THESIS
Sensemaking and Sensegiving in a Public‐Private
Partnership: An Exploratory Case Study of the
Shaping Phase of an Energy Sector Project
Thesis supervisor: dr. A. (Arno) Kourula Second reader: P. (Pepijn) van Neerijnen MSc Student: drs. M.L. (Annelous) van der Linden‐Jonkers, annelousvanderlinden@live.nl Student number: 10482121 Date: August 23rd 20162
TABLE OF CONTENTS
ACKNOWLEDGEMENT ... 3 1 INTRODUCTION ... 5 1.1 BACKGROUND ... 8 1.2 RESEARCH GAP ... 15 1.3 RESEARCH QUESTION AND OBJECTIVES ... 17 1.4 KEY DEFINITIONS ... 18 1.5 STRUCTURE OF THE STUDY ... 19 2 LITERATURE REVIEW ... 212.1 PUBLIC‐PRIVATE PARTNERSHIP ... 21
2.2 PROJECT SHAPING PHASE ... 23 2.3 SENSEMAKING AND SENSEGIVING ... 24 2.3.1 Sensemaking as a concept ... 24 2.3.2 Forms of sensemaking ... 25 2.3.3 Development of sensemaking ... 29 3 METHODOLOGY ... 34 3.1 RESEARCH DESIGN ... 34 3.2 SAMPLING ... 34 3.3 DATA COLLECTION ... 37 3.4 DATA ANALYSIS ... 39 3.5 BOUNDARY CONDITIONS AND QUALITY OF RESEARCH ... 42 4 EMPIRICAL FINDINGS ... 44 4.1 FIRST DATE: SENSEMAKING BEFORE AND AT THE START OF THE PROJECT SHAPING PHASE ... 44 4.2 WE’RE ALIKE: RESEMBLING OR COMPLIMENTARY FEATURES MODERATING LACK OF CONTROL ... 47 4.3 GETTING SERIOUS: THE TYPE OF SENSEMAKING WITHIN THE ORGANIZATIONS DIFFERENTIATES TO A LARGER EXTENT ... 49 4.4 MEETING THE FAMILY: DIFFERENCES IN THE TYPE OF SENSEMAKING BETWEEN ORGANIZATIONS BECOME MORE APPARENT ... 50 4.5 A BREAKING POINT IN THE RELATIONSHIP: EITHER COMMITMENT OR ENDING OF THE PARTNERSHIP ... 52 5 DISCUSSION ... 54 5.1 THEORETICAL MODEL LINKED TO THE EMPIRICAL FINDINGS ... 56 5.2 PROPOSITIONS ... 57 6 CONCLUSION ... 59 6.1 SUMMARY OF MAIN FINDINGS ... 59 6.2 MANAGERIAL IMPLICATIONS ... 60 6.3 LIMITATIONS OF THE STUDY ... 62 6.4 SUGGESTIONS FOR FURTHER RESEARCH... 63 REFERENCES ... 66 APPENDICES ... 72 APPENDIX 1 INTERVIEW STRUCTURE ... 72
APPENDIX 2 CODE TREE FROM QDA‐MINER ... 72
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Acknowledgement
I would like to thank my supervisor Arno Kourula and second reader Pepijn van Neerijnen for their patience and support. Arno Kourula commented on various versions of this thesis and managed to do this in an ever constructive way. He coached, supervised and supported throughout the whole process. Charlotte Spanjaard and Laura Keessen deserve gratitude for their belief in this thesis and its completion. They were always available when needed. I want to thank all participants in the interviews I have conducted for sharing their views and spending time in their busy schedules on my thesis. Dr. Jens Wimschulte, my MT‐colleague from Hamburg, offered to be a commenter and reviewer during the process. His input helped a lot. A special thanks to my husband Jos van der Linden and my parents Betty and Lout Jonkers. Without their endless care I could never have managed to complete this thesis. Combining work in a trading unit, education and parenthood is only possible with the support of these wonderful people: Betty, Lout and Jos.
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Abstract
Background ● The energy sector is facing enormous challenges. There is a need to move to sustainable energy production. Public‐private partnerships are needed to innovate in the current energy landscape to make this change to renewable energy happen. Sensemaking in the shaping phase of public‐private partnerships is key to understand how these partnerships move forward. Objective ● Giving insight into sensemaking in the shaping phase of a public‐private partnership in the energy sector and generating propositions for further research into this topic. Method ● An in‐depth single case study of a public‐private partnership project called “PPP‐X” in its shaping phase. Interviews were conducted using a questionnaire. Results ● Sensemaking during the shaping phase is a continued process. The levels at which it takes place differ throughout the process. Sensegiving, the leadership behavior to direct sensemaking to a target audience, is conducted on the axes of animation and control. During the shaping phase, the initial sensegiving is done primarily on the animation dimension to create commitment. As the shaping phase progresses, sensegiving is, to a larger extent, directed on control‐related activities to clarify what participants in the project can expect. In the process the identity of the project and its participants are solidified.Conclusions ● The participants use sensemaking in two different ways; first to create clarity
between project participants in order to be able to go into the scoping and implementation phase of the project. The second is to enable enough sponsor support internally to make the project and the cooperation come to live.
