Madero, 2014
Madero, 2014
Madero, 2014
by
Alvaro Madero
MASTER OF SCIENCE
in
(Forestry)
(Vancouver)
October 2014
Today’s changing business environments pose challenges for British Columbian forest firms in
sustaining long-term competitive advantages. In response to these challenges, forest firms can
initiate complex transformation processes that seek to project their performance out of a
conventional competition cycle. Of interest for multiple stakeholders are the questions of why
these transformations ultimately occur, which type of changes can produce them, and how they
can be implemented.
This exploratory research focuses on analyzing the opinions of senior executives of BC forest
businesses about the transforming processes of their firm. Understanding the views of these
executives is one of the fundamental pieces of making sense of the forest business
executives’ views and preferences for adopting different transformational strategies and new
product portfolios.
Analyses of the transcribed interviews reveal that executives associate firm-level transformations
with the execution of seven different business strategies. The findings suggest a firm-specific
pattern in defining the transformation processes. Differences in framing the concept of firm-level
product offerings in their firms also varied from one company to another, but were similar
between executives from the same company. The firm-specific defining pattern is explained by a
moderating role of the organizational culture of forest firms. The business culture of these
companies can regulate executives’ intentions to transform the firm and the decision-making
processes aimed at selecting the transformational strategies. The leadership style, ownership
ii
structure and the organizational values are elements explaining the business culture of the BC
forest firms.
Results also uncover a number of forces that can trigger transformation processes in BC forest
firms from the perspectives of the executives. The findings also reveal barriers to
transformational change and a set of factors that facilitate the implementation of the
transformation processes. To further understand the views of executives about firm level
transformations, future studies would likely benefit from the decision-making model and the set
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Preface
This study was conducted in collaboration with Drs. John Innes, David Cohen and Shannon
Hagerman. Under their supervision, I conducted most of the research design, data collection and
This research was approved by the University of British Columbia Behavioural Research Ethics
iv
Table of contents
Abstract .......................................................................................................................................... ii
Preface ........................................................................................................................................... iv
Glossary ..........................................................................................................................................x
Chapter 3: Results........................................................................................................................31
Bibliography ...............................................................................................................................113
Appendices ..................................................................................................................................120
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List of tables
Table 6. Number of selected product categories per executive and number of corresponding
Table 9. Research questions for future studies on forest business transformations.................... 107
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List of figures
Figure 2. BC Revenue from manufactured wood products and logging (dollars) .......................... 4
Figure 4. Factors proposed to influence the preference of individual executives towards the
....................................................................................................................................................... 27
Figure 8. Years of work experience of informants within the forest sector (n=10) ..................... 34
Figure 9. Years of work experience of informants accumulated outside the forest sector (n=10) 35
Figure 10. Total codes and number of executives per transformational path node ...................... 47
Figure 12. Number of executives per type of preference for each category of products .............. 50
Figure 13. Proportion of characters in drivers of transformation nodes by type of executives .... 62
Figure 14. Proportion of characters in barriers to transformation nodes by type of executives ... 67
Figure 15. Proportion of codes in barriers to transformation nodes by type of executive ............ 75
Figure 17. Impact on firm’s performance of transformation versus conventional competition ... 92
Figure 18. Potential decision factors influencing the selection of transformational paths in forest
businesses...................................................................................................................................... 99
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Glossary
Advance Tissue Molding Systems (ATMOS): novel technology used for sheet formation in
tissue production. This technology employs the use of a vacuum roll with a natural airflow to
pull water from the wet pulp fabrics. It can significantly reduce energy consumption with respect
Catalytic cracking: process of biomass conversion to ethanol and other alcohols. The alcohols
can be produced using pre-treated biomass in liquid or gas state. In the case of wood biomass
such as sawdust and shavings from sawmills, or wood chips from sawmills or whole tree
chipping, the catalytic process uses the product gases from wood biomass gasification systems as
tools using computer-aided design (CAD) and computer-aided manufacturing (CAM) programs.
manually or mechanically. CNC technologies are used in the wood manufacturing processes to
shape and cut timber and panels of various dimensions according to pre-defined designs.
x
Cross-laminated timber (CLT): large engineered wood panel manufactured by cross
laminating lumber with adhesives or fasteners. CLT is produced with three to seven layers of
lumber or planks stacked on one another at right angles and are either glued together in a
hydraulic or vacuum press over their entire surface area or nailed together. Each layer is
composed of softwood boards. As the CLT panels are loadbearing stable solid materials, they
can be used for floor, wall, and roof systems in the construction of multi-storey structures.
Densifying wood biomass: refers to impregnate wood by-products (i.e. chips or sawdust) with
additives under heat and pressure in order to achieve greater density and hardness. The densified
material has uniform sized particles, which facilitates their compression into solid and liquid fuel
Edging: process of trimming all irregular edges of a flitch (unfinished wood plank) leaving a
four-sided lumber.
Enzymatic Hydrolysis: process in which enzymes facilitate the cleavage of bonds in molecules
with the addition of the elements of water. The process converts lignocellulosic biomass to
fermentable sugars, which can be used as fuels and chemicals. Micro-organisms in nature,
Fast pyrolysis: thermal conversion of biomass to produce energy. As part of this process, the
biomass is rapidly heated to 450 - 600 °C in the absence of air. Under these conditions, organic
vapors, pyrolysis gases and charcoal are produced. The vapors are condensed to bio-oil, which
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are the main outputs of this process. Sawdust or barks can be used as inputs to produce these bio-
Gasification: process of partial oxidation that converts organic biomass (i.e. wood residuals) or
fossil fuel based carbonaceous materials into carbon monoxide, hydrogen and carbon dioxide.
This is achieved by reacting the material at high temperatures (700 to 16,000°C), without
combustion, with a controlled amount of oxygen and/or steam. The resulting gas mixture is
called syngas (or synthetic gas) and is itself a fuel. The power derived from gasification and
combustion of the resultant gas is considered to be a source of renewable energy if the gasified
carbon monoxide and hydrogen into liquid hydrocarbons (synthetic fuel). The FT gasification
process produces a synthetic lubrication oil and synthetic fuel, typically from coal, natural gas, or
Head sawing: sawing that makes the initial cuts in a log at a sawmill, turning a log into cants
Hydroprocessing in the oil and refining industry is a necessary process to remove pollutants like
sulfur, nitrogen and heavy metals from fuel oils. In the bio renewable industry, the process is
essential to make the hydrocarbon molecules of a biofuel compatible with petroleum diesel.
xii
LIDAR: Light Detection and Ranging a remote sensing technology used to characterize forest
attributes and other physical features of the earth’s surface with very high resolution. The
method consists in emitting laser pulses to a distant target on the surface and measure the time
delay between the transmission and the detection of the reflected signal. LIDAR applications in
forest lands allow making estimations and measures of canopy heights, biomass measurements,
Lignin-based platforms: refers to lignin derived cyclic and aromatic chemicals, such as
benzene, toluene, xylene and cyclohexane. These chemicals are obtained from thermal, chemical,
hemicellulose) and an aromatic polymer (lignin). These carbohydrate polymers contain different
sugar monomers (six and five carbon sugars) and they are tightly bound to lignin.
LSL: Laminated Strand Lumber or LSL an engineered wood product made from long strands,
which are arranged parallel to the longitudinal axis of the billet (the formed product). LSL is
most commonly shaped into framing boards for floor joists and support beams. It can also be
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LVL: Laminated Veneer Lumber or LVL an engineered wood product composed of layers of
scarf-jointed veneer glued together under heat and pressure with the grain of each veneer running
parallel to the longitudinal axis of the billet. The veneers are glued together under heat and
pressure using waterproof adhesives (i.e. phenol formaldehyde). A continuous press is used to
leading to the formation of high-purity single crystals (200 nanometers long). Different sources
of cellulose are used to produce NCC: cotton, wood pulp, sugar-beet pulp, etc. When extracted
from wood pulp, it can be processed into a solid flake, liquid and gel forms. Several key features
such as high strength, electro-magnetic response and a large surface area provide a basis for the
manufacture of new and advanced materials using nanotechnology. For instance, NCC can
increase the strength and stiffness of materials it is added to, making it attractive as a high-
performance reinforcing material. NCC can also alter the surface of material like paper, changing
its permeability, strength, flexibility and optical properties. NCC can be used to produce new
types of paper with novel applications and for paints, varnishes and advanced high-strength
materials.
Wood-based nutraceuticals: the term ‘nutraceutical’ derives from the words “nutrition” and
products, which result from processing tree barks and wood extractives into chemicals. Examples
include stanol esters from wood pulp and synthetic vanillin made from lignin wastes.
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Microfibrillated Cellulose (MFC): cellulosic material, composed of expanded high-volume
cellulose. It consists of aggregates of cellulose microfibrils, which have a very good ability to
form a rigid network. Its diameter is in the range 20–60 nm and it has a length of several
micrometers. Recent studies have encouraged the emergence of new high-value applications
focused on the barrier properties of MFC used in films, in nanocomposites, or in paper coating.
Wood is the most important industrial source of cellulosic fibers, and is thus the main raw
material used to produce MFC. Bleached kraft pulp is most often used as a starting material for
MFC production.
OSL: Oriented Strand Lumber or OSL is an engineered wood product which is produced by
aligning long strands of wood in parallel and binding them together using adhesives, pressure,
and heat. OSL is used in a variety of applications such as studs, beams, headers, rim boards and
PSL: Parallel strand lumber or PSL is a high strength structural composite lumber product
marketed under the trade name Parallam®. Because it is a glued-manufactured product, PSL can
be made in long lengths but it is usually limited to 20m (66 ft.) by transportation constraints. PSL
is well suited for use as beams and columns for post and beam construction, and for beams,
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Pyrolysis oil: See also fast pyrolysis. Pyrolysis oil is a densified biomass obtained from residues
of sawmills, which can be used as a replacement of fuel oil. Common usages include the
Through-Air Drying (TAD): in the paper industry is the technology used for sheet formation to
produce paper towels and bathroom tissue. The process covers a sequence of pressing, molding
Torrefaction: is a thermochemical process for removing moisture and volatiles from biomass
(i.e. wood residuals). During the torrefaction the biomass is treated at temperatures ranging
between 200 and 320 C. In this process, the biomass properties are changed to obtain a much
better fuel quality for combustion and gasification applications. Torrefaction leads to a dry
biodiesels, in which organic oils extracted from biomass (i.e. wood residuals) react with short-
chain alcohols (typically methanol or ethanol). The process can be adopted by industries
producing significant amounts of oil residues, such as raw tall oil in the pulp and paper industry
Black Liquor: Is the spent cooking liquor, or waste product from the kraft pulp process that
results from digesting pulpwood into paper pulp. It is mainly composed of chemicals and lignin,
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but it also contains other substances, such as hemicellulose (a part of the hemicellulose remains
in the pulp however), extractives (fat and resinous acids), aliphatic acids and inorganics (i.e. Na2
CO3). Recent studies and developments have shown its potential for conversion into valuable
products, which allows using the chemical structures of complex organic compounds in the
wood.
Kraft pulp: Is the most common chemical pulping process, also known as the sulphate process.
This is an alkaline cooking process that uses wood chips as the raw material input. The wood
chips are added to a digester where they are mixed with cooking liquor, known as white liquor,
containing the cooking chemicals (NaOH and Na2 S) and water. Cellulose fibers in the wood
chips are then separated from lignin (which acts as a glue between the fibers) because lignin
reacts with the chemicals in the white liquor. The chemicals and lignin form so called black
liquor. The fibers are separated from the black liquor in a washing step and are then screened and
possibly bleached before pulp is obtained. The pulp is either dried or transported to a paper mill.
measure that represents a company’s net income with interest, taxes, depreciation, and
amortization added back. The measure is used to analyze and compare profitability between
companies and industries because it eliminates the effects of financing (i.e. debt cost) and
business itself or to pay their interest and taxes. EBITDA is a useful measure only for large
xvii
companies with significant assets, and/or for companies with a significant amount of debt
financing.
xviii
Acknowledgements
I offer my sincerest gratitude to my committee members for their patience and persistence in
guiding me throughout this study. I would like to thank my supervisor Dr. John Innes for giving
me the opportunity to study at UBC and for his valuable support at critical moments. I am deeply
grateful to Dr. David Cohen for sharing his knowledge and perspectives with me and helping in
crystalizing my foggy ideas. This research would have not been an interdisciplinary one without
the support and great contributions of Dr. Shannon Hagerman. Her critical feedback gave to this
I am deeply grateful to all the industry executives, who kindly dedicated their valuable time to
participate in this research. The interest and professionalism with which they embraced the
I also want to acknowledge the Mexican institutions CONACYT (Consejo Nacional de Ciencia y
Tecnologia) and SEP (Secretaria de Education Publica) whose funding opportunities made this
research possible. These acknowledgements are also extended to my supervisor Dr. John Innes.
I would like to express my deepest gratitude to my lovely companion − my wife Vanessa − for
sharing this dream with me and for constantly reminding me of the important things in life. I also
want to thank my family − my parents, brothers and the Harabors − for their immense love and
support during this process. Last but not least, I would like to acknowledge the support and
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Chapter 1: Introduction
sectors. In particular, companies from the resources-based industries may need to transform how
they create value given the growing environmental and economic changes of recent years. The
interest to transform the Canadian forest industry is an illustration of how multiple stakeholders
Resources Canada, 2014b; Palma, Bull, Goodison, & Northway, 2010). However, to produce the
desired transformation of the Canadian forest sector, individual forest firms will need to
transform one after another and thus scale up the changes to the sector level (Cohen & Nikolakis,
2012, 2013). The questions of how firms ought to transform and what even constitutes firm-level
This thesis underscores the need to study the views of industry professionals about the
transformation processes of forest firms given its relevance for making sense of sector
manners, this research aims to improve the understanding of how decision makers of forest firms
define the transformative initiatives. It also attempts to identify individual preferences of these
decision makers towards adopting particular transformation strategies for their firms.
The subsequent analyses are focused on forest firms that operate in British Columbia (BC), given
the economic importance of the forest industry in the province (B.C. Ministry of Forests Mines
and Lands, 2010; HFHC, 2013). Historically, the BC forest industry has provided a significant
amount of jobs for forest-dependent communities, which has given them the access to a reliable
source of direct and indirect income (MFLNRO, 2009). Furthermore, the combined impacts of
1
recent environmental changes and the global financial crisis have uncovered an urgency to
The following section provides a background of the conditions that have affected the
1.1 Background
The competitiveness of the Canadian forest industry is influenced by various market dynamics as
well as by global economic cycles. The performance of the industry was negatively impacted by
the 2008 financial crisis, the U.S. housing collapse, and a strong Canadian dollar. On the positive
side, a growing demand for wood products in Asian markets buffered the supply-demand
imbalance observed during the recession years (Natural Resources Canada, 2014a).
In the case of British Columbia (BC), the slowdown in economic activity caused by the financial
This included forestry and logging operations, as well as the manufacturing of wood products
(Figure 1).
2
Figure 1. British Columbia real GDP by industry
Source: Statistics Canada, in British Columbia Financial and Economic Review 2010.
The offshore demand for commodities and manufactured wood products from British Columbia
registered a steady decline during the recession years, with the exception of Chinese markets
(Forestry Innovation Investment, 2010, 2012; Government of British Columbia, 2010a). The
reduced prices and low export volume for wood products (Figure 2). This generated low
operating margins for forest businesses which, under those market conditions, had serious
3
Figure 2. BC Revenue from manufactured wood products and logging (dollars)
Figure 2 shows the trend in revenues from the sales of forest products in British Columbia (2004-
2011). The data series includes sales from forestry and logging operations, pulp and paper
manufacturing products, and wood manufacturing products. Source: Statistics Canada, March
2013
Pre-existing regional dynamics can either intensify or mitigate the impacts produced by global
trends on the forest sector performance. This is illustrated by the economic and environmental
conditions existing in the BC interior before the onset of the crisis. From 2001 to 2007, the forest
industry dealt with the effects of a massive infestation by the mountain pine beetle (MPB) that
had occurred in the interior region for several years (Government of British Columbia, 2011;
Rustad & Macdonald, 2012). By 2007, the MPB outbreak had killed 13.5 million hectares of
lodgepole pine (Pinus contorta) (Innes et al., 2009; Kurz et al., 2008). In 2012, this epidemic
caused not only unprecedented ecological damage to forest ecosystems in BC, but also
(Legislative Assembly of the Province of British Columbia, 2012a, 2012b; MFLNRO, 2012).
