As paper machines become more efficient and competitive, companies should not forget the importance of the people who manage the work

Helping paper managers to make the grade

It is essential that the forest industry produces managers who understand the different areas of their business. They have to be capable of abstract and modern managerial thinking and they also have to be skilled in human relations.

Success breeds competence and competence breeds success, but who will be the management "grand masters" of tomorrow?

To achieve this goal, the paper industry manager needs to be competent in three broad areas

• a knowledge and understanding of how the paper industry works

   

• a good grasp of economics

   

• mental strength and flexibility.

   

In other industries, the situation was somewhat different. For example, some leading Finnish banks hired managers from the metal and forest industries who did not have extensive banking experience and they are still paying the price of those decisions.

Top managers need a deep understanding of their own industry in order to interpret information from the lower ranks properly and to succeed as managers. Understanding the logic behind an industry involves getting to grips with the information, skills, rules and operations of a specific industry. Added to that, a manager needs to understand the competition and the factors that contribute to their success. This involves getting to grips with production technology, cost and revenue structures, as well as customers and their specific needs.

Production technology has traditionally been the strongest area of competence among Finnish managers. This is partly through luck and partly thanks to a planned cycle of success, which has combined technical skills, a high level of education and technological advances.

After the Second World War, Finnish paper industry managers started to look for and develop new technical solutions with Finnish mechanical engineering industry and consultants. This created a fundamental base for technological advances, which in turn generated new technical solutions
and strengthened the industry's faith in
production technology as its most competitive tool.

This cycle of success has created managers with technical knowledge who, in turn, pass on their technical skills to the next generation. Standards among this top league of managers have become very high, forcing players to acquire top level skills if they want to reach the premier league.

Central cog

The central concept in the cognitive map of a Finnish paper industry manager is the paper machine. Thinking is ruled by the machine and it is through the PM that other more distant issues are handled, such as marketing, customers, organization and skilled people. This worldview built around the paper machine is the result of education, summer jobs and career paths where managers gradually gain more responsibility in a PM's operation.

From one point of view, this recipe for managerial thinking has worked well so far and created prosperity. But on the other hand, it is increasingly vital that managers develop skills in other areas of business besides engineering competence. In addition to the concept of vertical thinking illustrated in Figure 1, more horizontal thinking is needed.

In addition to understanding the paper industry, a manager must also be familiar with more general economic issues. This includes business terminology, a knowledge and understanding of the main business theories as well as the current state of national and international economies.

These issues have traditionally been taught in business schools, but during the last two decades, education programs within companies have become popular. Internal MBA programs organized by universities have also been on the increase. These training programs have boosted and updated the skills of Finland's paper industry managers.

Companies are used to analyzing processes and investing in equipment, but they must invest in people resources too

Unfortunately, more often than not, Finnish business education has been rooted in American consumerism as far as marketing, concepts, theories and ways of thinking are concerned. A program that frequently uses Coca-Cola and McDonalds as examples and focuses on central issues such as advertising campaigns and the battle for shelf space in supermarkets, is not particularly appropriate for management development in the paper industry.

Internal business training within companies has certainly been more effective, as have the company specific MBA programs organized by universities with the paper industry as the direct customer.

Understanding economics is a fundamental skill for paper managers to acquire. But it is also important to find and develop realistic and relevant theories from the viewpoint of the paper industry. These could then function as effective "glasses" through which managers could see issues in a new and more intelligent way.

Flex and go

The third skill that a paper industry manager needs to master is mental flexibility and strength. Mental flexibility is the ability to look at questions that are important for the company from the viewpoint of different interest groups. These interest groups could be customers, suppliers, middle management, employees or environmental organizations.

In principle, this sounds like an easy skill to acquire. But in practice, listening to different interest groups can be often be challenging. Another important aspect of mental flexibility is the ability to use different conceptual "glasses" or metaphors. While the cognitive map of a Finnish manager in the paper industry is mostly ruled by a paper machine, many companies also perceive the organization itself as a machine. But it is also useful to think of organizations and their management organizations using other metaphors. Organizations can also be thought of as cultures, political systems, instruments of power and even prison-like structures. These metaphors are just a few of the many that can be found in common use in the paper industry.

