Learning Organization.Harvard Business Review? www.hbrorg, Toot Kit cmpmeccnpigeneee 1S YOurs a Learning where they need to foster knowledge sharing, idea Org: anization? development, learning from mistakes, and holistic thinking. by David A. Garvin, Amy C. Edmondson, and Francesca Gino Included with this fll-text Harvard Business Review article: | 1 Article Summary ‘The Idea in Brief—the core idea The Idea in Practice—putting the idea to work 2 Is Yours a Learning Organization? 10 Further Reading Alist of related materials, with annotations to guide further exploration ofthe article's ideas and applications Reprint Roso3ti ee ‘This document shored usa oly by Papusskan PMS 1@PMBS.AC 10), Copying or osting = on inking capi, Plesse contac, “cnianeservenegnanardbvoreis ro 80D Si Oth fr addon catestougher competion. technology ad vances, and shifting custome preferences, |tSmore crucial than ever that companies ‘become leaming organizations tn lear: ing oxganization. employees continually crete, acquite, and uansfer frowledge— helping their company adapt tothe un redictabe faster than rials can But few companies have achieved this ideal Why? Managers dont know the pre ve sep for buldling a learning onganize tion. And they lack tools fo assessing whether their teams are lezzning or how that lesming s benetiing the company ‘Garvin, Edmondson, and Gina propose 3 sdluton Fest, understand the hue buicing blocks required for creating leatring orga izations: 1)a supportive envionment, 2) ‘concrete leaming processes, and 3) euder- ship that reinforces learning Then use the authowsclagnostc tool. the Learing Organization Survey to determine Pow ‘wel your team, department or enti com any performing vith each building block, 8y assessing performance on each bukiing block you pinpoint ares needing improve ‘meet, moving your company that much loser tothe learning organization ideal Toot kit eee reer Is Yours a Learning Organization? in Practice_ Garvin, Edmondson, and Gine recommend these practices for enhancing leaning in your team er company. IDENTIFY AREAS FOR IMPROVEMENT Sy assessing how well your team, unit, oF company exhibits the defining characters ies for each bulling block. you identity areas for improvement. Comping perfor mance of different units within your organ Zzaon or against industty berichmatks aso reveals useful information » barple: [AE uropean pubic uty sscoveredt compared with val companies, was weak in aeas such as openness t9 new ideas, eperimentaton, and inlormation terse Ths pattern wast uneapected fr a pubic tility that had long enjoyed monogoles ina seall umber of markets But the com any wanted to step up expansion ingosnew ‘deogranhic ares Its performance 235655 ‘ment provided evidence that torch this strategic goat would need to concentiste heavily on changing ts esiabished cukure Understand the Three Building Blocks ofa Learning Organization Building lock | Distingushing Characteristics ‘supportive tearing mployees fminorty wewpoints + Racognize eval of ‘opposing eas + Toke riksand exploce the unkown + Take time 9 teview oxganizatonal processes Concrete tearing processes ‘tearm. companyhas formal pocestes for. Generating collecting, serpin, 30d demir stormation Gathering inttigence on competitors customers and technological ends Developing employees il The organization’ leaders Demonstrate wilingnessto Teadenhip thotseinforces fearing + Signal the wnpoctance of spending nme on probe ‘deflection andistening ng Expenienting with new offerings ientiying and solving pots entertain alternative vewpeints identification, knowledge teste, + Engage in active questioning Example (Chien Hospital ane Clincs| + Feel safe disagreeing with others, |i Minnesota lnsttuted anew ashing naive questions owning ‘upto mistakes, and presenting policy of"bameles reporting The policy erlaced threatening texins errors“tavesigaons" with ess emotional aden ones Caccider “analys} People began Wenig 6 reporting sks wethout fear of blame. And the numberof preventable deaths and nesses Seeeseed. Through ns After Action Review process the US. Army concts 2 systematic debiefeg ater every mission, projet 0: cic act. Pateipans ask, ‘What od we set out do?” What acialy happened?“ and Wai da we do nex time? Lessons mave quick up and down the cham of command and lateral thcugh websites Results are cocfed Harvey Golub former CEO of Amenan Exxess. challenged managersto tank cieatively by {asking them questions such as, “What alternatives have you considered” and"What are your premives™His questions generated the open-minded discussion crucial toleaming. ‘hs docament is authored or ute ely by Ferpsisoan PBS (PERPUSTAKAAN PBS AID). Copying a posting ian ntngeneat of opin. Pease BAGS ‘tsiomersencegararcbsiess or ot 900 S89 085 er none ares k k I \ IUsing this assessment tool, companies can pinpoint areas where they need to foster knowledge sharing, idea development, learning from mistakes, and holistic thinking Toot Kit Is Yours a Learning Organization? by David A. Garvin, Amy C. Edmondson, and Francesca Gino Leaders may think that getting their oxgani zations to learn is only a matter of articulating a clear vision, giving employees the right incentives, and providing lots of training. ‘This assumption is not merely fawed—it's risky in the face of intensifying competi tion, advances in technology, and shifts in ‘customer preferences. Organizations need to learn more than ever as they confront these mounting forces. Each company must become a learning orga nization. The concept Is not a new ane. It Aourished in the 1990s, stimulated by Peter M. Senge’s The Fith Discipline and countless ‘ther publications, workshops, and websites, ‘The result was a compelling vision of an orga nization made up of employees skilled at teating acquiring, and transferring knowledge. These people could help their firms cultivate tolerance, foster open discussion, and think holistically and systemically. Such teaming organizations would be able to adapt to the unpredictable more quickly than their ‘competitors could. Manas RUSHES REVIEW = eARCH 2008 Tis documents auorind fo use oly by Perpustakaan PMS (PERPUSTAKAANGIORESS ACD) Comyn o posing a ningaantt cant Pease crn ‘isomercensceQhurarcusiness.rgo 800-960-006 fr atonal copies. ea Unpredictabitity is very much still with us. However, the ideal of the learning orga- nization has not yet been realized. Three factors have impeded progress. First, many of the ext discussions about learning orgs nizations were pzcans to a better world rather than concrete prescriptions. They ‘overcmphasized the forest and. paid little attention (0 the trees. Asa result, the assoc ated recommendations proved difficult to Iimplement—managers could not identify the sequence of steps necessary for moving forward. Second, the concept 35 aimed at ‘CEOs and senior executives rather than at ‘managers of smaller departments and units where critical organizationat work is done. ‘Those managers had no way of assessing ‘how their teams’ eaming was contributing to the organization as a whole. Third, stan- dards and tools for assessment were lacking. Without these, companies could declare victory prematurely or claim progress without delving. into the particulars or comparing themselves accurately with others. oSDavid A. Garvin Gaarunhbs ed) the C Roland stensen Poessor of Busnes Admiuseaton andthe chao {he Teaching and Leasing Center and Amy. Edmondson (2edinondsong bse the Novartis Fafa of Leadeiship and Management and the ch the doctoral programs. at ava Busnes School in Boston, Francesca Gino (ainoSadien ene eds asin asia profesor of rgarzaiensl behavior and theo st CCamegieNlon Users Fea Im this article, we address these deficiencies by presenting a compreherisve, concrete sur: ‘ey instrument for assessing Fearning. within an organization. Built fiom the ground up, ‘our too! measures the learning that occurs in a department, office, project, or division~ an organizational unit of any’ size that has ‘meaningful shared or overlapping work acti ities. Our instrument enables your company to compare itself against benchmark scores gathered from other firms; to make assess ‘ments across areas within the organization (how, for, example, do different groups learn Telative to one another?}, and to took ‘dceply within individual units. n each case, ‘the power is in the comparisons, nat in the absolute scores. You may find that an area your organization thought was a strength is actually less robust than at other organiza tions. In effec, the tool gives you a broader, ‘more grounded view of how well your company learns and how adepty it refines its strategies and processes. Each organization, and each unit within it, needs that breadth of perspec: tive to accurately measure its learning against that ofits peers. Organizational research over the past two {decades has revealed three broad factors that are essential for organizational learning and adaptability. a supportive learning enviro ment, concrete learning processes and prac tices, and leadership behavior that provides reinforcement. We refer to these asthe building locks ofthe learning organization. Each block and its discrete subcomponents, though vital to the whole, are independent and can be measured separately. This degree of granular analysis has not been previously availabe, Our tool is structured around the three building blocks and allows companies to mea- sure their learning. profciencies in great detail. As you shall see, organizations do not Perform consistently across the three blocks, ‘nor across the various subcategories and subcomponents. That fact suggests that differ: ent mechanisms are at workin each building block area and that improving performance imeach fs likely to require distinct supporting activities. Companies, and units within them, will need to address their particular strengths and weaknesses to equip themselves for long 1s Yours a Learning Organization? = Toot Kit term Jearing. Because all three building blocks are generic enough for managers and finns of all types to assess our tool permits organizations and units to slice and dice the data in ways that are uniquely useful to them, ‘They can develop profiles of their distinctive approaches to learning and then compare themselves with a benchmark group of re spondents. To reveal the value of all these ‘comparisons, lt’ look in depth at each of the building blocks of a learning organization Building Block 1: A supportive learning environment. An environment that supports, Jeaming has four distinguishing