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Co-operate or Perish - Assisting rural producers to adapt to changing markets

Neville Anderson & Stephen Chaffey

Contents

Executive Summary 3

Background 5

Figure 1: Terms of trade for Broadacre Industries, 1977-78 to 1996-97 6

Figure 2: Terms of trade for the Dairy Industry, 1978-79 to 1996-97 6

Case Study Context 7

Principles, Considerations & Assumptions 8

Type of Group 8

Motivations 8

Innovation 8

Strategy 9

Intellectual Capital 9

Competitive Advantage 9

Regional Development 10

Contractual Relationships 10

Figure 3: Parties to the Contract 11

Experiential Learning 11

Table 1: Levels of Problem Complexity 12

Action Learning 12

Table 2: Characteristics of Action Learning Identified in the Projects 12

The Laws of Learning 13

A Framework for Learning 13

Table 3: Examples of Some Attitudinal Changes In the Two Case Studies 15

Table 4: Relationship Between Change Management Processes & AUSAAB 15

Processes and Techniques 16

Figure 4: The Better Practises Process 16

Table 5: Characteristics and Time Lines for Development of HiCountry Fruits 16

Example of Process and Techniques for HiCountry Fruits 17

Table 6: Process Description for HiCountry Fruits – Planning Phase 1 17

Table 7: Process Description for HiCountry Fruits – Planning Phase 2 18

Table 8: Characteristics and Timelines for AlpValleysTM Summer Fruits 19

Example of Process and Techniques for AlpValleysTM Summer Fruits 20

Table 9: Process Description for AlpValleysTM Summer Fruits 20

Case Study Outcomes To Date 20

HiCountry Fruits Pty Ltd 20

Some Features and Benefits of the Managed Process 21

Table 10: Features and Benefits Observed in the Case Studies 21

AlpValleysTM Summer Fruit Growers Incorporated 22

Lessons & Questions for the Future 22

Implications for Further Action and Research 23

Conclusion 23

Appendix 1 24

Various Forms & Descriptions of the Learning Cycle 24

Figure 5:The Kolb Learning Cycle 24

Figure 6: The Learning Process 24

Bibliography 25

Executive Summary

Our purpose in writing this paper is to share the lessons we have learned in successfully applying a range of conceptional tools including adult learning models, to the formation of two industry groups in NE Victoria. The case studies selected are HiCountry Fruits Pty Ltd and Alpine Valley Summer Fruits Growers Inc.

Primary producers have been under immense financial pressure over recent years from such factors as a continuously declining terms of trade and the emergence of Supply Chain Management (SCM) organisational forms, both in Australia and increasingly internationally. These supply chains are dominated by very large companies (eg in Australia, three supermarket chains are now responsible for 86% of fresh food sales to consumers). It is becoming increasingly obvious that producers will need to learn to co-operate much more extensively both with each other (horizontal alliances) and with other members in the supply chains (vertical alliances) if they are to survive, let alone prosper. Horizontal alliances enable producers to effect cost reductions not available to isolated small producers, but more importantly, to target higher value-added markets for their product both in Australia and overseas.

The long-term decline in the profitability of agriculture on which the prosperity of rural Australia (apart from all but a few of the larger regional centres) has resulted in a “cash drought” in “the bush” which has triggered the now well documented economic, ecological and social problems. These three are like the legs of a three-legged stool – each is essential and yet they are inextricably linked in that, in the long term, all three must be in place for survival of the whole.

The conceptual models and processes analysed in this paper in the context of forming producer groups also have much broader application in helping to revitalise rural and regional Australia. They can be applied in assisting rural communities to revitalise through co-operating in developing a community vision and a strategic plan for making it happen (eg in WA and a trial currently taking place at Alberton in Gippsland). They can also be applied to assist communities to address specific problems such as withdrawal of health and banking services.

A major implication for government from our work is the importance of facilitating the emergence of the alliances that are going to underpin the revitalisation or rural and regional Australia. Alliances can take many forms including formal and informal networks, co-operatives, long term contracts, joint ventures and acquisitions. All are important. All can help to lubricate the wheels of necessary and inevitable change, the pace of which continues to accelerate. In particular, co-operative research and development has been allowed to languish in Australia over recent years compared to North America and northern Europe. Government has the opportunity to leverage very substantial revitalisation of rural and regional Australia on a modest investment through facilitating the development of these crucial alliances.

This paper is about the processes, methods and techniques used successfully to support two industry groups to identify and address their core problems and develop the alliances in order to move forward in an organised, managed and collaborative manner into a more prosperous future. In one sense, this is a micro process for effecting change management. It can also play a vital part, however, in addressing the enormous “macro” problems identified in this paper as currently bedevilling the development of rural and regional Australia.

Background

Our purpose in presenting this paper is to outline approaches, procedures and methodology which have proven successful recently in facilitating horticultural producers to form themselves into groups with a view to value-adding to their product. These groups have been able to realise cost reductions through such avenues as shared facilities. More importantly, however, it has enabled them to segment their end markets more effectively and profitably with a prospect of exports.

The malaise in rural Australia has been well documented. For example, ABARE (Research Report 98.6 page2) found that in 1994-95, 63% of the income of broad acre farmers in Australia came from off-farm sources while 39% of these families received income from off farm salaries and wages. Average incomes are also well below the Australian average (eg In 1994 – 5, broad acre and dairy farm families averaged $27,300 compared to average household income in Australia of $38,700).

