LEARNING ORGANIZATION

Many large companies, especially those that have been dominant in their field, are now finding
themselves having to take steps toward becoming learning organizations. A good example is AT&T,
which has made major changes since it was forced to divest itself of local operating companies in 1984.
While the company has acquired the national cash register firm and Macaw Electronics over the last
couple of years, this has not stopped the firm from redefining the way it does business and changing
polices and procedure to improve efficiency. For example, in the past each division at AT&T used to
operate semi independently of the others. Now the executives of all major business groups meet several
days each month to discuss their various operations and learn how to work together synergistically. This
is a totally new way of doing things for the firm. Top management has also set up teams to explore and
develop areas that they believe offer the greatest opportunity for the firm. Each team consists of
representatives from all four-business groups. The company’s CEO recently explained the logic behind
this new arrangement by noting, “ The intent is to mix it up, get people talking, and figure out businesses
and structures that AT &T as a company will need”.

IBM is also making strides toward becoming a learning organization. The company has recognized and
opened up lines of communication among all units. Lou Gerstner, the CEO, has created an eleven-
member executive panel, composed primarily of operating chiefs, and charged them with finding ways of
better working together. He has also replaced the firm’s three-member corporate executive council with a
worldwide council of Thirty-four executives. This team meets four to five times annually to compare
practices, problems, and solutions and to thrash out company wide initiatives. The objective of these
changes at IBM is to reduce the bureaucratic structure and force managers to learn new ways of doing
things.

In addition to implementing structural changes, many firms are now rethinking the way they train their
managers. To teach managers how to be more flexible and how to handle unique situations, firms such as
General Electric, Motorola, Weyerhaeuser, and IBM are building their own in-house universities or
closely monitoring the training efforts of those they bring in from the outside. For example, at
Weyerhaeuser, the giant wood and Paper Company, an in-house leadership institute for managers has
been created. The firm has put 1240 of its managers through the program and reports that its wood
products unit is more profitable than ever. At General Electric, in-house training is focused very heavily
on action learning, managers are divided into teams and taught how to gather information on business-
related problems and present it to senior-level managers. Groups of GE executives are divided into teams
and given free rein to go anywhere they want to gather the needed information. Some travel
internationally during the thirty-day period they have for handling the assignment. Then, led by
consultants, in-house trainers, and university professors, they organize, analyze, evaluate, and present
their information. As a result of such programs, GE managers are learning how to rethink their old
approaches to problem solving and to turn their enterprise into a learning organization that is able not
only to cope with the ever-changing world of business, but also to anticipate and learn from change.

Questions:
1.Why do firms such as AT&T and IBM need to be learning organization?
2.How are the approaches used by AT&T and IBM similar? Identify and explain two similarities.
3.Why are learning organizations developing greater use of in-house training and management
development programs?