characteristics. Psychological safety. To learn, employees cannot fear being belittled or marginalized when they disagree with peers or authority figures, ask naive questions, own up to mis: takes, or present 2 minority viewpoint. In- stead, they must be comfortable expressing ‘their thoughts about the work at hand Appreciation of differences. Learning occus ‘when people become aware of opposing ideas. Recognizing the value of competing func- tional outlooks and alternative worldviews in- creases energy and motivation, sparks fresh ‘thinking, and prevents lethargy and drift. Openness to new ideas. Learning isnot simply about correcting mistakes and calving problems, tis aiso about crafting novel approaches Employees should be encouraged to take risks and explore the untested and unknown, Time for reflection. Al too many managers are judged by the sheer number of hours they work and the tasks they accomplish When people are too busy or overstressed by deadiines and scheduling pressures, how: ever, their ability to think analytically and creatively is compromised. They become less able to diagnose problems and learn from their experiences. Supportive learning environ ‘ments allovr time for a pause in the action and encourage thoughtful review of the organization's processes “To change a culture of blame and silence about ertors at Children’s Hospitals and Clinics of Minnesota, COO Julie Morath instituted ‘new policy of “blameless reporting” that en couraged replacing threatening terms such as “errors” and “investigations” with less emo- tionally laden terms such as “accidents” and “analysis” For Morath the culture of hospitals must be, as she told us, “one oF everyone ‘working together to understand safety, identify "HOMERS ISTEY SESS 27 epuaan Puss (PERFUSTAKARNEPESAC0) Copia pti anit oop Peas AGE? ‘tnremveeGranrbnnere ro 80 ee earl capsWhen leaders demonstrate a willingness to entertain alternative points of view, employees feel emboldened to offer new ideas. risks, and report them with out fear of ‘blame” The result was that people started to collaborate throughout the organization to talk about and change behaviors, policies, and systems that put patients at risk. Over time, these learning activities yielded measur- able reductions in preventable deaths and illnesses at the institution. Building Block 2: Concrete learning processes and practices. A leaming organi zation is not cultivated effortlessly. It arises from a sesies of concrete steps and widely distributed activities not unlike the workings ‘of business processes such as logistics, iling, ‘order fulfillment, and product development Learning procesies involve the generation, collection, interpretation, and dissemination ‘of information. They include experimentation to develop and test new products and ser- vices; intelligence gathering to keep track ‘of competitive, customer, and technological trends; disciplined analysis and interpretation to identify and solve problems; and educa tion and training to develop both new and established employees. For maximum impact, knowledge must be shared in gjstematic and clearly defined ‘ways Sharing can take place among individuals, groups, or whole organizations. Knowledge ‘can move laterally or vertically within a frm. ‘The knowledge-sharing process can, for in stance, be internally focused, with an eye ‘toward taking corrective action. Right after a project is completed, the process might call for pose-audits or reviews that are then shared with others engaged in similar tasks. Alera. tively, knowledge sharing can be externally oriented—for instance, it might include regularly scheduled forums with customers or subjecemmatter experts to gain their perspectives fon the company’s activities or challenges. Together, these concrete processes ensure ‘hat essential information moves quickiy and efficiently into the hands and heads of those wha need it. Perhaps the best known example of this approach is the US. Army's After Action Review (AAR) process, now widely used by ‘many companies, which involves a systematic debriefing after every mission, project, or crit cal activity. This process is framed by four simple questions: What did we set out to do? ‘What actually happened? Why did it happen? 1s Yours a Learning Organization? + Toot kit What do we do next time? (Which activities do we sustain, arid which do we improve?) In the army, lessons move quickly up and down the chain of command, and laterally through sanctioned websites. Then the results are cod ified by the Center for Army Lessons Learned, or CALL. Such dissemination and codification of learning is vita for any organization. Building Block 3: Leadership that rein- forces learning. Organizational learning is strongly influenced by the behavior of lea cts. When leaders atively question and listen to employees—and thereby prompt dislogue and debate—people in the institution fee! encouraged to learn. If leaders signal the im- portance of spendingtime on problem ident fication, knowledge transfer, and reflective postaudits these activities ate likely to flourish, When people in power demonstrate through their own behavior 2 willingness to entertain altemative points of view, employees fee] emboldened to offer new ideas and options Harvey Golub, former chief executive of Amecican Express, was renowned for his ability to teach employees and managers. He Pushed hard for active reasoning and forced managers to think creatively and in unex: pected ways, A subordinate observed that he often “came at things from a different angle” to ensure that conventional approaches Were not accepted without first being seruti nized, “I am far less interested in people having the right answer than in their thinking, ‘about issues the right way" Golub told us. “What criteris do they use? Why do they think the way they do? What alternatives Ihave they considered? What premises do they have? What rocks are they standing on?” His questions were not designed 0 yield particular answers, but rather to gener- ate truly open-minded discussion, ‘The three building blocks of organizational Teaming reinforce one another and, to some degree, overlap. Just as leadership behaviors help create and sustain supportive learning, environments, such environments make it easier for managers and employees toexceute concrete learning processes and practices smoothly and efficiently. Continuing the virtuous circle, concrete processes provide ‘opportunities for leaders to behave in ways that foster learning and to cultivate that behavior in others. "OS SSSI 8 iy By epacakaan PMES (PERPUSTAKAANEPLGS A) Copying o potng ean iningeont ol apg Please AGA islmersorce @hurerdbvinessrge000-68-088 fy oaon cops | |15 Yours a Learning Organization? + Toot Kit Assess the Depth of Learning in Your Organization This diagnostic survey, which you {ke online, is designed to help you eterenine how well your company functions asa learning organization, The complete interactive version, 2valable 3 los hosed, inches alt the selrassessment statements tothe sight they are divided into thee se tions, each representing one building block ofthe learning erganization in ‘the fst 9 blocks, your task i 0 ‘ate, on a seven-point scale, how accu ‘ately each statement describes the ‘organizational unit in which you work, {nthe third block, your tsk isto rate how often the managers (or manager) to whom you report exemplify the betiavior deserved ‘Oynamnic scoring online synthesizes your ratings (some are reverse scored because they rofleet undesirable be Inavios) and yields an estimated score for each building biock and subcom- Ponent. synthesized scores ae then Converted 10. 2er010300 scale for ease ‘of comparison with other people in _your unit and ether units in your orga ization In adlition, you can compare {your scores with benchenark data that appear in the folowing sidebar. Building Block r: Supportive Learning Environment Psychological Safety to this uni tis easy co speak up about winat i on your mind I you make a mistake inthis unit it soften etd against you." People inthis unit are usually ‘comfortable talking about problems and disagreements, People inthis unitare eager to share {information sbourt what oes nd doesnt work. keeping your cards cose to your vest {isthe best way to get ahead inthis unit > Appreciation of Differences Differences in opinion are wekcome In this unit Unless an opinion is consistent wth winat mos people in this unit believe it won't be valved * This unt tends tohandle dterences of pinion privately or olin, rather than ddeessng them directly with the group” Inthis unit, people ace open to ater ‘osive nays of getting work done Openness to New Ideas In this unt, people value new ideas Unies an idea has been around for long time, no one inthis unit wants tohear it lo this ut, people are interested in better ways of ding things, this unit, people often cesist lumtried approaches * Tirme for Reflection People in this unit are ove stessed* Despite the workload, people inthis nit Find time t review how the work isgoing Inthis unit schedule pressure getsin the way of doing 2 good job * Io this unit, people are too busy to ‘vest time in improvement ® “Theceissirmpy ao time fr relection ie this unis Building Block 2: Concrete Learning Processes and Practices Experimentation This unt experiments frequently ith new ways of working, This uit experiments frequently with new product or service offerings ‘This unit has a formal process for “conducting and evaluating experiments ‘or new ies This unit frequently employs proto. {ypes or simulations when trying aut ew ideas, leformation Collection This unit systematically collects {nfrmatien on + competivrs + economic and social trends + technological weds This unit equently compares its performance with that of| competitors + bestimlass organizations Analysis Ths unit engages in productive «conflict and debate during discussions ‘This uit seeks out cissentiog views during discusscens, This wot never cevsswelbetabisted perspectives during discussions * This unit requently deaties and discusses underlying assumptions that right affect key decisions. This unit never pays attention to diferent views during discussions * Education and Training Newly hized employees inthis unit receive adequate training Experienced employees this unit + periodic taining and tesining updates + Waning when switching to new position + training when new initiatives are launched In this unit, training is value. In this unit, ime is made available for edveation and waining activities, Information