ORGANIC ORGANISATIONS ORIENTED TOWARDS LEARNING ABOUT SOCIAL TRANSFORMATION
ORGANIŠKŲ ORGANIZACIJŲ ORIENTACIJA Į MOKYMĄSI APIE SOCIALINĘ TRANSFORMACIJĄ
SERGIO GARCÍA MAGARIÑO
Institute for Advanced Social Research, I-Communitas, Universidad Pública de Navarra, Spain
This paper studies the new types of organizations and their management in the transition towards the knowledge society. Two holocratic management proposals are analyzed and they offer innovative productive factors, such as the learning and knowledge technologies, as well as experiences of talent development and personal and social transformation (typical of organizations with meaning and aligned with Horizon 2030 and with CSR 3.0). Also, this paper analyses two compared study cases, in different socio-cultural realities, such as ISCR in Costa Rica and ICGD in Spain. It is an attempt to systematize the proposals for organization, operation and results, offering a reference model for other organizations oriented towards the aforementioned model of knowledge and social transformation.
Keywords: sociology of Labor & Business Organizations; knowledge and social transformation corporations; talent; learning & knowledge technologies.
The world is experiencing rapid changes whose consequences are not easy to foresee. Likewise, humanity as a whole is facing monumental challenges, such as climate change, international terrorism and energy pressures, to name just a few, which require urgent and innovative responses. Social scientists coming from different disciplines, as well as philosophers, agree upon the idea that these changes and challenges might be indicators of a historical breakthrough and an epocal change. At the heart of this juncture, a twofold process can be perceived. On the one hand, there seems to be a disintegrative process which is eroding old forms of thinking, political activity, organizational structures and social and economic life. On the other, an integrative process can be identified, a process which seems to be driving the world towards more complex forms of social organization and solidarity which adopt the “entire globe” as their frame of reference. Thus, these forces affect both the minds and structures of society and organisations and companies are exposed to and affected by them.
This contingency requires, on the one hand, transcending traditional models of organisation which are incapable of navigating this environment and, on the other, finding new patterns of activity and organisational structure that can effectively address the challenges posed above. Although there is much theoretical debate on the features of such companies and organisations, it seems that this sort of new structures have not emerged from the grassroots yet.
This paper examines some concrete organisations which have grown out of a collective framework which guides their work. In order to approach the theme systematically, firstly, some thoughts will be offered on the nature of the debate within this group of organisations. Secondly, those elements of the framework shared by a group of organisations which seem to be relevant for their sphere of action and which have shaped their work and pattern will be described. Finally, the cases of I.S. Costa Rica (ISCR) and Instituto para el Conocimiento, la Gobernanza y el Desarrollo globales (ICGD) of Spain will be explored in order to highlight some of the theoretical features proposed in the second part of the paper.
Thus, the purpose of this paper is, first, to identify the main features of an incipient framework for management springing from the work of two specific organizations that are striving to explicitly apply a particicular set of concepts, values and approaches and, second, to correlate this framework to prevalent theories of management.
In order to achieve these aims, the general approach followed has been to map out and tipify the different sort of management theories, clustering them into four trends; to describe the main notions, values and methods that underpin the framework shared by a set of organisations; and to use this framework as an analytical tool to systematize and examine the experience of two singular organizations. In addition, the study has combined three broad methods: comparative analysis, systematization and an in-depth interview to the director of ISCR. Other techniques have also been used such as bibliographic review throuch specialized engines and taxonomy.
- Featuring the debate within the field of management and organisations
The development of administration theory over the last three centuries has been extremely rich and cannot be condensed within a few paragraphs. However, in order to highlight the similarities and differences with the proposal of section two, an effort to broadly describe the outlines of the discourse will be made. For analytical reasons, and conscious that many other classifications are possible, four categories of theories will be presented: classical theories, behavioral theories, system theories and new trends. Before entering into the debate, however, a terminological clarification is in order.
One of the characteristics of scientific language is its lack of ambiguity. However, in the field of administration, the word “model” and “theory” are used in two ways. On the one hand, they are used in a “descriptive” sense. Thus, the “theory” or “model” aspires to describe an existing form of administration. On the other — and this is probably the most used meaning —, “theory” and “model” adopt a normative significance. They “prescribe” how companies and organisations ought to be be managed and structured in order to enhance their performance. Further, “theory” and “models” are used interchangeably, although precisely speaking it could be said that, while theories are wide explanations of specific phenomena, models are simplified representations of particular dimensions of such phenomena.
Classical theories include different proposals about organisations but share the idea that organisations should be organised rationally, scientifically, in such a way that productivity can be enhanced through the correct application of clear rules, communication channels, top-down mechanisms and hierarchies, and through the efficient use of time , procedures, task distribution, specialisation etc. The analogy used is the machine and the purpose, more explicit or implicit, to increase industrial production (Gorodiestsky,1976). Although the authors are quite diverse and include people such as Marx, Smith, Taylor, Ford and Weber, all of them depart from the idea that empirical data should be the basis upon which laying the foundations of the companies and organisations’ work. Management methods and techniques should depend on proved and tested notions, methods, technologies and procedures. This mechanistic proposal has set in motion a very dynamic debate and practice on methods to manage organisations more effective and efficiently.