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1
Introduction
This research effort is done to explore the role of sensemaking and sensegiving in one specific public‐private partnership in the energy sector. It is done with the aim to comprehend the role of sensemaking in the shaping phase of one interesting partnership, called “PPP‐X”. A variety of individuals working on both ends of the partnership, all with different roles in the project, were interviewed to explore how sense was made in the shaping phase. In order to create a proper understanding and overview of the themes in this research, an introduction to the main topics in this thesis is offered below. Subsequently, there will be background information about the energy sector, public‐private partnerships including the shaping phase of these partnerships, sensemaking and sensegiving. Energy market The energy market is facing a big challenge, being the realization of a CO₂ neutral energy production by 2050 (Ministry of Economic Affairs, 2016). The transition needed in the coming years in order to achieve this ambitious target has profound impact on the energy sector as a whole. On December 15th 2015, 195 countries agreed to a climate act, which was put together under the supervision of the United Nations (UN, 2015). In the report, specific goals were agreed upon to reduce global warming as a result of CO₂‐production. The call on energy producers towards a more sustainable energy production is the result, paired with a call on energy companies to secure continued delivery of energy at a fair price. The three main objectives in energy saving are summarized as follows: lowering CO₂ emissions, creating more6 economic efficiency out of energy production and continuing a high level of security of supply (Rodel, 2007). Rotmans stated the following (Rotmans, 2015): “The energy world is changing rapidly and rigorously. Sustainable energy will become mainstream; coal and gas will lose ground. Companies refusing to take this into account, will cease to exist in the longer run. Energy companies need to come up with smart solutions and new revenue creating business models.” J. Rotmans, by Irene Schoemakers for Management Scope, 2015 PPP One possible way to achieve the transition in the energy sector is for energy companies to work with partners to acquire the capital needed to invest in innovation, to mitigate the risks of such large‐scale investments and to source the knowledge and skills needed to deliver on the climate targets. The involvement of the private sector in the development and financing of initiatives in the public sector has increased substantially in the past decade (Li, Akintoye, Edwards, & Hardcastle, 2005). According to Rockart, critical success factors (CSFs) of public‐private partnerships can be defined as the ‘few key areas of activity where favorable results are absolutely necessary for a manager to reach his goals’ (Rockart, 1982). Peter Smink comments on management challenges in the energy transition (Smink, 2016). He states: “We need to adjust to changes, just as in many other industries. We are fully aware of this need. What the size of our operations will be in the near future? Time will tell. We will have a role, once we stop to think in terms of large‐scale production. Those activities
7 reduce our earning potential, which will not come back either. We need to become part of the energy transition. We try to enter the zone between the customer and the producer of solar panels, for example. We shall turn into a company with service as its key feature. In the end, somebody has to arrange the daily power supply between producer and consumer.’ Peter Smink, CEO N.V. Nuon Energy, interviewed by R. de Lange and B. van Dijk, Financieel Dagblad, 2016 PPP‐X PPP‐X, a recent initiative by EnergyCo, aims to do exactly that, to enter into the chain between the producer of solar panels and the consumer of sustainable energy (Tielemans, 2016). The start‐up type venture called PPP‐X is the partnership of which the shaping phase will be explored in this case‐study. The partner involved from the private end is consultancy firm ConsultingCo. They are brought into the equation to support with advisory and online development skills. More information about PPP‐X will be provided in the background to this study. Project shaping phase The project shaping phase in a public‐private partnership comprises of the up‐front establishment of external project conditions, platforms, and environments. It is seen as the principal determiner of the success or failure of large, complex, high‐profile projects. Spending sufficient effort and resources to project shaping before starting execution should be considered the key to reducing the risk of projects ending up with negative outcomes (Westfall, 2004).
8 Sensemaking For this case‐study, sensemaking and sensegiving are primary notions. These sociological phenomena are stemming from Weick’s seminal article (Weick K. , 1988), where sensemaking is defined as the process of social construction that occurs when cues interrupt individuals’ ongoing activity. Sensemaking involves the development of meaning to rationalize what people are doing. Leaders actively steer sensemaking, which is referred to in literature as ‘sensegiving’ (Gioia & Chittipeddi, Sensemaking and sensegiving in strategic change initiation, 1991). The claim in this article is that sensemaking is incomplete, unless there is sensegiving, a sensemaking variant to create meanings for a target audience. A literature review on sensemaking and sensegiving is included in Chapter 2. 1.1 Background Energy sector Regulatory frameworks put increased pressure on the extent to which energy companies can emit CO₂. Emission measures are handled by European regulatory bodies, creating constraints for energy companies that relied for years on a “grey” instead of “green” fuel mix as input to their assets. Implications of these measures result in a complete change in the strategy of the energy companies (Yue, Liu, & Liou, 2001). This strategic necessity to change results in a triangulation, resulting in a continuous tradeoff the energy giants have to manage. Their traditional power stations are fossil fuel‐based, whereas customers request green energy, based on renewable sources, like solar or windpower.
9 The power stations do have an operating cost level, even if it is not profitable to let them generate electricity. Cost pressure is the result, which creates the need to introduce cost‐saving programs internally. Scarce skills and knowledge are impacted internally. Security of supply is the third factor in this trade‐off that needs constant managing. The Chairman of the Supervisory Board of E.ON, one of the largest German energy companies, states (E.ON Points of View, 2015): “None of the three goals of energy policy is currently being achieved. Security of supply is no longer a reliable cornerstone, energy prices are rising, and climate change effects are becoming even more significant, instead of being reduced. It is high time for a general revision of the energy turnaround; cosmetic changes will not do.” Werner Wenning, Chairman of the Supervisory Board of E.ON, 2015 The turnaround needed in the energy industry puts pressure on energy companies. There are, however, also positive results to the recent dynamic in this landscape. One positive result of this dynamic is the intensive exploratory trail energy companies have embarked on. Innovative findings were prototyped, partnerships with private parties became a necessity and the first results are visible (Weissink & Grol, 2016). Energy produced from natural sources like sun, wind and waves does not emit CO2 and thereby it will contribute to a sustainable society. Certainly, these projects have long lead times before becoming financially interesting to the owners, but they do provide new opportunities for future energy production. Investing in these sustainable projects is at present done by all leading energy companies in Europe (Energieportaal, 2015). Large‐scaled projects, however, are very capital‐intensive and have a long lead time before they are developed from ideas in a broad funnel, to specific concrete
10 projects. As is the case in the infrastructural sector (Kwak, Chih, & Ibbs, 2009), public‐private partnerships are a way to acquire capital, know‐how and mitigate risk in energy sector projects. Public‐Private Partnership Public‐Private Partnerships (PPP) have been a hot topic in the past decennia (Hodge & Greve, 2007). Especially following the worldwide financial crises there has been an increasing interest in adopting public‐private partnerships, both by governments in the Western world as well as in the developing countries (Osei‐Kyei & Chan, 2015). Where governmental organizations and private firms join forces to accomplish their goals, worlds are colliding. It is clear, however, that there is a mutual benefit for these partners in joining forces. Governmental organizations require the know‐how, capital and means that private firms can easily deploy or get access to. Other potential purposes for PPPs are policy design, planning, monitoring, resource mobilization and resource management (Bovaird, 2004). Many governments are now trying to get access to the expertise and the capital in the private sector in order to minimize their own financial deficits (Osei‐Kyei & Chan, 2015). Governmental organizations can serve public needs by engaging in projects, but generally lack sufficient executing capacity, knowledge and financial means to arrange for larger scaled projects to succeed. Another key characteristic of public‐private partnerships is the ability to share risks between parties (Ke, Wang, Chan, & Lam, 2010). Good examples of such PPP‐ projects can be found in the infrastructural and cultural sector. There is hardly any research into PPP‐projects in the energy industry.
