The role of wine consortiums in wine marketing and wine tourism development in Slovenia more

EPFIP - Institute for Entrepreneurship and Small Business Management At Faculty of Economics and Business, University of Maribor, Maribor, Slovenia And SDSR – Slovenian Society for Systems Research (Member of IFSR – International Federation for Systems Research) STIQE 2006 PROCEEDINGS OF THE 8TH INTERNATIONAL CONFERENCE ON LINKING SYSTEMS THINKING, INNOVATION, QUALITY, ENTREPRENEURSHIP, AND ENVIRONMENT Editors: Matjaž Mulej Miroslav Rebernik Tadej Krošlin Supported by: Republic of Slovenia, Agency for Research Town Municipality of Maribor Nova Kreditna banka Maribor Zavarovalnica Maribor Maribor, Slovenia, 28-30 June, 2006 STIQE 2006 of the 8th International Conference on PROCEEDINGS Linking Systems Thinking, Innovation, Quality, Entrepreneurship and Environment Edited by Matjaž Mulej Miroslav Rebernik Tadej Krošlin Maribor, Slovenia, June 28 – 30, 2006 CIP - Kataložni zapis o publikaciji Univerzitetna knjižnica Maribor 007(063):65.018.2 658.56:65.012.4(063) INTERNATIONAL Conference on Linking Systems Thinking, Innovation, Quality, Entrepreneurship and Environment (8 ; 2006 ; Maribor) STIQE 2006 : proceedings of the 8th International Conference on Linking Systems Thinking, Innovation, Quality, Entrepreneurship, and Environment, Maribor, Slovenia, 28-30 June, 2006 / [organised by] EPFIP - Institute for Entrepreneurship and Small Business Manageent at Faculty of Economics and Business, University of Maribor, Maribor, Slovenia and SDSR - Slovenian Society for System Research (Member of IFSR International Federation for Systems Research) ; editors Matjaž Mulej, Miroslav Rebernik, Tadej Krošlin. - Maribor : Faculty of Economics and Business, Institute for Entrepreneurship and Small Business Management, 2006 ISBN 961-6354-47-7 1. Dodat. nasl. 2. Ekonomsko-poslovna fakulteta. Inštitut za podjetništvo in management malih podjetij (Maribor) COBISS.SI-ID 57191169 Programme Committee Prof. dr. Gerhard Chroust, UNI Linz, Austria Prof. dr. Louis Jacques Filion, UNI Montreal, Canada Prof. dr. Michael C. Jackson, UNI Hull, UK Prod. Dr. Matjaž Mulej, UNI Maribor, Slovenia (predsednik) Prof. dr. Miroslav Rebernik, UNI Maribor, Slovenia (predsednik) Prof. dr. Erich Schwarz, UNI Celovec, Austria Prof. dr. Janko Tintor, UNI Zagreb, Croatia, Hrvatska Prof. dr. Stuart Umpleby, UNI Washington, USA Prof. dr. Gerard de Zeeuw, UNI Lincoln, UK, UNI Amsterdam Organizing Committee Prof. dr. Miroslav Rebernik, UNI Maribor, Slovenia Prof. dr. Matjaž Mulej, UNI Maribor, Slovenia Dr. Zdenka Pašič, UNI Maribor, Slovenia Mag. Tadej Krošlin, UNI Maribor, Slovenia Barbara Bradač, UNI Maribor, Slovenia Dragica Rošer, UNI Maribor, Slovenia Printing by: Tiskarna tehniških fakultet, Maribor CONTENT Peter K. A. Barz SAM Sustainable area management – sustainable tourism as a tool for the research, development, management & marketing of geographic areas and regions Innovative approach in management decision making 7 Nina Begičević Marina Klačmer Sandro Gerić H. S. Bhola Štefan Bojnec Mihael Renko Mila Božič Vesna Čančer Vojko Potočan Jan Cincera Andrejs Dreimanis Constantin-Dan Dumitrescu Robert G. Dyck Adriana Grigorescu Anita Hrast Matjaž Mulej Igor Jurinčič Štefan Bojnec Božidar Kliček Sandro Gerić Nina Begičević Jožica Knez-Riedl Sonja S. Lebe Katarina Schiemann Borut Milfelner Julij Nemanič Andrej Lisec Tomaž Kramberger Bojan Rosi Hellmut Löckenhoff 17 Education quality for quality of life: between the systemic and the systematic Innovating approaches and entrepreneurship in a tourist product quality development: the case of old town centre in Maribor Innovation growth through systematic innovation management Corporate environmental responsibility: where we are in Slovenia Systemic thinking in the context of environmental education Systems thinking and knowledge civilization: problem definition and solution perspectives How to think of quality now-a-days A cybernetic plan to engender collaborative cultures System composite of the triplet’s of strategic overview-links and prerequisites CSR: experience and knowledge transfer of retired experts for non-profit sector development support The role of wine consortiums in wine marketing and wine tourism development in Slovenia Innovative approach in environmental satisfaction survey – The green patrol case Corporate governance and corporate social responsibility – related and complementary concepts supporting holistic performance Ecology on the plate: development chance for SMEs in rural areas? 23 27 35 39 45 51 55 61 67 75 81 87 93 101 Systems Theory in Travelling Salesman Problem at Postal Companies 109 Quest for the innovative environment: the impact of societal constitution 115 3 Alexandre Makarovitsch Jean-Pierre Foll Pierre Chauvet Suzana Marković Dora Smolčić Jurdana Tatyana Medvedeva Matjaž Mulej Tadej Krošlin Vojko Potočan Zdenka Ženko Vladimir Pozdnyakov Veselin Trninić Robert Neumann Alexandra MüllerStingl Waltraud Grillitsch Sandro Piermattei A method to support innovation 123 Tourism and quality of environment: towards the sustainable development 133 Experience of introducing the concept of corporate university in training of prospective management reserve Transfer of knowledge to firms in transitional economies 141 147 Organisational order of knowledge: an “inside” organisational perspective 156 Ecologist and entrepreneurs: the market of landscape and the quality of tradition in the case of some agro-tourism farms in the Parco Nazionale dei Monti Sibillini, Italy How to create a requisite holistic business school strategy Toward a sustainable society: next steps Roadblocks to entrepreneurial absorptive capacity in Slovenia 165 Vojko Potočan Milan Jurše John Raven Miroslav Rebernik Ksenja Pušnik Polona Tominc Filippina Rissopoulus Gerald Steiner Terry L. Weech 173 181 189 What do innovative leaders have in common with ancient myths? A view of the archetypal hero within the modern manager How to support the ability to successfully generate radical innovation: what can be learned from IDEO? Librarianship, Systems Thinking, Innovation and Entrepreneurship: Library and Information Science in an Entrepreneurial Context 199 203 213 4 Dear participants of the 8th STIQE conference, Slovenia is 15 years old, these days, so is STIQE. In these years Slovenia has achieved much more than the other parts of the former Yugoslavia, in terms of economic and social modernization / development. Her problems are now the very usual problems of Western Europe: differences between people are growing, demands for education level are so too, jobs cannot be assured for everyone by the government as they used to be, international support to Tito is there no more and standard of living depends on the quality of work, especially on its management, 94% of organizations employ less then ten, only 0.3% employ more than 250, there have never been as many legal entities as today, entrepreneurial spirit is lacking, systemic thinking is found a necessity rather than a daily practice, etc. In terms of STIQE, meaning connecting systems thinking, innovation, quality, entrepreneurship, and environmental care, the briefed processes mean that we have been right, when we established STIQE. It is not only the only conference about this content in the world. It is also very much up to the point of the current needs of Slovenian and other European people, as well as of the needs of others around the world. Why are we speaking such proud words about our idea of 15 years ago to start STIQE? A few insights in reality say: Being an employee is no longer a much safer position than being an entrepreneur. There are beyond two billions more persons seeking jobs around the world. Living on routine has been good enough for all humankind for 100.000 years except the last three centuries; but there is a very limited set of activities which one can master well enough with no innovation. Globalization allows for no hidden places any more, at least not for people in Europe; the market pressure for competitiveness based on innovation resulting in (total) quality and run by entrepreneurship is all around us. Hence systemic thinking must be all around us and in us and between us: it is the source of holism, it brings various and mutually different professions together, it provides room for all specialists to work with other kinds of specialists toward their shared benefit. One-sidedness of specialist is a normal human attribute; it is both an unavoidable and insufficient source of success. Creativity and capacity of interdisciplinary co-operation are equally unavoidable. Holism results from their combination / synergy. Thus, being an entrepreneur working on innovation and using systems thinking at work and in free time, including the environmental care – this is what produces quality, which we call systemic quality resulting in success in market and at home. Systemic quality, as we have defined it a few years ago in one on our books, consists of reaching beyond customer expectation in terms of price, quality, range offered, uniqueness offered, and consideration for natural environment for our life. The five preconditions of success and benefit at work and at home are no longer a set, but a dialectical system – an indivisible whole of crucial and interdependent components of a good business and a good life. 5 Creative class is more and more replacing the working class of the 19th and 20th centuries. Research says that the traditional working class no longer reaches 40 %, but only 10 % of all jobs, while the creative class has risen from 5 % to 35 %, being also paid best because it contributes most; service class cares for conditions of work of creatives. There is hardly a creative class with no STIQE culture, experience says. Therefore, dear colleagues from 12 countries, who have passed both double blind reviews of STIQE, welcome and thanks for helping us to help people master their lives more holistically and successfully. We hope you will enjoy the 8th STIQE like in previous editions. We are very happy to have made a new tradition a part of STIQE: on the day before the conference doctoral students in STIQE topics meet and discuss their research in order to become professional colleagues and individual friends. At the 7th STIQE they were from Maribor and Klagenfurt, in 2005 from Klagenfurt, Maribor, and Warsaw, this year they are from Maribor, Klagenfurt and Graz. Lent Festival of Maribor is the other precious content that Maribor offers to you in STIQE times. This year, very much like last years, we will have a chance to admire about 3.500 presenters of several kinds of artistic performances. They are coming from +30 countries. We will be a part of a half a million crowd of spectators there in all evenings during STIQE. Welcome again, Matjaž Mulej Miroslav Rebernik Co-chairs Maribor, June 2006 6 SAM - SUSTAINABLE AREA MANAGEMENT FOR REGIONAL TOURISM DEVELOPMENT Peter K A Barz BSc MSc MIEMA CEnv Environmental Network Limited The Hillocks, Tarland ABOYNE AB34 4TJ Scotland, UK European Office Fritz-von-Graevenitzstr. 31 70839 Gerlingen Germany Fax: +49 7156 928 383 e-mail: pkab@env-net.com website: http://www.env-net.com Abstract Sustainable Area Management (SAM) is the proposal for a geographically-based decision support system for sustainable regional development that generates, controls and manages multi-disciplinary and multi-sectoral information via the Internet. SAM employs an iterative systems approach to sustainable development which seeks to balance in a spatial context the effects of economic market demand with the requirements of environmental, social and cultural protection and management. SAM may be focused on the research, development, management and marketing of sustainable tourism destinations thereby generating the information that enables the development of new commercial tourism products and services, the iterative improvement of local quality standards, indicators and targets for sustainable development, and the support of the necessary education & training to achieve this overall aim. For the further development and application of SAM links are sought with destination management organisations, university departments and research institutes willing and able to offer complementary economic development and scientific R&D opportunities. This paper is the result of the deliberations of a multidisciplinary design team of consultants and managers with a common recognition of the values of environmental management as a pioneer of sustainable development and seeks support for further improvement of the SAM system. This paper commences with a short introduction into the background of sustainable development in Europe and some of the key aspects of sustainable tourism and destination management. It then presents the on-line demonstration version of the eTrails.info software that is an integral part of the SAM system and then the SAM system itself, in the form of a MS PowerPoint presentation. 2 Environmental Management, Sustain-able Development and Spatial Planning in Europe Keywords: 1 Environmental Sustainable regional development. management; Introduction The following paper introduces a geographicallybased research, development & management (RDM) system for sustainable regional planning and marketing that simultaneously acts as a decision support tool for the research of sustainable development (SD) in tourism destinations. Environmental management is a relatively new vocational discipline that integrates a wide variety of scientific and professional subjects and is uniquely interand multi-disciplinary in its nature. It has arisen from the recognition that the increasing interference with nature by the rapidly growing world population, requires a corresponding understanding of the complex systems that exert the most profound influence on the survival of life on this planet. Over the last 20 years environmental management has thus adopted an important role in providing an understanding of this inexorable relationship between man and the global environment and developed important methodologies for the insight into and assessment of the complex ecological, economic and social systems involved. The many Environmental Assessment methodologies and the ISO 14001 standard and the European Eco-Management and Audit Scheme (EMAS) are some of the best known examples. As such, 7 environmental management may well claim to be the precursor of sustainable development (SD) as it provides its intellectual and scientific basis, concepts and management practices for delivery. SD is defined in many ways, but all definitions essentially express the paradigm of the management of existing resources for future generations, i.e. the famous: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (WCED, 1987). The concept of sustainable management originates from forestry and goes at least as far back as the 16th century (Spangenberg, J., 2003). SD is the process that leads to sustainability – by what in environmental management is called ‘continual improvement’ - i.e. a process that advances in the spiral movement of iterative progress towards the desired goal. SD has now achieved considerable attention as the EU has made it a central component of European policy strategy which recognises a long-term vision that links and balances economic growth, social cohesion and environmental protection as a matter of global importance (European Commission, 2003a, b). This policy is depicted in the now familiar concept of the static “3 Pillars of SD” (see Figure 1). As these three pillars are conventionally represented by individual stakeholder groups, the definition of SD remains elusive as each group upholds its particular interests and there is no indication of the means and routes of interaction. Technological Dimension Fig. 2: The “5 Dimensions of SD” Figure 2 not only identifies the additional parameter of governance (institutional dimension) – but also includes the ‘technological dimension’ as the fifth principal component of SD. This extended concept of SD identifies the routes of interaction between the various corners of the pyramid as axes along which the further development of SD needs to take place – for example in terms of the identification of composite SD indicators (Spangenberg, J.H; 2005). European regional development policies and programmes seeks to promote SD at the regional and local scales (European Commission, 2006). Accordingly, the number of European Directives, Regulations and national legislation that include a reference to SD has rapidly increased in recent decades – but there still are many other policies that indirectly and often contradictorily influence or control the multiple factors contributing to SD. Furthermore, the EU is very much focussing on the development of an integrated spatial planning approach which is based on the Nomenclature of Territorial Units for Statistics (NUTS) that is defined for the EU Member States and for which Local Administrative Units (LAU) are the basic components. Both SD and spatial planning are thus closely linked in science and policy (European Commission, 2003c). However, the implementation of SD in individual European countries and regions is challenged by traditional administrative and economic development concepts and their application in planning, education and training. Also the necessary technical expertise is often missing at these levels of administration. As a result, the “top-down” SD policies have to date not delivered results to the degree envisaged by the European Union as the required “bottom-up” approach still lacks the necessary competence and engagement (European Parliament, 2005). As evidence shows, more than a legal framework and expressions of wishful intent are required to achieve SD at the local or regional level. Not only is there a need for integrated and coordinated approaches to policy proposals, i.e. the geographical integration of policies (trans-national), horizontal cooperation (sectoral policies) and vertical cooperation (tiers of authority) – but also the Economy Society & Culture Environment Fig. 1: The “3 Pillars of SD” (Nuttle, T., Salles, P., Bredeweg, B., 2005) Beyond this model of SD more recent developments base SD on the following concept (see Figure 2): 8 research, development and application of sustainable territorial planning and management tools and systems. These in turn require the competent integration of a diverse range of researchers and practitioners and a high level of communication (Work, R. Jnr; 2001). Moreover, sustainable development, spatial planning, integrated resource management, and the drivers of their respective change are highly complex and very often show non-linear and multi-objective features (Miettinen, K.M., 1999). Accordingly, most attempts to construct integrated management models and models of SD describing the trade-offs between economic activities and resource conservation and maintenance have only been partial in terms of both focus and success (Rotmans, J., P. Vellinga, 1998) – an issue which has been central to sections of the EC 6th Framework Programme (FP6) and could be expected to remain so in FP7. However, there are in existence some innovative concepts and systems for spatial planning that aim to be sustainable – although none appear to have gained a foothold yet. These include, for example, the Sustainable Development Model for Communities presently under development (Gaia Group, 2006); the Sustainable Territorial Planning and Management (STPM) concept (UN, 2001), the European Spatial Development Perspective (ESDP), that has been developed by the EU INTERREG Programme (INTERREG, 2004), or the more specific ‘Flag Model’ that seeks to clarify the role of sustainability indicators in spatial planning (Nijkamp, P., Ouwersloot, H., 1997). These concepts all are to be delivered in a territorial context (European Commission, 2003a,b; Becker, E; Jahn, T; Stieb, J.,Wehling, P., 1997), seeking to achieve economic development of regional areas while protecting and enhancing the local environment and examining further innovative approaches to sustainable territorial development. Crucially, spatial SD depends on contributions from policy makers, administrators, engineers, nongovernmental organisations (NGOs) and other stakeholders. SD is thus debated in terms of the range of multi-sectorial demands arising from differing interests within societies and cultures (Rouchier J., Bousquet F., Requier-Dejardins M., Antona M., 2001); Irwin E.G., Geoghegan J., 2001). This makes their application essentially a compromise of value judgements (European Parliament, 2002; European Commission, 2003d) and requires new competences in the management of the necessary social and often multi-cultural integrative process. Furthermore, it is considered that the existing paradigm of SD which requires a careful balance between the often divisive goals of economic, environment and social and cultural development may be accurate in theory – but judging from existing achievements and power structures appears completely idealistic in terms of its ability of achieving results. The reason for this is that the global economic paradigm is so influential that to date there seems little evidence that it would be able to accommodate any competing concepts. This reveals that SD cannot achieve its aims unless it is able to operate from WITHIN the prevalent economic paradigm. Therefore, SD must recognise the overriding assumptions of economic theory and exploit the laws of the market economy – or in other words recognise that: “there can be no supply of SD without there being a demand for it.” This need for the creation of an economic demand for SD in turn points towards its development and recognition as a commercial product, i.e. that in order to be successful, SD must be marketed as a desirable good and gain universal acceptance. Accordingly, the key assumptions of SD are: • • SD is intrinsically linked to the principles of environmental management and economic demand and supply; SD necessitates a local or regional ‘bottom-up’ development approach that needs to be developed as a consensus between local/regional stakeholders balancing their diverse interests; SD requires a high level of knowledge of its diverse resources and their individual qualities; SD is an iterative process that continuously strives to improve the quality of its outcome; • • 3 Information and Technology (ICT) Communication Information and Communication Technologies (ICTs) contribute enormously to all areas of society, and SD also gains from the improvement of scientific methodologies and technological tools for multi- and inter-disciplinary information supply and management which enable the delivery of the necessary integrated processes and systems (Odum, E., 1975; Naveh, Z., Lieberman, A. S., 1983; Willis, K. 1994; Palmer, J. F, 1997; European Communities, 2001). This includes those for the planning and management of spatially-based environmental management and SD and those that provide optimal support for the collaboration of stakeholders, civil society and the responsibilities of decision-makers (EC-RTD Environment, 2005; European Commission, 2002). Based on the a priori availability of data, these instruments may be classified into four broad categories (Malafant, K., Davey, S. 1996): • Tools – including Geographic Information Systems (GIS), databases, image processing systems, visualisation and mathematical and/or statistical analysis tools; and algorithms such as present in assessment methodologies. Models – their methods or concepts: they form the building blocks or modules of more complicated analyses and modelling frameworks. • 9 Management Systems and Decision Support Systems (DSS) that integrate a mix of models to solve a specific set of requirements. • Integration Framework Systems – they facilitate the integration of various support tools, models or DSS into a single coherent framework and form complex modelling systems from many diverse sources. However, in terms of SD there is a profound deficiency of data and databases at the NUTS levels that contain suitable information about the multiple spatial resources that are to be managed in an integrated manner. In addition, the rules for the coordination and sharing of existing data – such as geographic information – still are unresolved (NSPIRE, 2006). The lack of such integrated databases which would be able to provide comprehensive, multi-disciplinary knowledge of the resource base of a given geographic area represents a most profound shortcoming at the very outset of the path towards the establishment of SD and thereby prohibits both adequate research and the successful application of SD. In order for SD to be implemented in a spatial context, it is essential that databases which contain suitable economic, environmental, socio-cultural and administrative data are being created and linked with each other. It appears that such integrated resource databases (IRRdb) do not exist to date and it is for this reason that we are currently undertaking the development of a prototype IRRdb including an online data entry template. A principal hypothesis arising from this is that as the availability and dependency on information rapidly increases in global society, it is suggested that SD may be researched, applied and developed through the management and control of information for which the Internet and other ICTs provide the necessary tools and opportunities. It becomes apparent that SD represents a completely new and unfamiliar paradigm for European societies that in order to establish itself will require an exceedingly proficient degree of integration at all administrative levels. This is the case as the research and delivery of SD and its intricate relationships and systems encounters not inconsiderable technical, scientific, socio-cultural and procedural problems that need to be recognised and addressed. In order for this conceptual shift from short-term economic exploitation to the long-term, inter-generational preservation and management of resources to gain credibility, SD - rather than a notoriously elusive ideal – needs to be considered a desirable article of consumption and be converted into a commercial product or service that can be hardsold in the global market place. • 4 The Development of Sustainable Tourism Regional development, SD and sustainable tourism show many overlapping characteristics, e.g. in terms of their common purpose, information requirement, technology, management techniques and stakeholder participation. The development of tourism generally represents an opportunity for the improvement of local, regional – or even national - economies and appears a likely solution for economic development in countries that have experienced a change to the global market economy and are short of marketable products and services. In such a situation, a country’s existing cultural and natural resources become the most immediately marketable assets, making tourism an obvious choice. The same applies to rural regions in the remainder of Europe that also have an urgent need for development, innovation and diversification that enables economic growth. However, as an ever-increasing number of tourism destinations turn to this solution, competition between them grows steeply, as in a rapidly-shrinking world in which communication is instant and travel has become cheap, destinations are easier to reach and the Internet and other ICTs afford instant and cost-effective opportunities for tourism marketing at the global scale. There also is a price to pay for the often rapid development of tourism that quickly exhausts the very resources that produce much-needed income. The massmigration into a destination of tourists who may temporarily multiply the local population by a factor of 10 and exploit the same resources, creates complex problems for planners and managers. The sustainable management of tourism destinations that may include a single location, several municipalities, a region or a province represents an important control function of the multiple impacts created by this industry. Sustainable management seeks to develop a destination based on an integrated plan and may include business association initiatives, business permits, land use planning and zoning controls, environmental and other regulations, quality definition and control, education and training and a host of further techniques and indicators that shape the development and daily operation of tourism-related activities. The needs, expectations and anticipated benefits of tourism vary greatly from one destination to the next, and although a host of basic provisions need to be made – e.g. in terms of principal environmental standards - there certainly is no "one size fits all" approach to sustainable destination management. As local communities living in regions with tourism potential develop a vision for what kind of tourism they want to facilitate, a comprehensive planning framework such as Local Agenda 21 has proved useful and is being used more often. Promoting sustainable tourism within Local Agenda 21 processes is a way to strengthen local stewardship of the destination in an integrative, holistic sense. 10 The characteristics of sustainable tourism are stated by noteworthy organisations as being: “informative; supporting integrity of place; benefiting residents; conserving resources; respecting local culture and tradition; not abusing its product; striving for quality, not quantity; and providing a great attraction” (UNEP-DTIE, 2006; National Geographic Online, 2006). It is apparent that sustainable tourism as described here shows the indivisibility and interdependence of the aims and attitudes of the tourist and those local to a destination, but it is the Destination Management Organizations (DMOs) that control the nature, identity and supply of the tourism product they wish to market These DMOs are often made up of participative structures of governance led by local authorities, with the involvement of NGOs, community representatives, and local chambers of commerce, etc. Frequently, DMOs take the form of local tourism boards, councils, or development organizations whereby a network of local tourism businesses often form a highly significant driver of the development of a destination that appears little regulated. This is the case as a consensus for concerted action usually is very difficult to achieve resulting in a lack of development policies that are carried by all. Much has been said and written about the need for “sustainable tourism concepts” (nearly 5 million results from a Google search) – and partially successful examples are in operation (e.g. ecotourism in national or nature parks). But crucial for successful sustainable destination development, management and marketing and much overlooked to date therefore is the apparent requirement - not only for a better understanding of the nature, availability and control of the multiple individual economic, natural and socio-cultural resources that occur in a destination, and the recognition of their intensely synergistic nature – but also for the applicability of advanced information and other technologies. There needs to be a transfer of SD principles to the many other destination resources – as well as further precision, development and articulation of the commercial benefits of the sustainability element in tourism products. This will support the preparation of sustainable tourism products that utilise their inherent synergistic character, and allow their integration into comprehensive sustainable tourism destination services. Quality standards of the tourism facilities and services provided by a DMO represent a crucial management and marketing issue but they have not been established firmly as often there is uncertainty about what they should be – or if known - they are too costly or complex to be applied. In the light of, for example, a rapid deterioration of local environmental and social resources, the question: “What is the appropriate quality for sustainable tourism in a tourism destination and how can it be defined?” is highly relevant for a destination that is made up of a range of diverging interests and opposing views and expectations. As a result, it is considered that the development of a sustainable tourism destination: • • • • Requires a political development process that includes all relevant stakeholders; Is dependent on the provision and management of comprehensive information on the multiple resources available; Must develop a quality product with market appeal that matches increasing competition at the international level; Increasingly relies on its operation via the Internet and the employment of other modern forms of ICT which give it new opportunities for the control and management of the information it uses and disseminates; Benefits from scientific research based on its multiple resources and their synergistic performance; Provides local quality standards for area-based SD and uses focussed education & training in sustainable tourism management to achieve this aim. • • 5 The SAM Sustainable Area Management Approach The SAM Sustainable Area Management system (Environmental Network Limited, 2006) was developed by a multi-disciplinary team of consultants consisting of a regional economist, a sociologist, an archaeologist, a human ecologist, an outdoor specialist, an environmental manager and an IT specialist. SAM was designed to address sustainable development in a multi-disciplinary and spatial context focusing on SD at the geographic level. The SAM Sustainable Area Management DSS operates via the Internet and addresses these challenges through the linkage of two usually independent processes supplying each other with input information - i.e. the eTrails.info software (eTrails.info, 2006) and a bespoke environmental management system based on ISO 14001 and EMAS. This enables the simultaneous use of the generated information by both systems and, in addition, allows the scientific research of the development of sustainable tourism at the local/regional level. While much needs to be done yet to develop lasting examples of sustainable tourism, in conclusion, it is suggested that there are four key requirements which determine the success of the creation and management of local or regional sustainable tourism. These are: • Consensus. Achieving the political will, aim and momentum amongst destination stakeholders required for the development of a sustainable destination. 11 Information. Developing an in-depth understanding of the multiple institutional, economic, environmental and socio-cultural resources of a given destination. This requires suitable Integrated Regional Resource databases (IRRdb) that can be exploited by a wide range of interests. • Standards. Identifying the quality of SD in a given destination with the help of indicators and standards. • Process. Management of the SD process with identified aims and iterative review of achievements linked to education and training in local sustainable development practices. Presently, the SAM model is being applied in the EC FP6 NATURNET-REDIME research project (NNR, 2005), which prepares the future sustainability web portal for the European Union and will provide a series of eLearning facilities for sustainable development. • Slide 6: The intended tourist or ‘user’ develops one or more potential and individual itineraries with the help of the eTrails.info ASP. The information given by the prospective tourist during his/her interaction with the eTrails software is automatically stored in a user database. As a result of this itinerary planning the user decides to visit the given destination – thereby making use of the various regional resources. This resource use results in multiple impacts on the regional resources – i.e. in terms of the ‘5 dimensions’ identified in the diagram in Slide 3. These resources are also called ‘Sites’ as they have a specific geographical reference in the IRR database. Slide 7: Slide 8: Slide 9: 5.1 Presentation of the SAM Sustainable Area Management System Description The following description relates to the system architecture and information flow in the SAM system and is provided as a Microsoft Powerpoint presentation (subject to review). Slide 1: Slide 2: Frontispiece Please note that eTrails.info and the SAM approach represent BOTH a commercial proposition as well as a research programme and as such are protected by intellectual property rights. This slide shows the underlying conceptual approach to sustainability SAM is based on. Here the ‘3 pillars of SD’ consisting of ‘economics’, ‘environment’ and ‘social’ (as used by the European Commission) has been further developed from a 2-dimensional to a 3dimensional concept that also includes ‘institutions’ or ‘governance’, and ‘technology’ as crucial determinants of SD (see above). Here particular focus pertains to the axes linking the corner points as they form the crucial interfaces – thereby exemplifying the need for (at least) a 3dimensional concept of SD. Access to SAM is via the tourism segment of the destination web portal The Application Service Provider (ASP) eTrails.info operates ‘behind’ this website providing the DSS. Details of this interaction are shown on the eTrails.info website (see above). Slide 10: Details of these resources or ‘Sites’ are contained in the Integrated Regional resource Database (IRRdb). This also contains the details of the users (see Slide 7). The impacts on and performance of these Sites is monitored and the information entered into the database. Crucially, the obtained information supports decisions on Site management (see below). Slide 11: The IRRdb not only contains resource or site information from which the user can construct and book individual itineraries - but also holds ‘pre-fabricated’ holiday itineraries which the user can select from. Slide 12: Clearly, the IRRdb is connected directly to the eTrails.info software that operates on the destination web portal and thereby completes the information exchange. Slide 13: The user has an eTrails.info facility to provide feedback (‘blogging’) about his/her stay in the destination via the webportal. Slide14: Feedback or ‘blogging’ by the tourist is important information that is also logged in the IRRdb. Slide 3: Slide 15: This slide shows the sustainable development R&D facility which is situated between the IRRdb and the eTrails.info user interface. All information available on the destination web portal therefore needs to pass through this element. Slide 16: This SD R&D facility clearly is a crucial element of the SAM approach as it is situated in a key position in the system and thereby is not only able to monitor and control the information that is contained in the IRRdb – but also controls the information that is fed via the eTrails.info software into the web Slide 4: Slide 5: 12 portal where it forms the basis of the decision-making by the user. This facility is envisaged to be operated by an academic multi-disciplinary research department which uses the information received from the SAM system as the basis for its research into tourism as an aspect of sustainable regional development. Slide 17: This slide opens a windows that gives an example of the type of multi-disciplinary information retained in the IRRdb – albeit the nature and extent of the actual information in this database will be much more varied and extensive. Slide 18: Here is illustrated one of the basic assumptions of the SAM approach (see above). The participation of local/regional stakeholders in the development of sustainable tourism – and thus the nature of the available information – is an elementary aspect of the operation and success of the SAM concept. Stakeholders provide and receive information to and from the R&D facility – as well as the IRRdb. Slide 19: The review of the presented SAM system shows that it is split into three subsidiary processes: The first on the left represents a system for regional marketing on the Internet – the one in the middle represents a system for environmental management while the third block on the right represents the crucial influence of the socio-political stakeholder aspects. The information flow across the three blocks joins all three systems into an integrated system. Slide 20: A further important role of stakeholders in the SAM system is their control of the quality standards they negotiate amongst each other and implement within the geographic area in which they represent their differing interests. These quality standards in turn underlie and influence the behaviour of the whole SAM system acting as a driver for incremental improvements of the quality of sustainable development intended and achievable in the respective locality or region. The result is an effect similar to that intended by management systems – such as ISO 14001 – where an incremental improvement of the environmental performance (by a business) is sought through continual feedback of the results obtained. Slide 21: As a direct consequence of the previous activity the information and experience obtained through the SAM system and the quality standards realised may be fed into a training and educational process which supports the delivery of the desired quality objectives and further assists the incremental development of regional SD. Slide 22: Finally, this slide identifies the whole SAM system as evolved as a tool for sustainable regional development. As a concept of a management process SAM requires further scientific input as well as access to existing resource data or databases in order to establish the underlying IRRdb. For the further development and application of SAM links are sought with destination management organisations, university departments and research institutes willing and able to offer complementary economic development and scientific R&D opportunities. 5.2 The eTrails.info Internet Tourism Marketing System As mentioned before, the SAM SD management system employs the eTrails.info software suite as a central user interface and is available as a Microsoft Powerpoint presentation. eTrails.info represents a new-generation commercial Internet software system for destination marketing while simultaneously providing to a growing market of users, individualized and geographically-referenced holiday itinerary planning and promotion. This software generates new and unique opportunities and benefits for destination management organisations, their stakeholders and visitors. A demonstration of the software is available on-line and may be accessed after request of an access code from the writer. 6 Conclusion Although far from receiving universal acceptance, sustainable development is supported by expressive European political aspirations and “top-down” legislative activities - but lacks recognition and application at the local and regional levels. Accordingly, SD is not being supported from the “bottom-up”, which endangers the delivery of existing policies. The SD of a tourism destination is dependent on the integration of its institutional, economic, environmental and socio-cultural interests and resources that in turn enable the creation and promotion of a commercial tourism product that is based on the sustainability of all its component factors. This challenge requires an iterative process of the development, management and marketing of complex, integrated sustainability products & services that have international market appeal. 13 The SAM Sustainable Area Management proposal for an Internet-based decision support system addresses the research, development, management and marketing of sustainable geographic areas and has been developed -for the use by tourism destination management organisations. SAM achieves this though linking the Internet-based eTrails.info tourism marketing software system in the ‘real-time’, commercial context of online destination promotion, marketing, management and booking, with an iterative environmental management system that balances in a geographic context the effects of economic market demand with the requirements of administrative, environmental, social and cultural protection and management. The SAM Project develops a spatial sustainable development model for destination management organisations that: • Acts as a marketing and management tool for sustainable tourism • Represents a scientific tool for the research, modelling and management of sustainable development as an expression of spatial planning. Provides for the co-ordinated collection, analysis and integration of local or regional resource data in an integrated database (IRRdb) that includes administrative, social, cultural, environmental and economic determinants; Enables the development of tourism destinations through participation of public administrations and stakeholders as agents of economic development, environmental, social and cultural protection; Identifies strategies and policy proposals for local sustainable development; Facilitates the development of quality standards for local sustainability indicators; Assists education & training in applied sustainable development; 3. 4. 5. 6. 7. 8. 9. 10. • • 11. 12. • • • • 13. Is aided by the application and further development of existing and innovative tools of information technology. Support for the further development of the SAM Sustainable Area Management model from destination management organisations and university departments as an applied, multi-disciplinary academic research project, is sought. 14. 15. REFERENCES 1. 2. The World Commission on Environment and Development (WCED) (1987); Our Common Future (Brundtland Report). Spangenberg, J. (2003); personal communication. 16. 17. European Commission (2003a), Communication From The Commission To The Council And The European Parliament 2003 Environment Policy Review Brussels, 2.2.2004, COM(2003) 745 final/2. European Commission (2003b); Commission Communication, Towards a Global Partnership for Sustainable Development, COM(82)final, 13. February 2002. Nuttle, T., Salles, P., Bredeweg, B. (2005), Guidelines for Sustainable Development Curriculum; Project Deliverable Report D6.8. NATURNET-REDIME EC STREP Project No. 004074, 2005. (www.naturnet.org). Spangenberg, J.H. (2005); The Institutional Dimension Of Sustainable Development; unpublished. European Commission (2006); Regional Policy Key Documents (http://ec.europa.eu/regional_policy/sources/key/key _en.htm); 16.June 2006. European Commission (2003c); Regions Nomenclature of territorial units for statistics – NUTS; 2003 /EU25 (Part 2). European Parliament (2005); Mid-term review of the Lisbon strategy; March 9, 2005. Work, Robertson Jr. (2001), “Decentralization, Governance, and Sustainable Regional Development”; in: New Regions: Concepts, Issues, and Practices; vol. 3, edited by David W. Edgington, Antonio L. Fernandez and Claudia P. Hoshino, 21-33. Westport, CT: Greenwood Press. Miettinen K.M. (1999), Nonlinear multi-objective optimization, Kluwer’s International Series in Operations Research and Management Science, Norwell. Rotmans, J., P. Vellinga eds. (1998) Special Issue: Challenges and Opportunities for Integrated Environmental Assessment, Environmental Modeling & Assessment, Baltzer Science Publishers, Bussum, The Netherlands. Gaia Group, (2006); Sustainable Development Model for Communities; http://www.gaiagroup.org/Research/TF/sus_dev/inde x.html; 16.June 2006. UN, 2001; Agenda 21, Integrated Approach to the Planning and Management of Land Resources; UN Department for Economic and Social Affairs Division for Sustainable Development. INTERREG, 2004; INTERREG 3b New Sustainable Territorial Development in NW Europe. National INTERREG Dissemination Event Tullamore, 23 November 2004. Nijkamp, P., Ouwersloot, H. (1997), A Decision Support System for Regional Sustainable Development; The Flag Model. Dept. of Economics, Free University, Amsterdam. Becker, E; Jahn, T; Stieb, J.,Wehling, P., (1997) Sustainability: A Cross-Disciplinary Concept for 14 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. Social Transformations, UNESCO–MOST Policy Paper, No: 6, Paris. Rouchier J., Bousquet F., Requier-Dejardins M. and Antona M., (2001); A multi-agent model for describing transhumance in North Cameroon: comparison of different rationality to develop a routine, Journal of Economic Dynamics Control; 2001. Irwin E.G. and Geoghegan J., (2001); Theory, data, methods: developing spatially explicit economic models of land use change, Agriculture, Ecosystems and Environment 85, pp. 7-24. 2001 European Commission (2003d); COM (2003) 131 final, 25.3.2003, Communication from the Commission: Developing an action plan for environmental technology. European Parliament (2002); Decision 1600/2002/EC of the European Parliament and the Council of 22 July 2002 laying down the Sixth Community Environment Action Programme. Odum, Eugene (1975); Ecology: The Link between the Natural and Social Sciences, New York: Holt, Rinehart and Winston. Naveh, Z., Lieberman, A. S., (1983); Landscape ecology, theory and application. Springer Verlag. New York, Berlin, Heidelberg, Tokyo. Palmer, J. F., (1997); Stability of landscape perceptions in the face of landscape change. Landscape and Urban Planning, 37, 1/2, p. 109113. Willis, K. (1994); Contingent valuation in a policy context. Landscape Research, 19, 1, p. 1720. European Communities, (2001); FOREN Foresight for Regional Development Network - A Practical Guide to Regional Foresight; Report EUR 20128 EN © European Communities, 2001. EC-RTD Environment, personal communication. European Commission (2002); Communication from the Commission concerning Corporate Social Responsibility: a business contribution to sustainable development, COM(2002)347, 2. July 2002. Malafant, K., Davey, S. (1996); Review of Information Technologies for Consideration in Comprehensive Resource Assessments of Forests; Bureau of Resource Sciences; February 1996. The INfrastructure for SPatial InfoRmation in Europe (INSPIRE), (2006) http://www.ecgis.org/inspire/. UNEP-DTIE, (2006), Sustainable Tourism Project; www.world-tourism.org/sustainable/ IYE/quebec/cd/about/unepdtie.htm, 16. June 2006. National Geographic Online (2006); Centre for Sustainable Destinations; http://www.nationalgeographic.com/travel/sustainabl e/about_geotourism.html; 16. June 2006 33. Environmental Network Limited (1993-2006), Sustainable Area Management: Multi-Disciplinary Research & Modelling of the Spatial Planning, Sustainable Development & Management of Geographic Areas and Regions in Europe; Concept proposal and software development; FP6 Integrated Project Proposal, 2002. 34. eTrails.info (2006); The ASP for Sustainable Regional Development, Management & Marketing; www.eTrails.info 35. NNR (2005); NATURNET-REDIME EC FP6 Specific Targeted Research Project (STREP); Project No. 004074; www.naturnet.org 15 16 INNOVATIVE APPROACH IN MANAGEMENT DECISION MAKING Nina Begičević, Marina Klačmer, Sandro Gerić University of Zagreb Faculty of Organization and Informatics Pavlinska 2, Varaždin nina.begicevic@foi.hr, marina.klacmer@foi.hr, sandro.geric@foi.hr Abstract Previous researches have emphasized rational decision making over intuitive decision making. One major reason for such tendency is stereotype that intuitive processes are beyond the scope of a scientific study and that systematic and careful analysis yields superior choices than those coming from the intuitive processes. Recent advances in cognitive sciences and artificial intelligence suggest that there is nothing profane and nothing irrational about intuitive decision making. Managers often use intuition in decision making and intuitive processes evolve from long experience and learning. Intuition allowed fast decision makers to react quickly and accurately to changing stimuli in their firm or its environment. Our survey examined important trends in decision making: a) intuitive processes are used often in organizational decision making, and b) increasing intuitive decision making by strategic and operations management. The results are showing increase in intuitive decision making process in case of strategic and operative/tactical decisions. The intuitive decision making process combined with judgment and rational based decision making is also more often used by all levels of management. Previous researches suggested that strategic (top) management often use intuition in decision making, but our results indicate increase of intuitive decision making by operations management. Intuitive and rational decision making are equally important for effective decision making. Intuition is playing increasing role in decision making process. A combination of intuitive synthesis and rational analysis would be better than using rational analysis and intuitive synthesis alone. Efficient decision maker has to couple analysis and intuition in strategic and in tactical decision making. 1. Introduction There are different approaches in management decision making and they differ according to the level of intuition, judgment and rationality included in decision making process. In this article, the accent will be mostly on the intuitive and rational management decision making. Previous researches have emphasized rational decision making over intuitive decision making. The reasons why the intuition sometimes looks unreliable derive from the types of the problem we must solve, the internal and external factors we must take into consideration, the opportunities for developing and using intuition and from the nature of experience and expertise of decision makers. One of the reasons for such tendency is also a stereotype that intuitive processes are beyond the scope of a scientific study and that systematic and careful analysis yields superior choices than those coming from the intuitive processes. Usually, intuition is defined as the inherent ability to connect with our "inner self." Our inner self is that part of us that knows everything we need to know. Successful business people are often described as having a "sixth sense," "good feel" or an "intuitive" feeling about their business, career, industry trends or stock market trends (Mann, 1998.). Some decision makers often think that good-feeling is not a rational decision making method and many of them fail to realize that good-feeling. The advances in cognitive sciences and artificial intelligence have suggested that there is nothing profane and nothing irrational about intuitive decision making. Recent researches have also shown that intuition is actually a sub-conscious derivative of the accumulation of years of management experiences and that managers often use intuition in strategic decision making, but also when they must take tactical or operative decisions. The survey which was made on, mostly small and medium private companies has confirmed these relatively new trends in decision making: a) intuitive processes are used often in organizational decision making, and b) increasing intuitive decision making by strategic and operations management. The results show increase in intuitive decision making process in case of strategic and operative/tactical decisions. The intuitive decision making process combined with judgment and Key words: decision making; management; systems thinking; intuition; cognitive science 17 rational based decision making is also more often used by all levels of management. The results of survey are very optimistic for giving more important role to intuitive decision making process. According to many authors, effective decision making is based on a combination of rational and intuitive decision making, on synthesis of analysis and intuition. 2. Importance of intuition and intuitive decision making For already thirty years, intuition and intuitive decision making process have had very important place in many researches and theories. In 1978, Beach and Mitchell (Klein, 2004.) have already claimed that there are times to use analysis and times when it is better to depend on intuition but they couldn’t precisely describe what intuition was. Herbert Simon has claimed that intuition and judgment are simply analyses frozen into habit (Simon, 1987.). Gary Klein has defined intuition as the way we translate our experience into action (experience lets us recognize what is going on and how to react). According to Khatri and Alvin, intuitive synthesis involves judgment, relies on past experiences, and manifests itself in the form of “good – feelings” (Khatri & Alvin NG, 1997.). Hayasi has asserted that people can substantially increase their decision-making prowess by tapping more into the right brain (right– brain is for the intuitive, subconscious and emotional) (Harvard Business Review of Decision Making, 2001.). According to Malcolm Gladwell, great decision makers aren’t those who process the most information or spend the most time deliberating, but those who have perfected the art of “thin-slicing” – filtering the very few factors that matter from an overwhelming number of variables (Gladwell, 2005.). The most important properties of intuition are (Khatri & Alvin NG, 1997): • Intuition is subconscious • Intuition is complex • Intuition is quick • Intuition is not emotion • Intuition is not biased • Intuition is part of all decisions. Various management studies have found that executives routinely rely on their intuition to solve complex problems when they can’t be solve with quantitative and rational methods. Alden M. Hayashi has interviewed many top executives and they claimed that they routinely make big decisions without relying on any logical analysis. Hayashi has also presented the research of leading scientists that suggest that our emotions and feelings might not only be important in our intuitive ability to make good decisions but may actually be essential (Harvard Business Review of Decision Making, 2001). Many other authors have also presented arguments that intuition isn’t paranormal and irrational and that evolve from experience and learning (Simon, 1987.; Agor 1990.; Ray & Myers, 1990.; Harung, 1993.; Parikh, 1994.; Hayashi 2001., Khatri). One of the main reasons for intuitive decision making of the management is an existing turbulent environment. Turbulent environment forces management to take decisions rapidly. They don’t have time for analyzing every one of the alternatives and for using PrOACT approach (Hammond, Keeney & Raiffa, 1999.) to make quality decisions even though is successfully tested for more than 30 years. The PrOACT acronym is a reminder that the best approach to decision situations is a proactive approach and the essence of this approach is to divide and conquer (Hammond, Keeney & Raiffa, 1999.). The eight elements of PrOACT approach are: Problem, Objectives, Alternatives, Consequences, Tradeoffs. (Hammond, Keeney & Raiffa, 1999.) When the situation keeps changing, when the information are insufficient for effective decision making, when the time pressure is high and when the aims are not clearly defined, then the rational decision making and PrOACT approach can’t help. In those situations the decision makers must depend on their intuition. The conditions favoring intuitive approach are: time pressure, undefined goals, dynamic conditions and experienced participants. The opposite are the conditions favoring analytical approach: conflict resolution, optimization, justification and computational complexity (Klein, 2004.). 3. Effective decision making = intuition + analysis Effective decision making includes analysis and intuition, combination of the rational and intuitive decision making. The synthesis between intuition and analysis that seems most effective is when we put intuition in the driver’s seat so that it directs our analysis of our circumstances (Klein, 2004.) The quality decision making is based on a combination of relevant information and intuition. Intuition and models need to be combined in a way that takes advantage of their complementarities. Most decision making activity can be viewed as consisting of three interrelated stages: (1) identify the relevant attributes (2) value the level of each attribute (3) integrate the individual attributes into an overall evaluation. Researches on the psychology of decision making have shown that intuitive approach is very good at the first two stages but when it comes to the third stage, the models are superior and needed approach (Hoch & Kunreuther, 2001). Strategies to coordinate analysis with intuition are (Klein, 2004.): • Start with intuition, not with analysis • Accept the zone of indifference • Map the strengths and weaknesses of options without attaching number • Use mental simulation to evaluate the options 18 • • • Simplify the comparisons Bring in the intuition of an outsider to check on your analyses Don’t try to replace intuitions with procedures 4. Research Prior studies have examining the trends in decision making. These studies have assumed that systematic analysis yields superior choices than those coming from the intuitive processes. The purpose of this study is to investigate that intuition is playing increasing role in decision making process, not just by higher levels of management but also in operational levels. The study is based on a sample of more than 50 small and medium sized companies and their representatives on different management levels. The results of the study are positively related to the increase in intuitive decision making process also on lower levels of management, in case of strategic and operative/tactical decisions. The results are that intuitive and rational decision making are equally important for effective decision making in all levels of management. The study provides a deeper understanding of the intuitive and rational decision making process and that for the efficient decision making is important a combination of intuitive synthesis and rational analysis. The study was conducted on managers of different management levels (we define them as low, medium and top level managers) who are also students at postgraduate Management of business systems study at Faculty of organizations and informatics in Varaždin. The research was conducted using paper and e-mail questionnaires. The structure of questionnaires was identical, and consisted of two main parts. The first part of questionnaire was used for gathering the participant's personal data (like age, work place, years of experience, management level), and the second part was used for data survey it self. We were asking the participants to give us answers on five segments of decision making process: • The type of decision they usually make (strategic or routine), • The type of decision making process used for strategic decision making process (e.g. intuitive, judgments based, rational), • The type of decision making process used for routine decision making process (e.g. intuitive, judgments based, rational), • The amount of information they required for decision making purposes (minimalists, maximalists), and • The elements they put accent on in decision making process (e.g. elements of PrOACT approach – problem, goals, alternatives, consequences, compromise). In the next two figures we are describing part of gathered results. Number of respondents 25 20 15 10 5 0 rn at iv es s s em s go al ce ue n m is e co ns eq c) a co m pr o Low level management Middle level management Top level management 20 14 11 8 4 7 3 6 8 14 10 3 5 6 3 ob l pr b) a) lte Elements Figure 1. Elements of decision making process by different levels of management The analysis of gathered results is showing significant differences in importance of decision making process elements of PrOACT approach by different levels of management. If we observe the management levels as low, middle and top management, then it is clearly visible that in all three levels the decision making process is mostly oriented on goals achievement. The problem solving and 19 d) e) consequences orientation are the next elements according to their importance. It is interesting that that all three management levels are evaluated compromises as the less significant element of decision making process, what means that they are rarely trying to achieve a compromise solution in their decision making processes. Combining those results (Figure 1) with intuitive decision making process, we may conclude 5,00 4,50 4,00 3,50 3,00 Average score that decision makers do not analyse and do not give a lot of attention in their decision making processes on certain PrOACT approach elements. This fact leans them more in the intuitive and(or) judgements based decision making processes domain, what certainly differs them form the rational decision making processes. 4,43 4,05 4,22 3,36 3,81 3,67 2,71 3,00 3,11 2,50 2,00 1,50 1,00 0,50 0,00 intuitive judgement Types of decisions Low level management Middle level management Top level management rationale Figure 2. Types of decision by different levels of management As already stated in the introduction section of this article this research has shown the increase importance of intuitive and judgement based decision making processes. Observed by different management levels it is clearly that the majority of decision making processes are based on judgement. The next are decisions that are based on rational analysis and conclusion. The research has shown that the intuitive decisions are represented in a lower manner. This fact is not in interference with our assumption from the introduction of this article where we stated that there is an "increase in intuitive decision making process in case of strategic and operative/tactical decisions", because a combination of intuitive and judgement based decision making processes (according to some authors the judgement based decision making is a form of intuitive decision making process) is more significant and more often then just rational based decisions. Even if we separate results for intuitive decision making process from the results for rational decision making process, the difference between rational and intuitive is very small. The results are showing that intuitive decision making processes have a relatively high average score, meaning that this type of decision making process is commonly used by low and medium management. The key to effective decision making is an assessment of the decision makers. Leaders must know when they have to rely on their own judgment and intuition in making tough decisions. Intuitive decision making can also play the important role in an understanding of the situation by drawing upon previously learned information and earned experience associated with that situation to arrive at a decision. The conclusion is that a combination of intuitive and rational decision making is better than using either intuitive decision making and rational decision making alone. The principle of using intuition and analysis as complements, to balance one another strengths and weaknesses, will continue to be a powerful management decision making style for using intuition and analysis to make quality decision. REFERENCES 1. 2. 3. Agor, W.H. (1990.), Intuition in Organizations: Leading nad Managing Productively, Sage Publications, Newbury Park, California Gladwell, Malcolm (2005.), Blink, The Power of Thinking Without Thinking, Little, Brown and Company, USA Hammond, John, Keeney, Ralph & Raiffa, Howard (1999.), Smart Choices, A Practical Guide to Making Better Decisions, USA 5. Conclusion 20 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Harung, H.S. (1993.), More effective decisions through synergy of objectives and subjectives approaches, Management Decisions Hoch, Stephen & Kunreuther, Howard (2001.), Warton on Making Decisions, John Wiley & Sons Khatri, Naresh & Alving NG (1997.), Role of intuition in strategic decision making, http://www.ntu.edu.sg/nbs/sabre/working_papers/0 1-97.pdf, <07.04.2006.> Klein, Gary (2004.), The Power of Intuition, Random House, USA Mann, Ronald L. (1998.), Developing and Using Intuition, http://72.14.203.104/search?q=cache:1BBpaRlLY LEJ:www.itstime.com/jul98.htm+a+%22sixth+sen se,%22+%22gut+feel%22+or+an+%22intuitive%2 2+feeling+about+their+business&hl=hr&gl=hr&ct =clnk&cd=1, <07.04.2006.> Parikh, J. (1994.), Intuition: the new frontier of management, Blackwell Business, Oxford, US Ray, M & Myers, R. (1990.), Practical Intuition, Sage Publications, Newbury Park, California Sikavica , Pere, Skoko, Hrvoje, Tipurić, Darko & Dalić, Martina (1994.), Poslovno odlučivanje, Informator Simon, H.A. (1987.), Making management decisions: The role of intuition and emotion, Academy of Management Executive Harvard Business Review of Decision Making (2001.), Harvard Business Scholl Press, US 21 22 EDUCATION QUALITY FOR QUALITY OF LIFE: BETWEEN THE SYSTEMIC AND THE SYSTEMATIC H.S. Bhola Professor Emeritus, Indiana University 3537 E. Nugget Canyon Place Tucson, Arizona, USA, 85718 520 232 9159 hs3bhola@comcast.net including embedded, overlapping, and interdependent processes and structures within a bounded system. Systems epistemology indeed includes in itself, three Efforts for improvement of Education Quality in triangulated modes of thinking: systems thinking, schools imply the larger objective of enhancement of dialectical thinking, and constructivist thinking. Quality of Life of communities. For the planning, (1) Systems are human constructions, some of implementation and evaluation of projects that can which after collective use over a long period of time, accommodate the dialectic between Education Quality acquire the status of laws of nature. The important and Quality of Life in the context of sustainable concept of “emergence” which is at the heart of development in this era of Globalization, a Systems systems theory is impossible to explain without use of Theory approach is essential to encompass the dialectical logic. Hence, the epistemic triangle formed structures and systems from the local to the global. In by systems thinking, dialectical thinking and the process of application of Systems Theory, constructivist thinking (Bhola 1996, 2002). “intermediate models” will have to be designed and (2) Direction of the move from perception and used, as for example: the Configurations-Linkagesunderstanding of reality is from the whole to the part, Environments-Resources (CLER) model for developing though the direction for intervention may be from the strategies for planned change; and the Contexts-Inputspart to the whole. Processes-Products (CIPP) model for the monitoring (3) Systems can be seen to have both structures and and evaluation of interventions and impact. substances as implied in such labels as environmental systems, social systems, library systems, professional Keywords: Systems Thinking, Education Quality, Quality of systems, innovation systems, entrepreneurial systems, Life, CLER Model, CIPP Model socio-technical systems, and intellectual systems, to Introduction name only a few. Taxonomies and categories including the categories of both structures and substances need to “Education Quality” and its associated objective be developed. “Quality of Life” today are parts of an overarching Theories are by nature general and often require an discourse of “Education for Sustainable Development”, intermediate process of modeling to be able to generate both at national and global levels. A discourse of such specific descriptive, prescriptive or evaluative prodigious dimensions that encompasses both the local statements about social reality in particular contexts. and the global; and which covers multiple structures Systems theory is no exception and would require within systems, located in turn within other systems, intermediate modeling for use in promoting education needs a theory that can fully accommodate this complex of quality to achieve improved quality of life. social reality without diminution or distortion. Only systems theory seems to qualify for the task. What is Education Quality? Abstract Systems Thinking: The Essentials Since its first enunciation some forty years ago (Bertalanffy 1968), systems theory has seen impressive, even explosive developments, and can rightfully claim to be a strong theoretical tradition that includes such diverse theoretical streams as cybernetics, soft systems, living systems, robotics, complexity, simplicity, big bang and spiritual realities (Midgley 2002). Only the bare essentials of systems theory can be listed here: Systems theory requires that human reality be construed as an ever emerging and evolving “whole”, Education is a concept as wide as the sky. Education can be formal, non-formal and informal. In turn, the hierarchical structure of formal education covers Early Childhood Education and Care at the lower level, and Higher Education at the upper levels. The content of education covers the vocational to the artistic, from sciences to social sciences, from medicine to laws of man and God. We should note that in our discussion of Education Quality, the focus is on “Basic Education” which today is defined as primary and secondary education. The Global Monitoring Report on Education for All (EFA) of 2005 presents “A Framework for Understanding Education Quality” that is both 23 comprehensive and systemic, and which includes: (1) Learner Characteristics - - aptitude, perseverance, school readiness, prior knowledge, barriers to learning; (2) Enabling Inputs - - teaching and learning (covering learning time, teaching methods, assessment, feedback, incentives, class size), teaching and learning materials, physical infrastructure and facilities, human resources (teachers, principals, inspectors, supervisors, administrators), and school governance; and (3) Outcomes - - literacy, numeracy and life skills, creative and emotional skills, values, and social benefits [UNESCO 2005, p.36]. The GMR 2005 also proposes four sets of context variables - - engaging in systems thinking with another name: Set,1: Economic and labour market conditions in the community, socio-cultural and religious factors, and aid strategies; Set,2: Educational knowledge and support infrastructure, public resources available for education, competitiveness of the teaching profession on the labour market, and national governance and management strategies; Set,3: Philosophical standpoint of teacher and learner, peer effects, parental support, time available for schooling and homework; and Set,4: National standards, public expectations, labour market demands, and globalization. (UNESCO 2005, p. 36). US$1.00 a day and another one billion living on less than US$2.00 a day (United Nations 1996). As indicated earlier, the structures and systems we need to change for improvement of Education Quality and Quality of Life require nothing less than dealing with the total world system for which nothing less than systems theory approaches will do. The two models, namely, the Configurations-Linkages-EnvironmentsResources (CLER) model and Contexts-InputsProcesses-Products (CIPP) model are both products of a process of building applied models, based on systems theory assumptions: A Systemic Model of Social Interventions: The CLER Model The Configurations-Linkages-Environments-Resources (CLER) Model, placed at the heart of the epistemic triangle, is a re-statement of systems theory assumptions oriented to practice (Bhola, 1988) , as follows: _____________________________________________ _ Planner Objective Adopter System X of Change X System _____________________________________________ _ The “Objective of Change” category must be analyzed to ask and answer the definitional questions, to establish the context and the clientele, explicate standpoints and values of planners and adopters, articulate the general (or strategic) means and ends calculus implied in the Objective, and to generally anticipate the indicators that might be used to establish levels of achievement to be able to claim success. The Planner System will be dialectically determined by the Objective of Change as analyzed, and will have to be described in terms of the social configurations (C) involved in planning for subsequent implementation, the linkages (L) and networks connecting the configurations, available resources (R), and the environment (E) that provides the overall context. The Adopter or the beneficiary system will also be similarly described. Four types of social configurations (agents and agencies) are identified in the CLER Model: Individuals (I), Groups (G), Institutions (IS), and Communities or Cultures (CL). All four, at the same time, could act as Planners or Adopters, generating sixteen configurational relationships: I-I, I-G, I-IS, I-CL; G-I, G-G, G-IS, G-CL; IS-I, IS-G, IS-IS, IS-CL; CL-I, CLG, CL-IS, CL-CL. Some or all of these configurations relationships should be used, as appropriate to develop configurational (socio-graphic) maps for both the Planner and the Adopter Systems. Linkages can be formal or volitional, and between and within configurations Environment (E) could be seen as the ultimate outside configuration to represent the context of a more tightly bound set of interrelated and interacting Framework of Quality of Life The Quality of Life discourse as we know it today has been a Western discourse, with middle class assumptions and aspirations. Contributors to the edited volume “In Pursuit of the Quality of Life”, discuss Quality of Life in terms of subjective well-being, responsibilities and quality of relationships in the family, quality of employment, opportunities for childrearing, quality of health provision, and quality of environment, among others needs (Offer 1996). Calvert-Henderson an American institution interested in futurism offers “a systems approach … to illustrate the dynamic state of our social, economic and environmental quality of life. The dimensions of life examined include education, employment, energy, environment, health, human rights, income, infrastructure, national security, public safety, recreation, and shelter” (Calvert-Henderson 2006). In the developing countries of the world today, Quality of Life discourse translates into a discourse of poverty eradication. Policies and strategies of poverty eradication have come to be seen as strategies of improvement in the Quality of Life. The First United Nations Decade for the Eradication of Poverty 19972006 declared that eradicating poverty is an ethical, social, political and economic imperative of humankind; and it called upon the member states to dedicate their political will and resources for improving the human condition of a billion living on less than 24 configurations. The Planner and the Adopter may not be constructing realities around them in congruence, or harmony with each other, and may not be responding to the same Environment. Resources are needed both by Planners to promote change, and by Adopters to adopt change. Six different types of resources are needed: Conceptual, of Influence, Material, relating to Personnel, Institutional and of Time (CIMPIT). Developing Strategies and Concrete Interventions Using CLER The CLER model is neither formulaic nor deterministic. Indeed, it is resonant rather than deductive. It simply implies that to increase the probability of a change event (or the achievement of an Objective) to materialize, the interactions between and among the Planner (P) and Adopter (A) and the Objective (O) must be analyzed, and optimized - - in synergy. This will involve looking at the analytical statements for P, O, and A in a state of “at-once-ness” and developing a sense of general strategies and concrete actions to be employed in the fulfillment of objectives (Bhola 1988, 1996, 2002). To apply the CLER Model to enhancing Education Quality for improving Quality of Life, the concept of Quality and the processes of actualizing it, will have to be elaborated and its implications for the structures and systems implicated in the process will have to be clarified at various levels and locations of the total system. It could be said that Education Quality (and associated Quality of Life systems) will have to be imagined as grids rather than as one flat and uniform space amenable to the same set of criteria and interventions. In other words, the concept of quality will have to be “contextualized” as well as “differentiated” within those contexts to be equitable rather than mechanically equal. be used in conducting evaluations as long as technical standards are maintained. While in its conceptualization and use, CIPP has been a systematic rather than a systemic model, it is easily amenable to use by those who wish to make systemic assumptions. Context, one of the categories of CIPP is central to systems theory. Processes, another category of the CIPP model could be expanded to include processes both causal and dialectical. Inputs need not be inert additive. Products could include a whole array of outputs and impacts, immediate and distant, anticipated and unanticipated. More than one scenarios and evaluative accounts could be deliberately developed to reflect different standpoints and angles, of different stakeholders, working singly or in participation with each other. INPUTS x CONTEXT(S) PROCESSES x PRODUCTS In today discussion of system thinking, positivist thinking is not excluded (Bhola 2002) but is considered as one particular construction of reality. Systems theory thus accepts the need to join meanings with numbers. In developing data sets and systems for continuous illumination of narratives, the CIPP model can play an important role. The four categories of the CIPP model can be analyzed to generate sets of indicators to relate to all of the four categories; and useful Monitoring and Evaluation systems can then be built for a whole array of policy initiatives, programs and projects (Bhola 1990, 2005). REFERENCES 1. Bertalanffy, Ludwig von (1968), General Systems Theory: Foundations, Development, Applications. New York: George Braziller. 2. Bhola, H.S. (1988), The CLER Model of Innovation Diffusion, Planned Change and Development: A Conceptual Update and Applications. Knowledge and Society: An International Journal of Knowledge Transfer. 1(4), 56-66 3. Bhola, H.S. (1990), Evaluating "Literacy for Development": Projects, Programs and Campaigns. Hamburg: UNESCO Institute of Education (UIE) / Bonn: German Foundation for International Development (DSE). [Also in Arabic, French, Persian, and Spanish]. 4. Bhola, H.S. (1996), Between limits of rationality and possibilities of praxis: Purposive action from the heart of an epistemic triangle. Entrepreneurship, Innovation and Change, 5, 33-47. 5. Bhola, H.S. (2002), A Discourse on Educational Leadership: Global Themes, Postmodern Perspectives. Studies in Philosophy and Education. 21 (2), 181-202. Bhola, H.S. (2005), "Approaches to 6. Monitoring and Evaluation in Literacy Programs", a paper commissioned by UNESCO Institute for The CIPP Model for Monitoring Evaluation of Change, Planned Implemented by CLER and and The CIPP Model came on the scene during the early years of model building for educational evaluation (Stufflebeam 1966). Reviewing his own model some forty years later, Stufflebeam described the CIPP model as “a comprehensive framework for guiding formative and summative evaluations of programs, projects, personnel, products, institutions, and systems (italics added) (In Mathison 2005). The CIPP Model in using the categories of Contexts, Inputs, Processes, and Outputs, resonates with some of the categories of systems theory. However, systems theory literature has not been referred to either in the elaboration or the utilization of the CIPP model; and the essential assumptions of systems theory are by means central to the CIPP model. Indeed, its orientation is claimed to be objectivist, independent from personal or human feelings. Multiple methods can 25 Education for the Editorial Team working Education for All -EFA Global Monitoring Report 2006: Literacy for Life. Paris: UNESCO. Available on UNESCO/GMR Web-site: www.efareport.unesco.org]. 7. Calvert-Henderson. (2006), Quality of Life Indicators, Accessed on www.Google.com, 8 January 2006. 8. Mathison, Sandra. (ed.). (2005), Encyclopedia of Evaluation. Thousand Oaks, CA: Sage Publications. (Sponsored by the American Evaluation Association). 9. Midgley, Gerald. (ed.). (2002), Systems Thinking (Four Volume Set, 1664 pages). London: Sage Publications. 10. Offer, Ayner, ed. (1996), In Pursuit of the Quality of Life. Oxford, U.K.: Oxford University press. 11. Stufflebeam, Dan. (1966), A depth study of the evaluation requirement. Theory Into Practice, 5(3), 121-133. 12. UNESCO. (2005), Global Monitoring Report 2005: Education for All- The Quality Imperative. Paris: UNESCO. 13. http://portal.unesco.org/education/en/ev.phpURL_ID=35939&URL_DO=DO_TOPIC&URL_SECT ION=201.html 14. United Nations. (1996), Observance of the International Year for the Eradication of Poverty and proclamation of the first United Nations Decade for the Eradication of Poverty. UN General Assembly A/RES/50/107, 26 January 1996 26 INNOVATING APPROACHES AND ENTREPRENEURSHIP IN A TOURIST PRODUCT QUALITY DEVELOPMENT: THE CASE OF OLD TOWN CENTRE IN MARIBOR Štefan Bojnec and Mihael Renko University of Primorska, Turistica – College of Tourism Portorož, Senčna pot 10, 6320 Portorož, Slovenia Fax: +386 5 6177020, e-mail: stefan.bojnec@turistica.si Abstract This paper investigates innovating approaches in creation of new tourist products as part of a broader tourist supply in a tourist destination. The main focus is on cultural and urban tourism, integrated quality management, competitive and sustainable development of the old town centre of Maribor as a part of entrepreneurial spirits in a tourist product quality development and maintaining natural and cultural heritage. The analysis of tourist supply and tourist demand is conducted to address the synergy between economic, cultural, and social factors in the investigated tourist destination. The in-depth surveys based on a written questionnaire with randomly selected domestic and foreign visitors of the old town centre of Maribor are conducted. We investigate strengths, weaknesses, opportunities, and treats in tourist supply and tourist demand in the destination. Using ordinal Likart’s scale, the surveys provide unique evidence on visitors’ evaluations, satisfactions, opinions, and suggestions on tourist supply and its possible quality improvements to induce tourist demands and to generate greater multiplicative effects. We analyze motives for visits, different tourist offers, and demands by visitors for differentiated tourist supply. We found that among constraints are not only less differentiated offers of rather average quality of products in the tourist sector, but also some impediments in the general development such as lack of parking places and lacks of information. Among opportunities are upgrading and improving of the existing tourist products, more differentiated offers and new cultural products for niche tourist markets, opening of the Maribor’s airport and greater cooperation in the tourist destination in association with more efficient tourist marketing and promotion. Keywords: innovation, entrepreneurship, product development, quality management, cultural tourism, urban tourism. tourist products for segmented tourist markets. The creation of new products induces opportunities to deepened market opportunities for the existing customers and widened market opportunities for new potential tourists. During the last fifteen years, the manufacturing and industrial activities in Maribor have been shrinking. Similar as in some other declining industrial areas in Europe one development opportunities are urban and cultural tourism. The Maribor’s tourist destination is endowed with different natural, cultural, historical, and built attractions as potential for greater innovative approaches and new tourist product developments. Well developed infrastructure, but with an unexploited potential of the airport, is an additional opportunity for tourism development. Except of some events during the year, there are opportunities for greater opportunities for urban and cultural tourism in synergy with destination of Maribor-Pohorje and development of new tourist products in the old town of Maribor, where are cultural and historical attractions to be promoted as tourist offer. The paper analyses tourist supply and tourist demand in the old town of Maribor, opportunities for innovation and development of new tourist products as a part of the tourist supply in the Maribor-Pohorje tourist destination. We conducted surveys and interviews with randomly selected local visitors and tourists in the old town centre of Maribor. 2 Urban and Cultural Tourism The starting point of our analysis is the question of quality in urban and cultural tourism development (European Commission 2000), particularly in difficult areas in the industrial towns (Buckley and Witt, 1985; Hope and Klemm, 2001). We want to explore some similarities and good practices to be used in development of tourist products in urban environment focusing on events and cultural tourist products and their marketing (Getz, 1997). In highly competitive tourist markets, the reaffirmation of urban and cultural tourism is a tendency during the last twenty years when the structure of economies in the most developed countries has been changing from industrial and manufacturing activities towards service activities. The old part of towns is reconsidered for emerging cultural, leisure and hospitality services. Among factors for 1 Introduction Different natural, cultural, historical and similar attractions have been the basis of the traditional development of tourist destination. These factors are still important in tourist destination development, but are in a greater degree combined by entrepreneurial and innovative approaches in developing of differentiated 27 urban tourism development are the needs for promotion of renewal and revival of old town centers to be attractive as residential and cultural places with different heritage for development as well as providing opportunities for shopping and different events for local populations and other visitors (European Commission, 2000). Kaspar (1995) argued that motivation to visit the centers of urban towns is often expressed among young and visitors older than 50 years, visitors with higher incomes, higher educated, single and those who want more actively spent free time in towns or cities. The visit of centre of towns is often main motivation for travel as towns or cities are often the starting point of visit of a certain country or region. Urban tourism can offer different tourist activities for holidays, businesses and congresses. Page (1995) argued that tourists are only one market niche. Residents and other domestic population are also demanding for activities and services, which can be offered by the urban centers. Different visitors have different motivation as a reason for differentiation of services and for development of diversified economic activities towards different market niches. Among different functional tourist areas in the centers of towns might be related to history, culture, leisure, restaurant and night life, and shopping areas. They can form an integrated tourist area offering supply and tourist services for residents, domestic visitors, business and other tourists. Tourism development can generate new jobs and incomes, but can also improve availability and quality of different events and tourist products. Tourism development can lead to recovery of cultural and economic development. Cultural and business tourism can be a factor that brings new town’s image that is integrated in international networks of conferences, fairs and business meetings. Participation of local people is crucial in tourism development as a part of overall economic development where tourism can promote interests of local people, contribute to employment and economic growth maintaining natural and cultural heritage as well as can increase identity of local products and local services (Dale and Duerksen, 2001). known by free time activities, events and festivals. It is less relevant for exclusively residential parts. Exchanges of knowledge and experiences, recommendations and exchanges of valuable information about urban tourist destination are important in development of quality and sustainable development of tourism that can be supported from the EU structural funds for tourist projects that contribute to higher quality of tourist services and sustainable development. For IQM are relevant both internal and external quality factors. The internal quality is observed through events and visitors’ feelings from the first information up to the end of the visit and can be measured by the quality of private-public services for information, hospitality, clean environment, safety, transport and infrastructure, and similar. These are factors for short-term growth. On the other hand, external quality is a factor of long-term sustainable local tourism development with rational use of renewable sources such as land, water, natural attraction, cultural and other heritage. The quality of supply is crucial factor to satisfy tourist expectations and their return, image, and for competitiveness. It is important to create network of suppliers and agencies for selling of services and products toward expectations and needs of tourists and different group of visitors. The development of quality in urban tourist destinations can be based on tradition, cultural and historical heritage, innovative approaches strengthening quality and comparative advantages in comparison to similar tourist destinations. 4 Tourism in Maribor Since the recession in 1991 the tourism economy in Maribor has recovered and represents between 4 and 5 percent of gross domestic product and a bit more in employment. The declines of both heavy and labor intensive industries have caused high unemployment. There is increasing awareness that tourism development can promote local development. Hope and Witt (1985) argued that even in such difficult areas of disappearing industries tourism can create new image of the town, including on the basis of promotion of collapsed industries as tourist attraction. In the Maribor’s tourist destination there are hotels of the highest quality categories, several private pensions and apartments, health and wellness programs, gambling, ski resorts, sport and recreation facilities, international events, wine and culinary offers, museums, galleries, cultural events, natural and similar attractions. However, the destination lacks international promotion and more innovative tourist products and programs within integrated tourist supply and tourist destination development. Some activities are occurring in networking of tourist suppliers, events development, marketing communication activities, development of information and reservation system. 3 Integrated Quality Management (IQM) Qualitative based tourism development contributes to sustainable development of urban centers, to greater competitiveness between enterprises, better social needs of population, maintenance of natural and cultural heritage (European Commission, 2000). The global approach in tourist destination development and principles of sustainable development are gaining in importance. This is promoted as the integrated quality management (IQM) of urban tourist destinations (European Commission, 2000). Specific supplies give specific characteristics such as cultural centers, business centers, fairs and conference towns, towns 28 The old town centre of Maribor is largely out of tourist offers. There are few reasons for its deteriorating role. On one side there is unclear ownership of several buildings. On the other side, there is no clear vision and strategy to include these urban and cultural parts of the town to the business and competitive markets. The shopping centers are emerging in sub urban areas, but greater potential are in competitive urban tourism development. Maribor is also not a member of Association of historical towns in Slovenia that aims to promote development of urban centers, whereas Maribor set up own association to promote development of the old town centre to increase number of visitors and for international promotion. The aim is to bring together economic subjects in the centre of the town to conduct joint promotion activities such as town card and joint events, resolving environment, parking and similar activities. In the activities participates around 300 members from the centre of the town, particularly restaurants and shops. Among envisaged activities are renewal of the old centre of the town, qualitative marketing and development of brand name contributing to recovery of the old town as resident, cultural, event and tourist town for segmented tourists and specific target groups with specialization on high quality tourist products. The tourist destination of Maribor offers tourist accommodations for holidays, weekend tourism, transit tourism, business and congress tourism, and similar. The IQM requires programming of development, development of infrastructure, education and training, tourism development priorities and development of tourist programs, regional networking and cooperation, marketing communication, internationalization and monitoring of development. It is envisaged to increase the importance of tourism in the destination Maribor-Pohorje in terms of investments, tourist beds, new programs, education, marketing and project development, capacity utilization, number of tourists and overnight stays. The quality improvements at reasonable price is targeted towards different niche markets of different tourist supplies which are based on combination of natural attractions, heritage, tourist accommodation, pubs and restaurants, wineries and wine routes, wellness, congresses, events, culture, festivals, sports and recreation, gambling, shopping, transport, sight seeing and similar. During the last years there is a slight recovery in tourist arrivals and overnight stays. The latter is increasing faster than the former indicating an increase in the average duration of tourists’ stays. However, the gross occupancy of tourist beds is still very low, which is less than 30 percent (Table 1). Table 1: Gross occupancy of tourist beds in Maribor, 1996–2002 1996 1997 1998 1999 Number of beds 754 760 775 1,013 Overnight stays 58,189 56,252 55,738 75,720 Gross bed occupancy rate (%) 21.2 20.8 19.7 20.5 Source: Statistical Office of the Republic of Slovenia (various publications). Among advantages for development of tourism in Maribor are transit and geographical location, existing infrastructure, cultural, music and sport events, history, diversified landscape, food and wine tourism, sport and congress tourism. Among weaknesses, there are lack of efficient networking and coordination in development of tourist supply, weak promotion activities of attractions and events, underdeveloped tourist infrastructure and superstructure, unclear role of local population on an importance of tourism in development, low occupancy of existing tourist accommodation capacities, lack of events on streets and market places, lack of parking places, unclear ownership structures in the centre of the old town, less favorable environment for entrepreneurship and craft activities. Among opportunities are organizations of qualitative events in the of centre of the town during the whole year, greater participation of local population in sustainable tourism development, on-line reservation system, wine tourism, promotion, EU structural and cohesion funds, operation of the Maribor airport, product and tourist destination development in 2000 1,001 85,665 23.4 2001 806 82,808 28.1 2002 949 96,011 27.8 cooperation of more municipalities to promote and increase the image of destination. Among threats are potential conflicts and fragmented interests in development of tourist products and tourist supply towards segmented demands in high competitive in tourist markets. 