The root cause of this “rural crisis” is the long term and continuing decline in the profitability of goods produced in rural Australia. This long-running “cash drought” has starved the bush of its economic life blood and this has resulted either directly or indirectly in most of the myriad social, economic and ecological problems currently impacting rural Australia (eg; How can producers set capital aside to invest in long term ecological work when they are worrying about meeting this month’s mortgage interest repayment?). The health of all but a very few large rural cities are almost entirely dependent on the profitability of regional agricultural produce and the agribusiness that processes it.

Any Rural Communities Program (RCP) that does not include a strategy for addressing this root cause of the current rural malaise will not provide a sustainable long-term solution to the problems currently bedevilling rural and regional Australia.

The model outlined in this paper is supported by case studies. Our purpose is to share the information gathered and convey the exciting potential which is achievable if the root cause of the rural malaise i.e. producer unprofitability – is addressed. In order to do this it is first necessary to understand the key pressures facing agricultural producers at the present time. These have been addressed in some detail elsewhere and hence only the key pressures shall be briefly identified here –

1. The cost price squeeze has been well documented in the past by ABARE and others. Most studies have found that average annual agricultural productivity growth has been between 2 and 3 percent for Australia. Despite the continuing increase in the productivity of key agricultural industries the terms of trade continue to decline at a still higher rate due to high input prices. Graphs below illustrate the declining terms of trade confronting the broad acre and dairy industries (Figures 1 & 2).

There is no reasonable prospect of this cost price squeeze relenting, at least in the short to medium term. It is therefore a “fact of life” for rural Australia.

Figure 1: Terms of trade for Broadacre Industries, 1977-78 to 1996-97

Source: Economics Branch, Department of Natural Resources and Environment, “Productivity Growth: Multi factor productivity on Australian and Victorian broad acre and dairy farms”,

Figure 2: Terms of trade for the Dairy Industry, 1978-79 to 1996-97

Source: Economics Branch, Department of Natural Resources and Environment, “Productivity Growth: Multi factor productivity on Australian and Victorian broad acre and dairy farms”,

2. Supply Chain Management (SCM) is increasingly dominating world agricultural markets. It is a concept initially developed by the Dutch and reportedly supported by US$300 million of government funding. Supply chain management may be defined as “an integrated approach that aims to satisfy the expectations of consumers through continual improvement of processes and relationships that support the efficient development and flow of products and services from producer to consumer” (“Chains of Success”, Commonwealth of Australia, September 1998 page 10). Alliances, both horizontal (between parties at the same levels), and vertical (between parties at different levels), are integral to SCM.

Australian producers are amongst the least prepared in the developed world to exploit this new development. Small and Associates in 1997 found that:

  • 45% of Australian producers had not developed close relationships with the next link in their supply chains (vertical alliances).
  • Only 9% had regular face-to-face contact with Asian customers.
  • Over 50% of Australian exporters (not producers) did not have regular links with others at the same level in the chain (horizontal alliances).

It is imperative that producers co-operate with each other, thus forming horizontal links. This will empower them to search much more effectively for profitable markets for their products.

In Australia, the three big supermarket chains now reportedly control around 86% of the fresh produce market (White 1998). They have made it clear that they prefer to deal with only a small number of suppliers who can regularly deliver to a specified quality standard. It is difficult to overestimate the ramifications for producers of this retail revolution.

Producers who are accepted as members of one of these three supply chains need to realise that they are at the mercy of supermarket customers. They need to develop effective forms of horizontal relationships with each other, as a counter balance.

The model proposed below facilitates the emergence of SCM in Australia and the development in particular of the horizontal linkages that will be crucial to producer profitability.

Case Study Context

This report will consider two case studies. The first is the formation and development of a marketing company HiCountry Fruits Pty Ltd. This company was formed by a group of six apple-producing businesses based around Beechworth and Stanley in North-East Victoria. This project has been running since July 1998. Apple growing in the Beechworth/Stanley district has been practised for many generations. Today the area is a small but distinct apple-growing region. The idea to form a marketing company among the remaining producers was first put forward as a throwaway line at an annual general meeting of the regional fruit growers association.

The idea originated from the pressure of market forces that were demanding larger volumes of fruit to be supplied consistently over longer periods and increasing pressure for each business to spend large capital sums on ‘state of the art’ packing and grading equipment to meet strict quality assurance guidelines. These changes were increasingly marginalizing the small producer.

The expressed need of the group was the ability to communicate as ‘one’ to the outside world so as to source further assistance to support their aims. The implied needs were to help them to articulate their purpose, discuss their motive, dispel mistrust and generate commitment. To achieve their goals, assistance was needed to manage the change process and pose the relevant questions in an attempt to obtain the required information for informed decision-making.

The second case study is focused on the formation of the AlpValleysTM Stone Fruit Growers Association Incorporated. Stone Fruits such as peaches, nectarines and cherries have been grown in North East Victoria for many years. The industry consists of approximately 30 small producers with two or three larger producers. In January 1998 a small group of producers came together and identified what to them were the major impediments to further development of the industry (Mitchell 1998). Issues identified included.