Progressively, the human dimension of work and organisations have received further attention. What are the kind of incentives people need in order to be more productive? What kind of human relations should be fostered to improve the performance of the company? On these questions, much research and practice has been carried out as well. Behavioural studies — mainly undertaken by behavioural psychologists who considered individual interest to be the engine of human motivation— were pioneers in this respect. Thus, the issue of salaries and other forms of stimuli were brought into the picture. The field of “human resources management” was institutionalized both at the level of company as well as of academia, and finally it became an object of research by its own. This trend has evolved meaningfully so far and keeps evolving. It might be said that postmodern sympathy towards “coaching” techniques which intend to draw on the best of people for the best of the company fall within these bunch of theories.
Within these types of theories — humanistic or behavioural theories — which focus on the human dimension of organisations, there appear to be two modalities. Firstly, those theories which just try to improve human performance but do not pay much attention to the structural and organisational dynamics and operate within the classical theories’ framework. In addition, there is another sort of theory related to what is named “change management”, “cultural change”, which builds on the same assumption — that people are the key to an organisation —, but further explores the collective and evolving dimension of human action within organisations (Gaspar Hernández, 2011). In any case, it can be said that beyond the operational dynamics of the classic proposals, these models stress the importance of people for the organisations. The humanist theoriessymbolize this care for human beings.
A third set of theories which build upon the previous ones but that approach organisations from a different angle might be framed as systemic or functional theories. The level of variation within these theories is important. However, all of them share the same underlying assumption: organisations are systems comprised of autonomous subsystems, which fulfil a functional role. Under this view, organisations might be addressed as a whole, as a series of interconnected processes and components, which only make sense under the light of the totality (Alegre, L., Berne, C., & Galve, C., 2008). The organisation is seen as a complex entity embedded within a social and biological context and so evolves in response to changes in that environment. Some system theories adopt biological analogies to explain the interconnectedness of the components, processes and subsystems of the company as well as the connection between the organisation and the environment (Félix Mateus, 2004) while others simply stick to the notion of social systems.
Finally, a last set of theoretical frameworks can be conceived as contemporary currents. These include a wide array of models, some of which have more scientific grounds than others. Contingent theories, which, in opposition to functional models, stress the conflictual dimension of human relations and present organisational management as the art of managing conflictual interests and of peacefully resolving inexorable tensions, are one type of new trend. Some people, especially as a result of the new technologies of information and communication, emphasize the crucial role that technology plays in management. The book Reinventing organisations (Laloux, 2014) poses an inextricable link between the evolution of collective consciousness and the development of organisational models and forecasts the incipient birth of “Teal” organisations. Other authors draw on physics to elaborate organisational management approaches. For instance, they emphasize the need to translate chaos into order or to apply insights from new scientific paradigms, such as quantum mechanics, to the realm of management (Wheatley, 2006). As pointed out at the beginning, this short and incomplete exploration of organisational theories was not an end in itself, neither was it intended to be exhaustive. The purpose has been, first, to illustrate the rich learning generated by a field of study and practice and, second, to pave the way for an analysis of a new and promising framework which seems to be generated out of the efforts of a number of organisations that share the same vision.
- An emerging framework
Having briefly explored the theoretical debate on organisational management, attention will be paid to a conceptual framework shared by a group of organisations which are consciously trying to create a new pattern of social organization inspired by the same vision. However, before starting, a few words must be said about the connection between ethics and business.
As has been shown, the knowledge generated about organisational management is vast. Likewise, ethics represents a huge philosophical area of inquiry. However, the debate on ethics and organisations beyond the frontiers of philosophy is not so rich. Usually, people take for granted that ethical companies are a homogeneous category. This statement, though, seems to be far from reality. From a certain angle, it can be asserted that every company is built upon different values. Thus, assuming that values are simply universal and “good” seems to be wrong. For instance, some companies value profit over any other thing. Other companies value profit but also environment. Some companies value fair competition while others value their human resources. In order to distinguish different proposals, some names have been coined. For instance, “corporate social responsibility” is a category that refers to a specific framework. In this respect, there is even an organisation (https://www.bsr.org/en/) that has identified the principles, which should guide companies that want to be labelled as “socially responsible”, and promotes the discourse globally.
There are other modalities of “ethical companies” which differ from one another. The “Triple Balance Companies”, for example, have devised an accounting instrument to assist companies and organisations to be (a) economically, (b) socially and (c) ecologically responsible (http://www.praxxis.es/es/). They developed a range of quantitative indicators to monitor the evolution of organisations’ responsibility. “Economy for the Common Good” is another trend, with its own theory, proposal, indicators and growth strategy to help organisations to transform in order to be more democratic, prosperous and sustainable. They also have a decalogue both for business administration and political economy (Felber, 2019).The United Nations Global Compact, and REAS are other movements within this camp.