Transfer “This unithas forums for meeting with and teatning trom + experts irom other departments, teams, oF divisions + experts from outside the organize + customers and clients + supplies ‘This unit eeputary shares inform ton with networks of experts within the organization This unit regulary shares informs {ion with networks of experts outside tie organization This unit quiekly and accurately communicates new knowledge 1 key decision makers “PRE AEESVISS ABLE 278 erp PUBS PEREUSTACAANGPNES AC 1) Copp pong an atngemet ot cope. ase AGES ‘isteme sence @hararasiness aig 800-996 O80 or hoa cone } | | |1s Yours a Learning Organlzation? « Toot Kit This unit egularly conducts post audits ane afteration eviews, Building Block 3: Leadership ‘That Reinforces Learning >My managers inte input from others in iscussons. >My managers acknowiedge their ‘ow limitations with respect to know edge information, or expertise Uses for the Organizational Learning Toot Oar online diagnostic tool is designed to help you answer two questions about the organiza tional unit that you lead or in which you work: "To what extent is your unit functioningas a learning organization?” and “What are the relationships among the factors that affect learning in your unit® People who complete the survey rate how accurately a series of brief, descriptive sentences in each of the three building blocks of earning describe their orga nization and its leaming culcure. For the is cof statements in the complete survey, informa tion about where to find it online, and details about how it works see the exhibit “Assess the Depth of Learning in Your Organization” ‘There are two primary ways to use the survey Firs, an individual can take it co get a quick sense of ber work unit or project team. Second, several members of a unit can each Complete the survey and average their score. Either way, the next step is to compare ind vidual or group self evaluations with overall benchmark scores from our baseline group of ‘organizations. The benchmark data are strati- fied into quarties—that is, the botwom 25%, the nest 25%, and so on—for each attribute, arrayed around & median (see the exhibit ‘Benchmark Scores for the Learning Organi zation Survey"), Once you have obtained your ‘own scores online, you can identify the quar tile in which your scores fall and reflect on how they match your prior expectations about where you stand. Having compared individual or unit scores with the benchmarks, i's possible to identify areas of excellence ané opportunities for improvement. f employees in multiple units wish to take the survey, you can also make the comparisons unitby-unit or companytice, Even if just two people from different parts ‘My managers ask probing questions My managers listen attentively My managecs encourage multiple points of view My managers provide time, re- soutces, and venues for identifying problems and exganiational challenges, My manages provide time, sources, and venues fr efecting and Improving on pat performance. of a firm compare scores, they can pinpoint cultural differences, commotalities, and things to learn from one another. They may also dis- cover that their unit—or even the company lags behind in many areas. By pooling individual and unit scores, organizations as a whole can begin to address specific problems Holding Up the Mirror at Eutilize Consider how managers from a major Euro ‘pean public utility, which we wil call Eutilize, used the survey 10 assess their company’s readiness for and progress in becoming. a learning organization. inthe summer of 2006, 19 midlevel managers took the survey. Before learning their scores, participants were asked toestimate where they thought Butilize would stand in relation to the benchmark resuks from other firms. Virtually all the participants predicted average or better scores, in keeping with the company’s espoused goal of using know! edge and best practice transfers as a source of competitive advantage. But the results did not validate those predictions. To Uh reat surprise, Eutilize’s managers rated themselves below the median baseline scores Jn almost all categories. For example, out of possible scaled score of 100, they had 68 on leadership, compared with the median benchmark score of 76. Similarly, they scored 58 on concrete learning. processes (versus the median benchmark of 74) and 62 on supportive learning environment (ver. sus the median of 71). These results revealed to the Eutilize managers that integrating systematic learning practices into their or- ganization would take considerable work However, the poorestscoring measures, such as experimentation ang time for reflection, were common to both Eutilize and the baseline organizations. So Eutlize was not My managers erticze views differ: ent from their owe. *Reversescored items For the complete interactive two), including scoring, goto loshbsedu "AY AER RANE SERS MABE 787 Po pustakaan PRES PERPUSTAMAANEPMBS ACD) Conying opting san ntingeman of copyight lease AGES ‘stonersenceghervarduneess.r 0 800-908-086 fr aon copes —‘unusual in where it needed to improve, just In how much, ‘The portrait that emerged was not unex: pected for a public utility that had long enjoyed monopolies ina small number of ‘markets and that only recently had estab lished units in other geographic areas. Eutilize’s Scores in the otto quartile on openness to new ideas, experimentation, conflict and debate, and information transfer were evidence ‘hat changing the company’s established ‘culture would be along hal 1s Yours a Learning Organization? - Toot Kit Eutilize’s managers also discovered the degree to which their mental models about their own ways of working were inaccurate For example, they learned that many people in their firm believed that “analysis was an area of strength for Eutilize, bat they inter- preted analysis tobe merely number crunching. “The survey results helped them to understand ‘the term analysis more broadly-—to think about the degree to which people test as sumptions, engage in productive debate, and seek out dissenting views. Each of those areas Benchmark Scores for the Learning Organization Survey ur baseline data were derived from surveys ‘of farge groups of senior executives ina v3- Flety of industries who completed an eight ‘week general management program at Harvard Business School We first conducted the survey inthe spring 0f 2006 with 100 executives in order to evaluate the statistic properties of the survey and assess the underlying constructs, That autumn we surveyed another 125 senior executives toute itn Bucs an Toi onten | sacant Sabeomponets asour benchmark data After you've taken the complete survey atlos.hbsedu, compace the average scores for people in your group with the bench mark scores inthe following chart. your _ groups scores fll ator below the median in a particular building block or subcomponent especially ifthey are i the bottom quart Consider initiating an improvement effort ln that area, One possibility isto assemble Hake Sees Th ‘Supportive Leoriag Eneansiont + Foci satety ses |e | ae [7 Aowrecinionstitioeness 14-86 | 57-00 | et fos73 | + Openness to nemieas 28-20 so | 91-95 Tie fr retstion saa | ov [ove anos ensanmer compete won| on [ras Concrete Learning Processes and Practices + Eaprinantation 9 n [ra + Inlrmatoncaleton 20 oo [ares = bostes 156 | r06 + Edscationaeining 25-68 co | or9s + nlermatin antes a8 nv frat eorngercesseseenponte 31-62 eae Leadership Tha Reinterens Learsing Composite forth wanes fos | [ine quate 2 team to brainstorm specific, conct strategies for enhancing the atea of weakness, Jn any building block or subcomponent here yaur group's scores fall above the ‘median—especiallyifthey are in the top und, but no one can specify precisely how they were manufociured because — fartsans wece responsible. By contrast, atthe highest levels of manvfacturing ‘edge ll aspects of production are known and understood. All materials and ssing variations are articulated and accounted foe, with rules and procedures ery Contingency. Here an example would be 2 lights out” fully aucomnated fae nat operates for mary haurs without any human intervention, this framework secitis eight stages of knowiedge. Fom lowest to high ccognizing prototypes (whatisa product? secogeizing atributes within proto (ability to define some conditions which proces gives good output). fiseriminating among atrbates ‘attributes ae important? Expects able performance, process designed by ‘expert, but technicians can perform i) 6, Recognizing and dieriminating between cantingencie (production pro. cess can be mechanited and monitored ‘manually 7.Cortaling contingencies (process ifer about relevance of paterns, can be automated) perators ae offen Vained trough Understanding procedures and com nticeships). trolling contingencies (process com feasuring attributes (some key at- pletely understood), bate measured, measures Maye ative and relative), Adapted from work by Ramchandran ocally controting atibutes repeat Jaibuumar and Roger Bohn? BEM SE RSKIS eI cy Mereacaan PAGS (PERPUSTAKAAN PUES ACO) Conyng posing i an etingernt ony Pee Snes? ‘tslomerseweednanarubusass ger 000 88-008 aso cops slelclslatsiatalatstellainlaleltaiatetalatl iding a Learning Organization the highest levels, and it went down hard” ‘Once the frst focused factory was running smHoothly-—it seized 25% of the marker in to ‘years and hele its edge in reliability for over a ‘decade—Copeland butt four more Factories in ‘quick succession. Diggs assigned members of the initial project to each factory's design tearm to ensure that early learnings were not lost; these people later roiated into operating as senments. Today focused (actores remain the comerstone of Copeland's manufacturing ssrategy and a continuing source ofits cost and quality advantages. Whether they are demonstration projects : like Copeland's or ongoing programs like At b legheny Cudlum’s, all forms of experimenta: tion seek the same end: moving from super iat knowledge to deep understanding. At its simplest, the distinction is between knowing how things are done and knowing why they oc ‘cur, Knowing how is partial knowkedge; it is rooted in norms of behavior, standards of prac tice, and settings of equipment. Knowing why is more fundamental: R captures undertying I Causeandbeffec reationhips and accommo: dates exceptions adaptations, and unforeseen vents The ability to conta temperatures and pressures to align gains fico an form sit- icon steel i an example of knowing hoe = derstanding the chemi and physical process that produces the aliganents knowing why Further distinctions are possible, as the in- sere “Stages of Knowieer” suggests. Operat | ing knoviledge can be arayed ina hierarchy, moving from limited understanding and the ability to make few distinctions to more com plete understanding in which all contingem es are anticipated and controlled. In this con teat, experimentation and problem solving foster learning by pushing organizations vp the hierarchy, from lower to higher stages of knowledge. 