Kicking the ball into no-man’s-land: by Ping-pong Design

Kicking the ball into no-man’s-land: How ĐŽŵŵŽĚŝƚǇ ƐĞƌǀŝĐĞƐ ŽƌŐĂŶŝǌĂƟŽŶƐ ƐŚŝŌ ĨƌŽŵ Ă ƚƌĂŶƐĂĐƟŽŶͲŽƌŝĞŶƚĞĚ ĞǆĐŚĂŶŐĞ ŵŽĚĞů ƚŽ Ă ŵĞĂŶŝŶŐĨƵů͕ ůŽŶŐͲƚĞƌŵ ƌĞůĂƟŽŶƐŚŝƉͲďĂƐĞĚ ŵŽĚĞů

Maarten Jurriaanse (Student no. 379725) ǆĞĐƵƟǀĞ DĂƐƚĞƌ ŝŶ ŽƌƉŽƌĂƚĞ ŽŵŵƵŶŝĐĂƟŽŶ ZŽƩĞƌĚĂŵ ^ĐŚŽŽů ŽĨ DĂŶĂŐĞŵĞŶƚ ͮ ƌĂƐŵƵƐ hŶŝǀĞƌƐŝƚǇ KĐƚŽďĞƌ ϮϬϭϱ dŚĞƐŝƐ ĂĚǀŝƐĞ ďǇ ƌ͘ DŝŐŶŽŶ ǀĂŶ ,ĂůĚĞƌĞŶ

Kicking the ball into no-‐man’s-‐land

Foreword After we did a project with late mister Wally Olins in Denmark – the project was the best brand education I could have wished for – I wanted to visit a lecture he would be giving at the Erasmus University in 2012. I was kindly asked to sign up – or at least pay – for the whole three-day course on corporate branding. Being educated as a graphic designer with only bachelor degree in arts, I was drawn in by what is known and unknown about the underlying mechanisms of the things that my design team worked with on a daily basis. When I was invited to write a joint assignment paper I jumped the bandwagon, which has since infested me with an insatiable thirst to understand things in general and about relationships between organizations in particular. So the first to thank is actually late Mr. Wally Olins. It is unfortunate that I cannot thank him in person and I think I am not the only one missing him. If it wasn’t for him I might not have considered the absurdity of wasting so much time on books and unreadable academic articles. For the work done on this thesis I would like to share my sincere gratitude to Eneco, the time and effort spent by all of the respondents, their enthusiasm, and their unscrupulous engagement during the interviews. Much gratitude also goes to the friendly secretaries and their determination to make some of the interviews happen against inhospitable time schedules. A thousand thanks to Mignon van Halderen from whom I learned the unimaginable power of optimism and how positive feedback can almost physically lift you from the deepest moments of desperation. I further want to thank Cees van Riel for his inspiring interactive courses and the wonderful team of lecturers that he managed to present every time. And not to forget Suzanne Marco who has been the patient and ever cheerful catch all-during my study. I want to thank my business partner Barry for keeping up with listening to my constant stream of useless academic trivia and his helpful reading through early unreadable versions. Thanks also to my wonderful and talented team who proved that my absence during writing periods made little difference. Many thanks to my friend and co-conspirator Bram van Hasselt who masters the art of seeing through jumbles of unrelated fragments and sculpt viable conceptualizations from that. I want to thank Marc Amaral, CCC alumni, thus experiential expert, premier student friend and office neighbor; who bared through early thesis subject test balloons and brief but intense enthusiasms about particular articles that I have now completely forgotten about. The thesis was – often – a joy to work on, and maybe also a relief to my dear friends and neighbors who haven’t heard from me for a long period. They may consider me deceased by now or contacted Amber-alert to find me… I am sorry guys, I’m afraid I will return to the living now… This thesis was most certainly a heavy burden for my greatest coach and love Doldie, my dearest children and the dog; she suffered the increasingly shorter walks… I will make it up to you all.

The Hague, October 2015 – Maarten Jurriaanse And oh yes – I have written this thesis myself, so I am fully responsible and liable for the content in this thesis. Which also means that the copyrights are mine (CCC manual 2013, p.4)

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Executive summary Firms like Zappos, Southwest and Patagonia have succeeded in maintaining networks of longterm relationships as a competitive resource by aiming for shared goals that lie beyond the selfinterest of the company. Zappos provides an identity platform for internal and external constituents to engage with their mission of ‘delivering happiness’. A philosophy which inspires different stakeholders to return and invest in the relationship because the mission seems to trigger a sense of contributing to the world that exceeds basic needs of salary, supply contract, return on investment or utility-need satisfaction. By adhering to neoclassical production dogma’s, many commodity services organizations like banks, telecom and energy suppliers, seem to have turned their backs to customers, to have lost the raison d’etre of their organizations and gradually started to believe their role of being mere producers of low interest commodities. However, these organizations are too important too be left for lunch on the plates of startups. With their broad customer base and deep roots in society they have the potential to impact the social, economic and environmental crises we are facing on a much wider scale than any government or social institution can. So how can commodity services organizations shift from the transaction exchange models that they are adhering to, towards adopt meaningful, long-term relationship-based models?

Research Transaction models – In my research I found that many of these organizations cope with the remainders of bureaucratic and procedures-oriented operating models, based on neoclassical views of business organization. It is important to understand these remainders in order to address them. Fundamental to these models is the focus on production, on division of labor, compartmentalization, command and control management and the idea that value is principally created inside the production process. The customer is merely the transaction and production endpoint, which can be delegated to the marketing department to maximize volume and profit. Relationship- models – Companies such as Zappos and Southwest are grounded on creating excellent customer interaction experiences by focusing on the quality of their cultures based on a shared and compelling vision. They apply the fact that happy employees have direct causality to happy customers, and happy suppliers, happy partners and happy investors. Customers are part of the organizational network and integrated in the enterprise value chain. Networks of internal and external stakeholder relationships shape the organization’s identity and facilitate a process of self-enhancement by offering a sense of belonging and contributing to a greater visionary purpose that serves business as well as society.

Case study To identify the critical challenges and success factors involved in how organizations can engage in such a shift I did a case study research by interviewing senior and executive managers at Eneco, the largest integrated sustainable energy services supplier in the Netherlands. Since 2007, under the visionary leadership of Jeroen de Haas, Eneco has a vision to reduce CO2 emissions and natural resource depletion by empowering access to- and shared ownership of decentralized, renewable energy sources. That vision made Eneco embark on an ongoing

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transformation journey to change itself from a traditional procedures oriented production incumbent towards a service innovation and relationship-oriented company.

Findings The four dimensions that emerged through a grounded theory process of coding, labeling and clustering of the various perceptions of their company’s transformation, revealed three dimensions with critical success factors and one dimension with critical challenges. Vision imperative – The new vision and de Haas’s visionary leadership helped the organization to “imagine the flight of the butterfly,” (a respondent) – to picture and understand the economical, social and environmental purpose of that future landscape. The vision continues to function as a touchtone for internal as well as external stakeholders; it helps them to reshape internal relations, attract new talent and reframe business partnerships. Simultaneously, the organization is also opening up to feedback, which motivates partner stakeholders to enhance the organizational developments by ‘holding up the mirror’. Activation signals – this dimension functions as amplifier of the vision imperative by activating internal as well as external stakeholders and audiences. Visual roadmaps and visual strategic frameworks that evolve along with the organization’s transition facilitate internal understanding and represent Eneco’s gradual acquisition of its own change capabilities. This is accelerated through symbols: The new headquarter not only facilitates new collaboration networks but the design also radiates the purpose of the vision. Product introductions demarcate new business territory to competitors as well as it provides evidence. The new digital thermostat Toon is a proud representation and eye-level utility translation of Eneco’s vision, allowing average consumers to save energy waste. Tensions – Eneco also suffers from remainders of neoclassical management structures. Command and control leadership impedes innovation and employee learning from exposure to customer interactions. Lack of front line leadership has negative effect on employee motivation and ultimately customer satisfaction. But this dimension also reveals a strong employee motivation to close gaps between promise and daily reality – and seem to polarize between ‘believer’ and ‘non-believer’ subcultures. Engaged employees have a vested interest in the organization’s vision as they enhance and categorize their self-image based on that. Value Relationships – Although many aspects are still under construction, respondents are consistent about the required capabilities Eneco needs to develop: people need to be able to unite across units; to join stakeholder and customer communities for shared goals. Recognize and enhance potential value chains and the ability to encourage partnerships for long-term investment relationships. The mission provides a lens through which commodity relations can be enhanced and reinvented, and service partnerships based on shared goals provide a platform for sustainable, meaningful and long-term relationships. These four dimensions appear to interact with one another: the vision imperative kick-starts the shifting process, which seems to be amplified and accelerated by the activation signals, which in turn creates tensions, but also helps shape value relationships. Engaged employees and partnership stakeholders appear to be motivated to close gaps between company projections and daily realities so as to enhance their self-image and categorization process.

Kicking the ball into no-‐man’s-‐land

Contents Foreword Executive summary

3 4

1. Introduction

2. Literature review

2.1 What are transaction models?

2.2 Paradigm shift 2.3 What are organizational relationship models?

14 15

2.4 Concluding comparison of the two sub questions

2.1.1 Rational Positivism 2.1.2 Managing Production 2.1.3 Distribution

2.3.1 the marketing view 2.3.2 the management view 2.3.4 Identity view

3. Research Method

11 12 13

16 18 21

3.1 Theory building from case study research 3.2 Company Context 3.3 Data Sources

27 28 29

3.4 Data analysis

3.3.1 Desk research 3.3.2 Interviews 3.3.3 Population

4. Research findings

29 29 30

4.1 The Vision imperative

4.2 Activation signals

4.1.1 Visionary leadership 4.1.2 Transparency 4.2.1 Change Support 4.2.1 Change Symbols

4.3 Tensions 4.3.1 Dissonance 4.3.2 Vertical & horizontal obstacles

4.4 Value relationships 4.4.1 Inter-‐organizational collaboration 4.4.2 Reframing the value chain

5. Discussion 5.1 Summary of the findings 5.2 Theoretical contribution 5.3 Managerial implications 5.4 Limitations and future research 5.5 Conclusion

References

35 37 40 43

45 46 48

51 52 56

59 59 62 64 65 66

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1. Introduction “Some companies focus on what they say and some emphasize how to behave. We focus on who we are, so we don't have to worry about policy instructions” (Tony Hsieh 2010). By applying an unwavering emphasis on customer service, the online shoe store Zappos has found a surprising approach for a technological company. Rather than prioritizing the ergonomics of the checkout and transaction process, they focus first and foremost on their ‘being’ – on ‘who they are’ as a community that emanates a great ‘wow’ culture for customers as well as others. They believe in finding, growing and connecting great people who will in turn deliver the ‘happiness’ experience, that makes suppliers, deliverers, customers and local communities want to stick around (Hsieh 2010; Koo, Kim & Mauborgne 2013). In a different way, Southwest Airlines managed to build relational capabilities with the explicit purpose of building long-term performance through specific mutually reinforcing practices among internal and external actors (Gitell 2005). What strikes me in the success of these firms is their capability to develop networks of long-term relationships as a competitive resource by aiming for shared goals that lie beyond the selfinterest of the company. Zappos has succeeded in providing an identity platform for both internal and external audiences to engage in meaningful interactions, which seems to correlate with their mission of ‘delivering happiness’. A philosophy which inspires different stakeholders to return and invest in the relationship because the happiness mission seems to have meaning to all stakeholders as it triggers a sense of contributing to the world that exceeds basic needs; salary, supply contract, return on investment, customer utility-need satisfaction. Organizations like Zappos connect with a broader emerging societal phenomenon: people want to find meaning in what they do. Our intrinsic motivations are not grown by salary and bonus, but by a human need to matter for others (Rifkin 2010). By feeling good about ourselves when making a difference for people, a community or society. By contributing to something bigger that exceeds our basic self-interest and feeds into our ‘moral selves’. These notions are supported by classic theories of ‘self-actualization’ (Conley 2007) and ‘self-worth’ (Brickson 2007, p.880). It also taps into our human need to belong to certain groups that shape our ‘social identity’ (Ashford & Mael 1989, p. 21), and the ‘hierarchy of needs’ as described and greatly adapted from Maslow’s ‘theory of human motivation’ (Maslow 1954 in Conley 2007). I would argue that this type of motivation applies to all internal as well as external stakeholders in the enterprise context and it is surprising that yet so very little of these insights are operated on a wider corporate scale. It is well known for example that customers value engaging experiences over utilitarian transactions (Brakus et al. 2009; Dalpiaz et al. 2010; Gummesson 2004). It is also recognized that suppliers will ‘walk the extra mile’, when they feel valued and recognize the company’s motivation to engage in long-term relationships (Krause et al. 2007, p.538). And even (institutional) investors have come to prefer long-term vision above short-term profit (Chouinard and Stanley 2012, p. 7). Unfortunately, doing so remains a challenging, if not failing, exercise for many long-standing organizations.

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Dealing with relationships is often delegated to specialist departments, designed to squeeze as much value as possible out of the relationships, which in itself harms the relationship. Marketers seem on a desperate search to ‘find the hole in the market’, the golden ticket that tricks customers into buying as much of a product as possible. This represents a neoclassical, and still dominant view of an efficient marketplace, propelled by natural maximization forces, void of any real people with their biases, hopes and beliefs. In this view employees, suppliers and customers are mere mechanical instruments that execute the predetermined transaction process of delivery and consumption. This view appears to be a failing interpretation for the future as it feeds into the already growing distrust of consumers worldwide towards businesses and their leaders (Edelman 2015). This increasing distrust causes rising ‘transaction-costs’ – marketers need to employ ever more aggressive tactics to attract increasingly uninterested customers (Morel 2010, p. 16). Poor imagination, a tendency to benchmark and invest in incremental product innovation offers little added value to consumers. This poor understanding of consumer aspirations seems to lead to a negative commoditization-spiral as customers negotiate away price margins because they can find similar and ever cheaper solutions elsewhere (Prahalad & Ramaswamy 2004, p.7). This spiral may well have enabled the disruptive force that many digital startups are now causing (Ries 2011). Building sustainable, meaningful relationships is particularly a challenge for organizations in commodity services industries – such as (retail) banks, insurers, healthcare, telecom, and energy providers. Stuck between low consumer interest, a semi-public and/or monopolistic heritage and unpredictable government interference and regulations, has lead many of these organizations to ignore and cut spending on customer service. For instance, my bank, healthcare, and energy provider seem unable or uninterested in having personal contact with me. They often view ‘getting in touch’ as an expense and have designed interaction channels mainly for ‘self-service’ interaction that suits them, not for learning how to deliver a meaningful dialogue experience. Even though we may not need to have strong emotional bonds with our banks or energy providers, they do play a fundamentally public role in society. Disrupting startups may certainly help drive down excessive pricing and improve customer service experiences, but it remains to be seen whether these innovators aim to responsibly build value for society and refrain from cherry picking only the easy and wealthy subscribers to their services. Because they manage vital public infrastructure, because they provide services to a large and wide spectrum of customers and because many banks, telecom and energy providers have deep roots in various layers of society – which gives them to a certain level a semi-public purpose – they have the potential to drive significant change in the social, economical and environmental crises we are facing on a much larger scale than any niche player will be able to do (Porter and Kramer 2011). To do so, however, they will have to reinvent their purpose, their operations and relationship skills and let go of the traditional production management and transaction orientation that has led them to become too much inward looking, fragmented, uninspired and unmotivated for both internal as well as external stakeholders. In light of the above, I formulate the following research question: How can commodity services organizations shift from a transaction-‐oriented exchange model to a meaningful, long-‐term relationship-‐based model

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The research question contains several sub-questions that need further examination and context. The first sub-question centers around describing what I mean with transaction models. What are the underlying economic beliefs, management philosophies and marketing practices that I can find in various articles and literature? The second sub-question requires more elaborate understanding of meaningful relationship models. What is known in theory and in practice about relationship models, strategies and practices? How do they work and what motivates employees as well as external stakeholders to engage in such relationships with companies? I will answer these two questions by reviewing existing literature and case studies examining exemplary companies that appear to adopt relationship models in their daily practices. The Third Sub-question is addressed through case-study research (Yin 1994; Eisenhardt 1989; Martin & Turner 1986) to shed light on how commodity services companies cope with such transitions, what challenges they face and what critical success factors can be identified for organizations to commit to such a comprehensive transition. To answer that third question, I take a case-study design to examine one specific commodity service organization in the middle of a transformation towards relationship-based models. Eneco is the largest independent energy provider in the Netherlands. Since 2007 they are in the process of reinventing themselves from being a traditional energy provider, to becoming a leader in the decentralized sustainable energy revolution in the Netherlands and beyond. They appear to seek co-creative relationships with internal and external stakeholders guided by a shared mission that seems to aim for two goals: 1) empower shared ownership of local and sustainable energy production and 2) form coalitions to reduce environmental depletion and CO2 emissions. Exactly because they have not yet reached this goal and because they are in the middle of transforming the strategy and structure of the organization to facilitate this ambitious vision in an uncertain market, I am interested in identifying the challenges they encounter and identify critical success factors in the perceptions of organization members and how they see the progress of the organizational transformation towards a relationship-oriented organization.

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2. Literature review 2.1 What are transaction models? To address the first sub question related to my research question I have identified broadly three aspects related to the worldview, the management and the distribution aspects of transaction models. In paragraph 2.3 I will also describe aspects of a paradigm shift in marketing and product value thinking. With transaction orientation I refer to a general management practice that seems to have permeated business and policymaking over the last century. This practice resulted in a dominant focus on ‘production’ and all other activity is subordinated to it. It stems from a rather mechanical, de-humanized and materialistic view of how people work and relate to each other: each actor, cell or unit applies its specialized skill-set to his or her piece of the chain before it is passed on to next. External stakeholders such as consumers are simply at the end of those chains and it is up to the marketing-cell to gain as much profit from the transaction as possible. In this view people are there to serve the economy rather than the other way around. This orientation is closely related to the way many managers until recently were educated (Brickson 2007, p. 883). Mainstream economics, also referred to as neoclassical economy appeared in the beginning of the 20th century in an effort to ‘purify’ economic mathematical modeling. In this view societies should strive to reach perfect economic equilibrium between supply and demand, which will eventually be realized by the market itself, negotiated through rational actors in the marketplace. For the purpose of this section, I have identified three typical elements that I assume to be characteristic for transaction orientation models. With Rational Positivism I provide a general background to the purpose and evolution of these neoclassical economic models. With Managing Production I try to describe how the organization of work has developed – the organizational practices how employees were managed. With Distribution I zoom in on the development of interaction practices between company and customer. What type of marketing relationships did organizations aim for and how did they manage them?

