QUESTION

Integrated Academic Report

This assessment item relates to course learning outcomes 1, 2, 3 and 4 as listed on page 1.

For this assignment you are to critically evaluate your chosen organisation’s current innovation

position with respect to the following five areas.

Part 1: The organisation’s need for innovation

Points to consider:

· What are the general imperatives in this industry sector?

· How have these changed in the last five (5) to ten (10) years?

· What specific Innovation imperatives face your chosen organisation?

· What is the organisation’s current level of Innovation?

· How does this compare with other more innovative organisations?

Part 2: The organisation’s vision and strategy for innovation

Points to consider:

· How well does the current vision and strategy address the need for innovation?

· What components does the vision contain?

· Does the innovation strategy differ from corporate strategy?

Part 3: Context, competencies and culture for innovation

Points to consider:

· To what extent is Innovation currently a core business process?

· Which aspects of the organisation and its environment currently support innovation?

· Which of these are most critical and why?

Course Profile for: HRMT20019, 2011 Term Three – Page 10

Part 4: Learning for innovation

Points to consider:

· What avenues for learning currently exist in the organisation?

· Which additional ones are most likely to be of value for the organisation and why?

· To what extent is the organisation able to continuously innovate and change?

Part 5: Potential change management issues

Points to consider:

· overall change process

· barriers and enablers to change
List of Companies for Integrated Academic Project you choose one from the
lists
• Transpacific Industries Group business

• Visy Recycling
• Seasol International Pty Ltd
• Alcoa
• Dairy Australia

 SOLUTION

Innovation is a business driver in the today’s knowledge economy. It has become a prerequisite for survival so much so that organizations are looking not just for product or process innovations, but re-examining the way they do their business completely. The traditional approach of building an R&D division which will spend 5-7 years on figuring out how to make incremental adjustments is simply passé, and innovation has made its way into the boardroom where organizations are looking not for incremental change, but for exponential change which will give them a distinct competitive advantage.

 

With information so easily available and knowledge sharing commonplace among firms, organizations are no longer looking within their own industries for best practices but are looking to examine how the world around them is adapting to change, perhaps even exploiting change.

 

However, there are few organizations where innovation is part of the social fabric. Some are born with it. Others acquire it out of necessity – a Darwinian kind of need to survive. However, there are few organizations like Australia’s own Visy, which married innovation into its way of life before it became ‘cool’ and carved out a niche for itself which no other firm has been able to replicate in the last 30 years.

 

 

Contents

 

Executive Summary. 2

Introduction. 4

Part 1: The organisation’s need for innovation. 6

Part 2: The organisation’s vision and strategy for innovation. 9

Part 3: Context, competencies and culture for innovation. 10

Part 4: Learning for innovation. 12

Part 5: Potential change management issues. 14

Conclusion. 17

Reference List & Bibliography. 18

 

Introduction

 

Visy is the single largest privately owned packaging and recycling company in the world. It has in excess of 5500 employees across 120 locations (mostly in Australia and Asia) and ended the 2011 Financial Year with revenues of $2.5 billion.  Visy currently services almost 4 million households in Australia.

 

The organization was started way back in 1948 as a family run packaging business. It continued as such till the 1980s when it entered the recycling business by starting to collect paper and cardboard packaging and set up paper mills to leverage its collections. The next three decades saw Visy continue to expand in both its chosen domains, largely using acquisition of existing businesses as its chosen route. Its most noteworthy acquisition was that of Southcorp Packaging which reportedly doubled the size of its packaging business. In 2005, $15 million was invested in setting up a Glass Recycling Plant and the following year another $4 million was spent on setting up a Plastics automated sort facility. Most recently, it has been given clearance by the Commerce Commission to acquire select assets and businesses of HP Industries Holding Limited (Commerce Commission 2012).

 

The Key products in its two lines of business are

 

a) Packaging – Paper, board, cans – food and beverages, cartons, PET bottles, PET preforms and plastics

 

b) Recycling – paper, cardboard, glass, PET, HDPE, cartons, plastics, aluminium and steel

 

As is quite evident from its product list, a large number of the products that Visy recycles are used in the manufacturing of the packaging materials it sells. It has thus created a win-win situation for itself by a simple model known as horizontal integration in the product value chain.