3. Learning from past experience. Compa- nies must review their successes and failures, sess them systematically, and record the les- sons in a form that employees find open and accessible. One expert has called this process the “Santayana Review! citing the famous phi losopher George Santayana, who coined the phrase "Those who cannot remember the past are condemned to repeat it” Unfortunately, oo many managers today are indifferent, even hostile, tothe pas, and by failing to re- fect on it, they tet valuable Inowledge escape.sssful programs re an incentive 1m that favors risk & gusts A study of more than 150 new products con- cluded that “the knowledge gained from fait esis] often instrumental in achieving subse ‘quent successes... the simplest ters, failure is the ultimate teacher=* IBM's 360 computer series, for example, one of the most popular and profitable ever built, was based on the technology of the failed Stretch computer that preceded it in this case, as in many others, fearing occurred by chance rather than by ‘careful planning. A few companies, however, have established processes that require their ‘managers to periodically think about the past and eam from their mistakes. Boeing did so immediately after its dtfcul ties with the 737 and 747 plane programs, Both planes were introduced with much fanfare and also with serious problems. To ensure that the problems were not repeated, senior managers commissioned a highevel employee group, called Project Homework, to compare the de- velopment processes of the 737 and 747 with those ofthe 707 and 727, two ofthe company’s ‘most profitable planes. The group was asked 10 Aevelop a set of “lessons leamed” that could be Uused on furwe projects. After working for UUnee yeas, they produced hundreds of recom ‘mendations and an inch thick booklet. Several ‘members ofthe team were then transferred 10 the 757 and 767 startups, and guided by experi cence, they produced the most successful, 110 free launches in Bocing’ history. Other companies have used a similar retro spective approach. Like Boeing, Kerox studied its product development process, examining three troubled products in an effort to under stand why the company’s new business init tives failed so often. Arthur D. Lite, the com sulting company, focused dn its pat Successes Senior management invited ADL consultants from around the world to a two-day “jambo- ree; featuring booths and presentations docu ‘menting a wide range of the company’s most ‘successful practices, publications, and tech riques. British Pecroleum went even further and established the post project apprasal unit to review major investment projects, write up ‘case studies, and derive lessons for planners that were then incorporated into revisions of the company’s planning guidelines. A five- person unit reported to the board of directors and reviewed six projects annually The bulk of the time was spent in the feld interviewing, ‘managers This type of review is now con Building 4 Lean 19g Organization ducted regularly atthe project level. [tthe cart of this approach, one expert has observed, is @ mindset that..cnables compa: nies to recognize the value of productive fai ure as contrasted with unproductive success. A Productive failure is one that leads to insight, lunderstanding, and thus an addition «0 the commonly held wisdom of the organization, ‘An unproductive success occurs when some thing goes well, But nobody knows how of why" 18M's legendary founder, Thomas Wat 00, Sr, apparently understood the distinction well. Company lore has it that a young man- ager, after losing $10 million in a risky venture, ws called into Watson's office. The young man, thoroughly intimidated, began by saying, 1 guess you want my resignation” Watson re plied, "You can be serious. We just spent $10 million educating you" Fortunately, the learning process need not be so expensive. Case studies and post project reviews lke those of Xerox and Biitish Petro- eum can be performed with litte cost other ‘than managers’ time. Companies can also en list the help of faculty and students at focal col leges or universities; they bring fresh perspec tives and view internships and case studies as ‘opportunities to gain experience and increase their owm learning. A few companies have es tablished computerized data banks to speed Up the learning peocess. At Paul Revere Life fn surance, management requires_all_ problem solving teams to complete short registration forms describing their proposed projects if they hope to qualify for the company's award ‘Program. The company then enters the forms into its computer sytem and can immediately retrieve a lsting of other groups of people who have worked or are working on the topic, along with a contact person. Relevant experi- ence is then just a telephone call aay A.Learning from others. OF course, not all Fearing comes from reflection and selfanalysi Sometimes the most powerful insights come from looking outside one’s immediate envi ronment to gain a new perspective. Enlight ‘ened managers know that even compan completely diferent businesses can be fertile sources of ideas and catalysts for creative thinking. At Giese organizations, enthusiastic borrowing is eplacing the “not invented here” syndrome. Milken calls the process SIS, for "Steal Ideas Shamelessly* the broader term for itis benchmarking. UES SRSA USE Sy lg akan Ps (PERPUSTAKAANGPHBS ACID) Copying o posing an ntingement of copyright Piensa coASsi® tablonersentoutanorebusinessrgo 00:9 808 fr asstors copies, | | | | | iing used lessons ‘earlier model lopment to help luce the 757 767—the most essful, error-free ches in its history. According to one expert,"benchmarking is an ongoing investigation and learning expert ence that ensures that best industry practices, are uncovered, analyzed, adopted, and imple mented"? The greatest benefits come from studying practices, the way that work gets done, rather than results, and from involving Tine managers in the process, Almost any thing can be benchmarked. Xerot, the con cepts creator, has applied i to billing, ware> housing, and automated manufacturing. ‘Milliken has been even more creative: in af inspired moment, it benchmarked Xecox’s ap. proach to benchmarking. Unfortunately, there is still considerable con fusion about the requirements for successful ‘benchmarking. Benchmarking is not“industial tourism)” series of ad hoe visits to companies that have received Gavorable publicity or won ‘quality awards Rather, it a disciplined pro- ess that begins witha thorough search to det Lily best practice organizations, continues with ‘careful study of one's cw practices and pesfor mance, progresses through systematic ste visits and interviews, and concludes with an analysis, ‘of results development of recommendations, and linplementation. While time concuming, the process need not be terribly expensive [ATAC's Benchmarking Group estimates that a rmoderate-siaed project takes four to six months and incurs outoFpocket costs of $20,000 ‘(when personnel costs are included, the figure isthvee to four times higher). Z Benctumasking fs one way of gaining an out side perspective; another, equally fertile source of ideas is customers. Conversations wath cus- tomers invariably stimulate learning; they are afterall, experts in what they do, Customers ‘an provide up-to-date product information, ‘competitive comparisons, insights into chang: ing preferences, and immediate feedback abou service and pattems of use. And comps. nies need these insights at all levels, from the ‘executive suite to the shop floor. At Motorola, members ofthe Operating and Policy Coramit. tee, including the CEO, meet personally and ‘on a regular basis with customers. At Wor ‘ington Stee, all machine operators make pe riodic, unescorted trips to customers’ factories todiscuss their needs, Sometimes customers can't articulate their needs or remember even the most recent rab lems they have had with a product or service, 1 hats the case, managers must observe them Building a Learning Organization Jn action. Xerox employs a number of anthro- pologists at its Palo Alto Research Center to observe users of new document products in their offices Digital Equipment has developed an interactive process called “contextual i _quirythatis used by software engineers to ab- serve users of new technologies as they go about their work. Milken has created “fst delivery teams" that accompany the st ship: ment of al products;team members follow the product thiough the customer's production ‘rocess to see how it isusee and then develop {ideas for further improvernent, ‘whatever the source of outside idea, learn {ng wil only occur in a receptive environment. ‘Managers can't be defensive and must be open tocritcism or bad news This sa difficult chal lenge, but itis essential for success. Companies ‘that approach customers assuming that “we must be right, they have to be wrong” or visit ‘other organizations certain that “they can't teach us anything” seldom learn very much. Learning organizations, by contrast, cultivate the art of open, attentive listening. 