Within the areas affected by the MPB there were approximately ten million hectares of forest
4
designated for harvesting operations. Projections of timber supply within these harvesting areas
indicate declines that would last up to 50 years (Legislative Assembly of the Province of British
despite the progress made in dealing with some of the challenges described above. This concerns
not only industry professionals but a wide range of stakeholders including provincial and federal
governments, communities and research institutions that recognize the need for ongoing
transformation of the sector (Adams, 2012; BC Business Council, 2010; HFHC, 2013; Kozak,
This research aims to advance the understanding of the factors that are likely to shape firm-level
transformations in the BC forest sector. An exhaustive analysis is beyond the scope of such a
thesis, thus my study focuses on understanding the views of decision makers within forest firms
about the transforming processes of their firm and the factors shaping these processes.
The specific research objectives (Section 1.5) are derived from the conceptual framework
described in sections 1.2 to 1.4. In Section 1.2, I introduce the distinction between sector
transformation and firm-level transformation that is used in this study. Section 1.2 develops a set
of portfolios of products and processes that illustrates potential outcomes of forest businesses
5
1.2 Forest sector transformation and firm-level transformation
To distinguish between sector and firm-level transformation, I describe the former as the product
looking at the different forest businesses as the sector's building blocks. When these building
blocks are aggregated they constitute the entire sector. Ultimately, major changes that affect the
structure of forest businesses will determine the scope of the transformation of the sector (Cohen
Firm-level transformations are defined in the organizational change literature as radical changes
produced in the structure of a firm between two points in time (Barnett & Carroll, 1995;
Pettigrew, 1987). A firm’s structure includes elements such as its mission, the type of products
and services offered, the technology used, its geographical position and the marketing strategy
affecting one of the elements of the firm’s structure, or by executing minor changes to several
returns) and create unprecedented competitive advantages (Butner, 2014; Day & Jung, 2000;
Dewar et al., 2011; Isern, Meaney, & Wilson, 2009). Using these criteria, a transformation
process begins when the senior leaders of a firm launch a formal transformative program for the
entire organization. Davidson (1993) further describes the transformation process of firms as one
encompassed by three phases: phase 1 consists on improving the operating efficiency of a firm,
phase 2 implies adding new services and features to the core business of the firm, and in phase 3,
companies shift from existing core competencies to new business activities and services.
6
Differences in defining the concept of firm-level transformations may create divergent views on
the type of changes that would be considered transformative in practice. In BC, initiatives that
adopt new technologies for improving their production systems. If one follows Barnet’s (1995)
criteria, forest businesses can be transformed only if changes in their technologies are quite
radical, or if more elements in their structure, besides technology, change as well. The list of
Technologies Program (TTP)’; the ‘Bio-pathways project’, phases I and II; the ‘Pilot-Scale
Demonstration program (PSD)’; the ‘Pulp and Paper Green Transformation program’ and the
programs were all released between 2006 and 2011 (Natural Resources Canada, 2014b). At a
provincial level, the ‘Wood First Initiative’ is another program that seeks to stimulate
transformative change. Through this initiative, the government of British Columbia has
promoted the increased use of both traditional and engineered wood products (EWP) for
It is unclear if the definition of firm-level transformations from the applied business literature or
the academic literature accurately describes the views of decision makers within forest firms.
Differences in defining these transformations could eventually lead forest businesses to pursue
multiple strategic directions in the future. In the same manner, the current strategic plans of
7
forest businesses in BC cannot be always aligned with the objectives of the ‘transformative
initiatives’ described above, despite being subject to changing business environments. Moreover,
there could be cases of forest businesses that simply do not intend to pursue transformative
This study aims to describe which alternatives are considered transformative by senior
executives of resources, commodities and value-added forest businesses in BC. The opinions of
these executives as the people who lead transformation efforts on the ground can contribute to
the development of sound explanations for forest business transformations. This type of data can
also provide insights for future studies about the transformation process for the entire BC forest
sector.
As described in Section 1.2, a business transformation opens the possibility to produce radical
changes in multiple areas of a firm such as its mission, the products and services offered, the
marketing strategies, technologies used, among others. The conceptual framework used by
Davidson (1993) underscores how a company’s existing core products and services might change
transformative efforts can target: i) operational excellence goals, ii) the development of new
services and features, or iii) moving towards completely new business activities. Drawing on
Davidson’s model, I developed a conceptual set of Portfolios of Products and Processes (PoPP)
to illustrate a broad range of operational scenarios and their associated mix of forest products
that could be adopted by transforming businesses in BC. Table 1 below, describes each portfolio.
8
Table 1. Portfolio of products and processes of transformed forest businesses in BC
P1. Diversified land Refers to the management of Forest lands Sustainable forest management practices C1. Environmental Externalities
management forestlands that focuses not only on Enhanced monitoring of forest values (Carbon offsets, biodiversity, alternative
maximizing gains of every hectare, (remote sensing, LIDAR, inventory data, harvesting methods, ecotourism, etc.)
but also in creating value from aerial photography) C2. Logs and timber
environmental externalities. It High performance restocking C3. Woodchips and hog fuel
significantly improves the Debarking, head sawing, edging, C4. Upgraded biomass (pellets, torrified
monitoring and maintenance of trimming, etc. biomass, bio-oil, etc.)
long-term forest values. It might Fibre transportation (inbound and
integrate on-site biomass outbound logistics)
densification from logging Mechanical degradation of woody debris
residuals. and densification processes (torrification,
fast pyrolysis, etc.)
P2. Extended Centered on the production of solid Logs, woodchips, Sawmilling, head sawing, edging, C4. Upgraded biomass
manufacturing of wood commodities and secondary hog fuel, trimming, etc. C5. Structural and visual lumber
wood products manufactured wood products. The densified biomass, Wood-chipping (forming, pressing, etc.) (graded, finger joined, studs, treated
mix of products becomes highly logging residuals Drying (kiln) lumber, etc.)
diversified. Wood residuals are Shaping, gluing, pressing C6. Panels and Veneer
used efficiently to generate power Manufacturing Manual and automatic processes to carve C7. Secondary manufactured (decking,
or to create feedstock products. inputs (glues, resins, and trim wood parts fascia, sidings, flooring, windows and
The manufacturing process is connectors, energy, Wood finishing (sanding, planning, doors, staircases, cabinets, etc.)
flexible for handling different lines etc.) coating, etc.) C8. Renewable power generation
(and volume) of products. C9. Engineered products (glulam)
Power and electricity generation (i.e. by
C10. Engineered products (LVL, PSL,
using wood fired boilers or organic
rankine cycle generators) LSL, OSL and other structural
composite lumber products)
Stress and quality tests
Transportation (outbound logistics)
P3. Advanced Refers to wood-based building Timber and lumber Design of products (customized 3D) C11. Engineered wood
Building Systems solutions. It provides a more products Design of building/houses products/systems (Cross-laminated
(ABS) sustainable alternative for Manual and computer programed timber applications in industrial,
construction than using steel and Wood composites assembly of wood parts (i.e. CNC timber commercial and residential
concrete, given its potential to technologies) developments)
reduce environmental impacts. The Manufacturing C12. Engineered wood
9
Portfolio Name Description Supply Key Processes Categories of Products 1/
manufacturing processes of this inputs (glues, resins, Heating, glued and pressing products/systems (pre-engineered wall
portfolio range from the fabrication connectors, energy, Stress tests panels, roof/trusses and floors)
of engineered wood products, to etc.) Forming and pressing composites C13. Engineered wood systems (pre-
the design and installation of end Specialized transportation of products fabricated houses/buildings)
building solutions (residential, Installation
commercial or industrial). *Sawdust and wood waste
P4. Augmented pulp Enhanced pulp mills that convert Pulpwood, Mechanical and chemical pulping C4. Upgraded biomass (bio-oil,
bio-based wood biomass into different related woodchips and Combined Heat and Power (i.e. gas or reducing agents, etc.)
products. On the pulp and paper densified biomass steam turbine) C8. Renewable power generation
side, it moves from a predominant Gasification (from debarking and C14. Pulp and paper (market pulp,
production of market pulp to Inorganic chipping) newsprint, and printing writing)
include higher value end compounds and Pyrolysis for conversion of biomass (i.e. C15. Pulp and paper (packaging)
applications (i.e. health care or chemicals (i.e. bio-oil) C16. Pulp and paper (tissue & towel
packaging). On the biomass sulphate, sodium Papermaking processes (in cylinder or grades, and others health care
conversion side it consolidates hydroxide, sulphuric fourdrinier machines) applications)
power generation as a revenue acid etc.) Tissue production (Through-Air Drying C17. Pulping by-products (tall oil,
stream, besides commercializing process or ATMOS - Advance Tissue sulphur free lignin, others.)
medium-to-low value platform Water Molding Systems) C18. Platform for bio-chemicals
chemicals. The highest value (ethanol, furfural, lactic acid, succinic
Enzymatic Hydrolysis of lignocellulosic
products within this portfolio are Electricity biomass acid, etc.)
films, nanocomposites and paper C19. Lignin-based platforms (benzene,
Fermentation processes for producing
coating from nanofibres and Enzymes and yeast toluene, and xylene)
platforms (in cellulose and
nanocrystals. for bioconversion C20. Nanocrystalline Cellulose films,
hemicellulose)
and fermentation composites, others.
Acid hydrolysis, centrifugation and
C21. Microfibrillated Cellulose films,
dialysis (for C20); homogenization,
pigments, composites, others.
microfluidizer, defibrillation, grinding,
others (for C21).
P5. New integrated Focused on producing bio All supply sources Processes mentioned in P1, P2 and P4; as Offers the most diversified product mix.
bio-based chemicals, bio materials and listed in P4, in well as: The list of products includes those
biofuels by the integration of bio addition to the − Transesterification, gasification-Fischer found in P4 as well as end-products like
refining processes into the pulp and various inputs for Tropsch, catalytic cracking processes and fuels, pharmaceutical / nutraceuticals,
paper industry. The integration of manufacturing end hydro-treating of liquids for bio-fuel textiles, surface coatings, plastics,
processes could also create products. production; packaging applications, etc.
synergies with industries that − Fermentation processes for bio- Main categories of products within this
manufacture non-wood related end chemicals; portfolio include:
products (such as pharmaceuticals, − Polymerization for producing coatings; C22. Composites materials/panels
auto parts, textiles, etc.). Forest − Manufacturing processes to create end- (wood-plastic, wood-minerals, etc.)
operations and manufacturing of user products (i.e. plastic injection, C23. New generation papers (bioactive
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Portfolio Name Description Supply Key Processes Categories of Products 1/
wood products are integrated to assembly of finished parts, others) and intelligent paper)
this portfolio by providing C24. Bio-chemicals (Ethylene, Xylitol,
feedstock (or energy) for bio others) or end products such as
refining. membrane filters, catalysts, phenolic
resins, etc.
C25. Bio-plastics/textiles (end-products
made from polylactic acid and fibre-
polymer composites. Includes new
decking, insulation, roof structures, auto
parts, etc.)
C26. Transportation fuels (bio-butanol,
FT diesel, methanol, dimethyl ether,
hydrogen, etc.).
1/
Categories of products: Each category of products groups together a set of related forest products. Forest businesses might not be interested in including a particular
category of products to their product mix. In the same way, they might focus on manufacturing only some of the products within a particular category.
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Each of the five portfolios illustrates a focus of transformation that goes beyond achieving
operational excellence. By operational excellence I refer to paths that create value by means of
cost reduction and increases in productivity, quality and speed of their services (Davidson,
1993). In developing these portfolios, I conceived operational excellence as the current industry
standard in BC (PwC, 2010). In this sense, forest businesses would transform from their current
and 4), or to the development of new core business areas (portfolios 3 and 5). The composition
of the entire forest sector would gradually change as the individual firms transform to adopt one
Among the sources I consulted for creating these portfolios are several reports regarding
strategic pathways for the forest industry (CEPI Confederation of European Paper Industries,
2011; COFI & Forest Sector Climate Action Committee, n.d.; FPInnovations & FPAC, 2011;
O’Malley, 2013; Roberts, 2012; The Swedish Forest Industries Federation, 2013), publications
about the different characteristics of emergent technologies and wood products (Crespell &
Gaston, 2011; Lavoine, Desloges, Dufresne, & Bras, 2012; Mansoornejad, Chambost, & Stuart,
2010; Sandén & Pettersson, 2013), as well as a range of information describing the progress of
ongoing innovative initiatives in the forest industry (Adams, 2012; FPInnovations, 2011b;
MFLNRO, 2009; Natural Resources Canada, 2012; UPM, 2013). I also incorporated information
from conferences and public lectures attended during the process of creating these portfolios
The design of these portfolios takes into account that 95% of the forest land in British Columbia
is provincially-owned (MFLNRO, 2006), which means that the vast majority of forest businesses
12
operate on public lands. Forest businesses that decide to operate within portfolio 1 would
continue to be tightly linked to forest land (land-based). In contrast, businesses moving towards
portfolios 2 and 3 have few or no ties with the land (consumer-based). Between the land- and
consumer-based options, there is a range of forest businesses that might operate within integrated
Portfolio 5 is the most complex scenario encountered. It implies that forest companies become
part of a web of shared processes and services among several businesses (hubs or bio-refineries).
The aim of these hubs is to deliver bio-solutions (end products or high-value biomaterials) to end
customers. Many types and configurations of these hubs can occur (Sandén & Pettersson, 2013);
however, in this study I centered on the kraft pulp process for the core of bio-refining processes.
Figure 3 shows a graphical representation of the hubs or bio-refineries. The value creation goes from low (at the left part of the diagram) to
high value end products (right side). The flow of energy and power closes the process like in a loop cycle.
commodities (i.e. structural lumber and market pulp) and other low value-added wood products
(Kozak, 2007; Parfitt, 2011; Woodbridge, 2005, 2009). If this continues to be their focus in the
13
future, forest businesses could miss opportunities that would give them a significant competitive
advantage in new business environments (Kozak, 2013; MFLNRO, 2009). This is particularly
technological advances and other innovative approaches for designing, manufacturing and
marketing of wood products (Futura Gene, 2011; Preem, 2014; Sandén & Pettersson, 2013;
UPM, 2013).
Reshaping the portfolios of products and processes of forest businesses can be a fundamental
strategy to develop more diversified and competitive business models (Glazerman, 2013). This
technologically advanced operational systems, the presence of diversified product mixes as well
The viability of forest businesses adopting an alternative PoPP in the future remains hard to
predict today, despite its potential relevance for transforming the forest sector. Currently, there is
very little available information concerning the factors that could facilitate the adoption of new
publications provide insights into the factors that shape firm-level transformations. According to
Pettigrew (1987), studies analyzing major changes that occur in firms use three different guiding
inquiries as follows. The first seeks to identify the firms’ structural outcomes resulting from
transformation. This inquiry answers the question of “what” has changed within the firm or what
is the ‘transformation content’. The second line of inquiry is centered on identifying the factors
14
triggering major changes across firms (the ‘why’ of the transformation). Moreover, studies
targeted at managers and senior executives are mostly focused on examining the processes and
Applied research in the field of business transformation has studied transformational changes
combining several aspects of the above three guiding inquiries. These studies have focused on
organizations and firms that produce consumer-end products; they have very rarely analyzed
changes in commodity or resource-oriented firms (Butner, 2014; Cohen & Nikolakis, 2013;
Davidson, 1993; Day & Jung, 2000; Dewar et al., 2011; Isern et al., 2009; Meyer, 2007; PwC,
2014). Although the majority of businesses analyzed in these studies lies outside the forest
products sector, the conceptual and empirical foundations of this research provide clues for
studying firm-level transformations in the context of the BC forest sector. For instance, the work
developed by Davidson (1993) is particularly relevant for framing the potential outcomes of
forest business transformations (see Table 1). In his three-phase model, Davidson describes
Studies focused on answering “why” firms’ transformations occur have distinguished between
the external and internal factors triggering major changes in organizations (Barnett & Carroll,
1995; Isern et al., 2009; Kotter, 1995; Pettigrew, 1987). External factors refer to the social,
organizations and in firms. Internal factors include aspects such as the company’s vision, the
capacities and skills of the workforce and staff, leadership style and the culture of the
organization. Each of the above internal and external factors can stimulate change to different
competitiveness are both factors that are consistently underscored as major influences for
15
initiating transformations (Butner, 2014; Cohen & Nikolakis, 2012; Isern et al., 2009; Kotter,
The literature emphasizes the role of senior leadership in the design and implementation of
transformative initiatives (Kotter, 1995; Pettigrew, 1987). Pettigrew (1987), for instance, placed
senior leadership as a central element in choosing the type of transformation pursued by a firm,
justifying the need for changes, and determining the way in which changes should be
implemented. Studies in the business literature underscore the role of corporate leaders and
senior executives in deciding the viability of new initiatives (Kaplan & Norton, 2008; Mintzberg
& Quinn, 2002). This high level decision-making process takes place within a firm through both
formal and informal strategic planning. For instance, in publicly traded firms the selection of
new strategies is a shared-task between the Chief Executive Officer (CEO), the President and
board members of the company, its shareholders, and other senior executives (Rock & Kahan,
2010). Each of these decision makers can have an individual preference towards the adoption of
new business strategies for the firm. Transformative initiatives figure among the new strategies
The work of scholars in the field of social psychology complements the business literature by
providing theories of how individual preferences and behaviours are formed (Ajzen, 1991;
Schwartz, 2006; Stern, 2000). Stern (2000) has created a conceptual framework that explains
how specific behaviours depend on a broad range of causal factors. The causal variables included
in this framework are: i) attitudinal factors, which account for personal moral norms, values and
beliefs driving particular behaviours; ii) contextual forces, such as economic implications and
costs, community and organizational expectations, public policies that support certain actions,
16
benefits and constraints provided by technology, etc.; iii) personal capabilities; and iv) habits and
routines.