11 In the energy sector, large investments and highly specialized engineering capacities are required to arrange to make the energy transition happen. In search of sustainable solutions, the fuel mix and energy landscape are changing in a rapid pace. Under pressure of political leaders, public opinion and regulatory frameworks across Europe, a change towards greener energy production is necessary (WEC, 1993). Consumers are no longer just interested in getting commodity delivered at the lowest price. They care increasingly about how energy is produced, to what extent this has an impact on the climate they live in and how this will impact the globe in the years to come. They use their option in liberalized markets to choose their supplier and change supplier if required (Dekker, 2015), causing the above‐mentioned need to make a transition in the energy landscape become a reality. By joining forces, public and private partners can seek access to cheap fuel provided by nature itself, enhance their reputation and improve the global climate. Other benefits are the possibility to tap into resources mutually, get access to valuable experience and materials and invest in innovative new ways to produce, supply and distribute sustainable energy going forward. PPP‐X PPP‐X is the anonymized name of a new initiative by EnergyCo. It consists of an online market place for exchanging renewable energy between peers. It is a peer‐to‐peer online solution to exchange energy flows. These consumers with the ability to make own electricity, using solar or wind energy, are called “prosumers”. These prosumers can use the online solution, hereafter referred to as “platform” as a market place, where they can buy and sell renewable energy.
12 PPP‐X has invented and developed an online platform, that can monitor energy flows between participants and send an invoice for the amount of energy exchanged via the platform. Also, the supplier of the platform can support by taking care of imbalances. If the sun doesn’t shine, or the wind doesn’t blow, the energy company owning the platform will secure the energy supply to the prosumers by delivering green energy from their own network. The owner makes money by charging a transition fee for every unit of energy exchanged on the platform. The platform is a complex IT‐application, that needed to be developed by a specialized consulting company. ConsultingCo was the company initially chosen to brainstorm about the concept, develop the business case and eventually, also build the platform. ConsultingCo is the privately owned partner in the public‐private partnership called PPP‐X. By enabling the exchange of renewable energy between peers through the platform, PPP‐X helps to speed up the energy transition to renewable energy (press release about PPP‐X, 2016). There are a number of areas where the introduction of PPP‐X has immediate impact. The context of PPP‐X per area will be listed below, each area under a separate header. Technical context of PPP‐X Under this header, the IT‐specifics of PPP‐X will be described. So‐called “blockchain technology” is able to replace registers of all kinds, by making an online database with mathematical formulas, allowing transactions to be monitored, checked and executed (Van Noort, 2016). The online platform can verify automatically whether a specific transaction is valid or not and subsequently confirm the transaction. There is a lot of interest in this type of technology from the banking sector and several other industries are now looking into deploying the blockchain
13 technology in their sector. Verification processes take time and cost money, as they are now mostly executed by intermediary agents like notaries and banks. A major concern in using blockchain applications, is the privacy and trust of stakeholders in handling the data (Jetten, 2015). Legal context of PPP‐X PPP‐X is specifically not an integral part of EnergyCo. It has its own legal entity set‐up. A legal counsel, dedicated to handling all relevant judicial aspects of PPP‐X, is part of the team. The reason for establishing a separate legal entity for PPP‐X lies in the need to avoid internal issues and risks around customer volumes and financial flows. A milestone in getting PPP‐X online, was the grant of the license of PPP‐X by the ACM, the “Autoriteit Consument & Markt”, or translated: the Authority for Consumer and Market. The ACM granted PPP‐X a license that gives permission for the establishment of a new energy company. Without a license, it is impossible to supply energy to consumers in the Netherlands. The ACM safeguards fair chances and choices for companies and consumers. They verify whether new companies entering the market do this on the basis of transparent and correct documentation. The ACM checked before giving the license whether the offering by PPP‐X is appropriate from a perspective of fair competition and whether consumers will be properly informed about their rights and choices at PPP‐X (ACM, 2016). With the license of the ACM in place, consumers can start using PPP‐X as their way of using self‐produced and peer‐produced green energy. Consumers have to switch supplier if they want to join the PPP‐X concept. This means that from a legal perspective, they have to cancel
14 their supply contract with their current provider and engage in a new contractual relationship with PPP‐X. Commercial context of PPP‐X For EnergyCo, PPP‐X may have financial consequences. The value of an energy company is determined ‐amongst others‐ by the amount of retail customers they have. Customers currently using traditional grey or green energy, supplied by EnergyCo, may decide to switch to PPP‐X. This could have a negative impact on the size of the customer basis of EnergyCo, if their customers decide to switch to PPP‐X. The upside, however, is that PPP‐X will also eat out of the customers basis of other large utilities, with a competing position compared to EnergyCo. The financial impact of losing customers is hard to assess and represent in hard numbers, as there is not yet too much we can say about the number of customers that will make the switch to PPP‐X. The first customers are now online on the platform and there has been quite some marketing effort invested in making the new company PPP‐X known to a broader public. The current first quarter will give a good indication of the total number of customers at PPP‐X by the end of the year, which will also make a more detailed financial assessment of the prognosed loss of customers for the mother company possible. Stakeholders in the context of PPP‐X There are various groups of stakeholders, affected by PPP‐X. Customers and the mother company were listed above. The ACM has a role and is a stakeholder as their license to operate is a conditio sine qua non. Producers of solar panels and wind mills benefit as stakeholder