4 Survey Analyses We have collected in-depth evidence on the current stage of tourism development and opportunities to improve tourist supply in the old town centre of Maribor using the written questionnaire, which includes 16 questions. We apply open, closed and combined questions. The Likart’s scale is used for ranking the answers. We analyze characteristics of respondents, their responses on general habits of visitors of the old town centre of Maribor, their opinions on current stage of tourist supply and proposals to improve and diversified different events and tourist product supplies. The surveys employing the written questionnaire were conducted with 110 29 randomly selected visitors of the old town centre of Maribor in August 2005. Our aim is to present the main findings on visitor’s satisfaction with the current offers of tourist services to obtain unique in-depth evidence and recommendations to improve quality of supply towards the needs of visitors and tourists. Table 2: Frequency in visit of the old town centre of Maribor Once 2 to 5 per week times per week Visit cultural 18.2 0.0 events outside Visit galleries 2.8 0.0 and museums Visit galleries 4.5 0.0 Visit restaurants 31.8 22.7 Visit sport events 0.0 0.0 Education 1.1 4.8 Employment 15.4 26.5 Shopping 15.3 7.5 Nights' clubs 29.5 2.5 Visit of free 7.7 1.5 Market Visit of ecological 18.1 0.0 market place Visit of state 7.1 0.0 Institutions Source: Survey results Among the 110 conducted interviews, the gender structure is 46 percent of male and 54 percent female participants. According to age, 34 percent of them are between 16 and 25 years, 27 percent between 26 and 35 years, 11 percent between 36 and 45 years, 16 percent between 46 and 55 years, and 13 percent above 56 years (see in more detail in Renko 2006). According to economic status, 37 percent are students, 36 percent are employed, 8 percent unemployed and 19 percent retired. According to the attained level of education, 5 percent are with primary education, 56 percent with secondary education, 7 percent with higher education, and 33 percent with university degree or more. According to permanent place of residence, 36 percent are from the old town centre of Maribor, 44 percent from the municipalities around the old town centre of Maribor, and 20 percent one-day visitors from the rest of Slovenia and from abroad. Among the main motivations to visit the old town centre of Maribor there are visits of restaurants (Table Table 3: Quality of tourist services Once per month 25.5 16.4 32.7 14.5 5.5 2.5 1.5 32.7 16.7 21.3 27.5 45.1 Every day 0.0 0.0 0.0 5.8 0.0 0.0 0.0 2.5 1.2 1.9 0.0 0.0 Rare 56.4 80.8 62.7 26.2 94.6 91.7 56.7 57.9 50.2 67.8 54.5 47.8 Total (%) 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 2). Among important motivations there are also visit of state institutions, employment, night’s club and shopping. These frequencies in visits of the old town centre of Maribor are in the line with our expectations as in the old town centre of Maribor are situated some restaurants, state institutions and small shops. The visits of the old town centre of Maribor are also related to visit of the ecological market place and cultural events outside during the summer time, but less due to visits of galleries and museums, visit of sport events and education. The quality of tourist services is investigated employing three questions (Table 3). The responses indicate the average or even below average satisfaction with quality of cultural-festival events, but the responses vary considerable. A bit better is evaluated quality of offers by different kind of restaurants, but at the same time suggesting that further quality improvements are still possible as well as expected. Arithmetic mean value Quality of restaurants 6.28 Quality of cultural-festival events outside 4.60 Quality of cultural-festival events in clubs 4.71 Number of observations = 110. Possible ranking between 0 (very bad) and 10 (excellent). Source: Survey results Standard deviation 1.89 2.01 1.62 30 In the separate question, the quality of the Christmas-New Year event and the associated December’s event activities in the old town centre of Maribor were evaluated rather critically and negatively. This suggests the need for innovative changes and development of higher quality product supply and better organization of events. On average, but positively was evaluated the decoration. However, much more positively the respondents evaluated the Lent festival, which is the greatest summer festival in Slovenia and significantly contributes to different festival, cultural, dance, sport and other tourist activities during the summer period in Maribor. Among suggestions there are to develop similar event management during the whole year, but with seasonal adjustments of subjects, events and holidays in the town. This particularly holds for more permanent presentation of different crafts that originate from the region, which is often only at the end of the week and during the summer. It has been identified that more innovative management approaches and development of new products can reduce the seasonal effect and contribute to deepening and widening of events and offers during the whole year where there are potential demands by different segmented local customers and other visitors. It is somehow surprisingly that there is a high proportion of the respondents who do not know for some traditional festivals and similar events in the old town centre of Maribor such as for the summer events, wine event and particularly for the festival of the town events “Castel masters” (Table 4). This suggests lack of adequate promotion and information activities. There are also some shifts in demands for events for example from the New Year event outside towards more expensive events on the ski resorts at Pohorje. This is consistent with the real income growth which should be considered for innovative and new tourist product development activities. Among the most popular to visit are Festival Lent, Martin’s event and Decembers’ events. Table 4: Visit of cultural-festival events in the old town centre of Maribor (%) The New Year event outside Carnival Festival of town Events Castel masters Festival Lent Summer events Wine event Martin’s event Saint Nicole Decembers’ events * Number of observations = 110. Source: Survey results. Yes 38.0 49.5 14.0 88.4 23.3 18.6 76.7 18.6 69.8 No 62.0 49.4 23.3 11.6 41.9 41.9 23.3 65.1 23.3 Do not know 0.0 1.1 62.8 0.0 34.9 39.5 0.0 16.3 8.0 Total* 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 We have also asked whether the local residents in the old town centre of Maribor are those who are entitled to request shorter operation times of restaurants and night clubs due to the noise during the night. The responses are divided, but greater majority (55 percent) responded that they do not have such a right to shorten the operation time. However, for successful tourism development it is necessary to built consensus with the local population regarding the operation time and possible exceptions. The separate questions confirmed that the local population is interested in for developments of new tourist products. They argued that cultural and similar events in the old town centre of Maribor are important for both tourists and for local population, and particularly, that local residents should be invited to express opinions and ideas as they represent also potential visitors of different events. The respondents in the great majority (more than three-fourth) revealed that in the old town should be offered different products and services than those that are supplied in the big shopping centers around Maribor. Among specific and tailored made products can be craft products (36 percent), specialized shops (25 percent), ecologically produced products (21 percent), and working-selling art and painting shops (18 percent). Therefore, innovations and product development in the old town centre of Maribor should be in direction towards traditional and unique products and services, which are not possible to be found in the big shopping centers. Among identified significant constraint to visit the old town centre of Maribor is the lack of free parking places. Around four-fifth of the responses confirmed this. Both the lack of parking places and the necessity to pay for parking represent considerable constrain visà-vis available and free parking places for the big shopping centers around the town. On the demand side, around two-third of visitors expressed the needs for longer opening time of shops and restaurants in the old town centre of Maribor. This 31 suggests mixed interests between local residents’ interests due to noise and customers’ demands for greater opportunities. As most demanding and missing among visitors there are the following tourist products and services: traditional Slovenian culinary and food (27 percent), night club or discos (18 percent), local program with music and dance program karaoke (15 percent), restaurants of higher quality (13 percent), shops with souvenirs (10 percent), technical shop (6 percent), tourist information centre (6 percent) and tea shops (5 percent). As activities and events that can encourage recovery in tourist developments are underlined cultural events outside (26 percent), better promotion and information (23 percent), recovery of old crafts (15 percent), accommodation capacities for young (14 percent), more shops (8 percent), longer opening time (6 percent), free parking places (5 percent) and cinema outside (3 percent). The cooperative approaches in tourist destination development of Maribor and Pohorje are considered as an important development priority in tourist products development. The ways to integrate tourist supply of the old town centre of Maribor with the tourist supply of Maribor-Pohorje into the integrated destination are the following: better promotion and information of the existing activities and events (30 percent), guided bus tours (26 percent), presentation of history and traditional activities in the region (16 percent), free bus transport (15 percent), sightseeing with horses (10 percent) and bonus cards with discounts for services (3 percent). More than four-fifth of responded believe that the old town centre of Maribor could be of greater interest for visits of international tourists. It requires also development of tourist activities and events. This is consistent with the facts that the main constraints that the old town centre of Maribor has been less attractive for foreign visitors are lack of knowledge and promotion to increase motivation for visit (35 percent), badly developed tourist supply (25 percent), image of Maribor as non tourist town (18 percent), lack of interest between local population for tourism development (15 percent) and fragmented and dispersed tourist supply (7 percent). The greater role of the Maribor airport is seen as a factor that can induce greater demands for tourist destination of MariborPohorje, including for the old town centre of Maribor. Less than 11 percent of respondents do not confirm this, but the great majority of the respondents underlined the importance of the Maribor airport for future development of tourism in the region contributing to greater accessibility and promotion of the tourist destination. town centre of Maribor. Among such activities are cultural offers, cultural heritage, and renewed cultural image as a factor of tourist destination development. Moreover, there are opportunities for business and congress tourism. These developments require engagement of local population and different tourist product suppliers such as restaurants, tourist service activities and shops. The cultural tourism is widely recognized by several European towns. So Maribor can also learn from some positive development and investment experiences, particularly in different EU countries, to develop unique cultural and festival programs, historic, ethnographic, art, religious, education, archeological, architectural, craft and similar events to create promotion and marketing of new image of the destination. The support and participation of local population is important to reduce potential conflict of interests in innovative proposals design, management and implementation on supply side and as one of potential customers on demand side. The focus should be on innovative approaches toward unique quality, tradition, local identity, and hospitality in cultural and event tourism promotion, management and marketing in an integrated and sustainable development (see more detail Renko, 2006). The niche markets for segmented urban and cultural tourism offers are domestic visitors, transit tourists and those coming on short visits as well as tourists coming to the MariborPohorje tourist destination during the winter and summer seasons. The greater increase in the number of tourist and overnight stays within the destination are expected with greater networking of different tourist suppliers, tourist, travel and promotional organizations. One example is “Rast” association to include the airport of Maribor in tourist destination development, which can incorporate also new cultural tourist products, wide promotion of highly quality cultural, festivals, sports, and other events, and their more efficient marketing and promotion. REFERENCES 1. Buckley, P.J., Witt, S.F. (1985), “Tourism in Difficult Areas: Case Studies of Bradford, Bristol, Glasgow & Hamm”. Tourism Management, Vol. 6, No. 3, 205-214. Dale, C. G., Duerksen, C. (1999), Creating City Centers. www.planning.org/thecommissioner/ summer99-1.htm. European Commission. (2000), Towards Quality Urban Tourism. Integrated Quality Management of Urban Tourism. Office for Official Publications of the European Communities, Brussels. Getz, D. (1997), Event Management & Event Tourism. Cognizant Comunication Cor, New York. Hope, C. A., Klemm, M. S. (2001), “Tourism in Difficult Areas Revisited: The Case of Bradford”. Tourism Management, Vol. 22, 629-635. 2. 3. 5 Conclusions The development of the old town centre of Maribor has been analyzed in a broader Maribor-Pohorje tourist destination. There are opportunities for innovative approaches in tourist product developments in the old 4. 5. 32 6. 7. 8. Kaspar, C. (1995), Der Tourismus seine Trends und die Rolle der Stadt in den Fremdenverkehrsstromungen. In J. Sirše (ed.). Turizem- osnova sodelovanja med mesti. Nacionalno turistično združenje, Ljubljana. Page, S. (1995), Urban Tourism. Routledge, New York. Renko, M. (2006). Tourist Product Development: The Case of Old Town Centre of Maribor. Diploma Thesis. University of Primorska – College of Tourism, Portorož. 33 34 INNOVATION GROWTH THROUGH SYSTEMATIC INNOVATION MANAGEMENT Mila Božič Institute BE-i, Slovenia E-mail: mila.bozic@be-i.org Abstract The main focus of an innovation program is to build further competencies in creative thinking, understanding and supporting the innovation process itself. Quality in innovation is how we deal with and how we manage complexity. We see both clear scientific vision and organizational culture as important enablers of innovation. A clear vision helps to focus on relevant issues and appropriate culture in support of, knowledge sharing, team work, learning and problem solving. Under global competitive pressure we are aware that the need for leadership and management of both innovation and people has never been greater. The first task of the innovation process is to transform the way we work as an organization and embrace a much more flexible, much more organic mode of operation that in many ways follows the principles of complexity science. With our systematic approach and implementation of an innovation program, we would like to achieve the utmost purpose: a supportive and spontaneous environment in which everyone’s full potential can be released. The key principles of our approach are: - Innovative companies are led by creative leaders due to the fact that our business model is founded on innovative management, - Innovative leaders implement the mental model: “We are all innovative”! - To support “high tech” we develop a “high touch” and creative thinking. Within that new holistic platform for innovation management (IM) we framed three interdependent levels of training to contribute to deployment of new vision, knowledge and experience, for researchers and project managers, top management and mentors of innovation. The content of those programs and results are presented, briefly. The innovation process is complex and at the same time it faces various paradoxes; due to this we need a far more reliable and responsible way to manage it and reach excellent business and scientific results for a better life and sustainable success. The innovation Imperative So why do companies continue to invest more in innovation? Judging from the BCG Report (1), many companies already have more ideas than they can effectively pursue. In addition, the investment profile is far from perfect: substantial sums of money are involved, the outcome is highly uncertain, and past performance is generally poor. What’s more, executives’ dissatisfaction with the return on investment in innovation isn’t a new story—a similar percentage of executives were unhappy with innovation’s ROI in last year’s survey, and a look across history shows the same picture. Even Thomas Edison had more failures than successes. To a certain extent, executives expect to lose money on innovation—but only some of the time, not in total. People like to say ten ideas are needed for every one success. And even with the poor performance many companies report, they are unwilling to stop or, in most cases, even reduce their commitment to it. Even small cuts in spending are often perceived by analysts, investors, and employees as a sign of weakness. The big reason for the almost unwavering commitment to innovation is of course growth. Fully 87 percent of the participants in our survey said that organic growth through innovation had become essential to success in their industry. That finding corresponds to the needs of the pharmaceutical industry, and equally applies to the healthcare sector (HC) (figure 1). No less than 54 percent of the participants said they “strongly” agreed with the statement: “Organic growth through innovation is essential for success in my industry”. What such responses tell us is that, in the long run, most technological companies feel they must find ways to generate growth on their own, rather than through acquisitions alone. Indeed, acquisitions obviously are not always an option, nor always a good one. In the computer industry, for instance, Hewlett-Packard has struggled since its acquisition of Compaq, yet Apple has grown well on its own thanks to the iPod and other successful new products. More recently, the success of the merger of Procter & Gamble and Gillette—two highly innovative companies with many potential synergies for new products—is by no means a sure thing. Keywords: innovation, competences, organic growth program, holistic, 35 Figure 1: Companies place a high priority on organic growth Internally, our strategic direction was clear: in current business we have to improve the efficiency and cost control, which is certain; on the other hand, the product of the innovation process is uncertain, as an ultimate prerequisite of efficacy and sustainability. The consequence has been reflected in holistic, ambidextrous organizational approach and structure of our innovation program. Tushman and O’Really proposed to successful leaders of innovation to create ambidextrous organizations well: it is organizations that can “get today’s work done more effectively and (also) anticipate tomorrow’s discontinuities”. These are two seemingly very different capabilities. Organizations that have them are capable of excelling in the present even as they create the future. They define their current products or technology position through incremental innovation while simultaneously developing new ones that will either displace current offerings or address new markets (2). Not many executives can operate successfully in these two very different worlds. Most are absorbed with the current business that the future business is treated as a stepchild. The best way to create an ambidextrous organization is to do the following: - Assess where you are in terms of innovation trends. Are your current products and technologies on rapid upward slope of S/curve, or are they in the mature phase of the curve? Do new technologies have the potential to undermine your business? Assess your company’s operations. Are they effective, fast and efficient? Are major cost improvements possible? Getting the right inputs is important for getting innovation preparedness. We look to our industry to understand where others are focusing their efforts. Sometimes this suggests where not to go; we study competitors to avoid copying them. The foundation of the innovation program1 We stopped asking the question “should we innovate?”, but asked rather “where should we start?” As the organizations we asked ourselves: - How can we make our company more innovative place to work? - How can we help people to think more creatively and have more ideas? - How can we help professionals to work on their ideas, suggestions and proposals? - How can we help people to develop and implement those ideas …? We have focused our approach first on structure and competences needed and not on the behavioral and culture changes that are mostly focused on, by majority of radical or breakthrough innovation programs. Our strategy outline is that we still persist on two levels of performance improvements, doing things 1 Designed for Lek, a middle-sized pharmaceutical company 36 better and doing different things. We wanted to nurture both levels on both personal and group creativity. Within every individual, creativity is a function of three components: expertise, creative-thinking skills, and motivation. Certainly, management influences these components for better or worse. So we put into our program for innovation management three different categories of skills and motivation tools to enable leaps to innovation breakthroughs at our business: - Innovative-leadership/management for top management, - Expert level skills, techniques for researchers and project managers - Mentors skills for company-wide mentors of innovation. We understand the importance of creating dream teams, full of different and contrasting skills. We wanted everyone to ask him/herself: What position do I "play" in? Am I a part of a "strike force" requiring creative genius? Do I need "defensive" skills to stop others impeding our performance? Or am I one of a central core of multi-tasking all-rounders, the "midfield" of my team? Have a think about which areas of your expertise are currently being shown the yellow card... Also we wanted all individuals to be aware of the paradoxical characteristics of creative groups: beginner’s mind-experience freedom –discipline play-professionalism improvisation –planning divergent-convergent thinking discontinuity-continuity FOUNDATION Management Strategy Opportunity scanning Marketing Operations Administration MANAGEMENT Managers are people who do things right. The paradoxical combination is confusing and disturbing to managers who have a need for order and linear activity. Accepting it is a first step toward success. We strived to achieve the blend of those contradictory characteristics that a group or team must have in order to maximize its creative potential (2). Gradually we wanted to overcome short term thinking and short-cut techniques, which never produce the long-term results we expect from the well established innovation process. It leads us to see that leadership is everybody’s business and that each person needs to take an inside-out approach. Primarily we wanted to benefit from the power of innovation focus, where conscious efforts to increase innovativeness will be governed by vision, discipline and passion of our leadership, which endures and changes the company direction on the way to sustainable success… With that new, more balanced leadership/management initiative we have implemented more empowerment and personal responsibility for key makers of innovation i.e., top management, responsible mostly for the business model, innovation climate and recognition system and for technical experts (researchers and project managers) as key drivers of scientific innovation, our main strategic purpose. Over the years it has become so evident in mature companies that most of them are vastly over-managed and desperately under-led. Due to this we emphasize the difference between those two practices and consequences in our education program accordingly (Fig. 2): INNOVATION Leadership Strategy for innovation Innovation opportunities Climate for innovation Core innovation process Measure & maintain LEADERSHIP Leaders are people who do the right things Leadership is about coping with change Leadership has about it a kinesthetic feel, a sense of movement Leaders are concerned with what things mean to people Leaders are the architects - WARREN BENNIS Management is about coping with complexity - JOHN KOTTER Managing is about ‘handling’ thinks, about maintaining order, about organization and control Managers are concerned about how things get done Managers are the builders - KOUZES AND POSNER - ABRAHAM ZALEZNIK - JOHN MARIOTTI Management is the design of work … it’s about controlling… Leadership focuses on the creation of a common vision - GEORGE WEATHERSBY Fig 2: Management vs. Leadership focus on innovation 37 Leadership creates an environment that makes people want to do, rather than have to do. For the ultimate success of the innovation process it was business imperative to create that environment, as well as an innovation centered climate. As Covey pointed out (3), only those people, who are allowed to tap into the needs and motivations of all parts of their naturephysical, mental, emotional, and spiritual, will find their voice and volunteer their highest contribution. For the body, the need and motivation is survival-economic prosperity; for the mind- growth and development, for the heart- love and relationships; and for spiritmeaning, integrity and contribution. The organization has the same four needs: 1. Survival - financial health (body) 2. Growth and development - economic growth, customer growth, innovation of new products and services, increasing professional and institutional competency (mind) 3. Relationships - strong synergy, strong external networks, and partnering, teamwork, trust caring, valuing differences (heart) 4. Meaning, integrity, contribution - serving and lifting all stakeholders: customers, suppliers, employees and their families, communities, society-making a difference in the world (spirit) Connecting those four needs of the individuals with the needs of organization is the key to unleashing the power of the workforce into innovation process. We involved some of those drivers in our holistic approach of the program setting. - Idea management system, 1 day workshop Continuous improvements, 1 day workshop Creative thinking, De Bono, 2 days workshop This development program was fulfilled partly in the first year after Board approval (2003). At the same time a new procedure for the rewording of innovations, ideas and use full improvements was introduced with a more supportive and flexible recognition scheme for different innovative contributions. The results of this prepared innovation program, increased the level of innovative proposals for 24% and 27% in following years (2004, 2005). Besides, we got gold recognition for the innovators of the Year at the national competition run by the Slovene Chamber of Commerce. Summing up In our new challenge of building an innovation program we explained what capabilities and competences we added to stimulate creativity and increase the pace of innovation. According the preestablished strategic direction it was our responsibility to: - Develop and nurture the creativity and innovation - Be active participants and in the process from idea generation to commercialization - Be open to new ideas and maintain scientific skepticism - Improve the existing processes - Put the right people in charge. For the successful innovation process we point out and demonstrate the faith in creativity, openness and people flexibility, and confidence in their capability to face current problems and new innovation challenges. New competences needed The preliminary work, reported at previous STIQE events (4), enabled us to prepare a more holistic innovation program, which involves top down and bottom up integration of innovation activities on personal and organizational dimensions covered by those three levels of development and education activities, as follows: A) Innovative leadership-management for top management included: - Sustainable growth and innovation potential in pharma industry, 1,5 day seminar - Creative thinking, de Bono, 2 days workshop - TIM, team innovation management, 2 days workshop References: 1. 2. 3. 4. 5. BCG Report 2005, www.bcg.com Managing Creativity and Innovation, HBS press, 2003 S. Covey: The 8th Habit, Free Press, 2004 M. Božič et al.: Innovation Leadership using Herrmann Model for Managing Group Creativity, Proceedings, STIQE 6, Maribor, June 27-29, 2002 I. Davis: How to escape the short-term trap, McKinsey Quarterly, 29. April 2005, Member Edition B) Expert level skills, techniques for researchers and project managers - Creative thinking, de Bono, 2 day workshop - TRIZ, techniques for technical problem solving, 5day seminar - TIM, team innovation management, 2 day workshop C) Mentor’s skills for company-wide mentors of innovation 38 CORPORATE ENVIRONMENTAL RESPONSIBILITY: WHERE WE ARE IN SLOVENIA1 Vesna Čančer, Vojko Potočan University of Maribor, Faculty of Economics and Business, Razlagova 14, SI-2000 Maribor, Slovenia Fax: ++386 2 251 0 461, e-mails: vesna.cancer@uni-mb.si, vojko.potocan@uni-mb.si Abstract To be competitive and hence innovative in contemporary global economy, most humans, economies, and businesses must innovate their understanding of economics in all areas and levels of human activity. This is especially important for enterprises, because they are faced with a number of new challenges, which require a thorough innovation of their work and its implementation. The paper discusses two theses: (1) To improve enterprises by implementation of sustainable development, enterprises tend to requisitely holistically meet legal, market, stakeholders’, and natural environment’s requirements in their internal and external social and business environments. (2) Improving of business is easier if influential enterprises’ members understand/implement “appropriate corporate environmental responsibility”. That is possible if enterprises innovate their working and behavior. The paper presents the results of a survey of work values and behaviors, in which managers and professionals from several business fields all over Slovenia expressed their views on the business activities that describe corporate environmental responsibility. The analysis results show moderate corporate environmental responsibility and neutral corporate ethical responsibility from the viewpoint of sustainable development. Keywords: Business, corporate environmental responsibility, corporate ethics, natural environment, sustainable development. 2004). What causes these differences? We will discuss about more holistic understanding and creation of enterprises on the basis of implementation of the idea of Sustainable Development (SD), the role and the importance of appropriate corporate environmental responsibility and their influences on enterprises. Members of sustainable enterprises (SE) direct and control enterprises. By doing this, they also provide for the structure through which the enterprises’ objectives are set, and means of attaining those objectives and monitoring performance (See: OECD, 2000; Čančer, 2002, 2004, 2005; Potocan, 2004). Still, functioning of contemporary enterprises depends a lot on the impact of different other participants (e.g. their external and internal members - persons that directly and/or indirectly participate in their business); it depends on purposes, ways and methods of their participation in enterprise and on its/their values (Potocan, 2004). Their desired business style can be supported (also) by the SD principles, making business requisitely holistic and acceptable, i.e. suitable by economic, social, environmental and ethical criteria (Potocan, 2002, 2004; Čančer, Mulej, 2006). Implementation of SD principles requires all enterprise members to share requisitely actively appropriate ethics. All influential members of enterprises have their influence by defining the enterprises’ way of working based on many political and professional interests. On the basis of different theoretical cognitions and our practical experiences we can (also) assume that “results of an enterprise” depend on its (appropriate and holistic) implementation (and/or realization) of the synergy of legal, market, stakeholders’, and natural environment’s requirements in its internal and external social and business environments. 1 The Selected Problem and Viewpoint of Dealing with It There are cases in the business practice demonstrating with a lot of echo that enterprises do not always meet expectations of their (e.g. social) environments (e.g. Enron, Royal Ahold, etc). On the other hand, modern enterprises also tend to requisitely holistically satisfy legal, market, stakeholders’, and environmental requirements in their internal and external environments (See: WCED, 1987; UN, 1992; Potocan, 2 Why is Sustainable Development so Important for Enterprises in Modern Society Times, including conditions of business operations, have changed a lot over the last few centuries, and especially over the last decades. The economic development processes made the humankind split into the welladvanced 20% and the increasingly lagging 80% (Dyck, Mulej, 1998). It is the approach to innovation which causes these differences – the innovation paradox: the ones needing innovation the most, like it the least, and support 39 entrepreneurial behavior the least, too (Rogers, 1995; Potocan, 2004). Globalization does not seem to overcome these differences, but to rather make them deeper. In addition, with a decision by its highest political body – the United Nations (UN) – humankind decided, in 1992, to accept the fact that a holistic rather than biased / one-sided care of humans for their economy and natural environment including themselves – called SD – had become a precondition of their own survival (See: OECD, 2000; Dees, Emerson, 2002; Potocan, 2002, 2004). Foresights, decisions and actions of all human activities (especially of enterprises) must include SD, i.e. a world-wide requirement for holism concerning economy, society, and nature, too, much more than ever before. Otherwise, profit (as a goal, defined onesidedly) kills profit (as the outcome), because oversights, neglecting nature around humans cause tremendous cost of eco-remediation and/or other renewal of preconditions of survival of humankind and other interdependent nature’s subsystems (See: WCED, 1988; OECD, 2000; Ecimovic, Mulej, Mayur, 2002; Potocan, Mulej, 2003). Conditions have changed rapidly and critically. Basic characteristics of the development of the market relations and environmental quality in the conditions (and/or environment) of the state / government supported buyers' market are: Basic relation/s between production and consumption: increasingly organized / legalized impact of customers requiring total quality of products & services & conditions of life; Impact of humans over nature as our environment: growing awareness of the terrible impact of onesided humankind’s impact over nature & its dramatic consequences for survival; Humankind’s interdependence with our natural environment: still as before, but world-wide official documents urge governments and businesses to be more holistic. Basic characteristics of the enterprises working in current conditions are: Market and social requirements: suitable price x quality x range x uniqueness x contribution to SD (as judged by customers); Enterprise’s ways to meet requirements: efficiency x technical & commercial quality x flexibility x innovativeness x SD; Type of enterprise: sustainable enterprise. Enterprises also require the creation of new understanding of the current reality (and the role and importance of all of us in this frame) and new (appropriate) way of thinking of all members of the modern society. Presented cognitions show why humankind needs sustainable working of enterprises in order to survive. How can firms (and other organizations) implement the idea of SD in their work and behavior? All of the economic conditions mentioned above result in requiring enterprises to take a new, more/requisitely holistic and future-anticipating vision aiming at their own long-term viability. This is also evidenced by the economic crisis of recent years, which is mainly caused by the lack of holism of enterprises’ decisions. Much more attention must be paid to a requisitely holistic definition of goals including long-term SD in order for the humankind to get out of permanent economic crises and to survive, too. All members of modern enterprises are, hence, facing a basic question: How to define the new development and future business of their enterprises. Based on the systemic approach, enterprises can be defined – from the viewpoint of running their business – as dynamic, relatively open, closely linked with their environment (See: Potocan, 2002, 2004). Enterprises exist and develop mainly by concerted operations of all areas and levels of their internal and external environment, of both the socio-economic and the natural parts of it. However, in both theory and practice there is no model of business, which would provide for a harmonized and target-oriented development. The SD concept offers a partial solution, trying to carry out common goals of humankind with a sustainable orientation of human activities at all levels of our common living and behavior (WCED, 1987; UN, 1992; OECD, 2000). On the basis of important theoretical cognitions (in the last twenty years) and our own experiences in business practice, we can define modern enterprise, most generally, as an enterprise that tries to work (and behave), as much as possible, to attain a synergetic whole of economic, ecological, social, and ethical objectives of its business. The basic directions (and objectives) of SEs’ working are depicted in Figure 1. DIRECTIONS Economic imperative Ecological imperative Social imperative Ethical imperative All dimensions OBJECTIVES Competitiveness Habitability Community Legitimacy Combined foci Figure 1: Basic directions (and main goals) of modern enterprises 3 What is Sustainable Development and How do We Understand It 40 4 Corporate Environmental Responsibility in Slovenia 4.1 Research Data and Data Analysis In a survey of work values and behaviors, in which 300 managers and professionals from several business fields all over Slovenia took part in 2004, we investigated the participants’ views on the business activities that describe corporate environmental responsibility (CER). On the basis of their expressed judgements about the acceptability of the CER’s activities we measured the importance of the observed activities that contribute to better environmental performance. They are presented in Table 1. Table 1: Business activities that describe corporate environmental responsibility. Symbol Description CER1 To prevent environmental degradation caused by the pollution and depletion of natural resources. CER2 To adopt formal programs to minimize the harmful impact of organizational activities on the environment. CER3 To minimize the environmental impact of all organizational activities. CER4 To devote resources to environmental protection even when economic profits are threatened. CER5 To voluntarily exceed government environmental regulations. CER6 To pay the full financial cost of using energy and natural resources. CER7 To assume total financial responsibility for environmental pollution caused by business activities. CER8 To ignore environmental issues when jobs are at stake. CER9 To only proceed with activities for which environmental risks can be fully evaluated and controlled. By using the respondents’ answers that indicate the degree to which they agreed or disagreed that the business should engage in the activity described (1 – strongly agree, 3 – moderately agree, 5 – neutral, 7 – moderately disagree, 9 – strongly disagree), we defined the numerical scale intensity levels of corporate environmental responsibility: 1 – strongly irresponsible, 3 – moderately irresponsible, 5 – neutral, 7 – moderately responsible, 9 – strongly responsible. For each respondent, the importance of an observed activity that contributes to better environmental performance (CER1, CER2, CER3, CER4, CER5, CER6, CER7, CER9; for a description see Table 1) has been obtained by giving the belonging number of points to each scale intensity level (e.g. the scale intensity level 1 was given 9 points, and the scale intensity level 9 was given 1 point). The importance of an observed activity that contribute to environmental degradation (CER8; for a description see Table 1), however, has been obtained by giving higher belonging number of points to higher scale intensity levels (e.g. the scale intensity level 9 was given 9 points, and the scale intensity level 1 was given 1 point). We consider that corporate environmental responsibility depends upon participants’ personal characteristics: age, gender, education (highest level completed), current position (non-supervisory staff, first, middle and upper level manager), number of years of full-time employment, size of company (less than 100 employees, 100 to 1000 employees, more than 1000 employees), and industry in which company is located (agriculture, mining, forestry and fishing; construction; manufacturing; transportation, communication and utilities are defined as high environmental impact industries; other industries are wholesale and retail trade; finance, insurance and real estate; services; public administration; health care). Our hypotheses regarding participants’ personal characteristics and CER are as follow: • H1: Younger participants attribute higher importance to CER than older participants. • H2: Female participants attribute higher importance to CER than male participants. • H3: More highly educated participants attribute higher importance to CER than participants with lower education level. • H4: Participants in higher organization position levels attribute higher importance to CER than participants at lower levels in their organizations. H5: Participants in larger organizations attribute • higher importance to CER than participants in smaller organizations. • H6: Participants in high environmental impact industries attribute higher importance to CER than participants in other industries. Furthermore, we measured the importance of the activities that express the creation and use of appropriate ethics in enterprises. They are presented in Table 2. 41 Table 2: Business activities that describe corporate ethical responsibility. Symbol Description CETHR1 To avoid compromising ethical standards in order to achieve corporate goals. CETHR2 To give priority to ethical principles over economic benefits. CETHR3 To be committed to well-defined ethics principles. CETHR4 To agree that ethical responsibilities may negatively affect economic performance. Understanding the role of corporate ethical responsibility as a factor of sustainable development, we defined the numerical scale intensity levels of corporate ethical responsibility (CETHR), the intensity levels of the importance of the observed activities that contribute to better ethical performance (CETHR2, CETHR3; see the description in Table 2) and those that contribute to ethical degradation in business (CETHR1, CETHR4; see the description in Table 2) in the same way as for CER. Our hypothesis about CER and CETHR is as follows: H7: Participants who attribute higher importance to CETHR, attribute higher importance to CER. 4.2 Research Findings The obtained mean CER’s intensity level (mean = 6.65, median = 7) shows moderate corporate environmental responsibility in the observed sample. Studying the mean importance of the activities for which participants believe that businesses should consider them to improve environmental performance (see Figure 2) can let us report that to the respondents in the observed sample: 1) To prevent environmental degradation caused by the pollution and depletion of natural resources is moderately to strongly important; 2) To adopt formal programs to minimize the harmful impact of organizational activities on the environment is moderately to strongly important; 3) To minimize the environmental impact of all organizational activities is moderately important; 4) To devote resources to environmental protection even when economic profits are threatened is neutral to moderately important; 5) To voluntarily exceed government environmental regulations is moderately important; 6) To pay the full financial cost of using energy and natural resources is moderately to strongly important; 7) To assume total financial responsibility for environmental pollution caused by business activities is moderately important; 9 8 Intensity Levels of CER 7 6 5 4 3 2 1 CER1 CER2 CER3 CER4 CER5 CER6 CER7 CER8 CER9 CER Activities 8 7,5 7,34 7 6,34 5,7 6 6,49 7 6,95 6,62 7 6,9 5,99 6 8 8 8 MEAN MEDIAN Figure 2: Mean values of the activities of corporate environmental responsibility 42 To ignore environmental issues when jobs are at stake is moderately to strongly important. Since such ignorance does not lead to environmental improvement, these results mean that participants moderately to strongly disagree with this activity; 9) To only proceed with activities for which environmental risks can be fully evaluated and controlled is neutral to moderately important. In the previous chapter we described our hypotheses that corporate environmental responsibility depends upon participants’ personal characteristics 8) (age, gender, education, current position, number of years of full-time employment, size of company, industry in which company is located). Table 3 shows that the correlations between the mean CER and each of these personal characteristics were not significant (neither at the p < 0.01 level nor at the p < 0.05 level). Therefore, we can reject H1, H2, H3, H4, H5 and H6; altogether, we can reject the hypothesis that personal characteristics significantly influence corporate environmental responsibility. Table 3: Correlation coefficients between mean corporate environmental responsibility and respondents' personal characteristics. Age Mean CER Age Gender Education Current position Years of employment Size of company **Correlation is significant at the p < 0.01 level (2-tailed). *Correlation is significant at the p < 0.05 level (2-tailed). Moreover, the obtained mean CETHR’s intensity level (mean = 4.73, median = 5) shows neutral corporate ethical responsibility from the point of view of sustainable development. Studying the mean importance of the activities for which participants in the observed sample believe that businesses should consider them to improve ethical responsibility from the sustainable point of view (see Figure 3) can let us report that the mean of their judgements about: 1) Avoiding compromising ethical standards in order to achieve corporate goals shows moderately corporate ethical irresponsibility; 2) Giving priority to ethical principles over economic benefits shows neutral to moderately corporate ethical responsibility; 3) Being committed to well-defined ethics principles shows neutral corporate ethical responsibility; and 4) Confirming that ethical responsibilities may negatively affect economic performance shows neutral corporate ethical responsibility, as well. 7 Intensity Levels of CETHR 6 5 4 3 2 1 CETHR1 CETHR2 CETHR3 CETHR4 2 5,71 6 5,34 5 4,54 5 Gender 0.036 (0.537) 0.001 (0.986) Education -0.078 (0.179) 0.319** (0.000) 0.042 (0.469) 0.044 (0.449) Current position 0.063 (0.277) 0.292** (0.000) -0.217** (0.000) 0.270** (0.000) Years of employment 0.068 (0.240) 0.953** (0.000) -0.014 (0.808) 0.238** (0.000) 0.244** (0.000) Size of company 0.022 (0.700) 0.100 (0.083) -0.056 (0.336) 0.034 (0.552) -0.028 (0.623) 0.135* (0.020) Industry 0.020 (0.730) 0.031 (0.588) 0.169** (0.003) 0.020 (0.724) -0.007 (0.908) 0.030 (0.611) -0.143* (0.013) 3,35 MEAN MEDIAN CETHR Activities Figure 3: Mean values of the activities of corporate ethical responsibility Further, we consider that participants who attribute higher importance to corporate ethical responsibility, attribute higher importance to corporate environmental responsibility, too (see H7). This hypothesis was supported in the given positive relationship between the mean CER and the mean CETHR at the p < 0.01 43 level. The value of correlation coefficient is 0.209, significant at the p < 0.01 level (2-tailed). 3. 5 Some Conclusions Enterprises can succeed if they understand (and implement in business practice) important business trends on the basis of holistic 1) implementation of the starting-points and the bases of SD, 2) implementation of all important elements of SD (e.g. economic, ecological, social, and ethical objectives of their business), and 3) cognition about the influence of SD and CER on enterprise working, behavior and results. The analysis results of a survey about corporate environmental responsibility, performed in Slovenia among managers and professionals in several business fields, show moderate corporate environmental responsibility. They support the rejection of the hypothesis that personal characteristics significantly influence corporate environmental responsibility in the observed sample. Moreover, they support our consideration that participants who attribute higher importance to corporate ethical responsibility, attribute higher importance to corporate environmental responsibility, too. Enterprises’ future depends on their innovating of individual/organizational values, culture, ethics, and norms, especially from the viewpoint of their relations to environment. 4. 5. 6. 7. 8. 9. 10. 11. REFERENCES 1. 2. Čančer, V. (2002), “Environmental Management in Slovenian Industrial Enterprises – Empirical Study”. Management, Vol. 7, No. 2, pp. 13-27. Čančer, V. (2004), “The Multicriteria Method for Environmentally Oriented Business Decision- 12. 13. 14. Making”. Yugoslav Journal of Operations Research, Vol. 14, No. 1, pp. 65-82. Čančer, V. (2005), “An Environmental Management Method for Enterprises in the Processing Industry”. Central European Journal for Operations Research, Vol. 13, No. 1, pp. 85104. Čančer, V., Mulej, M. (2006), “Systemic Decision Analysis Approaches - Requisite Tools for Developing Creative Ideas into Innovations”. Kybernetes, Vol. 36, No. 8 (forthcoming). Dees, G., Emerson, J. (2002), Strategic Tools for Social Entrepreneurs, Wiley and Sons, New York. Dyck, R., Mulej, M. (eds.) (1998), SelfTransformation of the Forgotten Four-Fifths, Kendall – Hunt, Dubuque. Ecimovic, T., Mulej, M., Mayur, R. (2002), Systems Thinking and Climate Change, SEM, Korte. OECD (2000), Framework to measure sustainable development, OECD, Paris. Potocan, V. (2002), “Sustainable development”, Management, Vol. 7, No. 1, pp. 67-77. Potocan, V. (2004), Operations management (In Slovenian), FEB, Maribor. Potocan, V., Mulej, M. (2003), “On requisitely holistic understanding of sustainable development”, Systemic Practice and Action Research, Vol. 6, No. 16, pp. 421-436. Rogers, M. (1995), Diffusion of Innovation, The Free Press, New York. UN (1992), Rio Declaration, UN, Rio de Janeiro. WCED (1987, 1988), Our common future on environment and development, Oxford, Oxford University Press. ENDNOTES This contribution is based on the research program “From the institutional to the real transition into the innovative enterprise”, which enjoys the support from the Public Agency for research, Republic of Slovenia, in 2004-2007 1 44 SYSTEMIC THINKING IN THE CONTEXT OF ENVIRONMENTAL EDUCATION Jan Cincera, Technical University in Liberec Technical University in Liberec, Czech Republic jan.cincera@tul.cz Abstract Helping students understand the systemic nature of the world is a crucial challenge for any long-term project of environmental education. This paper starts with a brief introduction to environmental education theories that analyse links between systemic thinking and environmental education, such as the ideas of Dennis Meadows, David Selby or Stephen Sterling. It shows differences in the philosophical backgrounds of their attitudes towards systemic thinking: on the one hand there is cybernetics theory; on the other hand there is deep ecology, close to spirituality. The paper further analyses the way systemic thinking can be taught in environmental education. It introduces the concept of interdependency and interconnectivity as the most important part of systemic thinking from the point of view of environmental education. It mentions references to phenomenological and Hanh’s idea of inter-being, awareness of life as a web of mutual interactions where nobody is an ‘isolated island’. The next part of the paper identifies the main educational areas that should be clarified in environmental education lessons to help students understand the idea of inter-being. For example: society and environment, ecological interdependency, poverty and richness, time dimension, etc. The paper briefly introduces a case study dealing with a project based on these principles. Keywords: environmental education, global education, Earth Education, deep ecology 2. 3. ecological interdependence in urban and rural areas; To provide every person with opportunities to acquire the knowledge, values, attitudes, commitment, and skills needed to protect and improve the environment; To create new patterns of behaviour of individuals, groups, and society as a whole towards the environment. (Tbilisi Declaration, 1977) 1. Introduction Systemic thinking is a general methodology for analyzing a problem as a functional complex of mutual links between cooperating items, managed by the web of positive and negative feedbacks. Systemic thinking can be used in many fields; this article introduces the way it can be used in environmental education. What is environmental education and what are its goals? When I speak about this with my students, I usually say that environmental education teaches people to diminish their environmental footprint and take up their responsibilities to the world. According to the Tbilisi Declaration, we can say that the general goals of environmental education are: 1. To foster clear awareness of, and concern about, economic, social, political, and Despite the many approaches that fulfil this broad definition in some way, we can find that systemic thinking plays a crucial role in environmental education. What do systemic thinking and environmental education have in common? Although there are more ways to understand goals and appropriate methodology of environmental education, we can see that most teachers in this field focus on teaching about connections, links and interdependency rather than on separated items. Students should understand the world as a web of interconnections: food chains, climate changes or sustainable development are primarily processes of mutual influencing and changes, not states. Environmental education is by its nature based on systemic thinking, although awareness of systemic thinking can vary a lot. From one point of view, environmental education is teaching about systems; from another, it can be systemic in its methodology. If we make a parallel with ecological systems, not only can they be subjects of teaching but also they can be a vital inspiration for designing educational projects and courses. We can call for projects that are based on a systemic approach; which are built from the intricate set of links between single activities and which are managed by positive and negative feedback loops. I would like to introduce both aspects of mutual links between environmental education and systemic thinking: environmental education as education about systems and as a systemic education. 2. Systemic education thinking in environmental 2.1. Approaches in environmental education The approaches in environmental education differ in many ways. Robottom and Hart (Palmer, 2003) differentiate between three main approaches: 45 Positivistic: based on knowledge about nature and objective facts • Interpretivistic: based on educational constructivism and experience • Critical: based on projects and selfmanagement of students From another point of view and in more details we can recognize that: • The authors who are close to the positivistic approach mostly use the terms ‘ecology education’ or ‘conservation education’ for their work. They are mostly biologists using transmissive educational methodology; • The authors connected with the critical approach prefer the terms ‘sustainable education’ or ‘education for sustainable development’, for example Sterling (Sterling, 2001), Fien (Fienn, Heck and Ferreira, 2004) or Cooper (Cooper, 2002). Some others use the term ‘environmental education’ – for example Hammond (Hammond, 1997) or Mogensen (Mogensen, 2004); • There are more interpretivistic approaches, such as: o Global education, which is nowadays very often based on educational or social constructivism and which was coined by Pike and Selby (Pike and Selby, 2004) o Deep ecology education or Ecology education which is based on the ideas of Naess, Seed and Macy (Seed, 1994) and o Earth Education, which was developed by van Matre (Matre, 1999). If we compare, for example, global education and Earth Education, we will get different sets of goals, different methodologies and recommendations for educational settings. However, both use the principles of systemic thinking. What differs is how they are applied.. • • Inner dimension – development of student’s personal skills and abilities. 2.1. Systemic thinking in global education The principles of systemic thinking play a crucial role in global education. From one point of view, global education is education about links and systems. It highlights four kinds of links or dimensions of global education (Pike and Selby, 2000): • Spatial dimension – awareness of interdependency, local – global connections, systemic relations; • Problem dimension – connections between students and problems; • Time dimension – connection between the past, present and future and Beyond the awareness of interconnections goes the methodology of global education developed by Dennis Meadows. (Meadows and Sweenay, 1995) He and his team from The Institute for Policy and Social Science Research describe the methodology of teaching such concepts as casual loops, positive and negative feedback, mental models, etc.. Typical educational vehicles for this way of global education are simulation games based on systemic models; you cannot be successful in Meadows’ simulation game STRATAGEM without a deep understanding of system dynamic. What will you learn in STRATAGEM? In this simulation participants play the role of ministers of a developing country somewhere in Latin America. They have to decide on long-term policies for energy, economics and food production and for education, social and environmental areas. They have consider feedback, interlinks and delays between state, action and changes. It does not rely on chance – it is only up to the players’ actions whether they succeed or not. This kind of interconnection between environmental education and systemic thinking can be both beneficial and problematic. In spite of the great educational benefit of STRATAGEM, if we use only these kinds of games, the message students will get about the world will be quite problematic and ambiguous. Not everything in the world is possible to count and forecast, our awareness of the world is not created only by logic, but also by our hearts and feelings. According to David Selby ‘global education theory and practice has, for the most part, been informed by an insufficient rebuttal of mechanism. In particular the readings of concepts such as interdependence, interconnectedness, and interrelatedness have tended to reflect a "higher order of reductionism" (i.e., an intricate relationship between still separate parts) inspired by the complex mechanism of the computer rather than an ecological or holistic understanding of the terms.’ (Selby, 2000) He calls for global education that is more bio-centric, ‘embrace the notion of "relational holism" in which relationship is primary and takes place between phenomena that are themselves processes rather than static components. Embracing such a radical reading of interconnectedness--captured in terminology such as enfoldedness, embeddedness, and interpenetration--has profound practical consequences for the agenda and structure of learning communities.’ Global education should be, according to Selby, ‘darker green’, and it should exploit emotional activities typical of deep ecology movements. 2.2. Systemic thinking in deep ecology education In many ways deep ecology is diametrically opposed to global education: both in terms of goals and 46 methodology. Deep ecology is bioregional, global education is ‘global’. Deep ecology tends to be too emotional, global education too rational. Global education is well suited to classrooms; deep ecology calls for an outdoor setting. Both of them, on the other hand, promote the idea of interconnectivity, which is crucial to systemic thinking. While global education is more typically based on cybernetics, casual loops and feedback, deep ecology tends to be philosophical and spiritual. The idea of interconnectivity is in no sense only the domain of cybernetics. In both western and eastern traditions it has been discussed in many philosophical works for more than two thousand years. We can find it in the Buddhist Diamond Sutra that introduced the metaphor of the world as a great web with mutual reflecting diamonds in each of its cords. Thich N. Hanh, a Buddhist philosopher of the 20th century, used the word ‘inter-being’. (Hahn, 1991). He explains this term through the example of meditating on a blank sheet of paper. If we look at the sheet more carefully, we can see that it is not blank at all. We can see a tree behind it, the work of many people, sunshine and rain, energy and transport, etc. The blank sheet connects us to anything else all over the world. According to him, we are connected with all the beauty and all the evil of the world; we are not ‘isolated islands’ but the ‘interbeing’. Similar ideas have been expressed by phenomenologists like Heidegger (Heidegger, 1993) or Kohak (Kohak, 1987). The educational means deep ecologists use for teaching the idea of inter-being are usually very emotional. Drama, rituals, imagination or art are commonly used. For example, in the activity Recalling Evolution (Seed, 1993), students are asked to visualize pictures described by the teacher. Students imagine the path of evolution from the stars to Earth, from the first living organisms to animals and to human beings. They are led to awareness of deep interconnectivity both vertically and horizontally; they become aware of the connection between the past and present and they will understand that we are connected with all living beings all over the world by our common past and by the material our bodies are made of. 3. The systemic approach in environmental education 3.1. Systemic thinking as the methodological principle for environmental education In the previous chapter we analyzed an understanding of interconnectivity as one of the goals of environmental education. However, systemic thinking can be used also as a methodological principle for designing educational projects. The most common practice of environmental education is to hold short programmes, which are offered by centers of environmental education to schools. Such programs are usually 40 – 90 minutes long and focus on selected ecological or environmental concepts, which are explained by a mixture of lesson, discussion and short activities. However, this style of environmental education can hardly be called systemic and its efficiency is probably very limited. There is only limited opportunity for making logical links and connections between the programs selected by one class during the whole school curriculum. Lecturers in the centers have no opportunity to build such kind of links because schools have usually no long-term conceptions of environmental education and the opportunity for cooperation on program design between environmental education centers is usually not taken advantage of.. However, we can suppose that we would get much higher educational gains if we were able to design educational projects on a systemic basis. Such a systemic project would be a long-term educational complex with clearly designed goals and outputs, where all of the items of the project are mutually linked and inter-connected. It would not be a single item, a short activity or 1-2 hour program, but a whole system of interlinked activities which bear a message and fulfills educational goals. This kind of methodology is typical of Earth Education programs that are held by regional Centers for Earth Education. Projects like Sunship Earth (Matre, 1979), Earthkeepers (Matre and Johnson, 1998) or Sunship III (Matre and Johnson, 1997) are built around clearly formulated messages that are introduced and explained by logical sequences of thoughtful activities. They are elaborated systems whose educational effect is bigger than the sum of all its activities. The programs usually use two main types of vehicles: Earth Walks - sensory activities for touching nature and building emotional attitudes towards the natural world and Concept Paths –learning activities for understanding selected concepts. There are clear links between activities and educational goals and among activities themselves. To avoid misunderstanding, students are confronted with educational goals in many ways: personal worksheets, program logos or other kinds of symbolic expression, a legend of the project, various kinds of rituals, etc. are used. Similarly, are developing a systemic methodology of environmental education, at the Technical University in Liberec 3.2. Systemic methodology in Liberec In the methodology we have been developing for the last four years a systemic approach is used, both for formulating educational goals and designing methodology. One of our educational goals is that students will understand the idea of inter-being. Students should understand that nobody is an isolated island and that they are connected with everything in the world. Although this idea is seemingly simple, it is not easy to appreciate its full scale and connect it with our daily 47 routines. Actually, the idea of inter-being is an appropriated educational goal for students of any age. We usually formulate the main goals in the form of shorter messages that express the way we understand the world; what we want is to confront our students with them and give them the opportunity to reformulate their own horizon in this area. In addition to Earth Education methodology we usually elaborate the main goals into more topics, which help to convey the message from various points of view. For example, for the main concept of interbeing we, usually, work with some of them: society and environment, ecological interdependency, poverty and wealth, man and time, man and nature, me and the others, etc. After formulating the topics, we design educational goals for each of them. For example, the educational goal for poverty and wealth could be that students will understand that both deal with devastating the environment and that the world of the wealthy can not be separated from the world of the poor. The educational goal for the topic ‘man and time’ could be that students will understand that every generation takes responsibility for its problems, that our decisions will set the conditions for the next generation in the same way as we are affected by decisions of our fathers and grandfathers. In the next step we look for appropriate activities for each topic. It can be a single activity or a sequence of activities. Although every single activity is meaningful, their full potential lies in the whole project. The top-down ‘message – topic – activity’ relationship is not the only kind of link in the project. Activities are also linked by horizontal connections in the sequence ‘evoking an educational goal – introducing new ideas – debriefing the goal’. This is a constructivist educational methodology that helps to better work with student’s preconceptions and makes the educational process more efficient. Occasionally, we use other types of educational links, for example influenced by Earth Education methodology. The third type of link is based on the theory of experiential education and the concept of group dynamics. The group dynamic theory expresses the willingness of group members to cooperate together and the average feelings in the group during the time of its existence. One activity can make sense only in its link to the appropriate stage of group development or in its links to other activities that together help the group to grow and develop. To sum up, the meaning of an activity is here defined by: • The activity itself; • The top-down relation expressing the links between the educational goals of the activity, the topic and the main message, last but not least expressing the links between activities used for expressing the same goals; • The position of the activity in the linear sequence ‘evoking – introducing – debriefing’; • The exploitation of the activity for empowering the group. There are more types of feedback that allow continuous modification. The first one is connected with the concept of Full Value Contract (Schoel and Maizell, 2002) that helps the group to grow and to assess both group and curriculum goals. The Full Value Contract is the system of interconnected rules designed and continuously assessed by participants. The Contract helps to identify the problems in the group and to specify new group goals and so to improve the setting of the project. The second type of feedback is focused on assessing curriculum goals. It usually has a written form and follows after closing all of the topics of one main goal. It is the last part of the ‘evoking – introducing – debriefing’ sequence and it is an opportunity for students to express the way they changed their horizons during the project. The last type of feedback is regular debriefing sessions that follow after each activity. They usually have an oral form that is structured and managed with the use of the Experiential Learning Cycle, constructivist theory or a mixture of approaches. All kinds of feedback enable both continuous and long-term modifications. Thanks to feedback, no two projects are the same – they are built on the same principles of design but they have individual features, like living organisms. 4. Conclusion Systemic thinking and environmental education have much in common. The article highlighted the idea of interconnectivity, which is usually one of the curriculum goals in the majority of environmental education projects. The idea of interconnectivity joins systemic thinking and environmental education. We could see that understanding interconnectivity is one of the main educational goals for at least two important approaches in environmental education: global education and deep ecology education. We could also see that both approaches differ in the way they transfer this idea to students. We could hardly find more different educational vehicles then simulation games and imagination. However, both ways help students to get the same idea. We could ask whether the validity of both right and left hemisphere approaches could be inspiring not only for the theory of environmental education but for other areas where systemic thinking is used. It May be that using right and left hemisphere vehicles for expressing and analyzing the world can be more beneficial than using only ‘too rational’ or ‘too emotional’ means. From another point of view, systemic thinking can be usefully incorporated in the methodology of 48 environmental education projects. It introduces a shift from single activities and short programs to long-term projects consisting of many mutually interlinked activities. Although the evaluation of efficiency of educational projects is a difficult task, we can suppose that more elaborate projects built on the basis of systemic thinking are more efficient then randomly selected activities. We should launch projects inspired by the living systems we teach about: the interconnected complexes of mutually linked activities whose meaning is defined primary by their links to other parts of the project, managed by an intrinsic system of feedback. REFERENCES COOPER, Geoff. (2002), Vztahy mezi ekologickou výchovou a výchovou k trvale udržitelnému rozvoji. Bedrník. Vol. 1, n.1, p. 13-14. FIEN, John; HECK, Debbie; FERREIRA; Jo-Anne. (2004), Learning for a sustainable environment. [online] [Cit. 2004-06-10]. Available at http://www.ens .gu.edu.au/ciree/LSE/mod1.htm#act3 HAMMOND, William F. (1997), Education for Action. A framework for thinking about the place of action in environmental education. Green Teacher. Education for Planet Earth. ISSN 11921285. Issue 50, p. 6-14. HANH, Thich Nhat. (1991), Cesta k plnému vědomí a uvedení do metody meditace v chůzi. Pragma, Praha. ISBN 80-7205-676-X. HEIDEGGER, Martin. (1993), Básnicky bydlí člověk. ISE, Praha. KOHÁK, Erazim. (1987), The Embers and the Stars. A philosophical inquiry into the moral sense of nature. The University of Chicago, Chicago. MATRE, Steve van. (1979), Sunship Earth. An Earth Education Program Getting to Know Your Place in Space. American Camping Association, Martinsville. MATRE, Steve van; JOHNSON, Bruce. (1997), SUNSHIP III. Perception and Choice for the Journey Ahead. The Institute for Earth Education, Greenville. MATRE, Steve van; JOHNSON, Bruce. (1998), Earthkeepers. The Institute for Earth Education, Greenville. MATRE, Steven van. (1999), Earth Education .. a new beginning. The Institut for Earth Education, Greenville. PIKE, Graham; SELBY, David. (2000), Cvičení a hry pro globální výchovu 1. Portál, Praha. MEADOWS, Dennis; SWEENEY, Linda. (1995), The Systems Thinking Playbook I-III. The Laboratory for Interactive Learning, Durham. ISBN 09666127-7-9 MOGENSEN, Finn. (2004), Environmental education – development and evaluation [online]. The Royal Danish School of Educational Studies. [Cit. 2004- 06-21]. Available at http://nibis.ni.schule.de/~beckmann/health/booklet /ee_start.htm PALMER, Joy A. (2003), Environmental education in the 21st Century. London; New York. P. 146-8. PIKE, Graham; SELBY, David. (1994), Globální výchova. Grada, Praha. ISBN 80-85623-98-6. 322 p. SEED, John. (1993), Myslet jako hora. Shromáždění všech bytostí. Nadácia Zelená nádej, Presov. 140 p. ISBN 80-88699-01-0. SELBY, David. (2000), A darker shade of green: The importance of ecological thinking in global education and school reform. Theory into Practice. Columbus: Vol. 39, Iss. 2; pg. 88, 9 pgs STERLING, Stephen. (2001). Sustainable education. Re-visioning Learning and Change. Green Books; The Schumacher Society, 94 p. ISBN 1-87009899-4 Tbilisi Declaration (1977), [online] [Cit. 2004-06-10]. Available at http://www.gdrc.org/uem/ee/tbilisi.html / The Institute for Policy and Social Science Research [website]. Available at http://www.unh.edu/ipssr/ SCHOEL, Jim; MAIZELL, Richard S. (2002), Exploring Islands of Healing. Project Adventure. 49 50 SYSTEMS THINKING AND KNOWLEDGE CIVILIZATION: PROBLEM DEFINITION AND SOLUTION PERSPECTIVES Andrejs Dreimanis Radiation Safety Centre, 165 Maskavas Str., Riga LV-1019, Latvia Fax: +371 7032659, A.Dreimanis@rdc.gov.lv Abstract A permanent and progesssively increasing growth of overall complexity of the world has caused the necessity to develop qualitatively novel values and realations, with the aim to provide further progress of our world as well as to minimize a possible rise of conflicts at all levels of human activities. As a possible approach to reach such aim, one can propose to evolve the currently developing knowledge society towards a qualitatively higher civilization level centered on the humanity as the dominant value. A possible way to develop such humane relations and to create a sane society seems to be a comprehensible knowledge civilization. In parallel with the already traditional approach the appeal to make all efforts toward peaceful and humane use of scientific progress, an actual question of the day should be to develop a novel basis in the system of our views of the most valuable things of our world. As a key point in the development of the necessary qualities and values a proposal to reorganize the education system towards development of system thinking is chosen. Our approach to such task consists of: 1) the definition of this task as an adaptation problem to novel environment characterizing relations between the system’s elements; 2) adjustment of the principle of requisite variety to the case of foreseing the necessity to develop novel insight and apprehension of basic values; 3) analysis of a possible use of modern sciences in understanding and stimulating the developmental mechanisms; 4) the role of creativity in development of integral systems-thinking capability and possible mechanisms of stimulation of creativity and systems thinking; and 5) recommendations for reorganization and optimization of education system, taking into account data on the brain hemisphere asymmetry and interactions. On the basis of development of the inner humane variety a further successful development of integral systems thinking approaches seems possible including humane use of contemporary knowledge, in particular, in peaceful use of nuclear energy. Keywords: knowledge civilization, humane values, inherent variety, integral thinking, education 1 Introduction A reasonably unavoidable, permanent and progressively increasing growth of the overall complexity of our world makes the New-Millenium mankind face a crucial necessity to comprehend and develop qualitatively novel values and relations, with the aim to provide further progress of our world as well as to minimize the possibility of the rise of conflicts at all levels of human activities. Now-a-days the nature and the level of various conflicts and man-initiated disasters are to a great extent connected with forming of contemporary knowledge society and determined by the achievements of modern science and engineering, in particular nuclear physics, genetics, space science. Therefore, an urgent problem of our mankind seems to be to achieve for all people – shortly: both voters and decision-makers – an inherent convinction and necessity of humane use of the science progress. As a possible approach to solution of aforementioned problem and to providing further stable progress of our world we can propose to evolve the currently developing knowledge society towards a qualitatively higher civilization level centered on the humanity as the dominant value. And just comprehensible civilization of the knowledge seems to be an efficient route towards the development of such humane relations and creation of a sane society. The basic tasks towards further civilization of knowledge and the whole society include the following one: to develop a novel basis in the system of our views at the most important things of our world. As one of the most effective approaches in the development of appropriate human personality, capabilities and qualities being necessary for forming a novel viewpoint at the whole system of human and societal values, we propose to reconsider and even to reorganize the whole education system. It should cover integral system thinking of human beings; it should promote comprehension, analysisis and assessment of the basic processes, values and tendencies in the local and global environments and thereby, chosing the most adequate principles and models of holistic thinking and behaviour in the society. 51 2 The Key Methodological Principles 2.1 The Extended Concept of Environment The basic question to be answered in solving our problem seems to be the following: in what manner could human beings adapt to novel conditions characterized by the increasing necessity to be conscious of inevitable revision of fundamental values, in order to safely and successfuly survive and develop ourselves in the world of growing complexity, controversies and challenges? Accordingly, our task could be defined as the adaptation problem of an individual as well as of the whole society to novel environment, where the concept „environment” can be considered in line of C.Popper’s and J.Eccle’s [11] concept of the human’s three worlds – namely; the set of 1) physical and 2) mental objects and states, as well as that of 3) mental products. Thus, the concept „environment” will include a multitude of physical, socio-cultural, political, psychological and other factors. thinking” [10] allowing us to see the „big picture” and to rise above the narrow functional silos and conventional stereotypes. 3 Contemporary Science and Systems Thinking Development 3.1 The Self-Organization in Human Beings A series of fundamental scientific achievements of the 20th century provided the mankind not only with a new knowledge, which shall be directed in the flow of its peaceful use, but also with novel knowledge and methods for management of social complexities and development of systems thinking. Among these fundamentals there are, first of all, synergetics concepts – self-organization (SO) and chaos, fuziness and quantum theory principles. It is well known that development of qualitatively novel structures – at various levels – is basically associated with nonlinear SO processes. This general rule can be attributed also to information phenomena [7] and in the case of our task – to generation of novel states in informational fields, starting from novel settings in our brain generating elements of new thinking, up to development of novel system of general humanly values. Furthermore, the SO processes in a self-consistent manner are capable to connect the individual’s problem with a more global non-linear process – transition of the whole society to a qualitatively novel state, where, according to the selfconsistency principle [15] „the individual members of society contribute, via their cultural and economical activities, to the generation of a general field of civilization”. 2.2 The Principle of Requisite Variety Having defined the extended concept of environment, we are coming to the key point of our approach, namely – the W. R. Ashby’s principle of requisite variety [2] and its adjustment to the adaptation problem and therefrom – to the following task: to develop a novel insight in and apprehension of fundamental values. In particular, the principle of requisite variety states: for successful development and survival of a given system (e.g., a human being), its own internal variety should exceed the variety of external environment. For our task the concept „external environment” can be specified as a set of human inborn, as well as developed and acquired ethical, cultural and mental values. Actually, as a voluntary decrease of environmental variety (or diversity) could lead to a destabilization effect, the basic problem of a human’s adequate survival and adaptation to complex external environment could be defined in the following way: how should a human being develop herself and be educated, in oder to elevate her own internal variety as well as the internal variety of the whole society to the level exceeding the external variety (where external variety could be regarded basically as a multitude of material and related matters). In other words, our task shall be to develop a society where mental and ethical values will dominate. Having drawn up this strategic task as well as basic requirements concerning human development of the personality, a possible general mechanism of its solving could be the integral systems thinking „being an answer to the increased complexity of the environment where we are live and work” [10] and including – among a series of important thinking skills – such highly efficient and prescient capability as „forest 3.2 Self-organization and Creativity These are just synergetic principles – SO and chaos – which make the possible mechanism of creativity – the phenomenon of ability to break the existing stereotypes of thinking and, in turn, to develop nonlinear, flexible and integral thinking. Thus, by bringing here into consideration the creativity concept and specifying mutual interrelations between creativity, information and adaptation, we are building further analysis on the following proposal: the basic routes of increasing our internal self-variety could be knowledge and flexible, creative thinking, in concert with the thesis [9] stating that knowledge as organized information can be considered as complexity factor and envisaged as a means to better comprehend human’s functioning in complex environment, and hypothesis [8] that just information, knowledge and meaning will be the basic ways we relate to our environment by means of SO processes. Moreover, in conditions of crucially changing environment where there are numerous degrees for the system to evolve, just the necessity of flexible integral thinking will come in the forefront, which will provide creative reaching out of the system’s own boundaries 52 [3]: „under self-creativity and adaptability a selforganizing system will reach the upper limit of ordinary environment at the end of evolutionary gradual and sudden changes and finally break the limit of ordinary environment” [14]. In order to reveal a possible synergetic mechanism of creativity, let us note: according to neurobiology and nonlinear physics’ data, SO is a fundamental principle of the brain structure and functioning. Namely, a main feature of brain neuronal networks possess is the ability of the generalized neuronal net to be a self-organizing system capable of SO and various modes of information processing [1]. In turn, an elementary creative act could be attributed to generation of dissipative structures [4], which we consider as qualitatively novel states of thinking patterns. Thus, a qualitative jump in the creative thinking process can be associated with a quantum tunneling act – a jump of the thought in the classically forbidden region. 3.3 Creativity and systems thinking A likely way to acquire the capability to develop a novel, complementary state of thinking patterns and sensible perception to the hierarchy of multiple sets of individual as well as global values seems to be the following one – namely, to develop a creative approach to world phenomena, problems and values. And it is especially important just now-a-days – in the period of mutually controversal realities and values [5] – that creative flexible thinking, as a manifestation of the systems thinking, could promote the SO process in the direction facilitating an integral perception of the world and its values. Furthermore, taking into account L. Zadeh’s proposal that elements of thinking are elements of fuzzy sets [16], one can deduce: chaos and fuzziness as essential components of creativity shall acquire a primary role in conditions of increased complexity and environmental uncertainty providing no unique answer and solution. external stimulation of an individual, and ii) the selfdisposal of the human’s psyche, in order to amplify the degree of higher mental functions. Thus, the effectiveness of the stimulation of creativity could be – to a significant degree – predetermined by the SO and control capabilities of neuronal networks which, in turn, could promote the development of such prematures of creative thinking as self-conscioussness as well as internal motivation. Moreover, these are selforganized chaotic activity patterns which could modify the motivation state [13]. In particular, internal motivation can be regarded as a possible mechanism of synergetical strenthening of creative efforts over competing activities, thereby resulting in general orientation of conscious and subconscious states of the human being towards flexoble integral systems thinking and creative problem solving. In parallel with the search of such short-term stimulation routes of the creative thinking process itself, a significant factor of creativity stimulation can be the long-term development of creative capabilities. Taking into account a number of evidences for complementary interaction of the right and left hemispheres of the human brain during the creative thinking process [12], one can deduce: exercising the associative „right-hemisphere” or synergetical thinking providing a unified integral perception of our world would be necessary for the development of creative spirit and capabilities at all stages of human education. 4.2 Proposals about education optimization On the basis of the above considered mechanisms of development of creativity, of flexible systems thinking, and taking into account data about the brain hemisphere asymmetry and interactions, one can propose some recommendations – with the aim to stimulate the forming of the desired model of human personality and thinking – for reconsideration and reorganization of the education system: a) At the elementary and secondary school levels – to increase the emphasis on development of the individual’s capabilities of creative, nonstandard approach to solving hard and complex problems; this includes development of such mental characteristics as predisposition to integral and global thinking as well as the capability of realizing them. A likely route to achieve such characteristics will lie in intensive training of right-hemisphere functions of our brain, by means of lessons in different arts, in particular, music, plays and games. b) A the high and higher school levels – to develop education programmes with the emphasis on comprehending actual humane values as well as understanding a consequence of the principle of requisite variety – for successful development of each individual as well as of the whole society the inner variety 4 Perspectives and Recommendations in the Knowledge Civilization 4.1 Possible ways of creativity stimulation On the basis of the above proposals we can put the question of possible mechanism of creativity stimulation, in the line of development of integral systems thinking capabilities. An efficient use of available elements of SO and knowledge management for beneficial development of the human Self and her inherent variety in a novel environment would require a proper creative potential and „spirit” or readiness, which is able to rise the necessity of tuning a human being to the dominance state; it is characterized by synergetical slaving of neuronal activities towards problem solving and, therefore, providing a more reliable route of SO of thinking processes. The achieving of such highly effective state of synergetical merging might be promoted by: i) the 53 and wealth of each human being (cultural, ethical, mind as well as the inner ones) should prevail over the external variety and wealth at all hierarhical levels of civilization. It seems just that a multitude of material goods, conditions and wealth as well as the whole implicit part of the intellectual wealth of a human or society which is used only for the increase of material wealth, could in the context of the applied Ashby principle of requisite variety - be representing the external variety of a human being as well as, correspondingly, SO at all increasing levels of our civilization. What is required is a new mindset and a change of heart, to be able to see the person across the ocean as our neighbour.” REFERENCES Amari, S. (1988), ”Mathematical Problems of Neurodynamics and Self-Organization”. Amari, S. (ed.): Biomathematics and Related Computational Problems, Springer, Berlin. 2. Ashby, W. R. (1959), The Introduction to Cybernetics, Inostrannaya Literatura, Moscow (in Russian). 3. Banathy, B. (1993), From Evolutionary Creativity to guided evolution, World Futures, Vol. 36, No. 1. 4. Dreimanis, A. (1994), “Creativity of Natural and Artificial Brain: Toward a Unified Synergetical Approach”. Bobel, F.G., Wagner, T. (eds.): Proceedings of the 1st International Conference on Applied Synergetics and Synergetical Engineering, FhG IIS, Erlangen. 5. Dreimanis, A. (1997), “Towards Settlement of Global Problems and Controversies”. Lasker, G. (ed.): Advances in Sociocybernetics and Human Development.Vol. 5: Culture of Piece, Human Habitat and Sustainable Living. IIAS. 6. ElBaradei, M. (2005), The Nobel Lecture by IAEA Director General and Nobel Peace Prize Laureate 2005 Dr. Mohamed ElBaradei. www.iaea.org/NewsCenter/Statements/2005/ebsp2005n 020.html 7. Haken, H.,ed. (2000), Information and Self-Organization: an Interdisciplinary Search for a Unifying Principle, (Springer Series in Synergetics), Springer, Berlin. 8. Keel-Sleswik, R (1992), “Artefacts in software design”. Floyd, R., et al. (eds.): Software Development and Reality Construction), Springer, Berlin. 9. Kuhn, H., and Lehman, U. (1984), “Transition from the Non-Living State into the Living State”. Mishra, R.K. (ed.): The Living State, Delhi. 10. Maani, K.E., and Maharaj, V. (2004), “Links between Systems Thinking and Complex Decision Making”. Systems Dynamics Review, Vol. 20, No. 1. 11. Popper, C., and Eccles, J. (1977), The Self and Its Brain, Springer, Berlin. 12. Rotenberg, V. (1985), “Sleep, dreams, cerebral dominance and creation”. The Pavlovian Journal of Biological Science, Vol. 20, No. 1. 13. Skarda, C.A., and Freeman, W.J. (1990), “Chaos and New Science of the Brain”. Concepts in Neuroscience, Vol. 1, pp. 275-285. 14. Tao, H. (1993), “The Structure of Multistasis: on the Evolution of Self-organizing Systems”. World Futures, Vol. 37, No. 1. 15. Weidlich, H. (1991), “Physics and Social Science – the Approach of Synergetics”. Physics Reports, Vol. 240, No.1. 16 Zadeh, L. (1978), “Fuzzy Sets as a Basis for the Theory of Possibility”. Fuzzy Sets and Systems, Vol. 1, No.1. 1. 5 Conclusions - The „New” Thinking in the Nuclear Safety To-day, there is a growing potential threat of nuclear terrorism (due to development and/or proliferation of nuclear technologies and materials – e.g, Iran) to global security. One can argue that only on the basis of the development indicated above of the inner humane variety a further successful advancement seems possible in developing the integrative system thinking approaches. This includes peaceful and humane application of the contemporary knowledge, in particular, a peaceful use of nuclear energy management, in order to fully comprehend the ideas of the Russell-Einstein Manifesto. It is now implemented in activities of United Nations, International Atomic Energy Agency (IAEA), European Commission and many other public institutions and organizations, aimed, in particular, at reaching safety and security of the use of nuclear energy and materials, at assuring to international community a peaceful use of nuclear materials. The current tasks and perspective in our efforts in increasing the global nuclear safety and security are soundly displayed by the Nobel lecture of the IAEA Director General Dr. Mohamed ElBaradei [6]: „I have hope because civil society is becoming better informed and more engaged. They are pressing their governments for change - to create democratic societies based on diversity, tolerance and equality. They are proposing creative solutions. They are raising awareness, donating funds, working to transform civic spirit from the local to the global. Working to bring the human family closer together. We now have the opportunity, more than at any time before, to give an affirmative answer to one of the oldest questions of all time: "Am I my brother´s keeper?" 