STRATEGIC PROCESS CONSULTING: AN INTEGRATION OF PROBLEM-BASED LEARNING, PROCESS CONSULTING AND STRATEGIC MANAGEMENT

Arthur Lloyd Sherwood, Ph.D. Assistant Professor of Management

Organizational Department Indiana State University Terre Haute, IN 47809 asherwood@instate.edu

(812) 361-5816

Joshua T. Callahan, B.Sc. Director of Organization Development

Sycamore Business Advisors College of Business

Indiana State University Terre Haute, IN 47809

jcallahan1@indstate.edu (812) 841-6942

Submitted to: Midwest Academy of Management

April 27, 2006

STRATEGIC PROCESS CONSULTING: AN INTEGRATION OF PROBLEM-BASED

LEARNING, PROCESS CONSULTING AND STRATEGIC MANAGEMENT

Abstract

This article presents an approach to teaching strategic management that combines problem-based learning and process consultation. The integrated result is called ‘strategic process consulting’ and is a method that allows students to act as consultants to external clients while not getting into a level of technicality that is beyond the experience and expertise of most undergraduate students. Background on problem-based learning and process consulting is given. Strategic process consulting is then discussed followed by two illustrative case examples that highlight the instructor-student interaction and the strategic process consulting approach.

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How can we teach the core concepts of strategic management to undergraduate students

in a way that is meaningful, exciting and transferable? One experiential approach that is often used is placing the student in the role of ‘consultant’. Through the use of cases or live clients, students are asked to engage with the organization and grapple with current or past problems and challenges.

A drawback to cases is that they are necessarily removed from the context of a real organization. Yet, if we place undergraduate students in a consulting role with live cases, they often do not have the needed industry knowledge and can quickly become immersed in non-strategic issues such as marketing, operational or information system tactics.

This article discusses a promising additional alternative that blends problem based learning (PBL), process consulting and core strategic management theory and practice. The result is what we call ‘strategic process consulting’ (SPC).

We start with background material on PBL and process consulting. We then discuss how strategic management material can be effectively integrated and taught via these mechanisms. At the same time we will present two cases, a not-for-profit (the City Children’s Museum) and a for-profit (United Machine & Design, Inc.) organization that focus on projects executed by undergraduate students using this approach.

Problem-Based Learning

Problem-based learning is an educational approach that places problems at the center of learning (Bereiter and Scardamalia, 2000). PBL has multiple educational objectives including construction of professionally useful knowledge, development of self-directed learning strategies, development of reasoning and problem solving strategies, increasing motivation for the learner and becoming effective collaborators (Barrows, 1986; Meyers, Kelson and Distlehorst, 2000; Sherwood, 2004). To accomplish these objectives, the process used includes encountering the problem, using problem solving skills to include identifying learning needs, self study, applying the newly acquired knowledge to the problem and ultimately reflecting upon what was learned (Barrows, 1985).

The instructor also plays a variety of roles in the PBL process that go beyond the traditional instructor who conveys information and expertise. Peterson (2004) identifies seven roles of the faculty member which include: lawgiver, mentor, coach, facilitator, cheerleader, manager and leader. Peterson also points out that there are three critical success factors involved with PBL including orienting the students, picking the problems and forming the teams. Each of these roles and critical success factors come into play in our experience using the PBL approach in strategic management. The steps in the PBL process clearly links to processes used by consultants to organizations and may very well be the reasoning behind appointing students as ‘consultants’ is such a widely used approach in the classroom. Yet, the demands upon a consultant to master both the needed content knowledge and the technicalities of a specific organizational situation resulting in actual value added to the client, are often well beyond the abilities of a student (not to mention the instructor) in a single semester.

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One consulting model in particular, Schein’s (1990) process consultation model, brings a viable approach to working through the steps of PBL without the shortcomings regarding the need for in depth technical knowledge. The model allows for the students to work with clients who need help related to the strategic process with the client ultimately making key decisions. Schein’s model will be detailed below as it was the basis for the development of the SPC approach in the strategy classroom.

