The Reality That We Take on: A Humanistic Change in IT Venture Company
Abstract
Imura, CEO of Second Selection, started an IT venture company, after quitting another venture. Building on his past achievement, he converted the audacious dream into his venture. After some time, some of his reliable colleagues left the company. He did some introspection and hired a consultant to transform the mindset of his employees. To his surprise, initially the employees did not respond to the new changes being brought in. After 4 years of struggle, he was able to engage everyone in this transformation. The new management system was finally embracing the change.
Introduction
Technology is a tool to solve problems and bring transformation, but it itself is a target to be overtaken by a new one. The exponential growth in the technology landscape makes technology-based venture business a challenge for association between them. The question of an association between a successful venture and humanism is yet unclear to the author.
The company in this case, with increasingly complex demand, chronic shortage of talented system engineers (SE) and enduring technological advancement, faces urgent problems to attend. To find a solution, Imura took the help of organizational development (OD) consultants that might bring humanistic change into the situation.
From an OD perspective, process consultation, a clinical-based therapeutic learning process (Schein, 1999), is a better tool to undertake it. In addition, appreciative inquiry (AI) (Cooperrider & Whitney, 2005), which is a positive approach to change, is an alternative to reframe existing organizational culture.
It is believed that both approaches and even OD itself have been built on humanistic thoughts; nonetheless, instances about the possible association of OD with humanistic management, which is a new research stream in the field of management, are quite few. This case examines the conceptual relationship between them.
An Apprenticeship Prior to Second Selection
Even at the age of 50 plus, CEO Mr Imura appears to be young. He is slim and tall. He loves migrated cats as family members and playing Japanese traditional comedy known as Raku-go. His life with his second wife is full of joy.
During the early 1980s in Japan, many companies vied for new graduates to put them as a cog in the wheel of the Japanese management system. Soon after earning his bachelor’s degree from Kinki University, Osaka, Imura chose to work at an IT venture company as its founding partner.
While working in the company as an SE for 25 years, one day he wondered if his work life was meaningful. During those days, he enjoyed his job as a talented SE because he was successful in almost all of the ambitious projects assigned by the CEO, who was one of the famous leaders in the Japanese IT industry, but in fact, Imura felt something was wrong.
Omron Corporation, a famous and large Japanese electronics corporation, was a major partner of the company for product development. Omron manufactured personal computers for business users known as the ‘workstation’, which processed a mass of transactional data for business to business (B2B) applications through the physical phone line and a low-frequency data transferring network.
At that time, Omron required a software to control input and output (I/O) data flow as fast as possible through an embedded board in the workstation; consequently, the company supplied it and deserved to earn fairly as a core of its businesses. After the internet was outfitted with I/O data flow through the optical fibre, the connection between them lasted long.
I/O systems for B2B customers earned sufficient revenue for the company; still, Mr Imura differed from the direction the company was following. He felt that the company might well set a clear distinction between commission businesses and start-to-finish (turnkey) completion ones.
The CEO of the company did not value the completion businesses highly but preferred the commission businesses. Imura frequently insisted that the shift from commission to completion business was worth considering; however, nothing happened. As a partner of the company, he was in the relationships to know what was going on in it and believed that there was something wrong. Finally, he decided to quit the job.
Over 25 years, I have been a sort of an egocentric hedonist ready to exploit all opportunities for becoming a winner and earn the best reputation from all customers, regardless of the size and business. Looking back to the past, I think, I was wrong in a sense of humanistic view of business and communication. In fact, there was an option that I would vie for a successor of the company. Possible though it seemed, I would prefer to quit the company and start a new company so that I could bring my dream into reality.—Imura
Embarking on the Journey for New Horizons
On 21 June 2006, full of dreams, he established Second Selection as an IT venture company. Based on sufficient experience from his former company, he was confident of getting things done better than others in the field of SE.
Regardless of his apparently valid vision, affluent experience and serious engagement with his new venture, the company gradually eroded by mundane management under the fierce competitive culture in the IT industry. Although he expected to earn the revenue optimistically, the reality was utterly different, even if he had uniquely refined skills. Well known as savage competition in the IT industry, his company had been drifting away from one point to another since its start.
With stringent resources during the start-up stage, the pressure to succeed drove him to commission business and the command-control leadership to survive in the market.