  • Lack of direction for the industry
  • Poor communication or co-operation between growers
  • Little support from industry levies
  • No local association and poor support from regional associations
  • Lack of representation and political clout
  • Inaccurate and insufficient information on the industry
  • Growers from the same region competing against each other in the market place
  • Large variation in QA standards amongst growers

Our task was to assist each group achieve their aims and ambitions in ways that would assist them bring real and long lasting change to benefit both them and their community. This was happening in a world that was well endowed with sources of essential advice addressing aspects of a solution but not in themselves establishing the processes necessary for producers to cope successfully with rapid holistic change.

Principles, Considerations & Assumptions

The following sections summarise some of the principles, considerations and assumptions that underpinned the thinking and actions for each case study.

Type of Group

In both cases the type of group that was being formed was clearly based around a ‘complex goal’ in the context of a long-term time frame. The original challenge was based around planning and management of medium to long-term strategies and tactics. As the groups evolved it emerged that there was a need focused on on-going learning, problem solving and continuous improvement and innovation (Clark & Timms 1999 pg 29).

Motivations

The early discussions and preparation made with these groups helped to identify what were the real motives for change. One of the most important principles of adult learning is that it is problem centred (Strachan 1992, quoted in Clarke & Timms 1999; Bawden 1985). The ‘problem’ had not yet been fully articulated and explored by the group in a way that engendered problem ownership and focus.

Senge (1990) argues that long-term change only occurs when people’s hearts and minds are committed. It was clear from initial discussions, hearts and minds were uncertain about the changes being proposed. No clear goal had been articulated and not everyone was fully engaged and contributing to the effort. Any work with these groups had to address these issues if it was to sustain the longer-term nature of the change being made.

Innovation

The crudest meaning of the word innovate is ‘to change or alter by introducing something new; ‘to remodel; to revolutionise’ (Webster’s International Dictionary 1906). These group’s proposed innovation was motivated by market forces. It was strategic in nature and would potentially involve changes in marketing, production, packing and grading, knowledge sharing and the social dynamics of the industry in the region. Bryant (1998, quoted in Clark & Timms 1999) concluded from empirical studies that ‘innovation primarily involves social processes’. It was clear from initial discussions that both formal and informal networking, information sharing and discussions needed to happen for these groups to make their desired changes.

At the core of these innovations was the need to learn. Not so much about technical or information based issues but about each other and each other’s business. This would require structuring a learning event that supported change in people’s level of awareness and understanding of the issues and a sharing and reaching agreement on aspirations. This would underpin the attitudinal changes required and lead to skill and behavioural changes necessary to make the innovation (Stanfield 1998)

Strategy

The early task for these groups was to define their strategy. Porter (1996) argues that strategy is about defining and communicating a company’s position, making tradeoffs and forging a fit amongst its activities. Fit among activities can be focused at activities within each business or at horizontal alliances between producers or vertical alliances along the supply chain. For example, these groups of small businesses would have to decide if they wanted to trade-off their own brands for another shared brand. They would be faced with opportunities of ‘forging fit’ among their activities such as reduced numbers of packing sheds or a greater degree of collaboration in purchasing inputs or plant varieties. They may also have opportunities to supply their products to new customers within a much shorter supply chain.

For a group of small businesses the change they were proposing was potentially significant and would require each to make tradeoffs and to create a better fit among their respective activities. The task for the facilitator was how best to create the environment and to select appropriate processes, techniques, and tools best for this situation. How does one help this process to happen naturally and safely for all, given the long-term nature and significance of the changes?

Intellectual Capital

Sherry (1999) believes intellectual capital is the new paradigm for business in the 21st Century.

‘Intelligence becomes an asset when some useful order is created out of free-floating brainpower … when it is captured in a way that allows it to be described, shared, and exploited; and when it can be deployed to do something that could not be done if it remained scattered around like so many coins in a gutter.’

The individuals in these groups did not just want to implement change in the way they physically marketed a product. They needed to share their considerable intellectual capital to stabilise and improve their situation. This transformation needed to be made easy, safe and to be a positive experience that continued to move the groups forward. If Sherry is right then in the future the intellectual capital of these groups could become one of the main ways they would differentiate themselves from their competitors by doing things better, smarter and faster.

Competitive Advantage

In the 1990’s the strategies for business to gain competitive advantage had shifted toward strategic alliances and joint ventures among others. This shift was underpinned by the notion that business systems, not just individual firms, create customer value, and that the focus of competition, was system against system, rather than one business against another (O’Keefe 1996)

For individual businesses, the idea of strategy has shifted toward the resource-advantage theory (R-A). The theory suggests it is resources that are difficult to imitate and substitute and these are the basis for superior performance in a competitive business environment. These resources are embedded as core competencies within the firm (O’Keefe 1996).

The resources at the disposal of HiCountry Fruits and Summer Fruits are things like packing sheds, the quality and quantity of land and water, the uniqueness of altitude and climate, quantity and quality of fruit varieties and the distinct differences of the district compared to many other apple growing regions. However it is not just the resources that bring competitive advantage it is the way they are used.

A core competency that lies at the foundation of the R-A theory is the learning capacity of the organization (the people) and its (their) ability to innovate (O’Keefe et al; Sherry 1999: Senge 1990). The formation of a company and an association was in essence, the formation of new organizations that had the opportunity to develop the current core competencies and discover new ones. It was an opportunity to start the learning process to discover and build the core competencies that underpin sustainable competitive advantage for the groups. O’Keefe et al (1996) suggests the secret to sustainable competitive advantage lies in fields such as the ability of the organization to learn, its market orientation, firm culture, and climate. All of these elements were on the table for change and improvement with both groups.