Aware of the importance of organisational structures to finding new and sustainable patterns of development and social organisation, as well as of the ethical and even spiritual dimension of some of the problems humanity faces, a group of organisations inspired by the Baha’i vision of a unified, peaceful, sustainable and prosperous world, have set in motion a practical learning process on the nature of organisational structures, procedures and practices most suitable to respond to those challenges. This network of organisations includes institutions as diverse as Universidad Nur in Bolivia, Fundación Badi in Macau, FUNDAEC in Colombia, BASED-UK in the United Kingdom, The William Mmutle Masetlha Foundation in Zambia, The Tahirih Justice Center in USA, CORDE in Cambodia, The Bayán Association in Honduras or The Barli Development Institute for Rural Women in India. Out of their experience, a specific framework for action has emerged, a framework which is continuously evolving and to which, other organisations, such as the ones which will be studied in this paper, can and must contribute.
This framework has implications for diverse spheres of action. The most salient one is social and economic development. However, only the direct implications on organisational management will be examined here. In the last section, two organisations which are trying to apply and to articulate the components of the framework related to organisational management will be studied.
There are at least 15 principles which inform organisational structures, processes and practices. The first one might be the perspective of “organic organisations oriented towards learning and social transformation”. The analogy used for organisations is the human body. The human body is an organic being. So, organisations should see their components as part of a whole. It might be said that organisations have certain organic features such as growth, development, diversification, integration, and parts assuming temporary functions and roles that do not correspond to the initial blueprint. In addition, organisations make sense within the context of their contribution to social progress. Along this line, social progress requires acting upon individuals, structures and communities, as well as upon the relations amongst them, relations which should be characterized by harmony, unity and reciprocity. Thus, organisations are embedded into a wider context and are part of it. The oneness that informs organisational order is not equivalent to uniformity. The analogy of the human body entails diversity, decentralization, the autonomy of the parts, but always within the context of the whole body. However useful, the analogy of the human body has limitations, which need to be recognised in order to avoid taking it too far. Organisations are not literally biological organisms and their parts do not match with “the brain”, “the legs”, “the feet”. Organisations are comprised of human beings, despite the fact that these human relations give birth to systems, processes, structures, values and a culture that can be studied almost independently from those humans.
A second feature which is included in the first statement is that organisations are oriented towards learning. Much has been written in the literature on “learning organisations”. However, within the framework which has been posited, by learning is meant a sort of methodological approach which informs the total operation of the organisation, which pervades its culture and which can be defined as the dynamic interaction amongst four elements: constant action and experimentation; reflection on action and experience; study and research; and consultation or collective deliberation. This feature equally highlights the importance of knowledge for progress and opens the door for a deeper examination on the nature of knowledge, its sources and the right attitudes towards it. However, it is sufficient to recall the idea proposed previously about the influence these organisations have on the needed dialogue between science and religion to find new patterns of action and social life. Thus, finding new patterns for organisations also requires this constant dialogue between science and religion, and between theory and experience. In doing so, fragmentation has to be avoided, whether between disciplines or, especially, between theory and practice. In particular, the artificial separation between theory and practice has produced a situation in which there are those who think, study and make proposals, and those who constantly act according to impulses or under orders.
Collective decision-making processes are another crucial mechanism whose efficacy conditions the performance of an organisation. There are different models: hierarchical models, where one person endowed with authority decides over the rest; assembly models, where everyone has exactly the same right to expression and contributions are equally distributed; negotiation models, where “interested” individuals or groups try to impose their will through pacific means… These models have been tried in practice and each one has strengths and limitations. The agile ones are not democratic and do not exploit human talent. The democratic ones are not efficient as usually long periods of time are required to come to decisions. Negotiation favours those with more capacity or power to negotiate. Aware of the limitations of current decision-making processes, authors such as Habermas have developed alternative theoretical models. However, they were never translated into practice. The collective mechanism to come to decisions that these organisations propose is known as “consultation”.
“Consultation” is a collective exploration of reality that seeks to generate a common view and to come to collective decisions that inform action for the common good. Consultation has a procedural dimension as well as an individual one. Some of the requirements for a successful consultation include: the need to share ideas freely but with tact, to avoid offending others and feeling offended; the recognition that once ideas have been shared, they belong to the group and can be refined, rejected or accepted without reference to the one who proposed them; to avert an insistence on one’s own points; the competent coordination of the discussion; that the interlocutors seek to reach certain points of concord after a period of time of sharing thoughts; the appreciation of the value of consensus but the recourse to voting for majorities when consensus is not possible; and finally, the ability to translate decisions into collective action in a unified way. This last point deserves special attention, given that many problems arise in the process of implementing agreements. Consultation requires that those who had different points before the decision was taken wholeheartedly support the decision. Otherwise, it is not possible to distinguish between a good or a bad decision. Experience, after a concerted and persisted effort —everyone giving their best—, will show whether the decision was good or bad.
A fourth principle concerns the nature of leadership. Organisations within the framework under discussion try to apply the notion of moral or transformative leadership. This kind or leadership is oriented towards (a) service and (b) empowering and building capacity within individuals and groups, (d) does not look for recognition so it is “invisible”, (e) is not exercised just by those who are in positions of authority —although those with authority bear more responsibility— and (f) endeavours to foster a positive and progressively more profound change in society.