2.1.1 Rational Positivism Early economic thought, also referred to as classical economics, had a rather static view on markets – the price of products was seen to be relative to the cost of production. Credit was almost impossible to come by so the economy hardly grew. With Adam Smith the revolutionary capitalist idea of reinvesting profit for growth emerged. Trust in future growth – a radical new concept – facilitated increased availability of credit, which facilitated growth hence the capitalist idea was born, based on the human capability of imaging and thus creating growth. The base rule is however: reinvest profits in production so as to make it grow to facilitate more credit (Hariri 2011, pp.341-352). By the end of the 19th century, economist were still seen as socio-political scientists whose academic discourse was dominated by a polarized debate between socialist and capitalist views Kicking the ball into no-‐man’s-‐land

about the distribution of wealth. The shift from classical to neoclassical thought was inspired by the so-called marginal revolution which proposed a dynamic price model relative to supply and demand levels. This inspired economists to design more scientific and mathematically pure models to describe an all-encompassing model of the economy, as was rather in fashion in those days. Inspired by groundbreaking theories from rockstar physics scholars and infused with general positivist view of human behavior, determined by immutable laws (Wikipedia 2015), it is hardly surprising that economists sought to formulate models that describe economic phenomena as if it were predicting the principal behavior of atomic particles, instead of the behavior of human beings. The key premise to neoclassic thinking according to Weintraub (2002) is that 1) individuals rationally choose their preferences, 2) they thereby maximize either personal utility – as a consumer – or profit – as a business 3) while acting autonomously on the basis of symmetrical information, relevant to the choices they make. The aggregation of these demand and supply behaviors would affect price levels of consumable goods. Rational choice theory is a typical example of neoclassic thinking rooted in positivist tradition, because it predicts market behavior based on the assumption that individuals rationally balance cost to benefits and that they are motivated to do so as their single most important objective is to maximize personal advantage. Presuming that we want more, rather than less of a good by choosing objects that provide the greatest utility reward against the lowest costs. It presents preferences as being stable and predictable, which of course makes it also much easier to calculate social behaviors simply and objectively. And by taking utility to be correlative to happiness, economists suddenly also provide a metaphysical explanation of human behavior: consumers are happy when they exercise their maximum utility” Even though many elements of positivist neoclassical models have been challenged, it has inevitably colored generations of management culture and policymaking. Both having significant impact on some of the service organizations I refer to as they are a direct result of a belief in the purifying effects of free-markets and de-regulation by politicians. Especially in the early days, but even until recent it was risky to challenge the fundamentals of this way of thinking because “to challenge the neoclassical approach was to seem to challenge science and progress and modernity” (Weintraub 2002; p. 3).

2.1.2 Managing Production From this perspective it is no surprise that governments strove to serve societies needs and wants by facilitating the maximization dogma. Policymakers reasoned that production growth would lead to consumption growth, which would inevitably lead to greater wellbeing as it serves consumers who – according to rational choice theory in neoclassical economics – always “want more, rather than less of a good” (Marsh 2014). This meant also that the level of production was – and up to a point still is – the most prominent indicator of national economic wellbeing. GDP measurement is derived from total production performance per capita. This dominant production-orientation would also determine how business organizations were seen. Ronald Coase (1937 pp. 390-391) is one of the first economists to argue that firms arise only when markets become too expensive to negotiate legal short-term contracts to raise capital,

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labor and suppliers for production than it is through long-term organizational contracts. In fact he argued that cost-considerations should be the sole motivation to formalize a long-term business organization. Consequently, the cost-lens through which production was organized had significant impact on the way business organizations developed. With incredible speed, along with the industrial revolution, businesses organizations would change drastically, fully orienting itself around the purpose to reproduce goods as cheaply and efficiently as possible. Workerpurpose changed almost overnight, from valuing skilled craftsmanship to an almost insatiable need for cheap, unskilled ‘puppets’ performing endless hours of repetitive tasks at the mercy of an unstoppable assembly line (Liker 2004). Scientific management or “Taylorism” developed in an effort to analyze the actual process of individual workers, something no one had considered earlier. Frederick Taylor (1856-1915) was a typical offshoot of the rational neoclassic thinking. Although he also intended to alleviate workers, he scrutinized the work process mainly to identify potential efficiency gains. His cold and mechanical views and the methods he applied, eventually lead to low morale and angry workers. Assigning skilled laborers to do tedious tasks must have constrained their sense of autonomy and pride (Gagné and Deci 2005) and Taylors’ approach indeed became a symbol for worker protests, which inadvertently strengthened the role of labor unions in those years (Drury 1915, in Wikipedia 2015). Nevertheless, Taylor’s meticulous efforts deconstructing the taskcomponents of laborers into simple knowledge algorithms nonetheless increased the process of labor commoditization, of outsourcing and increase in offshoring practices, which later lead to responsibility debates about worker conditions to this day.

2.1.3 Distribution Because mainstream economic models simply predicted that the more goods an organization produces, the more profit it would make, as economic laws predicted that consumers would consume “more rather than less” goods to satisfy utility-needs, marketing was seen simply as a matter of distribution. This is exactly what early marketers did and it is what I call the transaction-orientation. The organizational orientation being directed inward and the transaction being the distribution of the goods – a mechanical task, being delegated to the marketing department. With the growth of mass production came the need for mass distribution and marketing simply had to facilitate the transfer of ownership or “apply motion to matter” (Shaw 1912, p. 764 in Vargo and Lusch 2004, p. 5). Motion being the production of messages, directed to a rather undefined mass of consumers. The market was viewed by marketing theorist “[…] as a locus of exchange or as an aggregation of consumers […]” (Kotler 2002 in Prahalad & Ramaswamy 2004, p.4). Scholarly attention in early 20th century was mainly concerned with the distribution of goods, and the debate about the establishment of the marketing institution within organizations (Vargo and Lusch 2004, p.3). The purpose of that carefully fended off marketing institute in the organizations was – and to a certain level still is – to produce marketing communications by applying a ‘mix’ of various ‘oneway-street’ channels to distribute the product message. One of the most dominant instruments that developed from this production-paradigm is the 4P’s model, which created the marketing mix decision-making reflex based on management by numbers and market-share rather than on

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insights gathered from interaction with any real customers (Grönroos 1994, p.4). Because of its simplicity, marketing mix management still is one of the most dominant marketing practices, even though it’s “[…] theoretically based on a loose foundation […]’’ (Van Waterschoot & Van Bulte 1992 in Grönroos 1994, p.7). The institutionalization of the marketing function and the goods dominated modeling in marketing theory gradually became a problem for service marketers. Classical value models reasoned from goods being ‘embedded’ with value, thereby ignoring the potential value created in interactive service relations (Vargo and Lusch 2004). And the specialized marketing department delegated to ‘take care’ of the ‘customer-fuss’, not only had a problematic effect on the market orientation of other organization members, loosing “[…] whatever little interest in the customers they may have had” (Grönroos 1983 in Grönroos 1994, p.7; Vargo and Lusch 2004, p.3), but also alienated marketers from the rest of the organization (Morel 2010). Both issues are crucial if organizations want to develop towards relational models.

2.2 Paradigm shift Many elements of neoclassical thought have been disproved by a variety of scholars including psychologist, sociologists and behavioral economist. Although business management and policy making had been strongly influenced by it, the financial and economic crisis between 2007 and 2010 may have ‘sealed the fate’ of dogmatist neoclassical thinking as rational arguments could not avoid nor predict the devastation following the Lehman Brothers collapse (Krugman 2009). The fundamental premise of rational choice theory, which assumes that actors make rational choices, has been refuted by a variety of scholars. Among others is Daniel Kahneman (2011) who presents a broad amount of research how human behavior is biased by emotional preferences, later to be justified by the rational brain. These findings have undermined fundamental assumptions about market behavior in neoclassical theory. The ‘goods dominant view’ of the market, assuming that value could only be created in a production process presented another problem in a growing service economy. Gradually servicemarketing theorist started questioning whether consumers actually want goods or rather the value that it offers (Gummesson 1994 in Vargo and Lusch 2004, p.2). Marketing thinking started developing more service models, arguing that the value of almost all products can be created through services. Especially since the internet-revolution, consumer value does not necessarily require the possession of things, rather the outcomes: We don’t want cans with paint, we want colored walls... We don’t want CD’s, but a service to experience music… These are typical examples of a new services economy that seems to challenge the materialistic mass production paradigm. Prahalad and Ramaswamy (2004, p. 7) go even further by attributing today’s price erosion for commodities and company complaints about disloyal consumers, to the mediocre, unimaginative and risk avoiding cost- and production orientation of most manufacturers. Taylorism, division of labor and micro-specialization (Vargo & Lusch 2004, p.8), have proven to be effective factory systems to scale production. But it is proven quite ineffective to facilitate cross-organizational collaboration, motivation and innovation (Ries 2011; Liker 2004; Hatch and Schultz 2009; Gagné & Deci 2005; Gitell 2005). It suits an economy of ‘goods exchange’, which ignores the complexity of relationship building and the traits and competences needed to

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collaborate and compete (Day 1994 in Vargo and Lusch 2004, p.13) In the new service economy the roles of all economic actors are viewed more relational rather than mechanical. That includes the previously separated role of the consumer, who has become the locus of value creation (Prahalad and Ramaswamy 2004, p.5). Because marketing simply followed neoclassical thinking, customers – let alone other stakeholders – were merely viewed as endpoints. This mechanistic view had been accepted by mainstream marketers for many years, except B2B and services scientist, who are gradually causing a paradigm shift in marketing research (Grönroos 1994, p. 9), moving away from the dominant use of the marketing mix management model, recognized as too limited for the service relationship paradigm that has emerged (Grönroos 1994; Vargo & Lusch 2004; Gummesson 2004). Together with this shift, marketers acknowledge the importance of integrating rather than specializing the marketing function to serve a broad customer interface (Grönroos 1994, p.10; Vargo & Lusch 2004; Hatch and Schultz 2008; 2009) and at last engage and share knowledge with the rest of the organization (e.g. Morel 2010).

2.3 What are organizational relationship models? To address the second sub question related to my research question, I have identified three perspectives, or views, that explain important aspects of relationship models.

Three perspectives Even though there is a rising interest in organizational relationship models, I have not found many examples in academic literature that span internal as well as external and motivational as well as inspirational relationship mechanisms. This is partly due to the fact that these areas cross several academic fields, and I assume partly because traditional management literature has for a long time been rooted in neoclassical thinking. But other more humanistic fields (e.g. psychology and sociology) also provide interesting clues about social organization of management and the formation of organizational identity. More importantly, there are some shining examples that successfully apply relationship models. For example Southwest Airlines owes its sustained profits in a highly volatile industry to cross-organizational relationship practices (Gitell 2005). To study the characteristics of relationship models, I have identified three perspectives that I deem important for organizations making the shift towards relationship models. They are 1) the marketing vies on relationship management and value creation, 2) the management view, the practices that enable employees to apply relationship principles in their daily work and 3) the identity view and the role of organizational vision, identity and leadership that are essential to support, motivate and coordinate internal and external stakeholders to engage with the organization. Beside the fact that substantial literature on relationships can be found for each of the three perspectives, I believe they are complementary to each other. This appears to be confirmed in both the Zappos as well as in the Southwest cases, where they managed to build a relational attitude affecting the behavior of employees and even suppliers. To a certain extent, they exemplify what Grönroos (1994; 2004, p. 110) meant when he advocates that all employees

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should become ‘part-time marketers’, taking responsibility also for the market relationships of their organizations.

2.3.1 the marketing view In this section I cluster findings from mostly marketing literature about company-customer interaction, retention and customer relationship models aimed at long-term value creation. Such value can have different forms ranging from tangible to intangible, from emotional and experience value to economical or knowledge value. I found three principles that I think are important for the development of customer-company relationships: the first concerns principles of co-creation and the so-called ‘service dominant logic’ (SDL). The second concerns a new way of relational intelligence. In the third principle I zoom in on customer relationship management.

The Service Dominant Logic (SDL) When service marketers challenged the traditional goods-based models of value being produced in factories, they converged on a fundamental shift towards the point of interaction being the locus of value creation (Vargo and Lusch 2004; Payne, Storbacka & Frow 2008; Grönroos 1994; 2004). By repositioning the point of value creation, the customer becomes a determinant factor in the evaluation of the value of the service experience (Gummesson 1995 in Vargo and Lusch 2004, p.2). In this sense, value becomes contextualized: goods can be of zero or even negative in value when they appear to malfunction or arrive too late for, say a wedding ceremony (Grönroos 2004, p.108). Prahalad and Ramaswamy (2004) describe how dissatisfied, networked and empowered consumers seek influence to customize utility and personalize experiences. That no longer fits with the industrial view of market-segments as an aggregation of passive ‘targets.’ Mutual understanding cannot be developed in focus groups or occasional research, but has to be accumulated in direct interaction and in the service delivery itself. They argue that producers can overcome today’s price erosion and commoditization spiral by adopting an ‘experience-based view’: learn to see the market through the eyes of their customers who can “adopt a multitude of different roles”, varying from “a competence provider, a controller of quality, a co-producer, and/or a co-marketer (Storbacka & Lehtinen in Payne, Storbacka & Frow 2008, p.86). Firms should therefore learn to compete on their ability to govern “high quality customer-company interactions and personalized co-creation experiences” (2004, p.12). To guarantee a balanced infrastructure for mutual value creation and extraction, Prahalad and Ramaswamy (2004, p.13) present the DART model, which consists of four building blocks: Dialog, Access, Risk/benefits and Transparency (2004, p.9). Dialog has the purpose of building a shared knowledge platform. Without it, no mutual value can be created (e.g. Grönroos 2004, pp. 107-108). To facilitate value co-creation, the firm has to provide full disclosure (transparency/ access) to its intentions, knowledge and company goals to overcome the information-asymmetry (risk) that customers experience when engaging in a co-creation relationship (2004, p.9). Although this and other co-creation concepts have received much interest, also beyond marketing literature, substantial knowledge is lacking about the customer motivation to engage in co-creation relationships (Grönroos 2011 in Galvagno and Dalli 2014, p. 650). Kicking the ball into no-‐man’s-‐land

Relational Intelligence Heller-Baird and Parasnis (2011, p.34) argue how managers tend to overestimate customers’ interest in a general connectedness to the firm. They have identified significant gaps between the expectations of organizations and of consumers when they engage firms through social media. This is symptomatic for the lack of understanding of customer intentions towards firms, which appears to be either in a transactional or relational mode (Grönroos 2004, p.110). The problem here is that firms still tend to lump customers together to fit their segmentation strategies and find it hard to understand that customers might have other intentions than planned. Avery, Fournier and Wittenbraker (2014) have found strong correlations between consumerperceptions of romantic relationships and how they see their relations with companies (2014, p.4). They identified 29 types ranging from loyal marriage, to a ‘secret affair’ and ‘master-slave’ relationships, each accompanied with a specific set of social rules and regulations. It is crucial for firms to understand these relationship-regulations and learn how to align their service-interactions with the expectations of their customers. It is very well possible to move initial ‘secret affair’-consumers towards committed relationships, but if the initial consumer intentions are misunderstood – the excitement is answered with bureaucracy in the initial contact for example – the affair will likely not develop any further. Long-term committed customers on the other hand may become very demanding and even jealous, requiring dedicated and intensive attention and effort. Omissions or an occasional pass over – offering new customers better discounts than existing ones – can be interpreted as a grave insult, turning initial advocates into fierce enemies (Avery, Fournier and Wittenbraker 2014).

Customer relationship management The reality of company-customer relationship management in most organizations is that of delegation, automation and a general transaction-orientation (Grönroos 2004, p.100). Traditional commodity service providers in the telecom, banking and energy sectors find it difficult to engage in conversations, in part because of the sheer number of customers – many consumer service industries have seen consolidation peaks throughout the years. This means that the service relationships they manage are largely functional and sustained by ‘lock-in’ policies: the subscription-formats they apply, subsidize a so-called ‘status-quo bias’, which raises psychological barriers that prevent even dissatisfied customers from leaving their providers (Thaler & Sunstein 2008, p. 35). Despite this bias, the so called ‘churn-rate’ – the balance between newly acquired- and defecting customers – is a growing problem for many commodity service organizations – especially for energy providers in the Netherlands (Moerkerken et al. 2012). It may be difficult to engage in one-to-one conversations with millions of customers, but delegating the interaction to unresponsive CRM systems that “typically concentrate on the operational responses required to manage the customer” (Heller Baird and Parasnis 2011, p.30), or unmotivated customer-care teams, managed on a ‘cost to care’ basis, will probably not help improve those churn rates. Since the early nineties cumulative research related to the “Harvard Profit-Chain” stream of research have shown strong correlations and even causality (Payne, Holt, & Frow 2001, p.797, 802, 806) between employee satisfaction and customer satisfaction and retention (Heskett et al. 1994; Fleming, Coffman and Harter 2005). With excessive focus on customer satisfaction, the

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employee is often overlooked. This not only affects customer experience, but may also impair the firms’ capability to gather information about customer behavior. From this perspective, Ramaswamy and Gouillart (2010, p.14) argue that firms need to consider also the value-experience for their employees when designing customer experience. They have to facilitate a process of social and psychological value accumulation (esteem, status etc.) to motivate employees to deliver meaningful interactions (2010, p.4). As argued also by Grönroos (2004; p.110), this customer-orientation should not be delegated to one function within the organization, but instilled in the management culture of the organization.

2.3.2 the management view The third perspective clusters around cross-functional and intra-organizational collaboration, which I term the management perspective. Here the goal is to identify management models as well as organizational practices relevant to building sustainable inter- and intra-organizational relationships. For this purpose I look at three related operating models. The first describes how horizontal as well as vertically integrated Relationship Architecture can enhance performance (e.g. Gulati and Kletter 2005). In the second piece I look at evolutions in teamwork and collaborative workflows (e.g. Liker 2004 and Ries 2011). In the last section I look at successful management practices that have been applied in an extremely competitive environment through Relational coordination (e.g. Gitell 2005; Denning 2011).

Relationship Architecture Relationship capital is what Gulati and Kletter (2005, p.77) broadly define as “the value of a firm’s network of relationships with its customers, suppliers, alliance partners and internal subunits.” They suggest a model for the enhancement of firm’s of horizontal as well as vertical relationships, being as they call it “mission-critical assets” (2005, p.102). The idea is that firms have to expand through partnerships to enhance the customer value chain while at the same time managing costs by shrinking to core activities (2005, p.78). This can only work if the firm learns how to integrate and sustain seamless cross-organizational practices with internal and external parties. The value of such relationship-networks with suppliers, partners or even customers, build over time, so the organization has to develop strategies to sustain these relationships by laddering the ties from transactional- to relationships of shared ownership and investment. Successful relationship networks allow for a company to outsource functions to supplier networks that previously were considered core and it might even allow for partnerships with competitors to serve specific needs in the customer value chain. The traditional boundaries that define what is ‘in-’ and what is ‘outside’ the firm is becoming fluid, transparent and semipermeable (2005, p.95). Starbucks for example, has managed to build such multifaceted relationships with important stakeholders. Not only through an integrated and mutually rewarding network of suppliers and alliance partners, but also with its thousands of barista’s around the world who apply a relational attitude towards their customers everyday (Gulati, Huffman and Neilsen 2002).