Regional Development

The wider region in which these groups exist was also undergoing change with the emergence of the Australian Alpine Valleys Agribusiness Forum (AAVAF). AAVAF is a government sponsored, community owned and run organization. The purpose of AAVAF was to, become a vehicle for enabling the regions agricultural products to become recognised as world’s best. The focus for AAVAF was to support the capabilities of the people, companies, and institutions of the region in developing the resources there. For AAVAF to realise its purpose (especially with small businesses) it required people (eg; growers of apples or stone fruit) managing resources in a more collaboratively manner to ‘set up’ the synergies with AAVAF.

Anderson (1998) identifies community leadership as one of a number of key success factors for AAVAF. Israel et al (quoted in Anderson p 6) suggested that community leadership was about communities being able to act on local matters, with leadership skilled in involving a diverse set of actors in local decision-making who operate on democratic principles and place the welfare of the community (group) above the needs of special interest. HiCountry Fruits and summer Fruits required this type of leadership and any process design and implementation needed to support and empower this view of leadership.

It was opportune that AAVAF was emerging at this time as these groups had the opportunity to be proactive and present themselves as an organised, collaborating group of people with the ability to supply world-class products. This would make a direct contribution to a key outcome for AAVAF early in its life span.

Contractual Relationships

An important part of work of this nature is the formation of informal contracts that make clear the roles and expectations of the parties involved. It seems all too often services are provided to segments of the community without all parties (Table 1) making clear the arrangements under which work will be conducted. Some of the features of the formation of contractual agreements can be summarised as follows;

  • Clearly deciding to establish some form of agreement or contract between parties
  • Confirming and agreeing to the scope of the project, duration, time involved, what will / will not be included in the work
  • Clear performance expectations, who will do what by when, expected outcomes by all parties
  • Defined roles and responsibilities of all parties
  • Establishing some professional communication mechanisms between parties
  • Determination of standards of work, behaviour, communication
  • Establishing levels of commitment to the project
  • The terms and conditions of the contracted work. Often the terms are costs that are incurred but covered by another party such as government. If initially the terms and conditions of the contract are clearly defined to the parties there is more likelihood of achieving optimum value for the time and money spent.

Figure 3: Parties to the Contract

Experiential Learning

Many commentators have described experiential learning. A summary may help to clarify the concept (Appendix 1).

Over a fifteen-month period HiCountry Fruits went through many learning cycles. The learning cycles occurred at a number of levels. Checkland (quoted in Bawden 1985) suggested different types of problems demand different methodologies. Bawden (1985) described four levels of problem focus that could be linked to the learning cycle.

Recognition of the level and type of problem each group was dealing with was useful for two reasons. Firstly it assisted the design of actions necessary to move the group forward. For example the directors of HiCountry Fruits were faced with a complex situation they wanted to improve. It was important to recognise the level of problem focus was strategic when designing the early workshops. This meant delaying the urge to move to tactical or operation issues until the strategic was issues were dealt with (Table 2). Secondly, it served as a reminder that just tackling tactical or operational management issues without appropriate strategic planning that encompassed all the industry players would most probably cause problems at a later date when they would be more difficult to resolve.

Table 1: Levels of Problem Complexity

Problem Focus

Outcomes

Applications

Key Questions & Focus

Given this complex problem, how can I improve the situation?

Client satisfaction

Strategic Management

We are facing these threats; how do we improve our future prospects? There are many things we must do; How can we determine & agree on our priorities? I can’t do this alone; how can I involve other people?

Given this system, how can I optimise its performance?

Performance optimisation

Tactical Management

How do we get a standard QA system? We have 6 businesses & many varieties; how do we best market our products? How do we organise our financial, legal & marketing systems?

Given this component, how can I improve its effectiveness?

Problem resolution

Operational Management

How do we best organise our payments from the market? How do we improve our fruit thinning techniques?

Given this phenomenon, why is it so?

Puzzle Resolution

Scientific Research

Our apples are regarded as one of the best eating apples in the country. Why is this? Our cherries are judged to have superior flavour. Why?

Adapted from Bawden (1985)

Action Learning

Action learning is a continuous process of learning and reflection, supported by colleagues, with an intention of getting things done. It aims to allow individuals to learn with and from each other by working on real problems and reflecting on their own experiences (McGill & Beatty 1992)

Table 2: Characteristics of Action Learning Identified in the Projects

Component

Characteristic or Comment

Definition

A continuous process of learning & reflection supported by colleagues with the intention of getting things done

Learning Basis

The relationship between reflection & past action, thinking through, reflecting, and linking past action and more effective future action.

The nature of Action Learning

End points are uncertain, there is no right & wrong answer, projects can be specific issues or problems or complex & messy, projects have to be real issues or real problems

Motivation

Group members must want to do something about the issue or problem & be prepared to act

Design

Briefing, initial workshops, action phase, followed by these steps repeated for the second cycle

Immediate Goal

To initiate a significant amount of organisational change & to ensure the change is successful

More Important Goal

For participants to gain insight & learn from the preparation in the planning stage & from reflection after each period of action

Most Important Goal

For participants to learn how to network with colleagues & create learning situations for themselves

Set Member

Preparation of set (group) member

Sponsor (mentor or facilitator)

To contribute & agree to the change goals established: to meet regularly to encourage, support, guide, and to be willing to learn from involvement rather than just seeing a task done. To assist with wider liaison or securing additional resources.