54 HOW TO THINK OF QUALITY NOW-A-DAYS? Prof. Eng. Constantin–Dan DUMITRESCU, Ph.D. University “Politehnica”of Timisoara, Romania e-mail: dumitrescudan2003@yahoo.com Abstract The paper presents few aspects concerning the quality concept evolution in time, and in space; there are also presented concept integration modalities in systemic structures; in the final part it is presented the process of fabrication structure modeling using a mathematical model that also takes into account the processes quality. Keywords: total quality management, cybernetic system, processes optimization 1. Introduction An analysis of aspects concerning quality detects that the impact of quality on life is more and more obvious; when we say that we have in view some aspects: Customers’ requests evolve in time, either under the aspect of raising the existing products quality level, or of products and services variation, in order to ensure a higher level of living/ existence. All this generated modifications in the conception with reference to its integration in every day life; this latest aspect refers to every person report/ relation/ position with the environment. This report is biunique under aspect of qualitative approach: people wants to model environment elements pursuant to their own wish and conception, but also the environment, through the evolution of its parameters in time, assure transformation/ modelling of group/persons from a certain area. Under terms of a competitive environment the quality of a product concept has evolved: from abidance by technical characteristics, by components dimensional precision and by their conformity with afferent reference material (elements which are specific for period 1930-1950 in United States of America and 1970-1980 in Europe), to aspects concerning product reliability, its maintainability, quality of services assigned for the performing use of product, the impact of using product on physical-chemical environment (elements which are specific for the this millennium beginning ). The producer answer at this approach manner of clients’ requirements was oriented in two directions: Assurance of a progressive ascendant levels of quality – performance in time for researchdevelopment activities; the solutions approached for the design, fabrication/ execution technologies have as ultimate element a qualitative approach; From the point of view of organizational management, appears the necessity of cross correlation for all process-participant structures, in order to broaden the possibilities of elaborate strategic decisions (the product design structures, technologies, production processes, quality control, afferent services, internal and external logistics, human resources, material and energetic resources, storage / sale processes). Even more, these structures have a dynamic behaviour in time, which leads to approach of a specific process optimisation procedures in the frame of a complex system, which has a cybernetic behaviour in time. Programming the activities of these structures, under quality conditions required by the market, under economic conditions required by producer’s existence in the market, and under conditions of terms and of stronger and tougher and competition, is the main activity for any company aiming at reaching a certain level of excellence. Materialisation of this level of excellence can be assured only through assumption of total quality concept. Its achievement can be guaranteed through a specific management prosecution: total quality management. 2. The Stages of Quality Concept Evolution To explain the main development and evolution stages of quality concept we will select, from over 250 definition of quality, one definition, which refers to product itself, and its applicability meeting clients requirements: “Quality concept is an assembly of product or service properties and characteristics, which confer it the applicability (possibility, capability) to satisfy the requirements expressed implicit by the user.” In concept evolution, referring at evolution of products and services quality level can be distinguished four levels, different as time (T) and space (S) extension, as it results from figure no. 1. 55 s EVOLUTION OF PRODUCTS AND SERVICES QUALITY LEVEL in time and space QUALITY MANAGEMENT SYSTEM TOTAL QUALITY MANAGEMENT (TQM) Quality politics implementation; Clients and suppliers involvement; Processes management; Audit of processes quality; Performance measurement; Team working; Employees involvement in quality assurance QUALITY ASSURANCE (AQ) Development of quality assurance system; Advanced planning of quality; Using quality costs QUALITY CONTROL (QC) Elaboration of Quality handbook; Autoexamination; Process performance; Products testing; Basic quality planning; Use of mathematical statistics; Documents control. EXAMINATION (I) Data collection; Sorting, classifying, Corrective actions Identifying unconformities sources T 1970 1980 1990 Fig.1 3. Cybernetic/Economic System of Enterprise To characterize the cybernetic and economic system of enterprise one must identify some elements concerning defining and systemic framing of enterprise. The enterprises are basic sub-units of any economy. They contain different functional systems (a production enterprise has the following structure: departments, sections, production manufactories, offices, working teams, working collective for 2000 2003 56 designing structures, etc.), developing inside of these, pursuant to profile, production activities, service, and commercialisation. The enterprises constitute an mezzo economic system with a differentiated level of complexity, with structure adequate with their size and activity object, with a functionality oriented towards strategic objectives achievement (3-5 years), tactical (1-2 years) or operative (1 hour- 1 month) The enterprise considered as a system, concentrates, combines and organises resources to produce goods and/or services for market. The enterprise system is put under constrains, generated by the managers’ ability to control and efficiently orientate the company evolution. The leading function of a company as a system depends on its modality of purchase, hire resources or inputs of working services, assets and raw materials and of transforming them in outputs as goods and services destined for market. In this way, we can say that inputs owners use the income acquired from selling and/or hiring of production services factors to purchase other goods and services produced by other companies. In this manner we can talk of a circular flow generated by the economic activity of companies; inside it the involved companies realize products and services for sale, contribute to create jobs, pay taxes, fees in exchange for some services offered by polity – education, health, etc. – services they can’t perform efficiently or can’t perform at all. The cybernetic systems comprise systems, which constitute an assembly of people, machines and other resources and which are in interaction, in order to reach some objectives, characterized by auto regulating process on the basis of conversely connection or feedback. By cybernetic-industrial system „we understand any kind of industrial production unit, or division of it (enterprise, section, manufactory, process lines, machines, installation, working places), like any other reunion of such kind of units that auto adjust through a feature conscious of human nature, in order to reach the proposed objective”. If we take into consideration the definition of cybernetic system, we can say that enterprise is a cybernetic system, which includes in its structure subsystems that mutual interfere. At every subsystem level activities are performed to combine and using the available know-how and the specific elements of organizational management to enable use of available resources in the most efficient manner, under conditions of minimal costs. The cybernetic system functioning is possible only when it has at least one converse connection-feedback. Converse connection (feedback) always transfers information from user to source; information transfer can be accompanied by the transfer of accumulated substance, energy or information. Feedback mechanism’s good functioning is assured by possibility that, inside the system, different and complex effects can be transmitted, through the level and status variables. These effects correspond with different types of commands (decisions) / actions that can be applied in a cybernetic system. Considering that a system dynamics can be described as a catenation of flows and accumulations, to describe a cybernetic system we need only two types of variables: - Integration variables (named level variables - N); - Flow variables (named rhythm variables -R). Considering that a dynamic system has at least a feedback loop, results in finding that the simplest dynamic system is the feedback loop itself, which, being a dynamic system, can be represented through catenation of level and rhythm variables, as it results from figure no. 2: R Fig.nr 2 N In other words, the essential function of a company inside an economy is given by its aggregate offer on outputs market and by its supplies from the inputs market. In that way it creates two principal feedback loops, one between products/services market and company (F1), and the other between company and production factors market (F2), as it results from figure no. 3. 57 Market of Products and services F F1 Company Market of Resources generator factors F2 Fig.no 3 The first feedback loop (F1) has the role to adapt production to the request of goods and services market, expressed through: quality, quantity, prices, performance, quality –price ratio, offered maintenance/ service etc. Through the mediation of goods and services market prices, the company builds its offer that will be presented in the market, contributing like this to the aggregate offer. As a consequence, the total income obtained from products sale on the market depends on degree in which the offer satisfies the market aggregate offer. This cycle recommences, when the company uses a part of obtained income and information contained in products market prices in order to release a new offer. The second feedback loop (F2) is used to adapt production to generated resources factors offered. The request to generate production resources factors launched by the company is based upon the production programme and inputs prices on the production factors market; it represents a part of total factors request. As a consequence of this demand, the company gets a certain quantity of resources that allow it to make a certain quantity of products for sale. In other words, the loop made like that acts like a restriction on the loop made with goods and services market, allowing, in that way, to make a bigger or smaller quantity of products depending on inputs quantity that can be purchased on the market. For instance one can use the van Hilten, Kort, Van Loon model that is based on reason that enterprise can purchase any amount of inputs from the factors market on which it acts, but as much as the disposable funds permit. Therewith, the model is based on the following elements study: a) Production, selling and exploit income; b) Financing and company taxes; c) Performance criterion. To state this model one must study separately every element mentioned above, emitting a calculus equation for these. In consequence: a) Production, selling and exploit income We presume the next simplifier elements: - The company practices an un-homogeneous product, - The production level is determined by a single production factor, the cash that company disposes at a certain moment t. Q(t) = q K(t) (1) Where: K(t) = cash or capital goods existing at the t moment q = cash productivity or products made from a unit of capital good. We presume that: - q is short term constant, - Q (t) sold in same period in which it is produced, so, the company doesn’t hold a product stock at the end of period t If one considers the economic rule of diminishing incomes, then: S(Q(t)) = P Q(t) (2) Where: S = income realised from products sale P= sale price, which is presumed to be constant during t period Sale function S, is ascending, concave and positive, if Q>0. The exploitation income is determined as difference between sale income and production cost. Because one has taken into account only one production factor, K, production cost will include only 4. Mathematical Model for Optimal Shaping of an Enterprise Over the years, one pointed out a lot of preoccupations concerning companies’ future development, based on optimal development dynamic models. The emitted models are complex, succeeding in a good manner to relieve the main decisional politics and mechanisms used in order to lead the company in certain optimal evolution trajectories. The basic model of the company has the role to explain the main relationships that are establish between the main sub systems of company: sale, production, profitability and finance. 58 the expenses of capital goods. Depreciation is proportional with value of existing capital goods K(t), and their price is considered to be equal with a circulating medium. V(K(t)) = (qP - a) K(t) (3) Where: a = depreciation rate of capital goods = amortisation (0<a<1) b) Financing and company taxes Corresponding with cash - assets, one presumes that the company emits capital stock X (t), and/or raises bank loans Y (t) – liability. The calculus equation between the assets and liability value will be of shape: K(t) = X(t) + Y(t) (4) In other word, to get the capital goods the company resorts to a capital stock emission and to a bank loan. If, one knows the capital goods in the moment of company foundation K (0) = K0 and the existing capital stock, X (0) = X0 , then the company debt is equal to 0. If the company raises the value of capital stock emitted during its existence, then the company can hold a part of value resulting from its sale; another part can be used for taxes, fees, interest payment, to cover the production expenses (depreciation), and another part to cut the melon to the stockholders. If we note: - Sale incomes = S(Q) Respective for the accounts assets - Depreciation= Ak(T) - Paid Interest = R Y(T) - Profit Fee = F(K, Y) - Paid Dividends = D(T) - Income Held = E(T) Respective the account liability In consequence, we can specify that F(K, Y) is the taxes and fees function F (K , Y ) = F ⋅ (S (O ) − aK − rY ) (5) Where f = profit tax rate We mention that the tollage is applied to gross returns, which remain after subtraction of incomes obtained from sales, of expenses with replacement of depreciated equipment and of financial expenses (paid interest). -If the held income E(t) is used for stocks value increase: X (t ) = E (t ) , then from profit and loss account we can get the equation: ⋅ In this case we can judge that the above-mentioned equation is the equation of dynamics of company stocks value. The same for the profit and loss account, the cash flow account represent a source of information, furnishing data concerning company cash flow in a certain moment, whom components we note: - Sale Incomes S(Q) - Debt growth Y (t ) that constitute the account assets, and - Paid Interest Zy(T) - Gross Investment I(T) - Profit Tax F(K,Y) - Company dividends D(t) that constitute the liability of account mentioned above. Differentiating the equation (4) one obtains: ⋅ K (t ) = X (t ) + Y (t ) which says, that cash growth is equal with stocks value growth added with debt growth. If we analyse the assets account, we have: ⋅ ⋅ ⋅ Y (t ) + S (Q ) = rY (t ) + I (t ) + F (K , Y ) + D(t ) And using equation (7) one obtains: ⋅ Y (t ) + (1 − f )[S (Q ) − rY (t ) − aK (t )] + + aK (t ) − D(t ) = I (t ) but X (t ) = (1 − f )[S (Q ) − rY (t ) − aK (t )] − D(t ) then ⋅ Y (t ) + X (t ) = I (t ) − aK (t ) Considering that K (t ) = X (t ) + Y (t ) , The equation of dynamics of cash stock will be: (8) One can introduce an upper limit of debt, which the company can contract, depending on maximal obligation rate k applied to stocks value at t moment Y (t ) ≤ k ⋅ X (t ) (9) c) Performance criterion If one wants to maximize company value on a finite time horizon [0,z], then the criterion can be written as: CP = max ⋅ ⋅ ⋅ ⋅ ⋅ K (t ) = I (t ) − aK (t ) ⋅ ⋅ E (t ) = (1 − f )[S (Q ) − aK (t ) − rY (t )] + D(t ) (6) and considering that one obtains: ∫e z − it D(t )dt + e − iz X ( z ) S (Q ) − aK (t ) = V (K (t )) − aK (t ) (7) X (t ) = (1 − f )[V (K (t )) − rY (t )] − D ⋅ This criterion implies a dividends policy, which leads to the biggest company value. Also it is mentioned that - The dividends are liable to negativity constrain: D(t ) ≥ 0, ∀t ∈ (0, z (10) - The company value is influenced by the company investments policy. On these lines it can be presumed ] 59 that investments I(t) are included between a maximal and minimal limit: to introduce in calculation this structure, and supplementary hypothesis for its solving can be stated. I min ≤ I (t ) ≤ I max ⋅ ⋅ ⋅ ⋅ ⋅⋅ (11) 5. Conclusions 1. The quality concept’s evolution is bound with cybernetic evolution of production system; a direct correlation between clients’ request and producers‘ technical/technological possibilities, under terms of promoting a real competition is assured through this. 2. The broadening of quality management concept must have in sight the relation quality-cost; by this relation the producer has the possibility to evaluate, yet from primary stage, the possibilities to recover the investment in quality. 3. The approach of modeling process of a production structure using multivariable models that implies aspects concerning the quality system, allows business risk diminishing. where I min si I max are given. Under these conditions, the optimal criterion of company can be written as: J = max ⋅ D (t ), I (t ) ∫e 0 z − it D(t )dt + e − iz X ( z ) In above equation e , t ∈ (0, z represent the updating function, in which i is the updating rate of the respective values. Considering the above mentioned issues, the complete mathematical model of company development model, in which: - it is requested the policies determination D(t), − it (12) ] I(t), t ∈ (0, z and max ⋅ ] D (t ), I t e ( )∫ 0 z − it D(t )dt + e − iz X ( z ) , REFERENCES: 1. Brian Rothery, ISO 9000& 14000. Ed.Gower Publishing Limited, Hampshire 2000 2. Chang Richard Y, Continous Process Improvement, Ed. Kogan Press,Londra 1995 3. Ion Danaiata, Organizarea muncii in conditiile revolutiei tehnico-stiintifice, Ed.Facla, Timisoara, 1989 4. Ioan Constantin Dima, George Constantin, Managementul Firmei, Ed. Scrisul Românesc, Craiova, 1999 5. John Oakland, Total Quality Management, ed.Butterworth Heinemann, Londra 1995 6. Noori Hamid, Radford Russel, Production and Operations Management- Total Quality Reponse, Ed.Mc Graw –Hill, New York 1995 under conditions: X (t ) = (1 − f )[V (K ) − rY (t )] − D(t ) , K (t ) = I (t ) − aK (t ) , K(t) = X(t) + Y(t), and 0 ≤ Y (t ) ≤ k ⋅ X (t ) , ⋅ ⋅ D(t ) ≥ 0 , I min ≤ I (t ) ≤ I max X (0 ) − X 0 , K (0) = K 0 then a,f,i,r are given constants with values between 0 and 1 , and k,q,z are constants un negative. Certainly the solution concerning the optimal size of a company depends on its financial structure. So, to solve the optimum problem stated above it is necessary 7. ⋅ ⋅ ⋅⋅ 60 A CYBERNETIC PLAN TO ENGENDER COLLABORATIVE CULTURES Robert G. Dyck Professor Emeritus, School of Public and International Affairs, Virginia Tech 2905 Ashlawn Drive, Blacksburg, VA 24060,USA bobdyck@vt.edu Abstract: Cultures of collaboration are necessary for successful applications of systems thinking and systems theory, but cultural frameworks are not usually considered or planned from the perspective of cybernetics. Accordingly, this paper will utilize key concepts from Norbert Wiener and W. Ross Ashby in a new juxtaposition with ideas from Sally J. Goerner (integral science), John Nash (bargaining theory), Martin E. Marty (hospitality to pluralism), Saul D. Alinsky (community organizing), Robert G. Dyck (ideas to supplant neo-liberalism), Benoit B. Mandelbrot (fractal geometry and economics), and Nikos A. Salingaros (fractal analysis and design). Keywords: cybernetics, fractal geometries, oligarchy, strategic systems planning, subsidiarity. 1. Introduction The guiding premise of this paper is that oligarchic control is both the hallmark of modern civilization and also the source of its cyclical instability and the pending demise of its component modern cultures. Anthropologists have demonstrated that, from 18,000 BC to 3,000 BC, human civilization relied principally upon partnership arrangements for survival, socioeconomic development, and mutual support. But from 4,000 BC to the present, partnership systems were replaced by the war-based, hierarchical, oligarchic systems still used today in most parts of the world (Eisler, 1988). Now, we may be poised for a new stage of organizational development based on networking and collaborative social learning. A more integral global society is emerging because (1) command-and-control hierarchies are unable to cope with today’s complexity; and (2) the dominating economic and political pursuits of the oligarchies are destroying the resource base and social foundations of grassroots societies throughout the world (Goerner, 2004). Unfortunately, the prevailing views about cooperation and rationality, as embodied in neoclassical, neo-liberal, and neo-conservative traditions in economics and politics, are based on the premise that rational decisions are essentially self-interested. By extension, with a few exceptions, these traditions imply that cooperation and altruism are irrational. Yet many thriving collaborative enterprises exist in societies all over the world. And many communities in nonwestern, less individualistic societies reflect wide-spread collaboration as a cultural norm. Cooperation clearly requires more systemic exploration. A related conceptual bias, engendered by the prevailing cultural mind-set, is that Darwin’s competitive “survival of the fittest” ideas tends to exclude his findings about the more important role of collaborative processes, both within and among organisms. Thus, cultures of cooperation in the natural world have been paid relatively little attention until recently. The perspective of integral science, however, drawn mainly from systems analysis in the natural and physical sciences, helps redress this imbalance. The common thread of self-organizing energy transfer, found today in all fields of science, links information processing (intelligence), organic response (collaborative learning), and increasingly intricate organizational structure, in the evolution of all living organisms. A sequential S-curve development cycle is all-pervasive, leading either to increased levels of intricacy or ultimate collapse, with applications ranging from very small to very large entities, including civilizations (Goerner, 2004). At one level, based on experience, we can say that strategies for engendering cooperative cultures in a systems context should include the following: • Systems Education. To be fostered in all public education at all levels. • Leadership and Leadership Training. Crucial to collaborative processes. • Social Learning by Doing. See Fig. 1, a model of cultural evolution showing that large changes in cultural outlook may be generated as a summation of positive collaborative incremental changes in component ecological subunits. • “Appropriate” Science and Technology. Appropriate to systems that are collaborative at all levels from local to global. • Cooperative Organization and Financing of Science and Technology. Shared ownership, management, and control of systems-oriented enterprises in science and technology. The field of cybernetics, however, offers a more tightly conceptualized, more powerful way of organizing and shaping cultures that are collaborative. The term cybernetics was invented by Norbert Wiener to embrace the probabilistic theory of messages as a 61 means, ultimately, of controlling society as well as machinery. He derived the word from the Greek word kybernetes, or “steersman,” the same Greek word that leads ultimately to our word “governor.” Wiener discovered later that the same word had been used by Ampere with reference to political science, in the early nineteenth century (Wiener, 1950, 1954). Now we are ready to consider the possibility of guiding progressive cultural change by application of well-known cybernetic principles, in concert with other fundamental principles from several related fields, as outlined in the following parts of the paper. 2. Wiener’s Communications Thesis The thesis of Wiener’s classic book, The Human Use of Human Beings: Cybernetics and Society, is that “society can only be understood through a study of its messages and the communications facilities which belong to it” (Wiener, 1950, 1954, 16). This is both fundamental and sweeping. We must note also that Wiener classes communications and control together, because control cannot occur without communication. However, the title of his book suggests a more selfinterested view of the utility of others than indicated by the idea of consensual collaboration, which of course also requires communication. Nonetheless, Wiener makes it clear that he is much more supportive of relatively loose social structures, allowing opportunities for human learning, than of rigid control of other humans in the name of efficiency, which occurs in every fascist state (op. cit., 48-59). Here we find a significant parallel with the findings of integral science, which assumes collaborative social learning as fundamental to productive society and its survival, together with intricate organizational and communications structures. Since oligarchic social organization militates against social learning, we may also posit that controls against oligarchy, as well as against non-productive social conflict engendered by oligarchy, are necessary to protect and enhance social learning. are soft, but effective tactics, growing out of the Golden Rule, for mediation of conflicting hard-line (rigid, uncompromising) faith, economic, and political positions. Marty’s advice comes in the context of rapidly growing religious and cultural pluralism in the United States, sharply polarized debate in the U.S. concerning its immigration and naturalization policies, and growing consciousness of cultural differences at the international level. Conflicting ideological and policy positions are often hard-line because of perceived threats, but frequently the positions do not do justice to reality, and usually do not solve the conflicts. Marty proposes conversation, rather than argument, as the form of communication best suited to mutual understanding and amelioration of differences. 3. Ashby’s Law of Requisite Variety: the Role of Subsidiarity W. Ross Ashby, in his classic book, An Introduction to Cybernetics (1956, 1966) reminds us that if society wants to regulate or control itself (e.g., to be more collaborative), the Law of Requisite Variety requires that only variety in R can force down the variety due to D; only variety can destroy variety (207). R therefore must seek to work strategically (245), with regulation of error (222), and with amplification of the regulating mechanism (265 ff), in order to be effective. In practice, the principle of subsidiarity is easy to understand as a salient means of implementing Ashby’s Law. It states that “matters should be handled by the smallest (or, the lowest) competent authority” (Wikipedia). The Oxford English Dictionary defines subsidiarity as the idea that central authority should be subsidiary to other levels, performing only those tasks that cannot be performed effectively at a lower level. What this principle accomplishes, in effect, is to broaden the base of participation in a social system so that it is commensurate with the complexity of the problems that must be solved by the system. The word subsidiarity is derived from the Latin word subsidiarius and has its origins in Catholic social teaching on socioeconomic equity and justice (papal encyclicals of 1891 and 1931, as well as the 1986 pastoral letter of the U.S. Conference of Catholic Bishops, Economic Justice for All). It is found in several constitutions around the world, including the Tenth Amendment to the U.S. Constitution, namely, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States, respectively, or to the people.” Subsidiarity is also one of the features of federalism, by which powers and responsibilities are shared with competent lower levels of government. In addition, subsidiarity appears as a guiding principle of faith-based community organizing (FBCO), a U.S. social movement for democracy involving the poor and the disenfranchised working together to secure living wages, affordable housing, 2. Nash’s Bargaining Theory and Marty’s Hospitality Rule Consistent with Wiener’s communications thesis, individuals and organizations must learn to achieve such consensus between collaboration and conflict as to secure mutual advantage, as suggested by Nash’s theory of the two-person bargaining problem (Kuhn and Nassar, The Essential John Nash, 2002, 37ff). In other words, appropriate communications can lead to learning and in turn to avoidance or at least minimization of conflict. An interesting corollary is provided by the wellknown religious historian and theologian, Martin E. Marty. In his recent book, When Faiths Collide (2005), Marty proposes that risked hospitality and generosity 62 quality schools, health care, and safe neighborhoods for their families and communities. FBCO began with Saul D. Alinsky, who founded the Industrial Areas Foundation (IAF) in the old Chicago stockyards neighborhood made famous by the muckraking author, Upton Sinclair, in the 1940s. Alinsky coined the socalled Iron Rule of Organizing: “never do for others what they can do for themselves.” But this is simply another expression of the subsidiarity principle. Perhaps Alinsky used the name Iron Rule of Organizing to counter Robert Michels’ Iron Law of Oligarchy, a political theory stating that all forms of organization, no matter how democratic or autocratic at the beginning, will eventually and inevitably develop oligarchic tendencies, thus making true democracy practically and theoretically impossible, especially in large groups and complex organizations. Michels, a German sociologist, was an anarcho-syndicalist when he first developed his theory, and later became an important ideologue of Mussolini’s fascist regime in Italy. He claimed that oligarchy is inevitable because of the need for delegation of authority, bureaucratization, and specialization in large, hierarchical, and complex organizations (Wikipedia). We must consider whether the Iron Rule is more serviceable than the Golden Rule when we are attempting to mediate issues of structural disparity, i.e. circumstances of oligarchic political and economic oppression. In that situation there is a three-way relationship between the oppressing institution(s), the oppressed person(s), and the agent(s) of social change and justice. The Iron Rule has the advantage of bringing requisite variety, including power wielded by the oppressed participants, to the bargaining process. It is not difficult to appreciate that the Golden Rule may be more effective as a basis for dealing with one-onone relationships than in situations marked by the need for mediation of oppression caused by the exercise of opportunistic, self-serving, oligarchic power. demonstrated, in addition, that production units larger than 500 persons were neither efficient nor effective, based on the necessary consensus-seeking processes that informed Mondragon management practices. The Mondragon success suggests the broader need to organize relatively small, but diverse, selfmanaged sub-units of democratic political discourse and economic productivity as at least one demonstrated strategy for cultures to learn how to become more collaborative (see Dyck, 2004; Lutz, in Dyck and Mulej, 1998; Morrison, 1991, 80-81; and Whyte and Whyte, 1988.) Inherent in the Mondragon model are the organizational seeds to supplant the oligarchic control of politics and economies that characterizes neo-liberalism and its more extreme cousin, neoconservatism. 5. Fractal Rules of Cybernetics and SocioEconomic Development Before Benoit B. Mandelbrot coined the term fractal in 1975, fractal geometric shapes were regarded as “isolated curiosities with unnatural and non-intuitive properties” (Wikipedia). Thus, fractal analysis was not a mathematical tool available to the founders of cybernetics. However, Mandelbrot was interested in information theory as well as economics (2004) and fluid dynamics, and was the first mathematician to recognize the common properties of fractals running through these disciplines, including self-similarity and scale invariance, which have turned out to be of enormous utility in plotting energy and information exchange to and from network components of different scale. We now recognize, that fractal linkages up and down from the smallest to the largest units of social organization (i.e., at all levels of scale) are essential to facilitate communications and encourage collaboration. We can now say, for this reason, that fractal linkages should encompass the topics mentioned at the outset of this paper, including systems education, leadership and leadership training, social learning through collaborative projects, science and technology “appropriate” to collaborative systems, and collaborative ownership and management of science and technology. In addition, it is now clear that the interrelated rules of fractal connectivity (linking self-similar nodes of different scale) and fractal coherence provide new mathematical clarity and precision to guide collaborative planning of projects of all kinds, ranging from stimulation of local entrepreneurship, to city and regional planning, to international relations, to cultural change, thus encompassing all levels and kinds of social organization. Salingaros (2003) has outlined what these rules mean for city planning, but the rules are equally applicable to the other areas of endeavor, because in all cases we are concerned with exchange of 4. The Mondragon Industrial Cooperatives, Scale Considerations, and Ideas to Supplant Neo-Liberalism Founded some 50 years ago in the wake of the Spanish civil war in the Basque region of northern Spain by a simple parish priest, The Mondragon Industrial Cooperatives have become widely known for their successful utilization of many of the ideas discussed above, as well as for their economic productivity, high average incomes, and equitable community-based social services of high quality. Worker ownership and participation in management played a huge part in these successes, as well as minimization of middle management and limitation of the ratio of highest to lowest salaries. Intricate yet open organizational structure, institutionalization of social learning, and operationalization of the subsidiarity principle were all important. The experience of the cooperatives 63 energy and information. In effect, we now have a whole new way of thinking about cybernetics. In the case of connectivity, we are interested in constructing multi-layered networks that have very large numbers of fine-grain connections and a much smaller number of large-scale connections allowing short and efficient “small world linkages,” based on a fractal inverse power law hierarchy (e.g., a scale-free city that has the majority of its connections at the smaller scales, so that the shortest paths predominate). Note that a typical modern city, organized to protect the power of oligarchies, tends to minimize small grain connectivity in favor of large-scale highways, parking lots, suburban shopping centers, and metropolitan sprawl. Similarly, with regard to fractal coherence, we are interested in a fractal (scale-free) city with structural components or nodes at all scales, ranging from the size of the city itself down to the micro-dimensions of the building materials. Again, the smaller the urban components, the more numerous they have to be, following a fractal inverse power law distribution. The most revolutionary aspect of this theory is that it requires the distribution of built structures to be skewed towards the small scale, thus undoing the large-scale bias of 20th century city planning (Salingaros, op. cit.). But the theory also provides for mixed land uses and improved definition of large-scale urban structures by means of identifiable but permeable boundaries, quite different from today’s typical amorphous urban sprawl defined by uniform low-density single family residential land use and sharply defined lot boundaries, without discernable centers of social activity. Again, it is obvious that the disconnected modern pattern has been designed to promote and enhance the power of oligarchic corporatocracy, including the automotive, mortgage banking, construction, and media industries, aided and abetted by the bureaucratic machinery of government. It is now becoming clear that organization of social information exchange can be substantially improved, utilizing fractal rules regarding communications, with benefits accruing especially to increased levels of collaborative activity and reduced hard-line conflict. These conflicts are caused in large part by “the race to the bottom” that characterizes prevailing economic development, as promulgated by self-aggrandizing oligarchies on a globalized basis, with the support of policy structures that are neo-liberal at best and neo-conservative at worst. The good news, however, is that the same fractal rules of connectivity and coherence can be equally well employed in economic development (Dyck, forthcoming). 6. Concluding Comments No doubt it is high time to reconsider the rules of social inter-linkage, extending well beyond traditional federalism, that would provide the basis for national constitutions and business charters that are fractal in character. Now that we are experiencing the first throes of what is fast becoming a new Fractal Age, we need new structural guidelines, analogous to the revolutionary U.S. Constitution of more than 200 years ago, which was constructed based on the emerging principles of the Enlightenment. Where the original Constitution supported the rationalism and individual freedom espoused by the Enlightenment, the new Constitution would support a return towards community and cultures that are more collaborative, based on the new mathematical geometries, cybernetics, and social insights of the Fractal Age. Ideas that should be embraced include fractal nesting (a more integrated form of federalism) in terms of intergovernmental relations; inter-linkage of governmental and private sector institutions for management and finance, serving all levels of society; the role of planning in the context of legislative, judicial, and executive functions; the substantive specialization of certain branches of legislative bodies, representing more than just geographical territories; the appropriate role of collaborative proceedings, as well as adversarial proceedings, in law and other decisionmaking processes; assurances of real honest-to-god, accurate, fully shared public communications, along with protection of greater equality of economic opportunity, civil rights, public education and public health; new forms of territorial governance based on multi-state, regional, and megalopolitan units at the upper levels of organization, with attention also to the localized building blocks of socio-economic development at the lower levels, together with their fractal linkages with all scales of activity; progressive collection and distribution of public revenues; public financial support of political campaigns; the depersonalization of corporations, so that they do not live longer and better than the real people they serve nor those who own and manage them (Hartmann, 2002); and the eventual replacement of ministries of war with ministries of peace and non-violence. Congressman and Presidential aspirant Dennis Kucinich, of Ohio, has been working in recent years towards the establishment of a Department of Peace and Non-Violence in the United States (Kucinich, 2006). He and others are beginning to recognize that the expansive oligarchic powers and expenditures of the U.S. Defense Department require, at the very least, countervailing balance inspired by positive social productivity. Attention also needs to be paid to the institutional structural requirements of transition from oligarchic to partnership societies. Key issues will include how the political parties of the Fractal Age will constitute and differentiate themselves. The transition from rank individualism to a new emphasis on community, at all levels, will certainly play a pivotal role. Undoubtedly, multiple political parties will be useful to articulate and advocate the range of available social choices. To not 64 have political parties would invite lack of innovation, at best, and oligarchic control and corruption at worst. In general, we should advocate non-violent evolutionary rather than revolutionary transition mechanisms, to negate loss of life and other traditional revolutionary frictions and dys-functionalities. We should examine how the Zapatistas and other marginalized social groups seek to obtain control, without taking power in the traditional revolutionary manner, which always perpetuates the old oligarchical injustices (see Holloway, 2002). We should also consider the role, more generally, of nation-wide and perhaps world wide social movements. The Mahatma Gandhi and Martin Luther King non-violent change models both provided prototypes for significant increases in social justice during the Modern Age. How must such movements be modified in the Fractal Age? REFERENCES 1. Alinsky, S. (1971), Rules for Radicals. Random House, New York. 2. Ashby, R. (1956, 1966), An Introduction to Cybernetics. Science Editions, John Wiley and Sons, Inc., New York. 3. Dyck, R. (forthcoming), “Fractal Planning for Integral Economic Development,” in Kybernetes 35, 2006. Emerald Group Publishing, Ltd., Bradford, U.K. 4. Dyck, R. (2004), “The End of Neo-Liberalism and the Beginnings of Integral Economics,” in World Futures, 60: 311-317, 2004. Taylor & Francis, Philadelphia. 5. Dyck, R., Mulej, M., and Coauthors (1998), SelfTransformation of the Forgotten Four-Fifths. KendallHunt, Debuque , Iowa. 6. Eisler, R. (1988). The Chalice and the Blade. Harper & Row, San Francisco. 7. Goerner, S., Guest Ed. (2004), “Entering the Integral Age: How Integral Science Supports Today’s Global Social transformation,” World Futures, The Journal of General Evolution, 60: 271-286. Taylor & Francis, Philadelphia. 8. Hartmann, T. (2002), Unequal Protection: The Rise of Corporate Dominance and the Theft of Human Rights. Rodale Press, Emmaus, PA and New York. 8. Holloway, J. ((2002), Change the World Without Taking Power: The Meaning of Revolution Today. Pluto Press, London and Sterling, VA. 10. Kucinich, D. H.R. 3760, introduced Sept. 14, 2005, with 61 co-sponsors, provides for a Cabinet-level Department of Peace and Non-Violence (http://www.kucinich.house.gov). 11. Kuhn, H. and S. Nasar (2003), Eds., The Essential John Nash. Princeton Univ. Press, Princeton. 12. Marty, M., (2005), When Faiths Collide. Blackwell Publishing, Oxford, UK and Malden, MA. 13. Mandelbrot, B. and R. Hudson (2004), The (Mis)Behavior of Markets: A Fractal View of Risk, Ruin, and Reward. Basic Books, New York. 14. Morrison, R. (1991), We Build the Road as We Travel. New Society Publishers, Philadelphia. 15. Salingaros, N. (2003), Connecting the Fractal City. Keynote Speech, 5th Biennial of Towns and Town Planners in Europe (Barcelona, April 2003). Available on the World Wide Web under Salingaros. 16. Whyte, W. and K. Whyte (1988), Making Mondragon. ILR Press, Cornell University, Ithaca. 17. Wiener, N. (1950, 1954), The Human Use of Human Beings: Cybernetics and Society. Doubleday Anchor Books, Garden City, NY. 65 66 SYSTEM COMPOSITE OF THE TRIPLET’S OF STRATEGIC OVERVIEW – LINKS AND PREREQUISITES Adriana Grigorescu NATIONAL SCHOOL FOR POLITICS AND PUBLIC ADMINISTRATION 6, Povernei Street, Bucharest, cod 70000 ROMANIA Tel: 0040-310 08 98; 0040-724 253 666; Fax: 0040-21 410 25 82 E-mail: adrianag@snspa.ro adrianag@digicom.ro Abstract In the paper presented in 2004, we started from the definition of European Union constitution: “The Union protects the interest of union, country members and European citizens” and we proposed a set of triplets of strategic overview for European integration and sustainable development. The identified triplets were at macro and micro level of the socio-economic system. Through the important triplets identified among the fourteens identified could be placed as follows: European Union (UE) – State Members (SM) – European Citizens (ECz); European parliament will (PW) – national commitment (NC) – personal desire (PD); sustainable development(SD) - environment protection(EP) quality of life(QL); economics(EC) – social climate(SC) – politics(P); material resources(MR) – financial resources(FR) – human resources(HR); life security (peace)(LS) – food security (survival)(FS) – environment security(ES); agriculture development (AD) - industrial development (ID) – infrastructure development (IsD); jobs/salaries (JS) – affordability/ expenses (AE) - quality of life (QL) Due to the complexity of the socio-economic and politic environment it is hard to decide the priority of them. We identify a sum of factors and elements, with significant contribution on the future effects and we consider that for a strategy design the outputs of all triangles are profitable. The aim of the research is to continue the triplets identification, to organize and link them on two dimensions: micro and macro level, and to get possible final structures by linking the two plans. This geometrical approach will allow us to use some model in defining the links and the prerequisites between the elements. The estimation of the dependence and or influence between the elements on the constructed system will offer a better understanding of the limitation that the government has to face with. On the other hand it could offer better explanations to the citizens or business representatives. At the same time, it could be an integration tool able to harmonize the national and international development objectives and interests. Key words: sustainable development, overview, strategy, prerequisite 1 Introduction triplets, The experience of the new member states of European Union shows that the national strategies should be according with the European objectives of development. At the same time the national disfunctions have too be solved by each government by it selves. Not necessarily, between the European and national levels there is a perfect synchronization and the expected results generate the predicted effects. This is the reason of searching for more information about „What’s happen next?”. The purpose of the research is to get a structure of the system that allows the strategies designers and the decisions makers to better understand and estimate the future effects of their acts. We are working on a system of national strategy designing by a holistic approach of triplet’s structures. A triplet is defined as a triangle of three elements connected and depending one to another. 2. The basic idea The system will be build up in more stages, using a geometrical placement of the triplets. Identify the triplets Group them by levels Organize and links in a plane form Potential reorganize in a space form Find out mathematical function that could relate de the factors Finalize a model of systemic approach. Since now several triplets were identified; in the paper presented in 2004 they were grouped by level of action in macro level triplets and micro level triplets, as follows: Macro level triplet 67 European Union (UE) – Member State (MS) – European Citizens (ECz) 2. European parliament (PW) – national commitment (NC) – personal desire (PD) 3. sustainable development (SD) - environment protection (EP) - quality of life (QL) 4. economics (EC) – social climate(SC) – & policies (PP) 5. material resources (MR) – financial resources (FR) – human resources(HR) 6. international security (IS) - national security (NS) – personal security (PS) Micro level triplets 1. life security (peace) (LS) – food security (survival) (FS) – environment security (ES) 2. life security (peace) (LS) – advanced technology (AT) – industrial development (ID) 3. food security (FS) – agriculture development (AD) - environment protection (EP) 4. agriculture/utilization (AU) – industry/ pollution (IP) – un-recovered issues (UI) 5. union (trade-union, employer-union) (TU) – governments (GV) – civil society (CS). 1. jobs/salaries (JS) – affordability/ expenses (AE) - quality of life (QL) Next triptic was initially considered as a micro level one, but it could be as well a macro level triptic also, so it was delimitate individual. 1. agriculture development (AD) - industrial development (ID) – infrastructure development (IsD). The next step we are presenting is to organize them by link and by interactions. These will give an idea about what will happen if we change something in one item. 6. 3. Groups of triplets and interactions The firs tow triplets we have to consider are the „rocka-bottom triplets”: European Union (UE)– Member State (MS)– European Citizens (ECz) European Parliament (PW) – national commitment (NC) – personal desire (PD) Due to the fact that the first one represents the context of future development of Europe and the second the national reflection, they should be placed face to face: Figure 1 UE PW MS NC According to Figure 1, the European Union expresses its objectives, strategies and the mechanism that will lead to expected results by the European Parliament. The member states express their participation and involvement by national commitment. ECz PD The statute of the European Citizen induces the personal desire of a better life. Another type of link for these triplets is to place them on the same plane surface and than link the next triplet: sustainable development (SD) - environment protection (EP) - quality of life (QL) Figure 2 UE PW MS NC SD ECz PD QL EP 68 The perception of the quality of life is expressed in jobs and wages that allow people to satisfy their needs and desires. So the link is by quality of life with the next triptic: jobs/wages (JS) – affordability/ expenses (AE) - quality of life (QL) Figure 3 UE PW MS NC SD ECz PD QL QL EP AE The jobs, wages, affordability is very close relate with the results of the social dialog between the tradeunions and, employer-unions, government representatives and/or upon the civil society reaction, comments, signals etc. We can link the triptic: union (trade-union, employer-union) (TU) – governments (GV) – civil society (CS) by connecting the JS with TU and AE with CS. JS Environmental protection represents one of the most important priorities of the European Union agenda. There are strict regulation about the penalties for the polluters and the measurement that the companies have to take to avoid or reduce the pollution of air, sole, water. All the actions aim at the conservation of the environment, at present parameters, that still guarantees life in good condition. The effects of pollution could be present in agriculture development and later in food security. The Figure 4 UE PW Figure 5 ECz MS NC SD UE PW PD QL ECz QL CS MS NC SD JS EP TU EP AE GV TU FS AE PD QL CS EP QL GV AD JS 69 simplest example is the climate change that allows the more lend or the raining seasons with floods that affect big areas of crop. These allow us to link the triptic: food security (FS) – agriculture development (AD) - environment protection (EP). Industrial development is a result of new technology. glaciers to melt and to cover more and The agriculture development is related with the industry and both depend on the infrastructure. Starting with the products exchange and later the commerce development the products, agricultural or industrial, are exchanged around the world. industrial development (ID) Figure 6 UE PW MS NC SD IsD ECz ID EP AD AD EP GV TU FS AE PD QL CS QL JS Now the most important transformations are coming from the very fast evolution of technology, especially high-tech. After the Second World War, the scientific discoveries were mainly taking place in the military area of interest. Later they spread out to the civil life, so the first roles were to guard the life and to safeguard the peace and then to improve the quality of life. Here comes the opportunity to link the next triptic: life security (peace) (LS) – advanced technology (AT) – But, we all know that life security is determined by food security and environment security. Even if individuals are not very much involved in debates of these subjects, directly or indirectly everybody is concerned about them. An idea about it is reflected in efforts to go back to nature: ecologic food, agriculture tourism, natural fiber clothes etc. The triptic: life security (peace) (LS) – food security (survival) (FS) – environment security (ES) Figure 7 A LS E U P M ID ID N SD PD Q CS Q G T FS A Is A A EP EP JS 70 could be connected also by agriculture development The life security is part of the personal security Figure 8 LS LS AT ID ID IsD EC UE ES FS MS NC SD PW PD QL EP CS QL JS AD AD EP GV TU FS AE that turns from a chemical agriculture with better production quantity to the natural one. The environmental security comes together with the environmental protection, due to the fact that in addition to the pollution issues comes the sustainable exploitation of natural resources. that is related with the national and international security. A pace climate offers the possibility for each nation to preserve its history and assets. One of the EU aim is to protect the EU citizens and member states’ achievements. This gives the opportunity to add to the construction the triptic: international security (IS) national security (NS) – personal security (PS). 71 Figure 9 NS IS PS EC LS UE LS AT ID ID IsD ES FS MS NC SD PW PD QL EP CS QL JS AD AD EP GV TU FS AE The last tree triptics: agriculture/utilization (AU) – industry/ pollution (IP) – unrecover issues (UI); economics (EC) – social climate (SC) – politics & policies (PP); material resources (MR) – financial resources (FR) – human resources (HR) will be related with the potential connection they have. 72 Figure 10 NS IS PS EC LS UE NR HR ES AT ID ID IP IsD UI AD AU AD FS EP GV EP MS PW NC PP FR EC FS SD PD QL CS SC QL JS TU AE 4. Final geometric building Figure 10 shows a potential organization of the mentioned triptics in a geometric structure, placed on the same surface. It is obvious that could be added new triptics and there are some more options to arrange them, but on our opinion, there are versions of the same building. At this stage the building does not lead to a very structured geometric figure, it only shows the link between the items taken into account. It was not supposed to find the mathematic expression of the links and to relate them to certain indicators. There is a possibility to identify a better organized plane structure that could be then expressed in mathematical formulas. One of the important steps will be to determine the elements that could be used as axis (x, y), and to arrange the figures in the positions that reflect their evolution based on these factors. On the other hand three axis (x, y, z) or more could be taken into consideration. The extension of the axis number has to be made after an analysis between the items taken into consideration and the factors hat could influence their evolution. This approach will allow us to think about a space building that could be formed only by placing the triptics on the external surface or could allow also internal additions. 5. Conclusions The empirical structure of linking the triptics that are involved in socio-economic environment shows, in our opinion, that the decision makers should pay more cautions when they decide regarding an item in terms of its potential effects on others. That means that sometimes we are very strictly related to a subject to be able to imagine that it could have effects to an unexpected area. Triptics we propose were neither selected according with a certain criteria nor were there any concerns about a theoretical structure and scientific methodology involved in our exercise. The paper aims to highlight the opportunity of approach to the subject and to propose a possible way of solving the problem. At the same time, we are aware that using a strict methodology could jeopardize the whole project. There is another risk to never get to an end or to not be able to find out a classic geometric form that could be easier to express in mathematics. But the most dangerous risk is to have a useless model of strategies drawn up, mainly due to the fact 73 that it is too complicated to use or it is very difficult to collect the needed information. Nevertheless, the final geometric model shall lead, in our opinion, to a sphere, if all items are placed on their optimum position, even if it is not perfect. The main reason of our expectation is that our socioeconomic life has to have the same form as the planet itself. REFERENCES 1. Bouckaert G., (2000): RemodelingQuality and Quantity in a Management context, în volumul Public Productivity through TQM and strategic Management: International Perspective son Theory and Practice, IDM –IIAS, Rotterdam; Drucker, P.F. (1999): Realities of the world of tomorrow, Editura Teora, Bucharest. Drucker P., (2001): Management Strategic, Editura Teora, Bucureşti; Feldman P.L.,(1971): Societal Adaptation: A new challenge for Marketing; Grigorescu, A. (2003): Strategic decision in international trade, Editura Economica, Bucharest. Manolache, O. (1999): Communitary low. The four fundamental freedom. Communitary policies, Editura All Back, Bucharest. Pallitt C., Bouckaert G., (1995): Quality Improvement in European Public Services, Concepts, Cases and Commentary, SAGE, London; Rhodes R.A.W., (1987): Developing the public sector orientation, or let’s add a aoupcon of political theory, Local Government Training Board. 2. 3. 4. 5. 6. 7. 8. 74 CSR: EXPERIENCE AND KNOWLEDGE TRANSFER OF RETIRED EXPERTS FOR NON-PROFIT SECTOR DEVELOPMENT SUPPORT Anita Hrast IRDO - Institute for development of Corporate Social Responsibility, Maribor, Slovenia, anitahrast@siol.net Matjaž Mulej University of Maribor, Faculty of Business and Economics (EPF), Maribor, Slovenia, mulej@uni-mbi.si Abstract Corporate social responsibility is a holistic concept of company behaviour having many forms. In this paper authors investigate the form called Seniors Club that is aimed at retired experts’ knowledge and experience transfer to non-profit and for-profit organisations. A Slovenian experience is addressed. Keywords: Corporate Social Responsibility, Retired experts, Knowledge transfer, Social marketing, Nonprofit Organizations, Slovenia co-operation, which may include experts of different ages, including retires. 3 Slovenia Needs Retired Experts In 10 to 20 years from now, in Slovenia, a lack of labour force will appear, especially because of aging of Slovenian inhabitants. Unbalance between active and supported population will be greater as it is now and will be much more difficult to solve because of stable demographic movement (Svetlik, 1995). In Slovenia population is each year older; there is less active population from year to year. Approximately one half of population receives at least one form of pension. (Statistični, 2004). In Slovenia, activation degree of young people (age 15 to 19) and people older then 50 is mostly under European average. Due to smaller working activation of population, set mechanisms of state welfare are in overturn, as well as social reproduction. It will affect all social groups. Two central problems will appear: poorness and social exclusiveness. (Svetlik, 1995). Non-profit work may help. 1 Introduction The concept of corporate social responsibility (CSR) includes economic, social and environmental aspects (triple bottom line approach) in interdependence causing their mutual impacts from which new synergies emerge, including CSR replacing one-sided behaviour of firms. It includes numerous varieties of cooperation between enterprises, civil society, media, government and other stakeholders in wide society. It is a challenge for all included (Knez-Riedl, Hrast, WOSC 2005). In CSR concept neither the commitment to both business success and social responsibility can be overseen, nor the need for holistic approach because of the problem’s inter-disciplinary nature (Knez-Riedl, Mulej, Dyck, 2006). Methods in our research included description, comparison and compilation. We used mostly secondary data, but also primary (interviews). 4 Non-Profit Sector Non-profit sector’s importance in society is constantly increasing. Several factors have contributed to this development, especially: (1) changes in political systems in many countries are strengthening privatisation of public services; (2) changes in social environment are strengthening increase of free-will help; (3) changes in traditional sources of support to non-profit organizations that are declining … (Kotler, Andreasen, 1991). To strengthen the role of non-profit sector there is a need for change of financial support to this organizations, tax allowances and organization of other support mechanisms (such as consultancy) (Kolarič, Črnak-Meglič, Vojnovič, 2005). Consultancy may include retired experts and be a form of CSR. 2 Senior Experts – Untapped Resource Senior / retired experts have high knowledge potential, experiences and sometimes a lot of time. The question we have hence asked in this paper is: »How to use the wisdom of senior retired experts to benefit the society at large and to themselves at the same time?« and this was leading our consideration. Our topic is a kind of CSR behaviour in the form of a Seniors Club. CSR is namely a very complex concept, with multiple possible impacts - benefits, but risks, as well. The approach of an enterprise or Club to socially responsible behaviour should be holistic one and it hence needs system thinking. (Knez-Riedl, Hrast, 2006). This includes interdisciplinary creative 5 Seniors Club as a Mechanism of CSR In (Dyck, Mulej et al, 1998) several cases of retired people help to others have been analysed, such as (1) grand-parenting helping to children with trouble in school or family life, (2) helping educate inner-city 75 youngsters for entrepreneurship, which would help them escape gangs criminal life, (3) help develop revival plans for areas in trouble etc. Small Business Agencies in US also host retired professionals to advice potential future entrepreneurs (personal experience, Mulej with EPF students in San Francisco, 2000). In Slovenia such a way of developing CSR is a poorly successful attempt. It is worth another try. A Seniors Club is a possible way of CSR activities – a method of transfer of retired experts’ experience and knowledge to non-profit sector as a development support to it. Experienced professionals from different working area and education could namely support development of non-profit organizations with their knowledge, social capital, experiences and other kinds of support. How all stakeholders (retired experts, non-profit and profit organizations, volunteers, government, media, local community…) in this process could benefit is explained further. Our idea includes integration of Philanthropy, free-will help, Innovation, Knowledge transfer, System Thinking, Entrepreneurship and Societal Care. With SWOT analysis we will try to explain which strengths, weaknesses, opportunities, and threats, this idea as a possible future method of CSR could bring. Possible long-term cooperation among different stakeholders in context of CSR is included. With efficient coordination, non-profit services and expert consultancy (by retired professionals), fundraising in non-profit sector could develop faster. Experiment includes different tools (newspaper, fundraising school, organisation of charitable events, PR…) and technique. Basic for this proposal is strategic planning, which is a long-term process and is a cyclic tool to help to implement objectives of any organization (Graham, 1993). As experiences have shown, strategic planning for non-profit organizations could be even more pretentious then for profit organizations. CSR requires humans to behave requisitely holistically, i.e. in a systemic way. The recognition of societal needs and especially of societal problems is becoming critical for survival, not only for development. (Knez-Riedl, Hrast, 2006). Non-profit organizations with their warnings and initiative are basic for this recognition in any society, so experienced help would be great support to them. A Seniors Club can promote it, because it may have a lot of knowledge and experience available. contemporary social development and information society gives great value to speed of information transfer, ability to take the daily stress; there is no time for deep and slow transmission of personal knowledge. To transmit knowledge capital from old and pensioned experts to the society we have, as Drucker mentioned (1992), at first to question our-selves: “What would we like to be remembered for?” This is the question, which demands individuals to renew and open other viewpoints of personality – personality, which can be originated in the future. A person, who collected knowledge and experiences for his/her lifelong time, surely likes to be remembered at least for expertise left to others. 6.2 Associations of Senior Experts In research process we have met different associations of retired people in Slovenia, also Association of Seniors of Slovenia. With one representative of this Association we made a personal interview (Hrast, 2006). They have expert members, older then 50 years, only; mostly with academic or management experiences in their active employment time. As the interviewed person has said, they have some organizational problems, so they will organize a regional Association of Seniors and leave National Association of Seniors in Slovenia in the future. Seniors work in those organizations is oriented mostly to social meetings, education, lectures, literary and dance meetings, excursions. They have tried to transmit some knowledge to interested legal entities in region, but there was too little interest of different company managers. 7 Seniors Club for Knowledge Transfer 7.1 Vision and mission On this empirical basis, our goal in this research was to find a solution to make available Seniors’ wisdom to society at large. In this case the vision of Seniors Club would be: “To become an internationally known core of retired experts, who support social development and charity with their activities.” At first one must define one’s mission. This is an enduring statement of purpose. It provides a clear vision of the organization’s current and future business activities, in product, service and market terms, its values and beliefs, and its points of differentiation from competitors. A mission helps determine the relationships in each of the key markets with which the organization interacts, and provides a sense of direction and purpose, which leads to better independent decision-making at all levels of the organization. (Payne, 1993). Such a mission statement should explicitly reflect the underlying beliefs, values and aspirations, and strategies of the organization. (Payne, 1993) 6 Knowledge is Power, Knowledge is Capital 6.1 Knowledge transmission »Knowledge is power«, says Bacon. This was known also at craft - they have very well transmitted the knowledge of older craftsmen to younger ones. But the 76 So, a Seniors Club would have its mission as follows: “Senior Club with its activities contributes to activation of highly educated retired population for socially beneficial work and for development of nonprofit sector, e.g. in Slovenia.” 7.2 Groups of interests and their interests Each stakeholder in such a Club has his/her own interests. As much as these interests would be satisfied, so successful this Club and its activities would be. Figure 1 shows us potential interest groups with their interests. Non-profit Club such as Seniors Club would have more objectives, including fund-raising. Non-profit organizations in Slovenia are financed mostly from payments for services (44%), donations (29%), government, local community support, and from public funds (27%) (Črnak-Meglič, 2005/6). Similar structure would be made for Seniors Club. But a non-profit Club that becomes a prisoner of money-raising is in serious trouble and in a serious identity crisis. The purpose of a strategy for raising money is precisely to enable the non-profit Club to carry out its mission without subordinating that mission to fund-raising. (Drucker, 1992). 7.3 Sinergy of different activities for multiple benefits To avoid the role of a Fund-Raising Club only, there is a need for operation of different activities at the same time. With integration of all of them and with good social marketing, multiple benefits for all stakeholders included would be carried out. After talking with several pensioners we have found out, that best for them would be a Club, integrating different activities, as shown further: Consultancy to profit and non-profit organizations Education (organization of seminars, conferences, School of Fund-raising) Social meetings (Seniors Club – organization of excursions, dances, dinners, other free-time activities) Charity (Program of godparents (sponsors), Charitable dance, Senior Fund) Collaboration with domestic and foreign expert and other associations Media activities (PR, advertising) Publishing (publishing of expert handbooks, informative newsletter Fund Raiser) These activities, if well planned and implemented in synergy, can have long-term benefits for all included stakeholders. But we have to consider, that these activities demand good co-ordination, a lot of enthusiasm of managers and included persons, especially in the phase of starting up such a Club. Interest Interests / Benefits Groups Retired Living a useful free time experts (with Confirmation and promotion of higher gained knowledge and education, at experiences least) Additional earning & learning Support to others, charity Nonprofit Gaining expert knowledge and organizations support for free Creation of Social Capital and Alliances Promotion of activities and projects Profit Charity organizations Cheaper expert knowledge Strengthening management image and image of their organization Volunteers Assistance in organization’s work Gaining and exchange of knowledge and experiences Philanthropy Sponsors, Promotion in public, media donators Tax allowances Marketing support Media Introduction of interesting projects to their audiences Employees in Payment for the work done Club Partly philanthropy Other interest Exchange of good practices and expert Development of activity models associations Government, Development of Society local Completion to work of public community Clubs Tax payment Fig. 1: Interest groups and their interests in Senior Club 7.4 SWOT analysis of Seniors Club SWOT analysis provides a familiar, easily understood, and structured device for developing ideas for the future. (Payne, 1993) Figure 2 shows us what internal strengths and weaknesses and what external opportunities and threats of Seniors Club would be. 77 STRENGHTS WEAKNESSES Image and knowledge of Club is only retired experts beginning its Social Capital of retired activation experts Too rare developed Possibility of Club activities dissemination of Enormous work at activities also on other start of Club fields Too rare financial Support to nonprofit resources for organizations activation of Club development and to activities retired experts at the Too extensive same time programs No management board yet OPPORTUNITIES THREATS Competition in this field No trust of potential is rare sponsors and Recognition for work in donators yet domestic country and Insufficient interest of abroad potential financial Possibility of social partners for Club partnership with several Imitation of activities domestic and foreign by competing Clubs associations / Clubs Successful promotion of Too low interest of activities and more retired experts for possibility to gain work in Club (or too financial resources many of their own Other development activities or other possibilities obligations…) Fig. 2: SWOT analysis of Seniors Club Is it possible to start up a project, which is a kind of theoretical one, but with some experiences already (from other Seniors Associations)? In other senior Associations the project was oriented in satisfaction of their member’s interests only. The Seniors Club would work on many other topics, too: knowledge and financial support to nonprofit and for-profit organizations, charity, knowledge transfer, international cooperation, concluding different kinds of partnerships in the society… As Kotler and Andreasen said (1991), in social marketing they deal with sensitive, hard-to-research issues, invisible benefits or benefits to third parties that are difficult to portray and that are supposed to lead to long-term change. To develop this kind of Club, social marketing has great importance. As already Drucker mentioned (1992), nobody trusts you if you offer something for free. You need to market even the most beneficial service. 7.5 A need for good social marketing to change behaviour Social marketing seeks to influence social behaviours, not to benefit the marketer but to benefit the target audience and the general society. Social marketing can be carried out by anyone - individuals, informal groups, or formal organizations. It can be carried out by nonprofits and for-profits. Its goal is not to market a product or service per se, but to influence behaviour. Its sponsors simply wish to make the society a better place, not merely benefit themselves or their organization. (Kotler, Andreasen, 1991). And this is the mission of Seniors knowledge transfer to society at large. Seniors wouldn’t benefit only as themselves or as their Club. Benefits would get also all other included stakeholders as mentioned in figure 1. How has CSR come to include this topic? 8 CSR for Dissemination of Good Practices CSR was considered predominantly as a charitable activity, based on philanthropic and Christian values (Solomon and Solomon, 2004). With idea of sustainable development the understanding of CSR became more complex. Wright (1999) defines it as “continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of workforce and their families, as well as local community and society at large”. CSR as a macro and a micro concept is contributing to better society and cleaner / healthier environment. For implementing CSR as a macro concept there are three relevant key partners in the society: government, private sector / business (SMEs, multinational companies, associations, etc.), and civil society (NGOs: local, regional, national, and global, of different activities and fields of work). To successfully realize the CSR concept they should cooperate as a threeparties partnership. (Hrast, 2004) Seniors Club is uniting different benefits: knowledge transfer from retired experts to non-profit and for-profit organizations, pleasant free-time living of retired experts, education, exchange of good practices, and last but not least, complementing work for public institutions and acquiring additional tax payments to the state and local community. Therefore the concept of Seniors Club and dissemination of good practices are in context of CSR behavior. 9 Conclusions Strategy planning of organization’s development is of key importance for its existence and development. Non-profit organizations’ or Clubs’ work should be much more planned in details and carried out carefully. Because of limited resources (finance, employees, etc.), 78 their management has to implement demanded tasks. In non-profit sector products or services are not sold, but first of all we sell the idea, trust, promise. If promise is not fulfilled, trust is gone, and organization fails. This is a large taxation for promise un-fulfilment. Cybernetics and systems theory may apply to CSR. The definition of the CSR addresses linking of the societal, social, economic, and business viewpoints in the daily operation of a corporation (or any other organization, for that matter), and doing so on a freewill basis (Knez-Riedl, Mulej, Dyck, 2006). To persuade others you have to be persuaded in your idea too. You have to trust people and project under implementation. One must know desires and needs of all included interest groups and find balance among them. (Ledvinova, 1997). So, it is necessary to think, plan and act requisitely holistically and provide benefits for all included stakeholders. This means that all essential viewpoints must be applied and networked. Here we have tried to brief some of them to trigger discussion, which will bring more issues into the scene. On such basis, the Seniors Club can become more useful in responding to several issues sketched here. References: Adam, F. (2003), Socialni kapital v Sloveniji. Zbirka Sodobna družba. Sophia, Ljubljana. 2. Commission of the European Communities (2001), Green Paper on Promoting a European Framework for Corporate Social Responsibility. COM, 366 Final, Brussels. 3. Črnak Meglič, A. (2005): Menedžment pridobivanja sredstev – študijsko gradivo 2005/6. Fakulteta za družbene vede, Ljubljana. 4. Doz, Y. et al. (2001), From Global to Metanational, How companies win in the Knowledge Economy. Harvard Business School Press, Boston. 5. Drucker, P. F. (1992), Managing the non-profit organization. Butterworth Heinemann, Oxford. 6. Dyck, R., Mulej, M., and co-authors (1998): SelfTransformation of the Forgotten Four Fifths. Kendall/Hunt, Dubuque, Iowa. 7. Flanagan, J. (1993), Successful Fundraising. Contemporary Books, Chicago. 8. Graham, C. (1993): Keep the money coming. MacMillan Press. 9. Hrast, A. 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(1999), Corporate Social Responsibility: What stakeholders in emerging economies had to say. Corporate Citizen Conference. The Royal Institute for International Affairs, London. 79 80 THE ROLE OF WINE CONSORTIUMS IN WINE MARKETING AND WINE TOURISM DEVELOPMENT IN SLOVENIA Igor Jurinčič and Štefan Bojnec University of Primorska, Turistica – College of Tourism Portorož, Senčna pot 10, 6320 Portorož, Slovenia Fax: +386 5 6177020, e-mails: igor.jurincic@turistica.si; stefan.bojnec@turistica.si Abstract The competition in the wine markets is based increasingly on wine quality as the reflection of the preference between the consumers towards wine quality. Segmentation of wine markets and their differentiation by wine quality and wine prices are one of the most significant tendencies that are observed in the wine markets in Slovenia as well as in the developed countries. To respond to the demanding wine quality, the most advanced wine producers in Slovenia, which are often of small-size, have established the wine consortiums to increase economies of scale in wine marketing as well as to introduce innovative approaches in viticulture, wine making, wine bottling and wine tourism development to increase selling opportunities and to cope with the increasing competition. The wine consortiums are set up by a group of the largest wine producers in most of the Slovenian wine growing regions. Their main objectives are to contribute to innovative approaches in wine business, to improve wine quality, wine marketing and promotion activities to reduce fixed costs per unit of product and to contribute to higher wine prices. In this paper the experiences in the Goriška Brda wine district, which is the most growing wine area in Slovenia, are analyzed using the conducted survey results. The members of the wine consortiums are combining entrepreneurial and innovative approaches in high quality wine making, but at the same time are considering the ecological requirements as an important element of wine marketing, brand name development and promotion activities. New innovative approaches to increase quality are also closely associated with wine tourism development where are combined networks of wine cellars with own entrepreneurial spirit, integrated wine grape production and wine quality, quality of other home made products labelled under bio food and healthy nutrition and with high quality of other tourist services. Keywords: wine quality, wine consortium, wine tourism, entrepreneurship, rural areas, brand name, biodiversity. 1 Introduction The activities on ‘Nature 2000’ have shown that Slovenia experiences rather a high degree of biodiversity in the European Union (EU) (Hlad and Skoberne, 2001) indicating high level of environment protection in Slovenia. These natural advantages provide opportunities to build up a recognized brand name for agricultural and food produce originated from Slovenia to strengthen the image of high quality food within the enlarged EU (Loureiro, 2003). The environmental component in development is also strengthened by the emerging wine consortiums in Slovenia. Most of their members are introducing integrated grape production, which restricts the use of chemicals in viticulture. Such technology of grape production is becoming a part of wine making rules in the wine consortiums. Yet, the government by government subsidies supports the introduction of integrated agriculture and grape production as a basis of healthy food and nutrition (Hrustel Majcen and Paulin, 2001). With an aim to develop recognizable brand names and to promote high quality wine production and wine exports to Western and other world wine markets, the Slovenian winemakers (similar as Italians’ ones) have entered into associations under the umbrella of the wine consortium. The wine consortium is often an association of 10 to 20 the largest and most advanced wine makers in the wine district. From the very beginning they supply large quantity of already known high quality of bottled wines, which are produced under specific guidelines and rules under the brand name of the consortium. Almost all the consortium members offer visits of wineries, wine testing and wine purchase in the own wine cellar that represent an initial phase in wine tourism development (Getz, 2000). Wine tourism represents opportunities for growth in wine promotion and wine sales and thus new income opportunities in the wine cellar. Some wine cellars and farms specialized in wine production already have experiences in providing tourists’ accommodations’ and offers different additional activities at the wine cellar or tourist farm. The entry into the wine consortiums is open for new members as a tool to provide opportunities for a greater cooperation and association between the wine producers in a certain wine district in their joint marketing and promotion activities in wine and wine tourism markets. These 81 ways of cooperation provide also opportunities for new approaches in more successful promotion of Slovenian wine districts as a recognized tourist destination and for development of entrepreneurial activities in rural areas (Hall, 2000). So far in Slovenia there are set up six wine consortiums: the Consortium of Carst producers of Teran, the Cooperative Consortium of Cviček, the Club Šipon, the Consortium Goriška Brda, which is in more detail analyzed in this paper, then the Wine Consortium of Istria, and the Consortium of Zelen. Most of them are set up to improve wine processing and wine marketing. The wine consortiums are set up by few (i.e. nine in the case of the Consortium of Goriška Brda) to a greater number of known wineries, which quantity of production has so far been less important than total wine production in the wine growing region in which the wine consortium is established. However, the quality of wines of the members of the wine consortiums is particularly reflected by several domestic and international awards of quality. To achieve prestigious high quality of wines, the wine consortiums have adopted specific rules that assure high quality of wine grapes production and their processing into wines of high qualities, which are sold at high prices. Moreover, the wine consortiums are open for new product innovations to meet higher quality requirements and quality standards. Due to these, their activities have spill-over quality effects on other wine producers. Therefore, the role of the wine consortiums is not only for their members, but also for other wine producers in the wine regions as they also try to imitate positive results that are achieved by the members of the wine consortiums. As a result, this is reflected on the broader concept of the widening and deepening of high quality wine production in Slovenia with an aim to increase exports of Slovenian wines to the competitive world wine markets. The well settled farms, vineyards and cultural heritage in rural areas are the key stones of the recognized Slovenian winegrowing areas. Wine tourism and tourism in general can only be efficient on a long-term, if it is developed in a sustainable and environmentally friendly ways as an important part of the quality in destination development (Colombini Cinelli, 2003). Some additional high quality offers such as food, local culture, different events and active recreational offers are additional factors that can contribute to a greater quality and competitiveness of the tourist destination as expected by several tourists in the market segment of eco, environmental and rural tourism. 920 grape producers who cultivate around 1,816 hectares (ha) of vineyards. Grape production in Goriška Brda is fragmented, but still less than it is in Slovenia in general. More than 41 percent of grape production in Goriška Brda is produced by farms between 1 and 3 ha of vineyards and only 8 percent of farms are greater than 5 ha of vineyards (Table 1). The average size of vineyards per farm is 1.97 ha, which is for more than 1.2 ha greater than that of the Slovenian average (0.7 ha) (Rusjan, 2002). The wine quality in Goriška Brda has been improved rapidly and currently there is very high quality of wine production which at relatively high wine prices provides survival opportunities also for smaller farms that specialized in wine production. Table 1: Number of grape and wine producers and the average size of wine farm in Goriška Brda, 2002 Far Numbe Frequency Vineyard Frequency m r distributio s distributio size of n area in n in ha farms of farms ha of (%) vineyards (area in %) 0.0 – 7 0.8 0.53 0.03 0.1 0.1 – 156 17.0 48.50 2.7 0.5 0.5 – 190 20.7 144.16 7.9 1.0 1.0 – 381 41.4 671.06 36.9 3.0 3.0 – 110 12.0 420.60 23.2 5.0 5.0 – 70 7.6 454.99 25.1 10.0 10> 6 0.7 76.67 4.2 Tota 920 100 1,816.5 100 l Source: Rusjan, 2002. 2 Innovative approaches in viticulture: the case of Goriška Brda The wine district of Goriška Brda is one of the fastest wine growing areas in Slovenia. There are registered During the adjustments to the EU membership several farms invested in vineyards renewal. The restructuring in viticulture aimed to adjust towards new requirements in higher grape quality for high quality wine production of higher category of wine prices. In the structure of grape production in Goriška Brda there are around three-fourth white wines and around one-fourth red wines (SORS, 2000). The shifts are also in types of grapes from traditional towards grapes for high quality wine production. There are around 20 different types of grapes: 12 of them are white and 8 red. Rebula is the most important among white grapes/wines and Merlot among red grapes/wines. Rebula is considered as the autochthones grapes in Goriška Brda, which is promoted by the Association of Friends of “Briška” Rebula. 82 3 Entrepreneurial spirits: Family wineries in Goriška Brda It is interesting to note that most grape producers and wineries in Goriška Brda have stayed in their own individual business and that several of them stay outside the wine cooperative in Goriška Brda. Individual family farms and individual wineries on the basis of own tradition and knowledge have continued or began own ways of wine business, including own bottling and marketing under the own label. For the improved and better wine promotion they established the wine consortium and the Association of grape producers and wineries of Brda, which established own label for wine. In 2003 in this association were 92 members. Among members are particularly those who want to improve wine quality and brand image of wine. Among the most internationally recognized individual family wineries in Goriška Brda are Mirko and Aleš Kristančič (wines Movia), Marjan Simčič (wines Simčič), Ivan and Stojan Ščurek (wines Ščurek) and Dušan and Edbin Erzetič (wines Čarga) (Table 2). Some of these wineries have also vineyards in the neighbouring Italy. Table 2: The largest family-owned and operated wineries in Goriška Brda, 2004 Village Size of Wine Winer y vineyards production (in ha) (bottles annually) Movia Medana 18 100,000 Ščurek Plešivo 13 80,000 Simčič Ceglo 12 50,00060,000 Čarga Pristav 10 35,000o 40,000 Source: Winery Movia, 2004. 4 Entrepreneurial approaches and wine tourism: Survey analyses with the family wineries in Goriška Brda The written questionnaire was used to conduct the survey analyses. In the sample are included 14 bigger family wineries in Goriška Brda. Among the respondents by gender are included 79 percent of men and 21 percent of women. The age of the respondents varies between 28 and 60 years. The most frequent age is between 40 and 50 years. The individual wineries included in the sample have been established since the mid of the 17th century. The second oldest was established at the beginning of the 18th century and the third one at the beginning of the 19th century. The others have been set up since 1985. A bit less than twothird of the sampled wineries are family owned by more family members (64 percent) and in a bit more than one-third cases they are the single owned by only one family member. Other ownership structures such as partnerships between non-family members and public corporation are not recorded. Half of the wineries (50 percent) inherited the winery from parents; 29 percent bought land, and then started with viticulture and built the winery; and 21 percent inherited land and after then developed own wine production and built winery. There is no any example in the sample that the existing winery was bought. According to the frequency of wine production, five of the wineries produced between 10,000 and 20,000 litres of wines, one winery between 30,000 and 40,000 litres, three wineries between 40,000 and 60,000 litres, and four the largest ones more than 70,000 litres, but less than 90,000 litres per winery. Around half of the wineries responded that besides the full-time employment of the respondent or the owner of the winery they additionally employ one worker, while the other half of the wineries employ between two and seven workers. Among the family members, besides the winery’s owner, in the winery are full-time or part-time employed one or more children (43 percent), wife (38 percent), parents (13 percent) and others, including non-family members (6 percent). The next set of questions is related to the openness of the wineries for visits and sell of wines in the winery. In the most cases (86 percent) the wineries are open for visits and sell of wines in the winery, but not yet in 14 percent where has not yet decided. The first winery that was opened for visits, started with these developments in 1988, but most of other wineries started with this between 1990 and 1995, and some of them most recently. Regarding the engagement of the wineries in tourist related businesses, no any of the wineries recorded the exact statistics of visits of the winery, but most of them provided raw estimates on the number of visitors and their approximate different socio-economic structures. The number of visitors of the wineries per year varies between 35 and 700 per winery. The most significant group of visitors are those from the rest of Slovenia, then visitors from Italy, and local visitors from the winegrowing region, but so far less visitors are recorded from the rest of Europe and from the rest of the world. Besides visits of the wineries and sales of own wines, the wineries are most often offering informative publications and materials (38 percent), retail shopping (25 percent), and organization of weddings and private parties (13 percent). Some of them (6 percent) offer accommodation and have restaurants and offer locally produced food, have places for different games, but less often the wineries have places for picnics or sell locally produced art and craft products and less often organized special events and festivals. Most of the wineries (85 percent) are open for visits during the whole year. The remaining 15 percent of the wineries that are not open for visits the whole year they are also offering visits of their wineries 83 between October and August, when there is no harvest of grapes. Furthermore, 77 percent of the wineries are open for visits every day in the week. The remaining wineries are offering visits of the winery 6 days per week or upon the previous agreement. More specifically, around half of the wineries in the sample practice previous booking for visits arrivals before the visit of the winery and the remaining half of the wineries practice that somebody aims to be available at home when tourist arrived, but almost no any winery has employed somebody to accept tourists during the whole day. Moreover, 42 percent of the wineries offer regularly organized guided tours of the winery, whereas the remaining wineries are not offering this. According to the season, the most frequent tourist arrivals are between the spring and the autumn, but less over the winter time. Among the marketing communication and promotion methods for visits of the wineries, the wineries are practise own prepared published material (22 percent), signposts along the roads near the winery (21 percent), publication in journals (12 percent), newspapers (12 percent) and Internet (12 percent), in wine publications (9 percent), other methods, colleagues and friends and tourist agencies (6 percent), announcements in tourist guides and tourist promotion materials (3 percent) and the promotion of characteristics of entry into the winery (3 percent). It is worth mentioning that 75 percent of the wineries offer visit of the winery as a part of the tourist package: 32 percent of such arrangements are with bus and similar transport companies, 17 percent with tourist agencies, 17 percent with other organizers of tourist packages such as wine festivals, and 17 percent are associated with sport and similar events. The special question is related to innovative approaches in supply to encourage greater increase in the number of visitors of the wineries. Whereas the responses are mixed, the most significant single response is to improve brand name and the image of the local geographical wine as well as to increase direct sale of wines to visitors. Around half of the wineries are aware on the importance to develop list of e-mail addresses for promotion, communication and sales of wines. There is also expressed opinion to promote importance of viticulture in the region in tourist destination development. The importance of direct sales of wines to visitors in total revenues varies by the wineries. For the most wineries it represents less than 30 percent of their revenues. There seems to be a slight tendency rises in the importance of direct sales of wines, which largely vary between 5 and 25 percent of total revenues. Around 43 percent of the wineries intend to offer some new products and services in the near future. Among them are supply of at the farm produced products such as olive oils, fruit and other at the farm produced food as well as with offers of accommodation, rooms and apartments. As very important for their development the respondent argued that an increase in the number of visitors in the wine cellars is crucial and that for such increase are very important visitors from the other parts of Slovenia and from abroad. The aim of the wineries is to increase the number of independent visitors in the wine cellars and a bit less also organized visits by groups of tourists. Among the most important activities for wine tourism development, they ranked by the importance as follows: 1) promotion of their geographical wines; 2) legislation that support development of entrepreneurship; 3) greater promotion of their wine cellars as tourist attraction and financial support for development of entrepreneurship; 4) more accommodation places with breakfast; 5) greater promotion of their region as the wine tourist destination; 6) hotels, restaurants and pubs to promote their region as the tourist destination; 7) wine festivals and events, tourist villages; 8) specialized shops with typical products; 9) congress activities, special accommodation and activities for children; and 10) camps and sport facilities. Among proposals for development of wine tourism there are to increase the diversified supply of wines, fruit and other agri-food produce at the farm; new entries of special wine shops and wine tourist farms with associated sport, cultural and other activities; target government support towards viable farms; joint promotion in different fair activities by the regional wine, olive oil and fruit producers as well as presentation of typical local foods; networking in wine tourism supply with tourist agencies and tourist information centre in Slovenia and abroad; and development of different sport and other activities for tourists. The wishes for development of wine tourism exist, but so far the visits of the wine cellar are rare a part of tourist packages and relatively small proportion of the wineries cooperate with suppliers of tourist packages, which are largely transport enterprises. The recognition of the wine consortium in brand name development and in promotion of use of internet as communication, marketing and selling tools are increasing in importance. 5 Conclusion and policy implications The wine consortiums provide opportunities that encourage innovative approaches in viticulture and grape production, in wine processing and wine making, and in wine marketing and promotion activities. These innovative approaches are increasing economies of scale and thus reducing fixed costs per unit of product. Moreover, there are also spill-over effects and positive externalities which are achieved with sharing of 84 knowledge and experiences among the members of the wine consortiums. The members of the wine consortiums in a certain wine district in a greater degree are implementing wine storage in bottles and bottled wine marketing technique than the non-members, often small-size wine producers, which produce wine partly for market and partly for home consumption needs. The members of the wine consortium are also using more advanced marketing and promotion tools, including with the choice of bottle styles and more sophisticated graphical labelling. Most of wine consortiums are engaged in the export markets, whereas it is rather rare for small wine producers that are not members of the wine consortiums. The members of the wine consortiums are also more selective in participation of different wine fairs and wine competitions, including the international ones. They are also introducing wine tourism. They are open for visits of their wine cellars and are selling wine in the wineries. They are organized in different ways towards market niches and several of them particularly wine tourist farms are investing in tourist accommodation. In the wine tourism they see opportunities for direct wine promotion under the brand name of the wine consortium in the domestic and in international markets as an important source of incomes and employment at the farm specialized in wine production. In viticulture and wine production there are opportunities for the wine consortium members to gains from the wine consortium in introduction of new more advanced technologies such as the common bottling line and packing of wines for highly demanded markets. In this way there is improved access to the most advanced and expensive technologies, which are requested to comply with the high quality requests and standards of quality on the international markets. With the exchanges of experiences the wine consortium members have easier access to innovation and due to gains from economies of scale they have also opportunities for fastest implementation of innovations. The members of the wine consortium are often the biggest wine producers in the wine region and the owners or managers of the wineries are also more educated. Due to this they easier evaluate and decide for necessary innovation, which is more sophisticated, up-to-date and more often leads to quality improvements. There are differences between the wine consortiums between the wine regions and wine districts in Slovenia. It is interesting to note that the Slovenian wine growing areas are situated along the country borders areas. This is becoming important for exchanges of information and for development of cross-border wine tourist destinations where there is also important knowledge of languages in the neighbouring countries (Croatian, German, Hungarian and Italian). These exchanges of good practices are rather important at the cross-border areas with Italy, but some more recent developments are also occurring with Croatia. Among examples of good practices there are particularly well known results that have been achieved by the wineries in Goriška Brda. Therefore, we have in more detail presented these experiences from Goriška Brda, which is one of the fastest wine growing areas in Slovenia. This wine district is among the most innovative in implementing advanced wine making techniques and in wine marketing on the international markets. On the basis of the advanced grape processing and wine making techniques they are achieving the best export results among the Slovenian wine producers. The wine cellar in Goriška Brda, which represents the network for around 500 grape and wine producers, exports around 20 percent of wines. Some bigger and known private wineries from this wine district are even more export oriented, but this is less so, with some rare exceptions, in the other wine growing areas in Slovenia. References 1. 