He visualized his venture business to be ideal for the customers and the employees in the company. Though it seemed promising, demands for making money were likely to poison their venture spirits and turn it into economically logical decision-making. Therefore, his leadership approach of command control intensified their competitions within the company. Eventually, self-interest culture became predominant.
Five years later, in 2011, on a single day, five of his trusted colleagues quit without saying anything. Imura describes the situation:
When I did it, I felt that I was wrong at all. What I thought at the moment was to reflect on what I did and begin with changing myself as much as I could. I was stunned and felt desperate to seek help from experts. I called Mr. Hirose, who was a facilitator in Team Keiei and asked him to help me out of the situation. That was the beginning of my journey for the inquiry of ‘who I was’ and ‘what is my role in the company.
Learning from Failure
By 2017, the company had six businesses, such as the real-time network system in the production process, image processing systems, the replacement of the embedded I/O systems, the real-time energy network systems, training programmes for system integrators and web services.
In 2006, the major business was I/O controlling systems embedded in the devices; in addition, a contract with Omron and an electricity company was helpful to stabilize the financial situation in the company. Embedded I/O system devices were cash-cow businesses, but Imura pushed those into utility businesses in the energy sector and robotics technologies towards automation in the manufacturing plants. A sad separation occurred in the period when Imura was struggling with expanding his businesses towards becoming an independent venture company.
Following the feedback from Hirose and others in Team Keiei, Imura decided to change the way of management and his leadership. His first target was to transform the meritocracy wage system into the fixed one. After serious consideration, he changed the annual incentive-based salary system into a fixed salary system associated with the profit-sharing system. As a result, all employees, including Imura, received a fixed salary, respectively, depending on the position within the company.
This was a departure from the assumption that a winner takes all rewards, which was believed to work well under competitive pressure. In fact, it leads to serious emotional damages caused by an intensified competitive working environment. Over time, it turned out that such damage sapped intellectual ability to create innovative ideas for systems engineering. In other words, he guaranteed that all employees’ jobs and adequate salaries were secure, as long as they work diligently.
The Way of Management
Initially, Imura started his venture business with few people; however, in 2016, the company had grown to become an organization with up to 30 full-time employees. Since its inception in 2006, Imura brought in a lot of changes in management. During the growth stage, the company frequently changed the structure and functions to adapt to the IT business environment as the task they handled also became bigger, more complex and diverse to manage.
When five employees left the company, it led to a low morale among the employees. That is when Imura sought professional help. One of the changes, implemented first, was to break the business into smaller entities for better management. Second, until he designed a new organizational structure in 2017, he had been looking for a project manager to work with business groups so that those projects could achieve the goals efficiently and with high-quality output. Third, he engaged with strengthening the marketing function to expand capacity, develop skills and expand customer base. Finally, as the result of feedback from outside the company, he organized social events and gatherings to create a social bond.
Just after separation, there was chaos in the company. Imura started managing business groups as an active leader and coordinated those separately as a project manager. Due to the heavy burden, he named three people who managed three groups, respectively, as team leaders; however, he remained in the same position. Although, the size of the team varied depending on the customer demands, each team leader supervised roughly 10–12 SEs to deliver their systems to their customers on time. Each team leader could focus on the rhythm of their activities and to coordinate those well to save cost and time.
The marketing function covered a variety of activities, including R&D, market segmentation, maintaining good relationships with customers and maintaining promotional communication with potential customers. Though Imura knew well about it, he felt he was unfit for the activities because he had been working in the IT industry as a talented SE and even worse for him, there had been many niche areas in IT sector where he wanted to focus. Imura shared marketing experiences to get a contract with mega-corporations:
Fortunately, we have received a certain amount of the contracts from small and mid-sized companies in the diverse sectors since the start-ups period. Contrary to this, making a new contract with mega corporations like a Panasonic is as if we were walking down a long winding road to a customer in mega corporations. Recently, I could open a business account with Panasonic, but it took over 10 years to achieve it from scratch.
The Inquiry of Problems: Making a Consensus
Second Selection adopted team management after Imura noticed the value of human interaction. After taking a series of seminars offered by Team Keiei and others, he changed his leadership into a participatory style based on facilitative interventions. As a result, everybody in the meeting could come to say anything about the agenda from their own perspective. Imura accepted such an engagement worth following; however, this style slowed down the speed of decision-making. Mr Imura talks about it:
At times, it is frustrating to manage the meeting. Even if the participatory way is a good way to work with people, such a way of doing seems too idealistic to fit all situations without taking any consideration. Of course, I value consensus building highly, but nobody takes any responsibility for the delay caused by making a consensus. Eventually, in almost all cases, it was I who took responsibility for what we had been doing.