More often than not, managers see the competition between paper companies as a kind of war. They talk about battles for market shares, attacks and defense, enemies, competitive weapons, troops and price wars. For some companies, competition is perceived through sporting terms. Managers focus on the technological race, where machines have to run at full speed in order to hold onto a company's present position. At the same time, other businesses view competition between companies as a game. In this scenario, it is important to know the other players as well as the rules of the game, and carefully think about the next move.

When managing an organization and developing a manager's rationale, it is essential to strive for versatile and flexible ways of thinking, which require a conscious use of many metaphors. For example, competition in the paper industry partly resembles war, partly competition and partly games. As a result, managerial issues at a strategic level use features from many metaphors at the same time.

But when certain metaphors are used, they also start to appear in the concept being described in such a way that metaphors of war, sport and games can even start to reinforce the special features of what they are describing. For example, metaphors used to describe competition between companies do not sufficiently take into account the possibilities for cooperation in competition.

As our thinking develops and settles, the most successful metaphors can no longer be recognized as metaphors. This means that the original analogy disappears and the terms gain a new literal meaning. An example of this would be the widespread use of 'fine' paper, which has retained its name although it is no longer considered any 'finer' than many other types of paper.

In addition, metaphors bring with them additional meanings that may be difficult to recognize. For example, a commonly held view of the paper industry is that it is a mature business. In Canada, it has been suggested that no other concept of management research has caused so much damage for the forest industry as the metaphor of maturity. This notion has become widespread, tainting the whole industry and, to a certain extent, reducing faith in the business.

Paths to the top

Managers in the forest industry possess different skills and areas of development, depending on which level they find themselves. The first step on the management ladder is the trainee manager's position. The trainee's knowledge of a specific industry and general economics are relatively limited. If the trainee is a graduate paper engineer, he or she will have some idea of how the paper industry works. Similarly, a business school graduate will have a certain amount of economic knowledge.

Paper managers at the start of their career have quite a steep learning curve ahead of them. Such managers have to develop knowledge and understanding of the business they are in. They must also learn to understand the economy at a more general level. At the same time, it is important that they develop mental flexibility and strength. But first, a young manager usually starts to develop an understanding of the particular industry or business area.

For engineers, investments in the latest technology often represents the best development of human resources. The planning and implementation of a new technology creates an enthusiastic atmosphere and provides an opportunity to familiarize oneself with the development of component suppliers, the achievements of competitors, the needs of customers and be at the forefront of technological research.

Previously, business school graduates were seldom accepted in these development projects. Now, there are more openings for them. Development projects would also advance their knowledge and understanding of the business area. The startup of new production lines often requires the appointment of new managers and they are usually recruited straight from the development projects. In many ways, new positions reach to the future. They enhance knowledge of the business area and can even provide the acquisition of a new view. Another way to put it would be to say that success creates competence and competence creates success.

Paper learning curve

An important question in the paper industry is how to develop a manager's understanding of the paper business. Managerial career paths are still governed by so-called specialist careers. Production and sales organizations are usually separate divisions with different career paths. As a result, there is relatively little horizontal movement from one function to another.

The number of experts who develop a multifunctional background is also relatively small. An additional problem is that the larger the company, the later a manager gains experience of business responsibility in his/her career. At worst, the manager does not really develop any business knowledge, but remains a specialist in a narrow sector and does not recognize the connection between their work and the actual business.

Business graduates in supporting functions face the same danger. The best-case scenario would be to develop a wide understanding of the paper industry. Failing that, employees become administrators - they know the business like the back of their hands, but lack the necessary general understanding of economics.