5. Transferring knowiedge. For learning to bbe mote than a local affair, knowledge must spread quickly and efficiently throughout the organization. Ideas carry maximum impact when they are shared broadly rather than held ina few hands. A variety of mechanisms sput this process, including written, oral, and visual reponts site visits ané tours, personnel rota: tion programs, education and training pro ‘rams, and standardization programs. Fach thas distinctive strengths and weaknesses. Reports and tours are by ar the most popu lar mediums. Repors serve many purposes: they summarize findings, provide checklists of os and don'ts, and describe important pro- cesses and events. They cover a multitude of topics, ftom benchmasking studies to account- ing conventions to newly discovered marketing techniques. Today written reports are often supplemented by videotapes, whieh offer {greater immediacy and fidelity. ‘Tours are an equally popular means of trans- ferving knowledge, especially for large, multigt visional organizations with multiple sites. The mos effective tours are tailored to different ‘audiences and needs. To introduce its manag. ers to the distinctive manufacturing practices of Now United Motor Manufacturing. Inc (NUM, is joint venture with Toyota, Gen- ral Motors developed a series of specialized ‘Sear Satta id USE By TATE akoan PUBS (PERPUSTAKAANEIPMES AC 1).Cooying opting sa nkingement a copyright. ease BASE? ‘aatomererice harvardbvsiess. oo 90 S68 086 nao copes | |husiastic borrowing placing the “not anted here” syndrome. {ours Some were geared to upper and middle managers, while others were aimed at lower ranks. Each tour described the policies, prac tices, and systems that were most relevant to tat level of management. Despite their popularity, reports and tous ate relatively cumbersome ways of transfer ‘ing knowledge. The grity details that lie be hind complex management concepts ate diffi cult to communicate secondhand, Absorbing facts by reading thesn or seeing them demon stated is one thing; experiencing them per sonally i quite another. As a leading cogni tive scientist has observed “I is very dificult to become knovsledgeable in a passive way Actively experiencing something is consider ably more valuable than having it described For this reason, personnel rotation programs ate one of the most powerful methods of twanserring knowledge 1m many organizztions, expertise is held o- «ally in a particularly killed computer tecly nician, perhaps, a sawvy global brand mas ager, ora division head with a track record of successful joint ventures. Those in daily con tact with these experts benefit enormously Som their skis, but their eld of intuence is relatively narrow. Transferring them to differ: ent parts of the organization helps share the ‘wealth. Transfers may be from division to di vision, department to department, or facility {o faiy; they may involve senior, middle, oF firstlevel managers. A supervisor experi- ‘enced in just-in-time production, for example, ‘might move to another factory to apply the methods there, of a successful division man- ager might transfer to 2 lagging division to in- vigorate it with already proven ideas. The EO of Time Life used the latter approach when he shifted the president of the com- pany’s music division, who had orchestrated several years of rapid growth and high profits through innovative marketing, to the presi- dency of the book division, where profits ‘were flat because of continued reliance on tre Aitonal marketing concepts. Line to staff transfers are another option ‘These are most effective when they allow expe- rienced managers to distill what they have learned and diffuse ¢ across the company in the form of new standards, polices, oF training programs. Consider how PPG used just such a ‘ransfer to advance its human resouwee prac: Lees around the concept of hit commitment Building 2 Lesening Organization ‘work systems. In 1986, PPG constructed a new Aoatglass plant in Chehalis, Washington; it ‘ployed a radically new technology a well as nnovations i human resource management that were developed by the plant manager and his staff. All workers were organized into small, selfmanaging teams with responshility for work assignments, scheduling, problem solving and improvement, and peer review, ARer sev ‘eral years running the factory, the plant man ager was promoted to director of human re sources for the entre glass group. Drawing on his experiences at Chehalis, he developed a training program geared toward firstlevel supervisors that taught the behaviors needed to manage employees in a participative, self managing environment. Asthe PPG example suggests, education and {taining programs are powerful tools for trans: ferting knowledge. But for maximum effective ‘ess, they must be linked explicitly to imple- ‘mentation. All too often, trainers assume that ‘now knowledge will be applied without taking conctete steps to ensure that trainees actually {ollow through, Seldom do trainers provide op- portunities for practice, and few programs con: sciowsly promote the application of their ‘teachings after employees have retuned 10 their jobs. Xerox and GTE are exceptions As noted eat Ticr, when Xeiox introduced problem-solving techniques to its employees inthe 1980s, every. ‘one, from the top to the bottom of the organi ation, was taught in small departmental or d- visional groups led by their immediate superior. Aer an introduction to concepts and techniques, each group applied what they feamed toa reabife work problem. tna similar spirit, GTE’ Quality: The Competitive Edge program was offered to tears of businessunit Drestients and the managers reporting to them. At the beginning of the 3-day course, ‘each team received a request from a company officer to prepare a complete quay plan for their unit, based on the course concepts, Within 60 days. Discussion periods of two to three hours were set aside during the program 0 that teams could begin working on their plans. after the teams submitted their reports, the company officers studied ther, and then the teams implemented them. This GTE pro- ‘fram produced dramatic improvements in ‘Quality, including a recent semifinalist spot ia the Baldrige Avards Ses SEOSAISY YUE ANY TIS nan PUSS (PERPUSTAKAANGPMES ACID) Copying 0 posing an kngerrent copyrignt Plese EBs” ‘wlomerserscetahervardbusness 5 60080 0886 for ood conesstomers can provide petitive comparisons immediate feedback out service. And panies need these ightsat all levels, from executive suite to the ‘pfloor. ‘The GTE example suggests another impor- tant guidetine: knowledge is mote likely to be transferred effectively when the right incen- tives are in place. Ifemployees know that their plans wall be evaluated and implemented—in ‘ther words, that their leaming will be ap: plied progress is far move likely. At most com. panies, the status quo is well entrenched; only if managers and employees see new ideas as being in their own best interest will they ac cept them gracefully. AT&T has developed a creative approach that combines strong incen tives with information sharing. Called. the CChalrman's Quality Award (CQA),it isan inter nal quality competition modeled on the Bald Tige prize but with an important twist: awards are given not only for absolute performance (sing the same L000-point scoring system as Baldrige) but also for improvements in scoiaig fom the previous year Gold, silver, and bronze Improvement Awards are given to units that have improved thei scores 200,150, and 100 points, respectively, These awards pro- vide the incentive for change. An accompany” ing Pockets of Excellence program simplifies knowledge transfer. Every year, it identifies ‘very unit within the company that has scored at least 60% of the possible points in each award category and then publicizes the nares of these unite using writen reports and elec ‘wonie mail Measuring Learning ‘Managers have long known that “if you can’t ‘measure it, you can't manage it" This maxim is as true of learning as it is of any other corpo: rate objective. Traditionally, the solution has been “learning curves” and "manufacturing. rogress Functions" Bath concepts date back to the discovery, during the 1920s and 1930s, that the costs of airframe manufacturing fel predictably with increases in cumulative vol: lume. These increases were viewed as proxies for greater manufacturing knowledge, and most early studies examined their impact on the costs of direct labor Later studies ex panded the focus, looking at total manufactse- Ing costs and the impact of experience in other industries, including shipbuilding, oil refining, and consumer electronics. Typically, learning, tates were in the 80% to 85% range (meaning, that with a doubling of cumulative produc. tion, costs fell to 20% to 85% oftheir previous. level) although there was wide variation, Building a Learning Organization Firms like the Boston Consulting Group ‘ised these ideas toa higher level the 19705. Drawing on the logic of learning curves, they argued that industries asa whose faced “expert fence curves” costs and prices that fell by pre- sictable amounts as industries grew and their total production increased. With this observa: tion, consultants suggested, came an icon law ‘of competition. To enjoy the benetits of expert ence, companies would have to rapidly ‘crease their production ahead of competitors tolower prices and gain market shave Both learning and experience curves are stil widely used, especially inthe aerospace, defense, and electronics industries. Boeing, for instance, has established learning curves for every work station in is assembly plant: they assist in monitoring productivity, deter mining work flows and staffing levels, and set ting prices and profit margins on new air planes. Experience curves are common in Semiconductors and consumer electronics, where they are used to forecast industry costs and prices, For companies hoping to become learning “organizations, however, these measures ar in complete. They focus on only 2 single measure (of output (cost oF price) and ignore leaming that affects other competitive variables, like quality, delivery, or new product introductions. “They suggest only one possible learning driver otal production volumes) ane ignore both the possibility of learning in mature industries, where output is flat, and the possibilty that teaming might be driven by other sources, such as new technology or the challenge posed by competing products. Perhaps most impor- tant, they tell us litle about the sources of learning or the levers of change ‘Another measure has emerged in response to these concerns Called the "halfife" curve, ‘was originally developed by Analog Devices, a leading semiconductor manufacturer, as a way (of comparing internal improvement rates. A halflife curve measures the time it takes t0 achieve a 50% improvement in a specified pee- formance measure. When represented graphi- cally the performance measure (defect rates, ‘on time detivery time to market) is plotted on the vertical axis, using a logarithmic scale, and the time scale (days, months, years) i plowed horizontally. Steeper slopes then represent faster leaming (sce the insert “The Half Life ‘Cune" for an illustration) BRERA ET SAR runs werousTanNrues. A) Cory a gi aatgoe sie eee EASEThe logic is straightforward. Companies, di visions, or departments that take less time 10 improve must be learning faster than their peers In the long run, their