The Learning Model at the CPI Group Where Complexity is Profitable ...by..Hossam ElShazly

The Learning Model at the CPI Group 

Where Complexity is Profitable 

Hossam ElShazly

Organisational learning has been at the root of the majority of business development and growth throughout history. It describes how an organisation adapts to changes in the business environment and how it creates value. A great deal of literature and researchers have attempted to understand organisational learning in terms of a particular skill or activity that affects its ability to grow, mature, innovate and create value (Nonaka & Takeuchi, 1995). However, change in the twenty-first century has brought with it roles and obligations. Learning models should be sophisticated enough to match the complexity of the process and to enable firms to survive, grow and compete in a world of economic downturns, wars and instability.

Simon and Pauchant (2000) proposed an important structure to illustrate the learning process inside an organisation and used a critical learning case to discuss the three learning levels: behavioural, paradigmatic and systemic learning. These three learning levels can be described as a mirror to the CPI learning process over the last two decades. 

At the CPI International Group, these three levels of learning form a kind of an ongoing learning cycle, where behavioural learning represents the foundation of the business strategy of the group in its simplest format. 

At the beginning of this century, CPI launched an international pharmaceutical operation with activities in seven countries, two in Europe and five in the Middle East. The operation was titled the Newpharm International Group and involved the exclusive marketing and representation of LED France and the Disney-Time Warner children’s products which were manufactured in Italy at that time, in addition to an American food supplement company and a wide range of locally manufactured generic products from two factories in Egypt. The management team of the international operation in Switzerland, along with the regional managers in Europe and the Middle East, were experienced top managers who were recruited from leading multinational pharmaceutical organisations around the world. The President of Newpharm, who was also a former manager of a leading multinational company, likewise structured and managed the firm’s team based on their international experience and school. However, the product portfolio of Newpharm was to a great extent a generic and not a multinational one. The company invested too much money in its operation around the world and established a professional, but very costly, process. 

When the tragedy of the 9/11 World Trade Centre hit the world at the end of 2001, Newpharm’s operation in the Middle East suffered greatly due to the immediate cancellation of several finance agreements by international banks and private investors who refused to continue in the Middle East. Egypt’s operation, with more than 140 medical representatives, was the one that suffered most. The entire operation was shut down and other operations in other regions were entirely restructured. The learning process of the CPI-Newpharm case can be explained in the light of the three learning levels of Simon and Pauchant (2000), where the company maintained its business objectives in the pharmaceutical market but applied a new management and cost structure that involved a highly cutting cost strategy. 

On the other hand, the CPI Group launched a process of radical restructuring and change programmes in its entire business portfolio which can be viewed as an example of the paradigmatic level of learning discussed earlier in this article. According to Simon and Pauchant (2000), firms at this level of learning apply radical changes to the tools and strategy to maintain their business objectives. However, the learning process at the CPI Group continued to evolve. The board voted to add new business objectives and new business areas. CPI invested heavily in education, acquired majority shares in the Parthenon Innovation Group, USA, and launched the Cambridge Philosophy Corporate Centre and College at the end of 2003 in the cities of Chur and Wallis in Switzerland. 

The behavioural and paradigmatic learning levels at the CPI Group formed the launch base for the systemic learning model which dominates the group philosophy and strategy today and which turned the company into an international group: it hosts seven companies with businesses and operation in 19 countries, with major business and investments in the healthcare, education and renewable energy markets, and with a business value and forecast exceeding two billion Swiss Francs in January 2016. 

At this level, the CPI learning model turned towards a group culture, where complex educational and training systems were established, and the ALSKLS (Action Learning - Structured Knowledge - Lead Strategy) model was established as the core learning and business development system at CPI. I am really proud of the fact that I was the main strategic architect of ALSKLS, which was one of the main factors behind my recent nomination for the CPI Platinum Key Holder Award, which will be announced during March 2016. 

It is also my argument that the learning process at the CPI International Group involves several other models of organisational learning, including the one offered by Haunschild and Sullivan (2002), which discussed the role of the complexity of the process and its effect on the outcomes. The CPI learning process is a heterogeneous process, where many factors, industries, cultures and change elements are involved. However, it is my belief that the level of complexity of the learning process at CPI reached a status that gave the process a kind of autonomy, where creativity and innovation are an essential part of the process and where value creation is the only measurement tool for achievement within the group. 

The CPI learning case is complicated enough, but let us also think about the role of the learning model offered by Christianson et al. (2009) with regard to learning from rare events. The World Trade Centre crisis was one of those rare events that hit the entire world and affect many businesses and organisations. However, the unique structure and portfolio of Newpharm at that time—where the business represented an international network of investors and products from the USA and Europe who marketed and sold products in the Middle East—made the company very vulnerable to events such as this rare one. The CPI Group learned the lesson from this rare event and its future business was never built on homogenous factors; hence the group adopted a complex, diversified business structure in the following 15 years. 

The history of the CPI Group is full of events and experiences that have helped to formulate the group’s vision and strategy. The CPI management team has created a strategic frame that allows the CPI Corporate Institute, known today as the Cambridge Corporate University, to turn several sequences of events not only into business cases and lessons, but into a structured curriculum that is used in teaching executives from around the world inside and outside the company (March et al., 1991). On the other hand, when examining the learning model at the CPI Group deeply, we can recognise the crucial and leading role of the founders of the group. The vision, the philosophy and the leadership style together form a process which has developed from the initial intuition phase, moving towards interpretation, and which matures to integration, where all business sectors are currently integrated; finally it reaches the institutionalisation phase, where it becomes part of the organisational culture (Crossan et al., 1999). 

The CPI learning model is a corporate organism with a very complex heterogeneous structure; it grows, matures, changes and develops every day and in every location. People play the primary role in the process and represent the engine of change, value creation and profitability. At the CPI International Group Switzerland, it is only about people who are changing the world. 

References

Christianson, M., Farkas, M., & Sutcliffe, K. E. (2009) Learning through rare events: significant interruptions at the Baltimore and Ohio Railroad Museum. Organization Science, 20 (5), 846–860. 

Crossan, M., Lane, H. & White, R. (1999). An organizational learning framework: from intuition to institution. The Academy of Management Review, 24 (3), 522–537. 

Haunschild, P. & Sullivan, B. (2002) Learning from complexity: effects of prior accidents and incidents on airlines. Administrative Science Quarterly, 47 (4), 609–643.

March,J. , Sproull , L. & Tamuz, M. (1991) Learning from samples of one or fewer . Organization Science, 2 (1), pp. 1-13 

Nonaka, I. & Takeuchi, H. (1995) The knowledge creating company. Oxford, Oxford University Press. 

Simon, L. & Pauchant, T. C. (2000) Developing the three levels of learning in crisis management: a case study of the Hagersville tire fire. Review of Business, 21 (3/4), 6–11.