2. Getz, D. (1997), Event Management & Event Tourism. Cognizant Comunication Corporation, New York. Getz, D. (2000), Explore Wine Tourism: Management, Development and Destinations. Cognizant Communication Corporation, New York. Hall, C.M., Sharples, L., Cambourne, B., Macionis, N. (2000), Wine Tourism around the World: Development, Management and Markets. Butterworth Heinemann, Oxford. Hlad, B., Skoberne, P. (ed.). (2001), Pregled stanja biotske raznovrstnosti in krajinske pestrost v Sloveniji. Ministrstvo za okolje in prostro, Ljubljana. Colombini Cinelli, D. (2003), Manuale del turismo del vino. Franco Angeli, Milano. Hrustel Majcen, M., Paulin, J. (ed.). (2001), Slovenski kmetijsko okoljski program. Ministrstvo za kmetijstvo, gozdarstvo in prehrano, Ljubljana. Loureiro, M. L. (2003), “Rethinking New Wines: Implications of Local and Environmentally Friendly Labels”. Food Policy, Vol. 28, 547-560. Rusjan (2002), Model vpliva ampelotehnike na količino in kakovost grozdja cv. ‘Merlot’. V M. Puconja (ed.) Vinogradi in vina za tretje tisočletje. Ljubljana, Ljutomer, Celje: Strokovno društvo vinogradnikov in vinarjev Slovenije, Zveza društev vinogradnikov in vinarjev Slovenije in Poslovna skupnost za vinogradništvo in vinarstvo Slovenije SORS (2000), Popis kmetijskih gospodarstev Slovenije. Statistical Office of the Republic of Slovenia, Ljubljana. 3. 4. 5. 6. 7. 8. 9. 85 Dr. Igor Jurinčič, Senior Lecturer, University of Primorska, Turistica – College of Tourism, Senčna pot 10, 6320 Portorož, Slovenia, igor.jurincic@turistica.si. Dr. Štefan Bojnec, Associate Professor of Economics, University of Primorska, Turistica – College of Tourism, Senčna pot 10, 6320 Portorož, Slovenia, stefan.bojnec@turistica.edu, and University of Primorska, Faculty of Management, Cankarjeva 5, 6000 Koper, Slovenia, stefan.bojnec@fm-kp.si. 1 86 INNOVATIVE APPROACH IN ENVIRONMENTAL SATISFACTION SURVEY – "THE GREEN PATROL" CASE Božidar Kliček, Sandro Gerić, Nina Begičević University of Zagreb Faculty of Organization and Informatics Pavlinska 2, Varaždin bozidar.klicek@foi.hr, sandro.geric@foi.hr, nina.begicevic@foi.hr Abstract This article addresses "The Green Patrol" survey, an innovative ecological action with the mass public participation, organized as a part of E!2584 Ulixes – Intelligent Tourist Organization project in cooperation with Večernji list newspaper and City of Varaždin. This pilot project researches the present state of environment and particular incidents as well. This action was performed in a local community City of Varazdin in duration of four weeks at the end of year 2004. Satisfaction with the state and environmental protection was surveyed with use of different technologies: with web, SMS and classic paper survey questionnaire. Environmental incidents (red points) and positive examples (green points) were collected thru e-mail, MMS, interactive ecological maps and Green telephone. Article also gives an overview of used architecture facility necessary to obtain this function and a results overview of this survey. The reactions, steps and decisions taken by local government that were based on the survey's results are described in this article as well as influence and possibility of using types of actions (surveys) in local government decision making process. Keywords: environment, survey, Green patrol, protection 1. Introduction The ecological awareness is more and more important topic in every day life and it is an issue that is getting more attention. In that context different surveys about environment protection and satisfaction with environment are conducted. There are several surveys that were conducted during the last few years and that were used for the defining the local authorities development strategies, e.g. Quality of Life 2001 Research Study in Plymouth, 2002main survey environmental issues in Oxford, City of Greenwood Village 2001 Citizen Survey Report, and similar. The way those surveys were conducted differed in the sense of the survey methods they used and the goals they were trying to achieve. The trend is toward the use of computer assisted data collection methods that are increasingly replacing paper-and-pen methods of survey data collection. Most professional research organizations – academic, governmental, and commercial, now employ these new methods for much if not all of their survey data collection. Computer assisted telephone interviewing (CATI) is most prevalent and computer assisted personal interviewing (CAPI) is rapidly gaining in popularity. Also, new interesting forms of computerized data collection, for instance automatic speech recognition, and surveys through the internet are emerging. If computers are used for data collection there are several models that can be used. “Those models are known under abbreviations: CATI (Computer Assisted Telephone Interviewing), CAPI (Computer Assisted Personal Interviewing) and CASI (Computer Assisted Self Interviewing) (De Leeuw, E. & Nichols, W., 1996).” Besides these new models for data collection, in our survey we used some more traditional method, e.g. paper questionnaires and new and modern method interweaving via SMS (SMS survey). There aren’t many examples of surveys that combined those three methods. The use of mobile phones for surveys can be seen as a modification of CASI method, so in some articles this type of survey techniques is defined as Mobile CASI or MCASI. MCASI has many different forms, some of them are: surveys via wap pages, surveys via GPRS, or surveys via MMS and SMS messages. Based on this trends the ecological and educational action "The Green patrol survey" was organized in cooperation of Večernji list newspaper, project E!2584 Ulixes (Faculty of organization and informatics) and the City of Varaždin. Other media, and some public and NGO institutions were involved in this action as well. The action was conducted between September and November of 2004. The primary goal of this action was to support the preservation and improvement in environment and to profane the ecological awareness of citizens. The innovative contribution of this action is the use of multimodal methodology for data collection that helped us to create and use larger sample of survey participants. Combination of several methods could improve the survey and raise possibility of reaching all the necessary profiles, in prompt manner and in different circumstances. If we are using different data collection methods we are able to create a subset of survey participants that is more or less equal to a general population, and that is the desirable size of survey participants in every scientific survey. This approach is useful not only for surveys in the field of environment 87 protection and satisfaction but it can be implemented on different areas of every day life and science. 2. The Green patrol action The participants in this action were citizens of Varaždin county and the Večernji list readers. Significant support in this survey was given from the students of Varaždin Gymnasium and other high schools and the students of Faculty of organization and informatics who also participated in the survey. During this action a successful cooperation with an NGO and ecological group "Franjo Koščec" was made. The mentioned organization was involved in this survey with its own initiative called "The Green phone". During the Green patrol survey, a survey concept, methods and technologies developed in the scope of Ulixes project were tested. Although the Ulixes project is primary focused on researches and the use of modern ICT technologies in tourism, the environment protection is an important element of tourism so this was a good opportunity to test developed concepts. The action was quite successful in the Varaždin area, so the concepts of this action could be more widely used. The basic principle of the Green patrol survey is shown on figure 1. Figure 1: The Green patrol survey – basic principles (Kliček, B., Begičević, N. & Gerić, S., 2004) 3. Conducted surveys The Green patrol survey encompasses two parallel activities. The first one was a detection of positive and negative examples in environment – so called "green" and "red" spots. The "green" spots are positive examples of well decorated and developed surroundings, and "red" spots are negative examples of pollution, waste management, etc. The identification and notification of "green" and "red" spots could be made on several ways in this action: via SMS messaging, e-mails with description and attached photo(s), and over a web form with interactive map on which participants were able to pin-point an exact position of green/ red points and give their detailed description (with photos). The second part of the Green patrol survey was to evaluate and express citizen's satisfaction with environment and surroundings in the City of Varaždin. Using marks from 1 (the worst) to 5 (the best) participants were evaluating the following segments of environment satisfaction: horticultural and architectural surroundings, waste management, water and air quality, industry and government relations towards environment preservation, etc. Like in the first part, participants could here also use several survey methods: paper questionnaires, SMS questionnaires and web questionnaires. 88 4. The results The total number of participants in this survey is 600 participants. From these 600 participants only 547 questionnaires were correct and taken in the results. From the total number of correctly filled questionnaires (participants) the 300 (54,8%) persons were male, 244 (44,6%) were women, and 3 participants didn't give . answer on the question about their gender. The majority of participants were between 15 and 25 years old, and the most common way of participation (the questionnaire method that was mostly used) was filling the paper questionnaire (470 participants), then the web questionnaires (70 participants) and SMS questionnaires ( only 7 participants). Elements of environmental surroundings Marks from 1 to 5 Overall satisfaction with surroundings and environment protection 3,63 Relationships of local authorities to environment protection 3,55 Horticultural surroundings (trees, flowers,…) 4,10 Architectural surroundings (streets, buildings, squares) 3,70 Waste management 3,15 Water quality 2,54 Air quality 3,22 Relationships of citizens to environment protection 2,73 Relationships of industry to environment protection 2,35 Table 1. Average results by evaluated elements of environmental surroundings (Kliček, B., Begičević, N. & Gerić, S., 2004) From all evaluated elements the participants were most satisfied with the state of horticultural surroundings, and they evaluated it with an average mark of 4,10. The second best evaluated element was satisfaction with general condition (average mark of 3,63) and the participants are relatively satisfied with the relations of local government to environment (they give it the mark 3,55). The air quality (3,22) and waste management (3,15) are next best evaluated elements. Participants are thinking that citizens relations to environment (2,73), water quality (2,54) and industry relations to environment (2,35) are the problem areas in environment protection in City of Varaždin, and they are not satisfied with the current state with this 5 4,5 4 3,5 3 2,5 2 1,5 1 4,1 3,7 3,63 3,55 3,22 3,15 2,73 2,54 2,35 evaluated elements. The biggest surprise in these results is the satisfaction with water quality – in the last few years the quality of water was significantly improved in city of Varaždin, so this mark doesn't represent a real and objective situation, more likely it is the results of subjective evaluation influenced by years of pour water quality in Varaždin. The low level of satisfaction with relations between citizens/industry and environment are the real problems that will have be deal with in the next years. These results and action show us that this form of scientific survey can be used in every day situation, and can be used as an incubator for necessary and positive changes (in this case in environment protection). Ho rti cu ltu re Ar ch ite ct ur e t m en t ze ns ov er nm en an ag e Ci ti O W at G Figure 2: Overall satisfaction with surroundings and environment protection in Varaždin (Kliček, B., Begičević, N. & Gerić, S., 2004) The citizen's satisfaction with general living conditions in different areas of Varaždin is very important. For this purpose we collected 217 filled questionnaires with precisely defined city area of W as te 89 M In du st ry ve ra ll Ai r er participants. Because of small number sample those results can not be interpreted as reliable state indicators, but despite that they represent real trends in those areas of Varaždin. The next figures are showing the maps with geographical areas of Varaždin and results by those areas. Figure 3: Overview of geographical areas and their results (Kliček, B., Begičević, N. & Gerić, S., 2004) Area 1. Center 2. MO 3. MO 4. MO 5. MO Banfica Biškupec Overall 3,70 3,85 3,94 3,76 3,72 3,58 4,25 Local govern ment 3,47 3,94 3,78 3,75 3,52 3,54 3,95 Horti cultu ral 4,05 4,07 4,27 4,31 4,21 3,90 4,20 Archite cture 3,74 3,98 3,79 3,88 3,79 3,91 4,29 Waste manage ment 2,86 3,02 3,31 3,46 2,91 3,33 3,04 Water 2,07 2,72 2,43 2,66 2,00 2,39 3,24 Air 2,81 3,28 3,40 3,34 2,96 3,26 3,59 Citizens 2,77 2,81 3,08 2,88 2,95 2,62 3,30 Industry 2,30 2,19 2,78 2,54 2,43 2,36 2,67 Table 2: Overview of area results (Kliček, B., Begičević, N. & Gerić, S., 2004) According to gathered results we can estimate in which measure citizens from different parts of Varaždin are satisfied with their environment surroundings. The number of citizens involved in this survey is between 0,25 and 0,97% so the results are conditionally acceptable. As mentioned before, the second aspect of the Green patrol survey was identifying the green and red spots. During the action, together with NGO "Franjo Koščec" a total of 21 red points was identified. Here are some examples of spotted "red" and "green" spots: Supilo's Street – an old and ruined house opposite the train station; Biškupečka Street – side curbs are extremely high, and at the end of this street a bike trail ends up with a large bump – an ideal to break a neck!; gratifies on the Old Town Castle in Varaždin; Blizna creek and forests south-east of Varaždin – Zagreb freeway - lots of garbage, car wrecks, stows, and communal waste. On the Figure 4. is shown the interactive map that was used for "red" and "green" spots reporting via "Green patrol" survey web. 90 Figure 4: Interactive map with "red" and "green" spots (http://www.zelena-patrola.com) 5. Conclusions With the Green patrol, an innovative ecological action with the mass public participation, organized as a part of E!2584 Ulixes – Intelligent Tourist Organization project in cooperation with Večernji list newspaper and City of Varaždin, we accomplished several goals. Firstly, we identified positive and negative examples of environment surroundings, we evaluated the citizens satisfaction with environment, we were able to create an interactive map of City of Varaždin with environment indicators, and the action resulted with increased awareness of environment surroundings in Varaždin. The Green patrol survey's results were used by City of Varaždin authorities and based on them they initiated several activities with purpose to improve the areas that received the lowest rating (e.g. the water quality, industry relationship). The action was well presented in the media and that also contributed to the population of the environmental issues in the local community. Secondly, the results of the Green patrol survey have shown that the concept of this action is successful and that can be used for future actions. It also proved that innovative approach to public surveys, and the use of modern technologies (like web, e-mail, GSM – SMS and MMS) has a potential and can be used to gather a wider participant's sample, so that the success and the quality of conducted surveys can be improved. References 1. De Leeuw, E. & Nichols, W. (1996). Technological Innovations in Data Collection: Acceptance, Data Quality and Costs. Sociological Research Online vol. 1, no. 4. http://www.socresonline.org.uk/socresonline/1/4/le euw.html, <12.03.2005.> Kliček, B., Begičević, N. & Gerić, S. (2004). Sažetak istraživanja zadovoljstva brigom za okoliš – "Zelena patrola". Solomon, D. J. (2001). Conducting web-based surveys. Practical Assessment, Research & Evaluation 7(19). http://PAREonline.net/getvn.asp?v=7&n=19, <20.10.2005.> Tjostheim, I. & Thalberg, S. Are the mobile phone users ready for MCASI http://www.program.forskningsradet.no/puls <15.04.2005.> ***: Baseline Report on Environment & Health Indicators under the framework of the European Environment and Health Strategy (COM 2003)338 2. 3. 4. 5. 91 6. 7. 8. 9. final), http://www.brussels-conference.org, <15.02.2004.> ***: City of Greenwood Village 2001 Citizen Survey Report, Vantage Marketing Research, Littleton, Colorado, 2002. ***: Environment Catalogue, <http://www.anzlic.org.au/infrastructure_metadata. html>, 30.03.2004 ***: INTUSER survey, <http://www.iesd.dmu.ac.uk/survey/intuser/>, 26.02.2004 ***: Oxford city talkback panel - a partnership public consultation programme funded by Oxford City Council, Oxford City Primary Care Trust and Oxford area - Thames Valley Police First main survey 2002 environmental issues in Oxford, July, 2002. 10. ***: Public attitudes towards the environment and quality of life, ESAG Meeting, EPSIM/Defra, 2002 11. ***: Quality of Life 2001 Research Study Conducted for Plymouth 2020 Partnership, 10.03.2004. 12. ***: Vacation Experience Preferences and Environmental Beliefs Survey, http://www.createsurvey.com/cgibin/graph?s=2477&magic=DqUAaBwghsBOy6p, <26.04.2004.> 92 CORPORATE GOVERNANCE AND CORPORATE SOCIAL RESPONSIBILITY – related and complementary concepts supporting holistic performance Jozica KNEZ-RIEDL University of Maribor, Faculty of Economics and Business MARIBOR, SLOVENIA E-mail: jozica.knez@uni-mb.si Abstract: Two concepts evolving in parallel, Corporate Governance and Corporate Social Responsibility, are presented and linked together to support holistic performance of a modern organisation tending to gain and share profit - by principles. For that purpose some methodologies of Corporate Governance rating are presented, encouraging the involvement of the criteria regarding the concept of Corporate Social Responsibility as a case of systemic thinking. Key words: Corporate Governance, Corporate Social Responsibility, performance, rating, stakeholder, social finance institutions, systems thinking. 1 INTRODUCTION A corporation is expected to behave rationally and morally, at the same moment. But declines (gaps) – either in form of irrational or immoral behaviour, as well as indifference against environmental and broader social issues – could have harming, long-lasting, even permanent consequences on the environment, individuals, organizations, and broader society. Several interrelated reasons (like globalisation, environmental degradation, increasing of poverty, importance of stakeholders’ relationships, so-called mismanagement1, etc.) have been emphasising the significance of the concept of Corporate Governance (CG), but in parallel also the concept of Corporate Social Responsibility (CSR). In the paper we shortly explain both concepts, how are they mainly understood. If and in what extent the aspects of CSR have been already respected in everyday practice, could be seen from the indicators of CG, especially in the context of so-called CG Rating. In the paper we present only some typical examples, because there are many existing as well as various evolving methodologies. 2 HOW TO GOVERNANCE UNDERSTAND CORPORATE 1995). The main focus of the agency theory includes conflicting interests of shareholders (principals) and hired professionals (managers or agents). The latter are not consequently interested in the maximization of shareholders value, but also - or even more - in their personal short-term goals, like several benefits and bonuses. In a broader view, emerging since 1970 and coming more into force nowadays, Corporate Governance has been integrating the perspective of the stakeholder theory. It takes into account the impacts of the corporate behaviour on a range of stakeholders. But, equally, the exposure of the corporation to the impacts of the same and of several other stakeholders is relevant, too. Relationship between corporation and stakeholders matters and encourages the harmonization of their interests, being of very heterogeneous nature. Stakeholders are namely of very different kinds and their influence varies, too. Shareholders are only one type, generally the most important type, of stakeholders and for this reasons the maximization of shareholder value cannot be the only goal of corporation. Freeman (Solomon and Solomon, 2004) thought that stakeholders theory should be placed into the context of the general theory of a firm as well as in the context of strategic management. The relationship between corporation and its stakeholders should be positive, creative, oriented towards coexistence and development. That is why different interests should be well managed and coordinated. There are many organisations that pay great attention to CG. OECD published »Principles of Corporate Governance« in 1999. Its main aim was to provide guidance for governments, public bodies and companies to evaluate and improve the legal, institutional and regulatory framework for CG (UN, 2001). They were renewed in 2004 to support individual countries, where they are adopted as well as modified. But the main directions remained the protection of shareholders rights, equal treatment of shareholders and public, and transparency. They are used for the evaluation of legal, institutional and political framework in individual countries, where they are influenced by market specifics as well as by specific corporate culture2. 2 1 Corporate Governance is not a new concept. From the traditional view it is mainly leaned upon agency theory, taking into account principal – agent relationship (P-A) and agency costs. In agency relationship a person, the agent, acts on behalf of another, the principal (Allsopp, Greeve and Loeffler, in Gazdar et al., 2006 E. g. for emerging markets like Croatia see Vitezic (2006) 93 There are many definitions of CG. What they have in common it is the intention to actualise CG regarding demands of contemporary business and its environment. It is very significant that many theorists and practitioners understand CG in the context of Anglo-American concept, stemming from the circumstances of the capitalist economies with dispersed ownership, separated from the managers. Among several definitions possible we lean upon that one, which views CG as a direction and, at the same time, as a control of corporations (Solomon in Solomon, 2004). The term CG indicates legal and institutional frames, the impact on leadership's decisions and thus on corporate success (Steiger, 2000). It presents normative basis for leadership and control of corporation, oriented towards value creation.3.That should be done in a responsible way, with increased transparency enabling the better evaluation of corporation as well as the strengthening of public trust. The main intention of CG is predominantly to protect the investors, who are putting great emphasis on efficiency and quality of leadership and control of corporations, especially of listed ones (at Stock Exchange). For that reason we can distinguish external and internal CG4. External CG is oriented mainly towards capital market. The importance of internal CG has been growing, too. In this case the attention is paid to the corporation leadership and control (especially to the roles, competencies, and functioning5 of Board of Director and Supervisory Board). Taking into account also other stakeholders (e.g. natural environment, local, regional and global community, etc.) with various demands and expectations, CG emphasises the need for strategies and goals for their achievement, also in the field of environmental bottom line as well as of social bottom line, besides of economic bottom line. In this way corporation is taking into account the Triple Bottom Line (TBL) Approach, reflecting the extent of CSR. For that reason the understanding of this concept should be presented. Figure 1: TBL writers), began to put great attention to the poverty of the working class. As a scientific discipline, CSR has been coming into force since 1950. In spite of critics and opposite opinions (e.g. of Nobel Laureate Milton Friedman) the importance of CSR concept has been growing, especially in the past twenty years. There are several drivers of CSR, like globalization of trade, the increasing size and influence of companies, the repositioning of government and the rise in strategic importance of stakeholder relationships, knowledge and brand reputation (UNIDO, 2002). Recently the fall of New Economy, corporate scandals, increasing consumer power, as well as international terrorism, natural disasters, environmental degradation, are additional drivers of social engagement of organisations (corporations, smaller firms, individuals, NGOs), civil groups, etc. Corporations are confronted with problems that can be very hard to separate into economic, ecological and social ones. All kinds of problems mentioned are increasingly interwoven. CSR is variously defined (some definitions and contexts can be found in Knez-Riedl, 2002, Knez-Riedl, 2004, Knez-Riedl and Hrast, 2006 and Knez-Riedl, Mulej and Dyck, 2006). E.g. Business for Social Responsibility (www.bsr.org) defines it as »Operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business«. Zadek (2002) distinguishes three generations of CSR: The first generation - the most traditional and widespread form of CSR is generally manifested in corporate philanthropy to protect corporate reputation. The second generation - in it CSR is understood as a part of long-term business strategy. This opinion is coming into force nowadays, together with socially responsible reporting and auditing, stakeholder dialogue, and socially responsible investments. The third generation - where CSR is addressing poverty, exclusion and environmental degradation, has been emphasised recently. Figure 2: Three generations of CSR 3 UNDERSTANDING AND DEVELOPMENT STAGES OF CORPORATE SOCIAL RESPONSIBILITY The concept of CSR has widely spread roots. In the early industrial period in England some individuals, mainly Christian socialists (among them especially philosophers, political economists, philanthropists, and 3 4 Grundsatzkommission Corporate Governance, 2000 Greeve and Loeffler, in Gazdar et al., 2006 5 Greeve and Loeffler, in Gazdar et al., 2006 As trade and other economic activities hardly have any geopolitical borders, we can distinguish besides the CSR also the individual as well as global social responsibility. Being “out of sight” is no longer an excuse for being “out from mind” (Grayson and Hodges, 2001. In parallel, the strategic dimension of CSR becomes very evident. Equally, the responsibility of citizens comes into force. Viewing corporations as citizens, so-called corporate citizenship (CC) becomes a part of the concept of CSR with a typical proactive approach in building stakeholders relationships. Some speak about 94 corporation as a good corporate citizen (Westebbe and Logan, 1995). There are several organisations promoting CSR concept. Among them the UN Global Compact (www.unglobalcompact.org) is rooted in the Universal Declaration of Human Rights; the ILO's Fundamental Principles and Rights at Work; the Earth Summit – Agenda 21 principles on the environment. UN Global Compact (Ib.) addresses principles, covering • Human Rights, • Labour, and • Environment. 4 CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE GOVERNANC) AS RELATED AND COMPLEMENTARY CONCEPTS There is no doubt that the concept of CG can reflect also in what extent the concept of CSR is realized. It is especially evident from the attitude of managers and other corporation bodies towards ecological and social issues, from the proactiveness or reactiveness, how are stakeholders’ demands and expectations involved in the core business strategy. But, on the other hand the provisions on CG can be seen as relating to social responsibility (UN, 2001). The CG framework should (Ib.): • • Ensure the equitable treatment of all shareholders (including minority and foreign shareholders). Recognize the rights of stakeholders by law and encourage active cooperation between corporations and stakerholders in creating wealth, jobs and sustainability of financially sound enterprises. Ensure that timely and accurate disclosure is made on all material matters regarding a corporation (including financial situation, performance, ownership, and governance of the company). Disclose the risks related to environmental liabilities. Disclose the information relating to human resource policy (like programmes for human resource policy, employee ownership plans, etc.). credit agencies are among them, e.g. Standard & Poor's, or auditing and advisory companies, like McKinsey, PriceWaterHouse Coopers, or institutions like OECD (2002) and a number of specialized agencies for CG assessment or CG Rating, e. g. Governance Metrics Informational (GMI), Corporate Governance Authority (CGA). Besides them there are more advisory companies and information providers enhancing their activity in this new field, e. g. DWS Investment and Deminor Rating, Fortune, Governance & Value Creation Rating, Moody's Investors Service, non-governmental organisation PlaNet Finance and many others from several continents (besides Europe and North America, especially from Australia and Asia). Among agencies assessing CG quality Deminor should be mentioned, as the first European agency rating the governance of listed corporations. Their rating methodologies are rather similar. They already take into account different stakeholders, besides shareholders. But they differ regarding the attention put to the social responsibility. CORE Rating is such a positive example, taking into account corporation impact on environment and society. It is not the intention of the paper to present very detailed information about the special characteristics of methodologies mentioned and developed in global agencies and institutions, using a large number of different indicators and ratios supporting the assessment. We chose only some typical examples, enabling the insight into assessments methodologies. 5.1 Standard & Poor's – Corporate Governance Score (CSG)7 This prominent credit rating agency assesses CG for financial stakeholders, especially shareholders and investors. It assesses the policy and practice of CG. The assessment, called Corporate Governance Score (CGS) presents independent opinion, leaned upon transparent criteria and standardized analytical procedure. The assessment (CSG) consists of four components, which are structured more detailed. Component 1 – Structure of ownership and influence • Transparency of ownership • Concentration and influence of ownership Component 2 – Financial stakeholders rights and relationships • Voting and meeting procedure of shareholders • Ownership and financial rights • Defence of take-overs Component 3 – Financial transparency information disclosure • Quality and content of public disclosure • Time and access to public disclosures 7 • • • 5. CORPORATE GOVERNANCE RATING The increasing importance of CG raised the issue of its assessment and especially of criteria. There are several methodologies already existing and those in developing6 stage aiming to evaluate and judge the quality of CG of individual organisation. There are several international institutions and agencies providing the so-called CG Rating. It is not surprising that global 6 and Found mainly by Internet search Publication S & P’s, 2002 95 • Independency process and integrity of auditing Component 4 – Structure of board and procedure • Structure of board • Role and efficiency of board • Role and independency of external directors • Compensations of directors and executives, evaluation and succession policy. Figure 3: Components of S&P CG S Among criteria the financial transparency is the most weighted one. If it is weak or unsatisfactory, it indicates, at the same time, unsatisfactory information disclosure. In such a case the assessment of other factors of CG makes no sense. Weak transparency lowers the score or it is not necessary anymore. The lowest score is 1, the maximum score 10. The score is assessed on the basis of detailed analyses, including meeting with management and other officials, shareholders who get questions in advance. 5.2 Methodology GIRAFE 8 liabilities management, taking into account risk exposure. Regarding liquidity assessment safety, shortterm investments and cash flow projections are emphasised. E Efficiency and profitability (24%) - both in long-term. The so-called MFI Rating has been used especially in the cases of • • • • Investments (enabling selection the investors, financing institutions, and donators) Funding, Appraisal of development, and MIFs comparison. The methodology tends to assess financial, organisational and operating sustainability. The rating committee consists of independent members. The assessment can be A (Excellent), B (Good), C (Minimum required), D (Insufficient), and E (Immediate risk of default or very insufficient). Figure 4: GIRAFE methodology The so-called Rating Plus provides additional assessment by taking into account the following information about: - Environment (economic, social, political, traffic and communication infrastructure), - Maturity and volume (scale), - Target market. 5.3 GIRAFE – Solidaire9 Global non-governmental organisation PlaNet Finance10 was established in 1998 in Paris. Its activity is oriented towards strengthening the skills of micro entrepreneurs (by training, technical support), improving transparency (by rating and harmonization of indicators) and to the promotion of social finance in handicapped neighbourhoods (by market studies, support of SFI11 in these neighbourhoods, capital flow mobilization). The population of Small and Medium Enterprises (SMEs) has troubles in gaining financial assets. Some encouraging examples certainly include the activity of the so-called Social Finance Institutions or SFIs. In France they are focused on the SMEs, founders of which are socially excluded individuals, on the SMEs creating jobs for people being unemployed for a long period, as well as on non-profit organizations, which create jobs or offer services for handicapped groups and areas. The mission of SFI is very obvious: solidarity. Because of additional criterion – solidarity – the methodology is known as acronym GIRAFE-S. 10 More on web site: www.planetfinance.org. 11 Social Financial Institution 9 It was developed to assess the CG of micro finance institutions (MFIs). Participative approach, calculating and explaining ratios, benchmarking, and transparency are typical for this methodology. It is oriented towards strengths and weaknesses of micro financial institutions and what is especially interesting, it tends to their sustainability. The term GIRAFE is acronym of six fields, being assessed: G Governance and Decision Making (20%) – efficiency of ownership structure, coherence between vision and business handling, management quality, includes the assessment of Human Resources management. For that purpose several interviews with Board of Directors members are organised. I Information (12%) – credible information is essential for CG Rating. The emphasis is put on accountancy and financial information. The information safety and reliability matter, of course. For that purpose the collaboration with external auditors is necessary. – the risk R Risk management (12%) management quality assessment and, at the same time, searching of answers how are risks (especially the operating ones) identified by members of executive board, auditors and other key persons, how are risks managed and how successfully. A Activities and services (25%) – the assessment of the activities and services, which are related to credits and loans. F Financing and liquidity (7%) – the attention is paid to capital structure, financial strategy, assets and 8 www.planetrating.com 96 SFIs are confronted with troubles, stemming from their focus and from their small size, orientation (towards smaller firms and people with low purchasing power), but also from the fact that they offer smaller loans or smaller scale of other services. High transaction costs present additional trouble. PlaNet Finance assesses just SFIs what is in interest of government, shareholders and joint ventures. In their assessment the following attributes are taken into account: cost effectiveness, information quality, treasury, possible fraud, and corporate criminal, HR skills, key persons, assets management, portfolio quality, transparency and management efficiency, technical independence, and standardisation of procedures. They collaborate with FitchRating. 6 CONCLUSIONS The concepts of CSR and CG have been evolving in parallel. How related and complementary they are, this became more evident after corporate scandals, especially in the USA and Europe. Certainly there is a link between both concepts. CSR can help corporations to find the right answer to several external, especially market, as well as non-market pressures. In that way CSR is important for rational strategic choice that should improve the quality of corporation long-term performance (economic, ecological, and social performance). In this context we can understand e. g. the increased attention paid to so-called socially responsible investments (SRI). Both concepts are emphasising disclosing and reporting practices, indicating fields of corporation vulnerability and potentials of its viability. CG has been mainly oriented towards business success, being manifested in profit - but, what is significant, profit made and shared by principles of both CG and CSR concepts. In that way, a corporation becomes more aware and active regarding problems outside its borders and at the same time less indifferent regarding the social welfare. CSR is concerned about internal and external stakeholders, striving for improving working conditions, environmental quality, and quality of life of human and other living beings. Both concepts have been very intensively developing. For both the intentions of scoring or rating is also evident. The importance of assessments made in such a way is increasing, respected and used as decision and selection tool not only by investors, but also by a range of other stakeholders, including public. On the other hand, the assessment of both CG and CSR very seriously affects the status and references of managers, members of Board of Directors and Supervisory board. Such a trend has not been typical only for corporations (presenting large organisation) but increasingly for SMEs. The case of Girafe Solidaire presented in the paper is a proof how both concepts can be linked, driven by solidarity as a mission (in this case of PlanetFinance). Other methodologies presented are rather one-sided, not requisitely holistic ones. Because of a very wide spectrum of related issues there are certainly several topics in the subject of research regarding CG (e. g. voting rights, risk management, impact of CG on credit rating, etc.) and CSR (e. g. several non-traditional kinds of socially responsible activities, CSR management, economics of CSR, SRI, etc.). The mutual interrelationship of both concepts is another research topic. For that reason our further research focuses on additional aspects stemming from their relatedness and complementarity (e.g. their mutual impact on corporate performance and success, both understood in a broader view, as well as global and, at the same time, strategic dimension of both concepts, etc.). Especially because of the fact that both concepts are interrelated, they demand multidimensional view, hence systems thinking. References: Allsopp, V. (1995): Understanding Economics, Routledge, London and New York Gazdar, K. et al. (2006): Erfolgsfaktor Verantwortung, Corporate Social Responsibility professionel managen, Springer, Berlin Heidelberg New York Grayson, D. and Hodges, A. (2001): Everybody's Business: Managing Global Risks and Oportunities in Today's Global Society in HRT. The Prince of Wales, Financial Times Grundsatzkommission (2000), Corporate Governance http//www.dai.de/ /internet/dai/dai-2-O.nsf Knez-Riedl, J. (2002): Družbena odgovornost malih in srednjevelikih podjetij; in: Rebernik, M. et al., Slovenski podjetniški observatorj 2002, 2nd part, pp. 91 - 112 Knez-Riedl, J. (2004): From the Environmental Responsibility of Slovenian SMEs to Their Corporate Social Responsibility (CSR). 2nd International Conference: An Enterprise Odyssey: Building Competitive Advantage, Galetic, L. (Ed.) Zagreb: University of Zagreb, Graduate School of Economics and Business, pp. 1214-1223 Knez-Riedl, J. and Hrast, A. (2006): Managing Corporate Social Responsibility (CSR): a case of multiple benefits of socially responsible behaviour of a firm; in: Trappl, R. (2006): Cybernetics & Systems, Vol. 2 pp. 405 – 409, ASCR, Vienna Knez-Riedl, J., Mulej, M. and R. Dyck (2006): Corporate responsibility from the viewpoint of systems thinking, Kybernetes, The international Journal of Systems & Cybernetics, Volume 35 No. 3 / 4, pp. 441 - 460 Solomon, J. in Solomon, A. (2004): Corporate Governance and Accountability, John Wiley & Sons, Ltd Standard & Poor's Governance Service (2002): Standard & Poor's Governance Scores, Criteria, 97 Methodology and Definitions, McGraw-Hill Companies Inc., New York Steiger, M., (2000): Institutionelle Investoren im Spannungsfeld Aktien Marktliquiditaet und Corporate Governance, ZEW, Wirtschaftsanalysen, Band 47, Baden-Baden, United Nations (2001): Social Responsibility, UNCTAD Series on issues in international investment agreements, United Nations Conference on Trade and Development: New York and Geneva United Nations (2003): Selected Issues in Corporate Governance, Regional and Country Experiences, United Nations Conference on Trade and Development New York and Geneva UNIDO (2002): UNIDO and the World Summit on Sustainable Development: Corporate Social Responsibility, Implication for Small and Medium Enterprise in Developing Countries, UNIDO, Vienna Figure 1: Triple Bottom Line Approach Vitezic, N. (2006): Corporate governance in emerging economy and its impact on enterprise performance: A case of Croatia, Paper presented at the 4th International Conference on Accounting and Finance in Transition ICAFT 2006, Adelaide (in forthcoming proceedings of the conference) Westebbe, A. and Logan, D. (1995): Corporate Citizenship: Unternehmen in geselschaftlichen Dialog, Wiesbaden Zadek, S. (2001): The Civil Corporation, the New Economy of Corporate Citizenship, London, Earthscan Web sites: www.bsr.org www.CGRating www.planetrating.com www.planetfinance www.unnnlobalcompact.org Economic Bottom Line Environmental Bottom Line Social Bottom Line Figure 2: Three generations of CSR 1st generation - CSR as corporate philanthropy 2nd generation - CSR as long-term strategy 3rd generation - CSR addressing poverty, exclusion, environmental degradation Figure 3: Components of S & P Score Component 1 – Structure of ownership and influence Component 2 – Financial stakeholders rights and relationships Component 3 – Financial transparency and information disclosure Component 4 – Structure of board and procedure Figure 4: GIRAFE methodology 98 G Governance and Decision Making I Information R Risk management A Activities and services F Financing and liquidity E Efficiency and profitability 99 100 ECOLOGY ON THE PLATE: DEVELOPMENT CHANCE FOR SMEs IN RURAL AREAS? Sonja Sibila Lebe, University of Maribor, faculty of Economics and Business, SonjaS.Lebe@uni-mb.si Katarina Schiemann, University of Wuerzburg, Faculty of Medicine, Katarina.Schiemann@gmail.com Borut Milfelner, University of Maribor, Faculty of Economics and Business, Borut.Milfelner@uni-mb.si Julij Nemanič, Agricultural Institute of Slovenia, Julij.Nemanic@siol.net Abstract This paper is based on the research done during the preparation of the strategy for the tourism product gastronomy for Slovenia, performed (among others) by the authors of this paper. The research was based on a thorough analyses of the state of the art of the existing offer in the fields of culinary and oenology, followed by a benchmark analyses with some comparable European countries. The synthesis of our work was the proposal of an innovative, comprehensive and easily applicable model of matching culinary and oenology. It is based on respect to the local traditions, to ecology and allows a higher quality of gastronomic offer in rural areas 1 INTRODUCTION When talking about innovations, the stereotype thinking, which we share, is linked with technical and technological issues, as the greatest easily recognisable (material) innovations that have most significantly influenced the humanity since the renaissance, have been made in these fields. Sticking to this view, even nowadays we thus expect major – or even spectacular – innovations in the filed of electronics. Mulej [1], in the contrary, argues that most influential innovations happened in the social and management fields: a) by abolishing guilds, which have prevented through their monopolies and oligopolies any kind of competence and entrepreneurship and b) by separating church and state and thus finishing the monopoly on thinking and guarding traditions of the latter, which enabled innovations and competence based on democracy. We could here re-launch the eternal question about what was first – the hen or the egg – or, later on, the innovations or the democracy (e.g. the cases of Bruno and Galileo in the Middle Ages or today the restricted use of the Internet in Chie and in spite of it the swiftly progressing “westernisation” of the Chinese society. Irrespective of our view, we can state that: if centuries ago safeguarding of traditions was the biggest hinder for (economic) development, nowadays it is exactly the opposite in the filed we were researching. We discovered that in some fields of economy (like tourism and hospitality) preserving traditions can lead to significant chances for innovations, and, linked with them, for development of entrepreneurship, which is very important in (usually less developed) rural areas. where SMEs suffer from lack on highly skilled personnel. purpose of this paper is to point out an innovative way f The Our model encompasses an innovative three-degree wine offer to typical regional dishes. It is fully generable to any wine-growing region in the world and, in a modified way, also to non-wine growing regions in case they have a recognisable culinary heritage. Key words: Gastronomy, innovativeness, quality, rural SMEs, ecology Prosperity of some economic sectors and the quality of life, including the quality of our environment, often depends on minor improvements, insignificant at the first glance and being discovered by coincidence. One of such sectors is tourism, known for its low innovativeness but at the same time for its great eagerness to implement innovations coming from other parts of economy: in this sense, tourism was one of the first industries to introduce the systematic use of the Internet. In this paper we are going to discuss an invention linked with heritage and with a specific part of preservation of the regional identity in the field of hospitality: with its gastronomy. Special regard will be given to ecology, including organic food suppliers and their integration into the supply-chain of ecorestaurants, what we consider to be a part-system of quality. The research started in 2005, as the Slovene tourism board (STO) initiated a strategy on development of the tourism product “gastronomy” [2] (Lebe et al. 2006). A high-level multidisciplinary expert group (tourism, culinary, oenology, heritage, marketing and medicine) developed a model, which represents an innovative approach to matching typically regional dishes to local wines in wine-cultivating regions. Even in regions with no genuine wine production, the model can be applied in a modified way. 2 TOURISM DESTINATIONS META-SYSTEMS – HOLISTIC Very roughly said, we can divide tourism offer into two major categories: mass tourism on the one hand, based on economy of scale and competing primary with 101 prices, and individual tourism on the other hand, being more tailor-made, more expensive and based on competing through quality in widest sense of the word. The same can be said for tourism destinations. On the demand side we have a sustained growth of tourism since World War II – its turn-over in 2005 was bigger than that of the automobile or pharmaceutical industries – tourism is sharing place 1 with the petrochemical industry since last decade. The trends show that the demand is still going to increase as each year additional emerging countries attain a higher level of living, which allows them to participate in international tourism flows. The UNWTO (World Tourism Organization) expects more than one billion tourists in 2010 and more than 1.5 in 2020 [5]. The question arises – where should all these people travel to? Are there enough tourism destinations in the world with sufficient facilities to host 1.5 billion people in 2020? The answer is not: “No”, but much more: “Not yet”. Everywhere in the world new tourism destinations and attractions are being built – from hightech tourism like Dubai, followed by “trendy” city tourism fuelled by cultural tourism and thus flourishing most in European capitals with a very intense offer in this regard, up to eco-tourism that meets the demand of tourists searching for healthy environment and foods, for local traditions and for peace and quiet in preserved nature. The latter is suitable for rural areas, which we intend to discuss a bit more thoroughly later on. In the present paper we consider tourism destinations to be meta systems, following Bertalanffy [1, 3, 4], who considers systems as …interrelations of a great number of »variables«, which in our case are defined as part-systems that make out the destination. Its part-systems determine the type of the destination (the “what”, like rural, seaside, mountain, city, etc. destination). A system is, following Mulej [1], an abstract metaform, a whole of any kind. Its content depends on the selected viewpoint – in our case (destination) on viewpoints of all respective stakeholders within and outside the system destination, like: local inhabitants, authorities, suppliers, tourists and all participants in any other of the part-systems that have any kind of interactions with the meta-system destination (Picture 1). Mulej also states that the result of a system is always more then a sum of its parts, because the system can only be understood as the synergy of all its parts. Besides, a system always depends on human's perception, human's construction of a mental picture, in which the selected part of attributes is included [1, 3, 4]. This means that in case of a tourism destination we can talk about as many perceptions as there are visitors, suppliers, clerks, entrepreneurs, etc. that have to do with each unique destination. We consider any destination to be a holistic system, in which several relationships and interdependencies build key conditions of its (successful) operating. We describe them as dynamic (extremely sensitive to threats form the environment like diseases, terrorism, quickly changing – trends, fashion), complicated and complex (several levels and layers of interaction and /or integration on the horizontal and vertical parts so on the supply as on the demand sides of the tourism destination), partly only periodically activated (guest coming to the destination or into a restaurant not on daily bases but in broader time intervals) etc. Within the destination we can define three main part-systems: local population, tourism suppliers and tourists. Between them, we can observe several relations and interactions – one of the most important among them are economic interactions between the tourists and enterprises (suppliers) in the destination. Two other important part-systems are building intersections with the system destination, namely the authorities (local, national and supra-national like the EU) as well as tour-operators and intermediaries who build the bridge between the destination and the tourists coming from different countries. In the destination itself, suppliers compete against each another. But as soon as we leave the system destination, they are looked upon as on the whole, which forces them to co-operate to a certain extent – e.g. when negotiating with tour-operators and intermediaries or when customers need additional services or a package of services – and of course each time they try to attract tourist into the destination – in this case they act as allies. New tourism structures are generated not only through the competition and cooperation of service providers. Tourism has developed a dual structure which influences to a large degree the level of change and its direction [6]. Tourism suppliers can therefore be considered as agents, each playing its own role in the multi-agent system. Agents typically must cooperate to achieve their goals, due to differences in their capabilities, knowledge and resources. 102 Picture 1: Meta-system “destination” with its independences Friendliness of local Heritage population Quietness Leisure Supply Loyal Nature diversity Wine Communication costumers Regional systems QUALITY identity Pubs (SME) Hotel Authenticity service Information OF Public Drinking / Safety & Inns (SME) Beauty of bathing mobility DESTINATION security water Life landscape Cuisine Air Infra- Accessibility Promotion structure Touroperators and Economic Tourists Suppliers intermediaries interactions Tourism Destination suppliers Social management interaction Civil Authorities initiatives Local population Events Skills & knowledge 2.1 Problematic of rural tourism destination development The problem that we meet in many rural areas throughout Europe is its swift depopulation because young and educated people are leaving the villages to find a better and easier way of living in the cities. All European governments are therefore introducing measures in the fields of fostering agriculture and economy development in order to keep local population in their homes. Not all economic sectors are appropriate to contribute to the revival of the countryside – one of the reasons why is an acute lacking of highly skilled personnel, accompanied by a low degree on innovativeness and thus on competitiveness of rural destinations on the supply side. To improve this situation, we propose to concentrate on some chosen sectors – like agriculture and services, especially tourism. All countries in the world try to foster tourism development as it is an important source of winning foreign currencies and the best possible provider of jobs in demographically problematic (which means mostly rural) areas. In case a rural area has no industry and no significant resources to become industrialised, and if at the same time it has an attractive landscape and interesting heritage of any kind, tourism development can indeed be seen as a perspective development alternative. Tourism is known for being the most inter- and multidisciplinary sector of the economy, with beneficial multiplication factors for its environment: this too is the reason why its development is so important for rural areas. In this article we shall show an example of possible perfect co-operation of tourism and agriculture. The chances for a rural destination to come into the world’s top tourism destinations is equal zero – and it is good so. Rural destinations can impossibly develop into mass tourism destinations (like seaside or skiing tourism) because such development would make vanish their rural character, it would destroy them. Farm and countryside tourism are getting more and more popular throughout Europe – it is a response to the swiftly progressing globalisation that makes everything available throughout the year: strawberries, apples, grapes, sun and beach holidays etc. At the same time, the world is getting somehow uniform: if tourists walk through the streets of Paris or Sidney or New York or Hong Kong or Moscow – what they can buy is in all these cities the same: shop-windows in all main streets look alike, everywhere around the globe the same global brands – which makes the world not only smaller but less exiting as well. As a respond to this development, some tourism destinations started to promote themselves as being different, having their own character – and this can be found better than elsewhere in the countryside. Even a new word has been composed: glocalisation – trying to express the loyalty and respect for the local by offering at the same time the benefits of the global. Local has become a treasure: it is seen as the best possible point of differentiation without creating cheap and mostly ineffective imitations. The best possible fields how to attain this are the unique nature and a genuine culture in widest sense of the word’s meaning – thus including local cuisine with typical local spices, foods and beverages – especially local wines which match best with local foods. The problem of the “local” and “rural” is its size – such destinations are just too small as to be able to 103 promote themselves successfully at the global market. Associations and co-operations are urgently recommended and needed and the Internet is a very cost-friendly toll they can use very successfully. The next problem is the already cited lacking of skills. They can partly be compensated by systematic introducing of simplifications of as many working and organising procedures as possible in order to make them manageable even for lover-skilled personnel. Simplifying means (according to the systems theory) building models; in chapter 4 we shall present one of possible models that has been developed during our research for the field of gastronomy. 2.2 Quality as a vital system of tourism supply in the destination We determine the meta-system “destination” through a variety of different part-systems within it, and a variety of systems, building intersections with the metasystem. To better understand the functioning of a destination, we have to introduce another vital parameter: “quality”. It is present in all part-systems of the meta-system destination as an immanent subsystem of each one of them, as well as of all systems outside the meta-system that build intersections with it. Some most significant interdependencies between the meta-system, its part-systems and the principle “quality” are shown in picture 1. One of the key part-systems in the meta-system “tourism destination” is the offer of quality hospitality, where “quality” is defined through the elements that are making up the added value from the costumer point of view. They result in costumer satisfaction and loyalty, and are recognisable as accessibility (organisation, price, place, promotion) and quality (skills of the personnel, atmosphere etc.) of the offer. Following this, quality of tourism supply in the destination can be defined through elements that constitute customer’s total perception of tourist services. Perceived quality is defined as the consumers' judgment about an entity's (service's) overall excellence or superiority [13]. Perceived quality of service is a type of attitude, related satisfaction, and resulting from comparison of expectations with a perception of performance [14]. Thus, the two concepts are related, because incidents of satisfaction over time lead to perceptions of good quality [14, 15]. Tourists do not perceive quality as detached parts that constitute every service, but rather as whole package of services that have to be provided by a very large number of suppliers in the destination. In contrast to other branches of economic activity, consumers in tourism (tourists) typically purchase and consume a whole range of services, which together make up the “holiday or vacation experience”. Thus, tourists tend to base their judgements on the quality of and satisfaction with a vacation experience on all components of a complex tourism (destination) system. These components are captured by the “tourism value chain” underlying both the production and consumption of “holiday or vacation experiences” [15]. Since all relevant services contributing to the holiday or vacation experience take place in the context of a tourism destination, tourism researchers accept tourism destinations as the relevant unit for competition and/or benchmarking analyses. This also applies to the tourism value chain which constitutes the total customer (tourist) value associated with the holiday experience at a destination [16, 15]. According to this the relevant point in understanding the quality of tourism supply in a destination means understanding tourism services comprising the tourism value chain and good knowledge of different stakeholders in the system. The important aspect to consider is also the holistic character of the consumer act. The consumer (tourist) judges the total holiday experience, even though tourists do experience a multitude of individual service encounters and can also evaluate their inherent qualities [17]. Quality is crucial for the competitiveness of the destination as it determines its character (the “how” like excellent or poor service etc.). It is the key parameter of destination’s holistic performance as perceived by visitors. The quality of parts-systems in the destination varies considerably form one to another (e.g. service extent and proficiency of a hotel or a tourism farm, friendliness of local inhabitants, their language skills, quality of culinary – even if in the smallest inn etc.). The final perception will always reflect its holistic appearance and will depend on quality of all relevant stakeholders (suppliers, authorities, co-operators, visitors etc.). To define what else quality in case of a tourism destination can mean, we have to introduce its most important predecessor): innovativeness. Keller [6] argues that innovation in tourism is often constituted of a series of small steps that lead to incremental growth. Innovation is a feedback process, as one innovation inevitably leads to another one. Innovations improve products and reduce the cost of processes – and yet the innovation process does not function in a satisfactory manner in the destination-oriented small-business tourism industry. The main drawback is a lack of staff and funding. Additionally, tourism SMEs are above all concerned with the day to day needs of regular customers. They are not in a position to set aside funds for research and development. Moreover, in this field there are no patents that would compensate for the cost of innovation by providing monopoly profits. Innovation in tourism can therefore be more efficient if all stakeholders (and not only tourism suppliers) in the tourism destination system take their part in system processes. 104 2.3 Food quality as possible competitive advantage in rural destinations A very important quality parameter in rural gastronomy supply is the possibility of shaping the shortest possible supply chain "from the field to the plate", which still gets additional value-added for the customer in case the foods derive from an eco farm. A well-balanced nutrition is guaranteed only with foods, containing all vital ingredients, like carbohydrates (including fibres that belong to this same nutrition group and have a very positive effect on the gastrointestinal function), greases, proteins (long chain of amino acids), vitamins and minerals; all of them are present in fresh and "vital" plants. What we have to take into account in this regard as well, is the absence of harmful substances in ecologically gained foods. Not all people are aware of the art how the human body treats substances like pesticides, herbicides, fungicides and other synthetic plant sprays: most of them are being stored, mainly in the liver, and with time, their concentration has an equal effect on the health as if the person had drunk a glass of these substances – which is not a very inviting image. We stated that not all fresh vegetables were equally good for human health – much more harmful still is the permanent consume of denaturised food. Such inadequate nutrition causes most of the civilisation diseases like overweight (more than 50% of adult population in the USA), gout (too much meats and wine consume), diabetes mellitus (adipositas, chronically high blood sugar), hypertension (too much salt, adipositas), arteriosclerosis (too much grease and cholesterol), coronary heart diseases, inconveniences in metabolism of greases, heart insufficiency, osteoporosis etc. Not many people know that about 35% of cancer cases, ending with death, are caused by poor-quality food and false nutrition [7], [8]. Medicine therefore recommends to eat fresh, domestic (grown in the place where people are living) seasonal fruits and vegetables to assure a high consume on fibres, minerals in vitamins – and this is exactly where rural gastronomies have a clear advantage in comparison to urban places. Several opportunities for developing SMEs in rural areas can derive from these cognitions, like establishing co-operations between producers and gastronomy SMEs; the result would be a certification of the provenience of foods on the menu (from which farmer the foods derive and also whether they originate from an eco- or from a conventionally producing farm). A good marketing move would for sure be an own garden that could be seen out of the windows of the restaurant. Guests could choose there the vegetables and fruits they want to eat by themselves – this would augment the interest for such a gastronomy provider – modern costumers like new approaches in creating a positive and innovative atmosphere. 3 ENTREPRENEURSHIP IN RURAL AREAS In the previous section we have argued that quality was a vital part of tourism supply and therefore an important predecessor of success of the entire system “destination”. But what is it that gives a rise to success and superior performance? According to several authors, the answer can be found inside specific resources of the system (individual and collective) which enable individual entrepreneurs to exploit opportunities. Rebernik and Mulej [9] argue that a holistic view of the entrepreneurship process is requisite: not every resource is appropriate for every business opportunity – the said is concerning the metasystem destination as well. Not every resource is thus likely to generate competitive advantage. For a particular opportunity, particular specialised resources should be employed and only resources with special potential can be advantage generating. Resources with a potential for creating competitive advantage according to [18] therefore should have at least four characteristics: they must be valuable, in the sense that they exploit opportunities and/or neutralizes threats in a company’s environment, they must be rare among a current and potential competitors, they must resist imitation by current and potential competitors and they should not have appropriate substitutes. Such benefits of developing and exploiting resources have been a significant theme in the strategic management literature [19, 20, 21, 22]. This domain is classified under the term resource based view (RBV). In a rural destination we can seek for comparative and competitive advantages in its uniqueness – and in this paper we shall concentrate on local gastronomy, which varies with changing climate, land qualities and traditions. Sourcing the atmosphere of the local environment, food selection and the cooking procedures based in local traditions and heritage, we get attributes of quality and of differentiation that build plenty of opportunities for foundation of small businesses – especially in rural areas. Often resources of unique providers of services in a destination are barely productive. They should therefore rather be assembled in a specific mix (subsystem) which holds a high potential for the development of competences and leads to generating of competitive advantages [23]. With other words: to exploit the opportunity to its full extent, an entrepreneur has to create the unique mix of resources that suits perfectly the given opportunity [9]. The list of resources with desirable characteristics in any given tourism destination that should be included in this mix is likely to be a long one. Nevertheless several important resources concerning gastronomy development (capabilities and /or assets) can be recognized inside a system of tourism destination: assets that are defined through country’s (regional) geographical characteristics, assets in the field of gastronomy (typical national and local food and 105 beverages), combination of natural and intellectual assets (local geographical food and beverages brand names), innovation capabilities in gastronomy field, customer related capabilities (transparency of the quality of gastronomy services from a viewpoint of customer), networking capabilities (building and maintaining strategic relationships between stakeholders of destination), reputation resources (building and maintaining image and reputation of country’s gastronomy) and capabilities of establishing linkages between tourism destination and local gastronomy. Shields [10] has investigated whether in the USA rural geo-demographic features had significant adverse effects on small businesses, encompassing gender stereotypes, which have significant adverse effects on women-owned small businesses. He found out that assumptions that rural settings for small business were like metropolitan settings or that rural areas were in crisis, presenting extreme adversity to business, were not necessarily accurate. He pointed out that rural America had undergone significant changes over the past two decades and continued to evolve its traditional agriculture-based economy, now depending on a diverse mix of manufacturing, services, recreation, and other non-farm activities (Whitener and McGranahan, 2003) [24]. What proves to be similar in Europe, is a possible misinterpretation of the implications of rural destinations for small businesses, which prevents understanding that a more complete knowledge of the effects of rurality can be important to small business owners and entrepreneurs so that they focus their efforts appropriately – but besides anticipations, no comparable study has been carried out in rural Europe which could make a reliable comparison possible. Results show that rural small business owners manage their businesses consistent with rural socio-cultural values, and demonstrate the considerable influence of rurality on small business activities. Its effects are reflected in the importance business owners place on word of mouth reputation and on the primacy of relationships with family, friends, and neighbours to the successful operation of their businesses, affirming the significance of rural social networks [25]. These results suggest that traditional business advisors, such as accountants, and community groups, such as chambers of commerce or civic clubs, take a backseat to family, friends and neighbours. The main problem of a rural destination is thus not deriving from gender or special group discrimination (like youth or women) but from the poor level of knowledge in rural areas: visitors to rural destinations are normally considerably more educated than the average of the local population, which causes difficulties in communication (encompassing the how to communicate – different foreign languages – and the what – even if being capable of empathy and even if knowing foreign languages, there is only a little space for conversation between the local SME owners (not only those in the field of gastronomy but also crafts and agriculture. To surpass the knowledge gap between the level obtained in secondary schools, which represents the usual level on knowledge and skills of the personnel in gastronomy businesses, and the level needed to successfully operate a high-level gastronomy SME (which also includes knowledge on entrepreneurship, management and marketing skills), a models (meaning a simplification and concentration on key elements) has been developed: a system of “gastronomy couples”, which safely guides the personnel to more quality and thus more success for their firm. 4 MODEL AND ITS PURPOSE We have already discussed the often insufficient knowledge in rural destinations as to allow them to perform perfect and highest-value tourism services. A very concrete step into quality augmentation can be done by introducing some well-prepared working procedures, based on modelling. According to the systems theory, building a model means a simplification based on the concentration on key parameters, which can help bridge the gap between the lack of knowledge and expertise and the expectations of visitors. Doing so, it is very important to prevent an over-simplification based on overspecialization, which leads to blindness [1, 3, 4], leading to lots of risk and failures. Oversimplifications in our case could result from trying to systemise all working procedures in an intensity that would stifle creativity and striving after innovating. In order to facilitate preparing high-quality gastronomy offer, we developed a three degree model, in which one traditional dish gets three different proposals for matching wines from the region [2]. The first degree, which we called “the classical choice”, is a pure reflecting of tradition, thus a classical twin that the guest is expecting, for example matching the Slovene red wine “Teran”, growing in the coastal region, to airdried ham, typical for this same region. The second-degree twin, we called it “modern choice”, mirrors a transformed and modernised tradition, yet at the same time meeting expectations and needs of the modern era, like introducing vegetarian food, less grease, smaller portions etc. For the gastronomy, this means following a different, modernised rule of choosing wines, which is yet still “safely” embedded within the classical rules of matching dishes and wines. In this stage, we often recommend rosé instead of white wines – yet thus already permitting new experiences of flavours. To come back to our former example: in this case, we could recommend a white wine: the Slovene “Tocaj” or a Pinot Blanc. We called the third degree “daring”: it represents a real gastronomic innovation, causing often surprise at 106 the first glance (or at the first gulp), yet ending in positive approval of the choice by the guests. The character of the dish and of the recommended wine must build a harmony and render a perfect consuming delight. We are taking here about new characters of wine, like serving to “potica”, a Slovene national desert, sparkling wines (from dry to sweet), instead of sweat or off-dry wines (like the classical degree) [11, 12]. It is essential that the suppliers (gastronomy) stick to the horizontal and to the vertical principles of wine serving. The horizontal axis covers matching of wine with a dish taking into account its strength, aroma, exquisiteness etc., like red wine with a high degree on tannins to grilled meats. Within the horizontal axis, we then decide between three possible characters of wine following the three described degrees: classical, modern and daring. The vertical choice is considering the progressive order of serving wines: during a meal, human senses slowly loose their acuteness and get saturated. The dishes served thus have to slowly intensify their flavour from the first hors d’oevre (appetizer) till the end of the meal, always following the “golden rule”: a guest should never long for the former wine by getting served the next one. In concrete, the model must be prepared for each region – in our case destination – possibly by an interdisciplinary expert team that sets together a list of typical regional dishes and of typical beverages. A model claims for working out of suggestions on which beverages (including which imported wines) match to unique regional dishes. The practical value and applicability of this model is that we no more have a huge list of wines and other beverages that might “qualify” but a concise recommendation, which is describing the character of the best suitable liquids. This model is comprehensive and therefore especially suitable for gastronomy SMEs in rural REFERENCES 1. Mulej, Matjaz: Lack of Systemic Thinking and Innovation; Case of Slovenia - A Transitional Country in: Gu, J., Chroust, G., (2005): IFSR 2005: The New Roles of Systems Sciences for a Knowledge-based Society. The First World Congress of the International Federation for Systems Research. Kobe, Japan (on CD) Lebe, Sonja Sibila et al.: Strategija razvoja gastronomije Slovenije. Slovenska turistična organizacija. 2006, Ljubljana Mulej, Matjaz: Systems theory – a worldview and/or a methodology in Trappl, R., ed. (2006): Cybernetics and Systems '06. Proceedings of the 18th European Meeting on Cybernenetics and Systems Research. Austrian Society for Cybernetic Studies, Vienna destinations that often suffer a lack on quality personnel. 5. FINDINGS - CONCLUSION Rural destinations have a lot of comparative advantages that make a decision to start tourism development reasonable. The most significant one is the healthy and relaxing environment, including fresh and locally cultivated foods that should be served to visitors. We have shown the wealth of ecologically grown foods and their impact on human health – this too is one of the reasons why more and more tourists are asking for this product. Besides the benefits, there are some negative parts as well: the personnel is often not skilled enough to be able to establish a co-operation among the several SMEs in the destination and to take over a successful destination management. Using models – simplified pictures of reality – can help significantly by augmenting the quality of services as the personnel does not loose time by searching for possible viable solutions in literature. Quality of services inside a tourism destination system, closely linked to innovativeness, is defined as the most important factor for system success. Understanding of quality is based upon customer’s perceived quality concerning the whole range of services inside the tourism destination. Undoubtedly, quality can only be achieved through appropriate entrepreneurial combination of an outside and an inside view; with other words: with the right mix on appropriate resources. In the present article the authors define the one that is considered to have the greatest contribution to the parameter “success” (performance) and provides important orientation for development of gastronomy SMEs in rural destinations. 4. 5. 6. 7. 2. 3. 8. Mulej, M.; Espejo, R.; Jackson, M.C.; Kajzer, S: Mingers, J., Mlakar, P. Mulej, N.; Potocan, V.; Rebernik, M; Rosicky, A., Schiemenz, B.; Umpleby, S.A.; Ursic, D., Vallee, R.: Dialekticna in druge mehkosistemske teorije (podlage za celovitost in uspeh managementa). 2000, Ekonomsko-poslovna fakulteta, Maribor UNWTO: Tourism 2020 Vision; Europe, Vol. 4. 2001, Madrid Keller, Peter: Innovativeness and tourism OECD 2004. Conclusions of the conference on innovation and growth in tourism. 2004 Lugano Horn, Florian; Gerd Lindenmeier, Isabelle Moc, Christian Grillhösl, Silke Berghold, Nadine Schneider, Birgit Münster: Biochemie des Menschen. 2002, Thieme Verlag Renz-Polster, H.; S. Krautzig, J. Braun: Basislehrbuch Innere Medizin. 2004, Urban & Fischer, 3. Auflage 107 9. 10. 11. 12. 13. 14. 15. 16. 17. Shields, Jeffrey F.: does rural location matter? The significance of a rural setting for small businesses. Journal of Developmental Entrepreneurship, Vol. 10, No. 1 (2005) 49–63 Rebernik, Miroslav, Mulej, Matjaž. 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Weiermair, K, Fuchs, M.: Measuring tourist judgments on service quality, Annals of Tourism Research, Vol. 26 No.4, (1999) 1004-21. 18. Barney, J. B.: Firm Resources and Sustained Competitive Advantage. Journal of Management 15, (1991), 175–190 19. Penrose, E. G: The Theory of the Growth of the Firm. (1959). New York: Wiley 20. Wernerfelt: BA Resource-Based View of the Firm. Strategic Management Journal, 5 (1984), 171–180 21. Barney, J. B: Firm Resources and Sustained Competitive Advantage. Journal of Management 15, (1991), 175–190. 22. Hunt, S. D. Morgan, R. M.: The ResourceAdvantage Theory of Competition: Dynamics, Path Dependencies, and Evolutionary Dimensions. Journal of Marketing 60 (Oct), (1996), 107-114 23. Jüttner, U., Wehrli, H. P.: Competitive Advantage – Merging Marketing and the Competence-based Perspective. Journal of Business & Industrial Marketing 9 (4), (1994), 42-53. 24. Whitener, Leslie A. and David A. McGranahan: Rural America: Opportunities and Challenges 25. Miller and Kim: A Rural Perspective on Marketing Services to Older Adults 1999) http://www.haworthpress.com/store/ArticleAbstrac t.asp?sid=8MK7FUB475RP8MXH5JUH9WPF79 CVE6JA&ID=43692 online 10.3.2006 Journal of Gerontological Social Work, Volume: 41 Issue: ½, ISSN: 0163-4372 Pub Date: 4/1/2004 108 SYSTEM THEORY IN TRAVELING SALESMAN PROBLEM AT POSTAL COMPANIES Andrej Lisec, Tomaž Kramberger, Bojan Rosi University of Maribor Faculty of Logistics, Celje Krško Mariborska cesta 2 3000 Celje Slovenia E-mails: andrej.lisec@uni-mb.si; tomaz.kramberger@uni-mb.si; bojan.rosi@uni-mb.si ABSTRACT In this paper the theory and methodology of Roberto Wolfler Calvo (2000), described in the article A New Heuristic for the Traveling Salesman Problem with Time Windows, are presented and real application is made. The reduction of logistic costs using this approach is very high. Hence, this is case of innovation by systemic thinking using mathematical models and cost calculation per distances. KEY WORDS: Systemic thinking, Postal system, Traveling Salesman Problem, Postal Logistics Center 1. INTRODUCTION Quality of management depends on creative, dynamic, qualified, into development and interdisciplinary cooperation directed managers. However, nowadays, in the world of global economy they do not have on disposal/do not operate with sufficient quantity of information, needed for (more or less) complex problems solving and with them connected/linked decision-making. Fathers of the theory of systems (L. von Bertallanffy), noticed (already less than sixty years ago) sensibility of the theory of system to develop theoretical approaches (=general directions), methodologies (=knowledge about methods) and methods (=way of treatment), to support practice – systemic thinking – in researching, analysing (= recognition of the hidden essence), in preparation and decision implementation, considering essence of entangled phenomenon [4]. Thus, the mankind would become able to think, make decisions, and act as holistically as possible, instead of practicing one way /unilateral and simplified thinking [4, 5]. Sense of the systemic thinking, as it is predicted by modern Dialectal Network Thinking (DNT) is therefore the most (= sufficient) holistic and realistic preparation and performance of human activities, when we deal with researching, development, decision making, informing or performing [5]. It is important to use DNT in each aspect of the complex problem solving. The very moment we do not consider influence of the choice of the aspects, we can easily fall into virtual holism1 when we think, make decisions and act/perform – or carry out, for example, management decisions. Global business conditions force us to try to be holistic in our way of thinking, making decisions and acting, as much as it is possible and needed at the same time. Central European regions are improving their postal services. This paper presents an approach to the spatial optimization of postal services, particularly as applicable to the Post of Slovenia in respect to the Traveling Salesman Problem. The Traveling Salesman Problem with Time Windows - TSPTW developed by Wolfler Calvo [8] is described and applied to the Slovenian postal network by a set of fully interconnected posts (nodes), each one characterized by a time interval or a time window. One of these nodes represents a Parcel Post (depot), where the parcels from all local post services are collected and distributed. Each arc has an associated travel time and cost. The problem consists of finding a minimum - cost Hamiltonian tour visiting each node during its time window. The tour starts and ends on the lower level of the Parcel Post. The TSPTW is a useful generalization of the classic Traveling Salesman Problem - TSP and it has applications in many vital sequencing and distribution systems. This problem is only a part of logistic problems of Slovenian postal network when we wish to set up an optimal allocation of modern Postal Logistics Centers in given 4-level hierarchical structure of regional central places in Slovenia. A verified model of spatial optimization by Bruns [1], developed for the Post of Switzerland, has been previously studied and has been partly applied and extended to evaluate Slovenia’s second Postal Logistics Center Maribor. The previous analysis is based on the paper of Bruns [1]: Restructuring of Swiss Parcel Delivery Services, where 0 - 1 programming has been used. 1 Because of one way/one sided thinking, which may be consequence of extensive specialisation; we may have overlooked or neglected essence when we made choice or even aspect of treatment of some manager’s decision. 109 So far two Postal Logistics Centers - PLCs have been opened up in Slovenia in the last nine years. We evaluated the logistic costs considering two instead of one PLC and evaluated whether the two existing Postal Logistics Centers in Slovenia already have optimal macro locations of required capacity by using the model of Bruns [1]. Simulations demonstrated that the PLC Maribor in addition to the PLC Ljubljana is acceptable, if the variable costs of service from the PLC Maribor are lower or at least the same as the variable cost of the PLC Ljubljana and if the costs of services of both do not exceed a certain critical value. On the lower level Parcel Posts (with short time depots) have to be established. They do not exist so far. Not only in Switzerland but also in other Central European Countries, the problem of postal hub location has been presented in some papers as a vital one for efficient postal logistics. Wasner and Zapfel [7] described the hub transportation network for parcel delivery service in Austria in the paper An integrated multi-depot hub-location vehicle routing model for network planning of parcel service. According to them the problem of several parcel posts, their location and their coverage of area by the post connected in cycles is the basic problem on the lowest level. 2. TRAVELING SALESMAN METHODOLOGY EMBEDDED IN HUB LOCATION PROBLEMS Postal hub is a special type of central facility, which can act as trans-shipment point in postal transportation systems with many origins and destinations. E-commerce influences the increase of parcel services and the number of parcels all over the world. How can this demand be addressed properly? New technologies and modern organization in postal services could improve the design of postal systems and especially the logistics of these systems. By using the basic approaches of graph theory we improve the approach to the hub location problem with the model named Multi hierarchical hub location problem and also combine in with the vehicle routing problem on a special way. Given a collection of Posts and the cost of travel between each pair of them, the Traveling Salesman Problem is to find the cheapest way of visiting all of the activity nodes and returning to the starting point. In the standard version, the travel costs are symmetric in the sense that traveling from Post i to Post j .The basic problems of companies that are dealing with parcels are: 1. To determine the optimal number of Posts as hubs patronizing separate areas (Regional Parcel Centers), and to determine the location and size of hubs; 2. To determine optimal fixed locations of Postal Logistics Centers, patronizing Regional Parcel Centers, location of Regional Parcel Centers, patronizing Parcel Posts and Parcel Posts patronizing area of inhabitants. In these posts we need to achieve:An effective collection and sorting of parcels; - A reliable delivery; - An effective transport. The criterion here is that the total sum of logistic costs in this service of parcels should be minimal, often under certain capacity constraints. The Posts on the level of local communities, patronizing a certain area, have to be assigned to the proper Parcel Post. The transport network has to be built, which connects Posts, Parcel Posts, Regional Parcel Centers and Postal Logistics Centers, where the costs of daily trans-shipment of parcels would be minimal. These problems are well discussed and overviewed in the theory and practical applications of Ebery [3], O’Kelly [5], Campbell [2], Wasner [7] and Bruns [1]. Successful parcel service application of postal services model was developed by the Swiss post, described in Bruns [1], which deals with restructuring of the parcel service network, with choosing transshipment points among the nodes in the network. They used a discrete facility location model. Austrians Wasner and Zapfel [7] describe why optimal design of depot and hub transportation networks for parcel service providers makes it necessary to develop a generalized hub location and vehicle routing model. In this article the focus is on the Traveling Salesman Problem only on the lower level. The results by Wolfler Calvo [8] are being used. Let G=(N, A) be a graph, where N ={0,1,...,n} is the set of n nodes plus the depot {0} and the arc set is A={(i, j): i, j ∈ N, i ≠ j}. The time window is represented by [ ei , li ] and, to each arc (i, j) ∈ A, there is an associated cost ( cij ) and travel time ( tij ). The travel time matrix is symmetric ( tij = t ji ) and with strictly positive entries ( tij >0). Here ei is the earliest time for delivery (or collection) and li the latest time for delivery (or collection). A possible formulation of the TSPTW is as follows: min (i , j )∈A ij ∑c x =1 =1 ij ij (1) subject to: J ∈N J ∈N ∑x ∑x ∀i ∈ N ∀i ∈ N (2) (3) ji if xij = 1 then pi + tij ≤ p j ∀(i, j ) ∈ A (4) 110 ei ≤ pi ≤ li xij ∈ {0,1} ∀(i, j ) ∈ A ∀i ∈ N (5) (6) The variable xij used, otherwise xij = 1 means that arc (i, j) is = 0 . The variable pi represents the departure time from node vi . Equations 2 and 3 define an assignment problem of dimension (n+1). Equations 4 and 5 represent the time window constraints. 3. APPLICATION TO THE POSTAL COMPANY Our application is based on an analysis of Slovenia’s postal service. The country is divided according to NUTS system on NUTS 2 and NUTS 3 regions, patronizing 192 local areas. Spatial hierarchy of postal services is more or less embedded in geographically and politically determined regionalization. We used the data from the Post of Slovenia and optimized the hierarchical structure for picking processing and delivery of parcels from Post to Post. The Posts are allocated to Parcel Post on the criteria of minimum number of kilometers and especially on the experience of daily transport from Post to Post to Postal Logistics Center. We took the experience of postal workers in Business Unit Postal Logistics Center Ljubljana into consideration and used the method of the Traveling Salesman Problem. In Slovenia there are 555 posts in the year 2005. The flows of parcels are directed from Post to Post until the truck is fully loaded and then sent to PLC Ljubljana or PLC Maribor and back. Potential Regional Parcel Centers are not open yet, but could be opened in Regional Business Units. They will patronize Parcel Post. According to the results of our research, proper capacity and allocation of Regional Parcel Centers and Parcel Posts should be carried out. In this case the hierarchy for Parcel Posts would be as follows: the Parcel Posts should patronize twenty or less posts. Figure 1 presents the average daily number of collected parcels in PLC Ljubljana for all Business Units and Figure 2 the average daily number of delivered parcels from PLC Ljubljana. Figure 3 shows the structure of parcel flows in the Post of Slovenia. Posts start to operate approximately two hours before the post offices open and close two hours after the post offices do so. Figure 1: The average daily number of collected parcels from regions to PLC Ljubljana Our application is made for the covering service area of the Postal Logistics Center Ljubljana. We determined the optimal cycles for areas covered by the Postal Logistics Center Ljubljana: 4 Parcel Posts patronized by the post of Kranj, 3 Parcel Posts patronized by the post of Nova Gorica, 4 Parcel Posts in the Koper and 5 Parcel Posts patronized by the regional post of Novo mesto (Figure 4). Our optimization is applied only to the area patronized by the Postal Logistics Center Ljubljana 111 because we have experience here and all the necessary data also only from the PLC Ljubljana. We propose the use of the same optimization methods for the Postal Logistics Center Maribor as well. By using the Traveling Salesman methodology, the data on distances between Posts, the statistics of parcels from the years of 2003 and 2004 and intensity of flows between posts concerning the year 2005 we got an optimal new transportation network connecting the post and Parcel Posts patronizing them with the criteria of 24 hour time window delivery. Optimization is focused on the minimal length of the sum of cycles by using the shortest paths between Posts and Parcel Post. The results are presented in the sums of lengths of cycles (in kilometers) for all Posts, which are patronized by the Parcel Post areas. This is the only possible way to compare the difference of daily length of cycles between the new and the old transport structure. Here each Post is visited more than two times per day from patronized Parcel Post. Our results, presented in Table 1 show sums of the lengths of cycles in the previous regime, but Table 2 presents new optimal sum of the lengths of daily cycles. The transport structure of the Business Unit Novo mesto is presented a bit closer here. It encompasses the Parcel Post Sevnica, which has the following associated distance matrix in Table 3 Five iterations have been made. The value of the objective function is 58. The sequence of arcs on this cycle is the following (constrains in time windows are based on the average speed of 70 km/hour): Sevnica – Bostanj (2) – Studenec (13) – Radece (25) - Zidani Most (2) - Loka pri Zidanem Mostu (4) – Sevnica (12). The total distance is 58 km. The transportation costs are reduced (because of reducing the total number of kilometers per day) from 15.686 km (which is the situation at present) to 10.105 km. This will be achieved when Parcel Posts will patronize the sequence of Posts on the local area. The difference is 5.581 km. If we also consider fixed and variable cost, then the costs are reduced by 30 percent in total. Figure 2: The average daily number of delivered parcels from PLC Ljubljana to regions 112 Figure 3: The structure of parcel flows Table 1: Previous sums of length of all cycles in kilometers old Ljubljana Kranj Nova Gorica Koper Novo mesto truck 3.129 1.171 2.047 1.688 2.005 van 1.776 424 367 233 597 car 435 444 374 324 672 sum 5.340 2.039 2.788 2.245 3.274 sum 10.040 3.397 2.249 15.686 Table 2: New sums of length of all cycles – improved solutions in kilometers new Ljubljana Kranj Nova Gorica Koper Novo mesto truck 807 602 878 769 626 van 658 538 534 135 672 car 1.406 262 665 888 665 sum 2.871 1.402 2077 1792 1963 Table 3: Associated distance matrix sum 3682 2537 3886 10105 Sevnica Boštanj Studenec Radeče Zidani Most Loka pri Zidanem Mostu Sevnica Boštanj Studenec Radeče Zidani Most Loka pri Zidanem Mostu / 2 15 / / 12 2 / 13 12 / / 15 13 / / / / / 12 / / 2 2 / / / 2 / 4 12 / / 2 4 / 113 Figure 4: Regional Parcel Center Novo mesto and their Parcel Posts 5. CONCLUSION For more efficient and successful management of organizational and business systems, there are a lot of (management) theoretical and practical advice, techniques, methods etc. in the modern world. Without knowledge of systemic thinking and its usage, managers would not be able to integrate theories and practice into so called continuous interdependent dynamic process. In this paper the use of the Traveling Salesman Problem method has been described and applied to the Post of Slovenia, to the area patronized by the Postal Logistics Center Ljubljana. As presented, by solving the real problem of the Postal Logistics Center Ljubljana, the number of kilometers inside prescribed time window can be drastically reduced. [5] O'Kelly, M. E. (1987): A quadratic integer program for the location of interacting hub facilities, European Journal of Operational Research, 32, p. 393 – 404. [6] Rosi, B. (2004). Prenova omrežnega razmišljanja z aplikacijo na procesih v železniški dejavnosti. Doktorska disertacija, Maribor: Univerza v Mariboru, Ekonomsko-poslovna fakulteta, p. 18-19, 172, 218, 132-133, 157-160, 187-188. [7] Wasner, M., Zapfel, G. (2004). An integrated multi - depot hub - location vehicle routing model for network planning of parcel service, Production Economics, 90/3, p. 403 - 419. [8] Wolfler Calvo, R. (2000). A New Heuristic for the Traveling Salesman Problem with Time windows, Transportation Science, 34/1, p. 113 – 124. References [1] Bruns, A., et al. (2000). Restructuring of Swiss Parcel Delivery Services, Operations Research – Spektrum, p. 285 - 302. [2] Campbel, J. F. (1994). Integer programming formulations of discrete hub location problems, European Journal of Operation Research, 72, p. 387 405. [3] Ebery, J. et al. (2000). The capacitated multiple allocation hub location problem: Formulations and algorithms, European Journal of Operational Research, 120, p. 614 - 631. [4] Mulej, M. (2000). Dialektična in druge mehkosistemske teorije – podlaga za celovitost in uspeh managementa. Maribor: Univerza v Mariboru, Ekonomsko-poslovna fakulteta, p. 22, 31-34, 84-92. 