Involves a Group of People (set)

Making powerful decisions is enhanced by working with others

Set Advisor

Someone knowledgeable in the process of action learning who attends meetings (particularly the early ones) to ensure the group functions properly to support effective problem solving, action planning & optimal learning

Program Director

Someone who can unobtrusively set a framework within which participants establish their own goals for learning, & achieve them and are able to occupy centre stage

Reference; Bunning (1986); McGill & Beatty (1992); Appendix 1 Figure 2

The Laws of Learning

Malouf (1994) identified seven laws of learning to create the right environment for effective learning to take place and more recently, Stanfield (1997), distilled some important learning principles that underpin individual and group learning.

  • Law 1: Learners must feel a need to learn.
  • Law 2: The learning environment must be mentally and socially safe.
  • Law 3: Learners must set their own learning goals.
  • Law 4: Learners must participate actively in the learning process.
  • Law 5: Learning must use, and build on the learner's experience.
  • Law 6: Learners must see that their learning has been successful.
  • Law 7: Learning must involve effective two-way communication.

A Framework for Learning

The awareness, understanding, skills, attitude, aspiration, behaviour (AUSAAB) framework for learning is a useful way of identifying what changes have taken place from a learning event (Stanfield, D. J. 1998). AUSAAB is derived from Bennett’s hierarchy (Bennett & Rockwell 1995: Frank & Claridge 1997). Stanfield, D. J. (1998b) suggests learning is “applying an appropriate new response in an old situation or an appropriate known response to a new situation.” Below is a summary of AUSAAB framework and an outline of some changes made by the two case studied groups.

  • Awareness

[A vague, imprecise, indefinite, indistinct, unclear awareness of issues at the edge of understanding.]

  • Aspirations

[A will, desire, aim, ambition, eagerness or commitment to a course of action.]

  • Understanding

[A deeper comprehension, discernment, knowing which allows explanation to someone else.]

  • Attitude

[A belief, opinion, dogma, conclusion, judgements, supposition or way of thinking about an issue, objects, people or an event.]

Attitudes are formed through our association with our environment and the people round us. Attitudes can be a component of why people resist change. People can resist change because of habit, security issues, economic reasons and fear of the unknown and/or selective information processing. Resistance to change can be overcome by manipulation and cooptation, coercion, education and communication, facilitation and support and /or participation and involvement. The last two methods, whilst they can be time consuming, are the best methods for enabling people to develop commitment to implementing change (Robbins et al 1994; The Open University Open Business School 1984; Acumen 1995). Table 3 describes some of the attitudinal changes that have been observed in the two case studies.

  • Skills

[A mental, emotional or physical ability, aptitude, capacity or competence.]

  • Behaviour

[Actions, conduct, a way of being or acting.]

There have been some significant changes made by these groups. From an organizational behaviour view, successful change requires five steps (Robbins et al 1994; The Open University 1984; Acumen 1995). These five steps to some extent parallel AUSAAB (Table 5). For the facilitator and designer of change processes the relationship is a useful framework to help determine starting points, process and content for workshops in the context of change management and adult learning. It also helps to define the relationship between adult learning principle and change processes.

Table 3: Examples of Some Attitudinal Changes In the Two Case Studies

From

To

  • It’s my brand & it has taken me years to establish it. I can’t give it up
  • Its our brand and my brand can be used in other circumstances
  • My neighbours are my competitors
  • My neighbours are my partners & other regions are my competitors
  • The others are wanting to do this for their own advantage & to take control
  • We are doing this for good reasons & to benefit us all. We share the ownership of this move we are making
  • I think this is the brand we should choose
  • I think this is a good brand but I will abide by the consensus of the group
  • I keep my information & what I learn to myself
  • I share information & what I learn with my business partners but not so much with people from other regions
  • My packing shed is good & I’ll continue to use it.
  • My packing shed does not meet QA standards & I’ll pay my neighbour to pack for me
  • Quality Assurance is just a load of paperwork & I will not do it
  • Quality Assurance is important to our future & I’ll join my neighbours in doing it.
  • I was getting really cheesed off looking at photos & talking about the future
  • Looking at the photos & talking about the future was one of the best things we did

Table 4: Relationship Between Change Management Processes & AUSAAB

Change Formula

AUSAAB Relationship

Comments

Pressure for change

Awareness
Understanding

Individuals were under pressure to consider change particularly from their customers.
Increasing understanding of the reasons to change & the alternatives available helped to increase the pressure for change

Clear shared vision

Actionable first steps

Aspirations
Understanding
Behaviour

Shared aspirations & an owned action plan led to a better understanding of others in the group & a greater commitment to the new course of action that benefited all.
Small wins encouraged progress

Capacity for change

Attitudes
Skills

All individuals had the time, resources, ability and willingness to make physical & attitudinal changes. Outside help was needed to guide & smooth the way & to provide specific expertise

Model the way

Behaviour

The groups exhibited the behaviour & values required to support their vision. Attributes such as integrity, sincerity, responsiveness, willingness, commitment
Leadership & support from people external to the group enabled progress to be smooth & continuous at the groups pace. The process did not stall.