15 groups from PPP‐X. Wind mills are hard to realize in regular private households, as they require specific approvals and are very large and costly. Only those consumers with a lot of land, away from urban areas, and with sufficient own capital available (like for example farmers) tend to be able to buy and deploy wind mills. Solar panels, however, are easier to obtain for private use. In five years, the number of retail consumers with solar panels on their roofs quadrupled (news article on PPP‐X, 2016). Producers of these panels may see their financial results rising as a result of the launch of PPP‐X. 1.2 Research gap PPPs in the energy sector There is a well‐developed body of knowledge around PPP’s as such, mainly in the health and infrastructural sectors (Li, Akintoye, Edwards, & Hardcastle, 2005; Roehrich, Lewis, & George, 2014). The most identified CSF’s are risk allocation and risk sharing, strong private consortium, political support, community/public support and transparent procurement (Osei‐Kyei & Chan, 2015). The large players in the energy sector are public entities, and the ongoing transition creates a clear need for engagement with private partners to enable innovation or gain access to capital (Rotmans, 2015). Specific research on PPP’s in the energy sector however, can’t be found. Outcome instead of shaping of PPP’s Literature on PPP’s since the 1990’s seems to mainly focus on the outcome of PPP formation rather than on the process of forming and shaping them. Although partnerships are needed for
16 the aforementioned reasons in the energy industry, they have a strong likelihood to go sour (Chen, Hubbard, & Liao, 2013). There is a lot of literature on PPP’s, however, hardly any existing literature on the process of getting to shared goals during the shaping of the partnerships (Kwak, Chih, & Ibbs, 2009). Sensemaking perspective The literature acknowledges that both partners interact with their stakeholders to legitimize their involvement in a partnership. A process of social exchange is implied in this result (Boone et al, 2008; Muller et al, 2010). Subtle contextual social cues determine cooperative behavior and affect mutual expectations on cooperation during the shaping phase. The theory on sensemaking and sensegiving could provide an adequate insight into how this social exchange influences the way these partnerships are formed before they are formalized. The sensemaking perspective has provided insight into dealing with crisis and change (Maitlis & Sonenshein, 2010). Social cues, however, can enhance and induce mutual cooperation, so the notion of sensemaking linked to the shaping phase of a partnership could impact the cooperation during the partnership. Sensegiving mainly relates to the way managers steer sensemaking (Maitlis, 2005). Connection between the concepts sensemaking, shaping phase and PPP’s Current literature gives a proper insight into the technical features and formal characteristics of public‐private partnerships (Chen, Hubbard, & Liao, 2013; Reynaers & Graaf, 2014). There is, however, hardly any research on the shaping phase of these partnerships. This phase is strongly
17 driven by social exchange, which is not sufficiently researched. Empirical evidence in terms of the exchange in this specific phase is missing. A case study into one specific PPP in the energy landscape could provide insight into the exchanges and the way sensemaking occurs in the project shaping phase. Regardless of the existing theory and research, the actual development of the partnership in its shaping stage remains a black box. There is limited to no insight in how the partners influence each other and give direction and meaning in the shaping phase. This research gap is the starting point for this thesis. 1.3 Research question and objectives
The objective of this explorative research is to investigate cooperation in the project shaping phase of a project, and especially look into the extent to which sensemaking and sensegiving play a role. A case‐study will be conducted in order to create a set of propositions. The central question in this thesis is the following: “How do project participants use sensemaking and sensegiving in the project shaping phase of a public‐private partnership?” A questionnaire (referred to as “Interview structure”, see Appendix 1) is used to provide a checklist for the interviews. As explained in the methodology section of this thesis (see Chapter
18 3), the interviews were semi‐structured to allow participants to speak freely about sensemaking in the project shaping phase of the selected public‐private partnership. 1.4 Key definitions Key definitions need to be given of the following notions: energy sector, Public‐Private Partnership Projects (PPP’s), the project shaping phase and sensemaking and sensegiving. The energy sector is the collective set of companies working to produce and supply energy for and to end users. The sector is driven by the worldwide energy demand for all main economical and societal processes. Examples are oil and gas drilling and distribution companies, power producers and grid operators. As energy is the fuel of every economy, it is a vital product in today’s society. A PPP‐project is a cooperation between private parties and the public sector, mainly through contract, to deliver public services (Chen, Hubbard, & Liao, 2013). The private sector involvement in developing and financing public facilities and services has increased substantially over the past decades. Risks and rewards in projects can be shared by deploying PPP‐structures (Li, Akintoye, Edwards, & Hardcastle, 2005). Advocates of PPP‐projects argue that such partnerships secure better quality of for example infrastructure and services, whilst costs and risks are shared between parties (Kwak, Chih, & Ibbs, 2009). The project shaping phase is the phase of a project where cooperation between two parties is shaped (Smith & Winter, 2010). In this phase, a first idea to undertake a new project is generated and shared between stakeholders. The start of the shaping phase is the moment of
19 engaging in sharing the idea with stakeholders. Stakeholders are defined as follows: any group or individual who can affect or is affected by the achievement of the objectives or an organization (Laplume, Sonpar, & Litz, 2008). Sensemaking can be defined as: “it is the primary site where meanings materialize that inform and constraint identity and action” (Mills J. H., 2003). Sensemaking has the purpose to lead to a constructed, coordinated system of action (Weick, Sutcliffe, & Obstfeld, Organizing and the process of sensemaking, 2005). This can be done during small moments or small fragments of interaction. Sensemaking reflects a way for people to make sense of inputs and to use the sense or meaning they derive from the inputs to make the world around them more orderly. Sensegiving is defined by Gioia and Chittipeddi as a critical leader behavior during strategic change, whereby they define sensegiving as “the process of attempting to influence the sensemaking and meaning construction of others toward a preferred redefinition of organizational reality” (Gioia & Chittipeddi, Sensemaking and sensegiving in strategic change initiation, 1991). Sensegiving is a fundamental leadership activity within organizational sensemaking (Maitlis, 2005). Gioia’s research on changes in company strategy puts emphasis on top manager sensemaking (Gioia, Thomas, Clark, & Chittipeddi, 1994). In this article, it is emphasized that top managers not only make sense of their external environment to formulate changes; they use sensegiving as way to influence the construction of meaning. 1.5 Structure of the study
20 Chapter 2 provides a critical review of the literature on the topic, and it also gives a theoretical grounding to the research. The methodology of the research, including topics like sampling, interviewing, validity and limitations are addressed in Chapter 3. Subsequently, Chapter 4 provides the results of the study, followed by Chapter 5, where discussion and recommendations can be found.