short learning cy- les wil translate into superior performance. The 50% target is 2 measure of convenience it was derived empirically from studies of su cessful improvement processes at a wide range ‘of companies. Halflfe curves are also foxble. Unlike Teaming and experience curves. they ‘work on any output measure, and they are not contined to costs or prices. tn addition, they are easy to operationalize, they provide a simple ‘measuring stick, and they allow for ready com: parison among groups. Yet even halflife curves have an important weakness: they focus solely on results. Some \ypes of knowledge take years to digest, with ‘ew visible changes in performance for long pe ods Creating a total qualty-cultue, for in stance, or developing new approaches 10 prod: ‘uct development are dificuk systemic changes. Because oftheir long gestation periods halve ‘curves or any other measures focused solely on. results are unlikely t0 capture any shoctrun leaming that has occurred. A more campeehen- sive framework is needed to track progress. Building 3 Learniag Organization Organizational learning can usually be traced through thice overlapping stages. The first step is cognitive. Members of the organi Zation are exposed ta new ideas, expand theit mowiedge, and begin to think different. The second step is behavioral. Employees begin to intemalize new insights and alter their behav. for. And the third step ts performance improve ment, with changes in behavior leading to ‘measurable improvements in results: superior quality, better delivery, increased market share, or other tangible gains. Because cagni tive and behavioral changes typically precede improvements in performance, a complete learning audit must include al three Surveys, questionnaires, and interviews are useful for this purpose. AC the cognitive level, they would focus on atitudes and depth of un: derstanding, Have employees truly understood. the meaning of slfditection and teamwork, ‘oF ate the terms stil unclear? At PPG, a tearm of human resource experts periodically audits every manufacturing plant, including, exten- sive interviews with shop-foor employees, 0 ensure thatthe concepts are well understood, Have new approaches to customer service boon fully accepted? At its 1989 Worldwide The Half-Life Curve Analog Devices has used halt-lifecurves to compare learning rate led eventually to the best absolute per: the performance of its divisions. Here monthly data formance. Divisions D, £, and G have been far less ‘on customer service are graphed for seven divisions, successful, with litele or no improvement in on-time Division C is the clear winner: even though it started service over the period. with a high proportion of late deliveries, its rapid ‘On-Time Customer Service Performance ~ Monthy Date ogut 1987- lly 1988) Pexeage 9 15 4 Noimproreneat 60+ 2 eS Hol in Moats ine required i rede ne hres by ocho} See Ry St,“ crigTe Ky Maine oan” sea Magento Sp R72 NEO SE RSM GAS cA ye SP aan PRBS (PERPUSTAKMANGEMES ACD) Coying or os a ntingement of opie Pease PAGE? ‘asomersenscetarrebusiess.r e 800-989-088 fr nol conteting organizations vate the art of open, tive listening. agers must be open ticism ‘Marketing Managers! Meeting, Ford presented participants with a series of hypothetical situa UHons in which customer complaints were in conftct with shortterm dealer or company profit goals and asked how they would re spond. Surveys like these are the first step to- ward identifying changed attitudes and neve ays of thinking. To assess behavioral changes, surveys and ‘questionnaires must be supplemented by di rect observation. Here the proot is in the do: ing, and there is no substitute for seeing em ployecs in action. Domino's Pizza uses “mystery shoppers” to assess managers’ com: Imjunent to customer service at is individual stores; Li. Bean places telephone orders with its owm operators to assess service levels. Other companies invite outside consultants to vst, attend meetings, observe employees in action, and then report what they have leamed. 1 many ways, this approach mirrors that of ex: aminers for the Baldrige Award, who make severaldday site visits 10 semifinalists to see whether the companies’ deeds match the ‘words on their applications. Finally, a compechensive learning audit aio measures performance. HalFlfe curves or other performance measures are essential for ensuring that cognitive and behavioral ‘changes have actually produced results. With ‘out them, companies would lack 2 rationale forinvesting in learning and the assurance that learning was serving the organization’ ends, irst Steps Learning organizations are not bullt over- night. Most successful examples ae the prod ‘ucts of carefully cultivated attitudes, commit ments, and management processes that have accrued slowly and steadily over time. stil, some changes can be made immediately, Any ‘company that wishes to become a learning or ganization can begin by taking a few simple steps The first step is to foster an environment that-is conducive to leasing, There must be time for reflection and analysis, to think about strategic plans, dissect customer needs, assess ‘current work systems, and invent new prod- ‘ucts Learning i difficult when emplayees are hharied oc rushed; it tends to be driven out by the pressures of the moment. Only if top man agement explicitly frees up employees’ time for the purpose does learning occur with any ing 2 Learning Organization frequency. That time vill be doubly productive ‘i employees possess the skills to use it wisely, Training in brainstorming, problem solving, cvaluating experiments, and other core learn ing skills is therefore essential ‘Another powerful lever isto open up bound aties and stimulate the exchange of ideas. Boundaries inhibit the flow of information; they keep individuals and groups isolated and reinforce preconceptions. Opening up bound= aries, with conferences, meetings, and project ‘teams, which either cross organizational levels or link the company and its customers and sup: Dilers, ensures a fresh flow of ideas and the ‘chance to consider competing perspectives. General Electric CEO Jack Welch considers this tobe sucita powerful stimulant of change that the has made “boundarylessness" comerstone ‘or the company’s strategy forthe 19903. (Once managers have established a more sup portive, open enviconment, they can create Teaming foruss. These are programs or events designed with explicit learning goals in mind, and they can take a variety of forms strategic reviews, which examine the changing compet tive environment and the company’s product portfolio, tehinology, and market pestioning; systems audits, which review the health of laige, cross-functional processes. and delivery systems; internal benchmarking reports which ‘identify and compare bestin class activities within the organization; study missions, which are dispatched to leading organizations arousd the world to better understand their perfor ‘mance and distinctive skills; and jamborees or symposiums, which bring together customers, suppliers, outside experts, or internal groups to share ideas and lear from one another. Each (of these attivites fosters learning by requiring cmployees to wrestle with new knowledge and consider its implications. Each can also be tai lored to business needs. A consumer goods company, for example, might sponsor a study mmission to Europe to Team more about distr: bation methods within the newly unified Com: mon Market, while a hightcchnology com: pany might launch a systems audit to review its new product development process. Together these efforts help to eliminate barriers that impede learning and begin to move learning higher on the organizational agenda. They also suggest a subtle shift i fo cus, amay from continuous improvernent and toward a commitment to learning. Coupled SRS REAEEY 2 AY Fetelatzan PU (PERPUSTAKAANGPMBS ACID) Copying or posing an ntirgenent of cpg Pasco A? vce @horvarcsinss fj BOOSEEOHE or teat capes. | f I | | i |‘proved knowledge is 2 likely to be sferred effectively 1tthe right incentives n place. with 2 better understanding of the “three Ms ‘the meaning, management, and measurement (of learning this shift provides a solid founda: tion for building learning organizations References 2. Peter M. Senge, The Fifth Discipline (New York: Doubleday, 1990), p 2 Mujra Nonaka, “The Knowledge Creating Company Harvard Business Review, Novem ber-December 199, 9.97 4 Robert Howard, “The CEO as Organizorionol ‘Architect-An Interview with Xerax’s Paul Allaire” Harvard Business Review, September-October 1992, p. 106 4. Modesto A. Maidique ond Billie fo Zier, "The New Product Learning Cycle," Research Policy, Vol. 14, No. 61985). pp. 299, 209 5. Frank R. Gulliver, “Post Project. Appraisals Pay” Harvard Business Reviews, March-April ing a Learning Organization 1987, p. 128. 6, David Nadler, "Even Failures Can Be Produc: fave," New York Times, April 23, 1989, Se. 39.3 2. Robert C. Comp, Benchmarking: The Search for industry Best Practices that Lead to Supe- or Performance (Miwaukee: ASQC Quality Press, 1989), p12. Roger Schank, with Peter Childers, The Cre: ative Antitude (ew York: Macraillan, 1988) 9.9 9. Ramchandtan Joikumar and Roger Bahin,-The ‘Development oftteigent Systens for Industriat Use: A Conceptual Feamework,” Research on Technological innovation, Management. and Policy, Vo. 3 (1986), pp. 18 Reprint 92402 “To order, see the next page ‘0F call 800-988-0886 oF 617-783-7500 oF goto ww.hbeoxg Zac SNEED AE cy Patan Pus (PERPUISTAKAANGIPMES ACID} Coping or pacing san Fningement ot copyright. Please Eis ‘tstomererscnGhorvrdvomness.o 1 EODE6-006 br addons copessee FIFTH DISCIPLINE THE ART AND PRACTICE OF THE LEARNING ORGANIZATION Peter M. Senge es cunnency 0 Dousteoay NewYork London ‘Toronto Sydney Auickland |2 DOES YOUR. ORGANIZATION HAVE A LEARNING DISABILITY? FS large corporations live even half as long as a person. In 1983, a Royal Dutch/Shell study found that one-third of the firms that had been in the Fortune “500” in 1970 had vanished. Shell estimated that the average lifetime of the largest industrial enterprises is less than forty years, roughly half the lifetime of a human being! Since then this study has been repéated by EDS and several other corporations, and served as a point of reference in James Collins’ Good to Great, published in 2001. The chances are fifty-fifty that readers of this book will see their present firm disap- pear during their working career. In most companies that fail, there is abundant evidence in