Reinforce & solidify change

All aspects of AUSAAB

A formal review of progress, discussion of both tangible, & intangible benefits, key milestones, new ideas, issues, & steps to be taken to consolidate & focus the group on their development.
Increasing interest from outside parties and positive feedback from customers reinforced the value & recognition of the changes

(Adapted from Robbins et al 1994, and Stanfield 1998b)

Processes and Techniques

The Better Practices Process (Timms & Clark, 1999) was designed to enable individuals in groups and networks to improve thinking, decision-making, processes, practices and performance (Figure 4).

This process, whilst appearing simple, involves some skilful facilitation operationalise. In particular, judging which techniques are appropriate to move people forward, and equally important, implementing the techniques to gain real outcomes for the client. Experience indicates that once people can move through this process in a managed way they become more familiar with it and the journey of change becomes less daunting and time-consuming.

Figure 4: The Better Practises Process

(Source: Clarke and Timms 1999)

Table 5: Characteristics and Time Lines for Development of HiCountry Fruits

Time Frame

Actions

Process Stage

Elements of Group Development

Jan 98

The idea of collaborative marketing is floated

Reflective

Independent

Aug 98

Engage an external facilitator to help move the idea forward

Situation & Impact Analysis
Action Plan

Forming
Storming

Aug to Oct 98

Information gathering, sharing & decision making, engaging specialists

Taking Action

Performing

Nov 98

Form a Company

Feb 98

Go to market with first fruits

Aug 99

Review the year, generate issues, ideas, questions, prioritise & forward plan

Observe, Reflect, Plan

Performing

1999/2000

Second year of Group Marketing

Taking Action

Performing

Example of Process and Techniques for HiCountry Fruits

Table 6: Process Description for HiCountry Fruits – Planning Phase 1

Date: Winter/Spring 1998 Broad Aim: To allow all parties to increase the level of understanding and agreement to what they were wanting to do, how they were going to do it and why. Process Stages: [OBSERVE] [REFLECT] [PLAN] [ACT]

Purpose

Activity, Technique or Tool

Outputs & Outcomes

Individuals can feel comfortable operating in the group & they have a reference point for behavioural standards

Group agreement; Discussion around focus questions & documenting preferred behaviours

Helped people to relax & participate with the knowledge they had been able to contribute their preferences for behaviour, & how they want to be treated while in the group

Individuals have a greater awareness & understanding of the motives & reasons of others

Photo language; focus questions & discussion

Individuals developed a better understanding of each other’s motives, strength of commitment to their business, hopes for the future & desire to change to reach their goals.

Individuals have an opportunity to articulate & agree on the benefits of a marketing group

Photo language, focus questions & discussion

By developing a better understanding of each other’s motives and strength of commitment to the proposed future actions that increased trust & confidence in each other.

People know & agree on why the changes are important to make

Focused questions & discussion

Key market trends identified, meanings for individuals attached to trends & appropriate responses (action options) discussed

Identify & agree who are the competitors

Focused questions and specialist questioning

Enabled all individuals to have this discussion & agree on a common focus for ‘the enemy’

Identify what might be this group’s competitive advantages

Focused questions and specialist questioning

Identified a common sense of difference for this district, this group versus other apple growing regions. Developed a common outward focus

Express the disadvantages of marketing as a group

Focused questions & discussion

Enabled the concerns associated with the innovation to be raised, discussed & recorded

The group has a common & agreed purpose (mission)

Formal group planning technique

Allowed individuals to express the purpose of the group in their own words. Gave focus & ownership. Expressed common problems

The group to build & own an action plan

Formal group planning technique

Critical areas of impact were identified as marketing, the group & products. Goals & priorities identified eg; QA versus benchmarking

Implement the action plan

 

More meetings, more information, new learning cycles at the allocative problem level, increase outreach to other service providers

Table 7: Process Description for HiCountry Fruits – Planning Phase 2

Date: July/August 1999 Broad Aim: To allow the group to review what they have done, and plan for the future. Process Stages: [OBSERVE] [REFLECT] [PLAN] [ACT]

Purpose

Activity, Technique or Tool

Outputs & Outcomes

To enable individuals to discuss their reactions, observations & conclusions from their first year of group marketing

Historical scan; revisit & check validity of original purpose; check commitment to proceed

Allowed everyone the opportunity to take time out & review what had been done, what it had meant to them

Generate new ideas or issues for the future

Brainstorming

Generated 34 issues or ideas to explore under five main themes.