 

The focus of this report will be on Visy Recycling and to examine the nature and level of innovation that exists in the organization.

 

Part 1: The organisation’s need for innovation

 

The Recycling Industry’s existence in its present form is a fairly new phenomenon, as the idea of council recycling collections did not exist beyond the last 30 years. It took a while for the concept of recycling to gain some momentum with educating the end consumer a vital part of the learning process and convincing the customer, of the value of the exercise also a challenge. The end consumers initially were predominantly households, but have now grown to also include businesses, resulting in two parallel business opportunities. The customer of course was the government and as one can expect with dealing with government bodies there are always some who oppose legislation passed by the incumbent administration.

 

There is a lot that has changed in the recycling industry over the last decade, largely because recycling is now viewed as an environment friendly activity. With that being the basis of its existence, the process of recycling has needed to adapt to become environment friendly too. To understand this concept let’s take a look at an example. Households which are putting their trash in recycle bins feel that they have done their bit for the environment. But is that enough? The answer is quite simply no. The trash in these recycle bins used to be transported in these monster trucks – gas guzzlers – which themselves were not environment friendly. Material that cannot be recycled – the waste from the recycling process would go into landfills. However, the process of creating landfills and the process of creating landfill gas (an attempt to create energy from the waste) are not very environment friendly. Hence, innovation became an industry imperative for recycling to be considered as pro-environment exercise.

 

Just as important as innovation though was education. In the information age, not only does positive information spread at a quick pace, myths and misgivings of a process spread pretty quickly too. Hence, it has become an industry wide necessity to invest in educating consumers on the value of recycling and to dissipate myths on whether the efforts made by people translate into benefits for them (Planet Ark 2006).

 

All businesses are at the end of the day interconnected, and it is impossible for one organization to avoid the impact of the global recession if others around it are feeling it. Like every other sector, recycling plants all over the globe faced their own challenges of finding funding for future investment, cutting costs, managing talent and building an organization which can survive in the face of challenges.

 

Research, and making funds available for it are one of the biggest concerns for organizations in the recycling space. Technology is moving at such a rapid speed that there is always something quicker, better and more efficient around the corner, provided one is ready to invest the time, manpower and money required to fund it.

 

While a lot of the above mentioned issues are generally relevant to the recycling industry as a whole, there are some significant challenges which Visy needs to address. The most paramount amongst these is the cost of doing more business. As Visy’s Recycling business continues to grow by leaps and bounds, so do the costs of doing the business. Some of these are not necessarily noticeable on the outside because they don’t necessarily leap out of a balance sheet.

 

i) Transportation Costs – as the quantum of trash increases, so does the need for more trucks on the road, greater frequency of pick-ups, greater incentive for truckers to overload their trucks and considerably greater travel times between the pick-up points and processing plants.

 

ii) Hazardous Waste – who will manage it, where will be disposed, and what is the most effective method of doing so.

 

iii) Recycling Participation Rate – how does one encourage households to continue to be an active member of the recycling process. How much recycling is ‘optimum’ for a plant in a day so that economies of scale and scope are not affected.

 

iv) Innovation – who will fund the cost of innovation, and perhaps more crucially who will verify and authenticate that the innovation is delivering the desired / promised results.

v) Competitive Distinction – How can Visy prove to a council who issues tenders largely based on a budgeted cost that there is more to a selection exercise than how much money is bid for the contract. Elements such as Green House Gas impact, quality of material used in the plant, landfill process are all equally crucial and some companies do manage these a lot better than others (Visy Trends & Challenges 2008).

 

Visy to its credit has done remarkably well thus far. While most of the other recyclers in Australia tend to export their product, Visy uses most of their recycled material in their own manufacturing set-up bringing amazing levels of cost, quality and material control to its packaging business. This would not be possible without a high degree of innovation in its set-up. Some of the product innovations are more apparent in their packaging business like the Single-use Icebox Visy Cooler launched recently which uses waterproof paper – a combination of paper and laminated PET, or the Visy Beverage Board, a stronger, more environment friendly board which does not tear easily when wet (Visy Sustainability Report 2011).

 

The process innovations are often less visible like at the Tumut Kraft Paper mill which boasts of world-class water efficiency, on-site renewable energy generation and use of plantation-grown timber.