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Collaborative Workflows It was only until Toyota’s radical production-management philosophy started to influence mainstream management thinking that cross-functional collaboration and relational competencies became acknowledged as essential to organizational success. Lean and agile management principles are rapidly spreading far beyond manufacturing sectors entering the services industries and even changes the way managers think about business innovation (Ries 2011). Toyota’s Lean management philosophy was born out of pure necessity – they had only one press to produce all the various parts. To produce these in large badges would cause enormous delays due to congesting inventory logistics – constantly carrying around materials is a waste of time. Ironically, Toyota’s production philosophy is based on manufacturing principles from ‘Fordism’ and ‘Taylorism’, but the Lean-philosophy applies three fundamental differences: 1) Crossfunctional collaboration –what they learned from American Football; each player can take oneanother’s position in the field (Liker 2004). 2. Single piece flow; triggered by customer ‘pull’, teams assemble one high quality (‘first time right’) product at a time to avoid rework (Ries 2011, p.185). 3. Waste reduction in the broadest sense of the word; ranging from physical and material waste, to reduction of time and cost, to reducing environmental waste, and especially; reduction of social- or emotional waste of worker autonomy – allowing workers to identify and improve procedures and take ownership of their everyday work. Each of the three differences should theoretically contribute to greater employee motivation, as they appear to correlate with three principles of Self Determination (Gagné and Deci 2005, p.337): cross-functional collaboration, teamwork and understanding what others are doing, could enhance feelings of ‘relatedness’. Single-piece flow and the joint effort to perfect each product, have a sense of whole product – as opposed to the Taylorist idea of micro-specialization where only a handful get to see the ‘whole’ finished product – may allow for more employee pride, satisfaction and a sense of being ‘competent’ (2005, p.354). And waste reduction through employee involvement and process ownership may contribute to a sense of ‘autonomy’ (2005, p.343). There are of course many other factors that influence employees ‘intrinsic motivation’, which in the end depends for the most part on people, their daily routines, the relationship practices and how they are supported by leaders (Gagné and Deci 2005, p. 342): “People join companies, but leave their managers” (Buckingham and Coffman 1999 in Conley 2007, p.67). Toyota not only showed the western world how high quality and high profit can go hand in hand, Lean practices also disproved western assumptions about production efficiency through division of labor, specialization and departmentalization structures that dramatically impair the flow of tangible and intangible value, of materials as well as communication. The neoclassic management ideas have impaired organizational capabilities to share information, knowledge and commit for common goals – often deemed ‘soft’ and trivial elements, but they have proven to be decisive factors for sustainable business growth.

Relational Coordination Southwest Airlines applied and extended these lessons in a highly complex industry by enhancing cross-functional and inter-organizational coordination (Gitell 2005). These seemingly

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‘soft’ factors are directly related to Southwest’s sustained business success; each second an aircraft is longer on the ground literally impacts the profit of the organization. Airline operations are incredibly complicated, not only because of the technical and safety challenges, but also because it involves significantly different types of people and job-functions carrying various levels of ‘status identities’ that create social ‘in-groups’: pilots typically identify with other pilots, not with maintenance people. Such functional divisions may fundamentally threaten collaboration, knowledge and information sharing. In her book the Southwest Airlines Way, Jody Hoffer Gitell (2005) identified ten organizational practices that create an environment of shared goals, shared knowledge and mutual respect. Central premise is the communication imperative, used as an interactive, problem-solving and organizational learning instrument. Combined together, these organizational practices are the differentiating success factor that no other airline has managed to copy. The ten principles are: 1. 2. 3. 4. 5.

Outstanding business leadership Invest in Front-‐line leaders Hire and train for relationship excellence Use conflicts to build relationships Bridge the work-‐family divide

6. 7. 8. 9. 10.

Create positions that span boundaries Use broad performance metrics Highly flexible job descriptions Partner with Unions Build supplier relationships

Leadership and unions: Southwest’s leadership roles are primarily aimed at reinforcing relational attitudes: instead of showing disrespect, Southwest leaders explicitly share goals and knowledge with union representatives, which is not only helpful in time of a crisis, but also earns Southwest high employee-trust as they feel supported in their union-membership, something that otherwise causes a loyalty conflict. Front-line leaders: Contrary to tendencies in most service commodity industries, firms like Southwest and Zappos deliberately focus on investing and training leadership capabilities at the frontline by helping employees to act on delivering value in the moment – the employee no longer reports to his manager, but to his customer (Denning 2011, p.19). This improves the customer experience and has a positive impact on the employee experience; supporting a sense of autonomy (Gagné and Deci 2005). Similar to front-line leaders, Southwest also invests heavily in ‘boundary spanners’, flesh-and-blood knowledge and information coordinators – a task often delegated to information technology. The problem with such technology is that it cannot interpret, anticipate and apply the social persuasion and coordination skills necessary to span operational boundaries. Supplier relationships: Organizations such as Toyota, Zappos, Ikea, Starbucks and Southwest seek intense relationships with suppliers by engaging in long-term and mutually beneficial commitments. The traditional arms-length contractual negotiations fail on the long run as it is based on distrust, impeding knowledge sharing. This may be financially attractive on the short run, but will eventually harm the firm itself. “By treating these suppliers as partners, Southwest effectively extends its sphere of influence beyond its employees to encompass its entire value chain” (Gitell 2005). Which means that the actual value-creating cluster – what Hatch and Schultz call ‘the enterprise’ (2008; 2009) extends beyond the organizational boundaries, similar to the model of Gulati and Kletter (2005).

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2.3.4 Identity view In the three perspectives of marketing, management and identity, I follow an outside-in chain of ‘needs’ ranging from the need for customer satisfaction, which can be improved by the need for employee satisfaction, which in turn can be supported by management practices, which I assume can be positively influenced by an organization’s need for a motivating vision and identity – the cluster addressed in this section. The aspects of organizational identity and vision, of leadership and motivation, are inherently related to each other. In the first part I will zoom into the various models of identity and identity formation as described from social, psychological as well as marketing and communication perspectives (Cornelissen et al. 2007; Brickson 2007; Hatch and Schultz 2008; 2009). In the second part I will take a further look at the role of vision, leadership and motivation (Collins & Porras 1996; 1991; Hsieh; Gitell 2003; Gagné & Deci 2005; Conley 2007)

Identity Models The concept of identity can be viewed from various academic perspectives ranging from the individual to the group, to the organizational and corporate levels of analysis. Cornelissen et al. (2007) developed an integrative model that describes how the different identity constructs hold different processes, patterns and outputs, ranging from internal and cognitive processes on the individual level, to externally oriented and symbolic processes that result in tangible products and services on the corporate level (2007, p. S4). Even though the aim here is to understand the role of identity in the context of organizational relationships, the construction process of individual as well as organizational identity is important because they are formed and influenced by each other, specifically through relationships with external relationships.

vision

ning

nition

ival

who are we?

identity

culture

how are we perceived?

images

Figure 1: The V-‐C-‐I branding model and the feedback loops in the identity conversation (Hatch & Schultz 2008)

Identity conversation: Hatch and Schultz (2008, pp.48-50) describe how an early theory of identity formation by Herbert Mead in the 1930s, still holds ground, also on an organizational level. As soon as individuals begin to question ‘who am I?’ the second question arises: ‘how do others see me?’ Our identities are formed through a process of expressing, listening, interpreting, responding and consequently reshaping the images we project (see figure 1). This identity building process is inherently dependent on the response of ‘others’ – those relationships we Kicking the ball into no-‐man’s-‐land

value; that has a legitimate impact on us (parents, boy/girlfriends, colleagues, or customers, employees, investors, etc.). The formation of organizational identity thus develops through similar patterns. It is formed and shaped by these expressions and feedback loops and thus also stabilized (Brickson 2007, p.869) to form characteristics that are perceived as central, enduring and distinctive by stakeholders (Albert and Whetten 1985; Cornelissen et al. 2007, p. S6) and “[…] consists of participants’ shared perceptions about what their organization is (e.g. Ashforth & Mael 1996 in Brickson 2007, p.865).” Stakeholders are motivated to engage in the organizational identity conversation because it shapes and enhances their personal identity. The organization provides employees, investors and suppliers with attributes that help categorize themselves: a “perceptual lens […] that guides individuals’ sense-making” (Cornelissen et al. 2007, p. S6) “and drives motivation and behavior” (Brickson 2007, p.865). It could be argued then; that the quality of the organizational identity depends largely on the quality of the relationships the organization has with its stakeholders.

core ideology

recognition

envisioned future

vision

meaning

survival

who are we?

identity

culture

how are we perceived?

images

Figure 2: The vision model (Collins & Porras 1996) and the interdependent elements of unchanging ideology and values with elements of dynamic envisioning a vivid image of the future that is related to ‘big and hairy’, but reachable goals.

Organizational vision But for stakeholders to engage and affiliate with organizations, they need an inspiring vision to believe in. History has shown that a visionary narrative has the power to steer coordination across millions of total strangers, sharing a particular belief (Harari 2015, p.133). ‘Strategic vision’ is also the third element in the identity conversation as proposed by Hatch and Schultz (2009, pp.120-121). It shapes the identity process, but it is also shaped by it. Shaped by the perceptions and expectations of stakeholders, providing the firm with a license to operate; and shaped by employee cultures to coordinate execution of the vision. Unfortunately, most organizations express boring and instrumental visions that do not trigger imagination let alone actionable behavior. Collins and Porras (1996; 1991) devised a model of how successful companies formulate visions that describe both the Yin and Yang of firms. How they manage to preserve core characteristics, while stimulating progress and change (see figure 2). The core ideology – core values and core purpose – is that which is imprescriptible and nonnegotiable: Johnson & Johnson’s company credo has priority even if it would cost the firm money. What separates the good from the great companies, is the discipline of how those values are lived by and acted upon if violated (1996, p.71). The other side of the coin combines a ‘big, hairy, audacious goal’ – a ‘slightly unreasonable’ aim for the next 10-20 years – with a vivid but crystal clear description of an envisioned future. A highly imaginative landscape that is so expressive that it speaks to audiences within but also beyond company walls. The success of such

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visionary firms is not related to easier goals or a better strategy, “their success lies in building the strength of their organization as their primary way of creating the future” (Collins and Porras 1996, p.76).

Motivation and leadership But motivating people that are directly involved in making the future requires more than a vision. Because negative employee cultures have impact on the identity conversation and because it is shown that motivated employees directly improve the perceptions of customers (e.g. Payne et al. 2001; Ramaswamy and Gouillart 2010), we should learn what drives of employee motivation. Successful work cultures like Zappos and Southwest provide ‘psychological food’ that promotes intrinsic motivation as described in the SDT theory by Gagné and Deci (2005): intrinsic or Autonomous Work Motivation not only results in higher job satisfaction, but also promotes creativity, cognitive and conceptual flexibility and organizational (Gagné and Deci 2005, p.337). Such motivation requires (psychological) environments that abides to the following conditions: • • • •

Managerial emphasis on choice, self-‐initiation rather than control (2005, pp.345). Positive Feedback, acknowledging and understanding people’s perspectives (2005, p.342). A meaningful rationale, a vision that makes sense and is actionable (2005, p.341). Qualitative interpersonal management style, which in itself is seen to have a positive impact on job satisfaction, work attitudes and internalization of organizational goals (2005, p.346).

Successful firms applying relationship models extend their motivation strategies beyond employee cultures. They overcome crises by developing meaningful and motivating relationships with crucial stakeholders including suppliers, unions, distribution partners and customers (Gulati and Kletter 2005, Gitell, 2005). This means they are able to listen and expand their visions to include all their relation’s need perspectives. They understand what is at stake for them and are prepared to deliver on those needs (Andries Baart in Morel 2010, p.17). Similar to Gulati and Kletter’s (2005) model of relationship capital is Chip Conley’s (2007) book PEAK. But he goes further and learned to support self-actualization processes in the stakeholders of his hospitality group ‘Joie de vivre’. He built those invaluable relationships by adhering to Maslow’s 1954 Hierarchy of Needs. Conley (2007) realized that providing mere “satisfaction” to his stakeholders was not enough to build a resilient network of relationships that could protect and grow his firm in the highly fluctuating hospitality market. By laddering up from conditional to transformational value, from hygiene factors such as salary, fair prices and fair investment returns, to making them feel part of a movement, a sense of ownership, pride and legacy, Conley (2007) managed to sustain and grow his business (see figure 3). His approach suggests that stakeholders can be motivated by greater purposes beyond economic or utility need-fulfillment: a meaningful work or business relation can produce transformative value.

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vision

meaning

oned ure

recognition

survival

who are we?

identity

culture

how are we perceived?

images

Figure 3: The transformation pyramid (Conley 2007), the need hierarchy that should be identified for each stakeholder group

The strategic vision to build Zappos around outstanding service gradually grew on Tony and Fred, picking up momentum and meaning in conversations with employees. They would help reinforce and enhance the vision – effectively playing their part in the identity conversation. But Tony’s decision to transform that vision into an organizing principle of delivering happiness, allowed the culture to grow much bigger and faster because it is both meaningful, self explanatory as well as actionable: Everyone in the value chain understands the clarity of the purpose and is affected by it (Gadiesh and Gilbert 2001; Collins and Porras 1996). Therefore the ‘happiness’ principle could expand toward a network of suppliers and customer communities, who together not only extend Zappos’ resilience as a company, but also provide transformative meaning to the people in those networks (Hsieh 2010, p.271; Conley 2007). In a blog post in 2009 titled “Your culture is your brand”, Tony Hsieh explains his vision on how firms should embrace the reality of exposure through social networks. He argues that companies should stop hiding behind shiny marketing promises and anxious alignment policies to control the company image. Anyone with a smartphone can and will expose bad behaviors, which will spread like wildfire. But, he argues, a great experience is also worth spreading, so building a great culture is the best way to delivering great experiences that is a real brand. Not a promise. “At Zappos, our belief is that if you get the culture right, most of the other stuff — like great customer service, or building a great long-term brand, or passionate employees and customers — will happen naturally on its own” (Hsieh 2010, p.175).

2.4 Concluding comparison of the two sub questions In table 1 (see below) I provide a summarized comparison of answers found in the literature concerning the two models, related to the sub-questions in my research question. I have added a third column referencing available examples of aspects of relationship models and how they are applied in practice. Based on the three views that I deemed relevant for commodity services organizations shifting towards meaningful long-term relationship models, I included three subdivisions in the table: the marketing view, the management view and the purpose view. The three aspects of transaction models that are based on the general neoclassical schools can be integrated with the views as follows: Rational Positivism can be seen as the general raison d’etre of neoclassical firms, which fits with the purpose view. Managing production fits with the management view and distribution fits with the marketing view.

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The marketing view When comparing the two models in light of the marketing and distribution perspective, the most salient difference is related to the role of the customer. In transaction models the customer is completely anonymous and almost a distraction from the primary process: production which seen as the actual value-creating process. The organization is focused from the inside out (Denning 2011) and customer relations are delegated and ‘institutionalized’ to the marketing silo that seems to focus on efficient mass distribution (e.g. Grönroos 2004; 1994). Zappos’ – and many other (digital) service innovators – shows how new value is created in the interaction and experience between customer and the company (literally everybody joins the call center). In our increasingly commoditized world, the product gains only value at the point of interaction, which requires firms to understand the co-creation relationship conditions and expectations (e.g. Prahalad & Ramaswamy 2004; Avery et al. 2014) and engagement of all employees, as they become ‘part time marketers’ (Grönroos 2004; Payne et al. 2001).

The management view The most striking difference is the role of employees, and how they are either seen as ‘deconstructible units of labor’ that are subject to the production mechanism – or as the primary network of value creation through coordinated interaction, the ‘machine’ is the human network. In transaction models, management is largely top-down, instructive and mechanically aimed at enhancing the maximization premise of neoclassical thinking. ‘Taylorism’ led to labor commoditization, which eventually led to offshoring. In relationship models value is created in self-sustaining networks of relational coordination such as Southwest has managed to build by adhering to the principles of shared goals, shared knowledge and mutual respect (Gitell 2005). Growth is exponential by allowing individual employees to enhance efficiency AND value creation. If empowered, employees can listen and enhance customer experience as well as improve processes to enhance efficiency that also creates value. This in turn enhances motivation and job satisfaction, which will also loop back to the customer experience (e.g. Gagné and Deci 2005).

The identity view The difference is most fundamental in the general worldview that colors the way the purpose of business organizations are seen in the context of society. Transaction-models view the role of business as well as consumers in light of the maximization premise constrained by budget and assured by legal obligation. The more we have, the happier we, and thus society is. In relationship models, aspects of human needs to transcend from nutrition and safety levels to belonging and transformation, which can be achieved through engagement, by contributing to something bigger, something that can move civilizations (Harari 2015; Conley 2007). That something is a visionary goal that shapes and is shaped by the identity of an engaging community of internal and external stakeholders coordinating for that goal that enhances and defines their self-image and categorizes their personal identity in relation to that group identity (e.g. Hatch & Schultz 2008; 2009; Cornelissen et al. 2007).

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THE MARKETING VIEW

VIEW

TRANSACTION MODELS

THE MANAGEMENT VIEW

EXAMPLES OF RELATIONSHIP ASPECTS

Goods dominant logic (value created inside production chain)

Service Dominant Logic (SDL): value is created at the interaction point (Vargo and Lusch 2004)

Zappos’ customer service experience (Hsieh 2010)

Mass marketing, 4P’s marketing mix (Grönroos 1994)

Personalized co-creation (Prahalad & Ramaswamy 2004), relationship rules (Avery et al. 2014)

Relationship intelligence and Cocreation conditions through Dialog, Access, Risk/ benefit, Transparency

Customer relation is delegated to the marketing department

One-way street: marketing to serve the distribution of goods

THE IDENTITY VIEW

RELATIONSHIP MODELS

Customer relation is a joint responsibility across the organization – ‘part-time marketers’ (Grönroos 2004) Interaction and listening: marketing for retention, to learn, co-create value, gather insights. (e.g. Grönroos 1994; 2004)

Zappos: your internal culture is the brand (blog by Tony Hsieh, 2009) Lean startup: early prototyping, build-measure learn feedback loop (Ries 2011; Denning 2011)

Division of Labor, specialization Offshoring, outsourcing

Relational coordination & value chain partnerships (Gitell 2005; Gulati & Kletter 2005)

Southwest’s relations of shared goals, knowledge and respect with union and supplier stakeholders (Gitell 2005)

Taylorism: Efficiency to maximize production (Push)

Lean: Efficiency through waste reduction (Pull) (Jeffrey Liker 2004; Eric Ries 2011)

Toyota: Single piece flow and pride of product. Engagement with users: Lean startup (Liker 2004; Ries 2011)

Cost focus: requires cheap, unskilled, unmotivated and repetitive labor

Service focus: Customer satisfaction requires intrinsically motivated employees to engage and interact with stakeholders

Internal culture at Zappos of delivering happiness. Intrinsic motivation, SDT theory by Gagné and Deci (2005)

Top down, instructive coordination and management

‘Front-line leadership’ and autonomy to act – employee workers report to the customer, not the manager (Denning 2011)

Southwest: ‘boundary spanners’, conflicts to build relationships, flexible job descriptions (Gitell 2005)

The purpose of business is Neoclassic: Maximum profit/utility at minimum cost (e.g. Coase / Weintraub 2002)

The purpose of business is: Enhance society, ‘Shared value’ ‘self actualization’ (Porter & Kramer 2006; Conley 2007)

Zappos ‘Delivering Happiness’ as strategic principle (Hsieh 2010; Gadiesh and Gilbert 2001)

Inside-out perspective Quantitative growth. Shareholder capitalism. Sales today

Outside-in perspective. Qualitative growth. Meet unrecognized needs. Sales tomorrow (Denning 2011)

Five transformations in ‘continuous innovation’ (Denning 2011, pp.16-17)

Transaction focus: delegation customer contact causes loss of relevance, commodity spiral (Prahalad & Ramaswamy 2004)

Relationship focus: network provides resilience and sustained growth (Gulati and Kletter 2005; Gitell 2003; Conley 2007)

Resilient networks of engaged stakeholders willing to walk the extra mile because of personal investment Southwest, Zappos, Joie de Vivre etc.