Building capacity also requires a special mention. Although leadership focuses on building capacity in others, these organisations try to institutionalize a system which builds capacity at all levels, both individually and institutionally. This does not only manifest in constant training but pervades the whole culture of the organisation. For instance, things should start small, through one or two lines of action, and progressively grow, as experience is gained, and capacity built; people have space to develop and use their talents; etc.
Another feature, which detaches from the first principle is the importance of teamwork, cooperation and reciprocity. Drawing on the powers of synergy and collaboration, within the organisation and among organisations is an ever-advancing area of action and learning. This includes using and developing human talent, creating an atmosphere out of which potentialities can be released, reducing competency gaps —strict separation between those who think and those who act, or between manual and qualified workers—, establishing collaborative links with the public, private and civil sector, to name a few implications.
Justice and fairness is another principle, which such organisations progressively try to embody. There are multiple questions around this issue: what is the right distribution of salaries, to reward experience, achieved results, the required level of training, and responsibility held within roles, without generating excessive gaps? How can resources be more fairly used? How can everyone explore reality more scientifically in order to see things more objectively? How can relations within the organisation and with other people and institutions be free of prejudice? How can the progress of the organisation, of a community or of a group be propelled without affecting others negatively?
Finally, it might be said that the types of organisation under discussion are trying to apply certain ideas related to the notion of good governance, but these features are not always explicitly referred to while speaking about their common framework. For instance, transparency is important, but in tandem with prudence and discretion, which are sometimes equally important; financial, ecological and social responsibility; effective corporate governance; better channels for internal and external communication as well as a good management of formal and informal communication; efficiency, but a kind of efficiency which goes beyond instrumental rationality, where only costs and benefits are taken into consideration; the need to create intelligent systems that go beyond individual intelligence; the creation of spaces for different actors, coming from different sectors and involved in specific issues, to come together to make shared diagnoses, to plan and to act together; appropriate technology to increase productivity but generating awareness of the values different devices bring into organisational culture and collective dynamics; sensitivity to the culture and local community where the organisation is settled, so as to avoid any inadvertent harm, and to give back to that community as well; legal security and stable norms…
To end this section and before entering into the case studies, it is worth mentioning that, sometimes, these organisations name this way of taking principles into consideration as “analysing the practical implications of spiritual principles” with a view to creating “a coherent dynamic between the material and spiritual dimensions of existence”. This is an example of the dialogue between science and religion that they consider necessary to finding more effective models.
- Case studies
In this section, two organisations that are trying to apply the framework described above —one based in Madrid, Spain, and the other in San Jose, Costa Rica— will be examined, namely: Instituto para el Conocimiento, la Gobernanza y el Desarrollo globales (ICGD) and Information Systems Costa Rica (ISCR). The reasons why these two were chosen — instead of others with a longer trajectory such as the organisations identified previously— are various. ISCR, for instance, is generating sound learning on how to assist small companies to be financially, as well as ecologically, sustainable. This, in spite of the fact that there has been no formal systematization of the experience. On the other hand, ICGD is a new organisation, but it started as a result of a network of professors and institutions established almost three years ago around a master’s degree from Nur University, Bolivia, on managing organisations for development. ICGD has tried to deliberately apply insights from that initiative, which shares the framework highlighted above, to both its own functioning and the work of other organisations that are advised by it. Indeed, its mission is explicitly to begin to aid other organisations in this respect. One last reason to choose these two organisations is the direct involvement of the authors in their endeavours.
3.1 Institute for Knowledge, Governance and global Development (ICGD)
ICGD was founded two years ago by a group of friends who were aware of the need for local development learning structures devoted to raising capacity in individuals, groups and institutions. The founders were mainly in Spain but some of them resided abroad and were involved in other development endeavours like the Bayan association.
After nine months of consultations, they defined their mission as “assisting socially committed organisations to apply the mechanisms of good governance and to improve the effectiveness of their programs”. In addition, their vision was to build an organisation that might reflect the features of the framework explored previously in its own management and work and which might contribute to social progress in areas related to education and research, governance, development and communication. Once the mission crystallized, they wrote a short document to gather insights and guide future action.
The first challenge was to apply the notion of “starting small, learning and grow progressively as capacity is built”. In order to do so, from among three or four lines of action they were working on, they decided to focus on one: advising a local government to set in motion a participatory process that would allow local business-people and civil organisations to take part in the formation of local development policies. This initiative received most of ICGD’s attention for around two years. This way, they could systematize the experience and define a program named the “Collective learning Lab on governance and economy” which has had a great impact on the political, economic and social life of the locality and is being used by the local government of Torrelodones as the hallmark of their village. Currently, efforts are being made to assist the local government to maintain the program by itself.
Once this line of action was well established, the ICGD made efforts to elaborate a formal training program comprised of courses corresponding to each aspect of good organisational governance such as: the notion of governance as applied to organisations, organisational processes, leadership, processes of collective decision-making, communication, team work, the appropriate use of technology, organisations oriented towards learning, and processes of development and social change, to name a few. In order to achieve this, in addition to defining the program, finding the professors and thinking of the methodology, they tried to find universities to certify the program. After exploring many modalities, they signed an agreement with one university. Now there is a learning process in motion on how to promote the program at a low cost. The aim is to get an initial group of 15 students to test the program and thereby refine the method of delivery. Groups are being reached to offer different options. Once this is achieved, attention will be paid to refining the contents, in the hope of writing documents for each course.