Though the situation was apparently participatory, everyone kept on being quiet. To avoid an inactive meeting, I always energized them to speak up loud without any hesitation. Besides, I listened to them carefully with empathy until we arrived at a consensus. If it were right, the situation would be far from being my ideal situation.
Structural Change Initiatives
Imura did not understand well about where he was wrong and why his colleagues quit suddenly. Shimada and Hirose gave him a different lens to look at the company and his life. Throughout the experiential learning practices, little by little, he increased the diversity of his identity as well as his organizational identity.
To get out of the chaotic situation just after his colleagues left, Imura felt that he was obliged to take diverse roles and responsibilities for himself and the company. The roles he took were diverse such as a project leader for creative businesses, a team leader of three different teams to get things done punctually and a change leader to transform the company’s culture as well as himself. He was committed to engage in everything as much as possible; however, nothing seemed to have changed in the company.
In short, through all the practices, Imura got to know what organizational change is and what behaviour he should act on. Nevertheless, his behavioural change did not influence his company noticeably.
Interestingly, such a desperate situation encouraged Imura to open his mind for honest feedback from everybody around him. Plural voice and suggestion gave him a better understanding of the situation where the company was and the direction which it would take.
In 2015, Imura hired a person to take charge of a senior manager position and expected that the person would either work on a project and/or work as a team leader for three teams. Bringing the replacement for Imura’s position would reduce his direct role and free him for other important jobs in the company. It was a fact that Imura always sat in almost all the meetings as an observer to know how to run the meeting. During the meeting held by the senior manager, Imura saw the manager behave as a team leader and facilitator.
Even though the contract with the manager was cut off after 2 years had passed, in 2017, it turned out that two former team leaders were promoted to the senior manager positions as a project manager and as a strategic coordinating manager to three teams.
Personal Transformation
Six years ago, Imura’s personal transformation started off by reflecting on the past just after his colleagues left. He asked Team Keiei to help transform the company culture into a more interactive one. In addition, he participated in a series of seminars to understand how to change the organizational culture. On top of this, he invited Shimada and Hirose to receive feedback from them about what was going on. Shimada took long interviews to give him feedback and Hirose designed social events to be aware of the happenings.
At the same time, Imura began by transforming his identity into a new one. It was because he wanted his employees to give him an honest opinion. In other words, he should experience his personal change before he started to engage in cultural transformation in the company as a change leader.
According to Hirose’s observation, Imura was a rare business leader, no matter what the size of the company was. Hirose tells us about his observation:
In general, corporate leaders argue that employees should first transforms their attitudes to adapt to business environment, whereas the leaders should be the last person who transform their attitudes to the environment because of the anchor role of their businesses. On the contrary, at first Imura sought to master how to increase his self-awareness before employees did it. Looking back in the past, even though things did not proceed well as per his expectations, he continued his change efforts persistently. Somewhere during his personal change process, I suppose he realized there was hidden-identity for him to liberate himself from unconsciously captivating him. In that sense, the action to look for hidden-self is strongly associated with entrepreneurial actions in some degree, in that they are always trying to find out new ideas in every moment.
Organizational Cultural Change
Although encouraging others to change their attitude towards the work environment is difficult, Imura had an optimistic view for cultural change. Because employees would be affected with positive influence from others, he was confident of accelerating his personal change initiatives. But his assumption was not correct.
Imura’s leadership style was quite simple. It was micro-management—as he were to speak a lot, give all orders and manage every piece of action in detail. He believed that every great leader was supposed to seek higher personal growth and take charge of an agent role for something good beyond one’s own existence. His behaviour was always mindful as if he were to be a monk who desired to become a humble inquirer of his deep self. During the interview, he was frequently sorry to have displayed quite an egocentric behaviour while working in the former company and in the present company as a CEO, just before he noticed it.
Leadership Development
During personal transformation, Imura took a seminar of the facilitative leadership offered by Team Keiei. Satisfied with it, he asked Shimada to give him advice. Shimada met him in his office, and they talked about what was going on in the company.
Throughout their conversation, Shimada gave him his honest feedback, which meant to expose the incongruence between his talking and walking. In the middle of the conversation, he confessed he had never seen his deep self, seriously. Just before Shimada left his office, they promised to keep in touch with each other.