Organizational identity defined through legal contracts and product features (Coase 1937)

Organizational identity defined through stakeholder relationships (Hsieh 2010; Hatch and Schultz 2008)

Identity and culture is created through interaction with stakeholders at Zappos, Lego, Patagonia, Joie de Vivre.

Table 1: Comparison of Transaction models & relationship models and examples of applied aspects of relationship models

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3. Research Method The literature clearly provides alternative models and even practical examples for companies to engage in relationship strategies that can help forge resilient networks to grow and protect the firm during crises. I am however interested in how existing organizations can transform from a traditional transaction orientation towards relationship models. The exemplary companies illustrated in the literature clearly built their foundations on a different worldview than the thousands of semi-public commodity service organizations, who carry neoclassical management legacy on their backs. These organizations have to transform themselves from internally focused, un-engaging and departmentalized bureaucracies to lean, innovative and relevant organizations, embedded in society, providing the critical services that have a wide public interest. To study the barriers, insights and learnings involved when a commodity services organization engages itself in such a transformation, I chose to do a case study research on the largest independent energy provider in the Netherlands; Eneco. Specifically because Eneco expresses an explicit promise seeking partnership and collaboration in its marketing materials and tagline: “together for sustainability” – (Eneco 2015). As the director of the consultancy firm that redesigned Eneco’s corporate identity in 2007, I have learned how the organization seeks to transform itself to realize its vision: ‘DuurzaamDecentraal-Samen’ (DDS) translated as “Sustainable – Decentralized – Together” (Eneco Holding 2008).

3.1 Theory building from case study research The relationship principles that I have found in the literature as well as in practical examples are a loose collection of models and ideas, which may have the potential to converge into a coherent model. With some imagination it is possible to reason such a model into being and test its validity afterwards in one-way or the other. It will be difficult though to rule out bias and discern correlations from causalities (Kahneman 2011). Another, more interesting and more appropriate route for studying change and perceptions by organization members are to conduct theory building from case study research. And as my research question centers on ‘how’ organizations change which typically involves social phenomena, it makes sense to adopt the case study approach (Yin 1994, p.5). The idea of case study research is that a theory about applying relationship models ‘emerges at the end, not the beginning of the study’ (Eisenhardt 1989, p. 548). I therefore seek to adhere to the case study and grounded theory methodologies as described by Yin (1994), Eisenhardt (1989) and Strauss and Corbin (1994; 1990) to study the change perceptions from individual field perspectives (Eneco employees) through qualitative interviews, corroborated with formal documents such as annual reports and (internal) publications about the firm’s strategy. This type of study can be defined as a “nonmathematical process of interpretation, carried out for the purpose of discovering concepts and relationships in raw data and then organizing these into a theoretical explanatory scheme” (Strauss & Corbin 1990, p.11).

The goal of case study research is to identify ‘specific phenomena’ that may lead to emergent theories how commodity service organizations can transform toward relationship models (Eisenhardt 1989, p.548). Emergent patterns and concepts will be compared to the literature and examples provided in the previous chapters, but the aim is to “produce theory which closely mirrors reality” (1989, p.547). This is particularly important because throughout the Netherlands –or any other western society coping with changing (de-) regulation policies – there are many commodity service organizations that provide semi-public services, struggling with ever changing, more demanding markets and regulations, while under pressure of lean and disruptive startups snatching away the easiest and most profitable customer base.

3.2 Company Context Eneco is a Dutch Energy service provider with 3.500 employees serving 2.2 million households and businesses in the Netherlands, operating in Belgium, France, Germany and the United Kingdom. The Eneco group is owned by 53 Dutch municipalities in the Southwestern region (source history timeline) and consists of a variety of companies and participations, including the network company that most competitors have already split off earlier (which is related to Dutch legislation, forcing also Eneco to split off its network company). The company was founded as a regional monopolist – citizens are assigned to regional energy or gas suppliers – in 1995 through a merger of several local municipality energy- and cable companies. Between 1995 and 2003 the energy company gradually grew larger by integrating other local energy companies and by repelling the cable activities. The 2004 liberalization of the retail market took effect in 2004 and marked a significant change in the general orientation of Energy suppliers in the Netherlands. Suddenly customers could leave for their provider of choice – even though they had no idea who their providers were other than a yearly, incomprehensible bill on the doormat. The much desired market efficiency through competition and switching customers hardly occurred initially (Pomp & Shestalova 2007). But the policy-change did affect the energy companies. Suddenly customers changed from being production endpoints to a being a desired piece of market share. But the initial aim among the bigger energy companies was scale; acquire as much retail consumers as possible; no less than seven million connections was perceived to be conditional to survive in a European market (Kaal 2001, p11). The period of interest for the purpose of this thesis starts with the installation of the new CEO Jeroen de Haas in 2007. In that year Eneco announced a fundamental reorientation towards sustainable energy production (Eneco 2007, pp. 4-6) and by 2008 Eneco expressed its vision, mission and strategy to act on that orientation. The central mantra that is still used today evolves around three principles: “sustainable, decentralized and together.” This stands for an unconditional commitment to building a sustainable energy future “accessible for all”, investment in local and decentralized renewable energy sources, discarding the traditional centralized distribution model, and a strong belief in building collaboration networks with stakeholders and customers as a precondition to realize that future. In the early stages, Eneco positioned itself as a sustainable project development specialist (Eneco 2007, p.4). The vision affected mostly the product sources, but left the organization relatively

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untouched. Today, Eneco is speeding up its transformation process, partly because new entrants from unexpected directions disrupt the market, but also because a deeper understanding of the mission requires a completely different organization. For citizens, communities and businesses to organize, generate and obtain their own energy production, Eneco needs to provide them with the platform to do so. But this requires Eneco to “operate in the service of the platform”, and not in the service of its own production assets per se (Eneco 2014, pp.7-9). Another development is increased collaboration, investment and knowledge partnerships with (large) customers on the basis of a shared belief in sustainability. These relationships from an “ongoing dialogue that goes beyond the supply and purchase of services (p.18).

3.3 Data Sources For the purpose of identifying the critical success factors, barriers and organizational practices that characterize Eneco’s shift from traditional energy (production) company – what I interpret as being transaction-oriented – to a mission driven, collaborative service organization that provide insights about the role and level of adoption of meaningful relationship models, I have conducted semi-structured face to face interviews and performed limited desk research into the company and the energy market.

3.3.1 Desk research I have read through a number of articles concerning the liberalization of the energy market, Eneco’s annual reports between 2007 and 2014 and the information provided on its corporate websites. I have also gathered some of the available information on the strategy as it was communicated internally through the internal employee magazine ‘Puur’. The purpose of the desk research is twofold: • To get a sense of the general effects of the liberalization of the Dutch energy market between 2001 and 2004 and the consequent ‘churn-effects’ – customers leaving their standard energy supplier (Kaal 2001; Pomp & Shestalova 2007 and Moerkerken et al. 2012), as it provides context to the organizational change process that Eneco (and its competitors) initiated. • Because Eneco’s transformation is an evolutionary process, I decided to follow the changes through the most formal organizational message distribution system in use: the annual reports between 2007 – the installation of Jeroen de Haas as CEO and the announcement of the sustainability vision – and 2014, the latest report. In particular the ‘message of the board’ introductions and sections on company profile – the vision, mission and strategy. I use these texts to corroborate the context of respondent’s statements and claims, but also to follow how the organizational changes are annually communicated towards external stakeholders.

3.3.2 Interviews I treat the interviews as the primary sources of data in the case-study investigation because I am primarily interested in the patterns of interpretations of the people that are actively involved in

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the organizational change process: the perceptions and beliefs about the critical success factors, the barriers, and the learnings that they appear to converge on, in regards to the areas of interest: customer relations and marketing, management & organization and organizational purpose and identity (see chapter 2). I have therefore conducted semi-structured, face-to-face interviews with senior and executive employees at Eneco in the abovementioned areas of interest. I initially invited 23 employees, which I considered to play an important part in Eneco’s transformation from transaction orientation towards service and relationship models in the area’s of marketing, communications and management. Thirteen of them responded positively to the interview requests that I send out in the period between June 14th and August 17th 2015. Although I view the identities of the respondents as irrelevant, I do provide information about the roles and positions of the interviewees within the organization (see table 2). Sample transparency is important because the process of theory building in a case study is judgmental and interpretative by nature. By disclosing as much details as possible, I will try to provide insights in the representativeness of the ‘sample’ of respondents, so that readers can make up their own minds (Eisenhardt 1989, p.544). All respondents were initially invited by email. I viewed the invitation as an important part of the research process, as I believe that the way a respondent is invited has impact on his or her willingness to engage in an interview about organizational change. With various (formal/informal) nuances per respondent, I built up the invitation in 5 short paragraphs: 1. Explain the purpose: Case study for a master thesis at Erasmus University MCC program 2. Explain the subject relative to the position of the respondent: “I study the transformation Eneco is going through. Your perspective is especially valuable because…” 3. Explain the bigger picture: “I am researching how service organizations can shift from transaction orientation to relationship models” 4. Explain why Eneco is a relevant case: “Because in her mission for sustainability, Eneco is explicitly aiming for partnerships. I therefore seek insights and experiences from involved people in the sphere of influence of Eneco”. 5. Explain who is on board: “I have a 45 minutes interview planned with the director of…” (In the invitation procedure I made sure to have at least one director approved to suggest support and lower the barrier to free up a specific amount of time). Because of the holiday season, many appointments were rescheduled several times to fit in the time frame I had planned (until the beginning of September). The resulting respondent mix has therefore skewed slightly more to a dominant representation of staff and communication people than I had hoped for, even though they operate in various corners of the organization.

3.3.3 Population Four dimensions are worth noting: 1) More than 60% of the sample is senior management and or members of their respective management teams. At least 33% of the sample concerns directors. 2) Almost 80% of the sample has management and coaching responsibility towards subordinates. 3) More than half of the respondents worked at Eneco before or during the

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liberalization of the energy markets in 2004. 4) The sample is dominated by 42% with communications people, which include HR, online strategy and sponsoring functions reporting to the director of Communication and Corporate Affairs (CoPA). CODE

FORMAL FUNCTION

SINCE

POSITION

UNIT/DIVISION

communicatie

2001

executive

CoPA

corporate strategie

2013

executive

Holding

Ventures & Innovation

2001

executive

Innovation

Corporate Accounts

2001

executive

Business

Branding

2013

Senior

CoPA

Sponsoring

2011

Senior

CoPA

Sustainability

1999

Senior

Holding

Community / online strategy

2004

Senior

CoPA

Community / internal

2012

Senior

CoPA

Marketing

2004

Senior

Consumer

Internal Communication / HRM

1998

Senior

CoPA

Business development

1999

Senior

Business

HRM

2014

Senior

Consumer

Table 2: interview population, position and code (the code will be referenced in the statements)

Interview context The interviews were conducted in Eneco’s restaurant and cafeteria at their headquarters in Rotterdam and lasted one hour on average. The interviews were semi-structured in setup and the questions are aimed at retrieving information regarding three elements: 1) their perceptions of change and their role in it, 2) their perceptions of how and to what extent Eneco is living up to the notion of “together” as it is stated in its mission since 2007 and used in marketing communication “together for sustainability”. The questions are directed at retrieving perceptions regarding the three views (see table 1): the marketing view, the management view and the purpose view. 3) The last questions are directed at identifying the perceived challenges, threats and opportunities on the short and on the long-term.

3.4 Data analysis To develop an understanding of ‘how’ Eneco transformed, relative to my research question and in particular uncovering the converging perceptions of actors inside the transformation process of Eneco, I applied principles of grounded theory as described by Glaser and Strauss (1967 in Martin & Turner 1986, p.141; Corbin & Strauss 1990; Strauss & Corbin 1994) to identify the patterns and characteristics as they emerge from the data on various levels of abstraction. So instead of simply tabulating support for preconceived assumptions using interview data, I intend to develop a theory ‘grounded’ in ‘real life phenomena.’ It is a process of ‘discovering’ theory as Martin and Turner (1986, p.143) put it. This process can be roughly categorized into three levels of activity. Because grounded theory development is an iterative and nonlinear process, I would refrain of calling the categories ‘steps’. The research typically requires ‘rotating cycles of collection and analysis’ whereby the concept definitions ‘remain in flux’ as long as new

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data is collected and added (Martin & Turner 1986, p.150). The goal is to “represent conceptually what the data reflect empirically” (p.152).

The first level of activity – categorizing and open coding The initial step is to get “intimate interaction” (Eisenhardt 1989, p.547) with the interview data, through ‘open coding’ (Corbin & Strauss 1990, p. 12) identify related statements among the different respondent data sets. These can be categorized and labeled into preliminary concepts. These labels are by no means cast in stone and should be revisited and possibly renamed during the process of adding or deleting interview data. The challenge is to find the appropriate level of abstraction for the labels or concepts “[…] high enough for one to avoid creating a separate concept card for every “fact” observed, but low enough to ensure that the discovered concept relates explicitly to the substantive phenomenon […]” (Martin & Turner 1986, p.149). Initial concept-clusters seem relatively arbitrary, but with each piece of data added, the conceptualization of the label either grows to be more solid, or the definition of the concept alters. Or little support is found to grow the evidence in support of the concept.

The second level of activity – coding and labeling The data in the interviews initially produced fourteen different concepts with various levels of support. Even though the meaning of the concept-labels tended to change during the process of adding data-chunks, I would register my preliminary associative reasoning directly, but “in a free flowing manner” (Martin & Turner p.151), about the relationships among the data, relations with literature and the potential theoretical meaning. Even though the first iterations were jumbled, the role of these ‘theorizing write-ups’ (p.151) helped guiding the process of coding: a piece of code may support or reinforce the initial concept label, but it may also challenge or alter the initial ‘nominal’ definition of the label. This process of interaction between the clustering interview data and the definition and description of concept-labels continues until all relevant data have been gathered and distributed (p.150).

The third level of activity – axial coding By reevaluating the fourteen conceptualizations to identify higher-order relationships, I gradually converged on four distinct conceptual themes using a process called ‘axial coding’ to formulate the meaning of the higher-order concepts relative to its sub-concepts and the actual data (Corbin & Strauss 1990, p.13). Each different order should represent slightly different levels of abstraction, ranging from the ‘grounded’ statements to the highest order conceptualizations. Next step is to identify how and to what extent the four concepts relate to each other, also in relation to the desk research and most importantly: how and to what extent the findings answer the research question: how can commodity service organizations shift from transaction orientation towards relationship models. The results will be elaborated in the findings. To explicate the findings, I will select statements that are self-explanatory and best represent the aspects and factors addressed in the various dimensions.

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4. Research findings To return to my research question – How can commodity services organizations shift from a transaction-oriented exchange model to a meaningful, long-term relationship-based model – the findings provide insights in the challenges and critical success factors that shed light on how that shift can take place in a commodity service organization. These challenges and success factors are based on the perceptions of Eneco employees in relation to the transformation that they see Eneco is making moving away from a traditional energy distribution company – what I would call a transaction model – towards a company that builds sustainable, decentralized energy services in collaboration with partners and stakeholders – which I deem relevant to relationship models.

value relations VISION IMPERATIVE

activation signals tensions

Figure 4: Logical flow of reactions in the 4 dimensions of the findings. The light elements are perceived to be critical success factors; the dark element contains the challenges Eneco is perceived to be facing.

I have identified four critical dimensions that emerged from the grounded theory research, which includes three dimensions that can be identified as critical success factors and one dimension that can be identified as the major challenges to for shifting towards a meaningful, long-term relationship-based model. The four dimensions are different in character and appear to be interrelated to one another by following a logical flow of reactions. Although I have not been able to validate this assumption, the statements made by respondents indirectly suggest these relationships. The vision imperative can be seen as the most important instigator of the change process. The activation signals however function as amplifiers activating internal as well as external stakeholders and audiences. This seems to bring forth tensions between what employees see on a daily basis and what is projected outside. Another critical success factor that appears to follow the activation signals are the value relations, which to some extent appears to mirror some of the negative aspects in the tensions dimension. The value relations describe the horizontal collaboration and partnership development, based on the vision that is shared among Eneco’s networks of partners and stakeholders. In the table below, I present how the dimensions are constructed from the interview data and how each dimension is subdivided into factors and aspects. I have specified the support levels for the factors in two different ways: in the ‘support’ column I present the percentage of the total number of respondents that have given statements on the aspects in the given factor. In the ‘specification’ column I present two indicators: the first indicates the average number of mentions per respondent (AV). The second indicates the deviation from that average (SDEV), which means that a high SDEV number indicates that the

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majority of statements are made by a minority of respondents. Even though there are only a limited number of respondents in this study, I want to provide insights in the nature of the support for the various factors.

DIMENSIONS

FACTORS (2 order code)

ASPECTS (1 order code)

Unwavering determination

Visionary Leadership Vision as platform

Vision imperative

Opening up to feedback

Transparency Proactive stakeholder pressure

SUPPORT

SPECIFICATION

Strong 100%

AV = 2,38 SDEV = 1,44

Medium 61%

AV = 1,07 SDEV = 1,25

Strong 92%

AV = 2,23 SDEV = 1,83

Medium 50%

AV = 2,15 SDEV = 2,76

Strong 84%

AV = 3,23 SDEV = 2,83

Strong 100%

AV = 4,15 SDEV = 2,19

Strong 92%

AV = 3,69 SDEV = 2,49

Mentality reorientation

Change Support

Activation signals

Strategy communication Conspicuous policies The new HQ

Change Symbols Significant products

Dissonance

Tensions

Vertical & horizontal obstacles

Projections & perceptions Short term & long term Layers & leaders (vertical) Islands & peers (horizontal) Working for shared goals

Value relationships

Inter- organizational collaboration

Collaboration competence Vertical experimentation

Reframing the value chain

Advanced relationships Mission lens

Strong 84%

AV = 3,38 SDEV = 2,59

Table 3: Explication of the different grounded theory labels – Support column: the level of support for each factor is presented by the percentage of the total respondents (13 in total). Specification column: The percentages are specified by showing the average amount of mentions (AV) per respondent and by showing the level of deviation (SDEV) from that average: a high SDEV means that the majority of the support comes from a minority of respondents.