Priority setting

Individual questionnaire based on the 34 issues and ideas; Group priority listing & discussion

Critical success factors

Allowed everyone to express their priorities & hear those of others involved, - leading to an action plan built by all

Develop action plans for the future

Focused questions & discussion using the Six Hats method as a framework

Agreement to the meaning of the general idea, issues, aims & action plans expressed. This resulted in the identification & agreement on what the group can & wants to do for itself & what needs to be allocated to outside sources. Linking to consultant Tony Pickett for further assistance

Implementation

 

Engaged a consultant to help address specific issues, began orchard visits to refine productivity, joined a national fruit marketing group, completed QA program, & commenced to assess benchmarking options

Statistics and Times Lines for HiCountry Fruits

  • Cost in time from idea to market collaboration = 11months
  • Number of businesses in the industry =8
  • Number of businesses in collaborative effort =6
  • Number of service organizations involved =8
  • Costs over 24 months in facilitation to empower the group = 120 hours

Table 8: Characteristics and Timelines for AlpValleysTM Summer Fruits

Time Frame

Actions

Process Stage

Elements of Group Development

Jan 98

Industry analysis

Situation Analysis
No Impact analysis
No action plan

Independent
Counter dependent
Storming

Sept 98

Meeting at Shire Building, engage an external facilitator

Situation Analysis
Next steps

Independent
Counter dependent

Oct 98

Small group of industry representatives with external facilitator

Situation & Impact analysis, Action Plan

Small group become Interdependent

Oct 98

Industry meeting with unanimous support to move forward

Situation Analysis, Impact Analysis & Action Plan

Industry Independent
Some growers interdependent & performing

Nov Dec 98

Harvest 1998 Season

   

Jan Jul 99

Monthly meetings to progress toward formation of an association

 


Transitioning from counter dependence & storming behaviour to interdependent & performing

Oct 99

Form association

 

Nov 99

Harvest 1999 Season

   

Example of Process and Techniques for AlpValleysTM Summer Fruits

Table 9: Process Description for AlpValleysTM Summer Fruits

Date: January 98 to October 99: Process Stages: [OBSERVE] [REFLECT] [PLAN] [ACT]

Purpose

Activity

Outputs & Outcomes

Jan 98: To find out issues and constraints to the industry

Focus group & discussion by Shire rep

Surfaced issues and constraints facing the industry

Sept 98: Delatite Shire Meeting to discuss the cherry & stone fruit industries

Formal meeting & discussion

Contacts made with facilitation of the process for change

Oct 98: Wangaratta, small group of industry representatives meet to set the agenda for change in the regional industry

Focused Questions & action planning

A statement of vision that was shared by more than one person, articulation of the industry trends & reasons supporting the vision, constraints to change, options for growers & an action plan for change. Led to definite actions to move toward a new future for the industry

Oct 98: Regional industry meeting to seek endorsement for change

Special speaker, presentations & discussion

Unanimous endorsement to progress toward a collaborative industry structure

Jan to Jul 2000: Series of meetings by a committee to carry out actions for change & report back to the industry. Information gathering to aid planning & decision-making for growers

Surveys, questionnaires
Steering committee meetings

An association structure proposed & endorsed by the industry, QA systems undertaken by growers & packers, packing sheds rationalised for harvest 2000, single brand selling under the AlpValleysTM brand

Statistics and Timelines for AlpValleysTM Summer Fruits Growers Inc

  • Cost in time from idea to market collaboration = 19 months
  • Number of businesses in the industry = 48
  • Number of businesses in collaborative effort = 25
  • Number of service organizations involved = 6
  • Costs over 24 months in facilitation to empower the group = uncertain

Some Features and Benefits of the Managed Process

The table below attempts to break down the main features and benefits of the managed process as it applies to each case study. It aims to provide a different view of the managed process by linking basic features with perceived benefits.

Table 10: Features and Benefits Observed in the Case Studies

Feature

Advantage

Benefit

Plan/act/observe/reflect are simple processes

Simple but not simplistic

Process has strength behind it that can be selected & sequenced by specialist process designers to achieve powerful outcomes

Skilled people to design & facilitate groups events

Makes for effective & efficient meetings

Minimum time & costs & maximum outcomes for clients

A change management process

Able to manage improvement & innovation at the strategic, tactical & operational levels

Compatible with good policy design, management & improvement

Allowed people to identify problems, issues & ways of overcoming them

You can locate the areas that will make a difference to performance

Doesn’t bring immediate solutions but the unified effort will eventuate in change.

Providing a link to information

Helps people identify what they need to know & how to get the relevant information in order to make decisions

Speeds up the decision making process as many people have not previously been conversant with the vital information necessary to implement change.

It is a framework for managing processes & techniques for change & innovation

Change & innovation do not happen by chance

Allows people to take control & make change & innovation happen

A logical Six step Process;
Eg;

Easy to understand.

People come to accept better processes & practices that they can implement themselves.

Situation analysis


Identifies current practices & performance. Surfaces issues, needs, problems, opportunities & constraints

Involves people to set the scene & overcome their discontent.

Leads to a deeper understanding of the situation faced by others.

Surfaces the underlying issues & problems

1. Impact Analysis

Identifies what will make a difference to performance

People can see in which area they need to focus their efforts to achieve the most reward.

2. Action Planning

Locates steps for action for individuals & groups. Sets up performance benchmarks

People take ownership & responsibility for what must be done. You get practical, focused plans for action

3. Action Phase

People have the necessary time to carry out the actions they planned.

Because the planning and process is personalised it most likely happens

4. Observation Phase

Allows people the opportunity to look back at the original & present scene, see what happened, note what made a difference & why

People can take time to make sense & meaning of actions. People can see & share results & outcomes

5. Learning & creating

Enables people to release new ideas, questions & meaning. Discuss what can be different

Creates space & opportunity for innovation by the people who make it happen

Independent facilitators

Less politics, preconceptions & baggage

Increases people’s confidence & trust to address the difficult issues.