advance that the firm is in trouble, This evidence goes unheeded, however, even when individual managers are aware of it. The organ- ization as a whole cannot recognize impending threats, understand the implications of those threats, or come up with alternatives, Perhaps under the laws of “survival of the fittest,” this continual death of firms is fine for society. Painful thougli it may be for the18 THE FIFTH DISCIPLINE employees and owners, it is simply a turnover of the economic soil, redistributing the resources of production to new companies and new cultures. But what if the high corporate mortality rate is only a symptom of deeper problems that afflict all companies, not just the ones that die? What if even the most successful companies are poor learners—they survive but never live up to their potential? What if, in light of what organizations could be, “excellence” is actually “mediocrity”? It is no accident that most organizations learn poorly. The way they are designed and managed, the way people’s jobs are defined, and, most importantly, the way we have all been taught to think and interact (not only in organizations but more broadly) create funda- mental learning disabilities. These disabilities operate despite the best cfforts of bright, committed people. Often the harder they try to solve problems, the worse the results. What learning does occur takes place despite these learning disabilities—for they pervade all organizations to some degree. Learning disabilities are tragic in children, especially when they go, undetected. They are no less tragic in organizations, where they also go largely undetected. The first step in curing them is to begin to identify the seven learning disabilities: 1. “I AM MY POSITION” We are trained to’ be loyal to our jobs—so much so ‘that we confuse them with our own identities. When a large American steel company began closiag plants in the early 1980s, it offered to train the dis- placed steelworkers for new jobs. But the training never “took”; the workers drifted into unemployment and odd jobs instead. Psychologists: came in to find out why, and found the steelworkers suffering from acute identity crises. “How could I do anything else?” asked. the workers. “I am a lathe operator.” When asked what they do for a living, most people describe the tasks they perform every day, not the purpose of the greater enter- prise in which they take part. Most see themselves within a system over which they have little or no influence. They do their job, put in their time, and try to cope with the forces outside of their control. Consequently, they tend to see their responsibilities as limited to the boundaries of their position. Many years ago, managers from a Detroit auto maker told me of | | | | | |Does Your Organization Have a Learning Disability? 19 stripping down a Japanese import to understand why the Japanese were able to achieve extraordinary precision arid reliability at lower Cost on a particular assembly process. They found the same stan- dard type of bolt used three times on the engine block. Each time it mounted a different type of component. On the American car, the same assembly required three different bolts, which required three different wrenches and three different inventories of bolts—making the car much slower and more costly to assemble, ; Why did the Americans use three separate bolts? Because the design organiza- tion in Detroit had three groups of engineers, each gesponsible for “their” component only. The Japanese had one designer responsible for the entire engine mounting, and probably much more. The irony is that each of the three groups of American engineers considered their work successful because their bolt and assembly worked just fine. 7 When people in organizations focus only on their position, they have little sense of responsibility for the results produced when all positions interact. Moreover, when results are disappointing, it can be very difficult to know why. All you can do is assume that “some- one screwed up.” 2. “THE ENEMY IS OUT THERE” A friend once told the story of a boy he coached in Little League, who after dropping three fly balls in right field, threw down his glove and marched into the dugout. “No one can catch a ball in that darn field,” he said. 7 There is in each of us a propensity to find someone or something outside ourselves to blame when things go wrong. Some organiza- tions elevate this propensity to a commandment: “Thou shalt always find an external agent to blame.” Marketing blames manu- facturing: “The reason we keep missing sales targets is that our quality is not competitive.” Manufacturing ‘blames engineering. Engineering blames marketing: “If they'd only quit screwing up our designs and let us design the products we are capable of, we'd be an industry leader.” The “enemy is out there” syndrome is actually a by-product of “I am my position,” and the nonsystemic ways of looking at the world that it fosters. When we focus only on our position, we do not see how our own actions extend beyond the boundary of that position.20 THE FIFTH DISCIPLINE When those actions have consequences that come back to. hurt us, we misperceive these new problems as externally caused. Like the person being chased by his own shadow, we cannot seem to shake them. The “Enemy Is Out There” syndrome is not limited to assigning blame within the organization. During its last years of operation, the once highly successful People Express Airlines slashed prices, boosted marketing, and bought Frontier Airlines—all in a frantic attempt to fight back against the perceived cause of its demise: increasingly aggressive competitors. Yet, nonce of these moves arrested the company’s mounting losses or corrected its core prob- lem, service quality that had declined so far that low fares were its only remaining pull on customers. For years American companies who had lost market share to for- eign competitors blamed cheap foreign wages, labor unions, govern- ment regulators, or customers who “betrayed us” by buying prod- ucts from someone else. “The enemy is out there,” however, is almost always an incomplete story. “Out there” and “in here” are usually part of a single system. This learning disability makes it almost impossible to detect the leverage we can use “in here” on problems that straddle the boundary between us and “out there.” x 3. THE ILLUSION OF TAKING CHARGE Being “proactive” is in vogue. Managers frequently proclaim the need for taking charge in facing difficult problems. What is typically meant by this is that we should face up to difficult issues, stop wait- ing for someone else to do something, and solve problems before they grow into crises. In particular, being proactive is frequently seen as an antidote to being “reactive”—waiting until a situation gets out of hand before-taking a step. But is taking aggressive action against an external enemy really synonymous with being proactive? Once, a management team in a leading property and liability insurance company with whom we were working got bitten by the Proactiveness' bug. The head of the team,-a talented vice president for claims, was about to give a speech proclaiming that the company wasn’t going ‘to get pushed around anymore by lawyers litigating more and mofe claims settlements. The firm would beef up its own legal staff so-that it could take more cases through to trial by ver- dict, instead of settling them out of court.Does Your Organization Have a Learning Disability? 2 Then we and some members of the team began to look more sys- temically at the probable effects of the idea: the likely fraction of cases that might be won in court, the likely size of cases lost, the monthly direct and overhead costs regardless of who, won or lost, and how long cases would probably stay in litigation. Interestingly, the team’s scenarios pointed to increasing total costs because, given the quality of investigation done initially on most claims, the firm simply could not win enough of its cases: to offset the costs of increased litigation. The vice president tore.up his speech. All too often, proactiveness is reactiveness in disguise. Whether in business or politics, if we simply become more aggressive fighting the “enemy out there,” we are reacting—regardless of what we call it. True proactiveness comes Srom seeing how we contribute to our own problems. It is a product of our way of thinking,-not our emo- tional state. 4. THE FIXATION ON EVENTS ‘Two children get into a scrap on the playground and you come over to untangle them. Lucy says, “I hit him because he took my ball,” Tommy says, “I took her ball because she won’t let me play with her airplane.” Lucy says, “He can’t play with my airplane because he broke the propeller.” Wise adults that we are, we say, “Now, now, children—just get along with each other.” But are we really any dif- ferent in the way we explain the entanglements: we find ourselves caught in? We are conditioned to see life as a series of events, and for every event, we think there is one obvious cause. Conversations in organizations are dominated by concern with events: last month’s sales, the new budget cuts, last quarter’s earn- ings, who just got promoted or fired, the new product our competi- tors just announced, the delay that just was announced in our new product, and so on. The media reinforces an emphasis on short- term events—after all, if it’s more than two days old it’s no longer “news.” Focusing on events leads to “event” explanations: “The Dow Jones average dropped sixteen points today,” announces the newspaper, “because low fourth-quarter profits were announced yesterday.” Such explanations may be true, but they distract us from seeing the longer-term patterns of change that lie behind the events and from understanding the causes of those patterns. Our fixation on events is actually part of our evolutionary pro-22 THE FIFTH DISCIPLINE gramming. If you wanted to design a cave person for survival, abil- ity to contemplate the cosmos would not be a high-ranking design criterion. What is important is the ability to see the saber-toothed tiger over your left shoulder and react quickly. The irony is that, today, the primary threats to our survival, both of our organiza- tions and of our societies, come not from sudden events but from slow, gradual processes: the arms race, environmental decay, the erosion of a society’s public education system, and decline in a firm’s design or product quality (relative to competitors’ quality) are all slow, gradual processes. Generative learning cannot be sustained in an organization if people’s thinking is dominated by short-term events. If we focus on events, the best we can ever do is predict an event before it happens so that we can react optimally. But we cannot learn to create. 