A third line of action organically emerged from the Lab in the area of communication. The ICGD was formally linked to an audiovisual production company run by one of the founders. Another founder used to collaborate with her in a program on governance and economy. However, they had decided to stop that program until the Lab (the first line of action) was firmly established. However, after a year, one of the projects that emerged from the Lab was a local TV channel. Business-people working in the same area decided to create a program within Amaranta.tv (an existing online TV, run by the same lady) called Torrelodones.tv. The local government supported this initiative and asked the ICGD to organise broadcasted round tables on the topics revolving around the Lab: governance, economy and development, media and society… Thus, this line of action started to grow little by little. As some money started to flow in, there were more opportunities to involve some collaborators here. Finally, the ICGD decided to use the writing and audiovisual content developed by some of its members to feed another online platform: www.governance.es
In addition to applying this notion of building capacity progressively and advancing from one line of action to various lines of action and from simple actions to more complex programs, the ICGD made an effort from the beginning to create a system to learn, to document experience and to go beyond projects to elaborate replicable programs. In this respect, the coordinating team constantly reflects on its actions, studies similar initiatives, exchanges documents, has regular consultations, shares insights with others and tries to document everything. This process of learning is in motion although it has ample room to be strengthened. One of the challenges is to work with a group of six or seven people, with different levels of involvement and with almost no staff. There is only one part-time lady who shares her time with other projects. However, the circle of people involved in action, reflection, consultation, study and gaining insights is progressively growing stronger and wider.
In addition, the talents of collaborators with less time at present, are being used, as much as possible. For instance, there are collaborators who are very methodical and systematic. They assist with the planning, budgeting and strategic vision. Others can write, so they try to articulate insights into documents. This dynamic requires generosity, patience, confidence and a long-term vision. One final point on how ICGD tries to learn collectively is the vision it has about the difference between projects and programs. Projects are short-term initiatives, which usually require high competence: people with know-how. As the ICGD is small, the members cannot assume many projects despite the opportunities. In addition, projects do not seem to facilitate collective learning unless an extra effort is made to document the results and insights. Therefore, the ICGD approach is to generate programmes, with materials that can be replicated by others after a certain amount of training. In the Lab case, everything that has been done with businesspeople, coordinators, civil workers and politicians has been translated into drafts of educational materials. Thus, people in Andalucía and in the Canary Islands are trying to replicate the experience under the view that “Lab” is a two year program after which the local government takes charge of managing it with the support of a network of Labs. Similarly, the master’s degree, which is being offered, will contain written contents to become as independent as possible from experts — although masters professors will always require high levels of education.
Concerning decision-making processes, the ICGD tries to apply the methodology defined as consultation both to its own work and the work of other organisations. This has been an interesting experience, because training materials, which address procedural mechanics as well as individual requirements, have been developed to raise the capacity of the Lab’s coordinators. Assisting other organisations effectively to apply consultation is a promising area of learning about enhancing the performance of organisations.
Cooperation, reciprocity and unity manifest in the work of the ICGD in different ways. For instance, the relations between members aspire to be shaped by these forces. There are explicit conversations about this topic when certain forces such as criticism, lack of confidence in others, or tensions enter into relations. Powers are released and success is achieved according to the extent to which unity and amity is forged. In addition, relations with other people and organisations advance along this line too. Finally, and again, the context of the Lab, together with the broadcasted roundtables, helped the ICGD to become more aware of the powers released by cooperation. Presentations, articles, decalogues and videos were prepared to explain the forces which emerge from cooperation and to describe the way competition is pervading all spheres of human action and harming transformative collective action. This strand has been especially appealing for those organisations closer to the ICGD. Finally, the ICGD is trying to contribute to social cohesion as it views social fracture as a risk that usually goes unperceived until it is too late. The way it contributes is, on the one hand, by raising the consciousness of organisations about the importance of real unity and affection and the permanent risk of tensions between individuals and groups because of gender, class, ideology or nationality and, on the other, by collaborating with other institutions working in the field of radicalisation prevention.
Lastly, a few words will be said about social justice, to illustrate how the ICGD tries to align with the framework proposed. Firstly, it might be said that at the heart of the DNA of the ICGD, lies the desire to contribute to social justice. Founders and collaborators have their own work and devote much time to the ICGD to contribute to social justice. However, they envision to hire people as the ICGD gains more resources. The ICGD has billables from its contracts with clients, but the money is used to pay those who are directly involved in the specific project concerned. The ICGD keeps a percentage for refining the web page, to carry out marketing and to budget for future projects. Although the staff are few, the salary policy and financial management include certain criteria: a) salaries and payment should be dignified; b) depending on experience, training, time and level of responsibility, the payments are higher or lower; c) there is no individual profit although the ICGD tries to be self-sustainable, mainly through fees; d) money does not determine direction; e) administrative expenses should be minimized so as to better invest in programs; f) advertisement and publicity cannot be the main funding strategy for ICGD’s lines of action related to communication.