 

The Company’s Executive Chairman Anthony Pratt, a third generation owner of this family business, is so bullish on innovation and the role that clean energy will play to it that he not only sees this bringing massive energy saving for Visy and helping the environment, but also examines it as a possible new business division which can sustain itself. The aforementioned Tumut paper mill has its own renewable energy plant which generates 709,000 GJ of electricity (Visy Sustainability Report 2011).

 

There is no other organization in the recycling space which works with the same focus towards innovation as Visy. It is truly a one in a million company which considers the interests of all its stakeholders when taking business decisions.

 

 

Part 2: The organisation’s vision and strategy for innovation

 

The Executive Chairman Anthony Pratt’s vision for the company is articulated as one with “a clean energy future, investing in new technology to turn waste into energy and building clean energy plants in key locations.” This strong entrepreneurial vision of the top management is a key element in moving the company forward. By integrating this vision into the company strategy, Visy can build a road map for future (Visy Sustainability Report 2011).

 

The organization’s website while not clearly stating a company wide mission statement does use the word loosely in its marketing communication, stating that, “Our goal at Visy to find ways of recycling more and more materials until we live in a world where waste is a thing of the past.”

 

The organization’s homepage opens with its innovation strategy – “At Visy we’ve always looked at things differently. Where most see waste, we see opportunity. This innovative nature is stronger today than ever before. Not happy to rest on our achievements, we now strive to create a world where rubbish is a thing of the past and everything is recyclable.”

 

The choice of words in each of these messages of intent clearly highlight that without innovation it would be impossible to meet the objectives of the organization. Pratt’s decision to invest in new technology indicates his desire to innovate, while the company’s broader outlook is also one of looking for new solutions.

 

Converting this vision into action is the responsibility of the Insights & Innovation team. By creating a team whose sole purpose is to look at innovative opportunities that will take the company forward, Visy has integrated innovation into its DNA and made it an integral part of its corporate strategy.

 

Part 3: Context, competencies and culture for innovation

 

The fact that an Innovation team has been incubated inside the organization makes it a core business process. The team is called the Insights & Innovation team and is quite literally the two Is (pun intended) of the organization.

 

The key deliverables for this team are

a) Analyse market and category trends

b) Analyse consumer and technological insights

c) Facilitate product development

 

A process has been defined to make this possible. It has the following four steps:

a) Initial ideation

b) Feasibility studies

c) Consumer research

d) New product development

 

While all of this sounds a little jargon-ish, it is perhaps best illustrated using some examples. The Insights & Innovation team have highlighted the following trends as worth exploring in more detail over the days ahead.

a) A different waste – garden waste, kitchen organics and bulky waste are traditionally not seen as recyclable materials. Visy hopes to change that over the years ahead.

 

b) Recycling as a Climate Change Process – education, promotion and execution

 

c) Using low impact vehicles for transportation – less noise pollution, lower fuel consumption and Euro 5 approved engines.

 

d) Get paid for your waste service to encourage greater household participation

 

e) Optical automated sorting – currently being used only for PET and HDPE. Has great potential to help improve the sorting process.

 

(Visy Trends & Challenges 2008)

 

As is obvious, innovation is now happening all over the workplace, in products, processes and if possible to imagine even in people! Being such an integral element in the Visy way of life, the environment is such that it fosters innovation. The extent to which they can be adopted across the organization means a very fertile bed exists for innovation to blossom within the organization.

 

Having looked at what is happening within the organization, it is also important for a minute to consider the context within which it operates. The external environment due to the global recession is a very challenging one which results in both city councils and business clients operating on razor thin budgets. This often results in them opting for the cheapest recycling solution on offer, rather than the best. While this does put Visy under some cost pressures, it also makes innovation a necessity for survival, especially for an organization that cares about the impact its recycling process is making to the world climate (Visy Trends & Challenges 2008).

 

With this in mind, education of key influence groups on the recycling process and the impact it makes is crucial. While the final decision is often made by the city councils, it is possible to affect their decision making by strong lobbying and a powerful PR campaign. This is best achieved by alerting the constituents of each community about the pitfalls of choosing a recycling option which is not environmentally friendly. Visy has managed to introduce innovation in this process by increasing its bonds within the local community by launching educational programs targeted at teachers and students with links to the academic curriculum to ensure that the power of the brand has a lasting impact.