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2
Literature Review
In this chapter, a systematic review will be provided of relevant articles in light of the research question. A comparison of insights stemming from relevant articles is to be found. 2.1 Public‐Private Partnership In order to find an appropriate link or order between the topics in this thesis, I have designed a model (“Figure 1 – Social organization, value and sense‐creation model”), which can be found below. Culture and society → Cultural and social setting “No organization can properly be understood apart from its wider social and cultural context.” (Scott, 1995) ↓ Normative framing → Setting normative frames “Firm behavior is shaped by broad cognitive, normative and regulatory forces (to which values do actors need to stick) that derive from and are enforced by powerful actors such as mass media, governmental agencies, professions and interest groups.” (Scott, 1995) ↓ Public‐Private Partnership → Differing mindsets joining (Roehrich, Lewis, & George, 2014) ↓ Sensegiving → Steering meaning “Sensegiving creates the framework for sensemaking.” (Luscher & Lewis, 2008) ↓ Sensemaking → Creation of significance Sensemaking implies actually taking care of the core activity of giving meaning. (Weick K. , 2011) (Weick K. E., 2005) ↓ Value generation → Actual production process (primary company activities/servicing, production, transactions) Figure 1 ‐ Social organization, value and sense‐creation22 The lowest level in the model is the company‐specific value creation level. This level reflects the actual production, service and transaction process of the partnership. This is the basic level of company‐related activities in the model, resulting in the delivery of primary products and services. From the bottom‐up, the next level is “sensemaking”. Sensemaking is the creation of meaning through account‐definition for the value generation level. Weick (1995) refers to sensemaking as the efforts to interpret and create an order for occurrences. Account definition includes specification of value generation performance characteristics or indicators. For example: how many products should be produced per time‐slot? Which specific services should be delivered for which customer groups in society? Which stakeholders in the partnership should be satisfied? Consequently, sensegiving is the governance level of the supervisors of the company. Maitlis (2005) refers to sensegiving as a way to influence subordinates’ interpretations. The supervisors or managers provide specifications for the sensemaking level. Normative framing includes the judicial normative framing for the total company performance. This notion is added to the content of the articles, in order to position the company in its societal and governance environment. The level of culture and society affects the normative frames for all lower levels. It includes such notions as the needs and desires of a population or the societal environment. The model as a whole is included under the header of PPP, as this model offers an overview to position all theoretical notions and the linkages between them. It will be reflected in the empirical findings and discussion chapter as well.
23 2.2 Project shaping phase Prior to the exploration of the project in terms of scope, expected outcomes or business case there are specific activities which take place to “bring an initial idea through the muddle of ambiguity and choices, and convert it into a cohesive and accepted ‘sense’ that is a project” (Coleman & MacNicol, 2015). These are the front‐end conceptualization activities which bring an idea into a defined concept, which forms the basis for further action. The idea of ‘project shaping’ essentially represents the ideas, concepts and activities that lead up to a more detailed scoping. Smith and Winter (2009) looked at the ‘complex and messy social processes’ that lead to a specific new project, whilst understanding that projects are shaped by a range of individuals with differing interests in the organization. If PPP’s must become a success they must be soundly based; it is difficult to recover downstream from a partnership that has been poorly conceived (Chen, Hubbard, & Liao, 2013). The ‘project shaper’ is the person or group of persons who determine the form a particular project will take. They have to negotiate through the various power bases and interest groups within the organization using influence, negotiation, persuasion and facilitation to make sense of the requirements, benefits and outcomes from the project or partnership. They have to decide which are important and should therefore be prioritized. Shaping a project is done to address and resolve conflicts before the actual launch. Project shaping is not a single conversation at a single point in time. It is typically a series of exchanges over time, addressing and re‐addressing topics and previous interaction before arriving at a proper shape to take forward into the scoping phase. The shaping phase stops once the scoping phase starts.
24 During the shaping phase, an assessment is made as to whether the project or partnership is feasible from several perspectives, for example but not limited to financial feasibility, feasibility in terms of stakeholder buy‐in, cooperation and technology. Roles, such as the role of the project shaper and the project leader (Coleman & MacNicol, 2015) are divided during this phase and often a rhythm for regular contact with sponsors or owners is determined. Part of this phase is often also the creation of the initial document detailing the scope and size of the project, the means, timeline and milestones. 2.3 Sensemaking and sensegiving 2.3.1 Sensemaking as a concept Sensemaking is central to this research because it is the primary site where meanings materialize that inform and constrain identity and action (Mills J. H., 2003). Actions result from sensemaking and sensemaking occur when a flow of organizational circumstances is turned into words and a certain order. This order could for example have the form of written and spoken texts. Reading, writing, conversing and editing are crucial actions that serve as the media through which institutions and leaders shape the conduct of participants. There are several distinguishing features of sensemaking, including its roots in disruptive ambiguity, its beginnings in acts of noticing and bracketing, its mixture of retrospect and prospect. The reference to retrospect and prospect means, that people make sense of what is happening around them and communicated to them already, so they deal with what happened in the (recent) past. They do that in order to find a way to deal with what they have to do and deal with going forward, so prospectively. Sensemaking can be treated as reciprocal exchanges
25 between actors (enactment) and their environments (ecological change) that are made meaningful (selection) and preserved (retention). 2.3.2 Forms of sensemaking Sensemaking is defined as turning circumstances into a situation that is comprehended explicitly in words and that serves as a springboard into action (Weick, Sutcliffe, & Obstfeld, 2005). Sensemaking (Maitlis, 2005) happens within individuals and in their interactions. Sensemaking appears on four different levels: on the level of institutions, within organizations, between organizations and on an individual level. Sensemaking appears in four specific forms: guided, fragmented, restricted and minimal (Maitlis, 2005). The study by Maitlis (2005) identifies two key dimensions along which sensemaking can be described, animation (painting a picture, sharing a broader image or view) and control (steering, organizing and orchestrating). The four specific forms of sensemaking are described along these two aforementioned dimensions below. As these dimensions will be used to identify the different types of sensemaking in this research effort, they are described in a detailed way, as they tie into the empirical findings.