114 QUEST FOR THE INNOVATIVE ENVIRONMENT THE IMPACT OF SOCIETAL CONSTITUTION Hellmut Loeckenhoff Research Consulting, D- 71522 Backnang FRG e-mail: Loeckenhoff.HellK@t-online. de Abstract Innovation emerges from a highly complex and dynamic process both personal and societal. A multitude of factors appears involved: personal ability and motivation, the technical and economical domains, the markets new ideas are brought into. Seen from the practice case separate particular analyses reveal not the entire relevant situation. But together the above fields constitute a kind of general societal environment of intertwined and sometimes contradicting environments favourable or unfavourable for innovation. Practice evidence signifies, that this general impact from environment determines not only the individual motivation. It also furthers or curbs, virtually, the inclination of the innovator and of the society itself to innovate. Some crucial factors may be singled out. Typically the historical/ developmental phase – see old and recent members of the EU – forms different balances between risk taking entrepreneurship and attitudes relying on government support and social welfare. Institutional choice can either support a framework of opportunities or dampen any initiative by bureaucracy. Quasi – monopolies and de facto oligopolies naturally may prefer to maintain markets with given products and not to innovate, at least not fundamentally. Existing technological vested interests, investment as well as production and customers operations, may be involved and disturbed. Balances and power distributions may be put at stake. Globalisation has but added to the tendency to protect local or national markets. To break patents or to suppress them has become a part of company policy as it has for national economical politics. Legislation and operational handling of patent rights can deteriorate into a dubious instrument of power play or manipulation. To become or to remain reasonably competitive, the preconditions for innovation given by the general societal atmosphere as well as the heightened power competition created by EU and other global unions must be painstakingly observed and skilfully be handled. Key words: Innovation; Societal Environment; Political, Impacts; Power; Globalisation, Innovate or decline and perish: innovation is a necessity on any individual or societal level. In an ever changing and competitive world to defend positions passively is the smaller of policy and doomed to failure without complementing innovation. Innovation must be active, and it must be planned. Active and foresighted, even pre-emptive it needs to be. On the base of a long range policy only it can meet changes and challenges, responding and shaping general preconditions and competitors. Planning is necessary, strategy, investment and operation, since innovation represents a continuous long-term investment which must be conceptually prepared and financially be provided for. New ideas are born from steady exploration and testing, technological possibilities as well as marketing potentials. Continuity and provision are designed to smooth and ease the transfer from idea to innovation to market success. The last steps: acceptance, of the innovation by the utilizing company and the market usually prove costly, concerning as well time as money. Advantages of an innovation, in particular of a base innovation, are confronted with disadvantages, with imbalances. Not only that generally change is resisted. Deep rooted restructuring in virtually all phases from r&d to operation, marketing and utilisation procedures conducted by the customer might be the consequence. Likewise cost – investment, production and sales expenditures – will alter with the production capacity and the value chain, in particular the ratio of value added. Market acceptance may prove as a very complex technical/emotional /environmental adventure. The span of the gap and the tension between gains and pains, between losses/ loosers and profits /winners, depends to a high degree mainly on the reactions of the social environment, directly or indirectly. As it is, in the end, society which decides whether the society is innovative or stagnant, the societal inclination to accept and to integrate innovative ideas, products, procedures, costs etc. Understandably so, since society changes with its innovations; its state and its potentialities for the future. 1. Endangered Innovative Systems and Environments Evolution and history tell that survival and development ground on a mutual drive between the system’s internal structure and the relevant environments. From such a probing, mutually change inducing interplay, innovation emerges. Under societal Prologue: Gains and Pains of Innovation 115 conditions both sides may take the active role, depending form the particular historical preconditions. As it happens right now, they may even powerfully force each other. The already existing complexity of internal structures and environment is heightened by the fundamental and comprehensive quality of the ongoing historical change. The concept and the reality of a corporation have been and remain subject to changes even affecting the boarders of the corporation system, e.g. referring to the virtual, the temporary company. In reference the multitude and the networking of environments have grown dramatically. Scarcely any environment can be accounted for as given and, for a foreseeable time span, as predictable. Mutual influence between environment changes are observed as well, e.g. between basic commodities as energy or metals and the car market, demand and price. This interdependency refers only to one level of many. In tendency – and in the long range in practice – all sectors of the corporation are affected. Of the canonical environmental domains of a company, from technology to economy to material and to human resources none is left untouched. So is none of the referent internal structures – as information – of the company. The boarders are uncertain and changing; the mutual impacts complex and only partly observable save predictable. In this context ‘globalisation’ has become a rather opaque catchword if of very actual importance. Before such a background innovation and innovation policy are forced to face likewise complex, dynamic auspices which are, at the same instant, predictable only partly and with heavy constraints. In effect a innovation policy is required, which undertakes continuously to balance and re-balance flexibility of response with long range investment into basic innovative potentials. Basic R&D has to arrange with product development, actual marketing with long range demand forecasts. Often tightly squeezed between the actual and the potential the innovative system of a company has to strive for a minimum continuity. It cannot be explicated here by which means the balance is accomplished in individual actual corporation practice. At this point the role of the environment for the actual potential and for the capacity for innovation becomes obvious. In particular the societal environment predisposes the conditions, which further or curb motivation for innovation, for the mobilization of the tacit potential societal capacities. Even more important, the societal constitutions set the stakes for the transfer of innovation potentials into market shares, employment and GNP. The feedback between society and innovation turns this relation in tendency into a self-aggravating respectively self-attenuating spiral up or down. It generates also the insight, that innovation cannot be innovation in the economic domain only, even if here can be seen one of the nuclei if not the main nucleus of innovation. A society can be an innovative society only if and insofar all sectors of societal constitution and conduct support and stimulate innovation. Innovation must not meet obstacles, irrespective whether in business and tax legislation, bureaucracy of all kinds or, worst, ideological hurdles. Nor should it be impeded by the existence and factual revival of societal guild-like corporatist structures resembling the monopolies and oligopolies in the industrial sector. The actual state of innovation in the EU Europe provides sad examples. Italy, Germany and France – the sequence is arbitrary – are loosing with increasing speed the potential to innovate. In consequence the rate of GNP growth is very low; when statistics are adjusted to life quality and disposable income even markedly negative. The fight of political parties, not-seldom, appears to be designed to obliterate constitutional deficiencies, ranging from corporatism to ideological positions only insufficiently veiling power play. There are scarcely exceptions: political parties, business and agri business, unions, guilds are affected. The tax and welfare systems in salient points still are rooted and stuck with their origins in the 19th century. It provides little if any realistic motivation and chance for self-responsibility and self-organisation. It is in danger to degenerate completely to an instrument for government and power groups to gain and to manipulate power. 2. Institutional Frame and Atmosphere History shows so called ‘waves’ of increase and slowdown, active and passive states, of up and down, of change e.g. in value positions. On closer inspection they are the outcome of a multitude of factors, resulting in inclinations to observe, assess and re-act. The phenomenon has been christened differently: from ‘zeitgeist’ (mentality of the actual historical phase), or, as describing the development in after-WWII Germany, as ‘priority waves of behavioural inclination’. Better known are analogue economical cycles. Evidence points to that also the innovation potential and actual ‘innovativeness’ are, in analogy, subject to cyclical changes. From the network of interconnected factors two may be singled out here: societal institutions and the general social ‘atmosphere’, innovation is confronted with. Institutions can be described as culture, embodied in organisations and their authority exerted by rules and regulations, as e.g. codified laws and instructions. An arbitrary listing may begin with the constitution, the written and the actual constitutional ‘reality’ formed e.g. by jurisdiction and ‘felt’ by people. Following the line of formal codification, laws in particular in the economic sector – business and patent laws included – also tend to be more formal than oriented on societal reality and influenced by ideology and power. The loss of societal reality – what keeps a society together makes it grow; and drives it apart and lets it decline - is obvious. Similar conditions rule the rules and 116 regulations in the economic, business, taxation and public administration domain. The mess of often unclear and contradicting regulations is in itself costly and diminishes the action and option space that is funds for a policy of innovation support. Political announcements to further innovation cannot be much more than lip service. Even if the inventor and potential innovator is not repelled by the administration threat, he faces heavy drawbacks concerning time, opportunities and investment money. The negative atmosphere created by public administration is aggravated by an unclear if not unfavourable image of entrepreneurship. The main political tenor is the redistribution of wealth, not how the creation of wealth can be augmented. Social envy is interested in ‘my part of the cake’, not ‘to help to a bigger cake’. Taxation rules make it very difficult for the early phases of innovation to earn and retain the necessary funds for investment, after taxes and duties for the grossly expanded and distorted social security systems. The ‘culture’ of risk capital investors is rather low and often open only under particular unfavourable conditions. Political and economical bodies are self- and membership oriented, egoistically practicing little responsibility to the society at large. The growing unemployment is considerably the consequence of policy, of government, and in particular of union practices and corporatism. To meet the impending impacts of technology change (e.g. information technology), of demography, globalisation and related shifts innovative measures are the necessary means. Defending since long obsolete and contradicting positions prevents any innovative solution and leads straight into the decline. These attitudes negative to innovation reflect, on the more profound level, the according changes in value systems. Beginning in the late fiftieth’s and sixtieth’s of the previous century movements as e.g. the ‘68’th’ in Germany for obvious political reasons often wilfully and successfully destroyed the old ‘bourgeois’ value systems. Work and economic performance, responsibility and other, society building canonical values, were skilfully played down and defamed. Instead ‘the society’ was proclaimed responsible in often grotesque argumentation. In effect the value bases for a consistent and successfully developing society were destroyed, the aftermath of which we are experiencing up to now. In fact the authoritarian ‘state’, government regulations and re-distribution of wealth and income, are favoured. That wealth and income have to be earned before by innovative performance and by innovative individuals, by entrepreneurs, is factually ignored. Equally, it has not been seen that government has to provide a favourable frame. It seems no random coincidence that obsolete, twisted derivate socialism’s and Marxism’s as ‘state capitalism’ intentionally obliterated any sensible dialogue based on common sense. Emotionalisation, capitalizing on social envy, provided the emotional background to manipulate and cheat. The present situation appears the result of continuing attitudes of that kind, including the defamation of ‘liberalism’ and ‘neo-liberalism’. Movements for a ‘civil society’ reconciling the institutional and mental preconditions for a healthy society are too weak yet to be heard. Another serious deterioration is induced by the socalled investor and fund capitalism. For hit and run profits in some cases companies – and innovators - are just financially pressed, hollowed out and left to dissolve. The US-style pressure of investment funds forces corporations and their management to focus on short term (quarterly) earnings. A long range strategy to preserve and create potentials is discouraged. - By both the socialism and the capitalism distortion innovation is precluded, a long range policy aiming for continuous innovation not possible. Parasitic qualities of societal vested interests in policy, economy and administration set on to overgrow any paths out of the crisis. It must not be forgotten, that parasites – economical and in particular political ones - are winners who profit the more the crisis expands. Dealing with the environments of innovation a critical view on policy, politics and real-politic in the societal domain cannot not be avoided. Returning to the historical and evolutional/developmental view: At the actual moment the development of the European states, of the continents, of the Western and the Non-Western Spheres is caught in the nodes of a multitude of networked phase transitions. The simple hemi-sphere concept does not any longer hold, facing rising China and India, technology and ideology interacting, as do religion and economic interests, power and value systems, emotion and calculus, demography and geographical, cosmic and climatic events. If there is any moral, any conclusion, than it comes threefold. First, that but innovative approaches will help to bridge the gaps and conflicts on a higher level of coincidentia oppositorum. Positions in the actual ossified form will prove as obsolete, to keep attempts futile if not destructive. The quest for strategy favours back to basics into the future. Second, innovative attempts are quested for all and any aspects and levels. Not a localized part, the entire fabric is on trial for restructuring. Third, innovation begins in the minds, the value systems and attitudes. It’s time to recall simple truths of society development, of codified society (Gesellschaft) and personal based community (Gemeinschaft); to reconsider the decalogue of culture and transcultural dialogue in terms of innovation. To be noted: Innovation pre-supposes culture, and in reverse. 3. What Kind of Innovation, How to Realize? 117 Innovation is quested on all levels, in all domains, under any aspect. The process by which innovation is initiated, prepared, ripened into transfer and by which it is accepted or refuted, will differ from case to case. As aforementioned, innovation originates in a historical and societal environment and is accordingly furthered or discouraged. For example in the end of the 19th and the beginning of the 20th century an often fierce contest was fought between European nations by innovations. At present competition between the meanwhile members of the European union is conduced not so much by innovation but fighting for EU funds, building national industrial empires against one’s neighbour country and letting the others pay e.g. for ones agribusiness. In this context, innovation may happen or may not happen; more probably it will not. Different kinds of innovation need to be distinguished, as they will concern different domains. In general small innovations affecting only details are routine to be used in advertising. (It cannot be discussed here whether, in some areas, continuous improvements obliterate the absence of long due basic innovations e.g. in the automotive industry) The more fundamental innovations come, the more it is subject for competitive (dis-)advantages. Exemplarily the business domain will be discussed in the following paragraph. Here we shall investigate on the social and societal sector. The difficulties to reform any sector of the social systems it but too well known. A typical example is given by the social welfare and security systems, in particular the health care system. Drastically rising cost and comparatively diminishing efficiency qualify the system for a thorough reconsideration and reform. Why has any major change proven so far impossible? First, it is influenced heavily by the lobby of the medicine business. Higher cost means higher turnover and higher profits. Second, even more than other social security systems, it has grown into a redistribution carousel political clients can by satisfied with. Of course there are also ideologies behind, so the caring-for-all authoritarian state. Third, people are not accustomed any longer to care for small health problems themselves, employing simple and cheap cures. Chemical compounds are preferred to simple natural remedies. The ethics have been twisted: nowadays one has to prepare elaborate documents not to be kept alive by force even against ones intentions and at any cost. Even more basic suppressed discrepancies arise with generally growing age. There has to be a limit for investment into costly and at sight inefficient health measures into an anyway deceasing body, funds that will be missed e.g. for investments into children and young people, e.g. into education. Demographic changes for long made overdue to reconcile most fundamentally the relation between young and old people and their contribution and costs to society. Closely related is the understanding of birth, life including socialisation and reproduction, and death. That all these phases are a natural part of life seems forgotten or repressed. As it is no longer a matter of fact, that everybody is responsible for her/his own health and should not expect society to pay for selfinflicted maladies like obesity. And so on. In consequence the system as it exists today gives the wrong stimuli for health behaviour throughout for all participants involved. As to be expected the result appears a highly auto- and hetero-parasitic system, costly, misleading and resistant to reforms. The situation in other societal systems in tendency suffers from similar contortion and inertia. The nearer to the emotionally charged societal sector, the more difficult proves any substantial reform. One does not acknowledge the necessity, and one does want to. G. Diamond, already quoted above, has shown by examples, that the path to extinction is rather short. How to change the readiness to act? In some cases a near-disaster helps, when obsolete structures are destroyed and a reconstruction will realize the chance to do it better. The political pressure, global or European my help, internal pressures will lessen. A rare exemption appears the recent revitalisation of Japan after 10-15 years of stagnation. In this very special case it is the unbroken culture and cultural identity traded by an essentially uninterrupted tradition which provides the carrying fundament. Europe and in particular Germany cannot rely on an uninterrupted tradition and an unbiased identity, nor on a political system preponderantly caring for the wealth of the society. But one symptomatic example for a missing identity and for reality lost is given by the discourse with Turkey and the Islam, or the recent development in Turkey. Will we be able to re-learn to innovate our very base? History does not patiently wait; we need to be active and inventive. 4. Business: Investment, Capacity, Markets Business, corporations keep alive generating revenues for all stakeholders, for stockholders, for employees, for surrounding communities and for society. Literally and factually the wealth of the society grounds on profitable companies and a healthy business sector. To stay competitive steady innovation is paramount, and to that end flexibility and openness. So far the theory. Actual business practice may tell otherwise. As is the societal domain, fundamental and strategic innovation faces often high fences. That is partly but natural. Fundamental innovations, by definition, inhere a high risk potential: market, production, investment and finance that will be resisted. As any institution in the state of near metamorphosis, the transfer phase leaves the company vulnerable to competitors and markets. In addition the new procedure, material base or product, may change the entire value chain, the asset cost structure. It may alter production capacity needed, the value chains, employment and the customers operation when using the product, cost, turnover, profit. Security 118 may play a crucial role, e.g. the obligate licensing and registration in particular in the sensible societal e.g. the medical sector. Not only for small firms a base innovation successful or failing will in the extreme mean final success or failure, which can be survived only once. In a lesser degree an essential risk has to be faced in all fundamental innovations not but modernizing and adapting. As in national economy, on the corporation level, business cycles determine the ‘right’ point in time for an innovation relating to company strategy and tactics. To place innovation at least two basic cycles are important. One follows the product life cycle: from the first product version and market entrance up to the last version before the new product is launched. The other curve(s) represent(s) the long term developments in basic technologies. Examples are known from mobile phones, from vacuum cleaners, fuel injection etc. The actual position of a company’s product mix or of a single product has to be defined from both curves. The short term cycle may go up, while the long term curve is pointing downward. Accordingly the R&D department plans need to be scheduled. Because of feared dependencies corporations often prefer in-house innovations: new procedures or product should be ‘invented here’ and fit into the schedule. Inventions from outside are by several means directed if not forced into the time schedule by manipulating free patent holders. Negotiations are delayed at wish; the same happens to payments. When, in consequence, the inventor faces time and money squeezes, the better. Licence then can probably be bought at a lesser price; the contract dictated can follow the maximum security demands from the law department. The tenor of the contract anyway is strongly pressed in favour of the company. It may happen that a contract is negotiated only to prevent the patent to be realized, in an actual case for two years at considerable cost for the company. It made sense, since the company was just launching a last version of a concept known as obsolete, but made ready for the market at high investments. The backflow of invested means is estimated to take seven years. A so disturbing innovation had to be immobilized. That is near to the case were patents are bought to let them disappear and die in the archives. Additional problems arise when supplier/seller markets consist of de facto oligopolies and/or are fragmented. Competition on the one hand and investment funds on the other hand confront the innovator with special challenges. The actual case will be different depending on the kind of procedure or product and the main target market: investment, consumer or else; and on the state of closedness or openness of the market to international competition. From the point of the inventor several policies are possible. One favoured is a joint development of the prototype or the product ready for the market introduction. It connects the inventor more closely to the buying company as a mere contract which the patent holder. Patents sometimes are used ‘to slow down the competitor’, e.g. taking to court any obscure patents may have been infringed. Needless to say: the bigger company has the by far better chances to win. Such questionable use of law has for long worried critical observers of law and constitution, since, among others, it curbs innovation. Summing up: the business environment presents rather hard and non-favourable conditions for the inventor and in particular for the free patent holder. Innovation thus, with diminishing financial option and action space, is planned and conducted mostly by the large firms. Outsourcing and joint product development practised e.g. by the automotive industry seems to spread. Owing but partly to financial reasons a general tendency to avoid risk can be observed, leading to a marked resistance to innovation. For the greater part it seems caused by the general economical/political situation and an atmosphere, which is pointedly unfavourable to risk and innovation. 5. Innovative Phase Transition? There are exceptions from the general situation; in different branches the innovation rate is different. It is typically high in export oriented markets, and here in the mechanical engineering industry. Innovation in the latter domains need be and are in fact steady. Other branches, as e.g. conveyor technologies, show little if any innovativeness. As a rule current inventions are not patented: patenting lies open the new methods and procedures for copying and misuse. Globalisation and the two fast emerging economies China, India and others in the Indian-Asian area create a peculiar situation ruled preponderantly by power. Generally patenting grows more and more Janusfaced. On the one hand, as indicated above, it may deliver less protection for the innovator than opportunity for competitors to circumvent or right away disregard it. Law suits are costly, take incalculable time and must be prepaid. Often it seems better not to lay open the technique by patenting but let the plagiarists, pirates and forgers have the trouble and the time delay of copying from the actual product delivered. However, patent laws, if at the moment still reluctantly, need to be reconsidered as an essential element of innovation and competitive advantage. The present situation will in the long run cause disadvantage to all parties involved. Patenting is only one of the obvious aspects of the constitutional and legal environment and of the societal in general. The need to reform them is but a paradigm for the necessity to reconcile societal constitutional, institutional and ‘atmospheric’ environment. To do so seems pressing also since also the nature and societal function of innovation is changing. Innovation changes more and more from a convenience and a competitive advantage to an absolute life necessity: innovate or 119 decline. Pressure is exerted not only from the narrowing option and action space e.g. concerning resources. It is, within and in addition, the structural change which forces active and creative adaptation. ICT is but one of many examples. Innovation acquires the character of a path finding instrument, as a means to open new potentials. In spite of the acknowledged necessity innovation is facing persistent resistance. To summarize what has been enumerated above, innovation is sometimes with intent and by questionable methods restricted. One of the causes and reasons behind appears that the societal environment itself needs to innovate and is not ready to do so. It is not enough that innovation is accepted. It must be welcomed and furthered actively; institutionally, by constitution, law, jurisdiction and usances. It must be supported by the entire societal atmosphere. Innovators need to bet treated not as a nuisance, but as contributors to a future worth while life. It should be noted that the historical, religious and societal background all pose the innovation quest if in rather different articulation. Epilogue: Learning to Balance. Policy There is no sense nor gain in bashing ‘globalisation’ or ‘capitalism’. Both will happen and cannot be stopped nor be replaced. Any counteracting change instead of deliberately furthering innovation will worsen the situation. The world dynamics cannot be stopped by either ideology or passive seclusion. Instead but two ways are open to success. The first includes ramifications, rules to prevent extremes in globalisation, investor/fund capitalism, socialisms, power plays and the defence of vested interests. One needs systemic openness to stimulate and an open society, liberal and flexible. Liberalism and neoliberalism have been defamed for obvious ideological reasons and their extreme, socially ir-responsible positions and practices. The positive core demands openness for action and option space that is paramount for an innovation strategy and policy. Only by systemic, conscious, planned, deliberate social and societal innovation the challenges and threats of change can be met. Innovation only can transfer change into a metamorphosis and prevent the alternative decay and death. Gared Diamond has elucidated the alternatives and innovative learning as the only means to escape annihilation by evolution and history. Innovation creates losers and winners. Imbalances quest deliberate balancing. Balancing often meets contradictory conditions. One of many examples is given by the customs policy: high duties to prevent the collapse of native (e.g. European textile or agrarian) industries or low taxes to help the emerging countries? Negotiations must be innovation centred to find a solution; and it should be clear, that it can be only a long term, mutually agreed one, both sides actively contributing. The balancing between losers and winners in society turns out to be even more difficult. But two examples: the middle classes are threatened to lose their identity; growing inconsistency of roles claimed and actual roles threatened with dissolving consequences for orientation and identity. Societal innovation only can, in the long run, attenuate tensions and re-establish balance. To repeat: change knows winners and loosers, the more fundamental, the harder. Loss cannot be prevented by trying to fight change: ‘stop the world I want to get out’. This is but a sure method to loose for all parties involved and everything at stake, in the short and in particular in the long run. Protection of that kind destroys any future. Balancing is needed. If balancing is not to lead to increasing loss and lowering levels down to minimum survival and death it needs to be innovative, strategic and systemic. But trivially, everchanging preconditions and challenges can be coped with only by ever-changing new modes of matching the new and the unforeseen, that is by innovation. Therefore balancing needs also in strategy and foresight: to preserve and prepare the potentials and eventually necessary alternatives for the unprecedented. Such probing into the future must be systemic as must the policy based on it. As far as it is possible all requisitely relevant factors ought to be accounted for. The ‘right’ and successful innovation necessarily has been prepared strategically and systemically. Innovation is part of and has to observe social and environmental responsibility; it is imbedded in a long term strategy for comprehensive societal innovation. Innovation means a strategically targeted succession of innovations, exploring and following, which in reference to Maturana/Varela can be named a ‘natural drift’. A nucleus innovation emerges from and is constituted as a continuous learning process. What seems desirable, possible and feasible? How can it be transferred? Which are the results, including the nondesired side effects? Is it socially compatible or can it at least be compensated? Which vista, which potentials open for the future, which potentials expanded or closed? What is the actual action and option space for the next innovative step, dependent on them inner and outer potentials? And last, but not to be forgotten: how can the innovation and learning process itself be improved? Guided Evolutional Control Learning (GECL) of that kind can be realised in an open society only. The argumentative circle commenced in the first chapter of this paper closes: mental, institutional, political preconditions must motivate, mobilise, provide the institutional precondition and permit uninterrupted transfer. Closely tied to the open society is to shield the open science. The institution who pays influences the modes of inquiry, the results and against what scales these are valued. Thus Results of scientific research need to be scrutinised: who paid for it, which were them methods applied, and which where the scales and values systems used in evaluation. C. West 120 Churchman: ‘The Design of Inquiring Systems’ (Basic Books, New York 1971) is worth re-reading. Such critical view on science can be seen as part of a comprehensive re-thinking science. In search for innovative transdiciplinarity and considering the tacitly ongoing paradigm change new approaches are explored. 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Montreal 1998 122 A METHOD TO SUPPORT INNOVATION Alexandre Makarovitsch, Jean-Pierre Foll, Pierre Chauvet UCO, Institut de Mathématiques Appliquées - CREAM 44, rue Rabelais F49008 ANGERS Cedex 01 http ://www.uco.fr Abstract This paper is aimed at presenting a method to enable groups, but also individuals, to boost their innovation directed processes, whatever the activity domain. The method is based on the use of fuzzy sets as the main mathematical tool and is backed by specific software. Keywords: Fuzzy Sets, Innovation, Creativity, Value assessment, Risk, Impact, Coherence, Adequation, Resource Introduction Very often innovations arise from already existing facts or ideas. Various methods, such as brainstorming, have been used for long time; Computer systems such as office and database tools could offer facilities to collect, class and report the results of the brainstorming sessions. The approach adopted by the LookAhead® method to help innovators, is to offer a set of components to assist the innovation process in its different steps. The concepts manipulated during this process are mainly qualitative, and therefore difficult to represent through traditional mathematical methods and tools. We think that a better modeling is possible by using qualitative variables handled using the basic results of Fuzzy Sets theory developed by Pr. L.Zadeh (Zadeh 1969) in the sixties. User benefits Innovation is an expensive process; nevertheless it becomes vital to practically all the enterprises for their survival. Innovation is required in products as well as services, in business administration and organization. The method proposed here brings a series of benefits to the users. The first and the most important one, is that it helps create a common “universe of discourse” to all those who are concerned with the innovation process through the building and maintenance of a Collective Memory. Another very important benefit is the gain in time and resource. Time is gained by formalizing the findings and their storage for further use through a simple approach. Resources and time are spared by using the right tools at the right place in the process of bringing novelty. Actually, there is a lack of clear methods to formalize the findings and only large verbal descriptions are used resulting in no practical use, this occurring generally at the beginning of the process. Later in the process, when things are still in the domain of the possible but not measurable, thus not in the domain of the probable, tools from management science (operation research, statistics, etc.) are used and the results being unsatisfactory, iterations and models changes are performed. This is heavy and costly. There is this very large interval between the point where informal tools are no more efficiently usable and the point where quantitative analysis becomes usable (the domain of the probability measures). In that space there are practically no adapted tools. It is this gap LookAhead® tries to fill. Uncertain unstructured Partially structured Possible Very structured Probable Objective reached Start LookAhead® Fig. 1: LookAhead® action domain Not to be neglected is also the method itself which allows for teams disconnected in time and space to work nevertheless efficiently. International teams for example working in different time zones could work seamlessly. Last but not least, is the building of a true team spirit through the group work, and the building in action of a common “enterprise culture”. The method LookAhead® is based on the use of fuzzy sets, enabling the valuation of different qualitative variables 123 as “coherence”, “adequacy”, “impact”, “risk” or “priority” in the framework of a set of analyses. As said before, the method might be used by individuals or groups. We have to insist on the fact that collective, group work is far much efficient. The method supports and keeps track of the entire innovation process by means of a set of tools including objectives definition, production of new products/projects; value assessment of these products, impact on their systemic environment (or of the environment on the products), risk assessment, priority for resource allocation. The work group is led by a moderator in charge of driving discussions (keeping the focus, the motivation of members, the intellectual stress of the group, and results collection). With LookAhead®, results are immediately recorded, organized and stored in a database for further use. 1. Fuzziness Innovative processes deal with many qualitative assertions. Trying to respond to a question a question like: “ Do you think that social equity is compatible with business efficiency ?” is not simple. Nobody could answer by yes or no, true or false. In a group discussion, answers will vary from terms such “absolutely”, to “partially”, or “not at all”, well represented by a valuation. (the objective to be reached sets the boundaries of the universe of discourse). This view has been used all along the LookAhead® method, detailed in the following. 2. Morphologies Based on the Zwicki’s method (Zwicky 1969) as well as on the “discovery matrices” of A. Moles (Moles 1970), morphologic analysis proceeds in two steps. The basic idea behind the morphological analysis is the fact that combining words – by taking one of each part of the morphology – would provide combinations, leading to novelty. The method works as follows: i) Development of a set of morphologies. The subject morphology is a list of lists of words. These are words – actually key words – related to the subject to be processed and the objective to be attained. The judgment criteria morphology is a simple list of criteria used to evaluate the findings. The environment morphology is a simple list of the main elements composing the environment. Risks and resources are also simple lists. ii) Use of the morphologies in the analytic assessment processes aimed at providing the different results: ideas, their ranking, their impact – should it be direct or indirect –, risks, resource allocation schemes. 3. The assessment processes For describing the whole set of assessment processes, the group work assumption is used. 3.1 Coherence This analysis (also called “coherence analysis”), uses the subject morphology described above. Once a first version of the morphology is built, a random draw of a word in each sub-list is performed. This will be the material on which the group will work. A pair of words is selected and the group is invited to provide ideas suggested by associating the two words. The expressions are recorded. To summarize this result the moderator (after the group consensus) gives a fuzzy valuation to asses the coherence level of the association. A next pair is provided by the facilitator and the expressions and their coherence level is also recorded, and this, until there are no more pairs in the draw. It actually means that there are n(n-2)/2 pairs to associate. The fuzzy valuation of the level of coherence can be expressed either as a value on the 0 to 1 scale (0.9, 0.5,... and so on), or for the layperson user by a word assessing the considered level (from “perfectly coherent”, through “somewhat coherent”, to “not coherent at all”). Following an example issued from the Epsilon project (Epsilon 2005), A European funded project dealing with sustainable development: Fig. 2: A morphology 124 Let us assume that a random draw selected the following set of words: Structural condition, Interpersonal relations, Autonomy, Biodiversity A first pair is proposed to the group by the facilitator: structural condition as part of the Economic list and interpersonal relations as part of Social list. The group tries to express through a coherent phrase, an idea chunk, in the universe of discourse of the subject. The idea chunk is valuated by the group in terms of level of coherence. This association expression might be considered as very strong in the current worldwide situation, and Social: Interpersonal relations will probably yield to very rich output (interpretation is out of the scope of this document). Important is the qualitative result, and its further processing that will be carried out for each pair, repeated n(n-1)/2 times for an “n” lists morphology (in our example, six pairs). We have assumed relations as equivalence relations: obviously A coherent with B implies B coherent with A, and A (or B) is coherent with itself. So far, for each association set, we obtain a final symmetric matrix of fuzzy values, keeping, only the upper triangular matrix. Economic: Structural condition Institutional: Autonomy Environmantal: Biodiversity Social: Interpersonal relations Economic: Structural condition Institutional: Autonomy Environmental: Biodiversity Very strong Medium Rather strong Rather strong Medium Rather weak Fig. 3: The coherence matrix In the associated graph the links thickness is a function of the strength of the coherence value. Economic: Structural condition t ro ys Rather strong ng Ra th r Ve er we a k Social: Interpersonal relations Ra the r st ron g Medium Institutional: Autonomy m d iu Me Environmental: Biodiversity Fig. 4: Associated fuzzy graph This graph is the translation of the paired words association corresponding to the matrix in fig.3. Some links are close in terms of their valuation (eg: very strong and rather strong). By keeping just these links, we would associate three elements: Social Interpersonal relations, Economic - Structural condition, Environmental – Biodiversity. In the first part of the analysis we have taken in account only pairs. Now we have a richer set. Moreover, this set contains also the expressions we have found by the pairs association. A more comprehensive expression might be produced by the group. Technically, this process is done by an α-cut (Kaufmann 1973; Dubois 1980) ; in the fuzzy matrix of 125 fig.3 .Which means rendering binary the matrix – with 1 value instead of very strong and rather strong, with 0 value for the rest. – This implies the choice of a “reference value which in our case is “rather strong”. Every link which has at least the “rather strong” value will be included. The maximal similitude relations evaluation will then provide for our example the following crisp graph. Economic: Structural condition 1 1 0 Social: Interpersonal relations 1 0 0 Institutional: Autonomy Environmental: Biodiversity Fig. 5: Associated crisp graph after α-cut The result of this process is a bulk of ideas (or products) which should be ranked to find which of these is best suited in regard with the set objective. set of “eligible” solutions (the product/project ideas provided during the coherence analysis). Valuation means to assess the adequacy of the various solutions to the defined objective using a set of criteria. According to the fact that the entire assessment process is qualitative the adequation will be fuzzy too. In the example we have selected six productions or ideas: 3.2 Adequacy Implementation of a novelty has always a certain cost, in terms of funding and resource to achieve the goal. This adequacy analysis, actually is the valuation of a 126 Fig. 6: Some productions Also, five criteria (C1 to C5) have been selected and each production will be valuated against each criterion. The criteria are: • Efficient perception of the messages • Politically acceptable • Cost acceptable • Short term feasibility Criteria/ Productions C1: Efficient perception C2: Politically acceptable C3: Cost acceptable C4: Short term feasibility C5: Common agreement Weight 5 2 6 3 2 P1 Weak Rather strong Medium Rather strong Rather strong P2 Rather strong Weak Medium Rather strong Medium • Common agreement The criteria are weighted on a scale which is to be defined by the users, as a function of the type of criteria, of their perceived importance and of the degree of finesse to be achieved. This leads to the following adequacy matrix P3 Rather strong Rather strong Rather strong Medium Rather strong P4 Medium Rather strong Strong Medium Strong P5 Weak Strong Rather strong Strong Rather strong P6 Rather strong Rather strong Strong Weak Medium Fig. 7 Adequacy productions/criteria To select the best production/idea, various methods issued from the multi criteria analysis set could be applied. Taking into account the fact that here there are no numerical, measured, values but fuzzy valuations, a simple sorting algorithm was privileged, considering the weighted mean the maximum and minimum acceptable values, the criteria weight. Of course, the output will be a fuzzy result, providing a fuzzy ranking, sufficient in a possibilistic space. Within the process, different situations might be observed: i) The productions are all “good’ or all “bad”, meaning a poor selectivity of the criteria; this situation occurs because criteria were selected for their intrinsic strong value and not because of their selective properties. It is therefore recommended to select other criteria, eliminating those which do not show enough selectivity power. ii) A unique leading production, very good compared to the other, might mean that the solution is obvious and probably already implemented (we have “reinvented the wheel”): In this case the solution might be eliminated. iii) Productions are split in two or three sets: a leading one, medium one and a lower one (this to be discarded). Fig. 8: Sorted productions 127 In our example out of six productions, three (P4, P3, P6) are very close, they follow the same trend, criteria are not enough selective to split them, however two productions (P5, P2) show lower value and should be either reformulated and evaluated again, or simply discarded. We should note that production P1 has been automatically discarded due to poor valuation by highweighted criteria, in particular criterion C1 with its weight equal to 5. 3.3 Impact Even if finding a good solution (or project, or idea), represents a significant step in the innovation process, it cannot be envisaged to invest in it and undertake a costly development, without evaluating the impact on the “target” (or environment) as well as the impact of the “target” (or environment) on the solution. Such analysis is very often omitted or at least underestimated. Neglecting an impact analysis causes major problems, more difficult to solve once the product, project, or ideas are actually developed. In this impact analysis, the environment is to be understood as the “systemic” environment, where the considered product, project or idea will have to be developed and used. Currently direct impact is normally analyzed (using preliminary surveys, marketing analysis, various inquiries…) essentially depending on the kind of product or project. However Economy growth Po S tr on environment itself contains its own complexity with its specific interactions which have to be taken in account. The main goal of the impact analysis is to outline the direct impact (currently taken in account by a large number of methods) but also and mainly, to highlight the consequences of interactions inside the environment itself. This should help in bringing to the forefront emerging, indirect impacts (in particular phenomena currently called “side effects”). This aspect is unfortunately underestimated, in particular in decision support for political, economic or sustainable development areas. Hereafter a detail of the impact assessment: The first step will be to identify the characteristic elements of the systemic environment to be considered, the next step is to evaluate the direct impact of the product/project, in fuzzy terms, on the environment (or the reverse, namely the environment on the product/project). As a function of the finesse level, the product/project might be decomposed along the initially discussed morphology chapters. In our example, biodiversity is a very common problem of today’s ecological concerns. Environment elements are air, soil, water, biodiversity by itself. Whatever the product/project, these elements have strong interactions. Such fuzzy interactions are translated in a symmetric square matrix of reciprocal impact between environment elements. Let us consider a simple direct and indirect impact example: Biodiversity m iu er s io n o ,t x ic s Weak Direct impact g l lu tio ni nc M ed du st rea se Air Di sp Fig. 9: Direct and indirect impact scheme Economy growth is not perceived as having a significant direct impact on biodiversity, but taking into account environment elements interactions and their respective impacts, such as air pollution and toxicity distribution through the air, at least a global medium impact of economy growth on biodiversity has to be considered (by taking the max(min) between the two routes). These side effects might - if not taken in account seriously and early enough– completely compromise the product /project success. Three kinds of risks have to be analyzed during any project existence, summarized as follow: i) The considered project presents benefits for major targeted usage, but causes risk for minor usages. Balance between benefits and risks should be evaluated. ii) The project itself shows intrinsic risks (for example development, costs, delay, target change …) are risks to be considered in the early stages of a project. iii) Other risks are so called environmental risks, normally analyzed during the impact analysis. In the example used all along this paper to define a positive policy to protect biodiversity we have chosen various actions such as specific tax, coercive rules, communication campaigns faced to selected risks such 3.4 Risk evaluation of the novelty Technically speaking, risk evaluation is close to adequacy analysis, and in such case high risks imply human decision. 128 population acceptance, reactions … major economic actors The project/product is split along the above axes and assessed against each individual risk, leading to the following risk-analysis matrix: Specific tax Rather strong Rather strong National biodiversity protection campaign Weak Weak Ecological Strong pollution behavior Risk/ Assessment Weight control rules Policy R1: Population reject project R2: Major economic actors reject industrial policy R3: Uncontrolled costs R4: Lack of skilled people R5: No trust in communication message 6 2 Weak Rather strong Weak Rather strong 6 3 1 Medium Rather strong Rather strong Medium Rather strong Medium Rather strong Medium Rather strong Strong Medium Strong Fig. 10 Risk/Assessment matrix Then the risk matrix will be processed, providing a ranked list of risks which will allow, to carry on corrective actions on the project. i) Required resources: lack of such resources existence might compromise the project success. ii) Necessary resources: less restrictive for the project existence than the previous one, but key to its significance. iii) Recommended (“nice to have”) resources: lack of such resources does not actually compromise the project, but their existence could enhance it or speed up its achievement. Beyond their priority, resources can be split into variants, offering a larger combinatory choice to set up a project, in particular if resources can be shared between different projects, and when resources are limited. A simple sorting of projects/variants can be represented with the following example: Budget V3 ~5K€ ~4K€ ~3K€ ~2K€ ~4K€ ~2K€ ~2K€ ~3K€ ~3K€ Budget V4 ~3K€ ~2K€ ~2K€ ~4K€ ~3K€ ~2K€ ~6K€ Budget V5 ~2K€ Budget V6 ~4K€ ~3K€ ~5K€ 3.5 Resource priority management Even well designed, in terms of adequacy, impact and risks, projects are very often in competition; competition includes time scales, concurrency, budget restriction, high priority events changing the resources allocation and sharing. Various methods already exist, often based on optimization algorithms, used in management science. However, decision making is mainly based on subjective and qualitative fuzzy valuation, for which, such expensive methods can be avoided. According to their priority, project resources can be split into three categories: Project vs Variant Budget V1(*) ~25K€* ~23K€ ~6K€ ~5K€ ~5K€ Budg et V2 Project 1 Project 2 Project 3 Project 4 Project 5 * means "fuzzy" 25K€ Required Necessary Recommended NA Fig. 11: Project and variants In a probabilistic situation, - a variant might be selected using a knapsack-like algorithm. Considering variants not as being crisp numbers, but taking a fuzzy view, we could state that a variant is in a range from “very expensive” to “not expensive at all”. According to the priority of each project/module, an example question might be: “With a 50K€ 129 maximum funding, what projects will you choose to undertake?” Would you choose Project 1 + Project 2 with minimal variants, or Project 1 + Project 5 + more variants? The problem at hand might be solved by using the fuzzy numbers approach. 4. The Results Deliverables are a real added value of this method: each step corresponds to a natural flow from fragments of ideas for products/projects to productions/projects which are ranked and for which impacts, risks and resources get an assessment. This is the way an innovation builds up. Current experiences show that compared to brainstorming sessions, the efficiency of the described method is much higher. This method, offers all along the possibility to explain, justify, store, the complete history of a project. The method is also flexible and enables the separate and independent use of each module. For existing projects, the impact analysis can be carried out on existing situations, for instance to try to explain observed side effects and to correct the project accordingly. Adequacy may be used to rank various already designed solutions and assess each proposal against the various criteria various criteria. Risk analysis is interesting as an independent tool in situations where a rapid and early risk assessment on a proposed product/project is necessary. The same shall be true for resource analysis. 5. A computerized system The method is very well adapted to computerization. The fuzzy algorithms are simple and straightforward. The morphologies as well as the outputs are stored in a standard relational database. The developed system, named LookAhead ® runs under the Windows™ operating system, and uses a standard relational database. The first three assessment modules are operational and the following two (risk analysis and resources analysis) are in final development stages. The software allows for a much more flexible use of the method, notably for teams which are disconnected in time and space, situation very often encountered these days, in international corporations. Various versions of the software were successfully tested in diverse real situations. The ambition of the described system is to cover only a part of the entire process, that where informal, psychology rooted tools become inefficient and probability based tools cannot be used because the process is still in a too early stage. Results obtained show that the method and its computerized implementation are effective. The use of the fuzziness concept allows for a more realistic view, closer to the real, actual situation in terms of team work, rapidity, and reliability. The field of innovation is nevertheless very rich and complex and there are many other subjects to be covered, many of these being still in research stages. REFERENCES 1. Dubois, Prades (1980) “Fuzzy sets and systems. Theory and Applications” Mathematics in science engineering, Vol. 144, Academic Press Inc 2. Epsilon (2005) EPSILON IST-2001-32389 WP3 The Sustainability Model, http://www.sustainability4europe.org . 3. Kaufmann A. (1973), Introduction à la théorie des sous-ensembles flous, Masson, Paris. 4. Moles A. (1970), Créativité et méthodes d'innovation, Edition Fayard, Paris. 5. Zadeh L.A. (1978), "Fuzzy sets as a basis for a theory of possibilities", Fuzzy sets and systems, 1, pp. 3-28 6. Zwicky F. (1969), Discovery, Invention, Research Through the Morphological Approach, Toronto: The Macmillian Company Conclusions The system described above is aimed at helping groups of people undertaking innovation processes. Innovation is key to the enterprise development, but it has to be driven taking in account time and resource limits. Therefore it is essential to use in each step and space the adequate method. 130 TOURISM AND QUALITY OF ENVIRONMENT: TOWARDS THE SUSTAINABLE DEVELOPMENT Suzana Marković, PhD, Assistant Professor Dora Smolčić Jurdana, PhD, Assistant Professor University of Rijeka, Faculty of Tourism and Hospitality Management in Opatija Primorska 42, P.O.Box 97, 51410 Opatija, Croatia Tel. ++385 51 294 713, ++385 51 294 681, Fax. ++385 51 291 965 E-mail: suzanam@fthm.hr, doras@fthm.hr, http://www.fthm.hr Abstract The topic of the paper is the analysis of the existing and potential tourism development impacts on the environment in Croatia, the country where the tourism is a dominant economic activity. Tourism development of Croatia is been seen in the context of sustainable development concept, with the main aim to significantly improve the welfare of the local residents. Unique landscapes and a wealth of diversities in a fairly small area – the islands, the coasts, woodlands, and mountains – provide for shaping a tourism offer capable of meeting the differing interests and desires of tourists of the twenty-first century. With regard to the environment, comprehensive efforts are being made to protect and preserve nature, and the necessity of development in accordance to the principles of sustainable development has been embraced across all levels. In the competitive world tourist market the quality of natural environment, its' preservation and attractiveness, i.e. ecological value of the Croatian tourist product will have a great importance. Therefore, the ecological values of Croatia are analyzed from two points of view: as a prerequisite for future tourism development and as an integral part of tourist product. The purpose of this paper is to point out the advantages and necessity to implement the set of environmental protection measures in order to preserve the uniqueness of the environment and long term economic success of tourism industry in Croatia. In order to measure the expectations and satisfaction of tourists in protected areas the survey was made in all national parks in Croatia, results of which will be presented in the paper. Keywords: sustainable development, service quality, SERVQUAL, national parks, Croatia The objective of exploratory study was to investigate the service quality expectations of the ecotourists in eight national parks in Croatia by developing an adapted version of the SERVQUAL scale. 2 Tourism and sustainable development Sustainable development is the long-term and global aspiration of humankind. Sustainable development is a process of changes aimed at enhancing the ability of meeting needs and aspirations, both today and tomorrow, through the mutual co-ordination of resource exploitation, investments, technological development and institutional changes. (WCED, 1987) In the foreground, the concept emphasizes qualitative improvements over quantitative growth. The concept of sustainable development promotes controlled growth and development through the maximum preservation and rational exploitation of resources. This would provide for long-term economic and social development. Development that would, in the long run, cause the disruption of the economic, social and ecological basis is not development based on the principles of sustainability. According to Aronsson the term sustainable development has the following two main dimensions: (a) A resource dimension associated with the long-term use and development of the local countryside and local culture; (b) A dimension associated with workplaces and material rewards. The rewards may be sufficient to provide a basis for establishing family-firms and for generation shifts. (Aronsson, 2000) Important aspect of sustainable development is environmental limitations i.e. the limited abilities of the natural surroundings to meet present and future needs. In this sense, resources can be divided into renewable and un-renewable resources. Resource management is therefore of the special interest in the context of the sustainable development. When speaking of sustainability, it should be pointed out that we speak from the economic viewpoint taking into consideration the necessity and imperative of development. Tourism is becoming a massive world phenomenon and this is fact that must be accepted, because it provides the tourism industry with the possibility of making a living. It is necessary to differentiate between the term “massive” which is 1 Introduction Tourism and quality of environment are two strongly connected factors. Quality of environment is an element of tourism supply which tourists expect and they are very critical about it. The paper analyses the problem of the most sensitive protected areas, those which are suitable for development of eco-tourism. 133 inherent to tourism and the term “mass tourism”, which, given its characteristics, will no longer be capable of meeting the tourist demand. The requirements of the tourist demand are increasingly turning to the values of sustainable development – personalized relations, unique experiences, cultural events, ecological values. 3S (or 4S) destinations need to add new elements and higher quality to their standard offer of sun and sea. In the harsh competition of the world market, these new elements can tip the balance in favour of a particular tourist destination. Considering the attributes of the tourist offer of Croatia, these statements are very important. Development of tourism based on the principles of sustainable development has to accept the different interest and attitudes of many groups, organizations and institutions that on direct or indirect way influence on the development of tourism (stakeholders). Therefore, it is necessary get to know their attitudes, otherwise it is not possible to develop a positive communication and partnership which a must in a process of implementation of sustainable tourism development. Tourism has various types of consequences in an area, the main categories being economic, social and cultural, and physical and ecological. These consequences affect both the resources and the conditions for tourism as well as the tourism product; they may have both a positive and negative impact. We shall consider this impact. As is apparent, a large number of questions have to be answered in order to create a basis for an analysis of tourism at a destination in terms of development strategy. (Aronsson, 2000) When strategic documents are being drawn up for tourism development in a region, sustainability issues should permeate the whole analysis and not be limited to their own (isolated) section of text. All main stakeholders must accept the main principles and codex to make a sustainable strategy possible. Ryan has defined stakeholders as simply any individual or identifiable group who is affected by, of who can affect the achievement of objectives. It presupposes a moral obligation to involve such parties in meaningful participation in decision-making process. (Ryan, 2002). The stakeholders can be classified in five big groups: government (national and regional), industry, tourists, professional associations and groups, local inhabitants. Due to the multidisciplinary character of tourism engaging the interests of economists, sociologists, geographers, ethnologists, philosophers, linguists, culturologists, ecologists and members of other fields of science, a multidisciplinary approach is required to an even greater extent in the sustainable development of tourism. Sustainable tourism development must coordinate economic, sociological, cultural and political aspects with the aspects of environmental protection, the social and cultural identity and the quality of life of the local community. Tourism enhances interest in the public utilisation of the environment, which will further impact on the private sector, the regional and state government, and especially on the local communities, which are more susceptible to the issue of environmental preservation. The interdependence of tourism and the environment in achieving sustainable development involves the following: (Coccossis, H., 1996) • Integrating development policies with the management of natural resources based on projects, plans and programs. • Developing natural resources management on a regional level, which will provide the framework for management programs for natural resources on a local level. • Integrating the development of tourism and the policies of natural resources management on a local, regional and state level. • Increasing local capacities in accordance with the actual possibilities of the environment (especially in areas with strong tourism tendencies). The environmental policy is generally pointed out as the fundamental issue to consider in elaborating the concept of sustainable tourism development. It goes without saying that the importance of environmental management is incontestable, as it deals with the protection of nature and space, the fundamental resource basis of tourism. However, it should be underlined that it is impossible to competently speak of the sustainable development of tourism, without an analysis of the social, cultural and economic resources. Just like any other economic activity, tourism has its positive and negative outcomes. Sustainable tourism development should maximise the benefits from tourism, while at the same time minimising damages or expenses, and directing and limiting tourism development in accordance with the principles of sustainable development in tourism. There are several obstacles to the process of implementing sustainable tourism development in practise: (Muller, 1994) • Physical and natural limitations. It is difficult to precisely estimate the tolerance threshold of nature and space, due to continuous changes. • The complexity of the relation. Tourism development cannot be observed through the simplified relation of cause and consequence between two or more factors. Rather, it is a complex relation between various factors having different mutual connections. • Time deferred consequences. There are certain consequences with causes that go back into the past and with effects that have appeared after a lengthy period of time (the ozone layer hole, for example). • The assimilation period. A certain period of time is needed for both nature and humans to adjust to the new situation. The necessity of the assimilation 134 period is often neglected in development projects, resulting in adverse consequences. Although the concept of sustainable development is been accepted as the leading concept for planning tourism development in general, it has to be pointed out its’ special importance for ecotourism destinations. Thanks to the diversity of a landscape in Croatia – islands, coast and mountains - part of which are still well preserved there are great potentials for development of ecotourism in Croatia, especially in the eight national parks. Figure 1. Characteristics of hard and soft eco-tourists The ecotourism spectrum HARD (active, deep) • • • • • • • • • • • Strong environmental commitment Enhancive sustainability Specialized trips Long trips Small groups Physically active Physical challenge No services expected Deep interaction with nature Emphasis on personal experience Make own travel arrangements SOFT (passive, shallow) • • • • • • • • • • • Moderate or superficial environmental commitment Steady state sustainability Multi-purpose trips Short trips Larger groups Physically passive Physical comfort Services expected Shallow interaction with nature Emphasis on mediation Rely on travel agents and tour operators 3 Ecotourism and protected areas Increasingly parks, nature reserves and natural settings are becoming popular tourist destinations. The development of environmentally sensitive tourist resorts responds to the fast growing ecotourism markets and the general public’s awareness of environmental preservation and sustainability. Eco-tourism is one of the fastest growing types of tourism. Trends indicate that the growth of ecotourism coupled with the larger market segment of nature tourism far surpasses that of tourism in general. While the lack of clear differentiation between ecotourism and other forms of nature tourism makes tracking ecotourism development difficult, it is obvious that travel to natural areas is increasing at a tremendous rate. In order to measure ecotourism growth special set of indicators could be used, which do provide insight into the current and future magnitude of the sub-industry: growth in ecotourism education, international recognition and regional support, international funding opportunities, growth in tourism eco-certification and eco-labelling programmes. Each of these indicators provides a glimpse beyond the traditional statistical analysis, into the current position of ecotourism and its expected future growth. (Hawkins, D.E., Lamoureux, K., 2001) Many destinations try to include some kind of ecoactivities in their tourism offer in order to increase the attractiveness on the market. Demand for destinations that include natural elements such as national parks and local parks, forests, waterways and others continues to increase. As visitation to natural areas increases, including ecotourism visitation, so does the demand for travel professionals to accommodate these tourists. There have been an increase in tourism professionals, such as travel agents, tour operators, tour guides etc., that focus either on the ecotourism or at least, the nature tourism market. (Hawkins, D.E., Lamoureux, K., 2001) Eco-tourists could be defined as tourists seeking nature-based learning experiences and behaving in an environmentally and socio-culturally sustainable manner. Nevertheless, eco-tourists are not a homogeneous market, but display a range of motivations, behaviour and other characteristics. Ecotourism spectrum could be seen from hard to soft eco-tourists. (see figure 1) Source: Weaver, D. (2001) Ecotourism, Wiley, Milton, p. 44 Hard and soft eco-tourists also differ in the type of experiences and venues that they seek, which has important implications from a product perspective. Protected areas are of the great interest for eco-tourists throughout the world. The World Conservation Union (IUCN, 1994) defines a protected area as an area of land and/or sea especially dedicated to the protection and maintenance of biological diversity, and of natural and associated cultural resources, and managed through legal or other effective means. The literature indicates that public protected areas, especially national parks, are the overwhelmingly dominant setting for ecotourism-related activity throughout the world. The World Conservation Union (IUCN) has responded by devising a simplified protected area classification scheme comprising just six basic categories. The basic logic of this IUCN classification system, which is now widely accepted as the international standard for protected areas, is that the lower the designated number of a site, the lower the amount of environmental modification and human intervention that is acceptable. Categories of protected areas according to the IUCN are: Ia Strict Nature Reserve Ib Wilderness Area II National Park III Natural Monument IV Habitat/Species Management Area V Protected Landscape/Seascape VI Managed Resource Protected Area In Croatia according to the Environmental Protection Law there are nine different categories of protection of the natural environment. For tourism the most attractive are eight national parks. 135 4 Exploratory application study: A SERVQUAL The objective of this study was to investigate the service quality expectations of eco-tourists in eight national parks in Croatia. An adapted version of SERVQUAL scale was developed for this purpose. The paper focuses on the development of the SERVQUAL scale, its application and the service quality expectations of the eco-tourists. SERVQUAL and its Application SERVQUAL, developed by Parasuraman, Zeithaml and Berry (1985, 1988, 1991) is a multiple-item instrument designed to measure customer expectations and perceptions concerning a service encounter. Due to the overlap found between dimensions during analysis, the original 10 dimensions were collapsed into five. The final SERVQUAL consists of 22 items pertaining to expectations and perceptions. They are tangibles (physical facilities, equipment, appearance of personnel), reliability (ability to perform the promised service dependably and accurately), responsiveness (willingness to help customers and provide prompt service), assurance (knowledge and courtesy of employees and their ability to convey trust and confidence) and empathy (caring, individualized attention the firm provides its customers). In the hospitality/tourism area, most of the studies used a modified or adapted version of the SERVQUAL scale. In spite of the growth and potential of ecotourism, there is little or no published research on the service quality expectations of those who practice it. Although services in hotel, restaurants, airlines and resorts possess some underlying similarities, significant differences do exist among these entities with respect to regular tourists as opposed to the ecotype. It has been reported that the latters’ motivation, education, participation, and behaviour differ from mass tourists, even when visiting the same destination (Fennell and Eagles, 1990; Ingram and Durst, 1989; Ziffer, 1989). According to Crossley and Lee (1994) the two types sought different benefits. Since eco-tourists differed from mass tourists, their service quality expectations deserve a separate inquiry. Methodology This study analyzed the service quality expectations of the eco-tourists by using an adapted version of SERVQUAL scale in 8 national parks in Croatia (Plitvice, Brijuni, Paklenica, Risnjak, Mljet, Kornati, Sjeverni Velebit, Krka). The former included items that were either adapted or added based on information from ecotourism experts (academia and industry) and the literature. In this study, only the expectations items were measured using 7-point Likert scale ranging from strong disagreement to strong agreement. One of the guidelines in ensuring the most appropriate and effective use of SERVQUAL is to use it in its entirety as much as possible. Of the 22 items mentioned in SERVQUAL (Parasuraman et al., 1991), 19 were used in this adapted SERVQUAL scale and 6 items were added, resulting in a total of 25 to measure the service quality expectations of eco-tourists. The validated scale was pre-tested with a small pilot group. Data Collection and Analysis The sample population in this study consisted of ecotourists who had taken an eco-trip in one of the 8 national parks in Croatia. This was defined as a purposeful travel to a natural environment to interact, learn and experience other cultures. A total of 800 questionnaires were distributed to eco-tourists in 8 national parks in Croatia on arrival at the reception desk. The eco-tourists were requested to complete the survey questionnaire regarding their expectations of service quality. The survey questionnaire was self-completed by the tourists, with assistance available if required. Data collection was performed during summer (July and August) 2005. A sample size of 300 participants was collected, representing a response rate of 38 per cent, which compares favorably to other hospitality/tourism studies (Fick and Ritchie, 1991; Knutson et al., 1992; Barsky and Huxley, 1992; Danaher and Haddrell, 1996; Heung and Wong, 1997; Markovic, 2004). The statistical package SPSS (11.0) was used to summarize and analyze the responses. Data were analyzed using descriptive statistical analysis. Results The participants in this study were predominantly foreign visitors (72.6%). In most cases they were from European countries: Germany (21.3%), Italy (12%), Austria (11%), France (5%) etc. The sample of 300 respondents were 54.7 per cent male and 45.3 female, and the most of them were between 36 and 50 year of age (42%). The respondents have predominantly university education (47%). The most length of stay in Croatia of the respondents was 8 or more days, and length of stay in national park was mostly one day excursion (57%). Respondents have selected a destination for eco-trips mostly on the basis of recommendations of friends and/or relatives (40%) or previous experience with the same destination (20%). Table 1 shows the means and standard deviations for eco-tourists’ expectations by 25 questionnaire items and 6 dimensions. The range of service quality expectations items was from 1 (very low expectations) to 7 (very high expectations). The mean scores in this study ranged from 4.53 to 6.64, with an overall of 6.13 (Table 1). These high mean expectations values were not unanticipated because the items were intended to measure respondents’ normative expectations (Parasuraman et al., 1991). In the hospitality/tourism studies relating to service quality expectations, the overall mean scores 136 were somewhat similar: mean=5.95 (Knutson et al., 1990), mean=6.12 (Stevens et al., 1995), mean=6.12 (Heung and Wong, 1997), mean=6.32 (Markovic, 2004). High expectation values were also found by Fick and Ritchie (1991) in their research on airlines (mean=6.18), hotels (mean=6.11), restaurants (mean=5.91), and ski areas (mean=5.91). The most important service dimensions in the SERVQUAL scale appear to be “eco-tangibles” (mean=6.55), followed by “assurance” (mean=6.41), “reliability” (mean=6.27), “responsiveness” (mean=6.13), “empathy” (mean=5.84) and “tangibles” (mean=5.60). The hierarchy of service quality expectations of eco-tourists in this study was found to be different compared to other related studies. The most important service quality dimension for eco-tourists in this study was found to be “ecotangibles” with a mean score of 6.55. Since eco-tourists emphasize seeing and saving natural habitats, archeological treasures and wilderness and undisturbed areas, the importance assigned to environmental issues in this study is not surprising. Because of their sensitivity, they tend to prefer services that are environmentally friendly, with minimum strain on the ecosystem. Eco-tourists do not require luxurious accommodations or services but prefer conditions and settings that are locally appropriate. They tend to be less demanding and prefer to experience a simpler lifestyle (Boo, 1990; Eagles, 1992). The next service quality dimension was “assurance” with a mean score of 6.41. All items accounted for a mean of 6.28 or over. The item “provide necessary information” was considered more important, followed by “feel safe in their transaction”. Assurance refers to courtesy and knowledge of the employees and their ability to convey a feeling of trust and confidence by providing necessary information. This implies that business in order to satisfy conscious eco-tourists should provide services that are courteous and informative, and convey a feeling of trust. “Reliability” (mean=6.27) and “responsiveness” (mean=6.13) were the next important service quality dimensions. The eco-tourists expect to receive prompt, promised, accurate and sincere service from contact personnel. Within the reliability dimension, the respondents expressed a strong feeling that management should show a sincere interest in solving a problem. Because most destinations are located in developing countries, eco-tourists expect to face certain problems, which they hope are adequately addressed. Within the responsiveness dimension, item “employees always be willing to help tourists” received the highest mean score of 6.55. Although these dimensions were third and fourth on the hierarchy, business should train, encourage and rewards employees to convey a sense of credibility and compassion towards the customers. The fifth dimension on the hierarchy of service quality for eco-tourists in this study was “empathy” with a mean score of 5.84. In refers to businesses to have convenient hours, service that involve personal and individual attention and where the service provider goes an extra mile to satisfy the customer. Within the empathy dimension, the item “individual attention” received the lowest mean score of 5.60 and the item “operating hours convenient” received the highest mean score of 6.19. Last on the hierarchy of service quality dimension for eco-tourists was “tangibles” (mean=5.60). It should be noted that tangibles split into two sub-dimensions in this study, as in the revised study by Parasuraman et al. (1991). Though the other sub-dimension (ecotangibles) was considered very important by the ecotourists, tangibles were on the other end of the hierarchy. A closer examination showed that within the tangibles dimension, the two items that received the most “strongly agree” values were “facilities reflect local influence” (56.3%) and “facilities visually appealing” (52.7%). Furthermore, the lowest values found within this dimension indicate that these affect the overall mean of the adapted SERVQUAL scale used in this study. Conclusions The results of the study showed that eco-tourists distinguished between the 6 service quality dimensions and showed a hierarchy of service quality expectations. The highest on the hierarchy was eco-tangibles and the lowest was tangibles. This implies that eco-tourists place more emphasis on appropriate facilities and equipment compared to employees’ local attire, local entertainment, and visually appealing materials. In addition, it can be interpreted that environmental issues such as respect for the integrity of the ecosystem were considered higher on the hierarchy than socio-cultural emphasis. Once a desired service quality is achieved to satisfy the expectations of customers, efforts should be made to maintain it over repeated service encounters, since satisfaction over time results in perception of service quality (Parasuraman et al., 1988). With the growth in environmental awareness and interest in conservation measures, ecotourism’s future looks promising. Compared to its worldwide growth and potential, there are a limited number of studies that report empirical findings. This study contributed to the theoretical and methodological advancement of service quality and ecotourism literature by developing an adapted version of SERVQUAL, a scale to measure the service quality expectations of eco-tourists. REFERENCES 1. 2. Aronsson, L. (2000) The Development of Sustainable Tourism, London, New York: Continuum Barsky, J. D., Huxley, S. J. (1992), “A customer survey tool: using the quality sample”. Cornell 137 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 30. Hotel and Restaurant Administration Quarterly, pp. 18-25 Boo, E. (1990), “Ecotourism: The Potential and Pitfalls”, Vol. 1, pp. 70 Coccossis,H. (1996) Tourism and sustainability: Perspectives and Implications; in Priestley, G.K., Edwards, J.A., Coccossis (ed.): Sustainable Tourism? European Experiences, Oxon: CAB International Eagles, P. (1992), “The Travel Motivations of Canadian Ecotourists”. Journal of Travel Research, Vol. 2, No. 2, pp. 3-7 Fick, G. R., Ritchie, J. R. (1991), “Measuring service quality in the travel and tourism industry”. Journal of Travel Research, Vol. 30, No. 2, pp. 2-9 Hawkins, D.E., Lamoureux, K. (2001) Global Growth and Magnitude of Ecotourism, In : Weaver, D. (ed.) (2001) The Encyclopedia of Ecotourism, Oxon: CABI Publishing, 63-83 Heung, V. C. S., Wong, M. Y. (1997), „Hotel service quality in Hong Kong: A study of tourists’ expectations”. Journal of Vacation Marketing, Vol. 3, No. 3, pp. 264-320 Inskeep, E. (1994) National and Regional Tourism Planning: Methodologies and Case Studies, WTO, London, New York: Routledge IUCN (1994) United Nations List of National Parks and Protected Areas, Gland, Switzerland: World Conservation Union Knutson, B. J., Stevens, P., Patton, M., Thompson, C. (1992), “Consumers’ expectations for service quality in economy, mid-price and luxury hotels”. Journal of Hospitality and Leisure Management, Vol. 1, No. 2, pp. 27-43 Kušen, E. (2002) Turistička atrakcijska osnova, Zagreb: Institut za turizam Marković, S. (2004), “Measuring Service Quality in Croatian Hotel Industry: A Multivariate Statistical Analysis”. Naše gospodarstvo, No. 1/2, pp. 27-33 Marković, S. (2006), “Student’s Expectations and Perceptions in Croatian Tourism and Hospitality Higher Education: SERVQUAL versus UNIQUAL”. South East Journal of Business and Economics, February, pp. 78-96 Marković, S., Horvat, J., Raspor, S. (2004), “Service Quality Measurement in Health Tourism Sector: An Exploratory Study”. Ekonomski vjesnik, Vol. 17, No. 1/2, pp. 67-76 Mihalič, T. (2000) Environmental Management of a Tourist Destination: A Factor of Tourism Competitiveness, Tourism Management, 21, 65-78 17. Miller, G. (2001) The Development of Indicators for Sustainable Tourism – Results of a Delphi Survey of Tourism Researchers, Tourism Management, 22, 351-362 18. Muller, H. (1994), The Thorny Path to Sustainable Tourism Development, Proccedings of the Conference Prema održivom razvitku turizma u Hrvatskoj, Zagreb: Institut za turizam 19. Parasuraman, A. Zeithaml, V., Berry, L. L. (1988), “SERVQUAL: a multiple item scale for measuring consumer perceptions of service quality”. Journal of Retailing, Vol. 64, No. 1, pp. 12-43 20. Parasuraman, A., Zeithaml, V., Berry, L. L. (1985), “A conceptual model of service quality and its implication of future research”. Journal of Marketing, 49, pp. 41-50 21. Parasuraman, A., Zeithaml, V., Berry, L. L. (1991), „Refinement and reassessment of the SERVQUAL scale“. Journal of Retailing, Vol. 67, No. 4, pp. 420-450 22. PPA/CRA (1997) Smjernice za procjenu prihvatnog kapaciteta sredozemnih obalnih područja za turizam, Split: Centar regionalnih aktivnosti Programa prioritetnih aktivnosti 23. Ritchie, J.R.B., Crouch, G.I. (2000). The Competitive Destination: A Sustainability Perspective, Tourism Management, No. 21, 1-7 24. Ryan, C. (2002). Equity, Management, Power Sharing and Sustaianbility – Issues of the ‘New Tourism’, Tourism Management, Vol. 23, 17-26 25. Smolčić Jurdana, D. (2004) Tourism development under new conditions – towards sustainable tourism development, Conference proceeding ICES 2003 From Transition to Development: globalization and political economy of development in transition economies, Sarajevo BIH: University of Sarajevo, 459-472 26. Smolcic Jurdana, D., Markovic, S. (2003) Measurement Methods in Achieving Sustainable Tourism Development, International conference “Evaluation of the environment for tourist services”, Bratislava: University of Economics Bratislava, 188-190 27. Stevens, P., Knutson, B., Patton, M. (1995), “DINESERV: A Tool for Measuring Service Quality in Restaurants”. Cornell Hotel and Restaurant Administration Quarterly, April, pp. 56-60 28. Weaver, D. (2001) Ecotourism, Milton: John Wiley & Sons Australia 29. Weaver, D. (ed.) (2001) The Encyclopedia of Ecotourism, Oxon: CABI Publishing 138 Table 1. SERVQUAL Summary: Results of Statistical Analysis Service Quality Expectations Items Mean SD Strongly Agree (%) 72.3 71.7 78.3 67.7 69.0 65.7 60.3 65.3 63.0 65.0 52.0 53.3 60.3 71.7 53.0 45.0 48.0 43.7 38.0 57.3 43.3 30.0 51.0 52.7 56.3 Eco-tangibles 6.55 Facilities appropriate to the environment 6.54 1.13 Equipment that minimizes degradation 6.46 1.02 Facilities environmentally safe 6.64 0.80 Assurance 6.41 Feel safe in their transaction 6.45 0.98 Provide the necessary information 6.49 0.95 Have competence in answering questions 6.44 0.96 Instill confidence in tourists 6.28 1.12 Consistently courteous with tourists 6.37 1.04 Reliability 6.27 Provide services at promised time 6.39 0.99 Promise to do service by certain time 6.41 1.03 Perform the service right the first time 6.10 1.23 Insist error-free service 6.07 1.25 Show sincere interest in solving problem 6.37 0.95 Responsiveness 6.13 Employees always be willing to help 6.55 0.87 Employees give prompt service to customers 6.15 1.13 Employees never too busy to help 5.84 1.41 Employees tell exactly when service will be 5.96 1.34 Empathy 5.84 Personal attention 5.75 1.43 Individual attention 5.60 1.49 Operating hours convenient 6.19 1.21 Understanding specific needs 5.83 1.39 Tangibles 5.60 Provide local entertainment 4.53 2.18 Material visually appealing 5.89 1.51 Facilities visually appealing 5.91 1.52 Facilities reflect local influence 6.05 1.48 Overall 6.13 Note: Likert-type scale was used to measure (1 – strongly disagree, 7 – strongly agree) 139 140 EXPERIENCE OF INTRODUCING THE CONCEPT OF CORPORATE UNIVERSITY IN TRAINING OF PROSPECTIVE MANAGEMENT RESERVE Tatyana A. Medvedeva Institute of Prospective Transport Technologies and Training of Human Resources Siberian State University of Transport Novosibirsk, Russia, 630049 Fax: (383)228-74-67, e-mail: mta@stu.ru, http://www.stu.ru Abstract This paper analyzes an experience of introducing the concept of corporate university in training of prospective management reserve in the Center for Human Resources Development, Siberian State University of Transport (Novosibirsk, Russia). Keywords: socio-economic changes, new requirements to the workforce, the existing system of advanced training of employees and system of corporate education. Introduction Under accelerated formation of market economy in Russia, development of entrepreneurship, rapid radical changes in society, organizations and mentality of individual, when it is impossible to predict the future, the content of organizational, managerial and social and economic relations is undergoing significant changes. Apparent difficulties of working in constantly changing environment are aggravated by changes of a more general nature, which are taking place in human society and are caused by informatization, dissemination of knowledge, universal interdependence and globalization. As a result, an employee has to work in extremely demanding environment and to meet new requirements to workforce, namely: learning to learn; communication and collaboration; creative thinking and problem-solving; technological literacy; global business literacy; leadership development; career selfmanagement. (Meister, 1998) With the dramatic growth of requirements to the workforce it is necessary to re-evaluate the existing system of advanced training of employees as the time itself dictates that priority is to be attached to the development of new mentality rather than development of existing skills and that it is of primary importance to develop the ability to extend the scope of functions and roles performed at workplace. Comparison of existing system of advanced training with the system of corporate training The political and economic reforms of recent years have influenced changes of Russian railroads. Previously the railroad was a state-owned monopoly. Since October 2003 it is a shareholder-owned company. The system of advanced training of employees is in time of transitions, but in big degree it remains the same. The existing system of advanced training of company “Russian Railroads” is realized on the base of railroad institutes and universities. It includes • professional orientation of youth at secondary schools; • education of purpose-students in railroad colleagues and universities; • education of workers and technical personnel at technical schools; • advanced training of managers and specialists at railroad universities. Changed conditions of functioning of railroad dictate the necessity to look for new approaches, new methods for organization of advanced training of managers and specialists. The concept of corporate university is widely recognized by Western personnel training specialists and is gaining in popularity in Russia, let’s name the corporate universities of Severstal, AlfaStrakhovanie, Gazprom, and others. Corporate universities are known to pursue the strategic development of a company through the development of its employees. They combine a program of consulting (using the methods with actual firms), curriculum development (teaching the methods in classes), and research (measuring improvements achieved in firms). This is the way leading corporate universities operate in the West. “Corporate universities are different in many surface aspects, but they tend to organize themselves around similar principles and goals in pursuit of their overall objective – to become a lifelong learning institution. These principles and goals are: 1. Provide learning opportunities that support the organization’s critical business issues. 2. Consider the corporate university model as a process rather than a place of learning. 3. Design a curriculum to incorporate the three Cs: Corporate citizenship, Contextual framework, and Core competencies. 4. Train the value chain, including customers, distributors, product suppliers, and the universities that provide tomorrow’s workers. 141 5. 6. 7. 8. Move from instructor-led training to multiple formats of delivering learning. Encourage leaders to be involved with and facilitate learning. Move from a corporate allocation funding model to one “self-funded” by the business units. Assume a global focus in developing learning solutions. 9. Create a measurement system to evaluate outputs as well as inputs. 