Process Consulting

Process consulting is a relationship between a consultant(s) and a client in which the consultant takes a helping role in guiding a client through a process of discovery in which the client can identify problems or concerns in an organization (within their internal and external environments) in order for the client to ultimately make key decisions in resolving the identified problems or concerns (Schein, 1999). The role students take is that of process consultant, engaging a student in building a relationship with their client. This relationship is one of helping (as is a fundamental core in Schein’s process consultation model; Schein, 1990 and 1999). Process consulting is meant to identify problems and concerns in order for them to ultimately be resolved by the client in some way. Just as organizations seek help in resolving identified problems, process consultants offer help to organizations in determining what the problems are (Schein, 1990). Students are able to help an organization identify problems or concerns without getting overly involved in the technical issues of an organization. Undergraduate students rarely have enough industry background and specific technical expertise to solve operational problems that are identified through the process consultation relationship. This poses less of a problem when students act as process consultants because it is the client’s role to ultimately make those key decisions as how to resolve these issues. Students aid their client by helping facilitate a process of identifying the issues (strategic in our case) that an organization is required to direct their focus.

In the case of strategy, clients often have not taken the time to look at problems strategically on a regular basis, as they are deeply involved in ensuring that day to day operational problems are being solved. Students’ questions act as a catalyst for the client to focus on strategic issues in the organization and ultimately derive a list of strategic priorities that encourage organizational decision makers to seek positive resolutions. The process consultation approach allows for a win-win situation for the students and the clients in that the students are engaged in meaningful problems and the clients are encouraged to think strategically. Students’ engagement in the process consultation role (as defined by Schein) and with a live client, facilitates a student’s drive towards seeking answers to issues that are faced during their consulting work. ‘Strategic Process Consulting’ (SPC) is a method we developed and regularly employ each semester with over two-thirds of our undergraduate seniors. SPC guides students learning in strategic management and facilitates a process consultation and problem based learning approach that ultimately drives strategic assessment for a client.

Strategic Process Consulting

To integrate strategic management into the problem-based and process consulting approaches, students engage in a four step analytical model. Each step starts with a set of questions that set up strategic problems. These steps include a directional analysis, external

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analysis, internal analysis and a limited set of recommendations. Students prepare to engage with the client through identifying and preparing to apply analytical frameworks that will allow them to ask appropriate questions and gather appropriate data. This data is ultimately used to help the client draw meaningful conclusions about what areas of the organization need strategic development in order to meet stakeholder needs and create sustainable competitive advantage. The overall strategic framework and the process of guiding the client through the strategic process can be visually depicted as shown in Figure 1.

Figure 1: Strategic Framework for Strategic Process Consultation

Internal Analysis

(Including Gap Identification)

External Analysis

Implementations/ Recommendations

Directional Analysis

To better illustrate the PBL process and how SPC is implemented, we will discuss two

cases below. The first, City Children’s Museum, will be used primarily to illustrate problem based learning and will focus upon student learning and their interactions with the instructor. The second, United Machine and Design, Inc. will focus primarily on illustrating the implementation of SPC. The City Children’s Museum (CCM) was in transition, moving from a small interactive museum to a new facility that was significantly larger and able to handle a much greater volume of customers. The executive director was the main contact. The consulting team consisted of ten senior business students from a variety of business majors with one acting as the project team leader. The team was presented the overall project and worked with the client to negotiate how the semester would proceed. Once these decisions were made, they engaged in the major tasks/problems presented to them as shown in Figure 1. United Machine and Design, Inc., is a small, high quality, metal machining company that fulfills custom customer orders. At the time of the project, the organization was performing well at their current level of development, but was looking toward future growth. The student team consisted of nine senior level students from a variety of business majors. These students were presented the overall problem at the beginning of the semester and worked with the company and instructor to move forward using the SPC process.