26 Guided organizational sensemaking Guided organizational sensemaking can be found in processes with high levels of control and animation (Maitlis, 2005, p. 35). Leaders in those situations steer the way employees (or other stakeholders) give meaning to what is happening around them. They actively support that employees and other stakeholders have an understanding and get explanations of a process or event. Stakeholders respond with a high level of engagement in grasping the meaning of things, or understanding elements of processes. Leaders take a systematic approach in case of guided sensemaking. They coordinate and shape the contributions of stakeholders to their project or process. An outcome of guided organizational sensemaking is that the coordinator or leader creates a unitary view, integrating many opinions and perspectives into one unitary understanding of the issue at hand. This leads to a consistent series of actions, rather than single actions without any coherence level between those actions. Fragmented organizational sensemaking Fragmented organizational sensemaking (Maitlis, 2005, p. 36) appears when there is a high degree of animation, but a low level of control. Leaders collect the different views of stakeholders, but did not try to organize the discussions in regards to them. Stakeholder sensegiving is at a high level, whereas leadership control is at a low level. Typically, as an outcome of fragmented sensemaking, one will find multiple rather individualistic representations of reality. There will not be one overarching strategy, with a consistent view that incorporates individual views. A result might also be that inconsistent and diverging actions
27 by stakeholders are the result. Individuals typically take their own actions without coordinating with others, with detrimental results for collective sensemaking processes. Restricted sensemaking This type of sensemaking occurs when a leader, often through private meetings with a few key stakeholders, uses only a restricted number of views to shape an issue, like for example a strategy, plan or process (Maitlis, 2005, p. 39). Gathering these views is done in a controlled way, but animation levels are low as only a restricted number of views are included into the shaping. It does minimize discussions and saves time, but creates narrow, one‐time accounts. This means that often only ad‐hoc solutions are created to deal with issues. These solutions are specifically constructed to provide a consistent set of actions to solve an issue at hand, but prevent that multiple views taken into account could lead to alternative and better solutions. An emergent series of consistent actions will not result from restricted sensemaking. Minimal organizational sensemaking This form of sensemaking, so‐called minimal organizational sensemaking (Maitlis, 2005, p. 42), results from low levels of animation and equally low levels of control. Leaders take little action to collect various views on an issue at hand. Stakeholders do not actively engage in discussions. Rather than sharing interpretations and perspectives, stakeholders wait for others to share theirs. Leaders do little to nothing to organize views or challenge stakeholders to provide their perspectives on matters. The result of minimal organizational sensemaking is that stakeholders cling to any view that is shared to support shaping their own view. Any type of organized view
28 that could help resolving the issue at hand (in the broadest sense of the word, so also meaning to rearrange processes, solve problems etcetera) is taken on board. The nominal accounts that result from minimal sensemaking will not improve engagement levels of stakeholders; neither will it lead to a clear plan to move forward. The result will be one‐time, compromise type actions with an expected lower level of effect in terms of the output. Four forms of sensemaking and the relevance of the categories The consequence of the display of sensemaking in these four forms is a differing degree to which stakeholders engage in attempts to make others understand the meaning of an issue. According to Maitlis (2005) sensemaking is the result of two parties participating actively in sensegiving. Sensegiving is consequently defined as “attempts to influence others’ understandings of an issue. According to Weick (Weick K. E., 2005), sensegiving is to be considered a special variant of sensemaking. The major difference between sensegiving and sensemaking is that sensegiving is based on communication towards a targeted audience, rather than between random actors. In the literature, focus is put nowadays on the central role of middle managers, as opposed to top managers, in sensegiving (Balogun & Johnson, 2004). Middle managers mediate the sensemaking between top management and lower level employees in organizations. Top managers provide important starting points for strategic change, whereas middle managers construct their very own meaning to those intended changes. They consequently pass their interpretation on to employees handling customers and primary processes in the organization on a daily basis.