10. Utilize the corporate university for competitive advantage and entry into new markets”. (Meister, 1998) Difference between principles of functioning of corporate universities and traditional system of advanced training changes content of the system of personnel training. Criteria of comparison Philosophy of training Existing system of advanced training Reactive: reactions on existing problems Tactical Development of individual skills Improvement of technical skills Training through listening In-house employees of an organization University professors /consultants Instructor – expert: knows the right answers to all questions Once in several years System of corporate training Proactive: strategic view on corporate goals and objectives and their implementation through staff development Strategic Solution of real production problems and high quality work performance Development of key competences of specialist Training through action In-house employees of an organization, consumers of products, manufacturers of products In-house senior managers and consortium of university professors and consultants Consultative presentation of material: Knowledge is created jointly by instructor and trainee Continuous process Approach to training Goal of training Content of training Methodology of training Audience Instructors Style of instruction Periodicity of training Fig. 1 Comparison of existing system of advanced training with the system of corporate training Technology of training management reserve of prospective Scientific and Practical Center for Human Resources Development was established by a decision of the Technical and Economic Council of the West-Siberian Railroads “On improvements in human resources policy at the West-Siberian Railroads No. 4 of February 14, 2003” with the purpose of developing the system of continuous training of the managers of the West-Siberian Railroads, providing them with contemporary knowledge in economy, management and psychology. The Center is a structural subdivision of the Institute of Prospective Transport Technologies and Training of Human Resources, Siberian State University of Transport. Training of managers capable of efficient operation in new social and economic environment is a complex problem. The problem is that at present most of active managers are former technical specialists whose mentality is shaped to a great extent by their profession. They learned to be managers on own mistakes. Hence, the mission of the Scientific and Practical Center of Human Resources Development was formulated as to assist in the improvement of management in organizations. The tasks it pursues are set as follows: 1. Formation of a management reserve for the WestSiberian Railroads • Training of managers in the spirit of philosophy of quality; • Development of system thinking skills for deeper understanding of problems to be solved by the manager; development of the ability of setting proper goals and achieving them while comparing them to reality and feeling the reality; • Development of the ability of quick response, of adaptation in place of traditional planning because the 142 economy in transition is characterized by high degree of uncertainty, rapid radical changes and impossibility to predict the future; • Development of strategic thinking of managers. 2. Provision of on-going training of managers. 3. Adoption of Total Quality Management in production process management through training of managers of different levels. 3. Assist in the formation of corporate culture. From the very beginning the Center’s specialists worked out the programs of the Center development and training on the base of the concept of corporate university. Based on the concept of corporate university, the programs of the Center development and training were worked out in close collaboration with the personnel management service of the West-Siberian Railroads and other services interested in training. Deputy Director of the West-Siberian Railroads on Personnel and Social Issues E. N. Kulinich suggested that four levels of the hierarchy of the management reserve be determined and that each level be trained accordingly. (Kulinich, 2006) First level: prospective management reserve is formed from the most successful students of the fourth year of studies (purpose-students) on the base of testing of business and personal characteristics of candidates. Training of students is conducted according to a 270hour curriculum of vocational business training for students majoring in technical subjects. Students are trained in the Center during three semesters, prepare a graduation thesis and defend it at the meeting of Center graduates with the management of the West-Siberian Railroads. Along with the certificate of knowledge in management the students receive a detailed description of their business and personal characteristics. Second level: the personnel management service of the West-Siberian Railroads conducts the formation of prospective management reserve from young specialists with work experience up to 5 years. Training is conducted in the Center according to a 142-hour curriculum of advanced training of prospective management reserve. The goal of the training is to introduce contemporary knowledge in economy, law, crisis management, personnel management, corporate culture, total quality management etc. During the training the young managers are evaluated by psychologists of the Center who conduct diagnostics of their business and personal characteristics, identify the zones of favorable development and zones of risk, monitor the behavior of candidates during training and business games, analyze expert evaluation sheets provided by the enterprises where the specialists work, conduct meta-program interviews based on competences of respective management positions. The information obtained is used as a base to develop the description of business and personal characteristics of managers. One of the independent assignments to be performed by trainees is self-analysis of professional activity. In the process of self-analysis young executives evaluate personal management experience through a prism of new knowledge. The next step of the assignment is to develop a plan of innovations with assistance of specialists of the Center and professorinstructor staff that work with the trainees for two weeks. In the course of work on the plan of innovations young executives offer the methods of tackling real problems which they encounter in real production and management. At the end of the course the trainees take part in the graduate conference and defend their plans of innovations before a reputable commission composed of members of the professor-instructor staff and top managers of the West-Siberian Railroads. Third level: the audience is formed from deputy heads of enterprises, candidates for higher positions, and heads of enterprises with the record of service up to 2 years. The trainees conduct self-evaluation of management competencies and on the base of its results each trainee can obtain advice on the development of management competencies in the Center. The trainees take a 140-hour course under Corporate Management program encompassing such areas as strategic management, corporate marketing, development of corporate finances, total quality management, personnel management and etc. The program also includes a section on management competencies development. For the fourth level of management the Center has worked out a number of problem seminars on the issues of corporate structuring and corporate management in addition to trainings on management competencies. Each program of the Center is an integral part of the four-level complex of programs on the development of management reserve. The program introduces a list of issues which the modern manager is to be familiar with. The programs are structured to supplement each other so that the trainees accumulate necessary knowledge moving from level to level, and this is how the principle of on-going management education is realized. Each program focuses on corporate issues. In accordance with the ideology of corporate university, the Center pursues the development of trainees’ loyalty to a shareholder-owned company “Russian Railroads”. For this purpose, on each level in addition to lectures on corporate culture the trainees take part in a series of events aiming the development of corporate culture, including lectures on the history of Russian Railroads, visits to the museums of railway transport, field exercises at the leading enterprises of the WestSiberian Railroads, meetings with outstanding people who cast in their lot with the West-Siberian Railroads, with heads of the West-Siberian Railroads. Underway is the development of the training of values of the shareholder-owned company “Russian Railroads”. The 143 block is considered as “cementing” the relationships in the team as something that makes employees proud of belonging to this company. As the Center deals with young managers, the reserve, in other words, with the future of the company, we aim at proactive training philosophy so that the trainee be able not only to respond to current problems of the enterprise but also to envision strategic goals and objectives of the company and the ways to achieve them, which, in turn, enables them to manage taskoriented changes in the organization and motivate its employees for necessary changes. Accordingly, each program of studies in the Center sets as its goals, first, the formation in young leaders of the ability of systemic, strategic and conceptual thinking and, second, the provision of essential knowledge, including the basics of innovative management, innovative view of competition, cooperation, interaction of all interested parties would form their new motivation-intellectual basis and later make them prepared to undertake the implementation of corporate objectives on higher management level. Hence the programs emphasize the issues of strategy and crisis management, Total Quality Management, management competencies etc. This in our view could lay a foundation for modern corporate culture, the culture that while preserving the best of the existing culture would trigger the processes of goaloriented changes since they are the demands of the times. Another block, which the Center includes in its programs and keeps developing, is the health of manager. Stress management. This is a generally accepted fact that the work of the manager is associated with high stress, and this is particularly true for railroad management. We see our mission in training managers in coping with such problems. The Center solves this problem in collaboration with specialists of the Institute of Molecular Biology and Biophysics, Siberian Branch of Russian Academy of Sciences, who evaluate psychophysiologic resistance to stress and diagnose the ability of optimal functioning in the conditions of longacting stress factor. Using the information obtained specialists of the Institute of Molecular Biology and Biophysics advise the managers and work out recommendations on how to optimize their work. The Center is planning to create the laboratory of bio-management. Teaching methods used in the Center should be specifically recorded. Instructors are trying to reduce the number of classic lectures to the minimum and give preference to interactive seminars, business games and trainings. The Center’s instructors do not consider themselves to be the source of absolute knowledge that know proper answers to all questions and try to present the material as advice when the knowledge is jointly created by the instructor and trainees. It happens more frequently that leading managers of the West-Siberian Railroads become instructors of the Center and participants of its graduate conferences. The Center’s business culture is another form of communication with its trainees. We believe that the way we implement our tasks and achieve our goals is as important as the conceptual component of this work. We treat our trainees as the conductors of modern business culture, the substance of which is the combination of 1. Respect to personality and understanding that success of an enterprise, its reputation and viability depend primarily on its people; 2. Understanding that the result of any work is the result of joint effort of the company’s employees and that employees should be able to work in a team; 3. Understanding that profit is an alternative measure of efficiency of work and a source of development and that the service provided should be competitive; 4. Social responsibility as an indicator of the quality of interaction of individual and collective, individual and organization and individual and society. Probably the use of group facilitation methods could serve as the Center’s “business card”. In Soviet Union workers learned to wait for bosses to make decisions. People in the Soviet Union had to accept an authoritarian, repressive style of management, which suppressed individuality and initiative. As a rule, presently an authoritarian style of management is saved in Russian organizations. It means that, receiving the task, at the same time a person receives the “warning” about punishment for bad execution of the task. As a result, a person thinks about possible ways to avoid punishment but not about the quality of fulfilling the task. People came to believe that nothing depends on them in their country. The Soviet Union developed high technology but conserved the old style of social relationships among people, including a repressive style of management. But a market economy requires a faster rate of change and more initiative by workers. Workers need to learn teamwork, problem identification and problem solving skills. (Umpleby, Medvedeva and Oyler, 2004) Group facilitation methods are focused on releasing creative initiative of personnel, on involving all employees of all levels in the continuous process improvement of services. In the Center each group of managers has an interactive seminar on strategic planning activity based on the Technology of Participation (ToP). (These methods were developed by the Institute of Cultural Affairs (ICA)). In this way young managers become aware of new type of leadership and new methods of management. In addition, they have real possibility not only to discuss actual problems of management with their colleagues, but to try to create a strategy of overcoming these problems, to see that often another side of the problem is an opportunity to overcome the “narrow place” of the process, an opportunity to improve the process. 144 CONCLUSIONS An experience of introducing the concept of corporate university in training of prospective management reserve in the Center for Human Resources Development was quite successful. An attempt to spread this experience in education of all specialists in the Institute of Prospective Transport Technologies and Training of Human Resources faces many obstacles. The problems are primarily due to the current time of transitions: constant change and great uncertainty, searching for new ways of operating, work in a situation of high economic risk, misunderstanding between managers of different generations, lack of regular management, repressive style of management, etc. (Medvedeva, 2005) The Center operates in better conditions because it works with prospective management reserve, and at present development of management is a priority of Russian Railroads. The strategy of overcoming these obstacles includes following actions: • continuous improvements of the Center’s work with prospective management reserve; • individual approach of work with the Center’s students; • expanding the number of students of the Center; • creating of the system of feed-back with graduates of the Center, in this way, formation of a group of people who share our values and our vision of current changes; • formation of data base of how the Center’s graduates carriers are developed; • spreading information about the Center and it’s positive experience of training of prospective management reserve; • constant communication with top-management of West-Siberian Railroad in order to inform them about results of the Center’s work; • conducting short-courses on contemporary management, methods of interactive teaching, etc. for professors, who potentially may teach in the Center; • promoting total quality management, group facilitation methods and other contemporary management ideas; • promoting modern business culture; • publishing collection of articles “Corporate education”, authors are top-managers of Russian Railroads (Moscow, Krasnoyarsk, Omsk, Novosibirsk), professors of Russian Transport Universities, specialists of the Center for Human Resources Development and Institute of Prospective Transport Technologies and Training of Human Resources; • introducing the concept of corporate university in management and work of the Institute of Prospective Transport Technologies and Training of Human Resources. Results we (specialists, students and professors of the Center and Institute) pursue are new quality of management system. In the final analysis, there is a direct dependence between the success of the social and economic reforms carried out in Russia and Russian Railroads and the competence of managers of all levels and specializations. REFERENCES: 1. Kulinich, E.N. (2006), “Complex system of ongoing advanced education of West-Siberian Railroad personnel”. Grishchenko, V.A., Kulinich, E.N., Medvedeva, T.A. (eds): “Corporate education”, Siberian State University of Transport, Novosibirsk. Medvedeva, Tatyana A. (2005), “Innovative Influence”. Mulej, M., Medvedeva, T., Potocan, V. (eds), Proceedings of the WOSC 13th international congress of Cybernetics and Systems, V. 6 “Management Systems”, Maribor, Slovenia. Meister, Jeanne C. (1998), Corporate Universities: Lessons in Building a World-Class Work Force. McGraw-Hill, Inc., New York. Umpleby, S., Medvedeva, T. and Oyler, A. (2004), «Technology of Participation as a means of improving universities in transitional economies». World Futures, Vol. 60, № 1-2. http://www.gwu.edu/~umpleby/2003%20World%2 0Futures.doc 2. 3. 4. 145 146 TRANSFER OF KNOWLEDGE TO FIRMS IN TRANSITIONAL ECONOMIESi Matjaž Mulej, Tadej Krošlin, Vojko Potočan, Zdenka Ženko University of Maribor, Faculty of Economics and Business, SI-2000 Maribor, SLOVENIA E-mail: mulej@uni-mb.si; tadej.kroslin@uni-mb.si; vojko.potocan@uni-mb.si; zdenka.zenko@uni-mb.si Vladimir Pozdnyakov Voronezh State Uni. of Arch. and Civil Engineering Dept. of Economics RU-394006 Voronezh, Russia E-mail: vladimir@pozd.vrn.ru Veselin Trninić Bosnian Academy of Sciences and Arts Sarajevo, Bosnia and Herzegovina E-mail: trninic@lol.ba Abstract Recent research reports show that best off are areas where the 'creative class' prevails and innovation of business and management is found equally crucial as the technological one, at least. What can latecomers do to catch up? Transfer of knowledge, especially inventions, from research organizations – universities and institutes (U&I) – to businesses and other »real world« organizations (OO) can be an important source of inventions to become innovations in OOs. Its preconditions include the OO's absorption capacity for inventions, not only the U&I opening up to OOs, and government measures. The current official suggestions by European Union, e.g., make an essential oversight in this respect. We offer alternative suggestions. Key words: absorption capacity, innovation, knowledge, management innovation, transition economy 0 The selected problem and viewpoint of dealing with it here The most advanced areas enjoy most of the 'creative class' rather than service and workers class (Florida, 2005). In addition, the world most innovative companies practice several genres of innovation (McGregor, 2006). Among them, business and management style are found equally crucial as the technological ones, at least (ibidem; IBM, 2006). It pays (Henry, 2006). Mulej and coauthors maintained this 22 years ago (Mulej, ed., 1984; 1987; 1994). Latecomer countries in modern economic development, such as Slovenia, Russia, or Bosnia and Herzegovina, are facing the question how to make more creative class and innovation happen. In Bosnia and Herzegovina, this may even be critical for nation's survival (Trninić, 2006). In Russia, differences among regions are crucial and many means are tried to foster latecomers' catching up (Pozdnyakov, Mulej, 2006). Besides, Russian economy in recent several decades was overly dependent on conditions of international markets of oil, gas, and raw materials. Currently growing oil prices are the sources of revenue surplus for Russian economy. However, this surplus is a national concern. Russian Government faces the problem of finding rational ways to spend the surplus. Filling the economy in its current structure with money received from exporting oil can increase inflation, which is already becoming a problem. Inflation growth will wipe out the little achievements of several years of economic growth in the country. The underlying factor behind unattractiveness of spending oil revenue within the country is the current structure of the Russian economy: most businesses remain uncompetitive and poorly productive. Underdeveloped innovative and creative capabilities of them contribute to it. Transition years were marked by property redistribution and institutional changes, accom-panied by continuous economic reduction and not favorable for development of the ‘creative class’ able to innovate Russia. In most cases, these years brought up the class of imitators. There is further threat that current favorable economic conditions will postpone “waking up” of “creative class”. Economists and politicians tend to believe in the power of the so-called institutions so much that they tend to try to solve all the problems with adding new legislation to the existing one (See: EU, 2002; Mrkaić, 2004; Nabi, Luthria, 2002; etc.). Thus, they formulate institutions to impact enterprises and other organization (operational organizations – OOs). When doing so, they tend to either forget or consider that their institutional order forms only the general part of the OO's activities framework, while the group-specific and individual part (see Fig. 1) are left to the impact of humans as individuals and market (= humans and their OOs as suppliers, customers, co-opetitors). The market's impact is therefore a synergetic summary of many decisions of individuals and OOs in which and about which they decide individually or team-wise with a smaller or bigger level of holism. Hopefully, they attain the requisite holism (Mulej, Kajzer, 1998; and later). The same claim applies to the absorption capacity of OOs concerning inventions and other knowledge offered in research organizations 147 (universities and institutes – U&I), which is essential for OOs to use results from U&I. This is the topic of the research, which we are partly presenting in this contribution (See endnote). The general part of attributes of the entity under consideration – shared by all subsystems The specific (group-specific) part of attributes of the entity - shared inside a subsystem The individual part of attributes per subsystems – not shared, but dividing Figure 1: Interdependence (= dialectics) of parts of attributes of any entity 1 European Union - absorption capacity of OOs concerning knowledge is overseen European Union (EU) has long ago found that is has difficulties about its competitiveness because it has troubles with its invention/innovation processes and innovations as their outcome (Miege, Mahieux, eds., 1987 and 1989; EU, 1995). Newer insights show that the situation is changing too little (EU, 2000) and the very new ones allow for no satisfaction either (.. Lisbon ..., 2004). The problem does not result from theoretical models or economic institutions only, but a lack of political will of the member countries governments is detected (See: Bučar, 2004; Jenko, 2004). They do not mention the OOs owners and managers and their coworkers, except for the need for more innovative enterprises (as an objective in EU 2000). A similarly one-sided approach is visible in EU's Handbook (2004), p. 38. In it, EU requires universities to work in partnership with industries, and therefore to radically rework their own strategic orientations in order to include more cooperation with industries. EU admits that a successful long-term partnership between U&I and OOs is based on the willingness of managements to formulate a new mission and vision of their organizations and support the establishment and implementation of their new central tasks. – Mentioning of willingness may indicate the opinion that not only institutions and economic measures count, but also – or even first of all – the innovation of culture and management; thus, emotions and values are found equally important as the rational attributes (see: Adam, 1996; Mulej, 1974, and later, including Mulej et al., 2000; Mulej, 2003; Mulej, Pozdnyakov, Trninić, 2004; Mulej, Ženko, 2004; Pozdnyakov, 2004). This is very correct (e.g.: Potočan, 2003). The EU's worry is well based on key differences between the roles and related cultures of higher education on one hand and enterprises on the other hand (Handbook, 2004, p. 39). We may even leave national culture differences aside (Zver et al., 2005; Živko, 2006). These differences are essential and far from easy to overcome. Due to lack of room we will not quote them here. They have deep roots. Universities were established in medieval times by and for the rulers, not for OOs (Kobal, 2003). Basically, in terms of Figure 1, U&I are concerned with the general part of attributes of a society and their own related attributes while OO's are concentrating on the specific and individual parts and their own related attributes. We will therefore summarize here our own findings about these differences in terms of our definition of the dialectical systems of preconditions for innovation to be produced (Mulej, Ženko, 2004, and earlier, a stepwise development). 2 The dialectical system of preconditions for innovation to show up and the related essential differences between U&I and OOs A dialectical system is a network (= system in the mathematical content of the word, an ordered set, made of elements and relations) of systems (= partial, although round off, insights into the entity under consideration, based on different viewpoints / aspects of consideration). This term was introduced (Mulej, 1974; Mulej 1976; Mulej, 1977; Mulej, 1979; and later) as a tool for overcoming of the too narrow, but unavoidable, specialization inside individual professions – by interdisciplinary cooperation of mutually different and therefore interdependent (= dialectical) specialists. In mathematical terms this picture / »system« is holistic, round off, but in terms of content it is one-sided, due to authors' specialization. Bertalanffy (1979, p. VII) said directly that he had established the General Systems Theory to fight the exaggerated specialization. He wanted humans to feel citizens of the entire world and to consider the entire biosphere (Elohim, 1999). This notion means a total holism, which has experienced a failure of human capacity to meet it. Thus, we introduced the third way – the notion of the dialectical system (DS) (Mulej, 1974, and later) and fortified it with the law of requisite holism (Mulej, Kajzer, 1998, and later). DS proves helpful in humans’ finding a middle way between too much and too little specialization and holism. Around DS, we built the Dialectical Systems Theory in order to influence humans to become more holistic, creative, cooperative and hence innovative, and to know why so and how to do it (Mulej, 1979; Mulej et al, 1992; Mulej, 2000; Dyck, Mulej et al, 1998; Ecimovic, Mulej, Mayur, et al, 2002; etc.; see also Knez-Riedl, Mulej, Dyck, forthcoming; Mulej et al, 2003; Mulej et al, 2004; Pivka and Mulej, 2004; Potocan and Mulej, 2004; Rebernik, Mulej, 2000; Treven and Mulej, 2005; etc.). The dialectical system of precondition for an idea to become an innovation (which happens in less than one percent of new ideas; there is a long and complex process from idea to customers’ and authors’/owner’s 148 new benefit from the new idea – EU, 1995; etc, incl. EU 2004) can be expressed as in Figure 2. We lack room to define all of them here in detail. Innovation = f(invention/suggestion X entrepreneurial spirit and entrepreneurship X requisite holism X management and leadership X co-workers X culture (esp. the one of innovation and persistence) X suppliers (of values, knowledge, equipment, material, finance, etc.) X buyers and customers X competitors X natural environment X socio-economic environment X good luck and random events/factors) Figure 2: Dialectical system of preconditions of innovation The difference between U&I and OOs in terms of Figure 2 and empirical experience from Slovenia (collected for 15 years by Mulej's graduate students of innovation management in their analyses of organizations, mostly enterprises) can be summarized in Figure 3. Thus, there is obviously a complex network of attributes to be taken in account. it, not even in the doctoral dissertation bases. Hence we developed our own theses and suggestions. 4. Suggestions how to strengthen the absorption capacity of smaller OOs In transitional economies, such as Slovenia, Russia, or Bosnia and Herzegovina, there is especially in smaller OOs an inherited culture, which has reigned for centuries and supports their absorption capacity too poorly. Market innovate culture too slowly for a transitional or underdeveloped society to avoid neocolonization, which threatens it under globalization. The technological innovations alone are also changing the old culture to a modern one too slowly for innovation to receive support as a permanently reigning value-culture-ethics-norms system. Hence, the importance of innovation of culture and managerial style, which guides culture essentially, is enormous. Both the quantity and impact of other innovations depend on these two. Removal of obstacles against a modern action and behavior, which make culture visible, is not enough in transitional economies under globalization; it influences more the ones already in favor of innovation and enabled to work on it, than the ones who still favor routine-lovers and an exaggerated solidarity like in pre-industrial and especially preinnovation times. This contribution defines a system (as an ordered set, and as mental picture of the object under consideration) of attributes of innovation and links it with the innovation potential factors. The resulting needs include education and training for innovation and creative co-operation rather than a profession alone, equipment, co-operative rather than commanding management, modern ambitions (to create and be somebody, not to spend only), entrepreneurial OO, U&I and government, mutually supportive networks of OO, U&I and government aiming at innovation persistently ad requisitely holistically, etc. Many empirical investigation of several authors show that in a transitional society such as Slovenia, Russia, or Bosnia and Herzegovina, the said systems of attributes is not yet the prevailing culture, although it is on its way, gradually. This is so for socio-economic development and current reasons. Therefore we suggest (Mulej, 2006; in agreement with co-authors): 1. Government/state, as the most influential society's body, if people accept its influences, ought to do organizational and management innovation in its own arena, and can do so; this would make it a credible supporter and enforcer of innovation in OOs and U&I. It is also a big buyer (if we consider all state, para-state, state-subsidized, and co-programmed OOs) in the buyers' market and should require its suppliers be at the top of innovation results with no exception. At the same time, instead of separated state agencies, which are now seen in e.g. Slovenia, for science, technology development, higher education, etc. a common agency for innovation / innovative society should be 3 What attributes should one try to influence? Where should one start from to solve the problem? From the invention/innovation potential factors. Innovation results from them. Krošlin (2004; p. 89122) identified close to 80 (eighty) factors influencing the invention/innovation potential. He classified them in groups as in Figure 4. U&I can influence factors in Figure 4, if allowed or even invited, only. It can be done more directly or less directly. Both action possibility and outcome depends on the OO's absorption capacity, which in turn depends on the network/system of knowledge and values of the influential individuals and bodies in a given OO. In this respect very big differences have been detected between OOs depending on their size. In e.g. Slovenia, very much like in EU, only 0,3 (three tenths of a single percent) of OOs employ more than 250 (two hundred fifty), which classifies them as big OOs, while about 94 % employ under ten or even nobody (Rebernik et al, 2004). This large percentage makes us think of the small and medium sized OOs in terms of their absorption capacity for knowledge and inventions from U&I. It is clear from empirical insights that they cannot afford their own specialists for all the business functions, especially not for the ones that are not directly related to solving the OO's short- and mediumterm problems, but work on the long-term ones by research (producing scientific findings, inventions, and – possibly – suggestions, but nothing more concrete) and development (producing applied results and – possibly – potential innovations, but not innovations making new benefit/profit). At the same time, they are becoming crucial in the global market, not locally only (IBM, 2006). Though, we detected no literature about 149 established like in e.g. Portugal. The alternative to such a rather entangled (complex and complicated) system of measures is even more entangled – the neocolonial dependence of a non-innovative country to the benefit of the more innovative ones. Government/state should play the crucial role in formation of the national innovation system comprising different interconnected actors of innovation process (including OOs and U&I). In this system links among these actors are of primary importance. Government/state can facilitate strengthening these links. 2. Inside OOs one could oppose such a danger by enlarging the work of marketing offices (which exist in small and medium sized OOs, especially, more probably than research and development offices do). They should include information on U&I and strengthen the OO's absorption capacity for inventions and other knowledge from U&I as well as the cooperation of OOs with U&I. Due to differences in profession and culture such co-operation is both difficult and necessary: entities complement each other by differences, and benefit (from and to each other) therefore. We suggest ways to make such co-operation easier. It tackles small and medium sized OOs, first of all, because they are 99 % of all business entities, e.g. in Slovenia, Russia, Bosnia and Herzegovina, and in European Union as a whole. Being small, they face more human resource limitations than the bigger ones. These limitations can be overcome best in OOs cooperation with U&I (if we now leave, due to the selected view-point of research, the co-operation among OOs aside), as soon as we enlarge the notion of innovation from the technological ones to all beneficial novelties, and the OO to U&I co-operation to all beneficial (or promising and usable) knowledge. This co-operation is also beneficial to U&I which receive through OOs closer access to real market information important for commercializing and promoting innovations. 3. Preconditions of such a co-operation include ethics of interdependence of both OOs and U&I, because it helps build bridges over differences. This is as much easier to attain as bigger is the experience-based mutual trust between OOs and U&I, meaning the values/emotions part of both the necessary attributes of the subjective starting points and of the practice. It is also easier, if in OOs and U&I more of the entrepreneurial spirit develops / shows up / reigns, than e.g. Slovenia now possesses for socio-economic development reasons, after she has seen three waves of »export« of entrepreneurial persons in times of AustriaHungary Kingdom, Hitler's occupation, and guestworkers going west. Similar has been the Bosnian history (Trninić, 2006). Russia has also lost entrepreneurial persons during the decades of centrally planned economy. As mentioned above the recent decades of market reforms could bring up mainly entrepreneurs-imitators, not innovators. Imitators usually copy existing business models. Although imitation is a definite step forward in development, it is still not innovation and does not require absorption of new knowledge and ideas from U&I. Thus, in such a transition country, which is threatened by globalization causing neo-colonialization and has quite a lot of education and institutions that (passively, but anyway) support innovation, one must with full awareness foster the invention-innovation processes, especially the innovation of management and culture, i.e. the system values-culture-ethics-norms. Hence, the third part of this research makes many suggestions on how to support fostering of innovativeness and the inventioninnovation processes. They are based on finding of many empirical researchers that ethics is not unchangeable. 4. Thus, the entire research allows for the conclusions, that it is a too one-sided demand that only U&I should innovative their current behavior, while the practices of OOs and government are taken for granted and fully correct, facing no need for innovation. On the contrary, all three poles that we have tackled here have their equally valid roles and need innovation. From the process viewpoint, it is not the technological innovation, which comes first, although it matters a lot for competitiveness, but the first step must cover innovation of culture and management. It can become operational most easily with invention/innovation of organization processes. Organizing and its innovation is an activity, common to all: state, OOs, and U&I. A big majority of the technological innovation in U&I, smaller OOs and state bodies and organizations takes the form of buying equipment from specialized producers. In the case of transition countries, such as Slovenia, Russia, and Bosnia and Herzegovina, a majority of equipment is imported. Hence, the innovation of culture and management makes a precondition, without which progress and economic independence of such a country can (no longer) be practiced. 5. Conclusions The most advanced firms in the most advanced areas of the world economy find, finally, that innovation of business and management is equally crucial for their competitiveness, as the technological one. This finding is equally true of latecomer countries such as Slovenia, Russia, and Bosnia and Herzegovina. Knowledge about all kinds of potential innovation can be found at U&I, once OOs have their own absorption capacity to take and use it. This need requires business owners and managers to innovate their own culture. Government is facing the same need and obligation, in order to become a role model and require all its suppliers to be at the top of their innovative practices. 150 Precondition for innovation INVENTIONS/ SUGGESTIONS ENTREPRENEURIAL SPIRIT / ENTREPRENEURSHIP REQUISITE HOLISM Precondition's featuring in U&I They exist, but remain mostly unused, because a network of other preconditions lacks. A part of them can be patented or protected in other ways. They exist as a rare exception only, they are mostly not found needed, except in private and semipublic U&I. It is understood differently, the broadest concept may be there in composing a curriculum. But even here it is quite limited to the special profession at stake. It is more frequent with persons able and willing to cooperate creatively in interdisciplinary teams producing synergies. It rarely includes current needs of OOs. It is unavoidable for running daily activities, efficiency and effectiveness. It utilizes given resources, including humans. In U&I it rarely prefers working with OOs to asserting oneselves in international scientific community and in teaching. Scientific, administration, laboratory /technical, teaching staff. In line with the prevailing culture they work more in teams or more individually. Depending on the more managerial or more leadership style of bosses, they produce inventions. This makes them produce innovation rarely. They rarely move to competitors or to OOs. Prevailing habits, attitudes, and practices under impact of conditions, preconditions, and bosses, prefer either a narrow specialization or a broader inter-disciplinarity. U&I culture prefers theory, maybe self-sufficient science, international assertions of students / schools / science, inventions etc., to working in and with OO / innovations. It tends to be closer to suppliers' market than to buyers' market. These are especially other U&Is, highschools, libraries, publishers etc. Finances are supplied by government, mostly, partly the paying students, partly OOs. Other supplies: like to all OOs. Students, graduates' employers, publishers, government in the name of society, partly OOs for inventions, consultancy, training and education of coworkers etc. Precondition's featuring in OOs They exist, but remain mostly unused, even if other pre-conditions exist, but not all of them are strong enough to prevail over the established routine. In legal terms they exist in all OOs, but to different degrees in economic terms (= living on innovation), depending on humans and market conditions It is understood differently. On legal and organizational terms it is the division of labor that makes it possible, if their coordination works well and co-operatively. It is less frequent with commanding bosses than with co-operating people. It rarely includes U&I. It is unavoidable for running daily activities, efficiency and effectiveness. It utilizes given resources, including humans. In OOs it rarely prefers working with U&I to working with other OOs, if the first is avoidable for success in market. They have different professions in line with OO's business and their given business function. In line with the prevailing culture they work more in teams or more individually. Depending on the more managerial or more leadership style of bosses, they produce inventions. This makes them produce innovation rarely. They rarely know U&I but superficially. Prevailing habits, attitudes, and practices under impact of conditions, preconditions and bosses, prefer narrow specialization to a broader inter-disciplinarity. OO culture prefers work in and with OOs to theory, self-sufficient science, if avoidable for success in market. Innovations matter, if market requires them, inventions do not suffice. It tends to be closer to buyers' market than to suppliers' market. Suppliers of HR – schools of all kinds. Finance: investors and creditors. Equipment and material: specialized suppliers. U&I may be suppliers of inventions & potential innovations, exceptionally of innovations / licences, etc. Users / buyers / customers of products and services in markets. Quality matters to them more than innovation backing it, or invention / suggestion backing it. MANAGEMENT AND LEADERSHIP CO-WORKERS CULTURE (ESP. SUPPORT TO INNOVATION AND PERSISTENCE) SUPPLIERS (OF HR = VALUES & KNOWLEDGE, OF EQUIPMENT, MATERIAL, FINANCE, ETC.) BUYERS AND CUSTOMERS 151 COMPETITORS U&I of a similar specialty with OO of similar specialty offering products alternative offers to students and and services to the same (potential) publishers, conferences etc. They rarely markets. They often cause competitive cause competitive troubles requiring troubles requiring innovation. innovation. NATURAL It is only exceptionally victim of the It is very frequently victim of the regular ENVIRONMENT regular U&I work, because the latter is OOs' work, because their specialty and normally limited to teaching and short-term profit tendencies cause their research leading to inventions only. one-sided views, including about Development is included rarely, si is innovation and cost calculation. innovation. SOCIO-ECONOMIC Government legislation on U&I work, Government legislation as the framework ENVIRONMENT indirectly on graduates' work in OOs, for independent business decisions and national, regional, professional actions. They are taken in account in line cultures, ethics, norms. For U&I with the prevailing organizational and requirements and preconditions for industry culture as well as customers' and innovation tend to not be included in other partners' ones. Requirements for either government or market demands, innovation come from the markets and neither do the ones for co-operation may cause the need for absorption with OOs concerning transfer of capacity for inventions and knowledge inventions & knowledge to OOs. from U&I. RANDOM EVENTS / In spite of preparation, scientific and In spite of preparation, scientific and FACTORS professional work, and requisite holism professional work, and requisite holism in in them, making of inventions tends to them, making of inventions tends to depend a lot on random events / factors, depend a lot on random events / factors, and even more so do innovations and even more so do innovations Figure 3: A comparative black-and-white view at the preconditions of making an innovation, related to cooperation of U&I and OOs, including the absorption capacity of OOs for knowledge/inventions from U&I Factor under OO's control OO's vision, politics, and strategy – OO governance OO's management and organization OO's staff and their knowledge, skills, experience, motivation OO's culture and climate OO's research and development linked with marketing as well as other business functions • OO's technology • OO's networking with its business environment • OO's other available resources and capacity to gain them (finance, intelectual property rights protection, etc.) • OO's other attributes such as size, industry, location, export, previous business success Factor outside • Invention & innovation infrastructure, policies and factors outside OO OO's control • Markets' attributes • Random events and (good or bad) luck Figure 4: Invention and innovation potential factors in overview References: 1. 2. 3. 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The Journal of American Academy of Business. 5, 1-2, s. 412-417 46. Pozdnyakov, V. (2004): Improving Universities in Russia through the Network of Change Agents: the Case of Civic Education Project. In: Trappl, R., ed.: Cybernetics and Systems 2004. Vienna. Austrian Society for Cybernetic Studies, pp. 371374 47. Pozdnyakov, V., Mulej, M. (2006): Managing Social Performance for Sustainability of Selftransformation. In: Trappl, R., ed. (2005): Cybernetics and Systems 2006. Austrian Society for Cybernetics Research, pp. 438-442 48. Rebernik, M., Mulej, M. (2000): Requisite Holism, Isolating Mechanisms and Entrepreneurship. Kybernetes, 29, 9-10, pp. 1126-1140 49. Rebernik, M., Knez-Riedl, J., Močnik, D., Tominc, P., Širec Rantaša, K., Rus, M., Krošlin, T., Dajčman, S. (2004): Slovenian Entrepreneurship Observatory 2003. Institute for Entrepreneurship 50. 51. 52. 53. and Small Business Management, Faculty of Economics and Business, University of Maribor. Maribor Treven, S., Mulej, M. (2005): A Requisitely Holistic View of Human Resources Management in Innovative Enterprises. Cybernetics and Systems. An International Journal, 36, 1, pp. 1-19 Trninić, V. (2006): Međunarodni system I poredak antinasilja u izgradnji I zaštiti svjetskog mira. Saznanje I poruke iz BiH – inicijalne teze za pripremu novog međunarodnog skupa. Unpublished material. Bosnian Academy of Sciences and Arts, Sarajevo Zver, M., Živko, T., Bobek, V. (2005): Ekonomija in kultura. Umeščenost Slovenije v evropski ekonomskokulturni kontekst. Univerza na Primorskem, Fakulteta za management, Koper Živko, T. (2006): Economic convergence of the European member states from point of view of economic-cultural orientations. Kybernetes, 35, forthcoming in 7-8 154 i The contribution is based on the research program “From the Institutional to the Real Transition” that enjoys support of the Public Agency for Research, Republic of Slovenia, in 2004-2007. This research program is a next step following the previous one called »Innovative Enterprise in Transition«, which was sponsored by the Ministry for Education, Science, and Sports, Republic of Slovenia, in 1999-2003. 155 ORGANISATIONAL ORDER OF KNOWLEDGE: AN “INSIDE” ORGANISATIONAL PERSPECTIVE Robert Neumann University of Klagenfurt, Austria, Department for Organizational-, Human Resources- & Management Development (OHM); Department for business technologies (biztec), Universitätsstrasse 65 – 67, 9020 Klagenfurt robert.neumann@biztec.org Alexandra Müller-Stingl, Waltraud Grillitsch University of Klagenfurt, Austria, Department for business technologies (biztec), Department for Organizational-, Human Resources- & Management Development (OHM); Universitätsstrasse 65 – 67, 9020 Klagenfurt waltraud.grillitsch@biztec.org, alexandra.mueller-stingl@biztec.org Abstract Organisations are understood as social entities, which are constituted regarding the social interaction processes of the actors and acquire, integrate and handle knowledge. The model of a so called “organisational order of knowledge” tries to link considerations about “organisational cognition movement” with new system theory as well as structure- and action theory in terms of a post-modern organisational science. The target is to derive new impulses for a strategic management of the resource knowledge. This model, for the observations from a knowledge point of view, joins the basic considerations of self referential mode of operation accordingly recursive reproduction of systems. It includes some basic constitutive components of theory, which are sketched in their core conclusions and coherences. The model explores knowledge as a medium for the development of order and pictures guide lines for an organisational order of knowledge with constitutive elements and reproductive processes are given. The thought of “meaning generates knowledge” and the use of the order of knowledge as a generative resource is discussed, concluding with the basic functions of an “organisational order of knowledge”. Keywords Knowledge Management, order of knowledge, organisational behaviour, system theory knowledge architecture 1 The Need for Intelligent Organisations Companies need to focus on an efficient development, distribution, capitalisation and utilisation of personal, environment oriented and organisational knowledge. To activate the intangible resource knowledge it does not suffice to work on the organisational, technical and labour level of companies, moreover it is necessary to understand how organisations acquire and treat knowledge; how knowledge controls the activities in and from organisations and vice versa. This should lead to a focusing of the inside of organisations to look at phenomena, which control the intelligence of a company. Organisations are intelligent, if they observe differences; realize coherences, interdependencies and contradictions and hence derive qualified actions. The organisational intelligence is thus identified through successful execution of organisational knowledge and competence potential. The organisational intelligence meets the consequence that managerial attention and strategic investments are related to core competences to reach a “best in world” status and significant long-term competitive advantages. Increasingly the success of companies is sustainably determined by the ideas, the creativity, the ability to solve problems, tacit knowledge and furthermore the saved knowledge in anonymous rule systems of organisations, the competences, the identity, the company culture and the ability to develop, change and learn. Conscious and unconscious knowledge and competences finally determine the success or failure of organisations. “Knowledge” itself gives the chance to return to an inside look of organisations in giving identity and determining sustainable future abilities. On the contrary this implies the danger of a consolidation of the rationalisation paradigm in treating the organisation as a purposely-rational input-output model. Furthermore knowledge is directly assigned to management intentions, which leads to a disillusion regarding the variety and self-reference of the company’s reality. 156 2 An Organisational Order of Knowledge According the theory of self-referential systems, organisations simultaneously obtain open and closed relationships to the environment. They are open concerning an energetic exchange between organisations and environment and the incorporation of data. They are closed regarding the allocation of meaning and system-internal conversions of information to knowledge. Consequently social systems always need to control the balance between openness and closure, because they need to meet the decisions regarding stimuli and knowledge from the environment. Organisations only accept environmental information, which makes sense and matches the already existing knowledge for the perpetuation of a collectively constructed concept of reality, preservation of order and covering of identity. External events can possibly activate system-internal processes, depending on created systematic criteria and rules. Knowledge is developed through a so-called integration of information in a contextual relevance. The relevance criteria are derived from experiences, which were relevant regarding the logic value and development of organisations for its survival and reproduction. The self-referential character of organised social-systems establishes a central requirement for a possible training of an independent systematic intelligence (cf. Willke, H., 1998) and for organisational knowledge management. This order conserving aspect, which quasi describes the “inside” of organisations (illustration 1), as well as cognitive, structural and proactive theoretical approaches leads not only to a differentiated understanding of organisations, but to alternative approaches towards inter-organisational processes in dealing with assimilation, production, integration, utilisation and exclusion of knowledge. Organisations are specifically complex learningsystems in relation to the way how they acquire and process knowledge and how knowledge retroacts. Therefore the learning-ability of social systems depends on the coactions of organisationally relevant communication. This communication results in an emergent reality, which constitutes the own identity of the system through rules, behaviour, patterns, knowledge systems and other kinds of symbolic order (cf. Willke, H., 1995). Organisational learning quasi corresponds to a change process of reproductive coherence, which targets on enlargement and enhances reproduction-chances (cf. Türk, K., 1989). Self referential patterns are always detected in organisational learning, because a learning cycle is a matter of operationally closed causal processes with back- and after-relations. Each behaviour of the system retroacts on itself and is the starting point for further behaviour, so that an inside and self-referential momentum is developed. It leads to an inter-subjective converting of experiences, to associative combinations of already past organisational actions, to already experienced effects of actions and particular consequences of behaviour for future actions (cf. March, J.G./Olsen, J.P., 1976). The described selfreferential process of organisational learning emerges because of the momentum of recursive connectionbehaviour. Following learning processes are not externally induced, as long as they are relative autonomously established through systemic dynamic (cf. Probst, G.J.B.,1987) Intraorganizational Perspective Recursivity of actions and structures Rationality of decesions and codification, programmes Cognition, Knowledge, Experiences, Competence Theories, Paradigm, cognitive (re-)production Allocation of meanings, sensemaking, predispositions Identity, history, myths, norms, values, symbols, language (micro-)political behavioristic processes Containment, exlusion, bordering Self reference Obe rservation Communication Environments External reference Illustration 1:The “inside” operations of organisations (Neumann, 2000) 157 3 Guidelines for the Organisational Order of Knowledge From our point of view the aspects of an “inside” organisational perspective are only partially emphasised in the already existing business-knowledge management literature. Through the model of an organisational order of knowledge we try to describe some factors and processes, which create and reproduce knowledge in their coactions. It also invisibly and definitely controls the dealing with knowledge not only on knowledge based pattern of order. The model contains quasi a variety of constitutive leading determinations which should help to understand processes of cognition, knowledge integration, -enlargement, -use as well as –exclusion in and from organisations. The pictured “organisational order of knowledge” joins the self-referential patterns of order and recursive reproduction of systems. It contains the following key statements 3.1 Constitutive processes elements and reproductive The used term “organisational order” is based on the assumption that actors create a specific superior frame of order for special constellations and kinds of problems. This frame of order consists of premises, rules, routines, standards and norms, in which knowledge is imbedded. Furthermore it should fulfil a function, give a direction and be a spectrum for decisions and actions. Simultaneously it should exclude other possibilities to furthermore reduce complexity. The organisation gets its order quasi through the production of tangible (e.g. routines) and intangible elements like reciprocally divided expectations, ideas, causal-perceptions, values, language and relations. (Rüegg-Stürm, J., 1998). The order is a pattern of interplay between structure and behaviour, which connects, gives possibilities for identification and tries to give a meaning. Furthermore it allows and accordingly restricts the use of knowledge imbedded in rules and processes of knowledge base enlargement. Hence order stands for regularity, legality and limitations. Patterns of order can possibly change, adjust and develop specific boundaries. But they presume information, knowledge and coordination of human acting. Order is not known as the result of fixed structure, but as the result of organisational processes of action. This leads to a permanent confirmation of structure. Knowledge is processed and reproduced in structures, patterns of behaviour and action, so that it does not constantly need to be reflected and it leads to a standardisation of behaviour. Structural configurations conserve knowledge. Structures are the result of human knowledge about functionalities and accordingly the belief in the functionality of specific relations. Following it is accepted that existing behaviouristic norms and modes of behaviour are better than other ones, whereby a frame for order is mostly unconsciously designed and pretended. Order can also be created through spontaneous collective actions, which leads to a situational adequate kind of order. Consequently order arises as a result of continual fluctuation, change, creative processes, search- and learning processes, innovation, correction, explorations and experiments. It needs to be constantly re-produced. The background is composed by the organisational perception program [paradigm, cognitive maps (c.f.. Weick, K.E./Bougon, M.G., 1986), collective mind (cf. Weick, K.E./Roberts, K.H., 1993), local theories (cf. Baitsch, Ch., 1993); Heideloff, F./Baitsch, Ch., 1998, knowledge structures (cf. Lyles, M.A./Schwenk, Ch.R. 1992; Walsh, J.P. 1995)], resources (competences, experiences, skills) and structures (formal behaviouristic structures, rules routines, standards) which are reproduced in a process of analysis, combination, sense making and action at individual, group and organisational levels (illustration 2). Organisational structures which are based on individual beliefs lead to an order that connects the organisational members on the basis of these beliefs in a social world. This underlies no re-constructible logic. The leading organisational knowledge-based programs (re)produce and guide the experienced behaviour and acting of the members. The routines are stabilised and stamped into the memory of the organisation through successful use. 158 organisational perception programm Paradigm Pattern of Perception- and Interpretation Expectations Decissioning Rationalities Local Theories Cognitive Maps, Collecitve Mind Interpretation Combination Results ressources Specialisation/Expertise Best Practices, Experiences Established Formulated Knowledge I&C-Technologies/Media Skills Core Competences of the company Sense making structures Formal-/Behavioristic Structures Targets, Strategies, Programms Cultural Pattern Subordination-/Placing over Routines, Rules, Standards Documentation, Storage Act & Behavior organisational knowledge-basis Illustration 2: Organisational order of knowledge (Neumann 2000) 3.2 Meaning generates knowledge Complex relations between the internal and external perspectives, the surface and deeper structure of the organisation are handled with help of the organisational order of knowledge. Because the order of knowledge defines the organisational boundaries and it constitutes the relationship between system and environment. The organisational knowledge exchange process (with the internal and external environment) is shaped by knowledge, which tacitly exists in cognitive reference and in intra-subjectively shared constructions about reality (cf. Pawlowsky, P., 1995). Through it the problem of interference between a system-internal (self-referential) and a system-external (alienreferential) cycle of knowledge generation arises. The inner cycle tends to an operative closure of external needs and the external cycle tends, contrasting to the instrumentalisation of knowledge use, to shortterm organisational interests (Willke, H., 1998). Primarily only the kind of external knowledge gets a system-internal chance of integration, which fits already existing knowledge and does not cause huge irritations. Knowledge creates rule definitions about reality and the meaning of it. Hence it leads to an establishment and accordingly acknowledgement of order. The development of knowledge can be seen as a process of transformation, in which events are observed. These events are enhanced with systeminternally observed moments, so that knowledge is condensed (cf.. Willke, H., 1996). Hence knowledge emerges from the contextual combination of information, which is system-relevant. What is relevant or not relevant depends on experiences, historically logic developments and cognitive structures and depends altogether on the identity of the specific system (cf. Willke, H., 1996). This indirectly connects to considerations of path- dependency regarding a resource-based view. In the sense of “resource-trajectory” only competences, routines and assets are consolidated to core competences, which are based on historically developed knowledge of enterprises (cf. Rasche, Ch., 1994). Simultaneously the direction of processes depends on their flow and small events, wherefore the imitation of organisational capabilities is difficult (cf. Knyphausen, D., 1993, 1995, 1997). Considerations about “lock-in“ also start here, so that the efficiency of knowledge use is hindered by highly complex and recursively build processes of “lock-in” of organisational structures, technologies and forms of production (cf. Ortmann, G., 1995). 3.3 Basal knowledge - creation of order archetypes The order of knowledge is based on tacit and accordingly organisational knowledge and is reproduced through this medium. Knowledge can only be partially codified and shows a high amount of organisational specification (cf. Knyphausen, D., to 1995). It is imbedded in the deeper- as well as in the surface-structure of organisations and hence it is only hardly recognizable. Knowledge is detected in decisions, communication and actions; this is why knowledge becomes knowledge. A social reality emerges, which is based on a lower-level logic, but cannot be reduced to it. This phenomenon is described with the emergence and forms of core self-generation and accordingly selfreformation of organisations as formally organised systems. The tacit organisational knowledge determines, in the sense of theories of use, the deeper structure of organisations, because this kind of knowledge establishes emotions, interests, 159 expectations, recommendations, perceptions, values and norms, which are accessed by organisational members unconsciously (cf. Bühl, W.L., 1984). Hence this knowledge carries the codification-rationality of the system and therefore it is understood as systemcodified knowledge. The knowledge which is tacitly anchored in the deeper structure of the organisation determines expectations in the kind of decision-rationalities; it defines what should be reality; what information should be selected; what should be interpreted and combined with existing knowledge to the systeminternal content of communication. This “basal knowledge” (first-order knowledge) serves as a means of self-control, interpretation of world-view and perpetuation of identity. It leads to the development of patterns of order and controls and accordingly arranges the internal-organisational activities regarding structures and processes; the possibilities of change, as well as the danger of intractable feasibilities contrasting to constructive use of existing possibilities of new knowledge assimilation and hence the (intelligent) action of organisations as a whole. Simply said, organisations select, combine and arrange the disposable internal knowledge as well as potential external knowledge regarding specific self-designed criteria. These criteria are developed through the specific identity of organisations and accordingly the predominantly developed inter-subjective paradigm, which is stamped through behaviour, action and the decisions of dominant coalitions. Knowledge is also understood as “generative knowledge“(in detail in Heideloff, F./Baitsch, CH. 1998) which tacitly affects the development of order because it controls the identity, paradigm and finally the recognition and epistemology of organisations. 3.4 The organisational order of knowledge as generative resource The order of knowledge is formed by not codified and collected kinds of knowledge (through experiences), internalised patterns of recognition, interpretation and thinking, value attitudes and different management techniques, which are relevant for organisational actions. In this sense the order of knowledge builds a generative resource and basically determines how a company tries to generate, transfer and use relevant knowledge. Thus also structures need to ensure a company wide perception of relevant problems, the development of targets, strategies and alternative actions and the diffusion of individual organisational knowledge. Values, Culture, Sense, Tacit Knowledge, Organisational Orde r of Knowledge, Learning Product-Market combinations Structures and Processes Increasing protection of imitation Kind of Knowledge in terms of intangible ressources Cognitive/ behavioristic Illustration 3: Organisational knowledge as a barrier for Technicaleconomic Productattribute Productionmethods Technical Competence 1 2 3 4 5 6 7 8 9 10 Time of adjustment and development in years Period of protection of imitation order of imitation (Neumann, 2000) 160 The organisational order of knowledge as a means of "institutionalised wisdom"(cf. North, K., 1998), with normative character and company dominating force, simultaneously constitute an intangible competitive advantage, because it has a higher protection for imitation than e.g. technical-economic factors. Furthermore the organisational order of knowledge underlies specific logic values and coinages, wherefore it is hardly recognised and copied by the competition. The organisational order of knowledge is a basis for an “intelligent order of knowledge” and a companyspecific “organisational capability” (cf. Grant, R. M., 1991) 4 Basic Functions of the Organisational Order of Knowledge The organisational order of knowledge results in a variety of important functions with particular features: Reduction: absorbs uncertainties from a related system-environment difference and organisations are able to enhance their ability to absorb in a development of experiences dealing with alien knowledge. (cf. Cohen, W.M./ Levinthal, D.A., 1990) Orientation: The order of knowledge primarily determines how companies are specifically able to generate, save and use relevant knowledge. It contains “orientative knowledge” (saved in routines and action programs) and gives tacit instructions how to proceed in specific situations. Thus also structures need to guarantee, that relevant problems are noticed; targets, strategies and varieties of actions are developed and knowledge is diffused between organisational members (cf. Osterloh, M./Frost, J.,1999). Integration: The institutionalised kind of knowledge order achieves an integrative effort on the basis of knowledge (knowledge of members) (cf. Berger, P.L./Luckmann, T., 1990). Knowledge takes an integrative function, which simultaneously leads to a confirmation of inter-subjectively shared knowledge assets. The knowledge transferred through socialisation (patterns of thinking and action) is always used and leads to a perpetuation of order. Legitimation: legitimates action through recursive relation to existing rules. Interpretation: The order of knowledge contains cognitive guidelines for the interpretation of information, for the processing of communication, for decisions and actions, internal as well as external, to meet differentiations. Coherence: The order of knowledge has a connecting function, because it is a means of knowledge-, work-, routine and language community, which is based on specifically collective assumptions about reality. Through a communicative relation on organisational key episodes, patterns of explanation and belief the organisational order of knowledge is constituted and simultaneously reproduced (cf. RüeggStürm, J., 1998). Disposition: The order of knowledge provides contexts for self organised knowledge-based actions and decisions and defines the kind of knowledge, which is consulted. Interpretative Function Paradigmatic scheme of difference for interpretation of events (internal/external) Reductive Function Creates security by complexity absorbtion Perception Programm of the Organisation Integrative Function Integrates Knowledge in actions organisational Knowledge orde r Ressources Structures Knowledge, (normative/ Competences cognitive) Dispositional Function Creates constraints for knowledge based decisions and actions Legitimated Function Legitimates actions throuht the reference on established rules Coherent Function Connecting effects in knowledge communities Orienting Function Enables standardization and guidelines for action and behavior Illustration 4: Functions of the organisational order of knowledge (Neumann, 2000) 161 5. The order of knowledge: basing in and from organisations The organisational order of knowledge establishes a congenial kind of co-action between the perception program of organisations, resources and structures with a positive character. It represents the knowledge basing and identity of organisations and therefore establishes an intangible competitive advantage. This means a (re)produced and self-generated order invisibly controls the dealing with knowledge in the deeper structure of the organisation through ongoing observation, interpretation, combination, action and the giving of meaning. The organisational order of knowledge takes quasi the main function of a pre-dispositive guiding system, because it determines what kind of data becomes information; what kind of knowledge is acquired, integrated, distributed, used and excluded and what is the target of knowledge-based actions. This order is based on knowledge in structures, routines, competences, technologies and is tacitly referred to acting. Organisations are only oriented on their own criteria and develop their own knowledge to solve problems. They also develop own codifications and languages; shortly, actions are oriented towards stubbornness’ inner logic. Particularly the epistemology of an organisation determines, which kind of knowledge-creating questions are directed towards the own organisation and the environment (what kind of internal and external events are important and which are not). The pre-dispositive character of an organisational epistemology determines what knowledge is system-internally effective and can be transferred to competences through the integration of existing structures and the combination with existing resources. This organisational order of knowledge quasi arranges and controls the dealing with knowledge and the ability to organise learning- and knowledgeintensive processes. The knowledge-organisation is expressed in precise organisational actions, decisions and communication. The result of an organisational knowledge basing is shown in the surface-structure and expressed through „knowledge performance“ and organisational intelligence; the ability to recycle organisationally specific knowledge in kinds of intelligent innovative products and/or services (illustration 5). Utilisation of organisational knowledge Knowledge-based performance Knowledge-based performance and innovation and innovation Measureable Measureable KnowledgeKnowledgeperformance performance leads to Communication, Communication, decisions and decisions and actions actions Intellectual Intellectual Capital Capital Knowledge-based behavior and organisational action (competences) Intelligent Intelligent 1 Knowledge I Applicable knowledge Knowledge that is part of the organisational performances, because of the competences/expertise programms, structures, programms, structures, processes and achievement processes and achievement Organisational Knowledge apply Knowledge II knowledgeknowledgedevelop. knowledge and learning processes transfer knowledge- transfer knowledgeEnhancement, knowledge- diffusion 2 knowledge- diffusion knowledgeknowledgeacquisition acquisition knowledgeknowledgegeneration generation storage storage governs tracks Perception program Perception program paradigm paradigm impression and revision of organisational knowledge. leads to Order of knowledge (kognitiv, normativ) 3 Deeper dime nsion skills, co mpetences, experiences skills, co mpetences, experiences Knowledge III Reformation knowledge Ressources Ressources Core Knowledge targets, culture, standards, routines targets, culture, standards, routines Structures Structures Illustration 5: Dimensions of organisational knowledge (Neumann, 2000) 162 Knowledge-oriented organisationl. rearrange ment Knowledge-oriented organisational diagnostics 6. Conclusion The dialectic of knowledge, on the one hand as a resource and driving power for “anew” and on the other hand as an element for stability, is an “organisational knowledge challenge” regarding our point of view. Theory and practice need to face challenges through the area of conflict between preservation and change against the background of a necessary development of productive power. On the one hand stabilising organisational elements are needed in the kind of routines for more security, orientation, countability, standardisation and efficiency. On the other hand it is necessary to search for an adhocratic and disequilibrate philosophy of order to support flexibility, innovation, efficiency, learning and development. Knowledge is a dynamic factor, a process of ongoing movement and change, wherefore always promoting organisational contexts should be offered. In the future companies will be successful, which are able to understand, in an intelligent and efficient kind, to use, economically exploit and create awareness for existing organisational knowledge. This includes the ability of a constructive reflection of the existing order of knowledge. So contexts and knowledge-oriented kinds of communication, decisions and actions are generated for a knowledge-oriented corporate management. Moreover the ability of identification and modification of an organisational order of knowledge becomes the generic core competence of intelligent companies. REFERENCES 1. BAITSCH, CH. (1993); Was bewegt Organisationen? Selbstorganisation aus psychologischer Perspektive, Frankfurt/Main. 2. BERGER, P.L./LUCKMANN, T. (1990); Die gesellschaftliche Konstruktion der Wirklichkeit. Eine Theorie der Wissenssoziologie, Frankfurt/Main. 3. BÜHL, W.L. (1984); Die Ordnung d. Wissens. Berlin. 4. 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(1998); Systemisches Wissensmanagement, UTB, Stuttgart. 164 ECOLOGISTS AND ENTREPRENEURS: THE MARKET OF LANDSCAPE AND THE QUALITY OF TRADITION IN THE CASE OF SOME AGRO-TOURISM FARMS IN THE PARCO NAZIONALE DEI MONTI SIBILLINI, ITALY Sandro Piermattei Sezione Antropologica – Dipartimento Uomo & Territorio Università degli Studi di Perugia Via dell’Aquilone, 7 – 06100 - Perugia Fax: +39 075 5853160, e-mail: oida@libero.it Abstract How do ecology concerns and entrepreneurship coexist in the agro-tourism farm? What are the roles played in this connection by territoir, conceived as a combination of landscape – re-organized and used as an element of marketing strategies – and tradition, which seems to work as a guarantee for quality? Exploring some findings of an ongoing anthropological research in an Italian protected area, the paper will focus on the marketing strategies of some local businesses and the tactics involved in the formulation of what the author calls “the rhetoric and the practice of an idealized and essentialized space-time”. From this perspective, the discursive structures and the techniques emerging from organic and sustainable farming, from the restorations of landscape and rural buildings, and from the social construction of traditional products tend to stimulate the imagination of those customers and tourists who are already disposed to be enchanted by environment and tradition. Indeed, all these practices help show, construct or reassert the continuity of the farming tradition in a specific place, while hiding technological changes and the scarce belonging of new farms to the local context. Keywords: ecology; tradition; marketing; protected areas. agro-tourism; Introduction The Sibillini mountains are part of the Apennines, the chain that runs the length of the Italian peninsula from north to south. They are calcareous and karstic, with characteristic intermountain plains where the most intense and profitable agricultural activities are carried out with modern mechanical equipment. The territory, however, is largely characterised by woods and small plots of land where access by agricultural machinery is difficult, if not impossible. As a result, grazing and woodland activities are practiced in addition to family horticulture, which represents an important conservation tool for local agro-biodiversity, landscape and environmental knowledge. This situation caused, after World War II, massive emigration and local depopulation, with consequent erosion of the old mountain landscape. However, between the ‘80s and the ‘90s, a new class of business farmer emerged in the wake of the demand for traditional products, the introduction of organic agriculture and the success of eco- and agro-tourism. Some of these farmers are local rural families, others come from surrounding rural areas or are former immigrants returning to their grandparents’ or parents’ home to set up businesses. The creation, in 1990, of the Sibillini Mountains National Park – the region, in fact, is rich in wilderness and cultural goods – has played an important role in shaping this new scenario. In the same year, the first national legislation on protected areas was introduced in Italy. This legislation conceives parks as places to preserve nature while managing sustainable development, by means of a “manenvironment integration to be achieved safeguarding the local anthropological, archaeological, historical and architectonical values and the traditional rural activities as well”. Locally, interventions by the park board concentrate mostly on protecting the environment and promoting tourism, but little has been done for cultivated biodiversity conservation, a strategic issue for local agriculture. The research treated in this paper got underway in 1998 as an interdisciplinary study on the agro-biodiversity of the western slopes of the Sibillini Mountains National Park. The original aims of the research, which is still in progress, were two. The first, in collaboration with a group of agricultural geneticists, was to identify and collect crops’ landraces genetic pools found on farms, studying their genetic and morphological profile and preserving them ex situ, in a gene-bank, and on farm, in order to stimulate forms of economic recovery of these resources. The second involved documenting local knowledge about these crops and studying the multi-sited socio-cultural, political and economic dynamics that inevitably affect the local farms’ choices, culminating in landrace abandonment, preservation or revitalisation. This paper focuses on some of these latter issues, presenting an analysis of the local social and cultural life of the most important market opportunities and EU regulations used in these last twenty years by farmers. Thus, after a 165 brief introduction to the specific anthropological perspective that has been used to develop this analysis, three different sections will follow, concentrating on organic agriculture, the traditional foods’ market and agro-tourism. 1 Hiding change, emphasizing localism… Socially re-contextualizing the three principal regulations used by European farmers in order to develop their business means going beyond the surface of the textual analysis or that of the study of juridical sources producing them. It means interpreting these regulations as forms of social agency acting in a specific environmental and social context. It means observing their social life in the local context – a social life to be analyzed through the observation of actions, decisions and discourses locally produced by farmers and stemming from these regulations. First of all, from this point of view, it would be possible to look at how these regulations are intensively debated and contested. This happens in the general context of a multi-situated political arena involving opposing economic interests, spreading outside the borders of specific localities and reaching the level of the EU political debate. Here lies the debated question of European farmers’ access to EU aids to encourage “maintenance of countryside” and “sustainable agriculture” projects: political struggles opposing small and big farms, farmers’ unions and regional and national authorities and, at a higher level, even the national European governments. This debate is still more evident amongst local farmers, constantly divided in two “parties”: on one side, those thinking that European aids could be, in the long term, dangerous for entrepreneurship and competition; on the other, those farmers claiming the usefulness of EU economic incentives as part of the investments needed to convert their farms to sustainable agriculture. More precisely, one of the inspiring principles of the European regulations about sustainable agriculture is the principle of compensation “for any income losses caused by reductions in output and/or increases in costs” (preamble of Council Regulation No. 2078/92 of 30 June 1992). While the analysis of this political debate could take us very far from the concerns of this article, taking it into account in the context of the farmers’ interpretations and representations of European regulations is nevertheless important. These regulations are perceived by local farmers as agents to integrate and increase the farm’s income both directly and indirectly. A direct way is represented, obviously, by the opportunity to benefit from European funds for agriculture. Indirect ways are recognized by farmers in the capacity of these regulations to work as elements of farm and territorial marketing strategies. This article will focus on this particular aspect: the inner potential of these regulations to be used as marketing tools to essentialize the time and the space of the farm, its products and the territory as well. In this case, to essentialize is to affirm simultaneously the farm’s continuity within a local tradition (a continuity played on a temporal level) and the farm’s continuity within the territory (a continuity played on a spatial level). The term “to essentialize” comes from the remarkable influence produced by post-structuralism in the field of cultural studies between the ‘70s and the ‘80s of the past century. To use a definition by Barker (2000: 20) “Essentialism assumes that words have stable referents and social categories reflect an essential underlying identity. By this token there would be stable truths to be found as an essence of, for example, femininity or black identity. However, for post structuralism there can be no truths, subjects or identities outside of language, a language which does not have stable referents and is therefore unable to represent fixed truths or identities.” This means to affirm how language is something that cannot be put outside of history and contingency. Thus language and its terms are not “universals”, as an essentialist view would persuade us to believe, but “productions of culture in specific times and places” (Barker, 2000: 21). Moreover, essentialisms can be used as tools of regulatory powers, establishing “not only what can be said under determinate social and cultural conditions but who can speak, when and where” (Barker: 2000: 20). In this sense, European laws and regulations concerning sustainable and organic agriculture, or traditional products, establish what is “organic” and “sustainable” and what is not, what is “traditional” and what is not, in ways which are often contradictory and ambiguous. The official aim of these regulations is to give European customers a guarantee of environmental and nutritional safety and farmers a tutorship in the context of increasingly globalized food markets. My purpose here is neither to evaluate the EU regulations’ real capacity to achieve such aims, nor to reveal farmers’ frauds or tricks. My point is rather to give an account of the social life of these regulations in a specific entrepreneurial context operating in a mountain agro-environment become economically marginalized and affected by massive depopulation. In this case, the creation of a protected area and the assimilation of these regulations provide local farms and entrepreneurs with a new language to describe and offer quality and with new rhetoric tools to convince their customers and to legitimate the value of their products. 2 Essentializing tools (part one): organic and sustainable agriculture Here most of the farms have been organic for many years, but, in truth, we have always been organic because we have never made use of fertilizers, or herbicides, or pesticides. This happened because local farmers who tried these inputs then had to admit that production was getting worse. […] What has changed? 166 Nothing, but now you have to get and show a certification to sell a product as organic… without certification who could know if your product is really organic? With these words local farmers usually describe their choice to convert to organic agriculture. But this is how they can talk about the history of the local agriculture as well: a history about the impossible modernization of the Sibillini mountains, where modern inputs (especially chemical inputs such as fertilizers, pesticides and herbicides) have never been suitable or effective (Piermattei, 2004); a history that is indeed pictured in the context of the economic marginalization of these mountains – due to an evident loss of competitiveness – and the resulting massive depopulation. Therefore, organic agriculture is not a novelty but rather an official acknowledgement of the ecological sustainability of local traditional agriculture, a feature now recognized by the EU and the powerful knowledge of contemporary agrarian science. For local farmers, organic agriculture is thus a late acknowledgement rather than a revolution, a conviction that comes with a feeling of irony and contradiction: Why didn’t modern agriculture recognize these qualities of traditional agriculture before? Why should we now get a certification to be recognized as organic? It is the inner irony hidden in this regulation and perceived by local farmers, in particular the elder ones. In fact, on the basis of contemporary agrarian research findings and technologies, this regulation now criticizes modern food and agrarian science and policies driven by the principle of production intensification. These local farmers – educated to the modern principles and practices, even though in these mountains these could hardly be applied – view this kind of regulation as a joke or the late tribute to a dead agriculture in order to resurrect it. This is the typical attitude that we will constantly encounter while examining European regulations and policies on sustainable agriculture. Indeed organic agriculture, traditional products and the development of agro-tourism share the same critical attitude toward intensive agriculture, the same principles of environmental sustainability, safety and, why not, beauty and, to conclude, the same enchanting recall, directed to consumers, to a more responsible, safe and healthy lifestyle. Farmers who choose “to go organic” seem to be very conscious of this last point. Thus, irony leaves room to the perception of the opportunity to enter the market with renewed rhetoric tools to re-construct a sort of “modern antiquity” affirmed by what Grant McCracken (1988) defined as a “patina”. A patina would be “that property of goods by which their age becomes a key index of their high status” (Appadurai, 1998: 75). In any case patina needs a complicated maintenance process, otherwise it could be irreparably damaged and lost: “poorly maintained patina can become itself a sign either of poor breeding, outright social counterfeiting (Goffman, 1951), or, worse still, complete penury. In short, patina is a slippery property of material life, even open to faking as well as to crude handling.” (Appadurai, 1998: 75). On the other hand, when a patina is well maintained,“the transportation of temporality, the subtle shift of patina from the object to its owner or neighbour, is successful, and the person (or family or social group) himself or herself takes on the invisible patina of reproduction well managed, of temporal continuity undisturbed.” (Appadurai, 1998: 75-76). That is precisely the kind of rhetoric and marketing strategy at work in local farmers’ discourses about organic and traditional products. It is a discourse about time and territory which tend to naturalize and exhibit the continuity of a local tradition of great value that incorporates environmental issues and a strong historical identity as well. This makes organic and traditional foods not only healthier or more ecologically sustainable than their industrial counterparts, but also more peculiar, unique or, in a word, noble. In these terms, producing and selling these products means constructing their noble marketing patina, a patina of social distinction ready to be extended and transported to the farms and to the farmers, their environment and, at the end, even the consumers who choose to buy them. The patina of the “organic” and the “traditional” works to legitimate even the higher commercial value of these products, providing an economic incentive for farmers, as also the regulations promise. In the Sibillini mountains, the local farmers rhetorically link organic agriculture with traditional agriculture. It is a process of mutual identification, a way to say that nothing has changed here, that tradition is an indisputable, natural guarantee for consumers’ health. Hence the unfortunate history of the impossible modernization of the mountains reveals its own potential as added value within marketing strategies through a process of discursive naturalization of the “organicity” of these mountains. Their impossible modernization – seen, until the late ‘80s, as backwardness – becomes a strategic resource for farmers. In this kind of discourse one can recognize one of the key strategies of time-space essentialization, in other words, the embodiment of tradition and history in nature or, better, in a specific landscape. Nevertheless, history, tradition, and landscape itself, are conceived and represented, paradoxically, as essences “out of time”. Therefore, history and tradition can work as rhetoric elements to guarantee sustainability and food safety. This discourse is produced not only by local farmers but also by ecologists, agronomists, park managers and new “immigrant” farmers who contribute to provide even a scientific legitimization of it. Indeed the thesis of the natural “organicity” of mountain agriculture seems to be supported by a number of facts as, for example, depopulation and the resulting abandonment of old cultivated fields. This results in an 167 abundance of easily convertible fields to be almost immediately cultivated with organic crops. Consequently, the opportunity to rent and buy these fields at lower prices, the presence of the protected area and the low competitiveness of local farmers are still attracting many “immigrant” farmers to invest money in new organic-agro-tourism farms. Moreover, even though mountain agriculture presents greater risks and difficulties as well as stringent protection policies, these new farmers claim that the mountain environment offers consumers the best guarantee in terms of safety and health. However, to deny the cultural and technological change derived from the conversion to organic agriculture is to deny the recent history of the local farmers’ families (Piermattei, 2004). The conversion to organic agriculture forces these farmers to face a series of bureaucratic and technological passages that take them away from the traditional everyday practice of local agriculture. The choice to change is in itself a remarkable sign of transformation, motivated by the aspiration to earn more income and to collect EU economic aids and incentives. “Going organic” means taking part in training courses in order to learn new agricultural practices and, in turn, to gain credits to get more incentives. It means learning the bureaucratic processes to apply for European aids. It means creating commercial agreements with new distribution networks and learning the mechanisms of, and the opportunities offered by, the organic food market. It means a new way to sell and even present the product, as it is the case of the choice of a packaging or the participation to an exhibition. There are also contrasting attitudes between young farmers and their old parents (Piermattei, 2004). The latter, on the one hand, are the ones most likely to admit how agriculture has changed. For example, they mainly criticize the use of organic inputs that have to be certified as organic, while in the past it was sufficient to use animal manure. At the same time, they criticize, more in general, costs linked to certifications. For them it is more evident how the European regulation is ironic and contradictory towards traditional mountain agriculture. Young and new farmers, on the other hand, view certification as a very important step for two reasons: first, certification is an investment in obtaining more visibility and competitiveness for their products; second, certification provides transparency to the farm’s products, establishing a trust relationship with customers. This is claimed by many organic farmers also involved in agro-tourism, who believe organic certification should be better spent and re-contextualized in a more personal and direct relationship with the tourist-consumer. They start from the consideration that European aids can be used in dangerous forms of speculation. Many cases have seen big farms obtaining a larger amount of incentives than small farms, which, as a result, are pushed out of the market due to the greater competitiveness and cheaper prices of the big farms’ products, a sort of “organic for supermarkets”. Moreover, big farms can more easily elude inspectors’ controls. In this way, European regulations neither encourage new enterprises nor foster the protection of the environment. Local farmers argue indeed, that only small farms that use traditional techniques - restoring the landscape and maintaining the countryside, as the regulation itself prescribes - can guarantee the protection of the environment. Thus, for local farmers, certified organic labels would be more suitable and effective on a package to be sold in supermarkets, where all products are put at the same level. In this particular, impersonal context, the European organic label assumes the important value of a distinction mark from other industrial products. Nevertheless, a personal and direct relationship with the consumer is always to be preferred because it is the best way to create trust. A direct contact within the farm is able to make people go beyond the formalizations of certified organic. In the farm, in fact, a product can be easily viewed as more socially and environmentally produced than it would be in a supermarket shelf. 3 Essentializing tools (part two): traditional products What is a traditional product? This is a question that is likely to be answered in a number of ways. However, only two definitions are strictly important here. The first one, based on common sense, defines a traditional product as one belonging to a certain community and environment; its belonging can be recognized through its specific features. The second defines traditional products as those recognized and regulated by European laws – Council Regulation No 2081/92 of 14 July 1992, for example – protecting their geographical indications and designations of origin. The first definition is perhaps more generic, but genuine in its naivety; the second seems more precise but, at the same time, very ambiguous. Indeed, as established by the EU 2081/92 regulation, to obtain a PDO or a PGI designation, the product’s producer and/or processor “must comply with a specification” including at least : “the name of the agricultural product or foodstuff, including the designation of origin or the geographical indication”, “a description of the agricultural product or foodstuff including the raw materials, if appropriate, and principal physical, chemical, microbiological and/or organoleptic characteristics of the product or the foodstuff”, “the definition of the geographical area…”, “evidence that the agricultural product or the foodstuff originates in the geographical area”, “a description of the method of obtaining the agricultural product or foodstuff and, if appropriate, the authentic and unvarying local methods….”. As Bérard and Marchenay (1995 a, b) and Papa (1996) emphasize, two are the most ambiguous points: the definition of the geographical area and the description of the “authentic” and “unvarying” local methods. 