SPC: Directional Analysis

The problems associated with the directional analysis focus the student on questions of purpose and future vision of the organization. Questions include: For whom does the client’s

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organization exist to provide benefit/value? What are the major activities the organization engages in to create and deliver the benefits/value? How does the organization capture value back for the organization? What are the approaches to creating this value? Does this make sense?

To address the problems and answer the questions, students engage in problem definition and self study. The study leads them into strategic topics including mission, vision and values, stakeholder analyses, business model and value chain analyses, generic strategies and an initial look at sustainable competitive advantage. As is consistent with the objectives of PBL, the students are motivated to study this material because the material is needed to understand and ultimately answer the questions. The motivation grows as pressure increases and deadlines approach. City Children’s Museum Students encountered the problem of the directional analysis via the instructor and the business manual available to all students in the course. The students engaged in self study and asked questions to the instructor in order to better understand the material. They then prepared to interact with the client by developing key questions for the client to answer and then interacting with the client via email, phone and in person. The students sought answers to questions around stakeholders and the business model in order to better understand the direction of the organization. After the students initial interactions with the clients, they reported back their findings to the instructor via quality checks done through informal presentations of the material via computer/projector. These quality checks act as an opportunity for the instructor to have a conversation with the students and coach them on their work. The instructor was able to ask additional questions that helped the students realize they had not defined the problems well which led to not fully understanding the underlying concepts, leading to an inappropriate set of questions for the client and in the end, data that did not answer the initial questions. This led to another spiral of learning where the students went through the whole process again (problem definition, self-study, data collection, quality checks) resulting in better understanding and higher quality results. United Machine & Design, Inc. Students first engaged in strategic process consultation with United Machine & Design, Inc. (UMDI) by asking key personnel in the organization (through on-site visits and electronic communications) to articulate who they exist to serve within and outside of their organization (this allowed the students to prepare a stakeholder analysis). Students were faced with a problem that their client did not have specific stakeholders identified, as the organizations definition of their stakeholders were broad and unspecific. Students approached this problem by guiding UMDI through general types of stakeholders (i.e. customers, suppliers, employees, shareholders, etc.). By helping the client articulate their key stakeholders, by presenting a general framework to guide this process, UMDI was able to better clearly identify specific stakeholders that the organization exists to add value. This was a value adding experience for the students to resolve a problem that was put in front of them and to add value to the client in the process. Students better

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understood the need to be flexible and ready to adjust their methods of acquiring knowledge from the client to meet the clients and the strategic assessment needs. Students interacted with the client to articulate UMDI’s business model, or the activities that UMDI engages in to add value to those that they exist to benefit, as identified in the stakeholder analysis. Those activities were well articulated from the client, with the guiding process facilitated by the students, as activities centered on meeting the needs of customers for metal machining, tool and die making, and engineering services. Students assisted UMDI in articulating the support activities (or functional areas) that UMDI engages in to support the operations of the organization, which included the core functional areas in business (i.e. marketing, finance, human resources, management information systems, etc.). Through this process with UMDI, students were able to help UMDI articulate how the organization creates, delivers, and captures value which allowed students to focus the client on what the competitive sustainable advantage was for the organization in its current state. In UMDI’s case, their sustainable advantage was the level of quality that was ensured in their products, the amount of value adding services that UMDI provides, and the ability to maintain close relationships with their customers. The students’ instructor, through this directional analysis process, worked with the students as students planned the structure of their interactions with the client, in order to articulate answers the questions in the directional analysis. This provided students with enough autonomy to develop their own style and presence with the client, yet with enough structure to guide their learning through this experience.

SPC: External Analysis

As one would suspect, in the external analysis, students are presented problems and questions related to factors outside the organization. Questions include: What are the factors outside the organization that can impact their abilities to successfully create and deliver value to stakeholders? To capture value back? What are the implications for the internal capabilities and resources of the organization?