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4.1 The Vision imperative The most important factor that most respondents agree on is the vision as it was introduced and formulated by Jeroen de Haas (JdH) when he was installed as CEO in January 2007. It has been a fundamental source for Eneco’s ongoing transformation. The role of vision is imperative in the change process at Eneco, not only because it chronologically forms the basis of the various strategy evolutions since 2007, but also because it serves as the primary source for sense making by internal as well as external audiences. It is surprising how much the statements in the different aspects of the vision imperative reflect Collins and Porras’ (1991; 1996; 2002) dualistic model of visionary companies. They describe how long-lasting firms maintain a vision model that includes both stable and unchanging elements, as well as evolutionary elements. But other than in Collin’s model of vision – which appears to involve little stakeholder feedback and interaction, the underlying aspects in the vision imperative at Eneco clearly reveal the importance of vision as a platform that can be revisited and reiterated by internal as well as by external stakeholders. This resembles Hatch and Schultz’ (2008; 2009) model of the ‘identity conversation’ and how internal and external stakeholders shape and are shaped by the organization’s vision (see also chapter 2). To put it more simply; Eneco’s vision imperative is characterized by a ‘duality’ of 1) an unwavering choiceand course of direction for a sustainable, decentralized and collaborative energy future, 2) which provides internal as well as external stakeholders to revisit and reiterate the meaning of that vision – ‘vision as platform’ and ‘opening up to feedback’. The interviews revealed two interrelated factors that support the vision imperative as being the primary dimension of change. The first factor is ‘Visionary leadership’, which in itself revealed two aspects: ‘unwavering choice’ for a sustainable direction, and the vision as a ‘platform for reiteration’. The second factor is Transparency: by positioning Eneco on a course towards a sustainable energy future, the organization inevitably receives feedback also from external stakeholders such as partners, shareholders, subsidiaries etc. I have specified this factor by identifying two related but slightly different aspects. The first aspect concerns statements about the organizations’ opening up to feedback; the second aspect concerns a limited number of statements addressing proactive stakeholder pressure to ‘remind’ the organization of its vision.

4.1.1 Visionary leadership The new vision provided a relatively young and rather un-integrated company with an important sense of direction in very turbulent times. In the years leading up to the liberalization of the retail energy market in 2004, Eneco had integrated a total of nine local and regional energy providers (Eneco.nl). Meanwhile the once rather boring consumer market changed rapidly, forcing energy companies to position and profile themselves as to keep and acquire as much connecting customers as possible, fearing the immanent internationalization of the Dutch energy markets (see paragraph 3.2). In a time where the big energy companies had a rather neoclassical focus on production, volume, asset capitalization, market share and cost reduction, it was a wayward move to choose for a sustainability agenda; which meant tiny volumes in a low-interest market. Even though the

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vision may have raised a few eyebrows externally, it really set things in motion internally, which it continues to do today. During the interviews salient support was given to the role of vision and visionary leadership as the primary source for change. The data typically express two conditions that are important for the visionary leadership to facilitate change. The first concerns the principle of ‘unwavering choice’, the role of leadership to frame a meaningful direction and mobilize the organization to really commit to that choice of direction. The second element is the role of the vision as a touchstone for reiteration, for reframing the purpose of ones unit, products and services, value chain etc.

“It really is a transformation process. A snake loses its skin, but is still a snake. But a caterpillar transforms to a completely different being. It's difficult for a caterpillar to imagine life e as a butterfly. We need visionary change agents who are not only capable of imagining the flight of the butterfly, but also believe it's possible. Jeroen plays an important role in this”. (BeQ2)

Unwavering determination The ability to envision a future and convey that vision with a purpose that resonates with internal as well as external stakeholders is important now and was imperative in 2007. Eneco’s CEO made an important strategic as well as civic decision against the common path chosen by his peers. In a market dominated by volume thinking, sustainable energy was not yet seen as serious business.

“What has been important is that we have made very clear choices back in 2007/2008. Jeroen de Haas gave a speech then called "follow suit". We were 'lucky' that we had no fossil assets. Jeroen turned a traditional disadvantage into a future head start.” (HsQ2) But besides the truthful conviction that fossil fuels and climate change are ultimately harmful to society as well as long-term business development, Eneco also had a problem: they really needed more production capacity to avoid highly priced buying in from the competition. To raise support (and capital) for such an ambitious sustainability investment strategy, Eneco had to engage with its community shareholders for approval. So a compelling visionary story was needed for more reasons than simply motivating the various people for a shared goal. It was also a business imperative.

“The most important change has been that we chose for sustainable energy for all. So really committing to a mission with a tangible and expressive story. I think it also has to do with Jeroen de Haas, a very charismatic person capable of conveying his story… truly a visionary”. (NeQ2)

Vision as platform

Vision and ‘transformational’ leadership is also known to support processes of autonomous motivation with organization members (Gagné and Deci 2005) as it provides them with an inspiring rationale, which is seen to be an antecedent of identification and motivation. Another antecedent is having a sense of choice, rather than feeling pressured to ‘swallow’ the new vision

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direction. It is not surprising that these aspects bear similarity to critical elements that promote “acceptance of organizational change” (Kirkpatrick 1985 in Gagné & Deci 2005, p.339). Respondents clearly reported that the vision facilitates a continuous process of revisiting and reinterpreting the meaning of the vision; what it means for their work, the purpose of their teams or units. But it also provided the consumer division with a new rationale to engage its customers, who were previously seen merely as ‘connections’ – which resembles characteristics of a transaction-orientation.

“This [vision] led us to realize that we should relate differently to our customers, through different products and services. We can no longer view the customer as someone who pays the monthly bill and complains every now and then. We have to achieve our mission together with that same customer.” (JsQ2) The vision thus becomes a touchstone to check and compare the daily reality with the long-term goals. But it also facilitates a process of reframing situations. Because Eneco initially emphasized the difference between divisions by allowing them to develop their own positioning and identities (Eneco 2009, p.8), aligning these divisions on a shared strategy became increasingly problematic. By taking a step back and applying a different angle to the mission, alignment on outcome becomes an option instead of trying to force a course of action on to them.

“After an endless tug of war with the network division to make them adhere to the groups strategy, we took a step back and asked them: 'in fact you endorse our mission sustainable energy for all', but what exactly is your role within that mission?” (LaQ1) In short: An important quality of the vision imperative is that it provides the organization with a framework that is both stable as well as malleable, reinterpretable. It facilitates a constant evolution in strategically thinking about the contemporary purpose of the organization and about the next steps that are necessary.

“In 2007 we changed our vision from central energy production on the basis of fossil fuels to decentralized production on the basis of renewable energy in collaboration with the customer. That is still our basis. But a deepening of that vision is that when we are enabling local production, we are also transitioning towards a digital environment where it doesn't really matter who is the actual producer of energy. It's a refinement. It doesn't change our vision.” (JsQ1)

4.1.2 Transparency Whether internally or externally, transparent behavior in general encourages trust and engagement. I have categorized this factor under the vision imperative because I believe that as soon as an organization expresses a visionary purpose that goes beyond operational goals and describes the role of the company for the community, indirectly society is also addressed, which will inevitably lead to a response from that society, which (ought to) shape the self-image of the organization (Hatch and Schultz 2008; 2009). In somewhat different forms, we may assume that also external stakeholders may use Eneco’s vision as a touchstone or litmus to reframe and reiterate their relationship towards the firm. But

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it is also the partnering attitude that was made explicit in the vision – sustainable, decentralized and together (Eneco 2007) – which forces Eneco to Open-up to feedback, not only towards shareholders and internal audiences, but also towards partnering companies. And although this aspect received limited support, it is interesting to learn about the proactive stakeholder pressure, making Eneco adhere to the principles that it is beginning to share with others. This is not an automatic process and it is interesting to see how the use of the term ‘transparency’ has evolved throughout Eneco’s annual reports since 2007. Previously the term ‘transparency’ is mainly used in the governance section of Eneco’s annual reports. Only since the report of 2012 (pp. 3, 10, 23) the term becomes more widely used also in other sections, which seems related to the introduction of the customer-centricity program in the strategy update of 2012 (Eneco 2013, p.18). Particularly in last year’s report the consequences of intimate partnership are explicitly linked to transparency: “Being a platform and a partner are transparent roles that leave no room for costs relating to our traditional role of energy provider” (Eneco 2014, p.9). This seems to take the ultimate consequence of the idea of partnership, shaking off the old supplier role. This shows that it takes several evolutions before Eneco was able to unify with its own role as partner in the visionary landscape of sustainable and self-producing customers that it projected back in 2007. The literature about relationship capital, innovation and co-creation all point to transparency and information sharing as being imperative for value creation (Gulati & Kletter 2005, p.92; Denning 2011; Prahalad and Ramaswamy 2004).

Opening up to feedback The responses in this aspect were more limited and diffused than in others, which explains the limited support. But what characterizes the different responses is a gradual opening of the organization, especially in its relationship-building processes with corporate partners as they recognize the same dilemmas and struggles. This is not self-evident and goes against the natural response of most energy companies that are build on control and safety procedures.

“... That really is a discovery process that we often share with other corporates. Now we are very open about what we are doing, what dilemma's we encounter and often you see them [corporate clients] reacting and restlessly moving in their seats… and then it suddenly dawns on you; Philips is also struggling with mobility… 'But hey, what are your views and dilemmas? How can we help each other?” (JsQ8) This process of opening up was accelerated after a team of senior managers made a trip to Silicon Valley. Expecting a complete technical brainwash, they were surprised how much they learned about non-technical issues, about collaboration and knowledge sharing in a completely counter-intuitive manner than they were used to.

“My biggest lesson from our trip to Silicon Valley is: Be transparent, be open to the people you are talking with. Instead of starting with a Non-‐Disclosure Agreement, simply start with: 'this is our vision, this is our strategy and these are our products… What do you think?" This approach certainly helped in our current collaboration with start-‐ups; we don't position ourselves as better or lesser, but simply; what do you have? Here's what I have… So what can we do together?" (HsQ10)

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Proactive stakeholder pressure Another characteristic was stated in a few accounts about the role of external stakeholders reinforcing organizational values by holding up the mirror. The support for this aspect is very limited, but I found them to be surprising examples of proactive stakeholder engagement: An NGO reminder to substantiate a sustainable production claim (Eneco 2009, p.28) not only put pressure on business managers to really try reaching that goal, but also backed internal advocates to repair personally perceived gaps between what was promised externally and what was debated internally (see also paragraph 4.3). The partnership with the Dutch railways resulted in a similar situation

“Now that we have a partnership with NS [Dutch Railways] they ask critical questions like 'why aren't all your employees commuting by train? We have a partnership in which we collaboratively want to stimulate sustainable mobility, right?' Until recent I really had to struggle to implement such mobility policies internally – the car still is a holy cow. But that has become much easier since such an important stakeholder is confronting us with it.” (GnQ5)

4.2 Activation signals The activation dimension is closely tied to the previous dimension and they are interdependent. The vision and mission is taken for granted or even ignored if it doesn’t materialize and confront internal stakeholders on a daily basis. But materialization and activation is also relevant to external audiences, not only to prove that the organization ‘walks the talk’ but also to substantiate strategic claims on the ‘new territory’ by quick realization of those wind farms. The interviews reveal a very rich variety of factors and aspects that are related to the activation of the vision in everyday practice, ranging from programs to psychologically reframe the work in the heads of employees to the symbolic role of products that reinforce the meaning of the organizational vision. They are all quite different aspects of one crucial dimension to organizational change: to signal activation, to make it visible, tangible and actionable. Many of these principles are confirmed in literature. One interesting proposition is the SMaC recipe that Collins and Hansen (2011) discovered at Southwest airlines. It is a Specific, Methodical and Consistent list of the things that the company has learned it should and should not do, everyday. A framework for action and decision-making that reveals how strategic concepts can become real (2011, p.129). An important element of activating change is to make the desired behaviors highly visible, either by symbolic leadership behaviors or by literally flagging the organizational progress. The latter is common in agile and lean practice, which aims to gain efficiency by making all process- and progress- developments undeniably visible to everyone (Ries 2011; Liker 2004; Denning 2011). Symbolic leadership is seen to be important as it not only paves the path for new behaviors but also confirms the importance of those behaviors. When Lego CEO Vig Knudstorp first engaged with adult Lego fans, he not only debunked an internal marketing belief that tried to ignore these ‘shadow markets’, but “models the importance” of what could be learned about Lego from loyal, but extra-ordinary users (Hatch and Schultz 2008, p. 224).

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To return to the research results: the activation dimension consists of two distinct factors: Change Support, which contains aspects describing internal policies and behaviors, and Change Symbols, which contains aspects describing the role of products and buildings in signaling change examples.

4.2.1 Change Support As noted earlier: as soon as the organization projected its visionary ambitions, organization members immediately recognize the disparity with between the desired landscape and their everyday realities. This is especially complicated for an energy company that for a large part still depends on its commodity transactions even today. This is a complicating factor and extra challenge for the organization (Eneco 2014, p.8). It means that active reinforcement of the strategy is essential to keep internal stakeholders on track towards fulfilling the vision. And it is also a matter of building the internal competencies that are necessary to support the change process, which eventually has to become a core competence, as the technological changes will most probably require continuous adaptability from the organization. Eneco had to learn and adopt these change-skills from scratch; in the end each transforming organization has to develop and tune its ‘transformation engine’ to suit the specific needs, goals and dreams of the organization they aspire to become. There are three distinct aspects that emerged within the Change Support factor ranging from actions aimed at creating a Mentality reorientation to forging a Conspicuous policies that explicitly and unambiguously display exemplary policies, to the role of effective Strategy communication that help members understand their roles and positions relative to others.

Mentality Reorientation This aspect emerged from a relatively small group of respondents, but because of its specificity and because the various statements are very consistent, I deemed this aspect noteworthy as it concerns a program specifically aimed at changing the mindset of people towards customer centricity. In 2013 a broad range of employees were engaged in an extensive training program called Breakthrough. The goal of the program aimed to accelerate management support for the vision and intensify the mentality change that was deemed necessary to transform the company from a traditional energy supplier to a customer-oriented service organization (Eneco 2013, p.61).

“I really think that an important tipping point for us was the Breakthrough program. The goal was to identify that Eneco needed to think and act differently. The program is about awareness of the things you do as an organization, about being conscious how you engage the game, with what kind of attitude…” (BeQ2) The notion that employee engagement drives customer satisfaction is clearly shown to be effective as described in various articles dating back to the service profit chain (Heskett et al. 1994; Payne et al. 2001; Fleming et al. 2005 and Ramaswamy & Gouillart 2010). However selfevident, there clearly is a difference between knowing and managing others to focus on customer centricity and actually thinking and acting accordingly. This is also related to the product. Most

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employees have very limited ‘line of sight’ and interaction with customers, so feedback loops are limited and knowledge about customer perceptions used to be ‘owned’ by the marketing department (e.g. Denning 2011; Grönroos 1994).

“The Breakthrough program was very important in opening people up. It really caused a lot of doors and walls being razed.” (JsQ2)

Strategy communication This is a very specific aspect that concerns the role of communication in designing and distributing the various instruments to help organization members align on the changes required in the mission. When going through the data, this aspect wasn’t very obvious, because reference to it is rather indirect.

“We have to translate [opportunities] constantly: is it relevant for our customer? Is it relevant for our mission – sustainable energy for all? Does it support the sustainable energy transition and can we accelerate, only then we say yes. These are the rules of thumb.” (JsQ8). These rules of thumb match perfectly with the latest strategy update, which in itself shows its effectiveness. A strategy should support people in their day-to-day operations; rules of thumb should be basis for strategic documents to be effective (e.g. Gadiesh & Gilbert 2001). Throughout the years, communications, HR and strategy specialists gradually collaborated more intensively to develop the tools and training necessary to facilitate the transformation process. One involved respondent described how this has evolved through different stages, which started back in 2009 with an internal branding campaign. This helped raise some level of awareness, but by emphasizing the branding aspect, it was perceived to be rather remote from the business and the daily routines. This changed when the strategic frameworks were introduced and visualized, which allowed people to position their own roles and plot trajectories for themselves.

What helped in the communication is that we made the mission concrete by using strategic visuals. By now we have made three variations and the images became increasingly more concrete and focused, which has made it much more understandable. And we clearly saw that back in the data, because we closely measure these things. (NeQ2) Interestingly, also these frameworks have undergone various changes. The first version was a rather straightforward excel document, which revealed little information about the relationships between units and functions. That became more clearly in the framework where customer centricity was introduced and business functions were coupled with customer services (Eneco 2013, p.18). And in the most recent version the framework has become a symbol and is designed less instructive to encourage people to innovate trajectories themselves.

“First it was a table diagram, then it became a framework and now it's called a symbol. These denominations are notable”(NeQ3) Besides substantial communication and distribution effort – the latest strategy update is extensively discussed in the latest internal magazine called Puur, the collaboration with other staff departments resulted in more explicit translation into evaluation and hiring policies, even more helping people apply the vision and values in daily practice.

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“ They also translated the framework to our evaluation and planning systems, including the competencies that go along with it. Which is a great support when evaluating employees on their capabilities.” BaQ8)

Conspicuous Policy The aspect of conspicuous policy evolves around the inescapable and sometimes uncomfortable visibility of policy in the form of decisions, targets and priorities. Conspicuous because the policy decision or goal is explicitly designed to send an actionable message that cannot be misread or ignored. A lot of good managerial intentions get buried in ambiguities, in poor communications, in trying to keep the peace or simply treating the new policy as ‘opinions’ that can be argued about. Being conspicuous takes effort, but ought to send a clear message: this is the new norm.

“… One dedicated person, capable of sorting out all issues you [the customer] have. And by making this clearly visible in the organizational change, we made it tangible and visible for everyone: this is a different way of working” (JaQ4) As noted earlier, it is very difficult to signal the importance of making progress towards abstract and far away goals, to make them tangible for everyone, so that the goals become a shared responsibility and enable everyone to engage in the battle.