168 The problem, in effect, is producing specifications to regulate productions whose uniqueness, value and raison d’être lie precisely in their local technical and organoleptic variants. How could irony and contradiction not be perceived in this attempt to typeapprove something characterized by diversity? The fact is that to regulate these productions the EU is trying to introduce and apply the same health standards required for industrial food production, which, again, strengthens the bigger food companies, as recent research by Papa (1996, 1998) on olive oil production in Umbria demonstrates. Thus, this situation results in specifications re-defining products’ geographical areas according to specific economic interests, and in vague definitions of tradition. The latter, in particular, generally leave too much room to farms, but especially to food industries, to establish and select freely which elements of production are to be considered as traditional. Hence, modernized elements of production can be easily hidden by the rhetoric veils of this vague tradition. The irony about traditional products does not end here, however. All farmers, local or not, big or small, young or old, seem to share the same attitude in constructing an essentialized product’s image, essentializing even the representations of the territory and local traditions. There was a time in which these things were eaten only by our poor families. They were foods of famine, foods to avoid complete starvation. Then they became foodstuff for animals or for the sick. Now they have become food for the rich people who can pay for them. They still disgust me as they ever did. Perhaps this is an exaggerated account given by some of the older farmers, but it still tells the nutritional history of many foods now re-discovered. In some cases traditional foods were never socially marginalized, in others certain foods, especially during the assimilation of new urban nutritional styles, were almost completely abandoned. Today, the postmodern critical attitude towards urban lifestyles make people re-discover some foods as healthy and tasteful (Papa, 1990). The young and new local farmers have become the principal actors in this new kind of offer. Take, for example, the bitter green soup called farrecchiata, a dish whose main ingredient is a characteristic brown pea locally denominated roveja (Pisum arvense). Since at least ten years, many farmers have reintroduced this traditional cultivation in fields, offering it in local markets and agritourism restaurants. A young farmer told me that for his parents roveja represents the food of desperation and they abandoned its cultivation many years ago because they didn’t want their children eating it again. But some time ago I started to test it in my agritourism farm, especially with foreign visitors, and it was a real success. They think it is chic and tasteful. Even its bitterness and colour is felt as something very original […] Now, besides being the most valuable food I can offer here, it is also growing very popular. Today, roveja is not yet an officially EUrecognized traditional product, but the prospect of reaching PDO or PGI designation is good. At the moment, one can say that farmers are trying to “dust” the product, in order to create the proper patina for this food. In other words, its inglorious past is going to be converted into a noble or a mythical one, attractive for consumers and tourists. The social construction of a traditional product is the result of complicated processes of naturalization and embodiment. As it was for organic agriculture, these processes work within two different levels: the history of the farmer’s family and the landscape. Properly managing the traditional product’s patina involves, first of all, re-affirming and constructing the link between the history of the product and the history of the family conserving it. Vice versa, re-affirming this link means legitimating and naturalizing the long history of this food through its embodiment in the genealogical history of the family (Papa, 1996; 1998). Obviously, not all local farmers can use this kind of family legitimization. New farmers must rely on the history of the place through an accurate restoration of the landscape, as it can be seen in the case of agrotourism rhetoric. At the same time, a “spatial patina”, or, in other words, a kind of territorial characterization of the product, is needed. Undoubtedly, the local environment makes a certain food unique in terms of nutritional and taste features, giving it a personality, a cultural identity, a sort of citizenship that makes it peculiar in comparison with other similar industrial products. Thus, these two kinds of patina act in order to persuade and ensure consumer choices. Moreover, consumers may feel sophisticated and socially distanced from other mass-consumers. As it has been said for organic agriculture, the aim of patina management is to transfer temporality from the object to its owners (in this case a farmer and/or a consumer) and back. As noticed by Papa (1996), cultural and social constructions of traditional products take place constantly at the local level as well as in the global arena of markets and regulations. These are processes that mobilize a number of social players and political bodies, all involved in product marketing strategies whose ultimate sense is that of affirming the identification between place and food. In the case of PGI Castelluccio Lentils, for example, the image of the Piano Grande – the intermountain plain of Castelluccio in which this lentil is cultivated – is always present: behind the commercial stands of international food exhibitions, on all advertising material, on the package labels of local farmers. This intermountain plain plays as a guarantee for taste and health. Its seasonal flowering, for example, with the characteristic explosion of hundreds of colours, is an expression of the natural beauty of the local vegetation biodiversity not threatened by herbicides. Its altitude and its critical climate conditions provide a strong, tasty and nutritious 169 product. Thus, when the tourist attracted by the local naturalistic beauties arrives in the local grocery store and in the agro-tourism farms, the beauty of the landscape has already worked for us to convince consumers of our products’ goodness, as a farmer told me. 4 Essentializing tools (part three): agro-tourism and landscape restoration As already mentioned, new farmers have to play within a different representational strategy in order to affirm the spatial and temporal continuity with local traditions and territory. In most cases, their family does not belong to the local context, so embodiment strategies based on the essentialist link between “blood and earth” are merely impossible. In this situation, patina management is very hard and hazardous; lying excessively could damage the patina construction process and seriously hinder the creation of a trust relationship with consumers and tourists. A better strategy consists in exhibiting a constant and honest effort in assimilating and respecting locality from the perspective of local knowledge and traditions, even landscape. The keywords here are thus landscape and tradition exploration, restoration and conservation. Indeed many “immigrant” or new farmers decide to settle their activities in the Sibillini mountains soon after finding the place they wish to restore. In this territory, as more in general in all the Italian depopulated countryside, it is very easy to find old abandoned farms and fields. In cases such as these, however, farmers must also become ecologists, historians and conservation biologists capable of studying the territory, its environmental and landscape features and even its history. They behave as cultural anthropologists as well, so much so that they have been deeply involved in our interdisciplinary team’s research. Dealing with cultural aspects of crops’ landraces conservation, we consider them as key figures within this issue for our work. At the same time, they have participated in our research as key informants, introducing us to other local farmers. They, in fact, have an extraordinary skill in interpreting local knowledge as a networked one where the families of local farmers behave like many interconnected net routers, gateways and terminals through which local environmental and agricultural knowledge and landraces’ genetic pools incessantly flow (Piermattei, 2004). These farmers have understood that only by connecting themselves to these networks – that is, by participating to the community’s everyday life and even sharing knowledge and experiences – they can be assimilated and gradually recognized as part of the community, or, as some of them told me, as part of the landscape. In a sense, it is somewhat like an astute mimesis in which social and cultural distinction is played on another level. This is the level of entrepreneurship, a level in which they represent themselves as excellent in comparison with local farmers. Even “their” local “tradition” is “more traditional”, more philologically correct. Moreover, their agro-tourism farms are more ecologically sustainable and attractive; “their organic” is “more organic” than the local ones, because they have the skill to highlight the transparency and the goodness of their products better. In a word, their patina is, from their point of view, more effective than the one produced and managed in the other agro-tourism farms. Perhaps, I would say, it is often a too well managed patina, too well fitted to urban consumers’ expectations, to their aesthetic sense and cultural sensitivity. As McCracken (1988) says, an overmanaged patina is a sign of un-education, an obstacle to a successful transfer of temporality. On the other extreme, it is true that other local agro-tourism farms often exceed in penury. While, in a sense, they might be more honest towards their visitors, in many cases they are just room renters. Thus, the genuine concept of agro-tourism – i.e., a typical local farm open to urban visitors in order to make them live a real countryside experience – appears in both cases quite far, and temporality transmission is unsuccessful. It must be clear that I am not talking about agrotourism farms with swimming pools, tennis courts, football fields, or camping facilities, a kind of agrotourism that I would not even consider as such. Instead, I am talking about places in which farmers try to develop a serious and coherent discourse about local countryside, even though they do it from two very different angles. On the one hand, in the Sibillini mountains one can find local farmers not at all motivated to exhibit a rurality they felt as ordinary and uncontested; moreover, they usually think that visitors are not really interested in rural life or that it would be uncomfortable for them. On the other, one can find a sort of over-activism in that exhibition, an activism that even helps to hide the extraneousness of some farmers to the local context. From this perspective, landscape is used not only as a marketing tool for products, but also, in a broader sense, as a medium to communicate with customers, a form of communication and exhibition of the intentions, the guidelines followed by the farmers in their landscape and rural building restoration activities. This strategy finds its context in that rhetoric of transparency, honesty and sustainability carried on by this kind of farmer even in the case of organic agriculture and traditional products. Indeed, these people, often helped by a high and specialized education in agronomy or ecology, have coped with the impossibility of showing their roots in the territory by emphasizing their own sophisticated cultural sensitivity towards local rural culture and environment. Thus, the landscape’s elements and features are selected, reprojected, framed and styled to reflect and underline their traditional and multifunctional characters. Like for traditional products, every rural thing is not necessarily traditional. There are some elements that can be considered more traditional than others. 170 However, in order to enhance this tradition and translate it into a marketing tool, the farmer must reframe it in creative ways. To cite a typical example, a farmer told me about the restoration of the hedges in some mountain fields he recently bought. Hedges are typical landscape elements of old farms in some areas of the Sibillini mountains and they worked as field borders and even as soil defence against erosion caused by excessive sloping of the ground. This farmer restored his hedges in order to make them more evident, more beautiful, and more productive: I wanted these hedges to become more productive for my agrotourism business, I added some more flowering plants, including a number of blackberry cultivars. I now have fruit production and more beautiful hedges; I have more resources for small animals and birds and my fields are more valuable, even in ecological terms. Moreover, I can use my hedges to produce honey or to organize botany classes for my visitors. How to enhance the already existing landscape resources, how to power your business simply depends on you, on your imagination, on your long-term farm planning. In these terms, the farm’s multi-functionality could be interpreted as a single investment bringing multiple potential sources of income to the farmer. In these terms, landscape restoration is not only a philological or a historical question but also a cultural question rooted in the individual sensitivity and entrepreneurship. At the same time, the ability to discern fiction from historical evidence and to attribute the proper economic value to them would depend on the critical consciousness and education of the consumers. In doing this, however, consumers are supposed to be sufficiently detached, while the cultural and social life of the analyzed regulations and market opportunities seem to play, more effectively, within a ground made of emotions and nostalgia. Indeed, not having direct experiences with the countryside is a key aspect of our postmodern times and so it is more likely to become an enchanting, imagined and dreamt of place than a real one. This situation helps the essentializing practices of farmers very much. Essentialization helps not to wonder about the cultural, social and historical transformations of the countryside, to see it as having no history. The uncontested and attractive beauty of the landscape does the rest. Even the cultural attitude of park ecologists seems to help in persuading tourists of this static image of the territory… but this is another story. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. REFERENCES 1. 2. 3. Appadurai, A. (1998), Modernity at Large. Cultural Dimensions of Globalization, University of Minnesota Press, Minneapolis. Appadurai, A. (1986), The Social Life of Things. Commodities in Cultural Perspective, Cambridge University Press, Cambridge. Barker, C. (2000), Cultural Studies. Theory and Practice, Sage, London. 17. Bérard, L., Marchenay, P. (1995a), “Les procédures de patrimonialisation du vivant et leurs conséquences”, Actes du colloque: L’esprit des lieux. Le patrimoine et la cité, 28-30 septembre 1995. Bérard, L., Marchenay, P. (1995b), “Lieux, temps et preuves. La construction sociale des produits de terroir”, Terrain, n. 24 : 153-164. Bérard, L., Marchenay, P. (1997), “Diversité, protection et conservation: les productions agricoles et alimentaires locales et traditionnelles”, Atti del convegno internazionale : Saperi Naturalistici, Venezia 4-6 dicembre 1997. De Certeau, M. (2001), L’invenzione del quotidiano, Edizioni Lavoro, Roma. Goffman, E. (1951), “Symbols of Class Status”, British Journal of Sociology, Vol. 2 (December): 294-304. Kopytoff, I. (1986), “The Cultural Biography of Things: Commoditization as Process”, in Appadurai, A. (ed.), The Social Life of Things: Commodities in Cultural Perspective, Cambridge University Press, Cambridge. James, A. (1993), “Eating green(s): discourses of organic food”, in Milton, K. (ed.), Environmentalism – the View from Anthropology, Routledge, London. McCracken, G. D. (1988), Culture and Consumption: New Approaches to the Symbolic Cheracters of Comsumer Goods and Activities, Indiana University Press, Bloomington. Papa, C. (1990), “Un segno dell’identità: il farro in Valnerina”, L’Uomo, vol. III n.s., n. 1: 9-30. Papa, C. (1996), Antropologia dell’Impresa, Guerini, Milano. Papa, C. (1998), “The social construction of umbrian extravirgin olive oil”, in Papa, C., Pizza, G., Zerilli, F. (eds.), Incontri di etnologia europea, ESI, Napoli. Papa, C. (2002), “Presentazione”, in Spada, E., La transumanza. Transumanza e allevamento stanziale nell’Umbria sud orientale, “Quaderni del CEDRAV”, n. 2, CEDRAV, Cerreto di Spoleto. Piermattei, S., Papa, C. (2004), “Anatomia di un ‘itinerario di patrimonializzazione’. Le Monichelle nei Sibillini Occidentali”, in Lai, F. (ed.), Fare e saper fare. I saperi locali in una prospettiva antropologica, CUEC, Cagliari. Piermatei, S. (2004), Retoriche e Strategie della Rappresentazione e dell’Appropriazione del Patrimonio Agroambientale in un ‘area del Parco Nazionale dei Monti Sibillini, PhD dissertation, Università degli Studi di Siena, Siena. 171 ENDNOTES Recent research in Britain analyzing consumers’ narratives about their “eating green” motivations suggests how “the rise of an organic food market cannot necessarily be seen as an indication of the integration of environmentalist principles in British culture. Organic food has been incorporated into other food discourses centred on lifestyle and health.” (James, 1993: 216). In particular, “A report published by the Consumers’ Association, Which? Health (February 1990), indicates, for instance, that of those people who purposely bought organic food, only one in six did so for environmental reasons. A mere handful did so believing it to be kinder to animals. For the vast majority, health issues were the main motivation: one in two people said that they ate organic food because they believed it to be more healthy and one in three because it was free from pesticide residues and thus, presumably, was considered more healthy.” (James, 1993: 213). However, this could mean that the same motivations to incorporate safe and healthy food, could also work to establish a new common sense of ecological self responsibility. Thus a wider ecological concern could be brought by the personal concern about one’s own health. 2 To show some examples of patina, Appadurai cites “The polishing of old Silver, the dusting of old furniture, the patching of old clothes, the varnishing of old surfaces – these are all part of the embodied practice of the upper classes in many societies, or, more exactly, of their servants.” (Appadurai, 1998: 75). 3 As Papa (2002) notices, today in the Sibillini mountains there are “… new and interesting forms of resettlement, even though they are still very few, managed by young people with an high education. These new farmers are mostly coming from cities and they arrive in these mountains to settle breeding and agricultural activities, using their “urban” knowledge in order to manage farms.” (Papa, 2002a: 13). In other cases, they are already farmers of the surrounding areas who choose to invest money in a new business. 1 172 HOW TO CREATE A REQUISITE HOLISTIC BUSINESS SCHOOL STRATEGY Vojko Potočan, Milan Jurše University of Maribor, Faculty of Economics and Business, SI-2000 Maribor, Razlagova 14, Slovenia, Fax: +386 2 / 25 16 681 E-mail: vojko.potocan@uni-mb.si, milan.jurse@uni-mb.si, Abstract The emergence of the European Higher Education Area (EHEA) as part of the Bologna Process and other initiatives in higher education are changing the European higher education scene through increased international student and faculty mobility, internationalization of study programmes and schools, the opening of local higher education markets to international competition etc. These processes make new pressures on business school management and expose them to the new challenges in terms of schools adaptation to change in their education environment. The transformation process of school business strategy should be based both on the academic principles, and on proper understanding of market conditions. The paper discusses two theses. The first thesis: business schools must define and create more holistic business strategy on the basis of new requirements from Bologna process, new European higher education environment, and business education market. The second thesis: implementation of new - e. g. requisite holistically business school strategy is possible, if one use a innovated strategy model. We conclude contribution with some key implications for the business school strategy implementation in the changing higher education context. Key words: business school strategy, Bologna process, higher education, academic transformation. 1 Introduction commercialization of higher education and growing budgetary constraints in providing financial support to higher education institutions (Ottewell, McFarlane, 2001; Mintzberg, 2004). We hypothesise that some changes would require an ex post (reactive) adjustments of school curriculum and proper reorganization of school’s processes and services as its key competences for knowledge delivery system. On the other hand, other changes require a proactive response of schools’ managers in order to put each school’s business and academic strategy in line with an emerging new higher education business context in Europe. A proactive strategy of a BS should rely on two key facets of a strategy development – academic and business (Quinn, Rynes 2003). We have noticed a need for closer relationship of BSs with business world in a wider social context aimed to increase the employability of their graduates and to make a distinct contribution to final customers’ competitiveness (Loades, 2005). We assume that traditional BSs that will continue to concentrate on formal MSc, MBA and doctoral programmes, they will not be always able to respond aggressively to challenges in the external environment. We also assume that a proper and well-thought business strategy could be a viable strategic option for the traditional BS, if its management wants to develop key strategic advantages for its school’s dynamic growth and development. To do that, BS’s management will have to link academic and business aspects of its activities and processes into a requisitely holistic business and academic strategy. In recent intensive public discussions about implications of the Bologna process for higher business education system in Europe (See: EME, 1999; OECD, 2003; Quinn, Rynes, 2003) and in Slovenia (MSZS, 2003; Potocan, Jurse, 2004), one cannot avoid raising some key questions, such as: How to understand basic challenges of the emerging higher education area from the viewpoint of business school (BS) strategy? How to create new – more holistic strategy for BS to meet new conditions? What implications have these changes on a BS’s management and managerial tasks of their academic leaders? While higher education institutions are making their best efforts in maintaining loyalty to traditional academic values, it will not be easy to do so in the future because of the growing trend toward the 2 Business education market and evolving higher education system in Slovenia Like other countries in the region, also Slovenia has recently undergone fundamental social, political and economic change through the transition of its political and economic system from a more or less planned economy to a politically democratic social and market system, characterized by open market economy, private ownership and democratic social rights of citizens (Korten, 1999; Marangos, 2004; Potocan, Mulej, 2004). Higher education system in Slovenia has recently been rearranged by changes in the Law on higher education (RS, 1993), and other documents - e.g. National Programme on Higher Education Development in 173 Slovenia, decree on financial arrangement for higher education (RS, 2002; RS, 2002a). As postulated by the government, a constant effort to raise the quality of higher education and to adapt the education programmes to the needs of the national economy and broader society should be part of the academic and business strategy of universities and other higher education institutions, including new private BSs with accredited study programmes. An independent national accreditation institution will be established with the goal to monitor the quality of higher education institutions and their programmes. It is postulated that the higher education should be treated as a public good and therefore, the public tertiary school system should be in a certain part financed by national budgetary sources. Changes in financial system have been made and the lump-sum system as a new model of financing the higher education has been introduced. This model is based on two key criteria for defining basic financing of the university: number of enrolled students and number of graduates. The calculated normative financial means are then multiplied factors of infrastructural complexity of the study programme. Each university is awarded a calculate sum of money on a yearly basis (the so called “university budget”) that is then split among the university member schools. Because of scarce public financing, more and more schools, among them also BSs, have to rely on other, mostly commercial sources to supplementary finance their education and business activities (Potocan, Jurse, 2004). Other important topics to be considered in developing marketing strategy of a BS are recent demographic trends that define future market potential for higher education (Statistical office of the Republic of Slovenia, 2001; Potocan, Jurse, 2004). Besides unfavourable demographic trends, schools will face also the opening of the Slovenian higher education to broader higher education area in the EU and an increased rate of student mobility to other higher education institutions in the EHEA. The internationalization of Slovene higher education has been recently implemented through various international networks (CEEPUS), programmes (e.g. Socrates Erasmus Comenius etc.) and BS’ networks. School’s leaders should consider a broader array of all important (e.g. internal and external) determinants in developing the school’s strategic (academic and business) response to these challenges. We assume that each BS should respond accordingly to a more dynamic nature of the European higher education environment. Namely, in the process of developing its overall strategy, the BS management should carefully combine (1) the underlying academic approaches in curriculum adaptation according to the Bologna declaration principles with (2) a well-thought marketing strategy in order to develop an effective response to comprehensive changes in a highly volatile European market for business and management education. Through the emergence of the EHEA and other institutional initiatives for student and faculty mobility, an accelerating trend toward internationalization of study programmes and schools is noticeable. The consequence of that process is already evident: local higher education markets have become more open to the influences of international competition especially in the field of business education. In recent years, many BSs have aggressively pursued international expansion as a strategic response to opening of local higher education market in many countries, including those in Eastern Europe. From our viewpoint, the Bologna process is not a strategic threat, but rather an opportunity for local BSs to take the implications of described contextual changes in the European higher education as a rationale for linking the BS’s study programme restructuring with the BS’s marketing strategy realignment with new business realities in the market. Obviously, the BS curricular change, viewed as a BS’s strategic response to the challenges of the Bologna process and requirements of change in local higher education legal framework, should be embedded in a broader context of strategy adaptation. Usually, even changes in school’s culture will be required. They should respond properly to broader change in business education market and emerging more harmonized European higher education environment. The transformation process, therefore, should not be based only on academic principles, but also on proper understanding of market change. Higher education in Slovenia has become more open: (1) it has broadened the access to knowledge through less restrictive conditions for establishing new schools; (2) lowered entry conditions for students to higher education. With its recent additional proposals, the Slovenian government started comprehensive economic and social reforms. In then its explicit vision is to enable establishment of new universities and more independent, especially private, schools in higher education. Intensive spread of new private BSs in Slovenia in recent years is a clear sign of trend toward the institutional goal of privatising the Slovene higher education limited to less expensive professions, mostly. 3 New pressures on BS management After signing the Bologna declaration, the Slovene government has accordingly changed its higher education regulation. It thus spurred the process of restructuring the higher education system in curricula structure in Slovenia (RS, 2002, RS, 2002a; Potocan, Jurse, 2004; Potocan, Mulej, 2004). 174 4 How to create a requisitely holistic business strategy for BS Slovenia has been recently faced with fundamental institutional change in political and economic structure and system (Potocan, Mulej, 2004). Changes in financial system, especially in financing the activities of public social institutions have affected the functioning of higher education. More restrictive budgetary framework changed financial framework forced BSs to earn additional financial resources with their services in the market for business and management education. Many modern BSs that are market oriented, as well as consulting firms and other knowledge suppliers noticed this trend and started offering customized incompany executives programmes that are tailor-made for the particular organization in question (Grant, 2001; Grey, 2004; Ghoshak, 2005). They all actively vie for institutional customers with customized business content of shorter programmes and thus compete with traditional BSs offering more curricular-based classical undergraduate and MBA programmes. Thus, these nontraditional suppliers of business education have indeed become new competitors for the BSs in this lucrative part of business education. We can conclude that BS’s management will have to view the implications of described contextual change for school’s future plans, its study programme development and business policy in a much more holistic way to respond to more diverse external influences. The process of formation of more (holistic) business strategy for a BS can be defined as an entity of the following phases (See: Ansoff, McDonnell, 1990; Kaplan, Norton, 2000; Foster, Kaplan, 2001; EPF, 2003; Kaplan, Norton, 2004; Faulkner, Campbell, 2006): achieving breakthrough values, creating institution advantage, restructuring for the global economy, strategic human resource management, strategy: building and sustaining competitive advantage, and strategy, leadership, and governance. From the content viewpoint, BSs must link curricular school reform with a much broader process of a BS marketing strategy adaptation. BSs aim of improving their competitive capability in a more volatile market for business education in Europe (EME, 1999; MSZS, 2003; OECD, 2003; Potocan, Jurse, 2004). The BS’s transformation process, therefore, should not be based only on academic principles, but also on proper understanding of market change. Based on detailed analysis of key changes and their possible impact on a BS’s position in the European higher business education market we will now delineate some key strategic guidelines to enable BS’ managers to properly respond to changes discussed in previous sections of this paper. We summarize our view at key strategic response dilemmas of a BS in Figure 1. Some different strategic business profiles are: - BS A: based on a pretty low level of academic foundation, the BS is quite market oriented with a pragmatic approach in transferring knowledge and does that with little, if any, own basic research emphasis; - BS B: school moderately combines academic and market dimensions of its strategy and is a typical low profile – BSb with moderate academic potential and market orientation; - BS C: based on moderate academic capability, the school has developed good capability to listen to the market needs and is highly market oriented and pragmatic in its approach for knowledge transfer through carefully designed marketable programmes; - BS D: school is typical theoretically oriented BS, based on strong own basic research and specialized economic courses with strong theoretical foundation and quite narrow market focus; - BS E and F: schools are at comparatively same level of strong academic and research dimensions of their processes, but they develop quite different level of market responsiveness. With a strong theoretical research base and pool of knowledge, they differ in their capability to develop an effective marketing strategy through developing value added courses for the market. We can conclude that each BS will develop its individual strategic business profile. In the process of developing its business strategy both facets of a strategy, academic as well as market, should be considered and combined in an effort to provide a desired alignment with the relevant requirements of a broader social environment and to achieve its desired positioning in all markets. By combining their academic (A) and market (M) dimensions of business strategy BSs can develop quite different individual competitive trajectory profiles, which result from various factors, e.g. a school’s resource based capability, market conditions and school’s position in the local legal context. 175 D E Academic dimension (A) F Competitive trajectory profile B C A Market dimension (M) Figure 1: BS strategy linking academic and market strategy dimension However, at the same time it also reflects a BS’s management understanding of key success factors in business-education market, its vision and mission statement. By stressing only the academic dimension of its strategy a BS will develop mostly formal educational programmes. They are based on strong theoretical education as their competitive trajectory profile and will mostly compete for student who would like to develop a strong research grounded professional knowledge and competence. BS with more competitive trajectory profile in practical knowledge and its application will compete with many BSs in the market that educate graduates for managerial and executive practice. Changes in the higher education external context make the market for BS programmes change rapidly. It is shifting from the classical undergraduate and MBA programmes towards more emphasis on executive development and in-company programmes. BSs should strengthen their customer focus and deliver what the market wants. Obviously, the key to success lies in the capability of management to strike a proper balance between academic and market dimensions of the BS’s response to market change. We can also conclude that no single BS can hope to do everything with great success, in either teaching or research. It is therefore one of the key tasks of the BS’s management to develop a clear understanding of school’s strengths, weaknesses and capacity to change. It also needs to know very clearly where the school is positioned now and where it wants to be in the future. It must draw a proper trade-off between academic and market factors in school’s business strategy. But the value creation at BS takes place under ever increasing resource constraints and therefore, the business strategic profile is in great extent defined by the resource based pool of each BS. Recent trend toward the internationalization of BSs, also through formal M&A or joint ventures and other forms of strategic alliances is a clear sign of business education players’ realignment in a more and more globalised business education. Obviously, competition between BSs in the classical segment of formal business and management education will be intensified and especially competition among the classical BSs is expected to become tougher than ever. According to the Bologna declaration and further discussions on the future higher education system with three clear cycles, BSs should develop clearly defined educational programs for each cycle. We summarize our idea in Figure 2. Each degree programme in the three-cycle model of formal tertiary education is characterized by a specific level of knowledge complexity and abstraction and combined with appropriate mode of transferring the knowledge on students. If management of a BS wants to align its strategy to contextual change in a broader environment, the present framework for proper adaptation of its business strategy to new reality in the European higher business education market should be changed accordingly. 176 Creation: research Master programme Doctoral programme Level of knowledge complexity and abstraction Figure 2: Different knowledge concept for Bologna study programs in cycles To improve its market competitiveness in a dynamic higher education global scene a BS should respond with a strategy that combines both facets of its processes, the academic (education, research) as well as the business part of the processes (marketing strategy, school staff knowledge etc.). In order to develop a two-pronged business strategy as a market oriented research and education value creating process, the school’s management should be aware of the fact that the activities of BSs are at the same time judged by business and the academic community. From an academic point of view, BSs should attain certain scientific standards. From the point of view of business, they should provide graduates who have the potential to help firms to add value and improve their competitiveness. Strategic partnership and the establishment of close links with business matters, but at the same time management should devote enough attention to directing faculty’s basic research effort to produce science based knowledge that is relevant for their institutional customers and partners. Here close ties with firms can be beneficial for both partners: representatives from the corporate world can influence the choice of research items that those in academia will pursue, as well as heighten academia’s understanding of the latest key issues. Academia, meanwhile, will be able to articulate its research findings vis-à-vis business, thereby having a real and valuable impact. Thus, a two-way interactive dialogue and partnership will promote and increase a relevant value creation that is mutually beneficial. Knowledge transfer mode Dissemination: lectures Bachelor programme Factual Type of knowledge Conceptual 5. Managerial implications The challenges faced by BSs are large, profound and global. Bologna process, accompanied by the Lisbon strategy and idea of creating the European Higher Education Area until the year 2010 are key strategic visions of creators of competitive Europe that should enable younger generation in Europe to study, live and work in Europe as a globally competitive region of knowledge. The higher education institutions and with them also BSs are in the centre of transition process from old higher education system and structures to a new, more open, market oriented and globally transparent education structures and system. The academic and business parts of BS’s governance system are becoming key determinant of each school’s future prosperity in a competitive European higher education area. BS deans, presidents and directors have the responsibility to enable their institutions to develop into a more market responsive educational institutions without losing their research capability. In this process, public BSs will have to compete in future in their domestic market for business and management education with new competitors, especially with new private domestic and internationally recognized BSs. At the same time, they will be forced, due to more restrictive financial 177 resources from budgetary sources, to become more market oriented academic and business entity. The task is not easy and they are faced with traditional marketing problems: how to attract enough students (customers) and to produce enough revenues to be able to upgrade their learning and research infrastructure, improve working conditions for faculty and at the same time how to improve their faculty structures and their research, teaching and consulting capabilities in order to be competitive in the management and business education market. A look of proper response will force public BSs that are already faced with new competitive pressure from an ever increasing number of new, mostly private, BSs, to leave a substantial part of their share to more marketresponsive and aggressive players in local business and management education market. We have shown that leaders of public BSs have to complement a traditional role of their schools with the role of business entity that must develop its capability of listening to the needs of the market. It is no easy task for them due to the legal framework in which their institutions operate and function as part of a traditional university system. But without complementing their traditional academic postulates of functioning with principles of business entity that creates value for the market, they will be faced with a danger of losing their position in the management and business education market. Due to their academic and research resources, developed through years of operating as accredited higher education institutions it is understandably not easy to change the principles of academic freedom for principles of rude competition in the market. Business education should also be broadened to reflect the global business environment and the knowledge, skills and attributes required from the globally responsible business leaders. This new business education context requires also a significant change in the mindset of many faculty members. Corporate global responsibility issues need to be integrated across the curricula, not just in a stand-alone course. BSs will therefore also need to embrace the fact that the common good is their responsibility and, like businesses, will need to move away from protecting outdated models of business thinking. With more open eyes to the market needs, especially to the knowledge and skills needs of business managers, BS’ educational processes development should be tailored to the particular challenges of each manager by providing their customers skills they need within a particular market in which their company operates. Academic freedom of faculty saying that “the very selection of what we study is bound up with judgements about what is worth studying” (Grey, 2004) should be at this stage of BS curriculum development subordinated to the professional competences of graduates and their knowledge structure and skills required for employment after graduation. These are the key starting points in new curriculum development at the BS. Grey (2004) makes a key point to be remembered by the BS management, namely: the world does not match the static demarcations of university departments and disciplines; BS graduates are not choosing only narrow corporate functions, they are also becoming entrepreneurs, public servants, policy makers, and so on. Therefore, leaders of modern public BSs in Slovenia should not act only as an academic leaders (primus inter pares), but equally important, also as business leaders and top managers of their school. All these facts require BS to apply (1) systems thinking to requisitely holistic balance their academic and their business roles, (2) innovation of management to provide market exposure to BS faculty, (3) to become requisitely entrepreneurial also as a public BS, not only as a private one, and (4) to introduce all these novelties in synergy, including (5) the EU in broader context as well along with the local / national one. 6. Conclusions BSs as public higher education institutions have been recently faced with dual sources of pressure to change their functioning model. First, by promoting the principles of the Bologna declaration the EU wants to embed local higher education systems into a more transparent, open and more flexible higher education system as a part of an emerging European Higher Education Area. Second, local governments have started to restrict the financial support to public higher education institutions. They face budgetary constraints on one hand and at the same time they spread a part of their financial support to new players in higher education in order to support the idea of higher education as a public good. Redistribution of limited budgetary financial resources of local governments for financing the operation of more higher education institutions forced many BSs to search for new sources of revenues to upgrade their educational infrastructure and improve the quality of their value creating processes. Obviously, the changing nature of higher education context is forcing BSs to increase their capability to develop a more market responsive strategy without losing their face of academic and research institutions with a basic purpose to create and disseminate new knowledge. In our contribution, we presented a concept of twopronged business strategy development of BS as a requisitely holistic strategic response to these challenges in the business and management education market. First, we have put forward arguments to support our view, that the transformation process of aligning BS’s education system to the principles of Bologna declaration is not a technical operation of shortening the school’s formal curriculum. We see it rather as an opportunity how to link the curricular change with a proper understanding of the changing 178 nature of customers’ needs and embed the formal study programmes restructuring into a broader market responsive strategy. By a well-thought integration of academic (research, pedagogical) and business facets into coherent overall school’s strategy, the school should seek to establish its desired positioning in a dynamic and more competitive business and management education market. BSs should face some key implications for managing effectively in a new, more dynamic and competitive higher education market. In it the local business and management education market should be understood in a broader European and global educational context respectively. References Ansoff, I., McDonnell, E. (1990). Implanting strategic management. Prentice Hall: New York. Ekonomsko-poslovna fakulteta (EPF), (2003). Business strategy (In Slovenian). FEB: Maribor. European Ministers of Education (EME), (1999). Joint Declaration of the European Ministers of Education convened in Bologna on the 19th June 1999, EME: http://www.mszs.si Faulkner, D., Campbell, A. (2006). The Oxford handbook of Strategy: A strategy overview and competitive strategy. Oxford Book: Oxford. Foster, R., Kaplan S. (2001). Creative Destruction. Random House: London. Grant, R. (2001). Contemporary Strategy Analysis. Blackwell Publisher: London. Ghoshal, S., (2005), Bad Management Theories Are Destroying Good Management Practices. Academy of Management Learning and Education, Vol. 4(1), pp. 75-91. Grey, C. (2004). Reinventing Business Schools. Academy of Management Learning and Education, Vol. 3(2), 75-91. Kaplan, R., Notron, D. (2000). The Strategy-Focused Organization. Harvard Business School Press: Harvard. Kaplan, R., Notron, D. (2004). The Balanced Scorecard: Translating Strategy into Action. Harvard Business School Press: Harvard. Korten, D. (1999). The Post-Corporate World. Berrett– Koehler: San Francisco. Loades, R. (2005), The future of graduate management education in the context of the Bologna Accord. GMAC: Rome. Marangos, J. (2004). Alternative Economic Models of Transition. Ashgate: Aldershot. Mintzberg, H. (2004). Managers not MBA. Prentice Hall: London. MSZS, (2003). The Realisation of the Bologna Declaration in the Republic of Slovenia. MSZS: Ljubljana. OECD (2003). Education Policy Analysis. OECD: Paris. Ottewell, R., McFarlane, B., (2001), Understanding learners. Kogan Page: London. Potocan, V., Jurse, M. (2004). How to create requisitely holistic consideration of business strategy. In: Proceeding of STIQE 2004. FEB: Maribor. Potocan, V., Mulej, M. (2004). 'Governmentability' of management by sustainable development principles. In: Governance in managerial life: conference proceedings. University of St Andrews: St Andrews. Quinn, T., Rynes, S. (2003). Reclaiming Professionalism in Business Education. Academy of Management Learning and Education, Vol. 2(5), 189-205. Republic of Slovenia (RS), (1993). Zakon o visokem solstvu (in Slovene). RS, Ul. RS, no. 67/93. Republic of Slovenia (RS), (2002). The National Programme on Higher Education of the Republic of Slovenia, Ul. RS, no. 20/02. RS: Ljubljana. Republic of Slovenia (RS), (2002a). Uredba o javnem financiranju clanic univerz, od leta 2004 do leta 2008, Ul. RS, no. 20/2002. RS: Ljubljana. Statistical Office of the Republic of Slovenia (2001). Working papers. Nr. 3/2001, pp. 38. RS: Ljubljana. 179 180 TOWARD A SUSTAINABLE SOCIETY: NEXT STEPS John Raven 30 Great King St., Edinburgh EH3 6QH, UK 00 44 (0)131 556 2912 jraven@ednet.co.uk Abstract If we are to survive as a species, it will be necessary to make radical changes in every nook and cranny of our society. There can therefore be no blueprint of what a sustainable society should look like. It follows that we need a new answer to Smith and Hayek’s question of how to design a society which will innovate and learn Recent meetings of the European Social Forum and the G8 Alternatives fielded hundreds of speakers and attracted hundreds of thousands of participants. Virtually all speakers focused on one injustice or destructive practice or another and called on “our leaders” to do something about it. Most of the meetings also fielded protest marches, involving hundreds of thousands of people, calling on those same leaders to “do something”. Only a tiny minority recognised that, even if they were people of goodwill, our “leaders” (to be understood as “dominators”) would not know what to do … still less that, even if they did try to try to make common-sense based changes, their actions would be negated by systems processes which few have tried to understand and map. Even more basically, most of the participants seemed to believe that, with a little tinkering, Western society can continue to function much as it does now. Yet the available evidence suggests that a sustainable society will have to be as different from our society as agricultural society was from hunter-gather society. And, just as no one in a hunter-gatherer society could envisage what an agricultural society would look like, so no one in our society can envisage what a sustainable society would look like. To bring about a change of this magnitude we need a new answer to Adam Smith and Fred Hayek’s most basic question - namely how to design a society which will innovate and learn without central direction. Smith and Hayek’s solution does not, and cannot, work1. (Note that the question can also be formulated as how to design a society which will operate in the long-term public interest instead of in the short-term interests of dominators.) Many other issues were overlooked by most of the participants in these conferences. For example, few noted that the problems which confront us are fundamentally inter-linked in such a way that they cannot be tackled independently. Attempts to proceed on an issue-by-issue basis are usually undermined by without “wise men” or “leaders”. This paper outlines some surprising components of an answer that have emerged from 50 years of policy research and indicates some of the further research needed to move forward. Keywords: Sustainability; Socio-cybernetics; Democracy; Bureaucracy; Ecological science. the reactions of the rest of the system. Indeed, wellintentioned public action typically has the opposite effect to that intended. Few noted that the belief in authoritarian leadership and governmental summits - as Mill and Smith were at pains to point out - contribute to society’s problems rather than offering a route to their solution. In the light of these observations it may therefore be useful to sketch in some aspects of what might be called “The Scenario at Go” that need to be taken into account when prioritising what needs to be done to move forward. The Scenario at Square One There are at least four vistas that need to be taken on board by anyone seeking to move forward: 1. The inadequacy of current forms of public management. Michael Moore’s film Fahrenheit 9-11 makes a number of well known, but commonly overlooked, problems very clear: a) Conventional forms of “democracy” do not succeed in preventing a range of thugs and psychopaths rising to power. b) Conventional forms of “democracy” (opposition parties etc.) do not lead to the exposure of lies and double-talk, let alone to the production of viable alternatives. c) The media cannot be relied upon to question lies and to seek out and publicise counter information. d) Corporate interests - linked to making money by creating the maximum amount of maximally useless work (including the generation of useless “defence” and wars based on trumpedup charges) - overwhelmingly determine Government policy. e) Elected leaders are utterly indifferent to human suffering (one million dead in Iraq etc.) and thus unlikely to be swayed by “moral” arguments. 181 Moore’s assertion that the main function of wars is to legitimise the subjugation of indigenous populations to their “leaders” offers a glimpse - however inadequate - of a network of deeper forces controlling the operation of society. It is essential to have a more complete map of this network of forces and to use it to design ways of managing the planet in the long-term public interest, and, in particular, halting the selfperpetuating processes driving toward the extermination of our species. 2. The need to radically change the way we live. From their studies of “ecological footprints”, Rees and others have shown that it would be necessary to have five back-up planets engaged in nothing but agriculture for everyone alive today to live as we live in the West. It cannot be done. Furthermore, virtually all graphs of the destruction of the soils, the seas, and the atmosphere reveal exponential increases, most approaching situations beyond which recovery will not be possible. These processes are interlinked: There is no point in changing the means of generating energy with a view to fixing global warming without, at the same time, stemming the destruction of the seas and the atmosphere ... which means halting the production processes that the energy is used to fuel. What these observations mean is that we have to radically change our way of life: We have to get rid of our cars, our energy-intensive, chemically-based, agriculture, our central heating, our centralised production and distribution networks, our “defence” systems, our banking and “insurance” systems, virtually all trade (dependent as it is on energyintensive and resource-destructive transportation systems), and so on. What would a society without all these sources of employment look like? How could one manage the transition without creating widespread chaos and destitution? It is all very well to call for dismantling the “defence” system, for example, but what would everyone do without all this useless work to do (work is, after all, one of the main sources of satisfaction in life)? Note that it is systemic change that is required. One can always create, e.g., self-sufficient communities offering high quality of life in lacunae within the system … but they never do, and cannot, generalise. One can ameliorate some of the worst effects of, e.g., slave labour in Indonesia through legislation, but the effects are always negated by the reactions of the rest of the system. discussed more fully in endnote no. 1) not only does not, but cannot, work. Too many costs are ignored or externalised to the future and cannot be reduced to a single common denominator. Too many benefits (such as security for the future and public health) can only be purchased collectively or cannot be commoditised and bought and sold. (These inherent defects of the market process are independent of the observation that what we have at the moment is not a market economy at all but an economy managed by the international banking community and the TNCs but the management of which is obfuscated and legitimised with the aid of market rhetoric.) 4. The need to discard any lingering faith in the value of economic/monetary indices. The monetary system is almost entirely fraudulent. Not only are monetary prices almost entirely determined by an accretion of public servants decisions as to which costs to count and which to spread over the whole community; not only are most costs externalised to the atmosphere, the “third world” and the future; not only has currency become so debased that there are is now some 80 times as much money circulating round the globe as total world annual production. Money no longer (if it ever did) provides the “ball-bearings” required to allow a self-managing market system to work. Control of monetary flows combined with authoritarian intervention backed by economic and military sanctions linked to demands for conformity to those fraudulent indices is used to manage the world economy. Prices are not determined by the cost of land, labour, and capital but by an accretion of explicit, but ad-hoc, decisions to manipulate them to achieve both public and private goals - mostly the latter. Nominal financial “loans” are entirely fictitious. Not only are the true rates of “interest” mathematically infinite, their function is almost entirely to legitimise subjugation and exploitation on a breathtaking scale. ******* So, what are the most important things we need to do to move forward? At least three things follow from the observations made earlier: 1. It is essential to map the multiple, mutually reinforcing, and largely invisible, forces and feedback loops which control the operation of our society so as to be able to identify appropriate points at which to intervene in the system. This is to be done in a manner analogous to the way in which Newton conceptualised physical force (before that there had just been the violence of the wind and the waves) and showed how networks of forces (such as those governing the movement of the planets or sailing boats) could be mapped and harnessed. Note that one cannot “fight” the wind and the waves by recruiting the aid of more powerful gods. One can only work out how to harness them. By the same token one cannot expect to find a way forward by 3. The need to discard any lingering faith in the management of change through the market. As we have seen, the change that is required is pervasive … in every nook and cranny of the system … and as great as the change from a hunter-gatherer to an agricultural society and that Smith and Hayek were right to say that the only way forward is via a pervasive climate of experimentation and learning. Yet the “market” solution they proposed (and which is 182 fighting the powerful figures that control human destiny. Mapping a system permits targeted systemic intervention where there was before only system-wide (e.g., world-government-based) intervention grounded in ignorance. Small groups of people, even individuals, can make effective systemic interventions. Working out how to map, measure, and intervene in such networks of forces is a classic academic task ... but not one that will be undertaken by the universities as we now know them because whatever capacity they had to generate new insights has been systematically undermined by procedures forced upon them by the very system that it is so important to change. 2. We need to take the concept of the “information society” seriously. Instead of seeking to implement information-based decisions via the fraudulent monetary-based system, we need to evolve ways of giving direct effect to information-based decisions and, more importantly, arrange to learn from the effects of attempting to implement these interventions. 3. New concepts of public management - “democracy” - are required to enable public servants to initiate endless experiments, arrange for their comprehensive evaluation, and act on that information in an innovative way in the long-term public interest. Mapping Networks of Social Forces: Socio-Cybernetics By way of introduction to an illustration of what can be done to map networks of social forces, it is useful to introduce the concept of socio-cybernetics. Cybernetics is the study of guidance and control systems in animals and machines - and the design of better ones. Mention of the animals makes it clear that the term implies the study of natural guidance and control systems, not just man-made ones (as in missiles). So socio-cybernetics becomes the study of the hidden systems that control the operation of society and the design of better societal management arrangements. An Illustrative Study As in the elucidation of ecological processes more generally, there can be no royal route to revealing the processes that control the operation of social systems. Despite the conflict with bureaucratic notions of efficiency, multiple studies, conducted by adventurous scientists, investigating “the same” topic from different perspectives are required. Nevertheless it is perhaps useful to refer to some results from a study of the educational system that has been intermittently sustained for 50 years. We first showed that the most widely endorsed goals of the educational system include nurturing such qualities as the confidence and initiative required to introduce change and identifying, developing, and recognising the huge variety of talents that different people possess. However, the system mainly does the opposite. It stifles initiative and adventurous enquiry and instead inculcates and assesses smatterings of knowledge that is out-of-date when it is taught, forgotten by the time it is needed, and does not relate to people’s problems. Instead of generating and recognising diversity, the system arranges people in a single and misleading hierarchy of “ability” which is then used to allocate position and status How does it come about that well-intentioned public action is not merely neutered but actually subverted in this way? Bit by bit our research uncovered a whole series of problems each requiring for their solution major research and organisational development programmes. But it then revealed how these problems are interlinked so that attempts to remedy any one of them are negated by the reactions of the rest of the system. Although, given that it is a system, it is misleading to say that any of these processes is more important than the others, an impression of some of the surprising results may be indicated by saying that we learned: (i) That, despite its manifest objectives, the so-called educational system is not mainly about education at all but about the sociological process of legitimising the way in which privilege is rationed. At one level this is, of course, well known. But few have asked how these sociological forces can be harnessed to push educators in the direction in which they – and most other people – want to go. It is as if no one asked how the destructive forces of the wind and the waves could be harnessed to enable boats to sail into the wind. (ii) That widely endorsed concepts of public management (such as the belief that public servants are there to do the bidding of elected representatives and should treat everyone in the same way) undermine innovation by stifling experimentation, diversity, and the development of appropriate curricula and assessment procedures. It emerged that, crucial to finding ways of getting the educational system to achieve its manifest goals, is a new understanding of the role of public servants and the development of new organisational arrangements for their management. It turns out that one of the most important tasks of public servants (who unexpectedly emerge as the most important wealth creators the world has ever known) is to create variety and choice, to arrange for comprehensive documentation of all the short and long-term, personal and social, consequences of each of the options, and to feed that information outward to the public so that they can make informed choices between them instead of upward in a hierarchy to distant elected representatives to make “democratic” policy decisions binding an all. If public servants are to do these things, new job descriptions and staff appraisal procedures are required. There is, above all, a need for means of giving them credit for engaging in such activities as sifting information for good ideas and acting on it in an innovative way in the long-term public interest. New, network-based, working 183 arrangements are required to facilitate a climate of innovation and learning. And new network-based forms of public supervision - new forms of democracy - are required to expose what they are doing to the public gaze thereby helping to ensure that they carry out their re-defined tasks in such a way as to promote the longterm public interest. In the context of this last remark, it is of more than passing interest that, more than a century ago, Mill wrote “Instead of the function of governing, for which it is radically unfit, the proper office of a representative assembly is to ... compel a full exposition and justification of all (acts) ... It should be apparent to all the world who did everything, and through whose default anything was left undone”. Such democracy does not depend on elections. It does not depend on hierarchical accountability to distant dominators. It is not a determining and directing structure. Its function is to expose the behaviour of public servants (and others) to the public gaze so that they are more likely to act in the long-term public interest. Generalisation We may state the conclusions of this work in another way by returning to Newton. But before doing so it is useful to note that, in order to get relatively safe networks of sailing boats, one needed more than Newton’s conceptualisation of force and invention of ways of measuring it – i.e. making it visible and tangible. One also needed charts of the seas, the concepts of latitude and longitude, sextons and chronometers to enable ships’ captains to work out where they were, networks of lighthouses, and means of paying lighthouse keepers. None of these developments could have been anticipated or called for, let alone designed, by politicians. A whole series of inter-related developments based on theoretical science was required. No one of them, on its own, would have made much difference. So, to return to education, what we have seen is: i. That the problems confronted by the system cannot be understood or solved by “common sense”; ii. Still less can they be solved by central decree: pervasive change is needed: no central committee of ignoramuses can be aware of more than a fraction of the things that need to be done; no central committee can decide what it is possible to do and what it is not possible to do; no central committee can monitor and learn from the myriad of experiments that are needed; iii. That the most fundamental development required has to do with mapping the interacting, and mutually supportive, social forces that determine what happens in a manner analogous to the way in which Newton mapped the physical forces that determine motion; iv. That, to move forward, we need to harness these forces in a manner analogous to the way in which it became possible to harness the equal and opposite reaction of the sea to the wind by putting keels on sailing boats; v. That, in addition to such developments, we need better tools to take stock of where we are (sextons) and recognition of the wider range of jobs to be performed by teachers and administrators (sailors and ships’ captains); vi. That we need radical change in the way we think about public management (public funding of experimentation, ship designers, and lighthouse keepers). It is interesting to reflect on the role of international agreements and, in particular, the role of multi-purpose international assemblies in the development of a (relatively) safe network of sailing boats. Much of the necessary information - on ships’ design, on the scientific basis for the work, on the idea of preparing charts or building lighthouses - diffused of its own accord. Yet the evolution of common standards of measurement, ways of representing hazards on charts, and safety standards clearly requires some international negotiation. Unfortunately, laudable though the quest for common standards sometimes is, the way in which a concern with the operational process displaces effective pursuit of the basic objectives is horrifyingly illustrated in the workings of the European Community, where endless centrallygenerated prescriptions over-ride professional judgment and public choice. Teachers are told what they should be doing in every 10 minutes of the day. Pupils and parents have no real choice of education … only between schools following the same curriculum. The standards are laid down for environmental and food “quality” result only in a choice between brands of tinned peas rather than choice between a wide variety of natural seeds from which to grow peas. The tendency to prescribe what others will think and do has always run amok: Witness the endless persecution of people who do not share one’s religious faith, sexual orientation, or beliefs about evolution. Possible Activities: “What to do Next?” The work summarized above actually indicates many important, but non-obvious, things that need to be done. Some of them are things that can be done by individuals acting alone – such as by promoting recognition of the vital role which public servants play in society. Others are collective activities or scientific projects. Individual Activities It follows from the work that has been briefly summarised in this note that there are endless things we could do as individuals. These include: Promoting recognition of the vitally important role which public servants play in society; Promoting, and participating in, network-based supervision of the public service; 184 Articulating the fundamental reasons why centralised “democratic” control is useless; Promoting research to develop the tools that are required to hold public servants accountable for performing their newly defined roles; Promoting research to map the socio-cybernetic forces which are driving society and our planet against the rocks; Advocating greater efforts to promote variety, experimentation, and learning; Promoting a less reductionist, more “ecological”, image of science; Drawing attention to the changes that are needed in the way research is commissioned and organised and the criteria and tools required to hold the universities and research institutes accountable for their performance. These are only examples. There are, in reality, endless important things to do that would contribute to systems change. Yet hardly any of them are things that “common sense” would have suggested that it was important for us to do. Collective Activities or Projects Among the more collective, or “scientific”, things that might be done I will first discuss possible social surveys, of the “Measuring what Matters” variety, and then move on to list a number of possible “experiments”. The distinction is not sharp, however, because one of the merits of surveys is that they prompt people to think about things they had never thought about before … and this leads some of them to do something about them. On the other hand, there is an unfortunate tendency for those who conduct surveys to feel that it is “the authorities” who should act on the results. 1. Surveys, or “measuring what matters”. Many people have (rightly) suggested that it is important to build indices of quality of life into econometric surveys so that we can know where we are. But the research summarized above suggests that the most important thing to measure, create debate about, and improve is the capacity of a society to sift information for good ideas and act on those ideas in an innovative way in the long-term public interest. So far as we can see from the work we have already done, this involves assessing the extent to which a society: 1) Introduces Introduces radically changed job descriptions for public servants. It is their job to: Release a ferment of experimentation and learning. This involves basing their activities on new ways of thinking about multiple talents of their fellows and creating the public management, organisational, and legal structures required to release and utilise those talents and learn from the wide range of experiments so initiated; Arrange for the initiation of a wide range of experiments based on different perspectives; Arrange for the comprehensive evaluation of all the short and long-term, personal and social, consequences of each of the alternatives; Feed this information into public debate so that people can make realistic choices between the options; Study the systems (technological, economic, social-structural, political, legal, cultural, and social) constraints which prevented these experiments working as had been hoped; Invent ways of intervening in these systems so as to create more “successful” interventions … and arrange to monitor the effects of these “outwardlyoriented” experiments so as to learn more about the operation of these systems processes; Establish adventurous R&D institutes; Arrange for the development of appropriate tools to hold scientists accountable for adventuring into the unknown, finding ways of doing the impossible, and measuring the unmeasurable; Arrange for the development of the tools needed to hold themselves accountable for undertaking the activities mentioned above and for holding scientists … indeed everyone … accountable for taking initiative, finding ways of doing the impossible, and learning from the effects of their actions. Note that embracing such criteria implies that people will need to be evaluated in terms of whether they have engaged in processes which are likely, in the long-term, to make for innovation and development rather than in terms of the success of a particular enterprise or for having made no mistakes. In other words, the tools will be measures of processes rather than outcomes (although outcome measures are also required). 2) Changes widely shared images of science away from reductionist, single variable, science, toward comprehensive, or ecological, science in which one studies multiple processes, feedback loops, and outcomes. The quality of a scientific study is to be judged, not on the accuracy of its fix on one or two variables, but its comprehensiveness, on in its ability to get a rough fix on all important processes and outcomes and stimulate debate. 3) Supports adventurous research based on an ecological rather than reductionist model. 4) Supports social research to investigate such things as what makes for quality of life, quality education, well-being, etc. and subsequently to develop the tools that are required to run alternative systems. (Notwithstanding what was said earlier about the importance of developing new public management arrangements and intervening in the sociological processes performed by the system, reform of the educational system still depends on the development of new measures to recognise the wide diversity of talents 185 available and to understand curriculum processes.) By the same token, one of the most important activities to be undertaken in connection with enhancing quality of life is to develop means of indexing the wide variety of priorities and life satisfactions that different people have (cf. Kinsey). Yet such topics remain relatively trivial compared with the importance of developing a better understanding of the processes which determine what happens in society (sociocybernetics) and evolving alternative societal management arrangements grounded in recognition of the need for pervasive change. As Rothschild, in his review of the Social Science Research Council was at pains to point out, social scientists have in the past been their own worst enemies, focussing on topics that are too small and ignoring most topics that are crucial to the future development of society (understanding the word development to mean “radical change”). 5) Moves toward new concepts of wealth: Quality of life inheres in the public domain. Its components (like security for the future) cannot be commoditised and bought and sold. 6) Introduces new ways of thinking about the supervision of the public service and ensuring that public servants are more likely to act in the longterm public interest as a result of having more of their behaviour (considered in more appropriate terms) exposed to the public gaze. In addition to making some kind of multicomponent overall assessment of the workings of the system, it seems important to assess progress in relation to a number of more specific topics like: 1) The degree to which the mythologies associated with banking, supposed market management, and debt have been de-constructed. 2) Growth in awareness of the components of world management via the Federal Reserve Bank, World Bank, IMF, and WTO, linked to the determination of apparent prices through a vast range of government legislation. 3) Awareness of the triviality and false sense of citizen effectiveness created by such things as the McLibel case in comparison with the effects of WTO rules on stifling the dissemination of information – such as in the Canadian government’s attempts to draw attention to the effects of the chemical used to replace lead as the anti-knock ingredient of petrol. 4) Recognition of the need for scientific activity to do such things as study systems processes, find ways of nurturing and utilising multiple talents, and measuring the flows or real resources into different kinds of activity. 5) Awareness of uselessness of monetary indicators 6) Deconstruction of faith in central authority and the right of such authorities to command adherence to certain religions, educational systems, and “health” requirements (such as smoking). 7) Awareness of deficiencies of democracy: One of these is that long chains of authority to distant elected representatives meeting in multi-purpose assemblies filter out key information so decision takers are necessarily ignorant about most of the issues which should be taken into account. But others include the deficiencies of decision taking by majority vote instead of allowing people with different priorities to go their own way in the context of public debate based on comprehensive evaluation of the short and long term consequences of alternatives. 8) The strength of the tendency to unthinkingly accept and endorse the statements of authority and follow their commands without question, often inventing ever more draconian means of carrying out their policies than were ever intended. 9) Increase in systems thinking/learning/action. 10) The extent of serious action to implement policies that are obviously in the public interest such as deconstructing the defence and military systems; eliminating cars and dramatically reducing transportation; abolition of the planes that are responsible for global dimming; and so on … Experimental and Comparative Work Although there is no non-authoritarian method of introducing widespread social change in order to study its effects, it might be possible to find organisations, especially in backwaters in the public service, where one could conduct experiments, not in the classical sense of testing specific hypotheses derived from theory, but in the sense of introducing some changes on the basis of the kind of observations made above, monitoring the effects as comprehensively as possible, modifying the intervention accordingly, and again studying the effects. Before turning to proposals for experimental work, attention may be drawn to the benefits that would stem from more comparative study, grounded in the conceptual framework outlined above, of organisations and cultures along the lines of those previously carried out by such researchers as Shon, Kanter, Almond and Verba, and Lane. Possible experimental projects might involve: a) Varying the job descriptions of managers and staff, especially to encourage staff to innovate in very diverse areas supported by “parallel organisation” working arrangements; alternative staff appraisal systems; systems of public supervision, not only locally but, via network working, nationally and internationally (to create a sustainable society it will be necessary to intervene in China and the US without resorting to centralised authoritarian commands); and a variety of moves toward comprehensive evaluation. b) The creation of “developmental environments” in schools and workplaces. This involves the development and introduction of a new psychometric framework for thinking about human 186 talents and the evolution of better ways of thinking about developmental environments and their effects. To do these things it will be necessary either to work in backwaters somehow protected from mainstream societal pressures or to find ways of intervening in those sociological forces. c) Experimenting with ways of giving teachers and managers credit for having engaged in the difficult and demanding process of innovation. 1 A full discussion of the objectives of the market mechanism and why it does not and cannot function as Smith and Hayek hoped will be found in: Raven, J. (1995). The New Wealth of Nations: A New Enquiry into the Nature and Origins of the Wealth of Nations and the Societal Learning Arrangements Needed for a Sustainable Society. Unionville, New York: Royal Fireworks Press; Sudbury, Suffolk: Bloomfield Books. Nevertheless it may be useful to include a brief summary of what the “market mechanism” was supposed to do here. Adam Smith and John Stuart Mill both noted that politico-bureaucratic “solutions” to the problems we face simply do not work, commenting that government decisions are essentially decisions by “committees of ignoramuses”. At root, this is because there cannot be any such thing as a wise man or wise woman, let alone a committee of wise men and women. This follows from the fact that the most important information required to take wise decisions cannot be available. If A initiates a course of action in location X, and, unknown to him, B initiates another course of action in location Y, it is impossible to know what will happen as these two courses of action come together. Smith and Hayek proposed the “market mechanism” as a solution to this problem. It was envisaged as a societal experimentation learning and management system which would act on information which was necessarily incomplete, dependent for its implications and effects on other changing information, and widely dispersed in the hearts, heads, and hands of billions of people. It would not only initiate action on the basis of such information but also learn from the effects of that action and take such further (corrective) action as necessary. In the main, it was the system which learned, not the individuals within it. What “the market” offered was a mechanism whereby, if people liked what A was doing, they could purchase his goods or services or invest in his enterprise. So, if they were doing the right things, both A’s and B’s enterprises would prosper and, as the results came together, previously unimaginable things would happen. Note that the market mechanism as proposed was quintessentially a societal experimentation, learning, and management system. It has no other raison d’être. It neither endorses riches or lauds money. It does not endorse a divided society. It was a means of giving power to information and designed to create a ferment of innovation and learning. As the outcomes of endless experiments merged goals which could never previously have been envisaged could be accomplished. In short, society would innovate, experiment, and learn without anyone involved in it having to know anything very much. It would be decentralized, organic (with many feedback loops and potentialities), nonauthoritarian, and, like evolution itself, grossly inefficient in bureaucratic terms. It was the ultimate in participative democracy: Everyone involved could “vote with their pennies” independently on a myriad of issues instead of voting every five years or so for a package of issues or “wise” governors. It did not depend on intellectuals or explicit verbal knowledge. People could attend to their feelings and vote accordingly. Unfortunately, this solution to the problem does not and cannot work. In the first place, it has turned out to be extremely difficult to get the market mechanism to take account of, and respond to, huge amounts of vitally important information, such as all the evidence indicating that, as a species, we are headed to our own extinction carrying the planet as we know it with us. Hardin’s (1968) “tragedy of the commons” has proved endemic and pervasive. Second, to exert influence in the system, one has to be a “worker”. This has driven large numbers of people – especially women – to join the system despite the fact that doing so lowers their quality of life. Worse, being a “worker” in modern society actually means becoming someone who, as most people know in their souls, carries out useless work – worse, work which is both personally and socially destructive. In the end, it turns out that the function of market mythology is to create and legitimise the creation of useless work and to carry out that work as inefficiently as possible. Third, market processes do not, in fact, deliver a high quality of life, that is to say, genuine wealth. Lane (1991) has drawn together a great deal of research showing that quality of life depends on such things as security, self-actualising work, networks of friends and support in one’s workplace, and low levels of stress. Such things are driven down by market processes. Fourth, the marketplace does not reward (and therefore stimulate) the most important contributions to wealth-creation (however defined) because these come from the effects of actions taken by people who are long since dead and who got scarce rewards for their efforts, from collaborative research and planning activities carried out in the public sector, and from wives and husbands who provide love, psychotherapy, child-care, and other individual and social maintenance activity without being rewarded for their efforts. In part because the quality of life depends primarily on public provision – on things which cannot be 187 purchased individually – and on activities carried on outside the marketplace, the role of public management has continuously increased over the years until, at the present time (although the evidence cannot be included here) the spending of something of the order of 75% of the GNP of Western societies is controlled by their governments. In other words, we do not live in market economies at all: We live in managed economies. This has many important implications. Among them is the impossibility of any small group of elected representatives directing or overseeing the workings of the governmental machine in any effective way because there is just too much of it. Another is that prices are primarily determined by public servants, and not by the cost or efficiency of land, labour, management, or capital (which “costs” are all primarily determined by public servants). Instead, therefore, of having a marketplace which provides a societal management system, we live in a society in which the control of cash flows is used to orchestrate actions which have been decided through the political and bureaucratic process (which happens to be mainly under the control of the TNCs). We do not live in a society driven by market forces. We live in a society mainly driven by the decisions of international bankers, managers of the TNCs, and public servants, but, most importantly, controlled by mythologies which are every bit as important as those which we can so easily see bind together, and control the operation of, “primitive” societies. What generally passes unnoticed is that most public servants’ decisions and the mythologies which control us are largely nurtured and perpetuated by a handful of capitalists who profit from them every bit as much as the leaders of the churches in the middle ages profited from the mythologies they developed and perpetuated. Fifth, neither money nor prices mean what most people think they stand for. Prices are primarily determined by an accretion of expedient decisions taken by public servants’ – not only in relation to taxation, grants, subsidies and the creation of infrastructure, but also in relation to such things as which costs are to be loaded onto particular producers and distributors and which spread over the whole community. (When these costs are re-calculated it turns out that the supposed efficiency of centralized production is simply a myth.) Sixth, and it follows from what has already been said, most customers are not individuals voting with their pennies but people purchasing on behalf of vast organizations like school systems, health care systems, and defense alliances. References Raven, J. (1994). Managing Education for Effective Schooling: The Most Important Problem Is to Come to Terms with Values. Unionville, New York: Trillium Press; Oxford, U.K.: OPP Ltd. (now available from the author at 30, Great King Street, Edinburgh EH3 6QH). Rees, W. E. (2002). Conflict or Convergence? Bulletin of Science, Technology and Society, 22 (4): 249-268 Wackernagel, M., & Rees, W. E. (1996). Our Ecological Footprint: Reducing Human Impact on the Earth. Philadelphia: New Society Publishers. See also: www.footprintforum.org 188 ROADBLOCKS TO ENTREPRENEURIAL ABSORPTIVE CAPACITY IN SLOVENIA Miroslav Rebernik, Ksenja Pušnik, Polona Tominc Institute for Entrepreneurship and Small Business Management Faculty of Economics and Business, University of Maribor Razlagova 14, 2000 Maribor, SLOVENIA Phone: 386 2 22 90 254, Fax: 386 2 25 16 681 rebernik@uni-mb.si ksenja.pusnik@uni-mb.si polona.tominc@uni-mb.si Abstract In the knowledge society aimed at sustainable development, the exchange of knowledge among different agents is of crucial importance. New knowledge can not be absorbed without appropriate knowledge base. In the absorption process the learning but also unlearning is permanently taken place in all knowledge areas and with all types of knowledge. This makes the phenomena very complex and hard to comprehend without systems thinking, especially because processes are mutually dependent on the social, cultural, economic and political context which is different from country to country. The paper deals with roadblocks to entrepreneurial absorptive capacity in Slovenia, which like other transitional countries to a greater extent than mature market economies, lack each type of experiential knowledge: business, institutional and knowledge on how to internationalize. Authors argue that the development of entrepreneurial absorptive capacity in Slovenia is very likely stagnant because of (1) low level of internationalization of Slovenian firms, local market and local employment; (2) path dependency of socialist remnants such as anti-competitiveness values or egalitarianism; and (3) lack of internal and external activation triggers due to low innovativeness. Keywords: absorptive capacity, barriers to growth, systems thinking entrepreneurship, 1 Introduction With the rise of knowledge as the key factor of competitive advantage entrepreneurship has become a vital factor of economic growth in most developed countries as well as in the developing countries (Audretsch and Thurik, 2004). The knowledge-based society is unachievable without perpetual emergence of new companies which follow new ideas and new business opportunities. Entrepreneurship is an essential constituent of such a society since the potential value of an idea or knowledge is always uncertain and cannot be determined in advance. Due to its role in the economic society, the promotion of entrepreneurship holds an important position in economic policies of most developed and developing countries. Because of the lack of systemic thinking the interconnectedness between an individual, a company and the macroeconomic level is seldom considered when forming the entrepreneurship promotion policy. Entrepreneurial economy is all about enabling, very much based on 3T: talent, technology and tolerance (Florida, 2004). The most developed regions and cities are not those with best natural resources but those that cherish talent and diversity of people. In the knowledge society aimed at sustainable development, the exchange of knowledge among different agents is of crucial importance. To embrace the incoming knowledge and to use it productively a critical mass of knowledge and skills has to be already present in the organization. Without appropriate knowledge base, new knowledge can not be absorbed. In the absorption process the learning but also unlearning takes place. Learning and unlearning is permanently taken place in all knowledge areas and with all types of knowledge which makes the phenomena very complex and hard to comprehend without systems thinking, especially because processes are mutually dependent on the social, cultural, economic and political context which is different from country to country. This not only makes processes and tools of increasing absorptive capacity very hard to compare between countries but also call for our prudence when transferring experiential knowledge from one context to another which is especially important when we deal with internationalization of companies. The paper seeks to enhance understanding of entrepreneurial absorptive capacity in Slovenia and in this perspective the importance of learning and unlearning processes for increasing absorptive capacity of enterprises and society. In the paper we, first, present a simple verbal model to show the complexity of learning and unlearning and the importance of unlearning in transitional economies, like Slovenia, which lack each type of experiential knowledge. Second, we analyse the development of 189 entrepreneurial absorptive capacity in Slovenia, and, finally, we discuss some implications. 2 Learning and un-learning Many definitions of organizational learning and knowledge sharing exist (Hedberg 1984, Cummings 2003, Argyris 2004, Esterby-Smith and Lyles 2005). According to definition that "an organization learns in only two ways: (a) by the learning of its members, or (b) by ingesting new members who have knowledge the organization didn't previously have" (Simon 1991, p. 125) our attention should be paid also to individual level, as at both levels the learning and unlearning is taken place. If according to Johanson and Vahlne (1977) the knowledge is stored in the decision making system, when decision-makers leave the company, the knowledge is lost. Many of new companies in Slovenia in period 1990 – 1995 was formed by "drop-out" managers of large and medium sized companies. As many managers of previously (big) socialist companies has formed their own companies, usually as sole proprietorships, the experiential knowledge embedded in organizational routines has been lost. Large and medium-sized companies have lost the expertise gained at international markets, while newly formed (very often one man band) companies did not have the resources to internationalize. They may have had the desire but not the capital and people. Hierarchy of routines (Nelson and Winter, 1982) would lead us to conclusion that changing of dominant beliefs of top managers could be the answer. But here again, we enter the twilight zone of transitional economies where institutional arrangements are not build-up yet, rules of the game and the structures of payoffs (Baumol 1990) are not determined, many agency problems exist, false cooperation (Rebernik 1999) is taking place, and requisite holism is missing (Rebernik and Mulej 2000). For unlearning to take place intentional forgetting of some parts of existing individual and organizational knowledge is needed. Firm must "disorganize" some part of its knowledge store (Holan, Phillips and Lawrence 2004). Similar disorganization must take place also at individual level. The complexity of never-ending learning and unlearning processes is depicted in Figure 1. Transitional economies, like Slovenia, lack each type of experiential knowledge: business, institutional and knowledge on how to internationalize, to a greater extent than mature market economies. None of them can be obtained without costs and it is hard to be planned in advance (Eriksson, Johanson and Majkgard 1997). Business knowledge, i.e. the knowledge on customers, competitors and foreign markets is similar to the knowledge that the firm doing business at domestic markets is already exploiting. Institutional knowledge is much harder to obtain. It is consisted of knowledge of government and institutional framework, rules, norms and values in the targeted markets. The third type of knowledge is the knowledge on the process how to internationalize, and is very firm specific, embedded in the routines, norms and structure of the firm (Blomstermo, Eriksson and Sharma, 2004). Understanding organizations as an information processing systems where experiential knowledge is stored in organizational memory (Christensen et al. 2004) brings an important caveat for transitional countries like Slovenia. During their "previous life" in socialism/communism these countries have accumulated much experiential knowledge that has grown obsolete and should be disposed because it became useless and impedes the accumulation of new knowledge and creating absorptive capacity. Any understanding involves both learning new knowledge and discarding obsolete and misleading knowledge and that sometimes the unlearning may be as important as is adding new knowledge (Hedberg 1984, Sinkula 2002). Nevertheless, until recently not much research has been devoted to area of unlearning even though presence of certain knowledge may constrain learning or even encourage ineffective learning (Cummings 2003). 3 Roadblocks to entrepreneurial absorptive capacity in Slovenia 3.1 Absorptive capacities Entrepreneur is a person who is capable of recognizing the opportunity and collecting the resources needed for its exploitation. His performance is very much based on what Cohen and Levinthal (1990) named "absorptive capacity". They coined the term to describe the observation that prior related knowledge enables recognizing the value of new information, its assimilation and application to commercial needs. They underlined that "the ability to assimilate information is a function of the richness of the pre-existing knowledge structure: learning is cumulative, and learning performance is greatest when the object of learning is related what is already known" (Cohen and Levinthal, 1990: 131). According to that, learning is more difficult when individuals and organizations are faced with unfamiliar situation which was a major case with post communist countries of Europe. Not only new member states, the whole EU lacks competitiveness also due to lack of capacity to absorb innovation (Mulej et al. 2005). 