3.2. Systems Costa Rica (ISCR)
The next case is ISCR. It describes an initiative in Costa Rica to explore the implications of the framework of “universal principles and values” for the operation of a socially committed company.
Since the beginning of the project, ISCR has gone through different stages within which, many challenges have been faced that have required decisions, adjustments and changes on the part of the current director, that are explored for analysis and consultation. The task has not been easy, but it has generated many lessons with encouraging results so far.
In words of the director, who helped to systematize his experience for this paper “it is hoped that the analysis of this case will offer a starting point on which to develop many ventures that successfully apply the principles in the management of organizations”.
To help understand the context in which the case is presented, it is worth mentioning some aspects related to the business world. This will help to better understand the reasons why such initiatives are becoming increasingly urgent. What makes this task particularly challenging is that it moves away from the traditional model of business driven by profit and explores new ways to integrate social, economic and environmental dimensions in a financially sustainable model.
Businesses engage in complex interactions with the aim of producing goods and services. However, the pressing challenges facing humanity in terms of environmental pollution, the growing inequality between rich and poor, and the inability of governments to address multiple social needs are but some of the reasons that new business models are required.
Since it was founded, ISCR was mainly engaged in the commercialization of technology products and had at the time of starting the project some 85 employees. Its organizational structure consisted of about six management positions that oversaw various operational divisions. It was common for a manager to be responsible for more than 10 people and for decisions to be made only at management level without the participation of subordinate employees.
Like most companies, ISCR’s priority at the time was to generate profits and survive in a highly competitive environment. It is important to mention that the arrival of the Internet and of virtual companies like Amazon generated multiple challenges as it became possible to buy all types of products online and on a global scale . Further, at this time ISCR was going through a process of generational change as one of the founder’s sons assumed full responsibility for the company. According to the specialized newspaper El Financiero, only 30% of companies survive a second generation of management.
ISCR then faced several challenges. In the first place, it had to find a way to give continuity to an enterprise that had been born 35 years earlier and that was now without its founder. It also had to find a way to adjust to constant technological changes and unpredictable economic situations. Furthermore, in the company, issues related to compensation, workloads, responsibilities in each position, decision making, opportunities for improvement and capacity development were not consciously addressed. On the other hand, although practices that promoted corruption were not favored, they were not explicitly qualified as unacceptable. In addition, difficulties in internal or external relations were dealt with indirectly, without much dialogue with those involved. It was quite common for some situations or problems that required immediate action to be completely hidden, which over time made them worse and more difficult to resolve.
In operational terms, the organization, like most companies, was divided into departments which, although related to each other, saw themselves as “islands” which had to carry out their particular responsibilities without taking the rest of the organization into account. Plans and decisions were generated and resolved with little participation. The social projection was limited in the sense that there were no plans or projects oriented to the social vocation of the company.
ISCR generated most of its income in tenders to government entities. In the business world, it is common and a generalized practice for companies to resort to illegal payments to public officials in order to obtain advantages and win bids and this greatly limits the opportunities for those who are unwilling to employ these practices. In addition, it is very common for companies to look for ways to avoid paying taxes by reporting much lower profits. In addition, since social security taxes are quite high, it is usual to make arrangements to avoid these payments to the government, to the detriment of the worker, who, in the future will see the amount of his pension reduced.
Regarding corporate culture, within the company, competition limited employees’ opportunities to grow and further develop their capacities. In some cases, the people in charge feared that others would assume their positions by demonstrating their capabilities. At other times, it was feared that they would lose protagonism, so they avoided promoting individuals who could demonstrate greater capacities or abilities.
Since the above mentioned points presented multiple challenges, top management decided to take on the task of using ISCR as a laboratory to learn how to apply the above mentioned framework — of universal values and principles— to the administration of the organization. One of the objectives proposed was to transform the purpose from purely a commercial one to a social one. This new model of social enterprise breaks away in many aspects from the traditional model of a company dedicated exclusively to profit but connects with those whose sense of social responsibility makes them think of the ecological and social implications of their work.
The first challenge was how to find, in a company of more than 80 people, the way to introduce new management practices based on principles and values. It had to be demonstrated that a company of this type could not only be economically sustainable but could also generate value for shareholders as well as employees and their families. Additionally, because the whole company would be impacted in one way or another, everyone had to know about the project, its intentions and the expected results.
Regarding the beginning of the project, when it was initiated, the company ISCR was 35 years old since its foundation, so a significant number of employees had been working for more than 20 years. As it mightbe expected, during such a long time, people develop habits, assume behaviors that are considered acceptable, and do things in a way that develops a particular dynamic. The anticipated process of change thus implied a transformation from the prevailing institutional culture to a culture that better reflected certain principles and values.
Another issue was the outside culture of the social and commercial environment that was characterized by corruption, manipulation, the continual seeking after one’s own benefit, a lack of transparency and honesty, something that was looked at naturally. On this subject, some people consider that those who are best at manipulating the system in their favor are endowed with “business wisdom”. Additionally, there was the notion that all companies should strive to become better than others and that to do so they had to adjust to the reality mentioned above. In fact, it was considered that a 100% honest company is not economically sustainable, especially if all the others apply what are considered the “rules of the game”.