Applications of psychological theories to the field of management have studied the relationships
between top executives’ values and behaviors and different strategic options (Carpenter,
Geletkanycz, & Sanders, 2004; Hambrick & Mason, 1986; Papagiannakis & Lioukas, 2012).
Similar studies are built on applications of Ajzen’s theory of planned behaviour (TPB) (Ajzen,
1991) and the basic human values theory (Schwartz, 2006), to predict entrepreneurial behavior
(Halis, Ozsabuncuoglu, & Ozsagir, 2007; Kautonen, van Gelderen, & Tornikoski, 2013).
Another transdisciplinary research applies theories from the social psychology and
organizational behavior fields to the discipline of management (Berson, Oreg, & Dvir, 2008). In
that study, Berson et al. (2008) conducted a survey research with top executives of publicly
culture, and ii) relations between organizational culture and firm performance.
On the other hand, no study was identified that explicitly apply psychological theories in
industries, I developed a conceptual model to examine the potential factors triggering forest
business transformations in BC. This model is founded upon studies in the fields of business
transformation, organizational change and preference formation. In this model, I placed the
17
their businesses. The types of transformations correspond to the portfolios of products and
Figure 4 provides a summary of the conceptual framework for this study. The directions of the
arrows in the model indicate influences between potential factors affecting preferences of senior
executives.
18
Figure 4. Factors proposed to influence the preference of individual executives towards the adoption of alternative portfolios of products
and processes (PoPP)
19
1.5 Research objectives
Although research is available about firm-level transformations in consumer industries, little has
been done to examine these transformations in the natural resources sector. The primary purpose
of this study was therefore to examine and characterize potential factors shaping the
transformation of forest businesses in British Columbia. The nature of this inquiry was primarily
exploratory (Given, 2008), since there are no theories explaining the causes and potential
− Objective II: Identify and describe potentially influential factors driving the
− Objective III: Identify additional variables and specific research questions for further
20
Chapter 2: Methods
The exploratory nature of the specific research objectives (see Section 1.5) led to the adoption of
an inductive type of inquiry. The overarching goal of using this inductive approach was to
facilitate the discovery and explanations of patterns across the views of different senior
executives. The grounded theory method provides a logic framework for linking data collection
this research. Steps 1 to 4 cover the stage of designing the instrument for data collection. The
actual data collection is described in step 5. Finally, steps 6 to 8 comprise the procedures used
The small circles shown in Figure 5 represent secondary procedures that are linked to a preceding process. The hollow circles constitute the main
procedures. The circle numbered as 1 is linked to the literature review of this study (not shown in the diagram).
21
I adopted the individual as the unit of analysis in this study. Although the primary focus of this
research was to examine organizations’ transformation, the means to achieve that goal consisted
of analyzing the views of individuals (senior executives) who belonged to these organizations.
As insiders of forest businesses, senior executives can provide an in-depth view of the processes
I used semi-structured interviews to elicit the views and preferences of industry executives about
transforming their businesses in the future. Semi-structured interviews are characterized by their
potential for balancing between obtaining specific information and leaving flexibility to include
non-anticipated viewpoints (Flick, Kardoff, & Steinke, 2004). This characteristic was essential in
this study, since it allowed combining open-ended questions, which are exploratory in nature,
I developed an influence diagram that summarizes the conceptual framework of my study. The
development of the diagram was based on key findings from: i) the organizational change
literature, ii) the business transformation, and iii) the preference formation literature. The
diagram is also consistent with the research questions identified for this study. The diagram
(shown in Figure 4 of section 1.4.1) includes the factors suggested in the literature as influencing
the preferences of senior executives for selecting transformative strategies in their firms. In
addition to providing a summary of the conceptual framework (as detailed in Section 1.4 of the
22
introduction), the diagram helped outline the types of questions included in the interview
I developed an interview schedule for guiding the semi-structured interviews. The interview
schedule was comprised of three elements: 1) a set of 7 open-ended questions, which were
followed by probes (or follow-up questions) and prompts; 2) one practical exercise (or card-
Examples of the probes used in the interview schedule include expressions such as “Can you
give me an example?” Or “Just so I’m clear, by this you mean…. ” Four of the 7 open-ended
questions included a probe to expand the content of the answers. Five of the open-ended
questions were followed by a confirmatory prompt. The prompts were additional questions
related to previous responses of the executives, but these questions focus on specific information
The card-sorting task was a 5 to 10 minutes exercise divided into 2 stages. In stage 1, executives
reviewed a set of 26 cards, where each card represented a particular category of forest products
forest businesses in BC). For each of the cards the executives indicated if they had a ‘yes’ or a
‘no’ preference towards producing the particular product category in the year 2023. After
reviewing each of the 26 cards and indicating their preference, the executives split the cards in
two piles the ‘no’ pile and the ‘yes’ pile and continued the exercise focusing on the ‘yes’
pile only. Some of the executives asked for a third category the ‘maybe preference’. In these
cases, executives added the cards identified with a ‘yes’ and the cards selected with a ‘maybe’
23
preference and piled them together. This new pile was used to continue with the next stage of the
exercise. In Stage 2, executives were asked to indicate the three product categories they think
will be the core products for their company in the year 2023.
The application of the card-sorting exercise was followed by a set of demographic questions that
concluded the interview. All demographic questions were related to the previous work
The interview schedule was pretested with two research volunteers prior to the final application
of the interviews. One of the research volunteers was a fellow graduate student from the
University of British Columbia, and the other was a senior professional of a renewable energy
company. The test run revealed the need to conduct the interview at a faster pace. The intention
was to reduce its length from around 45 minutes to a maximum of 35 minutes. Others changes
made to the schedule included removing one demographic question (age), and modifying the
wording of one of the prompts used to verify information. The tested version of the interview
I used purposive sampling to identify individuals who were directly involved in the strategic
planning processes of forest businesses. The list of executives that are involved in this process
includes individuals in positions such as Chief Financial Officer, Chief Executive Officer, Senior
Vice President and Vice President, Director and other senior executive positions in BC forest
businesses.
24
Once I narrowed the selection of informants to this pool of executives, I then used three criteria
to refine the identification of participants. The criteria I used were: 1) to include senior
executives from companies that were in the marketplace for a minimum of 20 years. The
rationale for this criterion is that the longer a company has stayed in the marketplace, the higher
the probability it has passed through transformational processes in the past. Moreover, the firms
and organizations analyzed in the comparable applied business literature often have long
trajectories. 2) To include senior executives with different levels of involvement in the strategic
planning processes of their companies. In using this criterion, I classified senior executives based
by their roles in strategic processes. Typology A refers to senior executives who are able to vote
or can initiate processes for analyzing new strategic initiatives. This includes executives who
belong to the board of directors of their companies, or those who are responsible for the
development of strategic initiatives in the firm (i.e. CEO or others executive positions in the area
of corporate development or strategic initiatives). Typology B stands for those senior executives
who can develop business cases or proposals that are later assessed by the board of the company.
3) To include executives who belong to different types of producers. The range of producers
considered in this study includes: resource producers, such as timberland companies; commodity
producers, such as lumber or pulp producers; integrated companies; and value-added producers,
executives from each firm. My goal in testing the methodology of this exploratory research was
to interview between 10 and 15 senior executives; or to stop the interviewing process when
25
saturation of new concepts was reached. According to Charmaz (2006), this saturation point is
attained when no new descriptive codes or themes are emerging from the analysis of data.
Data collection and data analysis of interview transcripts were independent but iterative
procedures in this study. The four subsequent subsections describe how they were conducted.
I conducted 10 interviews during the period from December 2013 to January 2014. Nine of these
were conducted in-person and 1 was done remotely. Of the 9 interviews undertaken in-person, 7
were held in the offices of the executives and the remaining two in the Faculty of Forestry, at the
University of British Columbia. For the remotely conducted interview, I used a web-
conferencing service with video-streaming for the entire interview. To apply the card-sorting
presentation that contained the same 26 categories of products from the physical cards. In this
case, instead of creating two piles of cards, I deleted the categories that were not of interest to the
executive.
Interviews ranged in duration from 28.4 to 56.1 minutes. The average length of the interviews
was of 37.2 minutes. The sequence of the questions in the middle of the interview schedule was
modified as a function of how conversations were evolving. However, questions 1 and 2 at the
outset of the interview were always retained in order as was the card-sorting exercise at the end.
This was done to provide an ‘opening statement’ for initiating conversations, and in the case of
26
the card-sorting task, to confirm relevant information touched on by executives in previous parts
of the interview.
There were two reasons to conclude the data collection after completing the tenth interview. The
first was the difficulty in scheduling additional interviews with high-level executives that already
resulted in the data collection surpassing the scheduled time and budget. The second was the
apparent saturation of concepts after the 7th interview conducted (see Figure 6). Although the
data obtained from the 10 interviews was sufficient to address the objectives of this exploratory
research, it is still possible that having access to more executives would have revealed additional
insights.
Figure 6 shows the increase of new concepts after coding additional interviews. Only 4 new concepts were
encounterd from coding interviews 8 to 10. These concepts expanded the themes of risks and barriers of
doing trasnformations.
Each of the 10 interviews was recorded and transcribed for analysis. I used verbatim
transcriptions to capture words and sounds produced by research informants during the
interviews. In cases where executives use marked facial expressions to show their positions or
27
viewpoints I made notes in the transcripts indicating the type of expressions (e.g. excitement,
seriousness, others).
2.3.3 Coding
Verbatim transcriptions of each interview were analyzed using the thematic content analysis
tools of the NVivo 10 computer software. This software is commonly used for managing,
analyzing and retrieving information in qualitative research (Given, 2008). The coding procedure
I followed consists of reducing the data of the transcriptions to simplified themes of related
concepts (Coffey & Atkinson, 1996). Particularly, I used the logic of 'open coding' to break the
data down line-by-line in order to attach labels to emergent concepts. In parallel to the coding, I
created an attribute table, which gathers both personal and firm-specific information of the
executives. The table allows indexing the coded text to different attributes of the executives,
The coding analysis revealed both expectant and emergent themes. Expectant themes included
comprehensive details about issues that were identified a priori during the design stage of this
study (and that were explicitly asked about during interviews) (see section 1.3.1 of this thesis). In
contrast, emergent themes included information and perspectives about issues that were not
Table 3 presents a summary of the major themes obtained from the content analysis and their
links with the objectives of this study. Each of these major themes was formed by grouping
together a series of related nodes. A table that shows the entire classification of
Nature of themes
Research Objectives Themes/Nodes Expectant Emergent
Position and role of executives
Meaning of transforming processes
Objectives I and III Existent product mix
Views and preferences of future
products
Drivers of transformation
Barriers to transformation
Risks of doing transformations
Objectives II and III Enablers of transformation
Organizational culture
Ownership structure
Emergence of strategic initiatives
I used a series of bar charts, histogram frequencies and tables to describe the data gathered into
the theme/nodes classification. To create these charts and tables, I cross-referenced the data by
selecting particular attributes or distinctive characteristics across informants and then linked
them to specific themes. The use of NVivo software simplifies this procedure through the
function ‘nodes coding by attribute value’. The type of ownership structure of executives’ firms
(public or private) and the type of producer they belonged to (resources, commodity or value
added) were among the main attributes considered when generating these charts.
Commercially sensitive information provided in the interviews was aggregated and used to
highlight trends on the views held across informants (i.e. Figure 12, in Section 3.2.2), as opposed
29
to linking this information with individual executives or their companies. Likewise, no company
affiliations or individual names were used in any of the results produced in this study.
Each participant was provided the opportunity to edit or expand on the content of the interview
transcripts to improve the veracity of the information, and to approve its use in subsequent stages
of the study.
30
Chapter 3: Results
The sample size of this study, although small, facilitated the exploration of a diverse range of
views on forest business transformation. The composition of the sample included executives
from six different senior positions: Chief Executive Officer, President, Chief Financial Officer,
Of the ten executives interviewed, six were grouped in typology A. This typology refers to the
executives who either sit on the board of directors of the company or who were responsible for
coordinating the preparation of business cases to assess strategic initiatives. The remaining four
of the executives were grouped in typology B, which encompasses senior executives who can
participate in the development of business cases for new strategic initiatives. Table 3 provides a
breakdown of each typology including the number of executives and details about their positions.
Both typologies grouped executives in positions of senior Vice President and Vice President. The
variation in the typology assigned to these executives reflects differences in the type of strategic
functions defined in their job description: a senior VP grouped in typology A is more involved in
Degree of
involvement Generic position Number of
in firm’s strategic title executives
planning
Typology A Chief Executive Officer- 2
President
Chief Financial Officer 1
Senior Vice President 1
Vice President 2
Typology A total 6
31
Degree of
involvement Generic position Number of
in firm’s strategic title executives
planning
Typology B Senior Vice President 2
Vice President 1
Director 1
Typology B total 4
Total 10
Further description of the sample is provided in Figure 7, which illustrates its composition by
The number of research informants from resources producers was limited by the number of firms
of this type that operate in British Columbia, due to the high proportion of publically owned
forest land.
All executives provided information about the areas where they gained work experience in the
past, as well as the duration of such experience. Two categories of questions were asked: a)
32
about their work experience as executives within the forest sector, and b) about their experience
The information included in this section has been aggregated to protect the confidentiality of
research participants.
The experience of research participants within the forest sector covers a range of areas from
making. The list of activities/areas mentioned by the executives were: forestry and logging
operations (road building, planning layout, etc.), woodlands operations (i.e. managing licensees
and stumpage), sawmill operations, remanufacturing of wood products, forest inventory, pulp
manufacturing, inbound and outbound logistics management, marketing and sales of products,
The average time of work experience accumulated by executives within the forest sector was
24.3 years. Years of work experience of executives within the forest sector ranged from 9 to 35
years. Figure 8 illustrates the work experience of the sample of executives organized into four
categories. Eight of the executives interviewed had a minimum of 20 years of work experience
33
Figure 8. Years of work experience of informants within the forest sector (n=10)
Most informants had gained work experience in other industries apart from the forest products
and paper industry. The areas mentioned by executives are listed here using the North American
Industry Classification System. This more accurately reflects the informants' expertise and
experience. The areas of experience mentioned by executives were: primary metal manufacturing
services, offices of certified public accountants, recreation industries, retail trade industry and
investment advice.
The average working time spent outside the forestry sector was 4.8 years. Across informants it
ranged from zero to twenty years. Eight of the research informants had accumulated less than
five years of work experience outside the forestry sector. Figure 9 provides an overview of the
34
Figure 9. Years of work experience of informants accumulated outside the forest sector (n=10)
The following sections of this chapter report on the views of senior executives on the topic of
forest business transformations. These views are reported anonymously: however, each executive
was randomly assigned a number from 1 to 10 in order to facilitate the data analysis. The
numbers in parentheses at the beginning of the excerpted interview quotes indicate the response
of a specific senior executive. The numbering is kept anonymous for the scope of this thesis.