 

Part 4: Learning for innovation

 

A learning organization is defined as “one in which all systems, processes, and structures constantly seek data on system performance and use it at all levels to make the organization more productive /creative now and position it as best it can to succeed in an uncertain future and an uncertain environment.” (Organizations That Learn n.d.)

 

Based on the classical definition of a learning organization, Visy easily fulfils the desired criteria to be considered one. Being a learning organization though is as much about people as it is about processes, and the organization gives the employees an opportunity to enhance their skill set. In the last two years, more than 600 employees have attended formal Development Programs (Visy Sustainability Report 2011).

 

Like most organizations which are exhibiting good growth over the last few decades, Visy has also discovered the need for a stronger leadership team to be put in place to ensure professional management takes place throughout the organization. A specific Leadership Development Program was

launched in 2009 designed for key personnel identified at different levels of the organization (Visy Sustainability Report 2011). Some of these programs are:

 

a) Supervisor Development Program – designed for team leads

b) Management to Leadership (M2L) Program – designed for high potential candidates being nominated for new leadership roles

c) Management Development Program – designed for first time managers

d) Visy Leaders Development Program (VLDP) – designed for high potential senior managers

e) Visy Business Improvement Program – designed for on-site employees

f) Graduate Development Program – designed for fresh graduates entering the organization

 

Since the in-house learning programs are a new initiative, it would be premature to declare them as either a success or failure at this stage, but it is worth noticing that they are largely business oriented and do not focus a lot on the field staff, or “green collar” workers as Visy calls them. While it would be fair to point out that a large number of these are unlikely to move into management, they are the closest to the customer and are quite capable of coming up with incremental improvements to processes which office staff may not have even considered.

 

Also, learning programs are a fantastic way to motivate the workforce and also create a sense of belonging to the organization when done in groups. With this in mind, it is probably worth exploring for Visy if they can arrange maybe half-day workshops for field staff once a quarter. Such programs have the bonus learning objective of helping low level staff come away with skills that are easy, actionable and can be immediately put into practice.

 

The fact that the organization introduced these development programs in 2009 where none existed before shows that it has learnt that innovation in the workplace will not just come from technology, but has to be driven by people who aspire to make that happen. Developing leaders is a challenging exercise, especially keeping in mind that the employee turnover rate in the organization is close to 18% (Visy Sustainability Report 2011). With 1 in 5 people likely to leave the organization each year, there is no guarantee that the learning imparted in the organization will benefit it in the long run. However, Visy has taken a strategic decision to invest in its people and this could be one of its more brilliant ideas in recent times.

 

Part 5: Potential change management issues

 

The organization exhibited no obvious change management related issues, but given the fact that it has grown largely through an acquisition based strategy, there are bound to be some concerns, especially for employees from firms which were acquired. In an attempt to understand these, I undertook a literature review to examine in more detail what issues could arise in the future.

 

According to leading management consultants Booz & Company, there are 10 Guiding Principles of Change Management (Booz 2004). These are:

 

1. Address the Human Side of Change Systematically – with the organization clearly looking at rapid growth there will be a need for developing more middle level managers. All good organizations are pyramid shaped with a thin top leadership team, a robust middle management and a large workforce below them. In an organization with 5500+ employees and growing, the need for world class human resource management is self evident, and will need to be part of the strategic thinking for the senior leadership moving forward.

 

2. Change starts at the Top – This is obviously an area of strength for the organization already, and the senior leadership team is unlikely to have trouble being the change.

 

3. Real change happens at the bottom – The reality or a corollary to the above statement though is the maximum impact of change or innovation tends to be felt at the bottom, and here is where HR will need to step in to cushion the blow, especially when the organization looks at automating some processes carried out manually in the processing plants at present.

 

4. Confront reality, demonstrate faith and craft a vision – While a lot of vision statements can be inferred from marketing literature released by the organization, a $2.5 billion enterprise should have a well articulated vision, mission and objectives which are available to all relevant stakeholders. This is definitely an area where the company can attempt to improve.

 

5. Create ownership, not just buy-in – Ownership does not only refer to a stake in an organization, it often refers to process ownership that needs to be led by the people who are bringing change to the firm.