Case Study Outcomes To Date

HiCountry Fruits Pty Ltd

The following points are summarised from conversations with Rob Tully, chairman, HiCountry Fruits (Tully 2000)

  • The last two seasons have been very tough; “forming HiCountry Fruits has meant we have managed to stay in business. It would have been very tough had we not formed a marketing group.”
  • Relationships with agents are stronger. This gives more presence in the market and makes selling fruit easier.
  • There is no more profit than before.
  • Costs are reduced particularly through cheaper carton prices.
  • Volumes on branded product have increased over the two years. There is no more profit but it is easier to move product because agents are dealing with a bigger company.
  • HiCountry Fruits have amalgamated with the Australian Fresh Fruit Company (AFFCO), something they could not do as individuals.
  • HiCountry Fruits are still uncertain the company structure suits their operation. They have problems with taxation and profit management. It is messy.

AlpValleysTM Summer Fruit Growers Incorporated

The following points are summarised from conversations with Marion Rak, President AlpValleysTM Summer Fruits Growers Association Incorporated (Rak 2000)

  • Improved communication between growers and the exchange of ideas has raised significantly the level of business management
  • An implemented quality assurance program which the group was able to negotiate at cheaper prices than would have been available to individual growers
  • Negotiated cheaper prices and better service for soil, water and chemical tests and reduced transport and packing (eg cartons) costs for each business
  • Better service from agents eg; 7 days payment terms for fruit rather than up to three months previously, while newly introduced group marketing and quality assurance programs has meant in years of excess supply fruit is easier to sell
  • Restructuring and streamlining of group production processes has lead to more efficient labour usage

Lessons & Questions for the Future

  • Each community situation is different, not so much from base principles and physical assets but the soft issues of values, level of risk taking, trust and politics. Hence flexibility in approach is essential.
  • There is a need for skilled process and content facilitators to ensure the journey of change is smooth. Process, technique and information management is necessary so that collaboration occurs and solid groundwork is established. Content management is important so that the right questions are asked and useful information is obtained for sound decisions.
  • At each step of the process, all parties need to decide and agree on issues, such as, roles ‘time frames’ for engagement, costs, expectations and outcomes.
  • The process must empower ownership & leadership within the group or community
  • To ensure the process of change is coherent, organised and logical it is useful for parties to clearly agree on a starting and finishing point, important issues and concerns and the hurdles to overcome.
  • As the group or community develops, support for these changes needs to evolve. The level and nature of support required at the incubation stage differs from that required at the maturation stage. Sometimes fresh ideas need to be found to keep the improvement process from stagnating.
  • The process, techniques and methods employed in these two case studies are generally widely known and understood. However it is the way they are combined, designed and implemented that is so important in empowering people to make the decisions and take the actions necessary to realise their preferred future.
  • Conflict often arises between meeting the needs of the community and those of the funding provider (government). How can this issue be improved? It may be necessary for the funding provider to set a broad program strategy that gives the service provider and community the scope to design, manage and implement changes that “suit” the community.
  • Preliminary results to date suggest that there have already been substantial benefits flow to growers from the innovations implemented so far

Implications for Further Action and Research

The models applied in these case studies to facilitate the emergence of industry groups are also applicable to the resolution of other problems facing rural and regional communities. These include bringing communities together in order to articulate a ‘vision’ for their future and to devise a strategy for ‘making it happen’, as well as addressing specific problem areas such as the withdrawal of health and banking services.

In order to “lubricate the wheels of change”, particular attention needs to be addressed to promoting and facilitating the development of the alliances which will be integral to the emergence of internationally competitive supply chains in Australia. Alliances can take many forms, including formal and informal networks, co-operatives, long term contracts, joint ventures and acquisitions. All need to be investigated for their potential leverage in facilitating the emergence in Australia of internationally competitive supply chains.

In particular, the tide is well and truly out at present on the co-operative movement in Australia with negligible research and education taking place – insufficient even to disseminate and adapt world best practice to Australian conditions. This places Australia at a substantial competitive disadvantage – particularly to North America (eg new generation co-operatives) and Northern Europe. Large amounts are being spent in such areas on developing new co-operative forms of organisation to address current needs and on education to disseminate them. Federal and State Governments should make a priority of finalising standard Australia wide co-operative legislation – a move that seems to have stalled over the last couple of years

Co-operative action can also be a vehicle to assist disadvantaged rural communities to replace services withdrawn by both private and public sectors, including health, banking and even hotels.

It may be advantageous to identify, document and research the impact of what appears to be (both in Australia and internationally), over recent years increasingly oligopolistic practises amongst the purchases of primary products and fresh food in particular.

Conclusion

This paper has been about the processes, methods and techniques used successfully to support two industry groups to identify and address their core problems and to move forward in an organised, managed and collaborative manner into a more prosperous future. In one sense, this is a micro process for effecting change management. It can play a vital part, however, in addressing the enormous “macro” problems identified in this paper and elsewhere as currently bedevilling the development of rural and regional Australia.

Appendix 1

Various Forms & Descriptions of the Learning Cycle

Figure 5:The Kolb Learning Cycle

Bawden (1985); McGill & Beatty (1992)

Figure 6: The Learning Process

(Pedler et al 1986 quoted in McGill & Beatty 1992; Stanfield 1998a)

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