The order in which the sections are presented follows the themes-distribution of Table 3 (Section
2.3.3 of this thesis). Section 3.2 introduces the concepts used by the executives to define firm-
level transformations. The executives’ preferences about adopting new products in the future are
described within Section 3.2.1 and 3.2.2. A summary of the forces driving forest business
transformations is included in Section 3.3. Sections 3.4 to 3. 5 present a series of critical factors
35
3.2 Defining the process of firm-level transformations
Most executives defined the process of firm-level transformations as the execution of different
business strategies that have the objective of delivering significant performance improvement to
the firm. The seven different business strategies executives associated with forest business
transformations were: i) operational efficiency, ii) diversifying product mix; iii) entry into the
bio-economy; iv) sustained growth; v) market diversification; vi) diversifying the geographic
base of operations; and vii) adoption of a customer-driven focus. Opinions varied among
executives regarding which of the seven strategies could deliver the desired performance
improvement. Despite these variations in opinion, I identified a common set of components and
conceptual distinctions that were being used by the executives to make sense of the overall
transformation process.
One of the components used by the executives is the magnitude they assign to the
transformational changes. All but one mentioned that transformation implies producing major
(5) We've added a whole new revenue stream to our organization… We've been able to
successfully transform, grow, develop, radically change our organization and how it's
perceived in the marketplace. It is a complete change in production.
(1) We’re always trying to do things better, but we’re also looking for that transformative
change, the change that’s really going to make a difference, like a step change.
However, three of the executives who linked transformation with producing major changes also
linked transformation to executing minor changes in the structure of the firm. To these
36
(10) So for us it [transformation] comes in many different forms. So it's little innovations
or transformations that happen on the shop floor trying to get all of our team members
engaged in what they can do differently and how can we be slightly more efficient or
slightly more productive. So those are minor transformations, minor innovations. We're
in the middle of an initiative right now that's a little bit grander in scale … I suspect that it
would be [transformative], but we won't really know until we're all the way through.
The novelty or newness of a business strategy is a concept used by some of the executives for
differentiating between more and less transformative initiatives; as one executive stated: “Yes
that is [transformative], although that's less transformational because that has always been
present in our business”. Similarly, executive 6 described the transformation of his company as a
process of adopting ‘new’ or ‘innovative’ technologies over time. The executives who
commented about this ‘novelty’ aspect of transformations referred to the execution of firm-level
transformations as key strategies to differentiate the company in the long term. For instance, one
executive referred to the introduction of the iPad as an example of an ‘innovative idea’ that
The time-scale is another concept used by executives to make sense of transformative changes
that occur in their firms. All executives consider firm-level transformations as processes of slow
development, which are better explained in the long run. For instance, one executive used a 20
years time-frame to illustrate how major changes impacted the production cost of companies in
the kraft pulp business. Overall, executives used a long-term focus to approach transformations.
(4) I take a long-term view to transformation. I don’t think it's possible to do an abrupt
change... There are things that can happen immediately, but you have to sort of have that
vision long-term, to transform your company.
37
(10) Now projected ahead twenty four years, there has been a constant evolution as to
what we've been doing.
In the same manner, most executives describe the execution of transformative initiatives as
sequential step-by-step processes. The sequence described starts by implementing first the
changes that represent the lower risk to the overall firm’s strategy, following later by the
execution of larger changes. The process is continuous and its speed is controlled by the amount
of resources available, as well as the risk-reward relationships associated with completing each
step.
(4) Our approach to transformation is sort of a step change … Our company is not
prepared or interested in going down and building a brand new [plant] from scratch. It's
not realistic. But a step, incremental transformation is something that we can focus on.
(7) When you talk about transformation, you can't go from 1998 to 2013 in a year. You
can't do that.
The impacts produced by past transformative initiatives became evident to most of the
executives five or more years after their initiation. Only two executives provided examples of
transformative initiatives that produced radical or the expected changes in the firm within five
years of implementation. The exact timing of a transformational process was not easy to identify
given that the everyday operations always demand changes. One executive commented on this
difficulty:
(3) The company has transformed … because that was the view where the opportunity
was going to be, making that transformation. Does that mean our transformation is
complete? I don't know when you stop calling it transformation and when you start
calling it business as usual.
38
While defining firm-level transformations, most executives made reference to the causes
triggering such transformations. All but one executive commented that there is a constant need to
improve the competitive position of their firms given the presence of changing business
environments. These changing business environments constantly force executives to adapt their
(3) We don't control product prices, we don't control currency, we don't control weather,
etc. So, there is a whole bunch of external factors that we don't have any control over that
we have to function within … Recognizing there is a whole bunch of factors, including
competitors, who will change the operating dynamic that you are functioning in.
Discussions about the necessity to transform the company were often attributed to the need to
generate higher EBIDTA (earnings before interests, taxes, depreciation and amortization) and
increasing the share value of the company. These two financial indicators were used by
executives in publicly traded firms, whereas the executives belonging to privately held
companies referred to other indicators such as equity value and return on investments.
Table 4, below, provides a summary of the components and concepts used by the executives to
define forest business transformations. The row ‘Totals’ located at the bottom of the table, helps
to visualize the variation in opinions across the sample of research informants. The question
asked during the interview was: What does business transformation mean to this company? (See
39
Table 4. Transformation process as defined by senior executives of forest businesses
1 x x x
2 x
3 x x
4
5 x
6 x
7 x
8
9
10 x
Totals 9 9 6 9 3 6
The numbers in the row ‘Totals’ add up only the () symbol. The empty boxes ( ) indicate the executives who did not mention that particular
concept/component in explaining the meaning of forest business transformation. The symbol ( ) indicates when an executive mentioned the
concept/component in an affirmative manner, while the (X) marks indicate when executives expressed views against the concept/component.
*The list of the business strategies corresponds to the seven transformational paths: operational efficiency, diversifying product mix, entry into the bio-
economy, sustained growth, market diversification, diversifying the geographic base of operations, and adopting a customer-driven focus.
** Of the seven business strategies, some were regarded more novel than others.
40
3.2.1 Views on transformational paths
transformational paths for forest firms to radically improve their competitiveness. Each
transformational path focuses on changing a single or multiple areas within the structure of the
firm, such as manufacturing process or marketing strategies. Overall performance of the firm
could vary as a result of focusing on one transformational path, while discarding others. The
transformational paths identified in the content analysis are: i) operational efficiency, ii)
diversifying product mix; iii) entry into the bio-economy; iv) sustained growth; v) market
diversification; vi) diversifying the geographic base of operations; and vii) adoption of a
customer-driven focus.
Focusing transformation efforts on improving efficiency and reducing costs of operations were
the most mentioned of the seven transformational paths identified. According to executives, this
consisted of maximizing the value obtained from the raw materials used to produce current lines
possible, often through technological advancements. Key results from adopting this
transformational path were the reduction of costs, as well as improving the speed of the services
provided.
(4) We're continuously looking at ways to make our own existing products cheaper …
using that resource as efficiently as possible for creating materials that are competitive on
their own, without subsidies.
(3) We are also investing incremental capital that is driving our costs down … because
unless you're a ‘low cost’ in the commodity industry, you are going to underperform.
41
(5) On the production side, our goal is to increase efficiency to allow us to produce more
with the machinery that we have, to get obviously increased uptime and machine
utilization. That drives down cost, which increases profits … because how can we be
competitive against [main competitor]? We do that by driving cost out and then creating
experience [for the customer].
Diversifying the product mix of the company was the second transformational path most
revenue streams to the company by producing and commercializing new products, beyond the
firm’s traditional product offering. The examples provided by executives include the adoption of
products already traded in by other forest businesses in BC, as well as some products that were
traditionally outside the forest products industry (i.e. new engineered products or bio-chemicals).
(8) That’s the type of business model we’re moving towards. That comes from having
diversity of products, stable and predictable cash flows from parts of the revenue stream
that are not tight to commodities per se.
(5) We've added a whole new revenue stream to our organization … We created a whole
new side of our business that we did not expect.
(10) So for us, [innovation] it is our means of sustaining ourselves as we have to keep
pushing … So for us, we have to keep pushing and we have to keep expanding the
products lines.
Two executives used the term ‘diversification’ referring to products within the same category of
products (i.e. lumber, studs and J-grades such as ‘green squares,’ all in the category of structural
and appearance grade lumber). However, in this study I considered diversification as expanding
the product offering into different families or categories of products than the ones currently being
produced by the companies. For instance, if company A is focused on producing market pulp,
diversification can come by producing end products such as tissue or packaging. In the solid
wood business, a similar example can be found when a company that traditionally produces
42
lumber starts to diversify its product offerings by manufacturing added-value products such as
doors, flooring, engineering wood products, among others. Seven out of the eight executives who
talked about this transformational path also mentioned the potential they saw for changing the
Another transformational path described by executives was linked to the changes that forest
firms need to implement to advance into the bio-economy. Executives saw this transformation
happening in their firms on two fronts. Firstly, the changes could focus on implementing bio-
energy and renewable energy initiatives. Within the renewable energy business, the
transformative initiatives might focus on building solar panels, windmills, geothermal stations
and others developments on forestlands. With regard to the bio-energy side, transformative
initiatives could focus on implementing biomass-power projects (i.e. using wood biomass to
The second front of this transformational path relates to the production of different bio-products
and bio-materials. Executives highlighted the relevance of upgrading the kraft pulp model in
order to further ‘refine’ pulp byproducts into new materials. One executive commented on the
(4) Well, the bio-economy is a coined term and lots of people think about new biomass
electricity, new bio-chemicals and different things, but if you distill it down … the kraft
pulping process, it is like a refinery. You put your feedstock in and you chemically
separate out cellulose and a whole stream of other materials … Bio-products, bio-
materials … they are virgin. They're not … you can't say for this bio-material it's a billion
dollar market yet, but you can see that if the material is as transformative as we think it is,
it's a new opportunity for us.
43
Diversifying the geographic base of operations is a transformational path also mentioned by
some executives. This consists on locating the company’s operations (manufacturing facilities) in
a variety of geographic areas where there are attractive supply-demand dynamics and where
there is less risk of unexpected events affecting the company’s operations. Some of the
immediate benefits mentioned with following this path included protecting the firm against
currency fluctuations and weather conditions, as well as taking advantage of moving “closer to
the end markets”. One executive asserted the rationale of choosing this transformation path.
mentioned by executives. It refers to developing new markets and entering into different regions
to commercialize existing lines of products. One executive talked about the different goals of
(8) The whole subject just speaks to: you want to be diversified from a market
perspective. Then, within each market, you want to be diversified from a customer
perspective and then even within those customers make sure that you've got different
types of customers covered off within those sectors.
Another executive highlighted that new markets might need different types of products in the
future, which would eventually require initiating new transformational processes, in this case
The sixth transformational path for forest businesses according to the executives consisted of
growing the size of their firms. This was framed by the executives in terms of augmenting the
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firm’s production capacity and its revenue size. Executives from private companies mostly
linked ‘growth’ with building new infrastructure, particularly from companies manufacturing
value-added products. On the other hand, executives from public companies talked about
executing mergers and acquisitions. In the case of companies that had previously completed
mergers or other similar transactions, the executives noted that these transformations could
uncover the need to unify the culture of the consolidated firm. By the firm's culture, executives
referred to the different ways of working, the work environment and management style. In the
case of these companies, following one transformational path led to the initiation of other major
Adopting a customer-driven focus was the seventh transformational path identified from the
discussions. As described by executives, this path consists in adapting the production system of
the firm to develop project-based solutions that are tailored to customers’ needs. This approach
(5) You can transform from being a production product, push-focus to being a market-
driven, customer-focused company. That to me is transformation and that's something
this company is going through and it will take years.
The information included in Table 5 further describes the transformational paths mentioned
above. Table 5 gathers the most frequently used words in the seven transformational path nodes
formed during the content analysis (see Section 2.3.3). These nodes collect text extracts from the
interview transcripts in which executives described the transformational paths that they linked to
forest business transformations. The words listed in Table 5 were identified using the 'most
45
frequent words' query of the NVivo 10 software. In selecting these words, NVivo discards a
series of default ‘stop words,’ which are words less significant for data analysis (i.e. conjunctions
or prepositions). Once I identified the 10 most frequent words per each of the seven
transformational path nodes, I then removed the words that could reveal information about the
Figure 10 shows the number of executives who discussed aspects of each transformational path
(nodes). The number of text extracts (codes) linked to each of the seven transformational path
nodes is plotted in Fig. 10. The nodes ‘operational efficiency’ and ‘diversify product mix’ have
the highest number of codes (53%), accounting for 69 of the 130 codes created. Similarly, almost
all executives talked about the concepts coded in these two nodes.
46
Figure 10. Total codes and number of executives per transformational path node
Although all executives associated forest business transformations with improving efficiency and
reducing costs, most also highlighted that this path is only one component of delivering
Three of the executives indicated that they were ‘open’ to explore additional transformational
paths to the ones currently being executed by their companies. These three executives mentioned
that as the overall strategy of the business changed, their focus on developing different
transformational paths could also change. According to them, one of the most challenging
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(1) So the question the big question in transformation everybody is going to ask:
what is the right thing to do? Because there are so many choices.
Figure 11 further illustrates the variation in opinion across the sample of executives. The figure
provides a node breakdown of the proportion of coded characters by type of informant. This can
facilitate the identification of the transformational paths most mentioned by executives belonging
to certain types of producers (resources, commodities or value added). For instance, the
On the other hand, the transformational paths ‘operational efficiency’ and ‘diversifying product
mix’ were the only two paths mentioned by all types of executives.
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3.2.2 Preferences on future product portfolios for forest businesses
This section describes executives’ preferences on future product mixes for their companies. The
data being described here was obtained from the responses of executives to questions 6 and 8 of
the interview schedule (see Appendix A). Results were aggregated to protect the identity of
research informants and to avoid releasing commercially sensitive information about their firms.
reviewed a set of cards describing 26 product categories. Once the executives had reviewed all
the cards, they indicated the strength of preference towards producing these product categories
by the year 2023.The 26 categories correspond to those listed in Table 1 in Section 1.2. Figure 12
relates each of the 26 product categories with the number of executives who expressed: 1) A
solid ‘yes’ preference for producing products in those categories; 2) a ‘maybe’ preference for
producing products listed in the categories; and 3) no interest (or preference) in producing the
products by the year 2023. The glossary section includes definitions of the specialized terms
49
Figure 12. Number of executives per type of preference for each category of products
Figure 12 shows executives' preference towards adopting 26 potential product categories in their
firms by the year 2023. In the graph, ‘P&P’ stands for pulp and paper; ‘p&w’ refers to printing
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and writing products; EWP means engineering wood products; and ‘CLT’ stands for cross-
laminated timber. A miscellaneous category was formed to include other products mentioned by
executives that were outside the 26 categories (C27. Other products). The complete names and
Eight of the executives who completed the card-sorting exercise indicated a solid ‘yes’
preference for producing additional product categories in the future. One of the two executives
who had no interest towards producing additional products, also indicated a ‘maybe’ preference
for four product categories which were closely related to the existing product offerings from his
company.
As shown in Fig. 12, the top three product categories chosen by executives were: i) woodchips
and hog fuel; ii) logs and timber; and iii) renewable power generation. Nine out of the ten
executives showed interest in producing these three product categories in the future. Five of the
nine executives who showed interest in producing woodchips and hog fuel belonged to
companies that had already commercialized these products. For logs and timber, four of the nine
executives who prefer these products already had them in their company’s product mix.
Producing renewable power, whether selling electricity to the grid or commercializing biomass
power, is a product category in rising demand from forest businesses, according to senior
executives. Six executives indicated a solid ‘yes’ preference on these products, and three more
declared that they had a ‘maybe’ preference for including them into the company’s future
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product mix. Five of the six executives with a solid ‘yes’ preference to produce these products
belonged to firms that already sold them or that had started projects towards their production.
The three top categories mentioned above are followed, in order, by the upgraded biomass and
the structural and appearance grade lumber categories. The upgraded biomass category includes
products such as wood pellets, bio-oil or other forms of densified biomass. The preference of
executives for this product category was commonly linked to the concept of extracting more
value from the resources (or residuals) currently being used. Most of the executives who
indicated a positive preference for the upgraded biomass category also referred to executing
its production. With respect to the five executives who indicated a positive preference for
producing structural lumber products in the future, four of them currently have those products
within the product mix of their companies. Two of these four executives also indicated a desire
On the other hand, the category of panels and veneer led the group of less preferred products. No
executives wanted to include this category in the product mix of their companies by the year
2023. The panels and veneer grouping includes structural panel products such as plywood and
OSB; non-structural panels like MDF or particleboard; and veneer sheets. Also topping the list of
unpopular product categories were Nanocrystalline Cellulose (or NCC) and the platforms for
bio-chemicals categories, both of which were selected only by two executives (and only with a
maybe preference).