These questions lead to the path of general environmental analyses including PEST, industry analyses such as Porter’s five forces and the alliance environment. Students work with their client using appropriate tools and techniques to answer the questions and determine the potential impact that the external environment will have on the internal environment of the organization (the OT part of SWOT). City Children’s Museum The instructor re-introduced the overall model, now highlighting the need to move to the external analysis. The problem is framed such that part of the external analysis can be completed at the same time as the internal analysis. The student’s realized this and decided to split into two sub-teams. As Figure 1 illustrates, the identification of the external factors that are important ultimately arrows back to the question of what it means internally to the organization in terms of taking advantage of opportunities or managing threats. Students work to define how they will answer these questions and in the case of the CCM, they decided to take a list of theoretically possible external factors (PEST, Porter’s Five and Alliances) and have the client identify important factors and to identify what sort of opportunity or threat each posed. The instructor

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continued to coach and question the team, urging them to prepare well for the client interaction focusing on clear outcomes and a solid process to be used. After the client interaction, the team realized that the client was able to identify important external factors, but had limited factual knowledge about them. This led the team to devise a sub-team that conducted secondary research into the external factors. The instructor worked closely with the leader of this sub-team to help the leader gain insight into what research should be conducted and how to gather the data. Additionally, as the data was gathered, quality checks were performed to identify gaps in needed data. This then created another learning spiral where the students went through the same problem-based learning cycle multiple times. United Machine & Design, Inc. Now that students have guided the process of understanding the current direction of the organization, students were then able to look at external factors outside of their client’s organization that could have an impact on the client’s ability to be successful in creating and delivering value to their stakeholders. Three areas were examined with the client in their external environment which included UMDI’s industrial factors (factors specific to the industry that UMDI operates in), general environmental factors (i.e. economic and technological factors), and the environment of partners and alliances.

Students engaged in considerable research for UMDI as to how these factors play a role in the company’s ability to create and deliver value and in determining how these external opportunities or threats would play a role in the organizations internal environment. Students found that technology changes, and general industry competition played the largest role of impact towards UMDI. Students confronted these areas, with their client, by identifying how the technology of UMDI’s industry is changing and how that impacts UMDI, and how the competitive market in UMDI’s industry was growing. These two main areas of external environment concern play a role in the student’s assessment on the organization’s internal environment (which is the next phase in the strategic process consultation model). Students interact with their instructor for advice and direction as they research external issues relevant to UMDI. The instructor played an advisory role in guiding students through their information captured with the client to pinpoint specific opportunities and threats for their client.

SPC: Internal Analysis

In the internal analysis, students are asked: Where does the client desire/need to be on key internal capabilities and resources in order to successfully create, deliver and capture value back? Where are they now? What is the gap between the desired state and the current state? These questions lead students to draw deeper into all key business model areas including operational and functional. They work with the clients to define the desired place (perhaps the ‘ultimate’ destination such as a best practice or a time in the future such as three years out) and their current state on all key capabilities and resources in the operational and functional areas. City Children’s Museum Again, the overall SPC model was the initial point of problem presentation with the student team. The instructor discussed the objectives of the internal analysis and posed their