29 The research of Huy (2002) names another activity for middle managers in change processes, being emotional balancing. In his article, a new perspective on sensegiving is provided, being that emotions of subordinates are influenced by managers, alongside their actions and cognitions. 2.3.3 Development of sensemaking While scholars have a strong interest in conscious sensemaking and in making the sensemaking process more visible, it is also suggested that much of organizational life is routine and made up of situations that do not demand our full attention. Sensemaking is about continued redrafting of an emerging story so that it becomes more comprehensive, incorporates more of the observed data and is more resilient in the face of criticism (Weick, Sutcliffe, & Obstfeld, 2005). As daily life in organizations is full of power, politics and features of specific organizational cultures, some research considers sensemaking to be a somewhat naïve notion (Mills J. , 2003). There is evidence to support that powerful, wealthy and talented people have more possibilities to influence others, as they tend to end up in roles where this power can be utilized. Influencing hearts and minds implies influencing at least one out of seven dimensions of sensemaking, identified in literature (Pfeffer, 1981), being: 1. Social relations; 2. Valued identities; 3. Meanings, either accepted or denied; 4. Cues, in whichever form they present themselves; 5. Updating processes, whereby new meaning is given or meaning is changed;
30 6. Own standards people use to test accuracy and plausibility of images offered to them; 7. Approval of action taken as a way of dealing with a certain reality. Theoretical model In order to provide a broader picture of sensemaking and sensegiving, it is linked to a context and to the specific output. Figure 1 (see paragraph 2.3, “Figure 1, Social organization, value and sense‐ creation model”) is the self‐developed model to position sensegiving and sensemaking in relation to, amongst others, culture and society. Culture and society are mentioned as they impact the extent to which sensegiving can take place and consequently sensemaking can occur. To deal with ambiguity, interdependent people search for meaning, settle for plausibility, and move on. These are moments of sensemaking and they affect how action becomes a routine in organizations. Analysis of sensemaking also suggests important skills and capabilities that secure and safeguard attention and development. In his 2011‐article on organized sensemaking (Weick K. , 2011), a new view is added to the use of the sensemaking concept. Weick argues that there are strong links between the notions of sensemaking, organizing and storytelling. He states that “together, these three themes of sensemaking, organizing and storytelling provide tremendous scope for further developing our knowledge and understanding of action that lies at the heart of organization (and management) studies.” Given the importance of the sensemaking concept, Maitlis and Sonenshein continued the research on sensemaking, specifically in crisis situations (Maitlis & Sonenshein, 2010). They base their work on the assumptions made by Weick in his earlier articles on sensemaking
31 (Weick, Sutcliffe, & Obstfeld, 2005). They argue that two core themes underlie sensemaking specifically in crisis contexts, being shared meanings and emotion. In their complementary view to Weick’s earlier work on sensemaking in crisis situations (Weick K. , 1988), they examine when and how shared meanings and emotion allow for more helpful, or adaptive, sensemaking. They refer to sensemaking as a process of social construction, which appears when specific occurrences interrupt the activities of individuals. The disruption of their activities calls for the individuals to develop a sense of meaning in retrospect. The consequence of the retrospective development of meaning, is that individuals can thereby rationalize what they are doing and why. Developing meaning is done by bracketing cues from the external environment, and interpret those cues using frames the individuals have built themselves. By connecting these frames and the external cues, individuals can develop a level of account regarding the events they have to deal with (Maitlis & Sonenshein, 2010). Typically, sensemaking could occur in the shaping phase of a cooperation. This is where the leaders and sponsors undertake active efforts to convince a targeted audience of the need for their project and the added value of it. Tension in the literature There are two interesting areas of tension in the literature on sensemaking. The first one is around sensemaking literature and the context it is put in; the second one is around dealing with the process of sensemaking and its occurrence in time sequences. Sensemaking has been initially researched in the context of crisis (Weick K. , 1988), being a very sudden and impactful change or even disaster. Sudden change like a crisis often brings
32 about pressurized conditions, creating an urgent need for giving meaning and direction between those actors involved in the crisis situation (Weick K. , 2011). The concepts have become a staple of analyzing and defining employee and manager behavior during organizational change. Sensemaking and sensegiving in an organizational context, however, may take place over a longer period of time in a change process that is not equal to a crisis, but rather creates a change in organizational circumstances or the surrounding of an organization (Gioia & Chittipeddi, 1991). Maitlis and Sonenshein suggest to use the insights from the crisis‐related sensemaking studies to look closer into the topic of sensemaking in organizational context (Maitlis & Sonenshein, 2010). Despite differences between those contexts, there are lessons to be learned from sensemaking or a lack of it during crisis situations, to benefit from in organizational contexts. Crisis involves intense emotions and a disruption of the current status quo, in a usually unwanted and unexpected way. Organizational changes are generally directed at a specific purpose, may take much longer periods of time and are rather affecting commitment and identity of involved actors than posing a vital threat to their existence. Organizational change can be turbulent, but obviously it is not comparable as a context for sensemaking to for example a crisis like an accident. A second area of tension in the literature is the sensemaking as a passive, uncontrolled process, lead mainly by expressed emotions, informal communication and intuitive reactions to disruptive change (Mills J. , 2003) versus the approach of sensemaking and leader sensegiving as a targeted, conscious and ongoing effort to create commitment, confirm organizational and individual identity and create shared meaning or expectations (Maitlis, 2005). Maitlis and Sonenshein point out that using positive and negative emotions to create shared meaning, may
33 have detrimental effects. They point out how research shows that conscious and careful usage of ‐especially overly‐ pessimistic or optimistic expectations by leaders may have dangerous consequences if recipients fail to correctly understand which action to take as a result (Maitlis & Sonenshein, 2010). Where Maitlis and Sonenshein argue that sensemaking is a process that requires conscious effort, it might be steered. Mills argues that although the process requires conscious effort, people in social processes cannot help but make sense of the situation. It happens regardless of sensegiving activities. This is a challenging area for further research.
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3
Methodology
3.1 Research design
This research was aimed at exploring how sensemaking impacts the shaping phase of a project in the energy sector. Therefore, the strategy for analysis started by defining exactly what the notions “energy sector” (Yue, Liu, & Liou, 2001), “public‐private partnership” (Roehrich, Lewis, & George, 2014), “project shaping phase” (Morris et al., 2012) and “sensemaking” (Weick K. E., 2005) mean.