“With this strategy-‐update we introduced 'must-‐win battles. If we want to perform at the Olympics five years from now, but we keep postponing our training […] because we're busy with operational excellence [...] than we better give the ticket to someone else. These are the battles that we really must win if we want to make claims about progression towards our 2020 goals...” (LaQ5) The statement also addresses a common problem many leaders face: how to avoid getting stuck on a ‘zoom-level’. This is how Collins and Hansen (2011, p. 118) describe how ‘10x’ leaders are capable of zooming in on excellent execution as well as having the ability to zoom out to oversee the developing situation. But it also helps if the top is held accountable for the desired behaviors. The jury is out whether bonuses really work – some writers found negative relations between merit pay in non-profit organizations (Gagné and Deci 2005, p.345). It may also depend on the context and the kind of targets (financial or non-financial) that need to be achieved.

“What really helped was setting [personal] targets on the change process. That works well because we tend to focus on numbers and because top management is rather competitive. We made it simply depend on their bonus, albeit a small portion, but it counts. And it worked because we share their performance in the management teams.” (NeQ2) Besides the peer pressure effect, the relation between reward and strategy reminds of the ‘star model’ as described by Lawler (1996, pp.46-58) how rewards should be part of an integrated system of the business strategy. Eneco’s installation of a dedicated Ventures & Innovation department and Eneco’s announcement of investing 100 million euros in startup businesses over the coming five years caused quite a stir externally but also internally (Liempt, BNR 2015). It also offers an interesting

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new view on the term collaboration and how Eneco is learning how to form new cultural ecosystems with startup entrepreneurs. This is stated in last year’s annual report as follows: “We stimulate this development with smaller entities within and outside Eneco that have more freedom and shall pull us along in the change process” (Eneco 2014, p.8).

[…] “This is a very visible application of the fact that we are strategically heading in that direction. People see how money is invested, that things are happening there. And yes, some will say ‘hey, they are in the new business, which means I'm in the old business...’ That is an interesting new dynamic and it's okay that people sense this." (JnQ7) The installation of the V&I department is also a very visible decision, which is clearly seen by internal stakeholders, but also labeled by senior managers as a deliberate signal.

4.2.1 Change Symbols Even though this factor received limited support, the statements are very consistent internally and refer to some very typical characteristics that I did not anticipate on forehand. The factor concerns the role and effect of external, physical and symbolic statements made by the organization that can be interpreted as embodiments of the vision. Especially the introduction of various products that confirm or amplify the meaning of the strategy seems to have played an important role in the perceptions of employees. This notion is related to PEP – Perceived External Prestige, which describes the effect of reflected evaluations by external audiences on the perceptions of internal organization members; on how they see and categorize themselves – how they identify – in light of the organization they work for (Smidts, Pruyn & van Riel 2001, p.1057). Although too much identification with the organization may lead to certain levels of complacency, providing too much safety among employees (Van Riel 2010, p.47), strong identification with the goals of the organization might just as well be a vital asset in times of turbulence and change. Another aspect in this factor is the role of the new headquarters in activating the vision. This was mentioned frequently and they show similarities with mentions about signature products which points in the direction of the implicit symbolic meaning of the new building as well as the products. The signature products and the headquarter building are both symbolic and practical action instruments: symbolic in its signaling function, practical in translating the vision and strategy to the utility-level: the product Toon helps me (the average customer) save energy, but it also helps the employee as a symbol of the company he works for as it helps him point at concrete products that represent the organizations’ vision. So Toon utilizes the vision of the company while facilitating pride and ‘PEP’ in the organization.

The new HQ In April 2012 Eneco opened its new headquarters in Rotterdam. Besides being a symbol expressing the sustainable vision, it quickly became an icon for a new way of working: clearly designed to encourage cross-unit collaboration and interaction. For the first time in years employees from different divisions encounter and get to know one another at the espresso bar.

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This building is important to mention. We used to work in different buildings, which led every business unit to think, "I am Eneco." This building really contributed to breaching doors and walls. We can easily find and engage with each other. Now I regularly meet people from the consumer department, something that never happened before. So the building certainly is a success factor. (JsQ2) Even though the new headquarters was not instigated as an internal alignment program, it certainly is perceived to have a large impact on the integration of the organization. The role of the physical environment on the way people work together is underestimated, but it is possibly having a positive impact on individual- and group performance.

The fact that we're situated in this building has contributed to the notion of "together." Previously we had been situated in five different buildings. Most people didn't even know each other. The unit that bought the energy didn't even know the unit holding the customer-‐ portfolio! But this ought to be one integrated value chain. The fact that we are now situated in one building has resulted in much closer interaction and collaboration (HsQ8) Some of the statements refer to the role of the building and the interior design as signaling cues for the organizational identity and how the organization differs from others. To some extent the role of materiality and sensory or physical space is seen to have an impact on shared knowledge and identity formation among organizational communities (Schultz & Hernes 2012, p.5).

The CEO was very involved and wanted the building to be an icon, to symbolize the vision. And now, when we talk about Eneco and people look around, they see and sense what that story means all around. Not surprising that since the opening almost all meetings are held here and not outside. People are also much more proud of the organization than in previous years. (BeQ3)

Significant products Products have a symbolic as well as explanatory role in explicating the vision. But product introductions also play a strategic role: they mark the (current and potential) territory. This was crucial also in the beginning when the new vision was expressed to substantiate the mission. Which can be seen in the annual report of 2007: “Because we clearly signal that we choose for sustainability, that we make dedicated investments, Eneco is the natural partner for sustainability” (Eneco 2007, p.5). The Amalia Wind Park is not exactly a product, but it provided important proof for the strategy in 2008, which proved to be an important signal, also towards investor relations.

“The most eye-‐catching investment back then was the Amalia Wind Park, because it created massive evidence. It was the biggest park in the Netherlands, which allowed us to show we meant it.” (HsQ2) But even though the park supported Eneco’s sustainability agenda, it wasn’t exactly an example of decentralized energy production. More importantly, it wasn’t something that would speak to larger consumer audiences, let alone prevent them from switching to low cost suppliers. But also internally it was imperative that the vision was ‘solidified’ quickly to signal change

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[My role was] “to make it visible. Which started with the new corporate identity. That played a very important symbolic role, probably more important internally than externally.” (JaQ1b) Still it took Eneco quite a while before they could offer their consumers something that was tangibly different than what they expected from any energy supplier. It is difficult to be a different company if that difference is hard to sense or see.

“Products are crucial signals, also towards internal audiences. Otherwise people say; "we can claim that, but what are we actually doing about it?" Toon really gave us the answer. The same goes for customers; they could not discern what had actually changed in Eneco’s offering apart from solar panels.” (JsQ2) From this perspective, Toon really was a landslide for the organization because it produced a myriad of positive outcomes (Toon is essentially a smart thermostat allowing consumers to manage their gas and electricity use, but it has the potential to grow into a platform to connect any home appliance ranging from alarm systems to the refrigerator talking to your local grocery). For the first time, Toon facilitated a migration from the dark, hidden and cobwebby electricity cupboard to the living room. That in it self is a symbolic transition, which resembles the Intel case and how the “Intel inside” branding was a vital program also intended to improve low levels of self-esteem and pride with its highly educated and engaged employee community by signaling the quality of their chips also on the outside of the computers (Hatch & Schultz 2008, p.53).

“And it really helps that we can now inject the vision into our products. Especially Toon makes the link between sustainability and reducing energy waste much more concrete for consumers.” (NeQ5) In short; the products can function as symbolic amplifiers of the strategy; they support, activate and provide the necessary evidence both practically – translating the vision and strategy to the utility-level: the product Toon helps me (the average customer) save energy. But it the product also helps the employee as it represents symbolic evidence of the company vision; it utilizes the purpose of the company and facilitates company pride.

4.3 Tensions It seems obvious that as soon as an organization formulates a new vision that encompasses a change–or in Eneco’s case a transformation agenda; gaps and tensions are an immediate but natural byproduct. Which doesn’t mean that they can be ignored, but if no tension would occur, the transformation would probably be meaningless. This dimension contains two different factors, each containing two different aspects. The first factor concerns the dissonances respondents experience between external promises and internal realities or between long term goals and short-term targets. The second factor concerns perceived and to some extent real barriers to vertical as well as horizontal integration. These are the remainders of a traditional and to some extent neoclassical infrastructure related to the production company Eneco is transforming away from (Eneco 2008, p.6). But especially the horizontal barriers seem to be intensified with the new vision, because the vision helped attract new talent that specifically chose for the sustainability agenda (Eneco

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2007). With that, significantly different kind of people entered a traditionally rather bureaucratic and procedures-focused industry. But actions taken to breach these barriers as indicated in the activation signals dimension (paragraph 4.2) are certainly having a positive impact on closing these gaps. It is therefore important to note that many of the barriers indicated by respondents have their positive counterparts in the value relation dimension (see paragraph 4.4). It is also important to realize that organization members derive their personal identities partly from what their work organization stands for; how it behaves, acts and communicates. In this sense organization members are both part of the action as well as they are observers of what the organization is doing. Especially in times of change, they are sensitively perceiving and evaluating the management policies, the organizational promises, the behavior of top managers etc. But they also perceive the balance between positive and negative reactions and feedbacks of outside peers as well as the general public.

4.3.1 Dissonance This factor contains the perceived dissonance and discrepancies that employees triangulate between what they see in daily practice, what is promised or projected by the organization, what they believe the company stands for and how they perceive the management policy to be congruent with those beliefs and values. This is related to the famous Port Authority case study by Dutton and Dukerich (1991), which illustrates the role of organizational identity – what insiders believe the organization stands for and what insiders believe outsiders think about their organization’s actions. When the Port Authority employees experienced a gap between the harsh policy against homeless people in their subway system and the values they believed the company stood for – tied to what they feared the general public would think of their organization – the situation started to impact their self-image, which motivated them to take action in restoring the organizational image (1991, p.548).

Projections & perceptions This aspect reveals how organization members are engaged with their company and worried about the dissonances they experience between what is projected to the outside world, in the media, with what they believe should happen. Their perceptions are related to the fear that the high social and public responsibility their company is taking on – and they believe in – in the vision and mission could just as well be pierced. As the Port authority case illustrates: that fear is not simply related to the company they work for, but fundamentally related to who they are, how they see and define themselves. They have a vested interest that the organization really accomplishes the goals that they have a personal stake in.

“In those days there was this hype turning the garbage cans of climate gurus upside down to see if they were upright. I realized that that could also happen to us. I felt that the whole organization should shift and become sustainable, not just in supplying green power, but really develop a sustainability mindset.” (BeQ3)

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And this is not a totally unfounded fear. Countless organizations trip over vanity promises that lack substance. Enron had a remarkable CSR program, Volkswagen too. And it is shown that eyecatching companies who are truly developing highly integrated CSR programs may attract more intense scrutiny from NGO’s and other pressure groups as is shown in the Starbucks case by Argenti (2004).

“And I worry about our course. Nuon used to have great image on sustainability, until critical scrutiny revealed that their operations weren't all that green, which caused enormous reputation damage. We promise and preach and bring people on board, but we still have to prove it.” (BaQ4) And it is not so much whether these worries are justified or not, but it clearly signals their personal interest in making the vision they believe in come true. It really appears to be more than just work; it’s personal. People want to align their actions with what they believe in. They seek consistency, which is a common human reaction as shown by Kahneman (2011) how people will try to reason even the most unlikely incongruences just to keep a peace of mind.

In 2007 Jeroen de Haas proclaimed our shift towards the sustainability course. And I immediately wondered; but what are we going to do ourselves? Yes we can build wind farms, but what else? While I was building those farms, I was still driving in a bulky BMW. If we pretend to be green, it has to fit. (GnQ4) These examples relate to the work of Leon Festinger (1957), and his famous theory on Cognitive Dissonance or how people will seek to reduce tensions between their beliefs and their actions.

Short term & Long term Another form of dissonance that became apparent during the interviews is the perceived – and sometimes real –friction between short-term business unit targets and long-term organizationwide goals, which can be seen as a typical example of a collision between transaction-oriented management culture and the new goal which requires collaboration and service- orientation centered around the customer. In an article by Hansen and Nohria (2004), these are typical barriers to collaboration in large organizations as a result of increased emphasis on performance management, which has lead many employees to focus on “delivering their own numbers”, which won’t improve when helping others (2004, p.25)

“ People don’t know each other well enough, which is imperative to be prepared to work for each other, to contribute to a project of someone else, even if the results don’t account for your own KPIs.” (BaQ9) Considering the fact that for the most part Eneco still is also a commodity energy supplier for which the traditional management infrastructure works perfectly, it is possible that the barriers to collaboration only surface when cross-unit collaboration is required. So when plans unfolded to develop inter-organizational (social media) response capabilities that would allow the organization to become more personal in its interaction with the public, a conflict of priorities surfaced.

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“I was confronted with a lack of support by the management layer; they had a conflict of interest on the short term. And these issues created barriers between the different Business Units and the divergent KPIs each unit has.” (FrQ2b) In the early days after the introduction of the new vision, the markets weren’t ready to deal with renewable energy. Eneco had a highly advanced Energy trading business unit, but they had not figured out how to profit from these unpredictable and low volume sources, also because the market was not yet interested in discerning between gray or green power. Which is a typical example of having a vision that is far ahead of the market while the business model is still based on the old value chain. But this became a problem for employee motivation because the reward system was not yet aligned with the new vision, which resulted in negative internal evaluation, which was obviously perceived as unfair and inconsistent.

“In the beginning, when we had completed a wind farm, we had to sell the generated power through Energy Trade, but they had trouble selling it because it was complicated and unpredictable, so we didn't earn literally one cent with it, which resulted in a negative evaluation of our unit.” (GnQ6) Another remainder of the traditional energy company is the focus on procedures, on safety, control and risk. These are valuable traits that are also related to the nature of the product, the public responsibility and the traditional role of maintenance and large volume production. But these traits can also be perceived as impediments to other, more future oriented goals.

I think we are risk-‐averse as an organization. When you want to go ahead with a project it will be completely and endlessly calculated through. They will submit it to all the checks and balances imaginable. I find that incongruent with our goal of becoming more entrepreneurial, innovative, of making that necessary step. That really is the old way of doing things. (BaQ9)

4.3.2 Vertical & horizontal obstacles The barriers in this factor are somewhat related to the perceived dissonances in the previous factor, but they are more strongly experienced by the respondents as impediments to the evolution of the company as the data shows (see table 3). What distinguishes this factor from the previous factor is the visibility and daily confrontation with gaps on a horizontal level – between units, between functions and professional backgrounds and between generations – and gaps in the vertical sense – between management layers, management styles and exemplary leadership behavior. Where the vertical barriers are consistently identified as impediments that can and should be repaired, the horizontal barriers are more diversely identified and seem to be causing more concern with some of the respondents. And some of the barriers in this factor are also a very natural result from the fact that not long ago (2012) many of Eneco’s business units used to be physically located in separate buildings. It is obvious that not knowing or seeing each other slows the process of developing a sense of shared knowledge and shared goals. Trust is a base need before ideas, knowledge and goals are shared. This is clearly something that Southwest Airlines did manage to realize over time. For many years they would stick to having only one ‘home base’ in Dallas Texas and made sure that all personnel would return to base each night (Collins & Hansen 2011, p.129). So integrating the

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various units in one building certainly helps, but that is no guarantee that ingrained layers and silos will automatically disappear.

Layers & Leaders (vertical barriers) Trust is indeed an important element, also in this aspect. And it seems related to conflicts between ingrained and almost habitual management infrastructures rooted in control and risk thinking; management by telling others what to do as opposed to becoming an enabler, a coach supporting self-organizing teams, which requires a transfer of trust (Denning 2011, p.17).

During a management meeting Jeroen [de Haas] once mentioned his struggle to let things go –exactly the things related to those disciplines [financial & risk auditing]; Can you trust others to do it, and can you live up to trusting people as a leader? (BaQ9) Customer centricity and improvement of the customer experience requires not only a transfer of trust, but also a transfer of decision power to those employees who are making a difference, there where the difference has the most value – in the customer interaction.

“If we need a decision, it first has to go up three layers, later to come down three layers, which means that the decision is made by the person the most removed from the customer...” (AeQ2) A high level of management control is seen to have negative effect on autonomous motivation, identification and job satisfaction (Gagné & Deci 2005, p.342), which in turn has a direct impact on customer satisfaction (Payne, Holt & Frow 2001). And this is what they call ‘front line leadership’ at Southwest Airlines; managers are working side-by-side at the frontline, not arms length micro managing and controlling, but coaching, informal and on the job feedback and leading by example (Gitell 2005).

“I have no use of an account manager sitting behind his laptop controlling the whereabouts of his sales people. Such a person is not a connector. I tell them; ‘you should be on the road with your people, better; you should have your own accounts, lead by example’. We are getting rid of job descriptions; managers should be part of the action.” (JsQ9) The job description is a typical remainder from neoclassic thinking, specialization and the division of labor. In many industries, but especially in air travel, identification with the function can be a serious barrier to coordination for shared goals, such as fast turnarounds. So broadening job descriptions may help foster cross-functional coordination. The overall and shared goal should be that the organization shifts its focus “to ‘delighting’ the clients [which] means that those doing the work effectively report to the clients, rather than the manager” (Denning 2011, p.19 – emphasis added).

A control freak demanding that everything goes through him is undermining our strategy. He becomes a bottleneck because the thousands of people below him all have to go through his pipe (LaQ8) It is important to note that many leaders at Eneco – or any other organization with technocratic roots – simply became leaders because they were the best mechanic or the best engineer, not specifically the best leader.

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“We are originally a technocratic organization. Specialist knowledge would prevail. A good mechanic automatically became chef mechanics. But on senior management level we are now required to join and unite people across units.” (HsQ8)

Islands & Peers (horizontal barriers) This aspect contains two perceived sub-aspects: the problem of silo’s and sub-cultures and the problem of generations. Respondents clearly identify a divide between employee-cultures from before and after the new CEO took office and most of them indicate a correlation between generations and the reluctance to collaborate across units. Both issues are clearly related to the transition from a centralized energy production and distribution company towards a visionary company, focused on collaboration for the development of sustainable and decentralized energy services. This transition – or transformation as respondents frequently reference it – shows remarkable parallels to the identity traits model by van Riel (2012). Eneco’s “common collection of identity traits” (2012, p.21) are directed on a path from a traditional ‘bureaucracy’ towards characteristics that resemble the ‘shared meaning’ type of organization. These traits are influenced by two more general factors: the level of centralized management structures and the level of external turbulence. Eneco’s management infrastructure is highly centralized by nature and remains centralized also in their transformation towards a ‘shared meaning’ type of organization. The external turbulence – the market liberalization in 2004 and the increased competition with new entrants – clearly propelled the CEO’s visionary leadership towards a greater and more responsible goal, which can be typified as aiming for a ‘shared meaning’ type of organization (Van Riel 2012). Although the greater cause for Eneco has always had the public interest at heart ‘shared meaning’ requires much more internalization and proactive engagement from all employees related to that greater cause. In a ‘bureaucratic’ setting, employees are used to ‘following the rules’ (Van Riel 2012, p.24), which suggests a strong employee-inclination to demand clear instructions from line managers what to do, and a tendency to ‘delegate’ the social legitimation – the mission – as well as the formal accountability upward to senior management.