190 SOCIAL, CULTURAL, ECONOMIC, POLITICAL CONTEXT AREAS OF KNOWLEDGE: BUSINESS KNOWLEDGE INSTITUTIONAL KNOWLEDGE UNLERRNING LEARNING INDIVIDUAL LEVEL EXPLICIT KNOWLEDGE TACIT KNOWLEDGE MENTAL MODELS ORGANIZATIONAL LEVEL INERT KNOWLEDGE ORGANIZATIONAL MEMORY ORGANIZATIONAL CULTURE LEARNING UNLEARNING Figure 1: Complexity of learning and unlearning (based on Windeknecht and Delahaye 2004, Eriksson et al. 1997, and Blomstermo et al. 2004, see also Rebernik and Pušnik 2006) Absorptive capacity is a dynamic capability that influences the firm's competitive advantage (Zahra and George, 2002). They differ between potential absorptive capacity and realized absorptive capacity. The first deals with acquisition and assimilation of knowledge and the second with its transformation and exploitation. Acquisition is a firm's capability to identify and acquire externally generated knowledge that is critical to its operations. Assimilation refers to the firm's routines and processes that allow it to understand and process the information obtained from external sources. Transformation indicates firm's capability to develop and refine the routines that facilitate combining existing knowledge and the newly acquired and assimilated knowledge. Exploitation is an organizational capability and is based on the routines that allow firms to upgrade the existing competencies or to create new ones by incorporating acquired and transformed knowledge into its operations. It reflects a firm's ability to harvest and incorporate knowledge into its operations. The outcomes of systematic exploitation routines are the persistent creation of new goods, systems, processes, knowledge, or new organizational forms (Zahra and George, 2002). Data from the Global Entrepreneurship Monitor for Slovenia (Rebernik et al. 2006) makes us believe that (at least) some of the propositions set by Zahra and George (2002) on the impact of external sources and knowledge complementarity, the experience and on activation triggers are important: • The impact of external sources and knowledge complementarity: the greater a firm's exposure to diverse and complementary external sources of knowledge, the greater the opportunity is for the firm to develop its PACAP. • Experience: experience will influence the development of a firm's PACAP. Specifically, experience influences the locus of search and the development of path-dependent capabilities of acquisition and assimilation of externally generated knowledge. • Activation triggers: activation triggers will influence the relationship between the source of knowledge and experience and PACAP. Specifically, the source of an activation trigger will influence the locus of search for external sources of knowledge while the intensity of the trigger will influence the investments 191 LEARNING INTERNATIONALIZING KNOWLEDGE UNLEARNING in developing the requisite acquisition and assimilation capabilities. (Zahra and George, 2002: 193 – 194) In the next part of our paper we hypothesize that the development of entrepreneurial absorptive capacity in Slovenia is very likely stagnant because of (a) low level of internationalization of Slovenian firms, local market and local employment; (b) path dependency of socialist remnants such as anti-competitiveness values or egalitarianism; and (c) lack of internal and external activation triggers due to low innovativeness. your country. Is it more than 90%, more than 75%, more than 50%, more than 25%, more than 10%, or 10% or less? The answer is given in Figure 2. 3.3 Path dependency of socialist remnants such as anti-competitiveness values or egalitarianism We gained some insight into the egalitarian shared values in the Slovene society within GEM research (Rebernik et al. 2006) by asking the adults if they agree with the statement: In your country, most people would prefer that everyone had a similar standard of living. Results in GEM research show that in year 2004 there a very high percentage of adults in Slovenia agreed with the statement - even 83.34%. High percentage in 2004 ranked Slovenia at the top among the European countries, as shown in Figure 3. In 2005 the research reveals much lower percentage – only 49.64%. Since it is not very likely, that shared norms in society are drastically changed in a very short time period, results should be taken with precaution and should be checked and compared with results of research in 2006 and in following years. But with no doubt something is going on in Slovene society regarding shared norms and values of people. As results of GEM research imply Slovenia’s cultural and social norms are not especially conductive to entrepreneurial ventures. We gained the insight into the cultural and social norms as one of entrepreneurial conditions that directly or indirectly shape conditions for the start-up an growth of new firms within GEM research by interviewing national experts. In 2005, the experts placed Slovenia 31st among 33 GEM countries implying that the extend to which culture support individualism and personal independence, and the extend to which people accept the economic, social and psychological risk associated with entrepreneurship, are not especially conductive to entrepreneurial activity in Slovenia. The experts are the most critical of the willingness of Slovenes to accept the business risk of decision-making for their own firms. This could largely be contributed to half a century of encouragement of collectivism and extensive social security, although even before than Slovenes were probably not among the most entrepreneurial of nations. 3.2 Low level of internationalization of Slovenian firms, local market and local employment Looking at organizational learning in Simon's (1991) way and understanding internationalization as a learning process, one can expect a company to internationalize if (a) individuals are willing and capable of learning, or (b) where company is open and capable of employing diverse people. Due to the short entrepreneurship history in Slovenia in companies, there are not much established routines that would push for learning of its members, and as the employment is local, the process of learning is suppressed. Visiting exhibitions and fairs, reading professional literature and meetings organised for the exchange of information are among the most important methods used by enterprises in order to increase the level of knowledge, experience and skills. Slovenian enterprises (between 70 per cent and 80 per cent of surveyed enterprises) use these methods more often than European companies (between 30 and 60 per cent of surveyed enterprises). Both Slovenian and European large enterprises use these methods more frequently. The next important method is cooperation with advisers, which is used by 59 per cent of Slovenian and 33 per cent European SMEs (Rus and Krošlin 2004). There are some other indicators displaying low exposure of Slovenian companies to international competition. We gained the insight into the innovativeness of the entrepreneurs within GEM research (Rebernik et al. 2006) by asking the adult individuals showing entrepreneurial activity the following question: What proportion of your customers normally live outside 192 Table 1: The share of Slovenian and European SMEs that participated in various activities in order to improve the level of knowledge, experience and skills in the company 0-9 EU SI Visits to exhibitions/fairs Courses / seminars / consultations organised by external experts Encouraging employees to use professional literature Meetings organised for the exchange of knowledge Cooperation with advisers Courses / seminars/ consultations organised by the employees of the company Study visits Tutoring or mentorship for the company employees Head shunting (within the company or in other companies) Other activities 75 68 73 71 58 36 26 26 12 43 57 39 36 32 21 19 17 10 8 4 The number of employees 10-49 50-249 EU EU SI SI 84 84 79 82 69 60 33 42 39 52 70 56 39 46 32 38 22 20 17 5 90 89 83 79 74 71 38 61 57 59 78 70 58 56 39 54 41 27 29 5 Average E SI U 76 58 69 73 71 59 37 27 27 14 44 41 37 33 22 21 18 11 9 4 Source: Observatory of European SMEs, Competence Development in SMEs, 2003, No.1. and Slovenian Entrepreneurship Observatory, 2003 45 40 share of entrepreneurs (in%) 35 30 25 20 15 10 5 0 Export orientation: proportion of custom ers living outside the country 0 20,2 41,4 34 1-24% 38,2 28,3 40,2 25-74% 15,4 18,1 14,9 75-100% 17,3 5,5 9,7 not answ ered 8,9 6,6 1,2 nascent new established Figure 2: Internationalization of business 193 Percentage od adults who agree that people in their country would prefer similar living standard for everyone, 2004 Slovenia Ireland UK Greece Portugal Poland Norw ay Croatia Sw eden Finland Iceland Italy Denm ark Belgium France The Spain Germ any Hungary 0 20 40 60 Percentage 80 100 Figure 3: Egalitarian shared values in the European GEM countries in 2004. 3.4 Lack of internal and external activation triggers due to low innovativeness Many sources report on low innovativeness of Slovenian companies. Within GEM research (Rebernik et al. 2006) we asked adult individuals showing entrepreneurial activity the following three questions: • Is your product or service new and unknown to all your potential customers, to some of your potential customers or to none of your potential customers? (Figure 3) • Have the technologies or procedures needed in the production of this product or service been generally available for less than one year, for one year, for five years or for more than five years? (Figure 4) • Right now, are there many, few, or no other businesses offering the same products or services to your potential customers? (Figure 5) On average, Slovenian nascent entrepreneurs are more convinced than new and established entrepreneurs that their products or services are new to all potential customers (19.5%); only 5.6% of experienced established entrepreneurs believe so. However, a serious doubt arises in relation to the correctness of the conviction by Slovenian nascent entrepreneurs regarding the newness of their products since Figure 4 shows that in the vast majority of cases they use the technology which has already been available for five or more years. The percentage of new entrepreneurs who use old technology is similarly high (on average 78.5%). The greatest proportion of new technology is found in established businesses as on average 14% of them are convinced that they use technology which was unavailable one year ago. The GEM data cannot verify to what extent this information is accurate. If it is, then the case is concerned only with the technology that solely enables better utilisation of resources and higher production but does not involve new products since on average only 5.6% of the same entrepreneurs claim that their products are truly new. On average, one fifth of Slovenian nascent entrepreneurs and 4.1% of the established entrepreneurs are convinced that they have no competition for their products and services. More than 60% of new and established entrepreneurs believe that there exist many other companies which offer the same or similar products, which coincides with the finding about a low percentage of new products. It is apparent that the introduction of new products and new technologies together with the encouragement of novelties transfer from universities and institutes into companies still remains the priority task for economic policy which would want to raise the competitiveness of Slovenian economy. 194 Products/services 100% 90% share of entrepreneurs (in%) 80% 70% 60% 50% 40% 30% 20% 10% 0% not new to all new to some new to all Nascent 45 35,5 19,5 New 65,9 29,2 4,9 Established 78,2 16,2 5,6 enterprises in their technological development or in the process of internationalization. 100% share of entrepreneurs (in %) 80% 60% 40% 20% 0% Level of com petition nascent 20,8 43,6 35,8 new 0 36,9 63,1 established 4,1 34,3 61,5 no similar business some similar businesses a lot of similar businesses Figure 3: Are products/services new to potential customers? Figure 5: Level of competition 100% share of entrepreneurs (in%) 80% 60% 40% 20% 0% Technology used nascent 89,2 8,6 2,2 new 78,5 14,1 7,4 established 62,5 23,4 14,1 Available for longer than 5 years Available from 1 to 5 years Available less than a year Figure 4: Availability of technology used To encourage the growth and development, technology and research transfer, networking between university (professors, researchers) and the local economy, between financial institutions and various entrepreneurship promotion institutions (Small Business Development Agencies, the Chamber of Commerce and Industry, developmental agencies, etc.) is extremely important. In Slovenia, these supporting institutions are numerous, but their cooperation is poor. They mainly operate at individual level and are largely ineffective. In general, Slovenian universities do not take responsibility for helping small and medium-sized One of the key problems in connecting university and SMEs in Slovenia is the lack of technological development of small enterprises. In addition, they have a short research horizon and often lack the knowledge needed for cooperation; while academic staff are not particularly interested in cooperating with smaller enterprises, as they generate little or almost no income. Institutional, cultural and infrastructural barriers can all be identified as explanations for the lack of success in knowledge transfer (Rebernik 2003). Among institutional barriers, the present mode of functioning of Slovenian university system is the most influential. It does not direct researchers and staff into the commercialization of research. Universities are still predominately pedagogical rather than research institutions. In order to meet their obligations, academics mainly need to teach and research. To gain promotion and tenure, teaching staff need to publish papers and gain citations, rather than prove the practical applicability of their research. Considering cultural barrier, the prevailing mode of thinking at universities is still mainly administrative. The transfer of innovation into entrepreneurial practice is a complex process that needs to be dealt with as a whole. The complexity of this process is even greater in the university environment, where public and private interests are combined. Most innovations that can be commercialized come from technical faculties where there is little business knowledge available and where the creators of innovation rarely have any entrepreneurial knowledge or experience. Successful transfer of knowledge can only be made possible if university is capable of promoting creative team work 195 between technical and business knowledge, and establishes cooperation with successful companies, investors and various support institutions. The prevailing system of values at institutions of higher education in Slovenia is not inclined towards entrepreneurship. The peculiarities of Slovenian academic culture, which often sees involvement in commercial tasks as a violation of consecrated research work, makes the transfer and commercialization of technology even more difficult. Among infrastructural barriers for technology transfer relatively underdeveloped economic and business environment that surrounds universities together with lack of efficient promotional mechanisms and schemes is to be mentioned. There are no supporting mechanisms at universities with which we could facilitate the weak cooperation between university and business. The practice of company set up stemming from the cooperation between university and its partners is not valued in Slovenia. Neither of the Slovenian universities has yet developed business incubators up to the point that would focus on the transfer of research directly into entrepreneurial practice. The entrepreneurial scope of Slovenian universities and research institutes is still limited to single cooperation agreements and rare joint projects with established (larger) firms. 3. 4. 5. 6. 7. 8. 9. 4 Conclusions The situation in whole CEE confirmed that gaining the appropriate level of absorptive capacity is not a byproduct. When the current knowledge and needed new knowledge are closely related the learning is not difficult, and the increase in absorptive capacity is almost automatic. But when the current and new knowledge are wide apart, individuals and organizations have to invest in it. An important part in investment is un-learning of obsolete knowledge and values that impede our ability to accept new information and exploit it. To remove obstacles for accepting new knowledge and use it productively policy makers should take into account multidimensional nature of the absorptive capacity and encourage those elements that are most influential in a systemic way. Without systemic thinking this can not be achieved. 10. 11. 12. 13. 14. 15. References 1. 2. Argyris, C. (2004), On organizational learning, 2nd ed., reprinted, Malden, US: Blackwell. Audretsch, D.B., R. Thurik (2004). A model of the entrepreneurial economy, International Journal of Entrepreneurship Education 2 (2): 143-166 16. Baumol, W. (1990); Entrepreneurship: Productive, Unproductive and Destructive; Journal of Political Economy, 98, 893-921. Blomstermo, A., Eriksson, K., and D. Sharma (2004); Domestic Activity and Knowledge Development in the Internationalization Process of Firms; Journal of International Entrepreneurship, 2 (3), 239-258. Christensen, P. R., Andersen, P. H., Damgaard, T. and K. B. 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K. and B. Delahaye (2004), ‘A model of individual and organisational unlearning’, Proceedings 18th annual Conference of the Australian and New Zeland Academy of Management, Dunedin, NZ. Zahra, S. and George, G. (2002); Absorptive Capacity: A Review, Reconceptualization and Extension. Academy of Management Review, 27(2), 185-203. 197 198 WHAT DO INNOVATIVE LEADERS HAVE IN COMMON WITH ANCIENT MYTHS? A VIEW OF THE ARCHETYPAL HERO WITHIN THE MODERN MANAGER Risopoulos, Filippina University of Graz, Institute of Innovation and Environmental Management, Universitaetsstrasse 15, A-8010 Graz, Austria, filippina.risopoulos@uni-graz.at Homepage: http://www.kfunigraz.ac.at/inmwww/ Phone: ++43 (0)316 380 3232 Fax: ++43 (0) 316 380 9585 1 Abstract This contribution explores what modern managers have in common with heroes in ancient myths. Myths and religions have always tried to explain truths by means of symbols to some degree. It is the purpose of this contribution to uncover some of the truths behind the figures in ancient myths by investigating some examples and letting the old meaning become apparent by itself. Innovative leaders need to gain certain competences for several management fields and they have to be flexible in their thinking and acting. One function of a leader is to help the organization define and achieve its purposes. This means formulating strategies, visions, and challenges. Another function of a strong leader is to embody the spirit of the community and help hold it together. Once it is apparent that the differences between ancient myths and today’s myths are much smaller than is popularly supposed, this paper may contribute to those currently working for unification in the sense of human mutual understanding. management. The field of systems theory appears thereby as a science with a special approach to problem-solving which can per se be a heroic task. Innovative management and leadership can be considered a modern myth in which modern “heroes“ fight for economic survival by facing a reality which very often appears in different shapes, since people act based on what they consider to be reality and not so much what reality is or might be. In the following the terms “traditional“ leader or management are used as well as “modern, innovative“ leader or management. This is in order to make a distinction between what is meant by used behavior and behavior which has arisen in current times. This does not mean that “innovative, modern“ does not follow a tradition in management or leadership which has been developed since Adam Smith but it makes clear that different behavior need different terms. 3 A systemic view of organizational behavior or the modern myth of economic power Keywords: myths, managers, heroes 2 Introduction Today’s managers have to face all kinds of problems which deal on the one hand with hard quantitative, measurable facts (operative management) and on the other hand with problems which appear as strategic problems. It is a challenging field for every manager of a company and to keep the business running none of these can be neglected. To cope with both fields, similarly a systemic view helps to understand certain patters which are often responsible for non-linear functioning procedures of different constellations within a company. Within the complexity which appears with “non-trivial-machines”1 (von Foerster, 1971; von Foerster, 1993, 138) such as human beings, one can discover certain patterns which follow certain legalities. The following will give an idea of a management which is seen from a systemic view of The purpose of a modern management concept, such as the St. Gallen Management Concept which was already introduced some decades ago and has since become widespread in economic practice, is to make a multidimensional classification of management's decision problems. Based on systems theory, it provides a problem-oriented framework and methodology for an integral conceptualization of problem-solving approaches, considering contextual and situational factors of corporate development. Therefore, the main task of a management which is established in a permanently changing environment is to lead a company to a development of new ways of thinking and acting which provide long-lasting survival for the company. The sentence “innovate or die“ (Peters, 1997) today puts enough pressure on the organization’s leaders so that they sometimes have to undertake strange measures to survive on the market. There are all kinds of machines to ease physical work but there is not yet a machine invented which can ease a manager’s 199 work. To be economically effective in problem-solving, a manager’s work can be divided into three key questions: • What is the task of a manager? • What is the biggest problem? And • Which principle is behind this problem? First of all it is the aim of a manager’s work to drive the resources and efforts of an organization into one direction to take all the chances which help to get an economically important output. That means that most of the time is invested for problems instead of chances (Drucker 2000, 105-107). Traditional leaders are oriented to operative decisions and measures directly connected to profit and growth. So one can say the better the operative dimensions of a company are, the more it becomes dangerous when the strategic situation gets worse. Second, the main problem is the confusion about the distinction between effectiveness and efficiency which leads people to do things right instead of doing the right things. The main tools of an organization concentrate on book keeping and data collection (operative aims) which are both connected to efficiency. What a company needs is a way to identify fields of effectiveness and a method to concentrate on this (Drucker 2000, 105-107). Rites of the traditional management culture often force the management to give priority to operative aspects, especially to periodical business transactions, and the accompanied reporting in business press. Thus, the strategic thinking will not be paid attention to in the way that would be necessary (Malik 2000, 236-238). Third, what principle is behind the problem? An economic organization is not a natural phenomenon but a social one. However, events in social situations do not appear as natural events which are connected to a natural, normal distribution of the universe. In social situations a very small number of events – maximum 10 to 20 percent - is responsible for about 90 percent of all events while the major part of events is responsible for the 10 to 20 percent. An example of that is the market: very few customers demand the majority of orders. Another example concerns personnel problems: the majority of complaints come from a very small group of collaborating people (Drucker 2000, 105-107). Business schools teach that good managers have to take into account all aspects of organizational tasks, operational as well as strategic. However, the complexity of living systems such as organizations has to be accepted. By dealing with “non-trivial machines“, such as collaborators, customers and so on, it will hardy be possible for a manager to make all decisions by outside steering. And it is barely possible for a manager to know everything that has to be known to have solutions for all emerging problems. Top-down directives have very limited effects and disregard the momentum of a system. And “systems“ are called systems because of their inherent dynamic dimension. This cybernetic view of a complex, real living system such as a company explains the steps which have to be taken to keep a company alive. Outgoing from that systemic idea that everything that exists has once become one has to realize that today’s state of the world is the tentative result of evolution (socio cultural and economic-political development integrated). It has always been a process of development which has become and ongoing, becoming development which effects the technical achievement of human beings but is not measurable by human standards. The development of each organization independent of its size and economic power is widely determined by the structure of this evolutionary process. At the same time this development is one of the uncountable machines, which keeps the evolution going (Malik 2000, 240). 4 Innovative leaders or modern heroes? Today’s managers increasingly accept the fact that to lead a company means to deal with complex systems. The continuous necessity to adapt to changed conditions and the permanent pressure to develop into unknown areas are problems which are beyond the operative leadership of a company and put special demands on the management. A modern, innovative manager who is aware of his or her company as a complex system which does not function by “cause and effect thinking“ always solves problems in a broader sense. • He or she creates knowledge in ecological issues as well as in social matters. • He or she realizes that strategic aims very often have priority over operative goals. • The modern, innovative manager has different risk behavior than managers of the “old school”. • He or she improves emotional intelligence as a basis for social competence. • He or she takes into account having an uncomfortable state. • To be a good leader means to serve a community permanently. • A leader’s role is accepted within a community as long he or she provides security. Instead of top-down directions, social 200 competence is the key elements within a modern, innovative management. • A good leadership has to motivate all members of a team and has to strengthen people’s personal resources. It is a question of autopoietic action, which means to regenerate oneself and to cope with a permanent changing environment. So one further question is which qualities must a modern, innovative manager have to do well in a company? Questions about persons who should able to lead other persons deal with abilities, knowledge, personal characteristics, attributes, experiences, qualities and competences. An analysis of more than 600 of the largest companies in Germany has shown that a manager has to be: entrepreneurially thinking, team-oriented, communicative, visionary, internationally oriented, ecologically oriented, socially oriented, have integrity, charismatic, multicultural, intuitive and last but not least customer-oriented. A bulletin of a globally operating bank wrote that the managers of tomorrow have to be interrogativeintegral, integrating-intermediate as well as intercommunicative-instructive (Malik 2001, 16) One conclusion to this might be: The modern manager has to be a universal genius, or in other words a hero. Or do these expressions tell us something about a modern myth which makes us believe that all these attitudes generate a competent manager? 5 The functions of myths in the society Myths have always existed to explain scary and inexplicable phenomenon such as acts of nature. However, myths were also there to express elemental feelings like love, hate, jealousy and so on. Fate ordained heroes and gods fought for their survival, fame and honor. Myths were always and still are fascinating stories which are told in a lively and pictorial style to explain indefinable phenomenon. On the one hand they have entered our every day language (e.g. Oedipus complex or narcissism) and reflect the structures and values of the society. The following refers to Joseph Campell’s2 (Campbell 1968) point of view about the myth and the society, which is a kind of confrontation of individuals and the society of ancient mythological times and today’s demystified time. It is necessary to have this view of a myth-based society of former times and a non-mythological society of today to get an idea of what the specific orientation of the modern hero-task must be, and to discover the cause for the disintegration of all of our inherited religious formulae. There is no final system for the interpretation of myths, and there will never be any such thing. Mythology has often been interpreted by the modern intellect as a “primitive […] effort to explain the world of nature“, as a “product of poetical fantasy“, as “a group dream, symptomatic of archetypal urges within the depths of the human psyche“, and as “God’s Revelation to His children“. And there will be answers to all the questions concerning these ideas as long as one does not ask what a myth “is but of how it functions“ and “how it has served mankind in the past, of how it may serve today“. The tribal ceremonies like birth, initiation, marriage, burial and so forth translate the individual’s life-crisis and life-deeds into classic, impersonal forms. They disclose a person to him or herself, not as this personality or that, but as the warrior, the bride, the widow, the priest; and at the same time rehearsing for the rest of the community the old lesson of the archetypal stages. All participate in the ceremony according to rank and function. The whole society becomes visible to itself as an imperishable living unit. By an enlargement of vision to embrace this superindividual, each discovers him or herself enhanced, enriched, supported and magnified. All of which is far indeed from today’s life. The invention of the power-driven machine or the computer, and the development of the scientific method of research have so transformed human life that the long-inherited, timeless universe of symbols has collapsed. The dream-web of myth fell away; the mind opened to full waking consciousness; and modern man emerged from ancient ignorance, like a butterfly from its cocoon. The social unit of today is not a carrier of religions content, but an economic-potential organization. It is a hard and unremitting competition for material supremacy and resources. Therefore, the problem of today’s society is, that all is in the individual – but there the meaning is totally unconscious. One does not know toward that which one moves. 6 Conclusion Today many of the mysteries of ancient times have lost their power; their symbols no longer interest modern people. The descent of the Occidental sciences from the heavens to the earth - from astronomy in the seventeenth century to anthropology and psychologies in the twenty-first century mark the permanent prodigious transfer of the focal point of human wonder. “Not the animal world, not the plant world, not the miracle of the spheres, but man himself is now the 201 crucial mystery. Man is that alien presence with whom the forces of egoism must come to terms, through whom the ego is to be crucified and resurrected, and in whose image society is to be reformed“ (Campbell 1969, 391). Joseph Campbell’s point of view at the end of the 1960s on society and the interests of humans is still popular. Transferring this to traditional management practice one can conclude that in order to be successful, organizations often follow the causal principle “if – then“ and forget that one still deals with living systems, with people who – to say that with respect – do not function like “trivial machines“. The modern, innovative manager or leader is a hero of today who follows old mystic paths. He or she often takes into account fighting a battle which may seem impossible to win. He or she shows – for management behavior – a very strange kind of risk behavior and the most important thing about today’s heroes is that they listen und talk to their collaborators in a “systemic“ way, which implies that they care for themselves affectionately in the same way they would care for a newborn baby. 8 1. 2. 3. References Campbell, J (1968). The hero with a thousand faces, Princeton University Press, Princeton, New Jersey Drucker, P. F. (1998). On the Profession of Management, Harvard Business School Press, Boston Malik, F. (2003). Systemisches Management, Evolution, Selbstorganisation. Grundprobleme, Funktionsmechanismen und Lösungsansätze für komplexe Systeme, Verlag Paul Haupt, Bern, Stuttgart, Wien Malik, F. (2001). Führen, Leisten, Leben, Wilhelm Heyne Verlag, München Simon, F. B (1998). Radikale Marktwirtschaft. Grundlagen des Systemischen Managements, Carl-Auer-Systeme, Heidelberg Von Foerster, H. (1997). Kreuzverhör - Fragen an Heinz von Förster, Niklas Luhmann und Fancisco Varela, in Lebende Systeme, Wirklichkeitskonstruktionen in der systemischen Therapie (Ed. Simon, F. B.), Suhrkamp, Frankfurt a. M., p. 131-147 Von Foerster, H. (1993): KybernEthik, Merve, Berlin 4. 5. 6. 7. 7 Notes 1 Von Foerster’s famous distinction between trivial and non-trivial machines is a starting point to recognize the complexity of cognitive behavior. A trivial machine is a machine whose operations are not influenced by previous operations. It is analytically determinable, independent from previous operations, and thus predictable. For nontrivial machines, however, this is no longer true as the problem of identification, i.e., deducing the structure of the machine from its behavior, becomes unsolvable. One interesting comparison, for example, can be made to ancient myths in which the role of the hero follows a consistent legality. 2 Josef Campbell relied on the texts of Jung as an explanation of psychological phenomena, as experienced through archetypes. But Josef Campbell didn’t agree with Carl Jung on every issue, and certainly had a very original voice of his own. Josef Campbell didn't believe in astrology or synchronicity as Jung had. Josef Campbell’s true study and interpretation is in the melding of accepted ideas and symbolism. His iconoclastic approach was as original as it was radical. 202 HOW TO SUPPORT THE ABILITY TO SUCCESSFULLY GENERATE RADICAL INNOVATION: WHAT CAN BE LEARNED FROM IDEO? Steiner, Gerald Institute of Innovation and Environmental Management, University of Graz, Universitaetsstraße 15/G2, A-8010 Graz, AUSTRIA e-mail: gerald.steiner@uni-graz.at Homepage: http://domino.uni-graz.at/DEKANAT-Extern/main.nsf Phone: ++43 (0)316 380 7331; Fax: ++43 (0)316 380 9585 Abstract The paper investigates how the generation of radical innovation can be supported within an enterprise based on a systems thinking perspective. Hence, it will be discussed how the ability to generate radical innovation can be supported by the means of leadership, process design, methodological means, and stakeholder management. The basis of this paper is an in-depth investigation of IDEO as a best-practice example of a company in product development and innovation. The diverse fields of management such as innovation management, change management, and quality management, but also innovation-oriented engineering offer a huge set of more or less complicated methods and tools for supporting the generation of innovation. How relevant are those tools for the generation of radical innovation and to what degree are they applied within industrial design? In contrast to the main field of industrial design companies, IDEO has a very broad knowledge of potential methods and tools (see the empirical analysis within this contribution). However they consciously negate some of the so-called sophisticated methods in the above-mentioned fields, such as quality function deployment (QFD), value analysis (VA), TRIZ, six sigma, and others. Instead, the secret of IDEO’s success seems to lie in their ability to quickly understand complex systems, allow playfulness and flexibility by simultaneously providing for the minimum of structure, avoid disturbing organizational hierarchies, focus on the availability of a huge set of easy applicable methods from various different disciplines (that have to fit to the prevailing philosophy and value system of IDEO in order to “be lived”), undertake rapid prototyping, and respectful “real” interdisciplinary and trans-disciplinary work. Keywords: Radical innovation, Organizational culture and climate; Methodological and instrumental support, IDEO, Rapid prototyping generate innovation in order to cope with increasing change in most facets of today’s life. Although statements as citied will probably be agreed on by most business leaders and scientists related to innovation, it needs a lot to develop an innovative organization and the needed competences. Science certainly also tried to contribute by analyzing the underlying processes of the generation of innovation, personality traits of innovators, and specific roles such as opponents and promoters within the organization; investigating potential factors of success, and working on supportive methodologies for people involved in the generation of innovation. There have also been numerous empirical studies on diverse factors of innovation, not always with much relevance for the people confronted with the task to innovate. The purpose of this contribution is mainly to put the spotlight on the peculiarities and the behavior of one of the most innovative and successful companies in the field of industrial design, IDEO. What is IDEO, how do they work, what are they doing differently, what about their underlying philosophy, and what can be learned from them? Those are the core questions of this contribution. 2 Scientific approach What is the scientific basis (and the state of the art) with regard to that kind of investigation? What is the research design of the investigation? How can in-depth case analysis become a meaningful element within a scientifically sound investigation? What are the main research questions and the content of the investigation? How does the research process look? These are the questions that are raised prior to the investigation of IDEO as a best-practice example. 2.1 Scientific basis 1 Introduction The Economist claimed recently that “innovation is now recognized as the single most important ingredient in any modern economy.” Citations such as these or the statement by IDEO’s general manager, Tom Kelley: “innovation is the lifeblood of all organizations” (Kelly 2005, p. 3) underline the important role of the ability to The ability to generate innovation depends greatly on the organization’s ability to make use of its inherent creativity, but also of its ability to network with external partners in a way that makes those external creative capabilities synergistically accessible for its own ability to innovate. This is also the reason why industries cooperate with industrial design companies. An example is the cooperation between IDEO and Apple, and also between KISKA Creative Industries and KTM. 203 Creativity is a prerequisite for the generation of innovation and is of increasing interest when moving p. 44; Amabile 1997, p. 40; Utterback 1994; Ulrich 1994, pp. 7–14; Ford and Gioia 1996, p. 878). It seems to be obvious that the more creativity is needed, the higher the degree of innovativeness is. Or in different words: radical innovations require more creativity than incremental ones (for further detailed distinctions between incremental and radical innovation, see for example Christensen (2000) but With regard to creativity research the vast majority of scientific endeavor is still focused on personality traits (e.g., Gardner 1997). More recent research focuses on the creativity supporting climate within organizations and the social environment (Amabile 1983, 1995, 1996; Simonton 1975,1992; Anderson and West 1994; Ekvall 1997; Brodbeck and Maier 2001). In order to manage creativity with the focus on whole organizational systems, scientific research is in its infancy, not well developed, and conducted by just a few proponents (Steiner 2006; Ford and Gioia 1996; Williams and Yang 2002; Sundgren and Styhre 2003; Hellström and Hellström 2002). With regard to innovation research the situation is similar with a strong focus on personality traits, single issues of innovation and the innovation process. Examples are the investigations of specific roles such as diverse types of promoters, but also the focus on role types with regard to the market of focus on radical innovation the work of Christensen needs special consideration (Christensen 2000; Christensen and Overdorf 2001). Nevertheless, his work investigates ex post the underlying mechanisms of radical innovations, it does not give much insight into the competences, processes, and underlying methodology for the generation of radical innovation as a holistic system. 2.2 Research methodology The case study method has long been stereotyped as a weak example among social science methods, with insufficient precision, objectivity, and rigor (Steiner the case is just a fast forward means lacking the needed scientific rigor. With special regard to research based on systems thinking, the systems scientist Schwaninger and Hamann state that scientifically rigorous systems understanding has to be the basis for good research (Schwaninger and Hamann 2005, p. 3). Within a sound research design, case investigations are able to contribute significantly to scientific knowledge. This is especially valid for the investigation of outstanding innovation performances: usually those specific innovation patterns are not observable within the vast majority of organizations on the market, but with special consideration of continuous innovation and the ability to generate radical innovation, only a few companies seem to be really a step ahead of the broad field. Indeed, those innovators are rare, but if discovered they can contribute a lot to the innovation knowledge base. Therefore, purely relying on a broad empirical investigation does not tell us enough about successful proactive innovative behavior patterns of organizations. An in-depth case investigation based on a broad empirical investigation is the research methodology of this investigation. What cases are worth investigation? The objective of this paper is to give insight into the innovation patterns of a highly innovative organization that can be considered as a best-practice example with regard to its output as well as to its internal organizational culture and behavior. That means innovativeness is here considered as being output-related as well as processrelated. Within this investigation the first step was to identify an industrial branch with a generally high level of creativity and innovativeness together with a high degree of flexibility and variety in their innovation projects. By scanning the various systems of industrial branches according to those criteria the branch of industrial design appeared to be of interest. In a next step 131 industrial firms in Austria were the basis for investigating those companies with regard to cooperation with industrial design firms. 34 % of all companies considered the industrial design company’s creativity and innovativeness as the outstanding - and therefore also number one ranked - reason for cooperating. Parallel to the industry survey another empirical investigation was undertaken: the investigation of 111 industrial design companies in Austria and Germany with regard to basic elements of their innovation behavior. In a second stage, in-depth analysis of 75 selected industrial design companies was carried out with the objective of gaining further insight into the creativity and innovation behavior of those companies. After having gathered evidence for the creativity and innovativeness of the industrial design branch from industry and gained insight into the peculiarities of their creativity and innovation behavior, the criteria for finding best-practice examples of highly innovative industrial design companies (with the headquarters not necessarily in Germany or Austria, but also with activity in that market) were: • Output orientation on turn-key developments, that is the generation of an innovation including the whole innovation system with respect to functionality, appearance, market strategies, handling by the customer and services (not only “making the appearance of a product more appealing”). • Internationally active. • Number of products developed a year. • Diversity of innovations generated. • Innovation and design awards attained. • More than a minimum of 10 people in the core business of the company. • International rankings of innovative companies. It turned out that very few industrial design companies really fulfilled the underlying criteria. The 204 requirement of being oriented towards turn-key developments was only attained by a small number with companies such as KISKA and IDEO with an office in Germany, but with the main office in Palo Alto in California. 3 IDEO “Innovation is a networking process, a connection process – that is another reason why you can’t be individually locked away. Innovation is about connecting a lot of brains together.” (Brown 2002) 2.3 Research process The underlying research process of this contribution is divided into a block of basic research into industrial design companies in general by doing empirical field research and the IDEO-specific investigation: A. Basic research into industrial design companies • • • Basic field study on the innovation behavior of 111 industrial design companies in Austria and Germany. In-depth field study on the creativity and innovation behavior of 75 industrial design companies in Austria and Germany. Field study on the expectations of 131 industrial firms in Austria towards cooperation with external industrial design companies. Literature and other secondary research. Interviews with IDEO’s specific competitors. Interviews with IDEO’s specific customers. Observation at IDEO in Palo Alto. Interview with the CEO of IDEO, Tim Brown, at the company’s headquarters in Palo Alto.1 B. The case investigation of IDEO • • • • • 2.4 Content of the case investigation The content of the investigation of IDEO consists of a short specification of the company, its history, and peculiarities in its locations, philosophy, field of activity, and organization. To further specify the company, the question is in what ways innovation becomes obvious at IDEO, with regard to its products but also to its inner process. In a next step a people-centric point of view is taken by asking who the driving people behind innovation are within the company and what role leadership plays. Furthermore, we wanted to find out if there is a specific working process underlying IDEO’s working process for generating innovations. What models are used? What is the project management-related process behind the innovations? By trying to get even deeper insight within IDEO the question of methodological support and the peculiarities of the tools and methods applied is raised. In addition, how crucial are modern tools of management and engineering such as QFD, valueanalysis, six sigma, value-analysis, and TRIZ for the company? What tools are especially helpful for the generation of innovation and especially radical innovation? What are the limitations of some of the state–of-the-art tools of management? According to the criteria formulated in chapter 2 of this paper for best-practice examples within the empirical investigation, no other industrial design company showed such an extraordinary profile as IDEO (the Greek word for idea): IDEO was founded in 1991 in Palo Alto, Silicon Valley as a joint collaboration between the engineer David Kelley (who developed the world’s first computer mouse for Apple) and the designers Bill Moggridge and Mike Nuttall. Today, IDEO is a global player with its headquarters in Palo Alto and branch offices in San Francisco, Chicago, Boston, London, Munich, and Shanghai. That means approximately 400 employees worldwide (it is therefore also the biggest industrial design company in the world). It is represented in the U.S., Europe, and Asia and included clientele such as Starbucks, Proctor & Gamble, Nike, Pepsi, Yamaha, Canon, Nissan, Daimler-Chrysler, BMW, Virgin, The Gap, Seiko, HP, Microsoft, NEC and many others. With on average more than one hundred product developments a year, IDEO’s accomplishments include design services that “address all phases of development, from concept generation through final production”, and also strategic services “in order to set appropriate direction for an innovation effort or catalyze creativity within an organization”. Together this describes the full range of turn-key (product) developments. Or as the initial statement on its homepage says: “IDEO helps companies innovate. We design products, services, environments, and experiences.” Its success is also reflected in its industrial design and innovation awards that encompass almost all acknowledged awards including the awards of the IDSA (Industrial Designers Society of America). Just in the years 2004 and 2005 IDEO achieved 17 awards for products ranging from computer devices, communication systems, organ recovery systems such as a kidney transporter, toys, farming equipment, household appliances, and many others. As a result, a Boston Consulting Group study published in April 2006 shows IDEO as number 15 among the world’s top 100 most innovative companies. 3.1 IDEO’s roles for innovation “My main task is to encourage the company to step back on itself sometimes and to think about where it is going and to understand where it has opportunity, understand where it is not that effective.” 205 (Brown 2002) Innovation cannot be isolated from people, but innovation is done by people in an individual but most times collaborative effort. Complex problems, such as the development of radical innovations, require strong multidisciplinary teams. Besides the appropriate forms of leadership this also includes other driving forces such as all people within the organization with a strong commitment towards innovation. With regard to continuous innovation, in particular, those roles also have to comprehend more than the role typology of promoters of innovation as a potential means to overcome restraint within the innovation process (Witte 1973; Hauschildt 2004; Hauschildt and Gemünden 1999; Hauschildt and Chakrabarti 1988; Gemünden and Walter 1995). Empirical results support the fact that leadership is probably an outstanding criterion for an innovative organization (Steiner et al. 2003). But whereas many other organizational facets can be developed or partly substituted, the leadership style cannot easily be developed or changed. Leadership has to be seen in close relationship with the personality of the leader: personality traits show a fairly stable character and so does a leadership style. From a systems thinking perspective the appropriate leadership is fitting to the overall innovation system of the organization. With respect to IDEO’s leadership there have been some outstanding ambivalent personalities responsible for the culture, the climate, and the successful strategy of IDEO: Besides the co-founders Bill Moggridge and Mike Nuttall it was David Kelley, later CEO of IDEO, who established a spirit of continuous innovativeness, playfulness, non-hierarchical multidisciplinary environments, and excellence. In order to be more “inside” the design process again, Kelley (who is also professor in the engineering department at Stanford University) made way for today’s CEO and president of IDEO Tim Brown, but acts still as chairman of IDEO. Kelley is a perfect example of how important the networking function of a leader is. He is a link between IDEO’s practical world of innovation and the intellectual capacity of Stanford University. Tim Brown is furthering the spirit of IDEO, but also adding his personal style by redefining design. In his words design “is a human centered process”, that means that for the generation of innovation the designer has to look at innovation through people’s eyes (Brown 2006). Further, he stresses the importance of innovation as an emotional experience and points out strategies for doing innovation by rapid prototyping. Last not least, Tom Kelley, brother of David Kelley and general manager of IDEO, is not only a leading speaker for innovation within and outside IDEO, he influenced the company during 15 years of growth from twenty to more than 400 designers by being responsible for areas such as business development, marketing, human resources, and operations. Within that process of development reflection, structuring, and reframing have been essential, also leading to publications such as “The Ten Faces of Innovation” and “The Art of Innovation” that led to a better understanding not only for people outside, but also inside IDEO. Achieving a proactive climate for innovation requires strong leadership or, as given here, a team of leaders responsible for spirit, vision, and orientation. It also requires the other members of the organization to become innovators in order to attain an organization characterized by continuous innovation. Tom Kelley mentions here 10 different types of innovators, which are not inherent personality traits (and therefore permanently attached to an individual or to a team), but roles that are available to everyone in the team, and that can be switched depending on the situation (Kelley 2005, p.13). The objective of those roles is to foster innovation within the organization and to give counter arguments to opponents and naysayers of innovation (what Kelley calls the “devil’s advocate”). The different roles are to be used as personas rather than tools and support a philosophy of “being innovation” instead of simply “doing innovation” (Kelley 2005, 14). The personas include “The Anthropologist”, “The Experimenter”, and “The Cross-Pollinator” as learning personas, “The Hurdler”, “The Collaborator”, and “The Director” as organizing personas and “The Experience Architect”, “The Set Designer”, “The Caregiver”, and “The Storyteller” as building personas: The anthropologist is observing human behavior and developing a deep understanding of human interaction with products, services, and spaces (physically and emotionally). The experimenter prototypes new ideas within a process of trial and error. The cross-pollinator explores other systems such as industries and cultures and translates the gained findings for current system applications. The hurdler is a kind of promoter of innovation who is aware of potential obstacles and develops strategies to overcome them. The collaborator brings (multidisciplinary) groups together and helps to make use of those synergies. The director brings talented people together and helps to spark their creativity. The experience architect designs provide for extended experiences that encompass more than pure functionality by connecting to “deeper level with customers’ latent or expressed needs”. The set designer creates an environment that is supportive to the innovative endeavor of the team members and helps them to do their best. The caregiver cares about the customer by being aware of the customers’ needs and is also looking behind basic needs. The storyteller uses narratives to communicate fundamental values and cultural traits for internal morale and external awareness. Those personas are reminiscent of de Bono’s “Six Thinking Hats” (de Bono 2000), but whereas de Bono’s hats want to cover all potential thinking styles (black hat=critical thinking; white hat=positive and constructive thinking; green hat=creative thinking; red 206 hat=emotional thinking; blue hat=observing, organizing, and plan thinking; information-based thinking), visualizing the applied style and building awareness for and training of underrepresented styles, the ten personas are purely focused on different innovation-supporting roles. The personas also differ from promoters of Witte, Hauschildt, and Gemünden since they can be applied by all team members based on their own point of view and own skills and tools, not only by extraordinary members of the organization. Contextual switching between roles (personas) is, as Kelley states, something natural that we are also used to doing (Kelley 2005, p. 13), e.g., if one thinks about oneself as mother, business woman, daughter, grandchild, sister, and head of a club, actually most of us are used to switching roles with ease. By applying and living the roles, people get an opportunity to extend their own field of experience. Within the innovation process it is not necessary that all roles are always represented, but the building of awareness for those personas and the conscious roletaking stimulates a culture of continuous innovation and also opens it up for new thought patterns. differently and flexibly accordingly to the specifics of the given task (Kelley 2001, p. 6). IDEO’s innovation process is divided into five basic steps (Kelley 2001, pp. 6-7; Myerson 2001, pp. 28-33): 1. Understand: The objective is to understand current perceptions. 2. Observe: The question here is to observe real people in real-life situations and inquire “what makes them tick”. 3. Visualize: In this most brainstorming-intense phase it is up to the team to visualize both the novel concepts and also the customers who will use them. 4. Evaluate and refine: Here prototypes are evaluated and refined in an ongoing process with the objective of steady improvement. 5. Implement: The last step focuses on the implementation of the new concept for the purpose of commercialization. Whereas this methodology does not appear special and different at first glance, it actually is in the way IDEO applies it and truly lives it in its daily working processes. 3.2 IDEO’s working environment, teams, and working process “We decided to make a company that was made of differently, different people and so we ended up with a different result, we ended up with a different culture and at the end it has been pretty successful.” (Brown 2006) 3.3 Values and emotional experience “Much more important at IDEO than the process steps are the kind of values which we apply to that process. So, things like being absolutely user centred, using users as inspiration for ideas, rapid and constant prototyping and the work that we work together in teams – those are really the important things. It is rather the HOW instead of the WHAT that matter… It is the culture that makes IDEO effective.” (Brown 2002) “Using spaces is crucial – so we use a lot of project rooms, we make this very physical and tangible! Try to make the project come alive. It might be a lot of materials, it might be lots of experiences that are connected somehow to the project we are working on, it might just be a lot of toys. It could be all kind of things, it could be big posters of users and what they are doing, it can be anything.” (Brown 2002). In contrast to most other industrial design companies where industrial design is done just by industrial designers (Steiner et al. 2003), IDEO is doing real multidisciplinary work that also makes the difference with regard to most American companies in the field of design (Brown 2002): “Besides industrial designers we also have engineers, and we have psychologists, and linguists and anthropologists, and material scientists, and business people, I mean all in the same company, all focused on innovation and design” (Brown 2002). But what gives guidance to the team members in their work towards innovation? Although IDEO provides for a lot of flexibility and freedom within the working process, they apply a welldeveloped and clear methodology that provides for the needed orientation. As Tom Kelley states, the difference to most other companies is the way they interpret that methodology at IDEO; this is done very What about shared values at IDEO and especially with regard to working teams? “There are a lot of shared values. …I think we are quite good at staying focused on the same thing – that is the shared value thing. We can all get very enthusiastic about the same idea; there is a lot of respect for each other’s disciplines. So you might be an engineer and I might be a designer, but I have a lot of respect for what you do and you have a lot respect for what I do, because I know that you are the best in what you do and you know that I am the best in what I do. And so that helps a lot.” (Brown 2002). With respect to the economic value of a project and the manner projects are chosen, IDEO’s CEO gives a further interesting answer: “The economic value does not really match the other forms of value that come from a project. You can have really cool projects that do not pay much money, you can have less interesting projects that pay a lot of money. I want people to work on projects they care about instead of on the projects that pay the most.” (Brown 2002). 207 3.4 Methodological differences within innovation support “You can’t have ideas in the abstract.” (Brown 2002) The reason why the methodological approach strongly differs for incremental and radical innovation is its complexity (see figure 1): Incremental innovation is about the improvement of products, processes, or structures that are widely understood. Further, the indented improvements are marginal and still based on the basic concept. Although such systems can be very complicated it is nevertheless possible to give a relatively clear picture of the indented effects of the incremental innovation on the consumers and other stakeholders. Those kinds of innovation do not lead to breakthrough changes of the underlying system since the system’s patterns behave relatively stably over time. The existing paradigms are still useful but need to be improved. Sound market investigations provide here for the needed understanding of the market system. Talking about thinking modes there is no real need for breakthrough ideas, but instead logical problem solving and hierarchical order dominate creative abilities. The methods applied fulfill the same principles and are relatively demanding with regard to time needed for and difficulty in application; they are based on detailed and sophisticated knowledge of the system’s peculiarities in order to attain improvements. Examples of such tools are: • Quality function deployment (QFD) • Value-analysis (VA) • Six sigma • TRIZ On the other hand, radical innovations are often characterized by a shift in paradigms, a replacement or even destruction of prevailing systems,2 and the development of breakthrough ideas. The development of the whole innovation system cannot be determined since the group of relevant customers and the whole market relevant for the implementation in the future is not known yet (Utterback 1994; Christensen 2000). Therefore, the generation of radical innovation is a highly complex problem that calls for specific treatment. The strategy of having the need to attain knowledge of the given system of products, processes, and structures as perfectly as possible does not make sense anymore, since the objective to attain accurate knowledge of details of a system that shows instable and chaotic behavior (Steiner 2005) is useless: Logics and analytical thinking alone are not the appropriate thinking modes in order to handle this vague situation. Instead, a high degree of organizational creativity is needed to create breakthrough ideas. This cannot happen within a strict hierarchical order, but requires flexibility, openness, and also playfulness instead. The methodology and the applied tools have to be simple and easy to communicate in order to make use of the team’s inherent creative potential. In contrast to the generation of incremental innovation the credo here is to provide for as much guidance and structure as needed to avoid getting lost in chaos, but simultaneously to provide as much flexibility as possible in order to stimulate the organizational creative potential. The objective of the applied tools is to give guidance within a “journey of adventure”. Examples of meaningful tools that could also be observed by IDEO are: • • • • • Systems thinking and system analysis Storyboard based scenarios Creativity techniques Observation techniques Tools for improving the overall sensual sensitivity 208 Incremental innovation Degree of innovativeness Radical innovation Figure 1: Methodological support of innovation according to complexity The limitations of QFD, TRIZ, Value Analysis, and Six Sigma come from the strong determination of putting patterns of behavior, values, and expectation into figures. Instead, observing people and storytelling based on real extremes instead of mean characters might have much more potential. “When we are looking for inspiration, often it’s the people who do things differently that give us the interesting ideas.” (Brown 2002). Talking about the innovation process it is not only about applying a methodology and a set of methods, but more a question of how things are done. At IDEO they study a number of people, whereby “the people who are doing the investigation are sometimes psychologists, writers, movie makers…it will be more and more that we put those scenarios in real films” (Brown 2002). To sum up, aiming at radical innovation requires different paradigms, methodologies, and tools than is required by the generation of incremental innovation. Or as Tim Brown puts it: “Our clients stopped using it…it turned out to be really good at improving existing goods, but terrible for innovation… when a goal is to be innovative it is not useful anymore.” (Brown about QFD, TRIZ, Value Analysis, and Six Sigma 2006). the generation of radical innovations and these modes and methodologies are different from those applied within the generation of incremental innovation: 1. The higher the degree of complexity of the innovation task, the more important the synergetic interaction between convergent and divergent thinking becomes. 2. The higher the degree of complexity of the innovation task, the simpler the underlying methodology has to be. A higher sensitivity according to the underlying system’s peculiarities is needed instead of trying to copy best-practice examples such as IDEO. Copying can be devastating, since a system’s characteristics might be different and not compatible. In conclusion, it shows that the company’s own system – the organization itself – needs to be understood systemically as a basis for effective learning from bestpractices. Hence, learning has to be based on the understanding of the systems’ peculiarities, the filtering of compatibilities, and consequently the modeling and not the copying of other systems. REFERENCES 1. Amabile, T.M. (1983), The Social Psychology of Creativity, Springer, New York. 2. Amabile, T.M. (1995), “Discovering the Unknowable, Managing the Unmanageable,” in Ford, C.M. and Gioia, D.A. 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(Ed.), International Encyclopedia of Business and Management, Vol. 1, Routledge, London, New York, pp. 878-882. 14. Gardner, H. (1997), Die Zukunft der Vorbilder: Das Profil der innovativen Führungskraft. Howard Gardner in Zusammenarbeit mit Emma Laskin, Klett-Cotta, Stuttgart. 15. Gemünden, H.G. and Walter, A. (1995), “Der Beziehungspromotor – Schlüsselperson für interorganisationale Innovationsprozesse,“ Zeitschrift für Betriebswirtschaft, 65, pp. 971-986. 16. Hauschildt J., and Chakrabarti A.K. (1988), ”Arbeitsteilung im Innovationsmanagement,” Zeitschrift Führung und Organisation, 6, pp. 378-388. 17. Hauschildt, J. and Gemünden, H.G. (Eds.) (1999), Promotoren. Champions der Innovation, Gabler, Wiesbaden. 18. Hauschild, J. (2004), Innovationsmanagement, Vahlen, Wiesbaden. 19. Hellström, C. and Hellström, T. (2002), “Highways, Alleys and By-lanes: Charting the Pathways for Ideas and Innovation in Organizations,” Creativity and Innovation Management, 11/2, pp. 107-114. 20. Kelley, T. (2001), The art of innovation: Lessons in Creativity from IDEO, America’s leading design firm, Currency Doubleday, New York et al. 21. Kelley, T. (2005), The ten faces of innovation, Currency Doubleday, New York et al. 22. Kyburz-Graber, R. (2004), “Does case-study methodology lack rigour? The need for quality criteria for sound case-study research, as illustrated by a recent case in secondary and higher education,” Environmental Education Research, 10 (1), pp. 53-65. 23. Myerson, J. (2001), IDEO: Masters of Innovation, teNeues, New York. 24. Peters, T. (1993), Jenseits der Hierarchien: Liberation Management, ECON, Düsseldorf et al. 25. Schumpeter, J. (1934), The Theory of Economic Development, Harvard University Press, Cambridge, Massachusetts. 26. Schwaninger, M., and Hamann, T.K. (2005), ”Theory-Building with System Dynamics – Principles and Practices,” discussion paper, no. 50, University of St. Gallen, St. Gallen. 27. Simonton, D.K. (1975), “Sociocultural context of individual creativity. A transhistorical time-series analysis,” Journal of Personality and Social Psychology, 32, pp. 1119-1133. 28. Simonton, D.K. (1992), “The social context of career success and course for 2.026 scientists and inventors,” Personality and Social Psychology 29. Steiner, G., Strebel, H., Jarz, D. and Pfeiffer, D. (2003), Vom Kundenbedarf zur Produktinnovation: Eine empirische Analyse von Designunternehmen in Österreich und Bayern. Abschlussbericht des Projekts Innovationen durch Design - Eine Analyse der österreichischen Design Branche im Hinblick auf Innovationspotenzial und Wettbewerbssituation, University of Graz, Graz. 30. Steiner, G. (2005), “Innovation and Creativity From the Viewpoint of Systems Thinking and Chaos Theory,” in Gu, J. and Chroust, G. (Eds.), The New Roles of Systems Sciences for a Knowledge-based Society, The First World Congress of the International Federation for Systems Research (IFSR), Conference Proceedings, JAIST Press, Tokyo. 31. Steiner, G. (2006), Kreativitätsmanagement, Gabler duv, Wiesbaden. 32. Steiner, G. and Laws, D. (2006), “From Harvard Business School to Transdisciplinary Case Studies,” International Journal of Sustainability in Higher Education (accepted and in print). 33. Sundgren, M. and Styhre, A. (2003), “Creativity A Volatile Key of Success? Creativity in New Drug Development,” Creativity and Innovation Management, 12/3, pp. 145-161. 34. Ulrich, H. (1994), “Reflexionen über Wandel und Management,“ in Gomez, P., Hahn, D., MüllerStewens, G. and Wunderer, R. (Eds.), Unternehmerischer Wandel. Konzepte zur organisatorischen Erneuerung, Gabler, Wiesbaden, pp. 5-29. 210 35.Utterback, J.M. (1994), Mastering the Dynamics of Innovation, Harvard Business School Press, Boston, Mas. 36. Williams, W.M. and Yang, L.T. (2002), “Organizational Creativity,” in Sternberg, R.J. (Ed.), Handbook of Creativity, University Press, Cambridge, pp. 373-391. 37. Witte, E. (1973), Organisation für Innovationsentscheidungen, Schwartz, Göttingen. 38. Yin, R.K. (1986), Case study research: Design and methods, fourth printing, Sage, Newbury Park, CA. 211 1 Based on an interview of Gerald Steiner with the CEO and president of IDEO, Tim Brown at the company’s headquarter in Palo Alto in October 2002. 2 In the context of radical innovation is Alois J. Schumpeter speaking about the constructive destruction of innovation. See Schumpeter (1934). 212 "LIBRARIANSHIP, SYSTEMS THINKING, INNOVATION AND ENTREPRENEURSHIP: LIBRARY AND INFORMATION SCIENCE IN AN ENTREPRENEURIAL CONTEXT" Terry L . Weech Associate Professor Graduate School of Library and Information Science University of Illinois at Urbana-Champaign 501 E. Daniel Street Champaign, Illinois 61820 USA e-mail: weech@uiuc.edu, Phone, 1-217-333-0646, Fax 1-217-244-3302 http://www.lis.uiuc.edu/~weech/TLWHOME1.htm Abstract: The relationship between librarianship and innovation may not seem obvious to some, but it is common in research organizations as well as commercial business enterprises to employ librarians as part of their support team to stimulate and sustain innovation. The relationship of librarianship to systems thinking was detailed in the paper presented by this author at the STIQE 2004 conference in Maribor, Slovenia entitled "Globalization, Social Policy, Systems Thinking, and Librarianship.” In that paper, it was noted that the literature of systems thinking cited librarianship as involved in the analysis of information systems and librarians as part of a group of people involved in informatics. Further connections with systems thinking were indicated by the themes of "holistic thinking" and interdisciplinarity found in both librarianship and in systems thinking literature. In this paper, these themes will be expanded on to indicate both actual and potential contributions that librarianship can make to innovation and entrepreneurship activities in academic and business contexts. The paper also focuses on the role of students and faculty from the Graduate School of Library and Information Science at the University of Illinois in the activities of the newly formed Academy for Entrepreneurial Leadership. This Academy, funded in part by a grant from the Kauffman Foundation, provides support for a broadening of the understanding, appreciation, and inclusion of entrepreneurship in all disciplines. Among the strategies to achieve this goal, librarians are developing a database of relevant information to provide a base of documented scholarly research and curriculum development material. In recent years, students from the Graduate School of Library and Information Science have been involved with students in the School of Business on innovative entrepreneurial class projects, serving as the information resource facilitators to the business administration students. This, and other programs involving librarians in student, faculty, and private sector innovation and entrepreneur activities are discussed, with a possible model that might be adapted to institutions of higher education elsewhere presented for comment and review. Suggestions will be made on how librarianship can contribute to the synergy of Systems Thinking, Innovation, and Entrepreneurship, specifically in reinforcing the chances for prosperity of transitional countries in the age of globalization. Keywords: Innovation, Interdisciplinary, Entrepreneurship. Libraries, Systems Thinking 1. Systems Thinking As noted in the 2004 paper presented at STIQE 2004, librarianship has a tradition of wholistic thinking that is consistent with systems thinking in other disciplines. (Weech, 2004) In that paper, it was noted that systems thinking was applied to the library as a “learning organization” and that basic textbooks in library management cite systems thinking as one of the more important elements to be applied to the management of a learning organization. References to systems thinking and librarianship were also found in the literature of systems thinking, indicating that others outside the discipline of library and information studies (LIS) recognize that LIS (along with the related areas of informatics and information systems) apply the principles of systems thinking. (Mulej, M., Zenko, Z, and Potocan, V., 2002. p. 1135.) LIS is a fairly new discipline, having developed out of the professions of librarianship in the U.S. and Documentalist in Europe at the end of the 19th Century. In a 2004 paper, I and one of my graduate students explored the extent to which interdisciplinarity has penetrated LIS education in the U.S. (Weech and Pluzhenskaia, 2005). The research conducted in this study demonstrated that the trend in LIS has been to include more interdisciplinary faculty in LIS schools. 213 2. Librarianship and Innovation While there has been a long tradition of incorporating scholarship from other disciplines in LIS, the trend has increased in the past twenty years as LIS as well as other disciplines have adopted computer technology to their own subject content. This innovation has attracted many disciplines to LIS as a source of skills and expertise in information management. It is interesting that the path to innovation has come from LIS to other disciplines through the services found in a wide variety of libraries, but other subject disciplines have also sought out the Library and Information Science discipline to collaborate on special projects and programs. In 2004, I noted the innovation that the LIS profession provided in the classification, organization and retrieval of information with the development of the Dewey Decimal Classification System in 1876 and the Universal Decimal Classification in Europe in 1895. (Weech, 2004) Both of these innovations in information organization stimulated a variety of other information systems. Examples of these information systems are WIPO (World Intellectual Property Organization) and US Patent Classification Systems (for patents), the Standard Industrial Classification (SIC) Codes (Now the NAICS -- North American Industry Classification System) and a number of additional classification systems founded on the same principles. As noted in my 2004 STIQE paper, both Melvil Dewey, who developed the Dewey Decimal System, and the group of Belgian lawyers who developed the Universal Decimal System (UDC), did so with the intention that the use of these innovative information retrieval systems could enable any scholar or other individual to go into any library in the world using the decimal classification system and by indicating the decimal number of the information needed, and retrieve that information without resorting to complex language translations. While there are many reasons why this information retrieval system did not in fact reach its full potential, it did establish LIS as an innovator in information management and perhaps led to the interest of other disciplines in working with librarians and scholars and researchers in the LIS disciplines on projects related to innovation. It might be noted that Melvil Dewey was not only an innovator in a number of other areas, such as spelling reform (he preferred to spell his name Dui), but was also an entrepreneur. He founded a company to sell library furniture (such as card catalog cabinets and library tables and desks called “The Library Bureau.” Some years later Remington Rand purchased The Library Bureau and produced early information retrieval computers under the Remington Rand name. Melvil Dewey is also said to have organized an excursion to the British Isles to the first British Library Association meeting and retained the rights to the concession on board to rent deck chairs to the librarians who took the trip. He also was involved in a number of real estate entrepreneurial activities, including land speculation in Florida. Thus early founders of the discipline of library science were not only innovators, but also entrepreneurs in both the classical sense of starting new projects and in the more contemporary meaning of developing business enterprises for financial gain. 3. Librarianship and Entrepreneurship When we think of contributions of librarianship to entrepreneurship activities, special libraries serving business enterprises often come to mind. Traditionally, libraries have been categorized into four categories: Public, Academic, School, and Special. Public libraries are those established to serve the general information needs of the public and are usually funded by public tax money. Academic libraries are associated with institutions of higher education (post high school) and as such are funded by higher education funding sources. School libraries refer to libraries in elementary and secondary schools serving the teachers and students. In the U.S these libraries generally serve schools from kindergarten through high school. Special libraries serve the clientele of a specific group, which may range from specialized research libraries serving government, museums, hospitals, research institutions and private business enterprises. While the first special libraries were libraries serving government agencies (a library serving Wisconsin State Government is often cited as the first “special library in the U.S.), it was not long before the business sector recognized the value and potential contribution of libraries to the economic success of private businesses, not only in areas of information management, but also in providing the resources for the development of innovative products and to stimulate entrepreneurial activities within the organization. It is interesting that in recent years some businesses have closed their library services as a cost cutting measure on the assumption that the use of the internet would be an acceptable substitute for the services once provided by the organizations special library. It appears that some of these organizations have come to realize that the internet is not a substitute for the support services of a special library staff in the organization. It should also be noted that some of the organizations that did away with their special libraries ended in bankruptcy or were taken over by other organizations. Unfortunately for the LIS profession, we cannot establish any causal evidence between financial failure of organizations and the elimination of libraries, but it might be worth exploring. But special libraries associated with business enterprises are not the only type of libraries that are involved with entrepreneurial activities. In April, 2006 a search of the terms “entrepreneurship” and “libraries” in the web browser Google yielded 1,980,000 hits.. When the search was limited to entrepreneurship and 214 public libraries, 1,340,000 links were retrieved. Clearly libraries in general, and public libraries in particular in the U.S. are actively involved in providing resources and support for entrepreneurial activities. The following excerpts from the Google search provide some examples of the types of activities related to entrepreneurship that occur in libraries with web URLs listed where more information can be found:: Fort Smith (Arkansas) Public Library: A program for potential small business owners has been launched at the Fort Smith (Arkansas) Public Library. The River Valley Chapter of SCORE, a non-profit organization offering business advice and training, has provided the Fort Smith Public Library with a new laptop computer with special business software to be used for creating business plans by those in the process of developing new and/or expanding business ventures. SCORE volunteers will be available to help prospective business owners in the intricacies of the business plan and software. http://www.fspl.lib.ar.us/ Greensboro (North Carolina) Public Library reported on “premium information resources” for students, researchers, and entrepreneurs available at the library for library card holders. These users can gain access to selected business and research resources online once they are authenticated by typing their public library card registration number. http://www.greensboro-nc.gov/departments/library The University of Michigan’s “Internet Public Library “IPL” has a special page on “Resources for entrepreneurs: those who organize, manage, and assume the risks of a business or enterprise.” http://www.ipl.org/div/subject/browse/bus33.00.00/ 4, Role of Innovation and Entrepreneurship in Library and Information Science Courses Many courses offered at my Graduate School of Library and Information Science to students who plan to become librarians incorporate the concepts of supporting innovation and entrepreneurial resources to those considering social, economics or business activities. For example, when I teach courses in Information Sources and Services, I not only provide background on how to retrieve facts and data relevant to economic and business enterprise topics, but I also discuss strategies for providing resources to individuals in the community who may be interested in applying for patents for innovations they have developed, or are considering entrepreneurial activities and wish to have more background information to assist them in their efforts. In addition to the appearance of units on entrepreneurship within general courses, there are two specialized courses directed specifically at topics related to innovation and entrepreneurship that are offered in our curriculum.. The first such course is a course titled “Competitive Intelligence.” The official course description is “Competitive Intelligence: With the rapid proliferation of information communication technologies (ICTs), especially those that facilitate (positively and negatively) the transfer and management of information assets, an understanding of both competitive and strategic intelligence seems de rigeur. This course seeks to provide an overview of the principal theories of both competitive and strategic intelligence as well as methods for applying these theories to organizations that disseminate, manage, analyze, and/or archive information such as libraries, corporate information centers, dotcoms, and media or research firms. Furthermore, this course will introduce students to various organizational metaphors so that they can better understand which theories best apply to specific organizations and situations. Lastly, this course will teach students how to analyze an organization using the SWOT technique (strengths, weaknesses, opportunities, and threats) in order to develop solutions that will make that organization more competitive, strategic, and less vulnerable in the short term.” (University of Illinois, GSLIS Full Catalog, 2006, LIS 590CTI) Students in the Competitive Intelligence course are involved with projects in other departments and bring the special expertise of their information analysis to projects in the business school and elsewhere. A number of the students graduating from this course go into special libraries in the private sector or work as entrepreneurial librarians in information management and analysis. The second course that has particular relevance to the theme of innovation and entrepreneurship is the course in Information Consulting. The catalog description of this course indicates that is designed to provide students with "real world" experience as Information Specialists on cross-functional teams working on actual projects for business and industry clients. In addition to regular class sessions, students are assigned to work with teams of MBA (Master’s of Business Administration) students, providing crucial assistance in accurately defining and satisfying the clients' projected information needs. Course Objectives are listed as: 1) to become effective and contributing members of cross-functional work teams; 2) to develop an understanding of the people, processes, and resources involved in business and industry information work; and 3) to apply knowledge of information resources and technologies to organizational problemsolving. (University of Illinois, GSLIS Full Catalog , 2006. “LIS590IC”) The Information Consulting course in the Graduate School of Library and Information Science has been well received by the students and by faculty and students in the College of Business and the Illinois MBA program. The students work closely with the Illinois Business Consulting (IBC) group, which is as student consulting organization in the college of Business. Each year, approximately 200 students perform 40-50 projects 215 for Fortune 500, mid-sized, new venture and nonprofit clients. The organization enables students to apply their classroom learning to real business issues. The library school students work as part of these teams and they have received recognition and praise for their contributions to the success of the team’s performance. More information on the Illinois Business Consulting group can be found at: http://www.ibc.uiuc.edu/ 3) Engaging in a process of continuous innovation, adaptation and learning, 4) Acting boldly without being limited by resources currently in hand, and 5) Exhibiting heightened accountability to the constituencies served and for the outcomes created. (Dees, 2001) In April of 2006, a “Youth Social Entrepreneurship Symposium” was held at my University, which involved representatives from the Academy of Entrepreneurial Leadership, University of Illinois Extension Services, and the Graduate School of Library and Information Science. The purpose was to discuss seven innovative youth programs from across the country, all sharing a common vision: youth empowerment and leadership that is linked to community-building and social change. It is geared for youth leaders, teachers, librarians, youth educators, community leaders and others. The Academy for Entrepreneurial Leadership in cooperation with the Center for Global Studies recently announces a Request for Proposals for the first annual Symposium on Entrepreneurship and Global Culture Entitled, "Entrepreneurship Can Change The World." The RFP describes the symposium as intending to address the ways in which entrepreneurship, broadly defined, can address social, economic and political ills, while taking into account the unique attributes and characteristics of regions, nations, cultures and peoples. A copy of the RFP is available for download from the Academy's website, at http://www.ael.uiuc.edu In addition to the above involvement across departments at the University of Illinois, my school, The Graduate School of Library and Information Science, also has monthly meetings with a group of executives from the private sector representing a wide variety of companies in the region (soy product processors, large equipment manufacturers, electric power producers, and one of the largest property insurance companies in the U.S.) This group is called “The Corporate Roundtable.” The purpose of the meetings is to gain insight in the information management needs of businesses while educating the representatives from business to the services that can be provided by faculty and graduates from programs of library and information studies. 5.Academy of Entrepreneurial Leadership The Academy for Entrepreneurial Leadership, was established at the University of Illinois by a $4.5 million grant from the Kauffman Foundation of Kansas City to initiate cross-campus entrepreneurship education. The Academy encourages non-profit initiatives, which create long term community value, as well as those that are economically promising. Value is recognized not just a financial term, but a social, intellectual, cultural and artistic terms as well. The Academy offers financial, teaching, and research resources to faculty and students on the entire campus. The encouraging and supporting students and faculty from all academic departments and units to include entrepreneurship in their research and teaching is one of the missions of the Academy. A number of Library and Information Science faculty at my School have become involved in the Academy of Entrepreneurship. Most notably one of our former faculty members is currently developing an online database for the Academy which will be a beta version of an entrepreneurial research database. This database will be maintained by the Kaufmann foundation. It is described as "a unique, multi-disciplinary aggregation of resources, events and data for researchers and policy makers." The Academy website cites “entrepreneurship” as a new discipline that lacks an extensive academic base of documented scholarly research and curriculum development. Thus the need for the cross-disciplinary database on entrepreneurship is being developed at the Academy for Entrepreneurial Leadership as the “Entrepreneurial Research Portal.” (2006). The Academy web portal also provides links to case studies and best practices in entrepreneurship activities. These can be found at http://www.ael.uiuc.edu The Academy also supports programs on “Social Entrepreneurship” and provides resources on this topic as well. Professor J. G. Dees describes “social entrepreneurs as playing the role of change agents in the social sector, by: 1) Adopting a mission to create and sustain social value (not just private value), 2) Recognizing and relentlessly opportunities to serve that mission, pursuing new 6. Conclusion It is hoped that this paper has established the potential for librarianship to be involved in the support of both innovative and entrepreneurial activities in a wide variety of contexts. Because of the inherent multidisciplinary nature of both innovation and entrepreneurial activities, and the need in both cases to make ties to wholistic thinking, the relationship between systems thinking and innovation and 216 entrepreneurial activities should be self-evident. The ties to librarianship should also be evident for the multidisciplinary nature of that discipline and the tradition of both wholistic and innovative approaches to information management that have been developed by the discipline. As noted earlier in this paper, the role of librarians in innovative and entrepreneurial systems thinking is not just limited to the role of providing resources on demand. In the examples provided above, it should be noted that librarians have played central roles in multidisciplinary teams developing innovative approaches to entrepreneurial questions. If entrepreneurship is to be considered a new discipline in and of itself, as the Academy of Entrepreneurial Leadership at the University of Illinois suggests, then librarians and related information management professionals have the potential to play a significant role in the development of this new discipline. Once the traditional ties of librarianship to systems thinking is recognized, the potential for systems thinking to play a significant role in the development of the discipline of entrepreneurship should also be recognized. In fact, the activities at my University in developing multidisciplinary units such as the Academy of Entrepreneurial Leadership, might become the model for other Universities, especially those having library or related information studies schools within the University. By incorporating librarianship into the scholarly study of innovation and entrepreneurship, future librarians will benefit from exposure to the importance of meeting the needs of innovators and entrepreneurs. Thus in the long run, it is clear that all parties benefit from this arrangement. Librarianship may have a special opportunity apply the strategies of systems thinking in the efforts to improve the chances for prosperity in transitional countries. As this paper has noted, librarianship has a tradition of using systems thinking strategies in the age of information and globalization. In most transitional countries, libraries and librarians have had a central role in information provision and global orientation. Under socialism, libraries played a very important role of conveying and maintaining the socialist dogma, in many cases representing the central government’s information distribution agencies as an extension of the governmental information and cultural agencies. As the transitions have been made toward more decentralized and entrepreneurial based economic systems, libraries have also found themselves in a more decentralized environment, requiring more attention to local rather than central needs. It is the position of this paper that libraries in transitional countries are in an optimal position to support innovative and entrepreneurial activities through the involvement of librarians at the local level, whether in an university setting (academic library), in a corporate context (special library), or in the most pure and potentially innovative of all contexts, the public context (the public library). The public library especially has the potential to play a significant role in reinforcing systems thinking and improving the chances for prosperity. By working with local entrepreneurs and assisting them in reaching their goals using the multidisciplinary traditions of systems thinking that the profession of librarianship carries with it, the discipline of library and information science can truly contribute to the successful transition to innovation and entrepreneurship. REFERENCES 1. Academy for Entrepreneurial Leadership. “Entrepreneurial research Portal.” (2006) http://www.business.uiuc.edu/ael/initiatives/researc h_services.htm (Accessed 4/15/06) Berelson. (1949) The Library’s Public: A Report of the Public Library Inquiry. New York: Columbia University Dees. (2001) “The Meaning of ‘Social Entrepreneurship’ http://www.fuqua.duke.edu/centers/case/documents/ Dees_SEdef.pdf (Accessed 4/15/06) Mulej, M., Zenko, Z, and Potocan, V. (2002) "The Visionary Companies, and Excellent Case of the Informal Systems Thinking." In the Proceedings of the Informing Science+IT Education Conference, June 19-21, 2002, Cork, Ireland. University of Illinois, GSLIS Full Catalog (2006). “LIS590CTI-CompetitiveIntelligence” http://www.lis.uiuc.edu/oc/courses/catalog/ (Accessed April 15, 2006) University of Illinois, GSLIS Full Catalog (2006). “LIS590IC-InformationConsulting” http://www.lis.uiuc.edu/oc/courses/catalog/ (Accessed April 15, 2006) Weech. (2004) “Globalization, Social Policy, Systems Thinking, and Librarianship”. In STIQE 2004, Proceedings of the 7th International Conference on Linking Systems Thinking, Innovation, Quality, Entrepreneurship, and Environment. Maribor, Slovenia, June 23-26, 2004. Institute for Entrepreneurship and Small Business management, Maribor, Slovenia, 2004. Weech and Pluzhenskaia (2005) “LIS Education and Multidisciplinarity –Enhancement or Disintegration: an Exploratory Study.” Journal of Education for Library and Information Science Education Volume 46, No. 2 (Spring, 2005) 2. 3. 4. 5. 6. 7. 8. Copyright, Terry L. Weech, April , 2006 217 218 I SBN 9 61 6 3 5 4 4 7 - 7 9 799616 354478