Part 26 of 70 — Original Chapter: Chapter 9: An Urgent Need for Research and Change
This article forms part of the serialised republication of Panthers, Passion & Politics – The Roger Cowan Years.
Growth is not always smooth. There are so many roads that must be paved and most of them start as rough tracks. A good management team seeks improvements continually, every day. Some aspects of the business are given priority; others are set aside until there is time. It is never finished, and it is never perfect.
One of the biggest milestones in the history of the Penrith Leagues Club was the relocation to its new site on Mulgoa Road in 1984. In the years immediately following the move, the club experienced phenomenal growth.
The growth rate had been consistent from the time that Cowan started as manager in 1965. There were some flat spots, and a few years of concern about lower-than-expected profit levels, but they had always been able to overcome them.
In the years after the purchase of the property in 1971, they had spent vast amounts of time planning the transfer from Station St to Mulgoa Rd. When they left the old Station Street premises in April 1984, Panthers had about 200 employees and annual sales income of around $12 million.
The success of the intensive preparation for the move was certainly reflected in the sales. In the first year, sales increased to $16 million, and staff numbers jumped to 300. Most of the systems that had been in place in Station Street
were easily transferred. Despite the issues raised due to Mulgoa Rd being a much bigger building, by and large, the transfer went smoothly.
What they had not anticipated in all the forward planning was the rate of growth.
Within four years, annual sales more than quadrupled, to $65 million. The Club now had 850 staff. Cowan remembers it was an exciting time.
Everyone was highly motivated. It was one of the most enjoyable periods I remember. The new location was successful beyond our hopes. For years we had listened to the knockers saying what a bad move it was, and that our Station Street customers would not follow us that far out of town. 1984 was also a year of significant personal satisfaction. It was the first year of a new administration system for rugby league.1 We narrowly missed the final series that year but made it in ‘85.
Amidst the euphoria there were problems behind the scenes. Apart from a split in the Board and the stress of the misguided police investigation, there was something the matter with the business.
The fact was that while sales were going up, profit was going down. So, something was wrong. It should have been basic maths. Increasing sales, if managed properly, should lead to more profit, but that was just not happening. For more than twenty years we had been managing growth successfully, so what was different now?
In 1990, a chance discussion, a painful back and the Panther’s first grand final combined in a way that would lead to a dramatic change in the management style at Panthers. It would also lay the foundations that have allowed the company to move well beyond what most people ever envisaged.
David O’Keeffe was CEO of the Penrith Lakes Development and a very experienced administrator. He and Cowan were attending a function and their conversation got around to the club. O’Keeffe talked about its growth and asked about the number of employees. When told the staff had grown to 850, he said to Cowan, ‘I’ll bet you are having trouble keeping your thumbs on all of that.’ ‘Unbelievable difficulty’, was Cowan’s response.
‘I’ll send you something that will explain why you are having difficulties’, O’Keeffe promised.
The next day Cowan received an article entitled Evolution and Revolution as Organisations Grow, published by Harvard University and written by Larry E Greiner in 1972.
1990 was our first year in a rugby league grand final. We were to play Canberra on the Sunday afternoon, and coach Phil Gould decided to take the players to Sydney on Saturday and stay overnight. It was one of the times when I was CEO of both organisations and Phil asked me to join them.
For several weeks I had been suffering from a back problem that was giving me pain right down one arm. I had been having physiotherapy, but nothing was working. On Saturday afternoon the pain was driving me crazy. Instead of joining the players for dinner, I decided to go to bed and see if rest would help. I had brought a copy of the Greiner article with me and it was a good chance to read it carefully.
The article explains five evolutionary phases in the growth of an organisation. Greiner says that moving from one phase into the next is never smooth. Each transition is a revolutionary stage with periods of crisis that must be managed and overcome.
Cowan realised that Panthers had already been through some of those evolutionary phases, and had been able to solve some of the revolution crises as they arose. He found himself remembering periods when growth seemed to stall, followed by a struggle to find solutions. Then the feeling that there was a sudden breaking of the chains that were holding the club down, followed by another period of smooth growth.
Somehow the management team had made the right cultural and structural adjustments to get over each hurdle.
Greiner advises that the critical task for management in each revolutionary period is to find a new set of practices. They must then become the basis for managing the next period of evolutionary growth. He warns that many companies fail during the periods of crisis. Companies that are unable to abandon past practices and effect major organisational changes will either level off in their growth rates, or fold.
Reading the article was one of those ‘Aha!’ experiences for Cowan. He was now understanding things that he had never even considered before.
I suddenly began to see that the Panthers business employing 850 people with sales of $65 million was not a bigger business than the Panthers with 300 employees and sales of $16 million. It was a different business. Systems and management styles that worked for one would not necessarily work for the other. We had to change. We were in one of Greiner’s periods of crisis. Methodologies that had achieved growth in the past had to be re-examined, to see if they would continue to be effective.
That article had more effect on my attitudes towards management than anything else I ever read. It made me realise that I did not know enough to get Panthers through its crisis. I had been operating on the false premise that what we had done in the past would be suitable for the future. It set me off on a discovery path. I read voraciously until I had a picture in my mind of the new direction.
Introducing change is difficult and takes a long time. It causes tension in the organisation. Some find it difficult, even impossible, to adapt. But from that point we were a different organisation, constantly looking for change. We became students of authors on management, and devoted students of a few of them.
It all started with a rugby league grand final and that casual conversation. Strange to say, there was a medical lesson in it for me, too.
We returned to Panthers as losers of our first grand final, but to a heroes’ welcome. The club was packed to the rafters. The celebrations continued right through the night and I probably had a bit too much to drink. By the time I got to bed, the sun was way up and the pain in my arm and shoulder was gone. It did not return. It seems that I was tensing my back to compensate for the pain, which just made it worse. The total relaxation of that celebration let muscles, tendons, and everything else slip into their rightful places and I was cured. That’s my theory anyway! Had I listened to earlier advice to take painkillers, I might have been fixed much sooner.
The Greiner theory placed Panthers in the revolutionary stage he called “Red Tape”, when bureaucratic needs start to take precedence, dominating decision making and slowing down progress. The next evolutionary stage should be growth through collaboration requiring a high level of democratic management, combining teams across functions, flexibility of teams, frequent conferences of key personnel, educational programs, and more. Moving from one stage to the next was the challenge.
The Greiner article was just the tip of the iceberg for Cowan. Now he was on a mission of discovery.
He had always been a reader of books and articles on management theory, but it was done as an interest without any pressure other than to absorb any good ideas he found. Now he felt it was a matter of urgency. He was missing something, and he had to find it.
At that time, he was President of the Registered Clubs of NSW and Chairman of the Licensed Clubs of Australia. Once a month he had to attend meetings on the mornings of three consecutive days and stayed in a self-contained unit in Sydney. He remembers having books spread all over the floor of the living room, cross referencing notes on what might be applicable in a restructure of Panthers.
As the big picture started to take shape, Cowan saw another obstacle. The ideas had to be compiled into a coherent form, communicated to managers, and then filtered through the staff. Implementing change was no small order, even if the changes themselves had been simple. And the big picture in Cowan’s mind was far from simple. He needed help of an unusual kind.
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- The change to rugby league management structure is covered in Part 21 — The Right Structure. Finally! ↩︎
Panthers, Passion & Politics - The Roger Cowan Years 