This research generated a series of hypotheses which could be used for further research. It is an inductive research effort, meaning that the conclusions of the research have a certain likelihood, but are not proven beyond any doubt. The research doesn’t test a set of pre‐defined hypothesis, it rather leads to propositions that can be the starting point of further research. Although the theoretical basis in chapter 2 gave some structure to the coding, the main aim of the fieldwork was an inductive analysis of the interview results for the possible determinants of sensemaking. A case study was chosen as a research design. The choice of the case and how the study came about are mentioned in the next paragraph, paragraph 3.2. 3.2 Sampling The nature of this thesis is a qualitative, explorative investigation. The aim was for this thesis to generate a set of hypothesis that can be taken on for further research. The field of public‐ private partnership has been a topic of research mainly in the infrastructural sector, judging by many articles found in this area and a rather limited number of papers found on the topic of
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PPP‐projects in the energy sector (Yue, Liu, & Liou, 2001). Given the simple observation that energy fuels all economic activity and is a basic necessity in every household, there was a clear relevance of studying this topic. PPP‐projects allow for a combination of capital and know‐how. Both capital requirements and specific knowledge are necessary prerequisites to making large‐ scale PPP‐projects work. Often, either public or private parties on their own lack sufficient resources, expertise and/or liquidity to run PPP‐projects. When combining their assets, a result can be achieved that will provide added value to each individual party involved in the project. This topic can provide fruitful insights and lead to further research. The case at hand fitted a few criteria. First and foremost, a public and a private party had to be involved in this specific case. The case was still in full motion, meaning that the project shaping phase was still fresh in the minds of the interviewees. It was extreme in a sense that it could provide additional insight into the project shaping phase, whilst this phase was still ongoing. This case was intensively examined, not just by conducting interviews but also by working through relevant publications and documents regarding the case. An example of those secondary data is the Letter of Intent. This Letter of Intent is not disclosed as the document is confidential by nature. The Letter of Intent was used to define the scope, ownership, purpose and timeline of the project. The case in more detail: PPP‐X Linking prosumers with their own solar panels to consumers who want to off take the energy produced; this is the purpose of the new energy start‐up PPP‐X (see also the description of
36 PPP‐X and its consequences in chapter 1). PPP‐X is comparable to an online market for sharing energy between people open to sharing their energy in a community. The basis of the concept is a smart meter that translates flows generated and used to the grid and vice versa. The meter labels the energy and by doing that, can route energy to members of a chosen community. Everyone can take part, no matter whether you have solar panels on your roof top or just want to use the sustainable energy produced by others. In order to build the online platform using a cloud‐solution, a partner was needed to provide the innovative capacity to build the platform. The IT‐platform was supposed to monitor energy flows, generate invoices, overviews and potentially be scalable to other markets and products. On the website, the founding father of PPP‐X states: “Our purpose is to speed up the energy transition. This is why we give people a possibility to connect through a community. We offer them insight and the possibility to bring and take power to and from their peers.” Respondent 1/EnergyCo, initiator of PPP‐X and project shaper, press release PPP‐X (Tielemans, 2016) Finding participants to the interviews A snowballing technique (Bryman, 2012) was used to find participants to the semi‐structured interviews. Every participant was asked to name appropriate interviewees in their network to conduct follow‐up interviews with. Eight interviews were conducted, and six out of them were conducted with EnergyCo‐employees. An interview table can be found in Appendix 3, to reflect
37 some details of every interview. Three participants from ConsultingCo were willing to support with an hour of interviewing. The sample size wasn’t determined before the start of the interview series. Upfront, it was clear that getting access to the interviewees at EnergyCo would be easier than getting the ConsultingCo‐employees to join. As the ConsultingCo‐employees are working in a rather strongly money‐driven environment, there is little time on their end for non‐ billable activities like giving interviews to students. As the steering of the project and its main sponsors were on EnergyCo’s end, the emphasis in the interviewees was on EnergyCo‐ employees. Every participant was invited for interviews held locally at their work site. After three attempts to persuade participants to join in an interview without a clear appointment as a result, I aborted the mission and invited the next participant. Interviewing was done until theoretical saturation was achieved, meaning that no new or relevant data were created in the last interviews. Data categories seemed filled to the extent that no new insights arose to suggest that further interviewing would be necessary (Bryman, 2012). 3.3 Data collection
The research was conducted using a single case design (Yin, 2009). This specific case is at present in the final weeks of its project shaping phase. The project or start‐up consists of a partnership between state‐owned energy company EnergyCo and privately owned consultancy firm ConsultingCo. EnergyCo is owned by a North‐Western European state, which means that
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the representation of this state has a strong influence in the company and approves the strategic direction.
Interviewees have different roles in the project. As this was an exploratory research effort, the main aim in the interviews was to let the respondents speak freely. The information on how sense was given trickled through in the interviews by little remarks, sometimes even side comments made by the interviewees. In order to obtain a basic level of structure and comparable data, a semi‐structured interview was conducted, using an interview guide. The interview guide was used to make sure the main topics were addressed in the interviews, but as the semi‐structured interview was meant to allow the participants to give their perspective on the course of events, it was not used as a checklist. As the interviewer, I did not tick boxes during the interview; I rather solicited the interviewees to be frank and open. The benefit of the semi‐structured interview was that participants could elaborate freely on the themes presented to them. The semi‐structured interview allowed me as the interviewer to the let the interviewees give their own perspective and at times open up to a larger extent on what they experienced during the shaping phase of the partnership. The guide was used to make sure specific topics from the research question were addressed and the guide was discussed with and approved by the thesis supervisor prior to the start of the first interview.
39 The model I used to sample looks as follows (Bryman, 2012): General research question ↓ Sample theoretically ↓ Collect data (not just in interviews, but also in written form) ↓ Analyze data, based on coding efforts using QDA‐Miner software ↓ Theoretical saturation ↓ Generate hypothesis Figure 2 – Approach used to sample the data As this is a public‐private partnership where the shaping of the cooperation is now in its final stages, this means that interviews will take place whilst the interviewees are still caught in the middle of the shaping. The transcripts of the interviews are the key data used to explore. As mentioned before, secondary data were used in the form of the Letter of Intent, which was drafted as a result of the shaping phase.
3.4 Data analysis
As the research was aimed at explanation building of the processes that happened during the shaping phase, the data collection consisted of three phases (Huberman, 1994): data reduction,
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data representation and drawing conclusions. New hypotheses were generated whilst going through the interview material.
The three aforementioned analytical processes ran sequentially. To begin with, data gathered in the interviews needed to be reduced. The reduction was done by using a coding scheme (an example can be found in Appendix A). Next step is that data will have to be sorted and represented via a coding tree, and a third part is drawing conclusions. The first part of the analyzing strategy is to reduce the amount of data from the interviews, in order to be able to start linking the concepts in the research question to specific fragments in the interviews. In order to do this, the interviews were first transcribed. The transcripts did not contain every single sound; they were, however, the literal and readable versions of the actual one hour talks. All interviews were transcribed by an external agency, leading to a firm body of data as a basis for coding. The transcripts were reviewed to verify whether they represented the interviews on tape in a good and complete way. All taped interviews were available as digital files, so there was an easy verification process of the transcripts by listening to selected fragments of the audio tapes. I did this only in a few cases, where it was hard due to sound quality for the transcribers to hear precisely what was said. Coding Subsequently, three different levels of coding took place (Strauss & Corbin, 1990). Hereafter, I will go into each level of the coding, using the Straus & Corbin coding methodology. The first type of coding was open, selective coding (1990, p. 61). This meant that all the data gathered in the interviews were labeled. Every fragment in the interview that was relevant