Shimada’s impression after his discussion with Imura was:
I was in a venture business as an SE, which managed to register for Initial Public Offering (IPO) in Tokyo Stock Exchange Market. After IPO aborted sadly, I started out consulting business. At first time, I admired him (Imura) for his achievement. During our talking, I found an interesting behavior pattern like a “Seminar Goers.” They love taking seminars to bring fresh ideas into their business to use. In almost all the cases, nothing would happen because the lecturer’s situation was significantly different from learner’s situation.
Two years later, in the summer of 2016, Shimada took a 2-hour interview of Imura, and he was surprised to see the remarkable progress Imura had made. Shimada supposed there have been massive efforts by Imura such as self-introspection, repetitive practices to make it a routine and collecting honest feedback from everyone around him.
Shimada tells about that:
I think he (Imura) has matured so much because of self reflection on who he was and what he did. Based on his reflection, he realized that he was wrong. Earlier, he was not aware of it at all. I think he learned a lot about how he reflected in actual situation and took consideration for the human interaction around him deeply. As a system engineer in the past, emotionally, I give my empathy to his deed.
First Retreat for the Company
It was the first time that Imura met Hirose at a seminar in 2010. After exchanging name cards, they seemingly enjoyed their chatting. In 2013, bumping against a rattling situation, Imura called Hirose and asked him to teach him about human interactions. Hirose answered to him that taking human interaction courses run by Team Keiei might fit his needs. It was imminent because the company started to hire employees to grow fast and to expand their business into unknown areas.
Following change initiatives such as his personal transformation and cultural change within the company, Imura came up with the events for creating social ties, such as opening the drinking bar in a meeting room and the informal gathering to know about the self. At that time, he began with another change initiative.
Through all his work life, Imura said he had never convened a sort of retreat for his employees. It was intriguing, but this is the case with Imura. Getting into an imminent situation, he was unwillingly convinced of its importance and decided to convene his first retreat to master the skill of human interaction. One weekend in the middle of June in 2016, following suggestions from Team Keiei, Imura, four team leaders, and Hirose as a facilitator, stayed together for 2 days at the local hotel with Japanese hot spring.
In fact, the goal of the retreat was the inquiry of the positive core of the company throughout AI 4D cycles (Cooperrider & Whitney, 2005). The four Ds are discovery, dream, design and destiny. As the result of that, all members agreed on one statement of what the desired goal was and three goals to supplement the statement. The statement says ‘our company makes the customers easy, eliminating unnecessary steps for their business’. Supplemental statements are ‘good enough benefit from effortless work but unique products through respectful mutual interaction’.
Imura felt confident and found the 3-day practices as meaningful. He could see how the facilitation was as a convener and a recipient. But, once they came back to the routine work, all the statements, honest opinions and 3-day dialogue evaporated in the air. Only thing that they really practised was starting the Friday evening party.
Epilogue
Regular advisory contract between Second Selection and Team Keiei does not exist. When having problems, he calls Hirose. After a while, Hirose arranges for him to learn something new in the seminars, practices and events of the company.
Shimada first came to talk with Imura about the problems he faced and gave him opportunities to utilize later. Hirose, meanwhile, based on close connection with him, offered more opportunities to share their opinions through informal feedback. Hirose is not a clinical psychologist; instead, as a talented facilitator, he is good at taking a step closer to his mind and creating a comfortable rapport between them for a healthy influence on him.
On 20 June, in 2017, 10 years has passed since Second Selection started out. As celebratory presents and warm greeting speeches were delivered to the company, Imura was honoured to enjoy the anniversary with all the employees.
While taking pride in the special day, Imura invited all employees to share a long-term strategic plan and promised a few things. A part of his promise set in chronological order is the following:
1.
By 2018, he promised to add two chief officer positions (COO and CFO) and open for employees a special agreement with a trading company to strengthen marketing functions.
2.
By 2020, he promised to converge almost all business into a core business as ‘IoT Platform’ to increase spill-over effects across the company as much.
3.
By 2023, he promised to finish IPO in the Tokyo Stock Exchange Market to gain enough cash to grow.
4.
By 2017, he promised to start city development business based on diverse energy network technologies as core businesses.