Another challenge faced was the issue of credibility. In the eyes of the participants, a proposal that preaches the desire to generate well-being for all, applying justice, consultation, fairness, transparency and other principles, may sound somewhat illusory. Finally, if initiatives like this were to stem from religious beliefs, this could give rise to suspicions that these were proselytizing efforts. This implies that the legitimate purpose of seeking ways to generate social and economic welfare must be conveyed with complete sincerity.
Concerning the process of sharing the vision and plans with all involved, due to the novelty of this initiative, it was important for all engaged in the company to know its purpose, its goals and objectives, its components, as well as the actions to be taken. The fact that the scope of the initiative was the entire organization made communication and consultation critical in order to avoid fears, misunderstandings or even false expectations.
Additionally, because a commitment was being made to work for a new organizational model based on the application of principles, a great responsibility was taken to fulfill what had been promised, as well as to demonstrate sincerity of purpose.
One of the most important challenges was to explain the concepts and implications that revolved around each of the principles. Also, the question that naturally arose for people was whether their jobs would be threatened or negatively impacted in any way.
In relation to the process of implementing the principles to all aspects of the organization, as expected, the organization operated under schemes, structures and rules that required a thorough overhaul. There were important gaps between the vision of a principle-based organization and its functioning at that time. Although it was difficult to have a clear idea of what the organization would look like in the future, it was thought that it would show the following characteristics. There would be an environment based on unity of purpose. Consultation would be used regularly for all sorts of issues. Communication would be fluid and constant. The organization would have the capacity to learn and management would be based on systematization. All involved would have the opportunity to develop their skills and the compensation for the work would be fairer. The work would be done in a spirit of service and the organization would be a source of social and economic welfare for all. Relationships would be based on transparency and purity of intention. This should also be achieved by caring for and protecting the environment and complying with the country’s laws and regulations.
After six years since the project began, there are important learnings that can be analysed and reflected on. As far as the structure of the organization is concerned, as the years go by, the tendency has been to reduce levels of authority and give more responsibility to an increasing number of people. The negative aspect of this trend is that it makes it very difficult to justify positions that are losing relevance under the new structure. We could deduce that this is an effect generated by the creation of greater opportunity to develop capacity and participation. Having to let several people go has been quite challenging for many reasons. The first is the difficulty faced by the person who loses their job. The second is that rumors are generated about the financial situation of the organization because it is assumed that what is sought is to reduce expenses. For this reason, the norm has been to share the situation in the most transparent and direct way possible in each opportunity presented.
On the application of the principles in the context of the organization, since the objective is to make the organization as a whole reflect the application of the framework described, it is important to analyze the role of each member. The principles are manifested through concrete actions, are reflected in attitudes and ways of doing things so they must be integrated into the culture and actions of each person. At present, the director considers that around 15% of people understand the process being developed in a more organic way. These are the people who have a high level of commitment and conviction and who know in greater detail the conceptual framework that inspires their efforts.
As efforts continue, more people demonstrate an attitude and willingness to serve others. Some also express their appreciation by doing their work with excellence and adherence to principle. It is becoming increasingly common to see people consulting in groups to solve problems or make decisions. At management level there is constant consultation on issues related to compensation and working conditions. Perhaps the greatest impact is to have a small core of people consulting all the time about learning and ways to make an impact on the various lines of action laid out within the organization.
In connection with building a principle-based organization that learns, shares and contributes to the development of a new civilization requires new capabilities that are currently difficult to find naturally. There is a challenge to find a way to generate learning processes that will allow for the development of the necessary capacities. Among others, some of the identified capacities that can be mentioned are: generating plans and implementing them effectively, promoting timely consultation involving the right people, acting promptly to resolve situations that require attention, understanding the impact of decisions from a systemic and organic perspective of the organization, sharing and accompanying the building of capacity in others.
In general, it is thought that our educational systems from basic and intermediate to advanced levels such as the university do not adequately prepare citizens to face the complex challenges of today. The greater challenge then, is to design or find adequate programs that allow for the development of the aforementioned capabilities. Currently, management has chosen to accompany key people more closely in order to transfer knowledge, and in a collaborative manner to strengthen the required skills, attitudes and abilities.
With regards to the articulation and the way to strengthen efforts, the experience so far of ISCR seems to show that the way to organically grow and develop new opportunities is by sharing and taking advantage of the capacities, knowledge and skills of people and organizations involved in the process. The application of principles and values to the company as a whole has allowed it to venture into new areas such as technology for science education with various government agencies, apiculture through engaging with beekeepers and related organizations, energy efficiency and urban agriculture.
In so far as social impact in concerned, one of the big questions, when talking about social entrepreneurship, refers to the real impact that is being generated. At a basic level, social wellbeing is generated when people work in a harmonious environment, under conditions that allow their development and stimulate their creativity, where they receive fair compensation for the work they do, and where health is also a priority. At this level, ISCR currently has a doctor’s office that operates under national health standards and in coordination with the social security system. In addition to the social benefits obtained by complying with social protection regulations, the company provides life and complementary medical expenses policies. As an additional measure, in cases where public services are not considered to be effective, the company intervenes and assists directly by securing care through private means. As far as environmental issues are concerned, ISCR is certified under the ISO 14001-2015 standard, which ensures compliance with measures that protect the environment through recycling programs, energy saving measures and reasonable use of water.