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Between the most preferred and less attractive product categories, there was a range of products
that executives would like to adopt given their potential to diversify the company’s revenue from
current core products. These are the products located in the upper-mid part of Fig. 12, and
include the ‘secondary manufactured products,’ the four subcategories of the engineered wood
products (EWP) and the pulping byproducts categories. Although these products were selected
by similar numbers of executives, they were rarely seen either as core products or as disruptive
products that could entirely change the competitive position of the firm.
Also in the upper-mid part of Fig. 12 is the category ‘other products’. This accounts for those
products mentioned by executives which were not included in the 26 product categories of Table
1. In total, five executives mentioned an interest in producing ‘other products’ in the future. Only
one of these was a commodity producer. Three out of the five executives indicate a ‘solid yes’
preference and two indicated a ‘maybe’ preference for ‘other products.’ Within the list of the
‘other products’ category were prefabricated roof panels (non-residential applications), new
engineered veneer applications, alternative harvesting methods, ecotourism, and new glued
products.
Overall, the results from the card-sorting exercise were in accordance to executives’ views on the
seven transformational paths mentioned in Section 3.2.1. For instance, the executives who had
identified entering into the bio-economy as an opportunity for improving their firm’s
performance also chose product categories linked to this transformational path. In the same way,
the executives who were less interested in diversifying the product mix of their firm did not
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Executives belonging to the same firm chose a similar number and type of product categories.
This occurred despite these executives having different professional backgrounds, both in terms
of the areas and years of experience. The similarity of the product categories preferred by
executives in the same firm is particularly evident in three of the four firms with two executives
participating in this study. Executives in two of these three firms chose both similar type and
numbers of product categories, whereas the executives from the third firm chose exactly the
same number but slightly different product categories. In like manner, the executives from the
same companies chose categories of products that could be clustered in the same portfolios of
products and processes (PoPPs) of Table 1. In one firm, one executive selected product
categories corresponding to 4 PoPPs, while a second executive chose product categories from 3
PoPPs. Table 6 illustrates the variations in the number of product categories chosen per
Table 6. Number of selected product categories per executive and number of corresponding portfolios per
firm
Number of product Number of corresponding
categories selected per portfolios of products and
executive processes (PoPP)
Executive A Executive Executive A Executive B
B
Firm 1 14 14 2 2
Firm 2 7 4 2 2
Firm 3 8 8 2 2
Firm 4 20 14 4 3
Firm 5 5 - 1 -
Firm 6 9 - 2 -
In contrast, the type of product categories that were selected by executives varied across firms.
This variation in executives' preference occurred even in cases where two companies currently
trade in similar products. The portfolios of products and processes might vary in each of these
54
six firms given that each of the companies will produce different products in the future. In four
of the six firms, the product categories selected by executives belonged predominantly to a
primary PoPP, in addition to a small proportion of product categories related to a second PoPP.
Common views were held across the sample of executives, despite the differences in the types of
product categories that were selected between executives from different firms. A common view
expressed by executives was an interest in creating additional revenue streams through upgrading
the current residuals management. This view was also evident in the high proportion of
executives who indicated a ‘yes’ preference for the product categories of renewable energy,
Another common view shared among executives is the idea of maintaining control of their
inputs. This view was also expressed by the executives selecting the woodchips and hog fuel
category, as well as the logs and timber product category (Figure 12). Both product categories
represent essential inputs for the production of pulp products and engineered wood products.
The conversations helped to identify the views of executives about changing the core business of
their companies in the future. By core business, I refer to the products and services that represent
the main revenue stream of a company. For instance, before transformation, one company might
obtain 80-90 percent of its revenue from a single product line. After transformation, this same
company might get the majority of its revenue from a different product or multiple product lines.
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As part of the card-sorting exercise, executives were asked to identify and rank the categories of
products that would be the core business of their firms in the future. Two executives chose the
same product categories that currently represent the core business of their companies. Eight
considered it highly probable that additional product categories would be included in the core
business of the company by 2023. Four of these executives, however, continued to rank the
current main products above the new categories of products that would be introduced by the year
2023. None of the four belonged to value-added firms. The remaining four executives who were
interested in including new products into the core business of their companies assigned a greater
or equal rank to these additional products than they did to their existing main products.
In general, executives had difficulty in ranking the future core products of their companies. Some
attributed their difficulties in ranking to the lack of information about the market potential of
new products. These executives argued that the market for some new products is still at a
development stage. Despite the difficulties in ranking core products, most were able to
differentiate between one or two levels of importance among the products within the core
business.
(1) Well, I mean [the current main product] is going to be a core … but there will be a big
component of our business that’s different from what it is today. It may be new bio-
products. There will certainly be some new bio-products, but we may do something that
you wouldn’t anticipate that we would do, like [competitor’s company name] has gone
into [a specific business activity]. Why not, right? And then, these [3 product categories]
are just all the questions. I’m not sure which of these [3 product categories] is going to be
the right one, but you have to pay attention to all of them.
(8) I see us diversifying our revenue streams. Clearly, we have core a business … but I do
see us getting more tight into [name of an additional product category] … So, for me, I
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see us in a ten-year time frame being much more tied into that, probably in joint venture-
type relationships.
Executives in the same firm ranked the product categories with potential to become the core
business differently. The differences were observed in half of the firms with two executives
participating in the study, despite these executives having chosen the same product categories as
the company’s future core business. The executives who ranked the main products in different
In the case of executives from the same firm who also assigned a similar rank to the core product
The interview analysis reveals six different drivers of firm-level transformation in the BC forest
sector. By drivers of transformation, I refer to the forces that trigger major changes in the
structure of firms. These forces can originate from within (internal drivers) or from outside a
The drivers identified through the coding process were: i) emergence of new business
opportunities, ii) changing business environments, iii) pressure from competitors, iv) stagnant
All the executives mentioned the emergence of new business opportunities as one of the drivers
of transformation. According to the executives, forest products firms often initiate transformative
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marketing their existing products in new regions. The use of wood residuals and pulp byproducts
triggering major changes in their firms. Other examples mentioned by executives regarding the
development of new markets include the rising demand for building materials, tissue and
(9) Talking about that waste that you have in the log that maybe ten years ago was
considered waste and was actually a bit of an irritant, is now an opportunity. There is a
developing business for that, rapidly developing business for that around the world. So
really, we're in a business now where 100% of that log could be utilized in a commercial
way.
The second most frequently mentioned driver of transformation was a rapidly changing business
environment. Most executives perceived forest firms’ business environment as one that is always
at risk of change. To these executives, their companies can be particularly exposed to global
economic cycles, changing climatic conditions, currency fluctuations, geopolitical risks and
many other factors, which are beyond the control of their organization. The presence of these
factors can affect the competitive position of a firm, eventually forcing the senior leadership to
(8) Take a look at the volatility of a commodity business, which lumber and pulp both are
… We have had exposure in the past to economic cycles and we want to minimize that
exposure going forward or at least have it, so that in the bottom troughs of cycles that we
still continue to generate positive cash flow, versus depleting our cash reserves.
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Another driving force for forest business transformation is the high level of competition that
characterizes the forest products sector in British Columbia. Executives who belong to firms
manufacturing solid wood products provided examples of how this subsector could have lower
barriers to entry compared to other manufacturing industries. This condition can facilitate
(10) We always view our business as a fairly difficult one to sustain. The barriers to entry
are relatively low … and so for us, [innovation] is our means of sustaining ourselves …
as everybody else just copies what we do. Some of our products are hard to duplicate, but
others are easy.
Some executives in the pulp market business also mentioned that their competitors can quickly
adopt the processes and technologies of the leading firms. As a result, these leading firms often
executives referred to this driver as the need to deliver outstanding performance in order to
(4) It is generating higher EBIDTA. You need to. If you were just staying still and
focusing on [producing the main product] while you'd have inferior EBIDTA … It comes
back to shareholders, if they see higher EBIDTA generation in a different industry: ''I'm
going to go invest my money there and not invest here.'' If we are not transforming
ourselves and making us an exciting prospect for an investor to invest in, then we are not
doing our jobs.
(7) [Our business] requires transformation in order to continue to provide a better return
to shareholders. If you fail to transform and adjust, you will find that you lose the trust of
your shareholders and your share price will suffer. That's really the ultimate test … It
comes down to your share price, what is your share price doing? When the entire sector is
suffering, your share price may suffer along with everybody else, but really you are
judged ultimately according to your peers and you are judged on a larger scale which is:
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can you even attract people to your industry? [laughs] Public companies tend to be driven
to change because shareholders don't like stagnant companies.
provided examples of how the consumption of different wood-related products has seen declines
due to the entrance of substitute products. This negative impact on the demand of some wood
products has alerted executives in the past to start transformational changes in their firms. The
examples provided by executives include the replacement of pulp products as well as of solid
wood products.
(4) Different types of electronic media have decimated the newsprint industry. And with
iPads and different things, well now you see printing and writing paper coming off
significantly.
On the other hand, the possibility of using wood products as a substitute of non-wood materials
is triggering transformation. Some executives mentioned examples that illustrate the potential for
(6) Glulam replaces steel and CLT replaces concrete … That’s starting to get some
traction. There’s no doubt about it.
(1) There is a whole new possibility in packaging coming with fibrils. The fibrils can
displace NBSK.
According to the executives, the adoption of new technologies has also stimulated forest
covered cases of companies from both the pulp and paper segment as well as the solid wood
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area. The executives also noted that as part of upgrading the company’s technology they are
often forced to modify large processes of the production system of the company.
Table 8 presents a summary of the drivers of transformation identified in this study. The table
relates the number of executives and the total amount of text extracts (codes) linked to each of
the six drivers before described. The data in Table 7 is sorted in two subgroups: external and
internal drivers of transformation. Some of these drivers, however, can have features of the two
subgroups. For instance, the external drivers of ‘product substitution’ and ‘the emergence of new
business opportunities’ can also be classified as internal forces driving change. This
classification makes sense in cases where companies develop their own technologies and
Number of Amount of
Drivers of transformation
executives codes
External
New business opportunities 10 41
Changing business 9 43
environments
Pressure from competitors 8 29
Product substitution 6 14
Technological changes 5 10
Internal
Stagnant returns 7 23
Figure 13 shows the proportion of coded characters in the drivers of transformation nodes by
opportunities’ and ‘stagnant returns’ were mentioned by executives belonging to the three types
of forest producers (resources, commodities and value added). Similarly, the executives from
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commodity and value added firms mentioned all the six drivers of transformation. Contrastingly,
executives from resources producers mentioned only two out of the six drivers of transformation.
transformation. By ‘barriers’ here I refer to the different impediments that executives have
encountered when executing transformational changes in their firms. On the other hand, the term
'transformation enabler' makes reference to the factors that facilitated the implementation of past
transformative initiatives.
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3.4.1 Barriers to transformation
The nine barriers to transformation identified through the content analysis were: i) access to
capital, ii) legislation and government support, iii) attitudes towards change, iv) difficulties in
making projections, v) high risk-reward, vi) limited resources, vii) skills and training, viii) lack
The most frequently mentioned of the nine barriers to transformation was access to capital.
Executives underscored that although not all the transformative changes are capital-intensive, the
absence of an appropriate capital structure for financing transformative initiatives can limit
transformation efforts. Some executives even commented that not having the right capital had
(2) There were times in the company's history when we didn't have access to that capital,
so wouldn't allow spending money investigating into these [products and partners] new
options.
(5) So if we're going to put in a new machine, it needs to have a payback of ‘X’ months
or we don't do it. That drives transformation as well.
Legislation and government support was identified as another barrier to transformation. The
legislation and policies in place have the potential to inhibit transformation, particularly in the
areas of building code, immigration programs for hiring skilled workers, tenure and stumpage
systems, and transportation perimeters in forestlands, among others. With respect to the
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government’s support for encouraging innovation/transformation, some executives considered
that there is a substantial gap between the resources committed by the government and the
needs/potential for assistance. The gap was mostly identified at the provincial rather than at the
federal level.
(4) There are no programs in British Columbia for new product innovation if a company
wanted to build a pilot plant to make a new product … Having to do something that
hasn't been done before, you sometimes need some government assistance to do that. And
in other jurisdictions you can see very robust programs to assist with that, including in
Canada. Quebec is a good example … Quebec has some very innovative programs to
assist … It comes down to committing resources and when you look at the Province, the
size of it, the province is the owner of the forest resource, okay? The Province should be
investing in transformation and innovation on a scale that is commensurate with the size
of their resource. And you know, they're not even in the solar system in terms [support].
Another barrier to transformation was related to people’s attitudes towards change. According to
the executives, the different mentalities and individual objectives of the people working in a
company sometimes are incompatible with the transformational goals. One executive
underscored that the resistance to change of senior managers and technical staff can represent
significant barriers to transformation. Another executive stated that the real challenge of
(1) It has so much to do with people. Imagine somebody who is just sort of ‘okay,’ [he is]
making his pay cheque, [he] is five years from retirement. Everything is good. Are you
going to stick your neck on the line and go merge your company with somebody else or
take on a major initiative? Unless you are under an immense amount of pressure to do
that.
Some executives made comments about the constraints they face in developing forecasts for the
execution of transformative initiatives. The difficulties associated with creating future scenarios
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are attributed to highly unpredictable business environments and to the absence of historical
(4) The model doesn't compute because it is new. It's not like, for example, putting in a
new power generation. You understand the variables and you know the standard
deviations in sort of the risk. Something transformative, you can estimate it but….
Two executives highlighted the high risk – reward relationship that characterizes most
transformational initiatives. The risks that accompany transformations (in terms of the size of the
investment) can leave little margin of error when adjusting for deviations. This condition often
(8) When you move from lab to a pilot plant, to a demo plant, to a full-scale operation,
those full-scale operations will take hundreds of millions of dollars. So, you can’t afford
to make too many mistakes around those.
Another barrier to transformation was the limited resources that companies often had available
for driving transformation efforts. This related to both the time of the personnel and the
of biomass), as well as the need to upgrade their IT support infrastructure. Similarly, the skillset
and training of the workforce (including the senior management) can sometimes inhibit
transformation efforts, especially when the transformative initiatives deal with unexplored
commercial areas.
(2) So for us the bigger barrier is being in leading edge, or lack of experience in large
industrial realms that we have never been before.
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Other less-mentioned barriers to firm-level transformation were the limited research and
development (R&D) culture that characterizes BC forest firms and the poor
collaboration/networking amongst the different actors involved in the supply chain of forest
products. The network of actors mentioned by one of the executives includes different suppliers,
peers from other companies, and third party distributors, among others.
Figure 14 presents the proportion of coded characters in the ‘barriers to transformation’ nodes
arranged by type of executive. The barriers named ‘access to capital’ and ‘legislation and
government support’ were the only two barriers mentioned by executives belonging to the three
types of forest producers (resources, commodities and value added). In contrast, three barriers
were mentioned exclusively by executives in commodity firms and two of the barriers were
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Figure 14. Proportion of characters in barriers to transformation nodes by type of executives
The content analysis process identified a series of transformation enablers or factors that
facilitate major changes in forest firms. These transformation enablers can stimulate change from
within (internal enablers) or outside a company (external enablers). Most of the internal
transformation enablers identified arose from an active role of the firm's senior leadership in the
enablers, on the other hand, derived from the support provided by different stakeholders in the
others: Provincial and Federal Governments, wood producers associations, groups of investors
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and research institutions. Table 8 is a summary of the external and internal transformation
Number of Amount of
Enablers of transformation
executives codes
Internal
Entrepreneurial mindset 9 35
Support from leadership/board 9 17
Attract the right people 8 17
Continuous benchmarking 7 15
Long-term view 5 17
Identify the right timing 5 14
Training and support 5 6
infrastructure
Communicate targets-vision- 4 8
values
Tolerate mistakes 2 2
Transform at incremental steps 1 4
External
Networking 8 28
Policy and legislation 7 21
Access to attractive sources of 6 19
financing
Partnerships 4 13
All but one executive acknowledged the role of encouraging an entrepreneurial mindset in the
this transformation enabler as allowing the employees from all levels of the organization to
constantly search for new initiatives and business solutions. It was about focusing the entire
organization on “new ideas,” as one executive stated. These new ideas could be spotted from
almost any source, including from within the company (i.e. other divisions), competitors,
suppliers, distributors of end products, previous and research work, among many other sources.