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accomplishment of these objectives as the problem. The team discussed and defined the problem, determined a process for solving the problem and accomplishing the objectives and moved forward. As mentioned in the external section, at this point the team split into external and internal sub-teams in order to manage the work more effectively. The need to conduct an internal audit of the organization led the students to re-visit the overall business model for the organization. They decided to analyze the museum in operational and functional support categories. At this point, they moved ahead with data collection which turned out to be a mistake for the students. Rather than discuss with the instructor, they moved ahead and later found they had not fully defined the problem. Their research allowed them to give a solid account of the CCM’s current situation, but they did not fully understand they needed to also identify and define the future state desired by the CCM’s key decision makers. Additionally, they were unsure of how far into the future they should be looking strategically. This was all discovered at a quality check with the instructor. The students presented their work and as the instructor probed with key strategic questions, it became apparent to the team (and quite frustrating) that they had not fully defined their work. This would then require another round of data collection in order to do the full analysis. The students prepared for the next round through self study and then discussed this with the instructor who coached them about how to best gain the needed information and how to refine their approach. United Machine & Design, Inc. Students now understood areas outside of the organization that have an impact on their client’s ability to create, deliver, and capture value, thus now was the time to assess the current and desired/needed states in the internal functional and operational activities of UMDI. Students identified, with their client, the core functional (support) areas of the organization and the current and desired activities in operations. Students guided the client through a process of articulating what the current situation was in each of these areas (in other words, how did each functional/operational area currently add value to the organization). Students started this process with their client by identifying operational desires that were present in the organization. Students were able to assist the client in articulating what operational capabilities would like to be engaged in the future. After the assessment of operations, students took the client through the process of assessing the functional areas of the organization. Students organized this functional area knowledge with UMDI by identifying finance/accounting, management information systems and information technology, marketing, human resources, and management as the core support areas that are active in the organization. After the current situation was clear in the core functional areas, students engaged with the client in discussions surrounding where the desired state of these functional areas would be. Students also brought forward any information from the external environment that needed to be taken into account as a desired state for each functional area was being assessed. The gaps between the organizations current state and desired/needed state were identified. These gaps were organized for the client as to whether they were critical or non-critical issues (critical being the issues, or gaps, of top priority and non-critical being of a secondary need). In order to solidify these conclusions, the students engaged with multiple interactions with their client and instructor through confirming and articulating this information.

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SPC: Implementation/Recommendations

At this point, students have 30+ ‘gaps’ between where the client says they need to be and where they currently are. The students are now presented with the problem of prioritization and selecting particular problems to give technical advice (vs. process facilitation). Working with the client, students prioritize areas in order to help the client and make scarce resource allocation decisions. Then, students look to their own expertise and determine what advice they can offer. Generally, the advice is non-operational and falls along areas of majors such as marketing and MIS.

City Children’s Museum The student team met with the director of CCM and discussed the gaps present. They asked the director to prioritize these. Once they had this information, they made decisions regarding areas they felt they could offer some advice regarding closing the gaps. They discussed these choices with the instructor and the instructor coached them on their transitioning role of process consultant to that of technical consultant. The instructor asked if they felt qualified to give specific advice about these areas and whether or not the advice they could give would be value-added or obvious surface level information. Considering this, the student narrowed down their choices to discussing how the CCM might effectively gain the needed resources and capabilities for marketing to area schools and to create an effective volunteer program. They also gave specific recommendations regarding how to do each of these activities and models of how they might operate. The instructor pushed the students to go beyond the obvious. This again took multiple interactions as the students would present their information in quality checks and the instructor would probe about how their ideas actually connected to a strategic gap identified and how it could be pushed further to become truly value-added. United Machine & Design, Inc. Students, after ensuring that the information collected in the previous three phases of the strategic process consulting model were articulated correctly, engaged in discussions with the client as to how they (the students) could assist in more technical advice towards closing some of the ‘gaps’ that the client’s organization has between their current and desired/needed states. Information on the organization’s ‘gaps’ have been identified in the internal analysis. The client and the students review these gaps together and the students take on a more technical role in researching and articulating potential implementations that the organization could engage in to close their ‘gaps.’ Students, after confirmation with the client as to where their help is needed, worked to find answers to questions surrounding strategic ‘gaps’ in the organizations ability to be prepared for growth. This included offering recommendations in developing systems in each of the identified functional areas that would better prepare UMDI for growth. By taking the overarching strategic issue of growth in the organization and applying this growth framework to the organization’s ‘gaps’ in their current and desired state, students were able to provide UMDI with a set of quality and specific recommendations. These recommendations were developed to meet the needs of moving the organization in a positive direction and to improve upon the needs

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defined by the client, through the process that the students and the client together took to identify and define strategic concerns and issues in the organization. Students were able to put the knowledge that they have gathered during their undergraduate career, in their specific areas of expertise, to work in order to provide UMDI with quality implementation recommendations. The instructor and the students, at this point of the strategic consultation process for UMDI, interacted closely as recommendations for UMDI were discovered and evaluated to ensure that implementation recommendations fit the needs of UMDI that UMDI has defined during this strategic process consultation journey.

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