Yes I believe technicians find it difficult. They choose primarily for the job because they like technical stuff, they did not necessarily choose to work for Eneco. The numbers show poor alignment with technicians and the people in the call center. The main reason is that they don't really care, that the units are quite big and that the cascade is hampered (NeQ5) But new employees, attracted by the sustainability vision, are driven mainly by a desire to actively contribute to the cause as it facilitates a psychological process of ‘self-enhancement’ (Tajfel 1981 in Van Riel 2010, p.154) – “I am good because I work for a responsible and successful company.” Which means that the nature of the conflict between the old and new employee groups could be interpreted as follows; 1) older employees feel that the new cause-driven and pro-active employees disrupt the top-down routines and protocols, which they perceive as being imperative for the safety and legitimacy of the organization. 2) Besides ‘self-enhancement’, new employees also seek ways to categorize themselves and others in terms of group-memberships in order to make sense of the world around them (Tajfel et al 1987 in Brickson 2007, p.880). Which means

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that they will have a tendency to categorize employees who not fully embrace the vision as dissident ‘out-groups’ (Van Riel 2012, p.25).

The person who applies for a job with us now should really join us because we stand for something. He or she must endorse our mission and vision and think: I want to be part of this. Which brings a new drive to the organization, together with the people coming in. (JsQ9) Other types of sub-cultures are related to identification with the function, rather than with the organizational goals. Mechanics may identify more easily with other mechanics at the lunch table than engage in a discussion about the organizational vision with communications people. This doesn’t have to be a problem, unless an increased feeling of “us-versus-them” atmosphere starts to develop (van Riel 2010, p.154), which could also simply be the side effect of moving towards a ‘shared meaning’ type of organization which has the tendency to polarize in-groups versus outgroups (Van Riel 2012).

In regards to culture, the differences are significant. We have a substantial group of people who were already working here before Jeroen became CEO. They have completely different drives. And then we attracted a large community who came to work here specifically for the vision... But when I hear statements like 'people have to be future proof,' I'm afraid some people will fall behind… And I wonder sometimes, if we’ve really done enough to keep them on board. (BeQ4) This could also be interpreted as a clear understanding of who is capable of joining and who is not. Top management should be aware of the effects of these categorization processes and either find a way to balance excessive social exclusion, which can typically be found in more ‘ideology’ driven organizations (Van Riel 2012, p.26), or decide to listen and act on these discrepancies with the vision in mind, because the issue confronts people on an everyday basis, which may ‘slow’ the organization down, at least psychologically…

“That leaves a big gap between old and new personnel. But as a responsible manager, you will have to deal with that, through selection but also by empowering your people. Put some of these [older communities] on the mature business; some products [solar and wind] are already standardizing.” (JsQ9) It depends also on the organizational strategy Eneco continues to develop; whether they choose for a more diversified strategy or not (Van Riel 2010, p.148); whether technical support should remain integrated in the company or outsourced in the value chain to a specialist partner (Gulati and Kletter 2005, p.90). A partner who supports the greater mission, but who is also better equipped to support a process of self-categorization and identification, especially for mechanics. Such a decision could also resolve the growing tension between lagging and engaged employee communities (Van Riel 2012).

4.4 Value relationships This dimension can be seen as the positive counterpart of the Tensions dimension (see figure 2). The aspect of ‘working for shared goals’ for example, can be seen as the mirrored opposite of the ‘Islands & peers’ aspect in the Tensions dimension. This may come across as a contradiction, but

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I believe they are a natural result of how respondents look at their own organization and when asked to evaluate and respondents will automatically retrieve positive as well as negative evaluations simultaneously. The dimension reveals that inter-organizational collaboration is not just a functional competence, but is also developing into a business imperative if viewed and developed through the lens of the shared organizational vision. Although this is not yet an established organizational practice, the mission potentially provides Eneco with a ‘recursive’ or self-similar collaboration principle that can be applied in daily practice, irrespective of the hierarchical level. A great example of such a practice is the ‘fractal’ principle that Tony Hsieh (2011, p.270) referred to when explaining the ‘Delivering happiness’ premise, which serves to build relationships at every level, big or small: in one to one interactions with customers, in dealing with suppliers and even at the organizational level in their interactions with citizens and municipalities when building a new headquarters, or with the world at large (Hsieh 2010). And Eneco is by no means there yet, but some examples reveal a potentially new ‘operating model’, especially in their B2B relationships, that resembles the “relationship-centered organization” by Gulati and Kletter (2005), which describes how high performing organizations manage the value of their relationship capital with customers, suppliers, alliance partners and internal business units (2005, p.77). The perceptions gathered within this dimension are distributed over two, slightly blending factors, which identify various types of inter-organizational collaboration aspects as well as typical partnership principles that reveal Eneco’s determination to develop more meaningful customer relationships and potentially reframe the value chain. Most dominantly with businessto-business relations Eneco is clearly steering away from the classical transaction-based customer relation that is dominated by price and volume thinking.

4.4.1 Inter-‐organizational collaboration The statements that I found in this factor describe three aspects of inter-organizational collaboration, ranging from developing tools to literally ‘find’ each other for shared goals as a precondition to improving collaboration competencies, to cross-unit collaboration in so-called ‘Vertical experimentation’ to develop new value propositions across the organization. Although some of the aspects tend to blend into each other inside the factors, together they strongly support an internal view of the organization which reveals a strong motivation to develop the necessary preconditions, tools and skills to collaborate effectively within and beyond a web of cross-organizational relationships that were previously unthinkable. These developments seem to accelerate in spite of some remaining internal bureaucratic barriers and in spite of an increasingly competitive and turbulent context (Eneco 2014). It is encouraging that Eneco chooses to invest, rather than succumb to the reflex of arbitrary cost cutting, which is all too often the case: “Fear breeds the need for safety and security. And this race to the bottom of the pyramid can lead to a downward spiral of declining employee morale, customer satisfaction, and financial performance” (Conley 2007, p.36). Top performers on the other hand do the opposite in a downturn; they focus on customer needs and invest even more in the

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longevity of their internal as well as external relationship networks (Gulati and Kletter 2005, p.82).

Working for shared goals The increased momentum in Eneco’s transformation that emerges from the statements seems to correlate with the latest strategy update and shows a subtle difference in the approach to alignment in general. Although these are my interpretations, based on a limited amount of statements, Eneco seems less compulsory on process alignment – pushing a particular strategy – and more focused on outcomes that support and contribute to the bigger vision and mission of the group in relation to business units as well as teams and departments.

“A starting point for this update is 'mission alignment'. This is a beautiful theory that is based on the idea that you can collaborate and share information within your organization, but as long as you don't share the mission, it will simply not work.” (LaQ1) By taking a step back and focus on what the shared goals are, Eneco seems to have found a way to allow its subsidiaries to make a step forward and develop their own ways to contribute to the shared goals, which may change an attitude of waiting to be told how to align and live up to top management expectations. A focus on process alignment can be seen as the old way of centralized and top-down management typical of ‘follow the rules’ - bureaucracy-type organizations as described earlier (Van Riel 2012, p.24).

“One of the things that we are installing is getting everybody to engage in peer to peer reviews: every business unit has to present its year plans to those units or teams that they depend on to learn if they have a shared perspective on things.” (NeQ9) Another investment is made in bundling and enhancing the various internal social media platforms, some of which started initially purely as one-way intranet channels to formalize traditional ‘coordination mechanisms’ such as distributing the ‘rules & directives’ about house style and company presentation principles (Van Riel 2010, p.241).

“Internal platforms also played a role; Express is a sort of internal Facebook. It started as a KPIs sharing channel, but developed into a platform to share all kinds of things, ask people questions... If you're proud of something, you really receive a lot of response. That platform has most definitely led to much more internal connections.” (JaQ1) Such internal social platforms have shown to be a potential amplifier of change, to distribute and quickly share exemplary cooperation behaviors across the organization, which may function as an extra ‘nudge’- or form of peer pressure for other employees to learn how the dominant ‘norm’ is shifting (Thaler & Sunstein 2008). It can accelerate cultural exchange also across geographical boundaries, which was famously done at IBM when in 2003 employees from all over the world engaged in a massive ‘values jam’ to reinvent a culture of cross-unit and global collaboration (George 2012). But the platform also simply facilitates the ability to find the right expertise, which is seen as one of the four biggest barriers to collaboration: the ‘needle-in-ahaystack’ problem (Hansen & Nohria 2004, p.24).

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Collaborative competence The statements made in this aspect are very consistent in addressing the need to develop collaboration competencies in order to become more effective as an organization. These competencies are not only necessary to perform better coordination on the work-floor; they are seen as a fundamental capability that is closely connected to Eneco’s missionary role to realize the energy transition, which suggests that every employee should potentially become an ambassador to that cause and be able to engage with internal- as well as external communities.

“So if we claim that we want to develop access to sustainable energy for everyone and that we want to collaborate to realize that goal, than we need to have the capability to have engaging conversations to connect other people to our cause. That is the core competence we need to develop.” (BaQ4) The emphasis on competencies in the statements also reveals a shift of focus towards people qualities, away from traditional management procedures. And this makes perfect sense; structures and procedures work well when the organization has to scale its production capability to fulfill predictable customer needs. It can be questioned whether such ideal situation was ever reality, but it is certainly not real today (Ries 2011). At this moment flexibility and forward thinking are the prime qualities that organizations need and they are typically not found in old ‘command and control’ practices (Denning 2011) that stem from transaction models and the days when customers were considered ‘production endpoints.’

“And if you have good people who are capable and prepared to collaborate, able to look beyond their own walls, to break through conventions and really walk the extra mile for his customer, than it really doesn't matter how things are structured.” (BaQ4) Which brings to mind Collins’ (2001) idea of first getting the “right people on the bus” instead of desperately trying to structure the company for its destination. The disruption that is taking place across a wide range of services industries requires adaptive capabilities in organizations which allows for the right people on the bus to devise a new strategy when the circumstances requires the firm to make a new turn. The good to great companies have no problem in first getting “the wrong people off the bus” and then getting “the right people in the right seats” (2001, p.42). And it seems that the right people at Eneco have a pretty clear picture what the ‘wrong’ people are.

I think that it's important whether you are capable to connect… Can you collaborate? Can you think beyond your own boundaries and are you able to make an effort for someone else's goals? That is really important and the NS case is exemplary because units really found each other in the collaboration, because we were able to put the Eneco goal before individual targets. (JsQ9) What is interesting about these quotes is that they put some of the barriers mentioned in paragraph 4.3 in perspective; some goals and KPI’s are indeed conflictive, and some leaders may impair natural collaboration processes, but these should also simply be challenged by the ‘right’ people instead of waited out, because that is a typical mentality that fits the ‘bureaucracy’ type of organization (Van Riel 2012) in which people are as good as their leaders allow them to be.

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“The fewer there are managers, the better it goes. The flatter the organization, the better collaboration gets going. This will make sure that no longer management decides to what extent we act on the sustainability goals. Which means that we are developing self-‐managing teams. And if we can really endorse that, show our internal processes, which will radiate also externally, that will serve our credibility, which in turn serves our customer loyalty. (FrQ9)

Vertical experimentation This aspect is rather specific and received mostly support from executive people. That is caused in part because the idea of ‘verticals’ was only recently introduced in the organization and also because the word ‘verticals’ appears to be mostly top of mind on senior levels. Verticals are a themed way of developing new markets by combining specialists from all over the organization.

We have initiated Verticals, with themes like mobility, which is set-‐up a group-‐wide. We have initiated several themes that are going to be developed in 90-‐day schedules. So you have to pitch every quarter and showcase where you're heading. It is called 'vertical' because it should cut right trough the organization. That is a completely new way of working. We are doing this since April and it really is a discovery process. (JsQ8) By framing product development in 90-day schedules and by running experiments, the company may prevent inward oriented invention and dragging innovation programs for product-ideas, without knowing if there is a market for it. If Eneco really is prepared to quickly test and prototype unpolished services with dedicated teams and customers (Ries 2011), it will “foster deep, trust-based relationships among the participants…” (Denning 2011, p.19) and allow Eneco to build a new platform (Eneco 2014, p.7)

“Where do we want to make a difference? That is inherent in the products and services that cut right through the whole group, where composite teams work together. We call these Verticals. We organize joint forces from various corners of the organization to gather drive, knowledge, and money to make things happen together. I believe that that is an important aspect of 'together' in our organization.” (JnQ5) But there are also other statements that do not specifically mention the term ‘verticals’, but indicate the same experimentation posture towards breaking through existing silos and boundaries to try new ways of working and connect specific knowledge domains.

“[Employee x] has resigned from his job to set up a new venture inside Eneco. We are figuring out how that works... How to transform from a hierarchical organization to a platform where these kinds of processes become natural…” (BeQ9) This shows a willingness to allow employees to develop innovations in which they have a personal stake. In the section about innovation inside large organizations, Ries (2011) provides some interesting insights, specifically about the importance of being endorsed and recognized by the organization (2011, p.255), which serves also intrinsic motivation in people (Gagné and Deci 2005). What characterizes the statements in this aspect is that these developments are very recent and in part fairly ‘symbolic’ in the positive sense: by explicitly and visibly trying out new forms of working, the organization seems to gain traction in its transformation. By proclaiming the

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installation of a ‘ventures & innovation’ unit and the investment of 100 million Euros in energy startups (Liempt, BNR 2015), Eneco signals its ambitions externally, but also internally (see also paragraph 4.1). It comes across as kicking the ball into no-mans-land, forcing the organization to enter new territories and learn to deal with the terrain along the way.

4.4.2 Reframing the value chain Already since 2007 Eneco has been very outspoken about the envisioned future of collaborating for sustainable and decentralized energy production. But in its annual report of 2014 the dilemmas and the implications of that vision for Eneco’s existing value chains become clear as they openly explicate what value chains need to be disbanded in order to develop new ones. The basic idea is that Eneco ‘participates’ in an energy platform that is shared by citizens and businesses. And this participation requires a completely new and transparent role: no longer serving the interests of its own production assets, but serve the shared interests of the participants in the platform (Eneco 2014, p.7). The statements in this factor describe two aspects of developing value chain relations with stakeholders. The first and abundantly supported aspect is advanced relationships, which evolves around the respondent’s interpretations concerning the abolition of the ‘customer as production endpoint.’ The statements in the second aspect are slightly different because they include the mission lens as important reference for the new value chain relationships; how the added value of the vision can be shared with customers, reframes the purpose of business relationships. But even though the statements are mostly related to reframing value chains, the described collaborations are broad and do not only – although mostly, refer to customer stakeholders. They include how Eneco is reframing the municipality-shareholder relationship, how to collaborate with competing energy cooperatives, and how NGO-collaboration resulted in the development of a footprint measurement system, which allows Eneco to enable other businesses to adopt, measure and manage their sustainability programs (Eneco 2013, p.27). Another element that emerges from the statements is the involvement and inter-organizational collaboration between different internal business units in serving corporate and B2B customers. Especially the involvement of specialists that are traditionally considered ‘staff’ members in consulting corporate clients, such as the Dutch Railways (NS), to help change internal attitudes toward sustainability. And this makes perfect sense since Eneco has developed change capabilities since 2007, which puts them in a good position to help other service commodity organizations to adopt new behaviors.

Advanced relationships This aspect can be characterized by the way different stakeholder relationships are being redefined or reshaped in various levels of intensity. Even the engagement with average consumers is changing through the introduction of Toon, which literally migrated the contact from the hall-closet to the living room and empowers its customers to regain control over their own energy spending – something commodity services organizations tend to forget.

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But redefining business relations is also about challenging the conventions and being prepared to cut revenues from activities that contradict the vision. And not succumb to the commodityprice spiral just to meet your personal target (Prahalad and Ramaswamy 2004, p.7).

We are used to providing all the services and the advice for free, but we should just be bold enough to charge for those services! That will change the appreciation and the customer will expect something meaningful. (JsQ5) By aiming for enhanced business partnership relations with corporate clients that used to evolve around arms length, price driven and volume-oriented tender contracts, Eneco has managed to engage with other non-legal discussion partners that potentially share the same goals, which sheds new light on the commodity role.

“At the organizations with whom we do great business, we don't sit at the procurement table, but primarily with business and sustainability people. And that is our objective: Engage with the business of your clients, they understand the story from a different perspective” (JsQ2) By having a seat at the table, for example with the Dutch Railways, they both gained access to a completely new platform, which potentially allows Eneco to extend its business into other sectors. This reframes the relation from client to interdependent partnership, which is largely possible because of the shared sustainability goals.

“When a corporate customer asks us to develop a sustainability program, we can address two dimensions: mobility and property. For the first dimension we can do things together with the Dutch Railways as partner, and then we have a totally different conversation. We look for the shared goals and develop new revenues.” (JsQ7) This resembles the principles of value chain integration as described by Gulati and Kletter (2005). But there are many obstacles before such partnerships actually produce new revenues instead of merely reapportioning existing ones. A premise to creating and sharing new value is being critical in selecting the right partnerships (2005, p.85), which should be based on relationships of shared goals that lie beyond the narrow focus of short-term financial gains.

You could certainly say that being able to engage in collaborations is a competitive advantage. And I think that we – compared to others – are far better at it, especially externally. We are not too big to be cumbersome and not so small that we have no impact. And we have shareholders with a social orientation. That affects us. (JnQ5)

Mission lens By reframing its role as participant in an energy platform that is shared with citizens and businesses (Eneco 2014, p.7), Eneco seems to readopt something that resembles the public responsibility that Eneco used to have in the previous century, albeit in a much more proactive and visionary way. And that is of course largely related to the fact that the vision explicitly aims for a purpose that serves business AND society. And this vision appears to allow Eneco to engage in different and more engaging relationships with corporate clients beyond purely utility needs. That could be due to the fact that these corporate organizations share the same goals or at least aspire to gain a slightly better reputation by associating themselves with those goals.

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We continually build that sustainability narrative. Not just from the perspective of product development, we emphasize the added value of Eneco and present sustainability thinking as a service. We help you to improve your reputation matrix; it helps your brand, and helps to position you as an attractive employer (JsQ2) When the business strategy is viewed through the lens of the vision, suddenly potentially new value-relationships emerge and old ones become obsolete. In other words: when the vision is considered as a business objective: ‘collaborate with customers to develop sustainable and decentralized energy services’, then it becomes clear where Eneco should develop its added value.

If we don't want to make money with a commodity against the lowest possible price, then we have to develop other services, but also look for different types of customers and accept the fact that some customers do not fit with us any longer. (HsQ4) But that mission lens can also be used to critically look at internal value chains. Eneco has been struggling to upgrade its customer services without much success. They are now considering outsourcing this role to a partnership company that can provide the added value that is necessary to enhance the service relationship with customers. At first glance, that does not seem to fit with the inclusive nature that seems inherent in the vision and values of Eneco, and some of the statements clearly portray how people struggle with these issues. At the same time, the vision – and certainly not the service platform-concept that they are aiming for – allows for mediocrity and compromise in regards to the delivery of that promise inherent in building a meaningful service platform for businesses and citizens (Eneco 2014, p.7). Which reminds of a remark made during one of the interviews: “compromise is an expense we can no longer afford ourselves.”