In many corporations, there are also people with a high level of knowledge about the general logic of economics, but poor understanding of a specific business. This person will often be a university professor or a general consultant. There are not many of them in the highest ranks of the paper industry - but maybe this is for the best, especially if they are not genuinely interested in acquiring an in-depth knowledge of the specific industry.

At the top of the management pile is the strategist who understands both the paper business and general business concepts. This type of manager is capable of assessing phenomena in a particular business area in relation to other industries. A strategist can also use different theoretical "glasses" to make sense of individual events and phenomena. If a strategist is also mentally flexible and strong, then they become what are known as a "grand master" of business management.

Usually, a manager in the Finnish paper industry progresses from being a trainee manager to one who understands the logic of a specific business area. The manager's knowledge of economics starts to improve as he/she gradually gains more business responsibility.

If the person in question reaches top management status, there will also be more opportunities to participate in management training. Summer schools in universities abroad are quite common. Many companies also send their key people on MBA programs, which they take alongside their work, or even tailored MBA programs such as those created by the Finnish forest industry in conjunction with universities. These educational programs create a common managerial language, frameworks for strategic thinking and action, a corporate identity, and networking relationships within the corporate group.

The way forward

Through work and education, it is possible to produce managers in the forest industry who meet all of the above criteria. Management research is essential in the development of individual mangers, but there need to be strong links between theory and practice in research.

Science develops through discussion between researchers, but scientists risk losing sight of managerial relevance. Practitioners also face the danger of remaining in their own closed world without the stimulus and perspective brought by abstract theories and frameworks. It is important that theory and practice develop side by side.

Added to the interplay between theory and practice, the career path of a "grand master" of management also needs to include a large dose of mental diligence. Practical experience enables the manager to assess the suitability of different theories to the needs of the paper industry. A manager with professional experience will also be able to take in theoretical information more easily than students at a business school, because the concepts will affect him more.

The management theory industry is a machine in perpetual motion, which churns out more and more new concepts and metaphors. The competition between theories is a battle for the language and the minds of managers. Developing new concepts and metaphors is like constantly walking on a tightrope between two requirements. On the one hand, theories have to be realistic and they have to correspond to the complex reality of business management. On the other hand, they must be stimulating and encourage people to act, which means they need to be simple.

By adopting successful management concepts and metaphors, companies gain a competitive edge over the competitors in their field. But in time, the products of management theories turn into commodities familiar to everybody. Most of the management strategies in the forest industry fall into this category and they do not respond to the challenges of the forest industry.

To a large extent, developing a management strategy for a company is creating a language that is realistic enough to tackle the complexity of the situation in a company, and yet simple enough to be widely learned and adopted for use in communication. But it must not be already available on the market, otherwise the theory will lose its competitive edge.

A new competitive advantage for the forest products industry is now opening in the field of forest industry specific management research. One of the key developments in business economics in the 1980s and 1990s has been a trend toward research and theories that are industry specific. Many factors have affected this trend. Firstly, many researchers have lost their faith in the possibility of creating grand master theories of management that cover everything. They realize that many managerial questions are industry or business area specific. Secondly, many management researchers have become genuinely interested in questions regarding a particular industry. Another factor is that understanding the logic behind some industries is difficult for researchers, and they are "forced" to stay with the business they know.

In some cases, people have become management researchers at a later age and realize that they can put their decades of experience to use in research on their particular industry. These trends have all enhanced the development of industry specific theories, which are an example of the successful interaction between theory and practice.

Forest findings

There has been relatively little research on the forest industry so far, but the research in this area is becoming more popular among management researchers. The key task of the Finnish management researchers is to focus on empirical research within the forest industry and to create theories, glasses and thought models based on this research.

These theories should be positioned somewhere between general grand master theories and practical models for thinking. With their help, it would be easier for the managers in the forest industry to see both the wood and the trees across the realm paper industry management.

Kimmo Alajoutsijärvi is Professor of Industrial Marketing at the University of Oulu in Finland. Among a host of other things, he has carried out practical case studies in the Finnish paper industry.