Discussions and Conclusions
Taken together, Imura’s bachelor’s degree is in engineering, he has written computer programmes in the venture company and he started his own company. In short, he runs the company based on hands-on experience about what a CEO is. Through this, it is clear that he has superb capacity to create unique computer systems. Moreover, his sincere engagement to reflect on who he was proves that he has incredible capacity to mature quickly. That is the reason why he has achieved his transformation from an ‘egocentric winner’ into an ‘enthusiastic caregiver’ for the local communities, employees in his company and family members.
Unfortunately, his engagement with strategic management of the company seems to be looming. For example, just after his colleagues from the era of the first company quit, he reflected on an unexpectedly stunning separation as the result of his self-centred mindset, which means a lack of human skills and experiences. In other words, he felt himself that the most serious root cause of that was a lack of deep consideration for his employees and stakeholders.
Even if the option he chose is right, 4 years of struggling over it is an intriguing question. From developmental psychology like Adult Learning, the purpose of his personal change is key to read this case. Transformational personal change from the self-interested into the self-authoring stage (Kegan, Lahey, & Miller, 2016) would be a better lens to look at Imura’s mind. His sincere commitment to his transformation caused his psychological immune system (Kegan & Lahey, 2009) to kick in, leading to personal resistance. Hirose frequently received calls from him and offered personal mentoring and coaching to him. Imura’s serious challenge was crafting a diverse but consistent identity within a self and/or identity.
The meta-analysis of the field of identity work (Brown, 2015) proves that a core of human development is the psychological dynamism between increasing multiple identities and constructing an overarching identity. That is, what is happening in his mind to get into the self-authoring stage is shaping, repairing, maintaining and strengthening (Sveningsson & Alvesson, 2003) throughout the mutually constructive process (Watson, 2008) of identities. Lengthy struggling will be the result of reflective personal care from Hirose and identity constructing practices between employees as followers and CEO as a leader.
Following through deep personal transformation, just after the anniversary for the company, Imura declared that by working together with all stakeholders, and achieving four interim goals, he had built a healthy business organization from financial, technological, social and moral point of views.
The question is what made Imura eloquent so much i.e. the inquiry why a leader, who was struggling with personal change, chronicle shortage of staffer, and inactive organizational culture, has transformed significantly. Even if the case writer had a certain degree of influence on this case, an alternative lens to look at this case would be humanistic management, which consists of two dimensions of the worldview as follows: Homo economics and Homo sapiens (Pirson, 2017). The former view leads us to a resourceful, evaluative and maximizing model (REM) (Jensen & Meckling, 1994), which regards human activities as a rational short-term profit-maximizing engagement as well as a basic philosophy of social science.
On the contrary, the latter one tells us that humans exist socially to develop sociality through diverse life-long learning, to heighten morality through virtuous practices, to share the emotional empathy and compassion and to dedicate a part of the individual to something beyond us as altruistic behavior. On top of thorough management literature review, humanistic management (Melé, 2003) suggests that it emphasizes on human conditions, particularly, when it comes to consider all forms of and the fullest extent of human virtue. In other words, ethics are not the norm to comply with consciously. Ethics itself must be to give us abundant energy, generating meaning for our life and work persistently.
The purpose of his personal transformation was to change his management philosophy from an ‘economistic perspective based on technology’ to a ‘humanistic’ one. There is nothing wrong about that; however, it is curious that he found the way to heighten the quality of economistic as well as humanistic culture. In fact, Imura is a leader of an IT venture, which has audacious but logically sensible goals of its social entity as a business organization.
In that sense, Imura’s career begins with moving towards a Homo economics incarnate and moving opposite a Homo sapiens incarnate; finally, he noticed a distinctive structure between morally heightening activities, technological advancement and making profit. Discussions should not jump into the conclusion that the best balance between them is the answer; instead, believability-weighted (Dalio, 2017) decision-making seems succinct to this case.
Although there is no one-size-fits-all answer to the case, what leaders should do is to craft a distinctive business model for the company, while encouraging stakeholders to make a believability-weighted decision through honest feedback with radical transparency like Bridgewater in the case of an organizational model such as Deliberately Developmental Organization (Kegan et al., 2016). After finding it, Imura worked with them to design their own future. This is a hypothetical conclusion from this case.
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of this case.
Funding
The author received no financial support for the research, authorship and/or publication of this case.
Acknowledgments
The case writer is grateful to the CEO Imura in Second Selection Inc., Mr. Shimada, and Mr. Hirose in Team Keiei LLC. Without the access to the relevant information, the case would have never been born.
References
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Article first published online: October 26, 2018
Issue published: April 2019
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