(6) You have to constantly look. What are people doing? What are people doing better
than us? What’s an opportunity that’s out there that we can take advantage [of] with our
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equipment and our expertise? And you got to have that mindset, of always scanning the
horizon for those opportunities.
performing trials and pilot demonstrations prior to scaling up transformative projects. The
intention of constantly performing these trials is to select only those potential projects that have
(4) Working on new concepts that get to a certain stage and then you say: well, that
doesn't work. Put an ‘X’ through it. We know that won't work for us in transforming. Try
and look at something else … All of a sudden you might find that, yes, it's an interesting
product but the capital to make it is three times more than what would be feasible, so that
idea gets an ‘X’ and you just keep looking and looking and evaluating. It's a lot more
iterative than saying, “okay we want to grow our business.”
Having the support of the board of directors for proposing and implementing transformative
initiatives was another transformation enabler mentioned by the executives. Four of the nine
executives who mentioned this transformation enabler referred to it as an essential factor for
achieving successful transformations. A supportive Board of Directors and CEO of the company
can not only facilitate the startup of transformational projects but can also clear the path to reach
(1) That trust in that having the right people in the Chairs makes a different system
whether you can do things or not.
(4) Innovation starts at it’s not just a management thing. Transformation starts right at
the most senior level at the board of directors. Regularly having discussions and updates
on innovation and transformation with the board, it creates awareness … So, right at the
board level having an understanding of the processes and the steps that are taken by
management is sort of the first step.
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According to senior executives, attracting the right people to the organization can make a
processes, executives are often required to incorporate people with the specific skills and
expertise necessary to deliver the changes. Some executives emphasized that the risks of not
keeping up to the pace of changes are higher if companies are unable to hire personnel with new
skills.
(4) There are people available that have the knowledge and skills to work in those
[innovative] areas. And as we innovate and transform, we look at who's the best in that
area and we bring them in either on a consulting basis initially or as an employee. So as
we shift, we have people that have broad ranges and generalist type skills that can help in
a new area … It doesn't matter where they are in the world, we find the best people that
can help us in that area.
(3) You need more depth and professionalism. It can't be done on the corner of
somebody's desk. It needs to be a full time job, done in a very professional way. So, the
breadth and depth of the people has changed … We've really changed a lot in the last
year.
Another transformation enabler identified in the conversations was the practice of benchmarking
technologies and products of competitors. This practice is particularly important during the
design stage of transformative projects. The benchmarking can help the team leading the
transformation efforts complete the design stage by focusing on the technologies and products
already tested by their competitors in other jurisdictions. The executives referred particularly to
the products and technologies tested by European firms. The responsibility for allocating funds
and time for performing the benchmarking lies with the senior levels of the company. Some of
the executives even commented that they visit their European counterparts between one and two
times a year.
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(6) You have to, I think it's important for our manufacturers to get in to see other
manufacturers outside, in other places in the world and see how other people are doing it.
It's also the amount of ideas in terms of innovation that comes out of that is huge.
(6) That whole technology, it has improved in Europe, but no one has really adopted it
here in Canada.
Another factor that facilitates firm-level transformation is the screening of potential opportunities
based on a long-term view. The identification of the priorities and the goals of conducting
transformative initiatives can become a straightforward process when the senior managers and
the members of the Board of Directors adopt this long-term view. The executives noted that
adopting this long-term view can foster the discipline to continue implementing transformational
projects up to their final stage, despite not achieving attractive performance improvements in the
short-term.
(2) We not only based our decisions on financial reasons. They're made on a long-term,
financial, reliable rate of return over long periods of time … Sometimes we do a project
that it’s going to lose money in small areas of the company, but we'll do it for the larger,
more reliable rate of return.
(9) Now what one could do is take all of your product and ship it back to that market for a
short term gain next quarter, but that's not a good long-term strategy. You have to have
the discipline to maintain that focus ... It does take business discipline for management
breakdown.
Identifying the right timing for executing transformative initiatives is an enabler mentioned by
half of the executives interviewed. Being an ‘early mover’ was described by the executives as an
(7) You can transform a company, taking advantage of an expectation that things will get
better and the sooner you can anticipate both directions going down the wave or going up
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the wave, the sooner you can anticipate those things, the better you are prepared to take
advantage … If you just work around the edges, you are not going to take advantage of
an upswing.
Providing the proper equipment and training to the company’s workforce is a factor contributing
to successful transformations according to five of the executives. One commented that a well-
designed transformational plan could become ineffective without the personnel who can “extract
Collaboration with the various industry stakeholders was a transformation enabler referred to by
most executives. Creating an access to a ‘support network’ can help companies with plans to
transform by identifying new business solutions and assessing new technologies (R&D
networking). Moreover, becoming part of a ‘support network’ could also facilitate finding
One executive commented that the benefits of collaborating can continue after the transformative
initiatives are completed. For instance, this executive commented that the identification of
potential customers and business partners can be faster when firms are part of a larger network of
companies. Similarly, some of the executives related the success of setting up existing
benefits of setting up partnerships, four executives underscored that these partnerships can help
reduce the risks associated with moving into very specialized commercial areas, never explored
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The support provided by different government policies was another transformation enabler
identified in the discussions with the executives. Most executives acknowledged the suitability of
the forest sector. The ‘Green Transformation Program’ is an example of the cash contributions
and government grants provided by the Federal Government to forest firms. As described by the
executives, these grants helped forest firms undergoing transformation to reduce the risks
associated with large capital expenditures. Other supportive policies included the BC
government’s efforts to establish free trade agreements with Asian countries. This policy aims to
foster market diversification as a strategy for forest firms to adapt into changing business
environments.
(9) The government has been very helpful in China and they just made an announcement
two weeks ago. I think that they will invest some money in developing a relationship with
India further. They're making progress.
(4) There was a ‘green transformation program’ announced, that was implemented by the
Federal Government, a very good program. If you look, it allowed us to increase our
speed of transformation.
A common pattern observed in the conversations with the executives was an inclination for
describing different aspects of their companies’ culture. Although this pattern was observed
across the different stages of the interview, overall it was most recurrent during the final part of
the interview. For instance, the executives’ responses to question seven of the interview schedule
particularly centered on explaining aspects about their firm’s culture. Question seven asked the
executives to describe the origin of specific transformative initiatives and innovative solutions
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that were recently initiated or completed in their companies. The names of the initiatives were
Through the content analysis, I identified four different elements that comprise the culture of
forest firms, as described by the executives. Each of these elements has the potential to stimulate
or inhibit transformational change. The elements identified in the data analysis were: ownership
structure, leadership style, organizational values and the process of generating new initiatives.
Different types of ownership can influence forest products firms in the adoption of particular
transformational paths. In the discussion, the executives provided examples in which the
ownership structure of their companies was one of the elements affecting their opportunities for
implementing changes. For instance, the factors impeding transformation efforts of public firms
were often different from those of the public companies. Figure 15 presents the proportion of
codes (text extracts) in the ‘barriers to transformation’ nodes that were mentioned by each type
of executives (from public and private firms). As shown in Fig. 15, three barriers were referred
to exclusively by executives in publicly traded firms and other three barriers were mentioned
government support’ and ‘attitudes toward change’ were barriers mentioned by executives from
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Figure 15. Proportion of codes in barriers to transformation nodes by type of executive
Six of the executives participating in this study belonged to publicly traded firms and the
remaining four of the executives were from privately owned companies (60-40 proportion). In
Fig. 15, the nodes ‘access to capital’ and ‘legislation and government support’ had a similar
proportion on the number of codes attributed to each type of executives. For instance 62% of the
total codes within the node ‘access to capital’ belong to executives from public firms and 38% of
The difference in setting both the objectives and priorities for the firm was another element
linked with its ownership structure, according to executives. Differences in the transformational
paths pursued by companies could arise due to differences in the objectives established within
each organization. The goals of private and public firms can vary in multiple strategic areas, for
instance, in the number and size of the niche markets they target or in their interest in increasing
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the size of the firm. One executive from a private company commented that the owners of the
company have repeatedly decided to be “less aggressive and more risk adverse”, to avoid
damaging their existing relationships with customers and employees. Another executive
(7) So our job as a public company is to deliver a return to our shareholders … Public
companies tend to be a little different than private companies. Private companies often,
their goals are maybe different, depends on the owner … All public companies have one
goal [laughs]: increase return to the shareholders. That's their only reason for survival.
Setting the priorities and objectives of the firm is also influenced by the proportion of shares that
are owned by each of its shareholders, as described by two of the executives. This is particularly
evident in firms where one individual holds a high proportion of the shares. For instance, two
executives from two different public companies provided examples in which the selection of
transformational paths was assisted by individuals who held a significant proportion of the
shares. In both cases, these individuals sit on the board of directors and both have expertise in the
Overall, some executives described their firms as results-oriented organizations, while others
mentioned examples of previous decisions in which the owners/shareholders of the firm assigned
equal consideration to the means of attaining an objective and to the objective itself.
The style of leadership imparted through the company was described by the executives as one of
the most critical elements for shaping firm-level transformation. The role of a leader was
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ascribed to individuals in different senior positions in the forest firms. Five of the executives
linked the role of senior leadership with the CEO, three with the CEO and the board of directors,
and one with the board of directors. Only one executive made no distinction.
The analysis of the transcribed interviews helped me to identify two strategic functions that
executives attributed to the senior leadership of a firm. The two functions consisted of: a) setting
the firm’s future direction, and b) delimiting the boundaries of action in the execution of
different initiatives. According to the executives, the performance of these two functions could
influence the firm’s transformation efforts by contributing to the formation of different barriers
With regard to setting the direction for the firm, most executives highlighted the importance of
having a leader who was able to define and to communicate a clear vision for the company.
(4) It's also about your CEO having a vision of what he would like to see the organization
looking like in the future. And it's not a vision that, “we're going to be doing this, this and
that.” It's a direction.
(5) He can be a visionary and say what's next? Do we vertically integrate up? Do we go
and buy a forest license? Do we go and buy a machine shop? Do we…?
A narrower vision of the firm can limit the opportunities for transformation, as it can encourage
the executives and staff in the organization to develop only those initiatives that are aligned with
such a vision.
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Two factors describing the different styles of leadership in forest firms were the leaders’
willingness to modify their strategy and the risk-tolerance factor implicit in their decisions. The
commitment of the managers and staff to improve the performance of the firm can be
compromised as a result of the senior leadership sending a message that the strategies are not
subject to change. This could be the case of firms in which only the initiatives that are aligned to
the current strategy can be proposed to the senior level, as one executive commented: “Usually
the situations that you put in front of the board are consistent, they should be consistent with the
strategy, so there shouldn't be any surprises”. Contrastingly, companies whose leaders were open
to explore opportunities, which were not necessarily closely related to the current strategies,
Similarly, the amount of risk that senior leadership was willing to take distinguished between
different leadership styles. For instance, five executives expressed concerns at not being able to
recover the capital required for transformative projects within the projected timelines. To these
executives, the presence of multiple uncertainties was hindering the execution of specific
transformative projects. Among the list of uncertainties mentioned by these executives were the
negative response of the market to new value propositions, the reactions of competitors and the
Executives’ attitudes were variable when exploring potential business activities to which they
attributed the same type of risk. For instance, two executives considered policy changes (i.e.
subsidies) as a risk when executing carbon offset projects. During the card-sorting exercise, one
manifested having ‘no interest’ in including the carbon offset projects within the future portfolio
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of products of the company. When reviewing the respective card (environmental externalities),
(3) I don’t know. I honestly don’t know. I hate to even make a view when something is
driven [by] government policy that is ambiguous, to be determined. It is hard to know. It
is hard even to handicap it.
A second executive expressed a ‘maybe preference’ for developing carbon offset projects in the
future, despite having previously manifested a concern about the availability of subsidies to
(8) ... we don’t necessarily want to base our business investments on subsidies, [but] we
absolutely want to be active where they exist.
Another key function performed by the senior leadership of a firm is to define and maintain a set
of values or principles that govern the way in which the people in the organization perform their
activities. As discussed in the conversations with executives, the senior leadership of some forest
(6) You got to have that mindset, of always scanning the horizon for those opportunities.
I think I do a good job of that. I think I've imparted that culture here inside [name of the
company] … [to] encourage everybody else to be the same way.
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3.5.3 Organizational Values
As mentioned above, the values or principles imparted by the senior leadership were seen as a
fundamental aspect defining the organizational culture of a forest products firm. The executives
who made comments about their company’s values referred to them as influential behavioral
(3) One of the things we care very deeply, we got this floating around [printed flyer with
the values of the company], is our core values ... Our core values go to how we operate as
a company … how we behave and how we function.
(7) The skills are important, yes, but it's more about the culture of the company and
having your core values rooted and everybody knowing what the vision of the company
is. The company has an absolute clear vision and with that vision, we have our core
values and everybody in the company knows what the company is all about.
In the discussions, half of the executives made reference to a common set of values/principles
shared by the people in their respective organizations. Three referred to the organizational values
as publicly announced principles. Of note, four of the five executives who did not talk about
organizational values chose the largest number of products categories during the card-sorting
exercise.
The process of generating new initiatives in the firm was a theme that emerged during the
conversations. The executives described how transformative initiatives emerged and evolved in
their organization. The process of generating new initiatives spanned the building of a formal
project plan (business case), followed by its assessment, until it was finally approved or
discarded by the senior leadership of the company. Three executives used the term ‘screening
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process’ for the initiative generation. Most executives provided information about the roles of the
executives and staff participating in this process, as well as the steps followed to complete it.
According to the executives, two types of processes generate new initiatives. Some described the
always changing, type of process. In companies where the process was more systematic, it was
conducted regularly on an annual or biannual basis. In these cases, the screening was part of the
major strategic planning process in which the board of directors, the CEO and other senior
Executives from three different firms provided examples of initiatives that started with the
identification of new ideas at the operational level of the company. Once the ideas were
identified, they were commonly investigated further by the senior management group, until they
were finally approved by the board of directors. In the case of these three firms the executives
(9) We have initiatives coming from literally every corner of the company. A lot from my
department or my counterpart's department, in terms of new ideas … What happens is,
there's a chain, so someone would take it to their supervisor, then to a manager. A
manager would bring it to me. We would decide: does this make sense? Then we would
agree on what they are and we would take them and present them in our annual business
plan that would be approved then by the CEO and then also would be approved by the
board.
In other companies, the screening process was a straightforward process in which the executives
were encouraged to investigate the different benefits and risks associated with a particular
opportunity. In these firms, the process could be initiated directly by the CEO or by the senior
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management team. A business case was commonly used to summarize the different risk,
The time needed to elaborate a business case varied depending on the type of initiative being
analyzed. The amount and quality of the information available on the potential opportunity was
fundamental in determining the length of the process. For instance, initiatives related to
unexplored, innovative commercial applications could take longer to become formal business
plans than others which were linked to traditional business solutions. Three executives
highlighted the importance of having access to people with specific expertise and skills during
As described in Section 3.4, potential opportunities and new ideas could be spotted from both
within (i.e. divisions or units) and outside the company (competitors, suppliers, others).
Similarly, ideas and opportunities could be identified by multiple individuals in the organization,
including the people from operational-levels, mid-level managers, and directors, among others.
In contrast, the design of business cases and the coordination of new projects were done
exclusively by the senior management team, according to nine out of the ten executives
interviewed. In only one company, privately owned, this strategic activity was a shared process
The executives who attributed the role of generating the new initiatives to the senior
management group also distinguished between two driving forces: the CEO on one side versus a
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more team-centered process on the other. In the former case, it is the CEO who powers the
(7) It's CEO-driven and the CEO derives the strategic plan and drives those higher level
initiatives of the company. And he has a team of people, of course, that helps, pulls in to
make it happen. But it's very much CEO-driven.
In this type of process, the role of the remaining senior executives (Senior Vice- Presidents and
Vice-Presidents) is relatively limited to the formulation of the business cases, though they can
also provide additional advice to the CEO concerning the implications of particular initiatives.
For the firms practising a team-centered process of generating new initiatives, other senior
managers, in addition to the CEO, are actively engaged in formulating and proposing these
initiatives to the board of directors. In these firms the other executives shared with the CEO the
(4) I guess my role in the company is being some of that conduit [for evaluating new
ideas]. I have a colleague, who also does some of this too and we coordinate, but we also
both report directly to the CEO. When a new concept is, a new opportunity is presented to
the board, it is the CEO. The CEO will bring in the senior management team responsible
to present the opportunity and to be available for the questions and answers.
