct them (2007); The otherworldly view of economics – and its consequences (2005), and The ship of fools – a society of selfish individuals (2006). But results are also to be found in conference proceedings and journal articles such as "Always work with a straight back": the fallacies of modern management and the alternative. (2007); One must know it! – arguing for self-regulation and responsible entrepreneurship (2008)); Self-fulfilling aspects of unrealistic assump­tions in management theory (2007).

The new book Vildveje i velfærdsstaten (2008 and 2009) [Errings of the welfare state] is based upon some of the work con­tained in these working papers and articles.