We will outsource some of our supporting services, simply because we are not good at it. So instead of bothering customers with our incompetence, we will devise a seamless experience with a good service partner. Our main condition is however that such a partner understands and contributes to our mission. (LaQ5) To some extent, that idea fits with Gulati and Kletter’s (2005) analogy of high performance organizations that have succeeded to ‘shrink’ their businesses to the most essential functions, while at the same time expand its relationship networks to provide high level service experience to its customers. These relationships become strategic assets, which require more than legal agreements to develop a “collective sense of purpose” as an incentive for long-term coordination (2005, p.95). And that model potentially fits Eneco as they are preparing for the platform role.

There are hundreds of these [local-‐community] energy cooperatives, but they are small and have trouble growing. Traditionally we would consider them to be competitors, but we realize that they are essential for the energy transition. So instead of opposing them, we convince them to collaborate with us, based on a shared vision. (HsQ7) By reevaluating its relationship networks through its vision and mission, Eneco is learning about new value chains that cut across and beyond the organizational boundaries. They are discovering that the traditional role of supplier and customer can be redefined by replacing the ‘legal lens’ and volume focus with the ‘visionary lens’.

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5. Discussion In the following paragraphs I explicate the findings by first providing a summary of the aspects, factors and dimensions. Then I will deliberate how these findings contribute to management and organization theory. I will also explicate what elements might be of interest in practical and/or managerial application. Next I will share the limitations of these findings and what I believe interesting topics to follow up in future research. I will end this thesis with a short conclusion.

5.1 Summary of the findings The four dimensions The case study and grounded theory approach revealed a very rich variety of data, particularly from the interviews (Eisenhardt & Graebner 2007, p.28). The dimensions, factors and aspects that emerged from the statements not only revealed insights in the critical success factors and barriers to transforming towards relationship models, but also suggest a logical flow of reactions among the dimensions (see figure 4). The flow seems to suggest that as soon as the organization’s leadership expresses a compelling and socially engaging vision, internal as well as external stakeholders will naturally identify gaps between what is being projected and what they perceive as the everyday reality. Symbols, products and policies activate, amplify and solidify the vision, which may result in a widening of the gaps because the differences become more and more explicit, but at the same time these dimensions also seem to activate internal as well as external stakeholders to engage and close those gaps as they have a vested interest in the shared goals of they organization that they work for or partner with. I have based the insights, described above on indications in the interviews and on models by writers such as Dutton and Dukerich (1991) and Hatch and Schultz (2008) to name a few. And although I have not been able to establish empirical confirmation of the logical order of this flow, the sequence of events appears to suggest a natural cause of action. Other than that, the four dimensions also simply reveal three very salient and useful success factors and one barrier dimension that clearly help us to identify how commodity service organizations can shift towards meaningful long-term relationship models. In the following section I provide a short summary of each of the four dimensions and highlight the elements that struck me as most salient for the dimensions as a whole.

The vision imperative dimension There are three distinct principles that I believe can be extracted from the vision dimension: • (Visionary leadership) Unwavering determination – An inspirational, uncompromising and socially engaging vision carried and expressed by a charismatic ‘change agent,’ who is capable of “imagining the flight of the butterfly” (BeQ2) – is imperative to instigating the organizational change process. It will set the rusty, bureaucratic commodity wheels in motion, it forms the basis for added value in business relations and it attract as well as rejects the ‘right’ and the ‘wrong’ people respectively.

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• (Visionary leadership) Vision as platform – Counterintuitive in combination with the first aspect, this aspect reveals encouragement to engage the vision as touchstone for sensemaking, for reiteration and reframing of the organization, of the roles and relations of teams and business units and as a framework for business relations and product development – it thus encourages ownership of the mission. • (Transparency) Opening up to feedback & proactive stakeholder pressure – As the vision addresses business AND society purpose, transition towards a sustainable energy production and decentralized ownership, stakeholders are triggered to ‘hold up the mirror.’ Because Eneco is opening up to feedback, stakeholders engage the company and start addressing the goals they feel they are sharing with them. This outside in pressure effectively helps to enhance and accelerate the organizational change.

The activation signals dimension A general characteristic of this dimension is visibility and activation – external as well as internal: How the organizational vision solidifies in policies, symbols, products and the working environment and how that accelerates organizational change. • (Change support) Mentality reorientation – How Eneco has learned to develop its own change capabilities by addressing and shaking the ingrained and procedures-oriented ‘bureaucracy’ attitudes to install proactive engagement and customer orientation with employees. • (Change support) Strategy communication – In parallel to these reorientation processes, Eneco develops visual roadmaps that evolve by trial and error, progressing along with the organizational change, for people to understand their roles and relations in the value chain. • (Change support) Conspicuous management – Awareness of the effects of policy decisions as effective instruments to signal change, on the condition that it is well designed and purposely acted upon. Both sloppiness and conspicuousness in the execution are seen, weighed and evaluated, which will determine its success or failure on the work floor. • (Change symbols) The new headquarters – By translating the vision into tangible, visual and/or sensory representations the organization not only motivates and attracts internal and external communities to align to the vision. The new headquarter design emanates the symbolic meaning of the vision, but also provides cues for the expected way of working, collaboration, knowledge sharing, goals alignment. • (Change symbols) Significant products – Products such as the Amalia Wind Park signal and demarcate the new competitive territory and provide evidence for internal as well as external constituents. Toon provides consumers as well as employees with eye-level utility translation of the organizational vision, which serves pride and perceived external prestige.

The tensions dimension The perceived gaps in this dimension are multifaceted encompassing aspects of dissonance between internal and external realities, between short and long-term expectations and obstacles of horizontal barriers and vertical layers. These aspects indicate two things: a) Eneco has a long way to go in adapting to meaningful long-term relationship models b) Concerns about these

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inconsistencies appear to express a motivation to fix the tensions, which could represent: a bottom-up change-dynamic. • (Dissonance) Projections & perceptions – Employees have a psychological but very real interest in the external projections and perceptions of the success of the company as an instrument of self-enhancement and self-categorization. Concern about discrepancies, seems to motivate them to close gaps between promises and projections made by the company and the everyday reality they see and experience on the work floor. • (Dissonance) Short & long term – Contradictions in management policy in regards to visionary goals and direct targets are a serious threat to levels of autonomous motivation and job satisfaction. These will inevitably hurt levels of customer satisfaction. • (Vertical & Horizontal obstacles) Layers & leaders – When moving towards service and relationship models, customer line-of sight should be enhanced by exposing employees to customer feedback, adopt enabling instead of controlling management practice and working side by side, applying what is called ‘front line leadership.’ • (Vertical & Horizontal obstacles) Islands & peers – Transforming from a ‘bureaucracy’ to a ‘shared meaning’ type of organization leads to increased polarization as each time period – before and after the new vision – acquired a different type of workforce adhering to different working attitudes. By introducing a more ‘moralistic value system’ to replace the bureaucratic one, ‘dissident’ attitudes become more visible, which motivates a process of polarization between cultures.

The value relationships dimension The factors and aspects in this third critical success factor provide concrete reference to aspects of relationship models. And many elements show resemblance to examples found in the literature (see paragraph 2.4, table 1). They are, nevertheless, under construction at Eneco. • (Inter-organizational collaboration) Working for shared goals – Stepping up the value chain by allowing self-managing teams, encouraging initiative, value-chain awareness, responsibility and collaboration. Instead of focusing on getting units to follow the constructed procedure of change, encourage them to conceive and map their own contribution to the visionary goal. • (Inter-organizational collaboration) Collaboration competence – The need for leaders to ‘become change agents,’ connectors, being able to connect others – customers, business units, stakeholders – as well as having the competence to join communities and unite internal as well as external constituents to build shared futures. • (Inter-organizational collaboration) Vertical experimentation – The fact that Eneco engages in start-up experiments is proof that they are shedding off their procedures-oriented feathers. Symbolic or not, the activities send strong signals to all constituents. Similar to the mechanisms in the vision dimension, these experimental promises may encourage people to close the inevitable gaps that will emerge by engaging in experiments. • (Reframing the value chain) Advanced relationships – By reframing the commodity business relationships, by integrating knowledge across business units and by identifying the need for sustainability services, Eneco is finding a way out of the commodity trap.

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• (Reframing the value chain) The mission lens – the mission helps to get a new seat at the table, to enhance business relations, which not only commands better margins and more sustainable, meaningful and long-term relationships, but the shared capabilities in the partnerships potentially provides access to new capabilities and new business territory.

5.2 Theoretical contribution The findings from the case study research as well as some of the insights found in the literature review reveal the following aspects that contribute to the areas organizational and management theory, (internal) communication and marketing.

Integrating identity, organization, HRM and marketing views With this case study, I provide insights in the inner workings of how a commodity service organization is transforming from a procedures-driven organization to a service innovation organization, and how that affects peoples’ interactions, perceptions and identities. In doing so, I cross borders between important, yet often not connected, literatures as well as management practices. There is limited research that studies complete cross-sections of organizational practices. Although various writers mentioned in this thesis have elaborated overlapping aspects, they provide only fragmented models. And this is understandable because studying such crosssections automatically oversteps the boundaries of many different knowledge domains, which requires complicated cross-disciplinary collaboration. And it is also difficult to devise applicable one-size fits all models that are practical as well as measurable for organizations (Payne et al. 2001, p.809). Be that as it may, engagement in cross-disciplinary research usually leads to richly new understandings and cross-disciplinary concepts, which benefits all domains. It could provide the necessary “frame-breaking thinking that should lead to deeper insights” (Eisenhardt 1989, p.544). A cross-disciplinary team could bring new understanding and conceptual models when studying cross sections of organizations. And that is necessary because many traditional commodity organizations are under huge pressure from agile new entrants who offer high value and high service experience. The pressure is mounting to fundamentally transform the transaction-oriented operating models. Incremental change or partially adopting some of the existing models may do more harm than good and may take too much time. The needed changes require holistic restructuring of management infrastructures and thus holistic change models. This in turn requires more integrated knowledge how different domains converge and what practical guides help organizations to simultaneously reshape multiple dimensions at once (Gulati & Kletter 2005, p.102).

Sensory symbols as change accelerators A significant amount of statements in this study suggest a potentially effective role of signature products, symbols and physical environment to signal a visionary change towards internal and external constituents. The signals also have a strategic purpose: the Amalia Wind park in 2008 clearly reinforced the meaning of the vision, also towards shareholders. But it also seems to demarcate the new territory towards competitors, which touches on the field of impression management. Toon for example provides ‘eye-level’ utility of the vision and is symbolic as it migrated from the hall closet to the living room. This provides also internal audiences with the

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necessary evidence supporting a sense of pride at ‘birthday-party introductions.’ This is related to the field of symbolic management and sense making, and it resembles what Dalpiaz et al. (2010) refer to when they write about the strategic use of products and design as symbolic as well as cultural resources, being underestimated competitive instruments. But this is also related to the literature about organizational identity (e.g. Cornelissen et al. 2007) and social identity as is explained in the Intel case by Hatch & Schultz (2008, p.52). The difference to the Intel case however is that Toon is not so much a logo on the outside of a computer, but a product that represents AND utilizes the vision. It contributes to the visionary goals as it helps customers to save energy waste. The fact that the role of the new headquarters was frequently and consistently mentioned, also suggests its powerful role. The statements revealed three specific attributes that may contribute to knowledge areas of design and human resource management. The first and most frequently mentioned was the role of the building in facilitating encounters with other units and teams who used to be situated in different locations. The second element was the symbolic effect; the design and interior – the materials, the vertical garden, and furniture design – inhibit deliberate cues to signal the visionary purpose of sustainability and collaboration. The third element was pride; which is supported by the fact that since the opening most business meetings are now almost exclusively held inside the head office. Another interesting aspect of the role of symbolic instruments to facilitate organization members in making sense of the organizational transformation is the visual strategic framework that would depict for example the position and role of business units in the value chain and how they relate to each other and to the customer. The visuals evolved along with the evolution of the company’s transformation and the strategy updates. All together, these findings contribute to the academic literature on strategic management and related areas of symbolic and impression management by showing that organizations can make strategic use of design, of visuals and symbols and products to accelerate and amplify the organization’s goals and to influence attitudes of constituents AND competitors.

Strategic alignment The case study revealed a much more provocative role of the vision than I had anticipated. Even though articles by Collins and Porras (1991; 1994; 1996) provide brilliant insights in the role of vision in highly successful companies, they do not address the role of internal and external stakeholders. The vision, culture, identity (VCI) model of Hatch & Schultz (2008; 2009) provides inspiring insights in how vision projections and the perceptions of stakeholders shape the shared conception of the brand, but they do not address how these processes affect proactive initiatives and actions by internal as well as external constituents to close gaps. Eneco employees used the vision to reframe the purpose of their business units, but also as a touchstone to reframe their commodity business relations. The shared value in the vision even seems to provoke external stakeholders to hold up the mirror and engage the organization to encourage them to close perceived gaps. This idea resembles Dutton and Dukerich’s (1991) Port Authority study, but it also suggests the possibility that the identification and categorization-process is not the exclusive domain of internal constituents. The case study elaborates on many aspects of self-enhancement, self-categorization and identification (Brickson 2007, p.880; Van Riel 2010, p.154; Dutton et al. 1994), in particular in

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the Tensions dimension. The study also suggests the powerful role of these aspects in closing perceived gaps, which suggests that these aspects play a functional role in organizational change processes in general. Many statements reveal a relation between perceived gaps between what is promised or projected and a genuine motivation to proactively close emerging gaps. Similar concerns about employee generations reveal self-categorization processes related to identifying in- and out-groups and what resembles ‘dissident’ subcultures (Van Riel 2012, p.26). These processes seem to suggest a strong motivation to defend and engage with the ‘vested interest’ they have in reaching the shared goals of the company to maintain a consistent self-image (e.g. Dutton, Dukerich and Harquail 1994).

5.3 Managerial implications I have identified three aspects that can contribute to managerial practice in service organizations entering a change program towards building meaningful long-term relationships with internal and external stakeholders. 1. Devise engaging visions that addresses fundamental business as well as society needs beyond internal and short term operational objectives. The goal is not just to inspire and enlighten internal stakeholders and company constituents, but also potentially allow for suppliers, shareholders, local communities, NGOs and new business partners to support, adopt and contribute to the vision. This requires openness to ‘shaping pressures’ and accountability when they hold up the mirror to the organization. Such a compelling vision and leadership supports processes of autonomous motivation, which is shown to support job satisfaction (Gagné and Deci 2005), which is proved to support customer satisfaction (Payne et al. 2001). The case study also shows a potential way out of the commodity spiral as the vision provides a new business seat at the table. 2. The shared vision process will not develop if not activated by symbolic application in products, environments and visible policies. These are not only important signals to internal and external supporters, but serve also strategic purpose to demarcate the new territory and potentially raise psychological barriers to competitors. Symbolic products are not just a marketing story; their utility should really be a practical translation of the meaning of the vision if it is to convince and serve pride and sense making. The same goes for the buildings and strategic visuals; they should radiate a coherent whole. Conspicuous policy is an equivalent of the above described aspects, but it involves the visibility of purposely designed actions, decisions and policy measures that are seen, weighed and interpreted by internal audiences. These should make sense and contribute to the visionary goals. 3. Align on visionary goals instead of process alignment. When transforming from a bureaucratic type of organization to alignment on an a shared vision, instructive top-down management may reinforce delegation reflexes and procedures oriented habits that impede mission ownership to contribute to the greater goal. To encourage initiative the internal organization should be more exposed to customer feedback and interaction. This requires ‘front-line-leadership’ where managers work side-by-side, encounter the same problems and lead by example. Such transition of management practice also requires management by enabling instead of controlling people.

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5.4 Limitations and future research The key limitations of this case study concern elements of scale and sample width, of possible bias and to some extent of generalizability of the findings. Sample – in total I have interviewed thirteen mostly senior and executive managers during the course of two months at Eneco’s headquarters in Rotterdam. Due to time and scope constraints I have not been able to interview other constituents, in particular more internationally stationed managers and especially external stakeholder communities. Reflections by customers, suppliers and shareholders would have been helpful in corroborating some of the statements made about their interactions, but also because they play an important role in the ‘identity conversation’ (Hatch & Schultz 2009). To some extent the sample size is indeed limited, although that is not necessarily relevant to case studies as its purpose is primarily to be “generalizable to theoretical propositions,” and not about enumerating or statistical generalization (Yin 1994, p.10). Bias – another limitation related to time and scope is the fact that I conducted research and coding procedures alone with limited external ‘fresh-watching’ to challenge interpretations. Together with the fact that I had conducted extensive literature research before entering the field, which holds the risk of becoming biased and less open minded (Eisenhardt 1989; Kahneman 2011). Generalizability – Even though the emerging framework from this study is solidly grounded in real evidence, it is difficult to discern what elements are particularly related to the uniqueness of the company under study, and what are more general characteristics in the sector, or the particular region. And more importantly: to what extent do these processes apply to ‘commodity services organizations’ in general? Which brings us to possible approaches for future research. Future research could shine new light on the following aspects: •

Testing the above mentioned validity and generalizability of these aspects in other commodity services organizations – in what way are they engaging in transformation processes, what are the common characteristics and to what extent do they confirm or contradict the identified barriers and success factors in this study?

•

More understanding is needed about the proposed flow of interactions between the identified dimensions of vision, activation, value relations and tensions, testing the assumption that vision and activation seem to activate stakeholders to close emerging gaps.

•

On a more specific level, it would be interesting to engage in further research about the role of symbolic instruments – such as (strategic) visuals and physical environments (interior design, architecture etc.) – on sense making and behavior change with internal and external stakeholders in organizations that are in transition.

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5.5 Conclusion The study has revealed that it is certainly possible for commodity services organizations to shift from transaction-oriented exchange models to meaningful, long-term relationship-based models. It has also revealed that this shift is by no means simple and straightforward. It requires comprehensive development of internal change skills, enormous efforts and a long-term determination and stamina. In that sense, the word ‘shift’ (as used in the title of my thesis) may well be replaced with the word ‘transformation’ as it has become clear that the effort that needs to be undertaken is far more multifaceted and less linear. It is not a matter of implementing a change program from A to B it really is a matter of reinventing the whole organizational practice, which is a far more iterative and experimental process that could very well fail altogether (Ashkenas 2015). A compelling vision is clearly vital to motivate and inspire all the enterprise stakeholders to keep investing and engaging with the company during this transformation process, but it is just as vital that the vision is confirmed by showing identifiable progress related to the social and business goals. The higher the expectations people have, the higher the stakes are to be open and transparent about the true state of affairs. Failing disclosure, small dishonesties or sloppy reporting has devastating effects on all stakeholders and on the transformation process itself.

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