Rule-Based Systems Institutionalisation and Problem Solving

1. Rule-Based SystemsInstitutionalisation and Problem Solving • 21 February 2014 • @nikzadoraee Dr Nikzad Oraee n.oraee10@imperial.ac.uk • MSc Environmental Technology Global Environmental Change and Policy

2. Lecture Content • Introduction to Organisations • Business Strategy • Rule-Based Systems • Case study • Team work • Presentation Ⓒ Nikzad Oraee-Mirzamani

3. Introduction to Organisations • What is an Organisation? • Are they real? • What do they do? • Why do we need them? • Organisations are product of conscious design, as well as the evolution of informal & organic networks, constructed to seek specific goals and serve a purpose • They are not the end; they are the means • What if the purpose becomes irrelevant? • Why study organisations? • To learn about and conceptualise the past • To understand the present trends • To predict the future • So as to influence the future and prevent the unexpected Ⓒ Nikzad Oraee-Mirzamani

4. Introduction to Organisations • Organisations from a structural perspective • The Model • Technical Rationality and Control • Clear inputs → Transformation process → Outputs • Main Assumptions • Organisations require clear goals and rules • Success comes from effective response to environmental demands • Source of Advantage • People understand clear focus on structure and cause-and-effect • Think about the problems this model creates Ⓒ Nikzad Oraee-Mirzamani

5. Examples of Organisations • Examples of Organisations • Government • Judiciary • Companies • NGOs • Charities • The Church (and other religious governing bodies) • Labour Unions • International Agencies (e.g. UN and related entities) • Trade Organisations • Institutionalisation • Problem or Opportunity? Ⓒ Nikzad Oraee-Mirzamani

6. Institutionalisation Theories • Organisations, just like people, tend to create rules to achieve their purposes and goals • Desire towards Institutionalisation • Thinks of how industries and sectors developed • Legal system seek to regulate industrial activities (inter alia) • Follow the precedent simply it has been successful in similar circumstances • Organisational theory: due to market uncertainties in the long run • Such that predicting the future of business climate is deemed extremely complex and somewhat impossible • Theories developed by Royston and Hinings 1996, DiMaggio and Powell 1991, Meyer and Rowan 1977 Ⓒ Nikzad Oraee-Mirzamani

7. Institutionalisation Theories Ⓒ Nikzad Oraee-Mirzamani

8. Institutionalisation Theories • “Been here for 50 years” • “In here, he’s an important man; he’s educated” • “These walls are funny” • “He’s institutionalised” • Are companies in a prison? • Organisations create their own set of rules and follow them to reach their purpose • Prison Walls = Thinking Boxes • Creativity and innovation • So, often difficult to convince firms that new models of operation could be more efficient and effective Ⓒ Nikzad Oraee-Mirzamani

9. Institutionalisation Theories • Two stands: the old and new institutionalism • Old Institutionalisation: influence, coalitions, and competing values, along with power and informal structures (Royston and Hinings 1996, DiMaggio and Powell 1991) • New Institutionalisation: legitimacy, the embeddedness of organisational fields, and the centrality of classification, routines, scripts, and schema (Meyer and Rowan 1977, Royston and Hinings 1996) • Irony: Institutionalisation theories need to become “institutionalised”! • If firms are already creating rules, why not redesign sustainable thinking into such a framework of rules? • Sustainability: a set of rules embedded within a continuing process Ⓒ Nikzad Oraee-Mirzamani

10. Business Strategy • What is strategy? • Our strategy is to be a low-cost provider • Our strategy is to provide unrivalled customer service • Our strategy is to become more sustainable in order to achieve our ultimate goal • Our strategy is to produce our goods in the most sustainable way • Where does it originate from? • Strategy is a central, integrated, externally oriented concept of how the business will achieve its objectives • Has many factors; a coherent strategy will bring all factors in as a whole and ensure that they work together • Why do firms need/makes it? • Is copying successful firms a strategy? Ⓒ Nikzad Oraee-Mirzamani