5. THE PARABLE OF THE BOILED FROG Maladaptation to gradually building threats to survival is so perva- sive in systems studies of corporate failure that it has given rise to the parable of the “boiled frog.” If you place a frog in a pot of boil- ing water, it will immediately try to scramble. out. But if you place the frog in room temperature water, and don’t scare him, he’ll stay put. Now, if the pot sits on a heat source, and if you gradually turn up the temperature, something very interesting happens. As the temperature rises from 70 to 80 degrees F., the frog will do nothing. In fact, he will show every sign of enjoying himself, As the temper- ature gradually increases, the frog will become groggier and grog- gier, until he.is unable to climb out of the pot. Though there is nothing restraining him, the frog will sit there and boil. Why? Because the frog’s internal apparatus for sensing threats to survival is geared tosudden changes in his environment, not to slow, grad- ual changes. The American automobile industry has had a long-standing case of boiled frog. In the 1960s, it dominated North American sales, That began to.change very gradually. Certainly, Detroit’s Big Three did not see Japan as a threat to their survival in 1962, when the Japanese share of the U.S. market was below 4 percent. Nor in 1967, when iit was less than 10 percent. Nor in 1974, when it was under 15 percent. By the time the Big Three began to look critically i i tDoes Your Organization Have a Learning Disability? 2B at their own practices and core assumptions, it was the early 1980s, and the Japanese share of the American market had risen to 21.3 percent. By 1990, the Japanese share was approaching 25 percent, and by 2005 it was closer to 40 percent.” Given the financial health of the U.S. car companies it is unclear whether this particular frog will ever regain ‘the strength to pull itself out of the hot. water. Learning to see slow, gradual processes requires slowing down our frenetic pace and paying attention to the subtle as well as the dramatic. If you sit and look into a tidepool, initially you won't see much of anything going on. However, if you watch long enough, after about ten minutes the tidepool will suddenly come to life. The world of beautiful creatures is always there, but moving a bit too slowly to be seen at first. The problem is our minds‘aré so locked in one frequency, it’s as if we can only see at 78 rpm; we can’t see any- thing at 33-1/3. We will not avoid the fate of the frog until we learn to slow down and see the gradual processes that often pose the greatest threats. 6. THE DELUSION OF LEARNING FROM EXPERIENCE The most powerful learning comes from direct experience. Indeed, we learn cating,.crawling, walking, and communicating through direct trial and error—through taking an action and seeing the con- sequences of that action; then taking a new and different action. But what happens when we can no longer observe the consequences of our actions? What happens if the primary consequences of our actions are in the distant future or in a distant part of the larger sys- tem within which we operate? We each have a “Jearning horizon,” a breadth of vision in ‘time and space within which we assess our effectiveness. When our actions have consequences beyond our learn- ing horizon, it becomes impossible to learn from direct experience. Herein lies the core learning dilemma that confronts organiza- tions: we learn best from experience but we never directly experience the consequences of many of our most important decisions. The most critical decisions made in organizations have systemwide conse- quences that stretch over years or decades. Decisions in R&D have first-order consequences in marketing and manufacturing. Investing in new manufacturing facilities and processes influences quality and delivery reliability for a decade or more. Promoting the right people24 THE FIFTH DISCIPLINE into leadership positions shapes strategy and organizational climate for years. These are exactly the types of decisions where there is the least opportunity for trial and error learning. Cycles are particularly hard to see, and thus learn from, if they last longer than a year or two. As systems-thinking writer Draper Kauffman, Jr., points out, most people have short memories. “When a temporary oversupply of workers develops in a particular field,” he writes, “everyone talks about the big surplus and young people are steered away from the field. Within a few years, this cre- ates a shortage, jobs go begging, and young people are frantically urged into the field—which creates a surplus. Obviously, the best time to start training for a job is when people have been talking about a surplus for several years and few others are entering it. That way, you finish your training just as the shortage develops.”” Traditionally, organizations attempt to surmount the difficulty of coping with the breadth of impact from decisions by breaking themselves up into components. They institute functional hierar- chies that are easier for people to “get their hands around.” But, functional divisions grow into fiefdoms, and what was once a con- venient division of labor mutates into the “stovepipes” that all but cut off contact between functions. The result: analysis of the most important problems in a company, the complex issues that cross functional lines, becomes a perilous or nonexistent exercise. 7. THE MYTH OF THE MANAGEMENT TEAM Striding forward to do battle with these dilemmas and disabilities is “the management team,” the collection of savvy, experienced man- agers who represent the organization’s different functions and areas of expertise. Together, they are supposed to sort out the complex cross-functional issues that are critical to the organization. What confidence do we have, really, that typical management teams can surmount these learning disabilities? All too often, teams in business tend to spend their time fighting for turf, avoiding anything that will make them look bad personally, and pretending that everyone is behind the team’s collective strat- egy—maintaining the appearance of a cohesive team. To keep up the image, thiey seek to squelch disagreement; people with serious reservations ‘avoid stating them publicly, and joint decisions are watered-down compromises reflecting what everyone can live with,Does Your Organization Have a Learning Disability? 25 or else reflecting one person’s view foisted on the group. If there is disagreement, it’s usually expressed in a manner that lays blame, polarizes opinion, and fails to reveal the underlying differences in assumptions and experience in a way that the team as a whole could learn from. : “Most management teams break down under pressure,” writes Harvard’s Chris Argyris—a longtime student of learning in man- agement teams. “The team may function quite well with routine issues. But when they confront complex issugs that may’ be embar- Tassing or threatening, the ‘teamness’ seems to go to pot.”* Argyris argues that most managers find collective inquiry inher- ently threatening. School trains us never to admit that we do not know the answer, and most corporations reinforce that lesson by rewarding the people who excel in advocating their views, not inquiring into complex issues. (When was the last time someone was rewarded in your organization for raising difficult questions about the company’s current policies rather than solving urgent prob- Jems?) Even if we feel uncertain or ignorant, we learn io protect ourselves from the pain of appearing uncertain or ignorant. That very process blocks out any new understandings which might threaten us. The consequence is what Argyris calls “skilled incom- petence”—teams full of people who are incredibly proficient at keeping themselves from learning. , . DISABILITIES AND DISCIPLINES. These learning disabilities have been with us for a long time. In The March of Folly, Barbara Tuchman traces the history of devastating large-scale policies “pursued contrary to ultimate self-interest,”? from the fall of the Trojans through the U.S. involvement in Vietnam. In story after story, leaders could not see the conse- quences of their own policies, even when they were warned in advance that their own survival was at stake. Reading between the lines of Tuchman’s writing, you can see that the fourteenth-century Valois monarchs of France suffered from “I am my position” dis- abilities—when they devalued currency, they literally didn’t realize they were driving the new French middle class toward insurrection. In the mid-1700s Britain had a bad case of boiled frog. The British went through “a full decade,” wrote Tuchman, “of mounting conflict with the [American] colonies without any [British official]26 THE FIFTH DISCIPLINE sending a representative, much less a minister, across the Atlantic . +. to find out what was endangering the relationship . . .”* By 1776, the start of the American Revolution, the relationship was irrevoca- bly endangered. Elsewhere, Tuchman describes the Roman Catholic cardinals of the fifteenth and sixteenth centuries, a tragic manage- ment “team” in which piety demanded that they present an appear- ance of agreement. However, behind-the-scenes backstabbing (in some cases, literal backstabbing) brought in opportunistic popes whose abuses of office provoked the Protestant Reformation. More recently, historian Jared Diamond tells similar stories of arrogance and blindness leading to demise, only this time the vic- tims are entire civilizations. From the Mayas to the Easter Islanders, Diamond shows how powerful dominant empires collapse, often in remarkably short periods of time. Like failing organizations, most of those inside the empire sense that all is not quite right, but their instincts are to more strongly defend their traditional ways of doing things rather than to question them—let alone develop the capacity to change those ways.’ We live in no less perilous times today, and the same learning dis- abilities persist, along with their consequences, The five disciplines of the learning organization can, I believe, act as antidotes to these learning disabilities. But first, we must see the disabilities more clearly—for they are often lost amid the bluster of day-to-day events.