Despite the above, it could be argued that many companies meet all these requirements, so these efforts are not so new. Hence, It is worth mentioning some additional elements that break away a little further from the traditional models. Within the vision of ISCR as a social enterprise, three new entities have been created that are dedicated to diverse topics. NeuroAula promotes research in the use of technology for science education. Optimo is dedicated to systematizing and sharing ISCR’s learning around the theme of social entrepreneurship. Corona Dorada is the first productive enterprise based on a beekeeping project that seeks to explore the economic, social, environmental and educational impact of a honey-producing company in a rural environment. Finally, in order to promote and develop these initiatives, ISCR reinvests a significant percentage of its profits, which creates an interesting relationship between the commercial and the social dimensions.
Among its most significant projects, Corona Dorada is promoting a series of initiatives aimed at transforming the beekeeping activity and commercialization of honey in Costa Rica. In collaboration with beekeepers, associations and government entities, production is being strengthened, expanding the value chain and distributing profitability more fairly. Additionally, efforts are being made to develop innovative products based on honey, pollen and wax. New trading partners are also being sought in European and Asian markets where these products can be better valued. An important element to mention is that a percentage of the sales price will be allocated to education, research and social impact projects.
Further, with respect to sustainability and the projection of growth, the results to date have shown that the application of principles such as consultation, unity, justice and fairness and compliance with laws, among others, generates various benefits. It generates sustainability because energy is focused on construction and innovation rather than on the resolution of internal conflicts and controlling people. In addition, the organization learns through consultation and can react more quickly to solve problems or unforeseen situations. In addition, transparency and relationships of trust enable trade agreements to be fair to all parties. The next graph shows profit tendency during the last 9 years which confirms financial sustainability and growth.
1 Fig. Net profit IS Corporation
Source: data obtained by the authors
A critical element to ensure the continuity of the efforts already initiated by ISCR is the integration of new participants who systematically internalize the whole concept and model mentioned above. With this in mind, the company hopes to have a more organic and integral vision of the construction process on which it is working. Management at ISCR feels that for this to happen, it is important to share the discourse based on participation, capacity building, generation of social, economic and environmental welfare. The motto that summarizes these concepts in a few words is “to create value without destroying any other value in the process”.
To end this case study, it can be stated quite confidently that the experience shows that an economic model based on excessive competition and the justification of dishonest acts for greater profits leads to “toxic” relationships where everyone tries to generate profits at the expense of others. When companies move away from this model and operate under assumptions based on trust, transparency, honesty, and the pursuit of common wellbeing, just and lasting relationships are built. It does not seem true that a company is obliged to offer the lowest prices or to break laws in order to survive or exploit people because of competition.
There seems to be a pressing need for new forms of organisation that can contribute in innovative ways to solve the complex issues that humanity is facing, such as climate change, poverty, problems of social cohesion, and inequalities, to name a few. This kind of problems require the engagement of all sectors of society in collaborative endeavours that can address social problems from complementary angles.
In addition to dealing with these multifaceted problems, these new organisations face another challenge: operating in such a way that their functioning attains higher levels of efficiency. In order to do so, different theoretical models describe and prescribe new trends in the field of management. Four categories of theories were explored to illustrate the rich debate within this field: classical theories, behavioral theories, system theories and new trends ranging from conflictual to other models that try to apply insights gained from quantum mechanics to organisational management.
At the heart of the paper, an exploration of an innovative framework for management that emerged from a set of organisations for development was carried out. Some of the features of the framework that these organisations apply to their work as well as to their functioning are the following: they conceive of organisations as organic bodies; these organisations place learning and knowledge generation at the center of their operation; they use a noble decision-making process known as “consultation”; their notion of leadership revolves around empowerment and is influenced by an ethos of service and altruism; they articulate the relations within the organisation and with external groups through cooperation and reciprocity; a multidimensional understanding of justice informs their practices; and an appropriate application of the manifold mechanisms for good governance shapes their structure.
The way they understand their framework goes beyond classical proposals to connect ethics to business and organisations. They conceptualise their efforts as an attempt to create organisations committed to social transformation, which incorporate insights gained from both science and religion, which they view as two overlapping systems of knowledge and practice: science and religion.
Finally, two relatively new organisations working under the same innovative framework alluded to previously were studied in order to highlight, in practical terms, their effort to consciously apply certain concepts, principles and approaches springing from the framework to be more effective in their work. By doing so, it was pointed out —although in a limited manner— that the framework had an impact in the emergent programs and in the pattern of management they follow. To conclude, it might be said that their framework, rather that constraining their action, enables them to release certain powers emerging from sophisticated forms of cooperation and reciprocal relations that serve to propel and widens the scope of their work. Particularly in the case of ISCR —a private company which also generates social benefit — the application of values and principles contrary to prevalent competition for power and resources, did not affect their financial stability. To the contrary, the economic balance of the company, apart from being positive, has allowed the company to empower disadvantaged groups to generate their own wealth.
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