 

6. Practice targeted over-communication – While innovation continues to be at the center of Visy’s philosophy, it is also crucial that be on the minds of the 5500 people directly attached to the organization. This is where the role of internal communication comes in the firm. At the risk of overdoing it, the company must drive home the point that innovation is the backbone of their business and they must simply innovate or risk stagnation.

 

7. Explicitly address culture and attack the cultural centre – An organization’s culture has a lot to do with its roots, more so for a company like Visy which is a family owned enterprise with a third generation owner who has been groomed his entire life for taking over at the helm of affairs. But the culture of an organization morphs over time, especially affected by the acquisitions that it undertakes. A new culture is born which is significantly influenced by the amalgamation of the collective histories and prevailing cultures of the resultant organization.

 

8. Assess the cultural landscape early – It is very important to be aware of and to measure the impact of culture early, especially before an innovation is rolled out. For example, an attempt to automate the plant could cause a lot of trepidation amongst the workers about their jobs.

 

9. Prepare for the unexpected – A change management initiative is never going to exactly work out as one plans. However, one can be better prepared for any eventuality if one considers how different people could react to a new situation. For example, the announcement of automation could be met with great joy from the employees at the plant because it would increase their safety levels while working with sorting glass through other waste materials.

 

10. Speak to the individual as well as to the institution – An organization is the sum total of all its parts, perhaps it is even a bit more. When announcing a change, it is important that the champion of the change addresses the organization, but it is equally important that it addresses the individuals too. While it may not be possible to address each of the 5500 employees individually, breaking into smaller teams and working in groups might allow a lot of personal concerns to be addressed.

 

Conclusion

 

A packaging firm named Visy took 30 odd years before it dawned on the industry that it made sense for it to backward integrate and enter the business of recycling. Not only has that business decision been a very good one, it has done wonders for Australia as a nation. It collects trash from 3.8 million households in Australia annually; imagine if that didn’t happen we’d be living in a ‘Wall-e’ world. In all seriousness though, it is not the fact the numbers that Visy puts up on the scoreboard that are so impressive, it is the fact that is uses innovation as a means to do more than anyone else could, better than anyone else does. And in the safe hands of Visy, one can truly believe there might be a day where we wouldn’t be ‘wasting’ anything at all.

 

Reference List & Bibliography

 

Visy Recycling Official Company Website, 2012, http://www.visy.com.au/recycling/, viewed 26th April 2012.

 

Organizations That Learn, n.d. ,  Some Thoughts about the Learning Organization, http://faculty.virginia.edu/orgsthatlearn/corlett.learning–orgs–thoughts.pdf, viewed 26th April 2012.

 

Booz & Company, 2004, Ten Guiding Principles Of Change Management,

http://www.booz.com/media/file/138137.pdf, viewed 26th April 2012.

 

Visy Recycling, 2008, New Zealand Packing Accord Seminar: Improving the Sustrainability of Packaging Used in New Zealand,   http://www.packaging.org.nz/new/documents/Auckland-ManukauMRF-VisyRecycling.pdf, viewed 26th April 2012.

 

Visy, 2009, Submission on National Waste Policy, http://www.environment.gov.au/wastepolicy/consultation/submissions/pubs/083-visy.pdf, viewed 26th April 2012.

 

Visy, 2008, Trends and Challenges, http://www.ipwea.com/cp/Mitchell.pdf, viewed 26th April 2012.

 

Planet Ark, 2006, Recycling Myths: Sorting the Facts from the Fiction,

http://recyclingweek.planetark.org/documents/doc-78-nrw-recyclingmythsreport.pdf, viewed 26th April 2012.

 

Visy, 2011, Sustainability Report, http://www.visy.com.au/pdf/sustainability-report-v8-pr2-spreads.pdf, viewed 26th April 2012.

 

Commerce Commision, 2012, http://www.scoop.co.nz/stories/BU1203/S01112/visy–granted–clearance–to–acquire–hp–industries.htm, viewed 26th April 2012.

 

European Commission, 2004, Innovation Management and the Knowledge-Driven Economy, http://www.innovation.lv/ino2/publications/studies_innovation_management_final_report.pdf, viewed 26th April 2012.

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