11. Rule-Based Systems • Within the core of institutionalisation lies the inherent need for firms to follow rules. Because • Has been successful in similar cases • Makes replication easy • Current examples of rule-based frameworks • Market based: GRI, ISO, SBSC • Regulatory based: H&S, Anti Trust • But sustainability is extremely difficult to regulate • Definition of sustainability? • Constituent factors? • Limited or Unlimited? • Thus, mostly not required by law, but by stakeholders Ⓒ Nikzad Oraee-Mirzamani

12. Rule-Based Systems • Abiding by sustainability rules is beyond compliance • But without laws, how do we measure extent of sustainable development? • Cannot be intellectually defined within the realm of human knowledge • Strongest weakness and / or critique that sustainability defies explanation or a comprehensive definition • So how is it understood? • Requires a rules-based system embedded within a continuing process • Help understand sustainability in relation to the current challenges and requirements Ⓒ Nikzad Oraee-Mirzamani

13. Rule-Based Systems • Current examples of Rule-Based Systems • GRI • SBSC • ISO • Are they really effective for the purpose for which they are designed? • GRI: No indication of sustainability, only reporting • SBSC: Has goals and KPIs for reaching goals • ISO: only a methodology with no need for organisation to understand the objective • What’s the alternative? • Does one size fit all? Ⓒ Nikzad Oraee-Mirzamani

14. Future of Rule-Based Systems • How research needs to be developed in this area + potential other benefits such as regulations • The basis of sustainable development as one that requires deliberate decision making in order to “direct global development and system evolution towards a more sustainable route” • Rule-based systems have to become the norm in firms to for sustainable development • But rules should be bespoke – meet the company’s needs. Not just generic rules • Rules for industries with high impacts on environment (and other sustainability factors) Ⓒ Nikzad Oraee-Mirzamani

15. The Case Study Ⓒ Nikzad Oraee-Mirzamani • Main focus on Health, Environment and Community issues • Health • Provide extensive guidelines on the effects of their products on consumers’health • Strive to be healthy while maintaining ingredienttransparency • BUT: subjected to growing criticism on health related issues • Growing concern over acidity and toothdecays • Coca Cola website has a specific section on keeping healthy teeth! • Environment • Use sugarcane to produce new drink bottles • Introduce new web-tool called Recyclometer™ • calculating amount of energy saved through recycling • BUT, concerns remain over packaging; Coca Cola strongly opposes legislations on sustainable methods and processes of packaging • India, concerns over the cleanliness of the water used in production

16. The Case Study • Coca Cola is one of the largest international firms • Has over 80 products • Has significant market share globally • In the UK, Coca Cola market share was 17% in 2012 • In 2012, sales up by 0.8%, but volume sales drop by 3.3% • Pepsi in 2012, sales up by 7.4%, volume up by 10% • Huge investment in London 2012 sponsorship – but almost no effect on sales • 20 Minutes reading time (use as break also) Ⓒ Nikzad Oraee-Mirzamani

17. Case Study – SMART Framework • Sustainability, Mitigation, Adaptation and Risk Tool – appraisal tool • Used often in large organisations in managerial training • Designed to prioritise different elements of business activity • Link challenges to goals of CCE • 15 Minutes Ⓒ Nikzad Oraee-Mirzamani

18. Case Study – Stakeholders • Identify 3 most important stakeholders of CCE • Identify 3 most pressing requirements of each stakeholder • 15 Minutes Ⓒ Nikzad Oraee-Mirzamani

19. Case Study – Final Teams Ⓒ Nikzad Oraee-Mirzamani • Stakeholder group should convince CCE group for addressing their needs • Conflict is good – but ensure your conflicts are aimed at reaching objective results • Ensure to resolve your conflicts • 20 minutes

20. Case Study – Team Presentations • Each team will present for 15 minutes • 2 representatives from each team • Typically 5 slides • Address: • Challenges, priorities and solutions of Coca Cola • Challenges, difficulties, priorities of stakeholders • Areas of conflict between the two sub-teams and how you resolved them • Have you addressed aspects of sustainability? • What is the implication of your results on rule-based systems? • There will be a winner Ⓒ Nikzad Oraee-Mirzamani