The role of the board of directors in this screening process was described by all but one
executive as facilitating, as well as providing final approval of the new initiatives. Between
firms, the board can have different names, such as the board of directors for publicly-traded
firms or, for private companies, the ownership group meeting or the advisory board. Most
executives commented that their boards did not propose or were not involved in the process of
(5) The board is a ‘how to,’ rather than ‘what to do.’ The board asks very good questions
to make us reflect. Very, very high level: Is it right? Does it fit? Is it the right thing for
your company? Does it fit with what we're trying to achieve as a company?
All executives agreed that when a business case was presented at the board meetings, it was
ultimately the board of directors who were responsible for approving or rejecting it. Having a
supportive board of directors is crucial for starting major strategic initiatives, such as most of the
transformative projects.
Executives link the meaning of forest business transformations to the implementation of different
business strategies, or transformational paths. Opinions varied across the sample of participants
regarding which of the seven transformational paths identified could deliver a significant
backgrounds, executives from the same company indicated similar preferences toward adopting
Market pressure and the organizational culture of forest products firms appear as the two critical
factors driving and shaping the outcomes of forest business transformations. Between the six
firms, all but one of the factors that triggered past transformative initiatives were linked to
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Most barriers to transformation identified by executives in these six firms were different between
private and public companies, as well as between the type of producers (resources, value-added
and commodity companies). Access to capital and the legislation and support from the
Internal and external driving factors, barriers, enablers, as well as new business opportunities, are
identified and filtered by the senior management through different types of processes in order to
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Chapter 4: Discussion and conclusions
This exploratory research examined the views of senior executives of BC forest businesses about
the factors shaping forest business transformations in British Columbia. The semi-structured
interviews conducted in this study provided the data collection tool to elicit the views of these
executives on the following themes: i) meaning and scope of transformation processes in their
firm, ii) adoption of transformational paths and new products offerings in the future, iii) forces
triggering transformational change, and iv) barriers to and enablers of transformational change.
Results support the implicit assumption of this study, namely that generation and execution of
team. For all six forest products firms analyzed, potential business opportunities are identified
and screened by senior executives, who interpret and integrate them as to their relevance for
More importantly, the results of this thesis underscore the need for further study of forest firms'
the views of executives varied across companies in regard to the transformational paths their firm
should adopt (see Section 3.2.1). This variation in opinions occurred despite attributing the need
for change to similar contextual forces. Correspondingly, executives’ preferences about adopting
new product offerings in their firms also varied from one company to another, but were similar
between executives from the same company. This variation in the preference of executives for
producing new products occurred even between companies that traded in similar products.
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Overall, the differences in the professional background did not account for the variation in
executives’ views, nor were these variations always explained by the types of producers
by identifying the role of firms’ culture in selecting new strategic initiatives. The following
section expands on these two general themes and discus on the additional findings of this study.
4.1 Discussion
Differences in defining the transforming processes are potential explanations of the variation in
executives' preferences. The concept of firm level transformation was similarly framed by
executives in a single firm, but differently by executives in other companies. Each definition
On the other hand, the definitions of firm-level transformations compiled from the literature also
use a range of different interpretations to explain such transforming processes. For instance,
studies in the organizational change field define the transformation processes based on the
content of their changes (Barnett & Carroll, 1995). Definitions of firm-level transformation from
the applied business literature underscore the objective of executing the changes while
downplaying their content (Day & Jung, 2000; Dewar et al., 2011; Isern et al., 2009). My
analysis suggests there are limited conceptual similarities in the way executives of forest firms in
BC and different scholars account for the transformational changes. Below, I provide additional
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4.1.1.1 Interpretation of defining frameworks
Overall, most of the definitions of firm-level transformations consulted for this study do not
accurately reflect the views of executives about the transforming processes of their companies.
Studies from the organizational change field have adopted a linear approach in defining and
measuring the impacts of firm-level transformations. When following this linear approach, the
transformation content is identified by comparing the structure of the firm at two points in time:
a pre-transformation moment (t0) and a post-transformation (t1) (Barnett & Carroll, 1995;
Pettigrew, 1987). Contrastingly, senior executives on the ground referred to the transforming
process as being cyclical and iterative rather than linear. To most executives, the outset and
identified. Results of this study suggest that senior managers sometimes start implementing a
business initiative without labeling it as transformative or having the certainty that it will
produce transformative changes in the firm. In this sense, most initiatives are labeled as
transformational strategy often triggers additional changes in the firm. In these cases, the
bundling of two or more transformational strategies occurring at the same time can make
identifying the overall conclusion of a transforming process quite difficult. Linear approaches to
the transforming processes become very limited if the completion of such processes is not easy
to identify. Furthermore, the business environments could also evolve during the implementation
of potentially transformative initiatives. When adopting a linear approach, this could create
additional bias in separating the effects of transformative initiatives from those caused by the
thesis show how executives on the ground have divergent views about the content of forest
business transformations in BC. Similar mixed patterns on the content of transformative changes
were found in previous empirical studies that analyze forest products firms in North America and
Northern Europe (Cohen & Nikolakis, 2013). As part of this study, Cohen et al. (2013) contrast
the opinions of industry executives and industry experts (former executives, government official
and researchers) on the topic of business transformation. That study shows that not all changes
Likewise, studies within the organizational change field have looked at what constitutes a core
structural change across different organizations, in an effort to better characterize the content of
transforming processes (Amburgey, Kelly, & Barnett, 1993; Barnett, 1994; Hannan & Freeman,
1984; Hannan, 2005). Changes on the product offerings, market shifts and technological changes
are among the most recurrent core changes identified in these studies. Nonetheless, as Barnet .et
al (1995) have pointed out, the pattern of findings in some of these studies should be carefully
interpreted given that some of the changes that were deemed as core in these studies are assessed
Improving the competitiveness of the firm is the end goal of the transformation processes
according to most of the definitions available in the business transformation literature (Butner,
2014; Cohen & Nikolakis, 2013; Isern et al., 2009). Perhaps these studies link the goal of the
transformation processes to such a broad parameter due to the absence of agreed criteria to
characterize transformation content. Arguably, this goal falls short of describing the magnitude
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of the transformational changes. This is particularly so if one considers that practically all
company are oriented towards that same goal. Similar to what has been expressed in the existing
competitive (see Section 3.2). The executives also used broad financial measures like EBITDA,
earnings per share growth or equity value as proxy indicators to measure the success of
transformative changes.
Few studies have attempted to unify conceptual differences on: i) the linear versus cyclical
approaches to transformation, ii) the transformation content, and iii) the limitations of targeting
broad transformational goals. The work of Davidson (1993), for instance, identifies specific
goals for each of the three transformation phases that encompass his sequential model. Each
phase in Davidson’s model focuses on producing specific changes in the firm (content) and
achieving defined targets. The work of Dewar et al. (2011) can be interpreted as another effort to
Dewar et al. (2011) used the concept of organizational health to frame the scope of the
transforming processes. According to Dewar et al. (2011), organizational health is the firm’s
capacity to continue to change and adapt along with its business environment.
Davidson and Dewar’s definitions help to understand forest business transformation processes as
a multi-level sequence of changes (3 phases). In the first phase the changes have limited
operational and financial results, but during subsequent stages those changes would start creating
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notable increases in market value and organizational health of the company (phases 2 and 3).
However, this interpretation is not necessarily situating the transforming processes within an
ever-changing context, which in the particular case of commodity producers can produce highly
variable cash flows (see Sections 3.3). Taking that into account, my interpretation of the
transforming processes of forest firms uses the business economic cycle to account for the
variability in the context surrounding forest products firms. A business cycle consist of periodic
macroeconomic variables (Parkin & Bade, 2012). The level of productivity fluctuates from peak
(or top level of economic activity) to troughs (bottom parts). At peak points, economic activity
stops rising and starts to contract, whereas in troughs, the contractions cease and the upward
Fig. 16 illustrates the phases of a business economic cycle using a flat trend. Aggregated data
can show upward or downward trends
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Forest firms commercializing products at the lower end of the forest products value chain (i.e.
logs, lumber, pulp, etc.) may be more prone to mimic the business economic cycle, as the prices
of such products are determined by global supply and demand dynamics. Companies need to
adjust their operations quickly at the lower levels of the economic activity (troughs) or they are
Using this cyclical approach, a firm-level transformation can be defined as a continuous process
of executing changes in order to project the firm out of a conventional competition cycle. This
implies moving away from highly reactive and faster changing scenarios to strategies of
incremental and proactive changes. Figure 17 is a conceptual scheme illustrating the cumulative
effects on firms’ earnings when they shift from conventional to transformation focuses. The
productivity of the firm (earnings) now fluctuates always within positive margins, even at the
troughs parts of the cycle. The time to complete a business cycle is longer in transforming mode,
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This interpretation of the firm-level transformations acknowledges that firms do constantly
change when following conventional competition. However, the changes are not diversified nor
aligned enough to deliver full transformations. A pure focus on operational efficiency in the
particular case of the forest businesses would allow them to outperform some of their
competitors; however, this approach is highly limited in moving away from the conventional
competition cycle. The five portfolios of products and processes in Table 1 (see Section 1.3)
illustrate potential transformation scenarios for forest firms beyond a pure focus on operational
efficiency.
Resolving the differences in defining firm-level transformations can have practical implications
in the type of strategies forest firms adopt as transformational. One question is how to identify if
a change is transformational or not? One answer may lie in looking at the transforming processes
as a cumulative set of changes, instead of trying to find ‘the transformational type of change’.
The sequence and alignment of implementing multiple types of changes in the firm becomes
more important than trying to find a single solution to produce radical transformations. Other
parameters enabling judgement on whether changes are transformative or not are the contextual
forces shaping the performance of the entire forest sector. As a result, the assessment of
transformational strategies needs to adopt longer time frames given that the transforming process
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As described above, focusing solely on operational efficiency can only produce limited benefits
to the firm, especially when viewed through the lens of a broad transforming cycle (Fig. 17).
Today’s business environments force forest firms to become highly efficient, as well as to use
those efficiency gains in buffering unexpected fluctuations in demand and product prices. In
today’s conventional competition scenario forest firms need to be efficient in order to survive.
Similarly, an exclusive focus on market diversification can produce limited long-term benefits
for firms, if the existing base of core products does not evolve to compete again rising entrant
products (i.e. low cost Chilean radiata pine). Excellent execution of a single transformational
strategy can produce performance improvements, but it could be of limited value in taking the
In the case of the BC forest sector, one can argue that companies adopting a pure focus on
remain competitive even at the bottom parts of the economic cycle. However, it is likely that
these strategies would have failed without an active involvement of the provincial and federal
governments. In the case of BC, the government accelerated the development of new markets in
an effort to offset the impacts of the financial crisis (MFLNRO, 2013). Although these initiatives
helped companies to remain in the marketplace, they create protective environments in which
forest firms could be tempted to rely on a single approach to compete. This may significantly
One could use the cyclical transformation process depicted in Fig. 17 to analyze potentially
transformative initiatives of companies in rapidly changing sectors, such as the online retail
industry. The online retail business is a form of electronic commerce that allows consumers to
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directly buy goods or services from a seller through the use of a web browser. In recent years,
this sector has evolved from e-commerce, to mobile e-commerce (i.e. smart phones), and it is
change in such a dynamic sector. Different viewpoints can also arise in this context, for instance,
in the case of Amazon Inc., that strategy has not translated into outstanding profit increases and
share value1. An exclusive focus on short-term financial results would judge Amazon’s
diversification strategy to be less transformational than when using the cyclical framework
suggested in this research. Amazon, originally an online bookstore, is now an online retail firm
much larger than any of the forest firms in BC. In early 2000 Amazon started to expand its
product offerings far beyond the traditional line of products to sell items such as furniture,
appliances, digital content like TV shows, or even groceries, among many others. However,
beyond a pure focus on asset purchases and executing merges and acquisitions to expand its core
business, Amazon combined these transactions with operational efficiency approaches (i.e.
speeding its shipping and reducing margins from content partners) and technology development
(i.e. devices and cloud computing). Although some analysts argue that Amazon’s profits have
not increased at the same speed as its income, the company is now competing with well-
established online retail leaders such as EBay and Yahoo. Arguably, Amazon can be considered
as one of the best-positioned online retailers given its diversified portfolio and its focus on re-
1
Information about the performance of that company is available at: http://www.theglobeandmail.com/report-on-
business/international-business/us-business/digital-dilemma-amazon-pushes-to-package-up-more-
profit/article18831281/?page=3.
95
As a parallel, results of this study show how some forest firms in BC have started to expand their
product mix beyond wood commodities by commercializing green energy produced with wood
residuals. Undoubtedly, this strategy has helped firms to create new revenue streams based on
built-on capacities. However, companies that continue investigating new applications for wood
residuals could be better prepared to compete in the long-term. This complementary focus on
research and development can be particularly relevant given that selling green energy could soon
become an industry standard (see Section 3.2.2). Following Amazon’s example, the
transformation focus should not only be about diversifying product offerings, but include
ongoing research and development towards improving the value proposition of the new product
lines (.i.e. Amazon’s Kindle and cloud services). When using a sequential view of
transformations, diversifying the product mix would not automatically become a transformative
strategy. This is particularly true if this strategy is not accompanied of other changes, all of
Lastly, the question of which opinion matters the most for judging the different types of
the need to transform the forest sector. Each of them can also have a particular view on how
firms need to transform. These stakeholders can be limited in very many different ways. For
instance, industry professionals who are immersed in dealing with day-to-day tactical changes
might be prone to consider transformative any change that modifies their regular conditions.
Scholars and consultants could propose changes that can be very difficult to translate into
practice on the ground, and government officials would support the implementation of changes
96
on the basis of generating minimal risks. How can one find a common ground to align the views
The following section describes potential factors influencing the selection of transformational
strategies in forest firms. Decision factors can influence the way forest businesses’ executives
perceive the transformational changes. These decision factors can also shape how executives
Results show that definitions of the firm-level transformations were similar between executives
in one firm, but different when compared to those from other companies. This firm-specific
defining pattern is a potential factor explaining the differences in the type of transformational
paths followed by forest firms. Similarly, executives’ preferences towards changing the product
offerings of their firms were in accordance with their views about the transformational paths.
A tentative interpretation of the firm-specific pattern mentioned above places the role of the
organizational culture of forest firms at the center of searching, assessing and selecting
transformational paths and new products. Overall, the results of this study suggest a moderating
role of the organizational culture of forest businesses. By moderating role, I refer to the effect
produced by a variable or set of variables, in regulating the strength of the relationship between
two other variables (Baron & Kenny, 1986; Rosopa & Stone-Romero, 2008). Cultural elements
of forest firms such as leadership style and organizational values are thought to regulate how the
97
transformative initiatives are proposed in the firm. These cultural elements can filter executives’
Figure 18 is a conceptual model drawn from the results of this study. This model helps to build
up an initial understanding of the direction and strength of influence between different decisional
contextual forces, their intentions to transform the firm and different elements of the business
98
Figure 18. Potential decision factors influencing the selection of transformational paths in forest businesses
Figure 18 shows a relationship between different decision factors influencing the adoption of transformational strategies and PoPPs. The direction of the
arrows in the diagram indicates influences between themes and variables. Doted black arrows indicate loss of information in the process.
99
The moderating effect of the organizational culture implies narrowing down the concept of
transformative initiatives to those initiatives that are compatible with the leadership style and the
organizational values of the firm. If the potential initiatives are perceived as incompatible with
these cultural elements, executives would discard them completely or they might need to adjust
compatibility/incompatibility pattern can be observed in the case of the executives who clearly
recognized the organizational values of their firm and who also chose a well-defined set of
product categories during the card-sorting exercise. In the case of those executives, a clear focus
in organizational values could be linked to a clear focus in preferences for product categories
(see Section 1.5.3). This pattern of organizational values and preferences for strategies concord
with the Attraction-Selection-Attrition model originally proposed by Schneider et al. (1995), and
later used by Berson et al. (2008) to predict organizational performance. Results of the study by
Berson’s et al. (2008) suggest that behaviour and priorities of the people in the organization can
resemble the value system imparted by the leaders of the firm. Additional patterns or
dichotomies explaining the role of the organizational culture of forest firms are linked with the
ownership structure. For instance, executives in public firms made a more straightforward
In the sequential process of Fig. 18, once senior executives had filtered the incompatible
initiatives they moved on to focus solely on researching those initiatives that fit with the
organizational culture of their firm. These compatible initiatives are translated into business
cases and then presented to the CEO and the board of directors of the firm to determine their
100
viability. The main criterion in evaluating business cases is financial viability and profitability of
a transformative initiative. However, given that more than one transformative initiative can
‘look’ financially viable, the adoption of the initiatives would be limited to those that are
compatible with the goals, priorities, organizational values and other cultural aspects of the firm.
The outcomes of the decision-making process depicted in Fig. 18 could lead to two possible
the proposed initiative to continue operating as usual. The development of new product
categories in the firm will depend on the type of transformational paths selected. This potential
causal relationship between the transformational paths and the type of portfolios of products is a
pattern that was observed in this study. For instance, the executives who link forest business
transformations with diversifying product mix expressed their interest in producing additional
product categories to those currently produced in their firms. On the other hand, executives who
were not interested in diversifying their firm’s product mix continued selecting the same product
Besides using the patterns identified in this thesis, the model also integrated findings of previous
studies within the applied business literature. These studies have underscored the central role of
the organizational culture in the execution of successful corporate transformations (Day & Jung,
2000; Kotter & Schlesinger, 2008; Kotter, 1995). Kotter (1995), for instance, identifies that in
successful transformations the senior leaders of the firm expend sufficient resources to develop
strategies for communicating a vision, as well as fostering new attitudes and behaviours of the
people in the organization. In his study, Kotter (1995) also highlights the importance of creating
101
a sense of urgency among the senior managers of the firm in order to spur change. In a more
recent study, Kotter and Schlesinger (2008) identify four common internal barriers to
transformational change; two of these barriers are closely linked with the type of organizational
values and leadership style imparted through the company. The study of Day and Jung (2000),
which analyzes transformation efforts of different corporations, point outs the dichotomy of
The results of this study revealed a number of factors triggering transformative initiatives in BC
forest businesses. The factors or drivers of transformations identified in this thesis lend support
to the findings of previous research in the fields of business transformation and organizational
change. Isern et al. (2009) classify the causes triggering transformations as either reactive
(response to external shocks and market pressure) or proactive (internally planned). Barnet et al.
(1995) have distinguished between external and internal forces driving changes in firms. Barnet
et al. (1995) also identified the nature of changes as either action-oriented (finding new
of the six transformation drivers identified in this study qualify as external forces; while only one
corresponds to an internal driver (see Section 3.3). This predominance of external forces
drivers of change identified in previous studies of firm-level transformation (Cohen & Nikolakis,
2013; Isern et al., 2009; Kotter, 1995). In the particular context of the forest sector, Cohen et al.
(2013) identified that all executives from their sample of 33 forest firms associated the
emergence of transformative initiatives with responses to external pressures. On the other hand,
102
the results of my interviews indicate that ‘avoiding stagnant returns’ and ‘taking advantage of
new business opportunities’ were the only two drivers mentioned by executives from the three
returns is classified as an internal driver of change. This internal driver is linked with the way the
senior leadership of a firm reacts to the pressures of multiple stakeholders (i.e. owners or
shareholders) concerning the financial performance of the firm. For instance, some leaders can
set more challenging performance and financial goals than those of their direct competitors, as a
direct consequence of the pressure of these stakeholders. In this sense, each leader can interpret
in a different manner the urgency of always increasing financial returns. Executives from public
firms could be particularly susceptible to try to address this challenge, given that investors and
market analysts can use short-term financial metrics to judge firms’ performance. However, the
evidence from this study shows that both types of executives (from private and public firms) are
very aware of this particular driver of transformation. Additional studies are needed to provide
Nine barriers to transformation and fourteen transformation enablers (or factors facilitating
change) were identified in the content analysis of this study. Five of the nine barriers to
transformation identified in this study coincide to the ‘transition barriers’ described by Davidson
(1993). Davidson’s study (1993) analyzes the outcomes of past transformations efforts of 50
firms from a variety of industries. The following list relates Davidson’s transition barriers with
government support), human resources (skills and training), corporate culture (attitudes toward
change) and technical feasibility (limited R&D culture). Similarly, five of the nine barriers to
transformation concur with the factors impeding successful transformations identified by Cohen
et al. (2013). Specifically, the five barriers to transformations of my study can be grouped within
the three the most important ‘barriers to successful transformations’ identified by North
American executives in Cohen’s study. These three barriers are: organizational inertia/risk
The findings of this thesis are also in line with a series of management recommendations and
best practices for leading corporate change (Blackburn, Wood, Ryerson, Weiss, & Wilson, 2011;
Day & Jung, 2000; Kotter & Schlesinger, 2008; Kotter, 1995). In particular, the internal
transformation enablers identified in this thesis are linked to the principles for guiding successful
transformations developed by Kotter et al. (Kotter, 1995). His eight principles for transforming
corporations are targeted to senior leaders whose firms have plans to initiate transformational
processes. The transformation enablers ‘long-term view’, ‘identify the right timing’, ‘support
from the board’ and ‘communicating targets/vision/values’ are directly linked to four of Kotter’s
eight principles (creating a vision to help guide the change, communicating the vision,
In addition to concurrence with the findings of previous research, my results suggest the
presence of patterns between the different types of barriers and the characteristics of firms. Only
two barriers were common to executives from all three types of firms (resources, commodities
104
and value-added). Similarly, only three of the barriers were mentioned by executives from both
types of ownership structure. These results suggest that commodity producers face capital-
dependent type of barriers. A similar pattern is observed when the data are organized by
ownership structure. With the exception of the barrier named ‘access to capital’, the rest of the
capital-dependent barriers were mentioned by executives in public firms. Likewise, with the
exception of the ‘attitudes towards change’ barrier, all the human resource/skill-dependent
Another pattern observed can be stated as: the larger the firm, the more capital-dependent the
transformation. The size of the firm here refers to its production capacity (i.e. board-foot/year,
tons/year, etc.)
A tentative interpretation of the above described patterns is tight to the differences in defining
firm-level transformations. As described before (see Section 4.1.1), differences in framing the
the views of executives, different transformational paths can be linked to different types of
changes. In the same way, the implementation of a particular transformational path would
Additional research with larger population samples could confirm the patterns identified in this
transformation. The following subsection discuses the limitations and advantages of the
105
4.1.5 Future research
Further empirical studies with larger population samples could test the validity of the proposed
model to predict the selection of transformational paths in forest firms (Fig. 18). These studies
could contrast how executives of companies in more rapidly changing sectors such as online
retail or biotechnology industries select the transformative initiatives. These studies could
expand the geographic reach to other jurisdictions, as well as to analyze the views of multiple
stakeholders beside those of industry executives. Including a broader range of stakeholders can
more accurately reflect the diversity of opinion regarding the meaning of firm-level
transformations. Additionally, these studies can contrast how executives of companies in more
rapidly changing sectors such as online retail or biotechnology industries select the
transformative initiatives. Table 9, is a summary of potential research questions that can guide
106
Table 9. Research questions for future studies on forest business transformations
Organizational culture
What is the role of the company’s values in determining the type of strategies for change?
Do companies that have changed their product portfolios have a clear set of organizational
values?
Is there an organizational culture typology which can describe the different forest product firms
(traditional, risk-averse, innovators/game changers, etc.)?
Does the organizational culture of forest firms vary as a function of the type of product category
of the company (resources, commodities, value-added)?
Does the organizational culture of forest firms vary as a function of the ownership structure of
the company?
107
4.2 Study limitations
4.2.1 Limitations
There are four limitations of this study: i) extent to which the findings can be generalized
(exploratory nature), ii) small sample size, iii) access to potential research participants (senior
executives), and iv) constraints in presenting the data due to anonymity considerations.
The nature of this study is exploratory; therefore, its findings cannot be used to explain
transformational changes of companies beyond the ones analyzed here. The study did not test
any explicit hypothesis, nor did it use a randomized sample design. Instead, the study followed a
logic qualitative approach to understand the views of BC forest businesses’ senior executives
about the factors shaping transformations in their firms. The results of this study open new
samples.
Limitations (ii) and (iii) are closely related to each other. Access to high-level senior executives
surpassing the scheduled budget and time. This limits the inclusion of additional research
participants, thereby affecting the sample size of this study. In particular, I faced difficulties in
scheduling interviews with executives belonging to resource producers. The data from the 10
interviews was sufficient to address the objectives of this exploratory research, but it is likely
that having access to more executives from a greater range of companies would have revealed
additional findings.
Lastly, most of the questions and topics covered in the interviews dealt with commercially
sensitive information about the executives’ firms. This information was treated with extreme
108
caution, which in many occasions limited how the findings and patterns could be presented in the
thesis.
High-level executives are the industry professionals whose main job is to make sense of the
transformation processes of their firm. The semi-structured interviews designed in this study
could be further used to elicit sufficient and valuable information from these types of executives
Overall, the application of this method produced analyzable data and facilitated the identification
questions, followed by prompts and finalizing with a card-sorting exercise) proved to be useful
considerable detail. The application of the card-sorting exercise (Build your 2023 portfolio of
products, see Section 2.2.2) was particularly well-adopted by all the executives during the
interviews. The application of the card-sorting exercise facilitated the discussions about sensitive
topics such as the company’s strategic initiatives (past and future). In fact, two of the executives
after completing the exercise praised the technique and wanted to replicate the process with their
peers in the senior management team. There were executives who share their thoughts and made
Another advantage of using this framework was the possibility to have two different executives
from the same firm. This allowed identifying individual biases of executives, as well as
separating between the views of individual executives and the company’s perspectives.
Additionally, the narrative style used to present the results of this thesis can facilitate getting the
109
message across to a broader set of lectors, who have no science background. The field would
benefit from the replication and extension of these methodologies to additional organizations in
other jurisdictions.
4.3 Conclusions
Understanding what firm-level transformations are, why these processes occur and how they can
competitive advantages. My study used semi-structured interviews to elicit the views of forest
business’ executives about the transformational strategies adopted by their firms. Understanding
the views of these executives is an essential step in making sense of the forest business
transformations.
Analysis of the transcribed interviews shows that executives associate firm-level transformations
with the execution of seven different business strategies. These strategies or transformational
paths are: operational efficiency, diversification of the product mix, entry into the bio-economy,
and adoption of a customer-driven focus. Opinions varied among executives regarding which of
the seven transformational paths are essential to produce radical performance improvements in
their firms. However, executives belonging to the same firm expressed preferences for the same
or similar transformational paths. This occurred despite the executives having different
professional backgrounds. In like manner, executives’ preferences about adopting new product
offerings in their firms also varied from one firm to another, but were similar between executives
110
from the same firm (see Section 3.2.2). These findings reveal a firm-specific pattern in defining
Differences in framing the concept of firm-level transformations were linked to differences in the
types of changes that were considered transformative. Each transformation path can be linked to
path would require overcoming specific limitations (capital, technological, skills, etc.) and other
this study were similar with Davidson’s (1993) transition barriers, and expanded on the findings
of Cohen’s barriers to successful transformations (Cohen & Nikolakis, 2013). The findings also
revealed a number of transformation drivers or forces that can trigger transformation processes in
BC forest firms. Most executives linked the transformative efforts of their firms to respond to
external forces rather than internal. This predominance of external transformation drivers concur
with the findings of previous research (Cohen & Nikolakis, 2013; Kotter, 1995).
The firm-specific defining pattern was explained by a regulating effect of the organizational
culture between executives’ intentions and the selection of the transformative initiatives. The
firm’s leadership style, ownership structure and the organizational values were three main
elements explaining the organizational culture of forest firms (see Section 3.5). Considering the
insights from previous studies on transformational change and drawing on the patterns and
findings described above; I developed a conceptual model and a set of research questions that
can guide future research of forest business transformations (see Section 4.1.2). These studies
could also take advantage of the methodological approaches of this thesis, given their potential to
obtain strategic information and to identify individual biases (see Section 4.2.2).
111
The study of forest business transformations continues to be context- and firm-specific: however,
further studies with larger population samples would likely benefit from the methodologies
applied in this study and from the findings on the organizational culture theme. These findings
could progress in the development of testable hypotheses and general explanations on firm-level
112
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Appendices
The following questions were used as a general guideline for conducting interviews in this study.
Questions 1 and 2 were always retained in order to start the interviews. Similarly, the card-
sorting exercise and the three demographic questions were always asked at the final part of the
interviews. The sequence of the remaining questions varied as a consequence of how each
conversation evolved.
Set of Questions
Q1. What is your title and role in this company? Probe: How can you explain that ‘X’ function in
simple terms?
Q2. People in the industry often talks about the transformation of their companies, but what does
transformation means to this company?
Probe: Can you give me an example? Prompt: Is this the same as [becoming more
efficient/productive, changing product mix, moving up/down into the value chain,
expanding operations into other sectors, others]?
Q3. In your company what (if any) are the major factors driving business transformation?
Prompt: Speaking personally, what should be the motivations for pursuing those
transformations?
Q4. What risks/barriers do you see in the way of transforming your company?
Q5. What would facilitate business transformation in your view?
Prompt: You mentioned before ‘X’ factors, what about [knowledge/skills/legislation
changes], is there any particular [ _ ] that [you would need to develop/ will need to occur]
to facilitate this process?
Q6. I would just like to confirm that these are the categories of products your company is
currently producing.
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-The interviewer lists them according to the information available at the company’s web site. Categories
include: pulp, newsprint, softwood lumber, logs, timber, structural and non-structural panels, structural
composite lumber, others.
Is this information correct? Does it need to be expanded? Thanks for this information. I would
like to ask to you: What kind of forest products do you think your company will be producing ten
years from now?
Probe/prompt: If the forest management is at one end of the value chain and consumer
products are at the other end, where do you see your company creating its value 10 years
from now?
Q7. In your company, what is the process by which new business initiatives arise or are
implemented?
Prompt: Say for instance, ‘X’ initiative: how did that come about?
Probe: So as I understand, it would be the CEO/the board/senior management who
usually leads new initiatives?
Probe: Let me just to confirm this, in your role as a CEO (or CFO/VP), you are able to
formally participate within the process of proposing new initiatives. Is that right?
Q8. Exercise: Build your 2023 portfolio of products.
DQ. We are just about done; I just have a couple of Demographic Questions (DQ) for you.
DQ1. How many years have you worked in the forest industry?
DQ2. What other areas have you worked during these years?
(such as forest operations, human resources, resources conservation, marketing and sales, finance, wood
products processing, forest resources management, etc.,)
DQ3. If you have worked in a sector different from the forest sector please let me know
which one and for how long?
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Appendix B Complete theme/nodes classification
Number of Amount of
Theme/Node
executives codes
Position and role of executives
Formal title 10 10
Role 9 21
Meaning of transforming processes
Examples of transformations 8 25
Transformational paths
Operational efficiency 10 37
Diversifying product mix 10 32
Entry into the bio-economy 5 13
Customer-driven focus 4 11
Sustained growth 3 13
Market diversification 4 11
Diversifying geographic base of operations 3 13
Magnitude of changes 9 41
Temporal scale of transformations 10 34
Drivers of transformation
New business opportunities 10 41
Changing business environment 9 43
Pressure from competitors 8 29
Stagnant returns 7 23
Product substitution 6 14
Technological changes 5 10
Barriers to transformation
Access to capital 7 13
Legislation and government support 5 16
Attitudes toward change 5 12
Difficulties in making projections 5 11
High risk-reward 2 2
Limited resources 2 2
Skills and training 2 7
Lack of R&D culture 1 3
Ineffective collaboration 1 2
Risks of doing transformations
Failure to implement 6 13
No improvement or competitive advantage 5 8
Capital risk - undercapitalization 4 6
Short-term underperformance 1 2
Losing trust of shareholders 1 2
Enablers of transformation
Entrepreneurial mindset 9 35
Support from leadership and board 9 17
Networking 8 28
Attract the right people 8 17
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Policy and Legislation 7 21
Continuous benchmarking 7 15
Access to attractive sources of financing 6 19
Training and support infrastructure 5 6
Long-term view 5 17
Identify the right timing 5 14
Partnerships 4 13
Communicate targets-vision-values 4 8
Tolerate mistakes 2 2
Transform at incremental steps 1 4
Current product mix
Company 1 2 9
Company 2 1 13
Company 3 2 14
Company 4 2 10
Company 5 2 10
Company 6 1 11
Organizational culture and governance 10 83
Ownership structure 7 16
Emergence of strategic initiatives
Who drive the new initiatives 10 37
Board's role in new initiatives 8 18
Strategic planning process 9 33
Views-preferences of future products
2023 Portfolio of Products 10 72
Uncertainties and questions 10 41
General beliefs 10 37
Position in the value chain 9 31
Problems with forecasting 3 5
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