The Learning Organization and the Learning Manager

THE LEARNING ORGANIZATION and THE LEARNING MANAGER

In the days when strategsc planning meant plotting a bunch of growth-share matrices, it was widely assumed that organizational learning occurred in lockstep with the number of units produced. As more units were produced by a firm, it became more proficient at producing them and costs dropped correspondingly. This was one reason why BCG plotted relative market share on its matrix. The firm that held the largest share had presumably produced more units, and therefore had learned how to lower costs the farthest. Now that the Japanese have demonstrated both that a low-share competitor can learn faster and that learning can improve quality as well as reduce cost, U.S. managers are forced to rethink their whole notion of learning. In the emerging view, the kind of changes made by both GE and Xerox are successful be­cause they greatly increase the rate of organizational learning.
Ray Stata of Analog Devises has argued that an organization’s rate of learning is the key to its competitiveness. Specifically, he argues that “At Analog Devises, and many other U.S. companies, product and process innovation are not the primary bot­tleneck to progress. The bottleneck is management innovation.” After deciding to tackle the issue of management innovation at Analog Devises, Stata discovered that organizational learning drove management innovation, “I see organizational learning as the principal process by which management innovation occurs. In fact, I would argue that the rate at which individuals and organizations learn may become the only sustainable competitive advantage.” This conclusion focused his attention on how to use the strategic planning process and a total quality program to increase the rate of learning in his company. Incidentally, how he arrived at his conclusions is an example of the new approaches managers are beginning to take in their quest for organiza­tional learning. Stata joined a group of managers working with two MIT professors to develop and exchange ideas in this field. For example, Stata’s recognition of the key role played by organizational learning can be traced to the influence of fellow group member Arie deGeus, director of group planning at Shell International.
A learning organization is an adaptive organization. It is able to rethink its structure and function and redefine itself in response to market challenges and cus­tomer needs. The need for faster and smarter change is obvious: Many managers be­lieve adaptability is the key to success, and are making it the cornerstone of their strategy. This requires pushing both authority and initiative down into the organiza­tion, encouraging people to think harder and learn quicker-and giving them the freedom to do so. But as Stata also observes, “Organizations can learn only as fast as the slowest link learns,” and, in many cases, the slowest link is management.

THE LEARNING MANAGER

In 1983, around the time Xerox began its total quality drive, Professor Elliot Carlisle of University of Massachusetts at Amherst wrote a story-a parable actually-about a harried manager who bumps into a successful mentor-like manager on an airplane and learns from him a new way of thinking about management. Here is what the men­tor had to say about thinking:

“You know,” he mused, “when you get right down to it, it’s almost impossible to get any real thinking done at work. Not just because of interruptions, but almost more impor­tantly, the whole psychological and physical environment in which managers work tends to discourage contemplation and encourage activity. The higher the level in an organization, the more critical is the role of reflection and the less important that of activity, but so often we’ve become conditioned on the way up through the ranks. How many bosses would give a word of encouragement to a subordinate if they were to come upon him sitting at his desk, chair tipped back, foot resting on an open drawer, and staring into space with an abstract expression on bis face? They’d be far more likely to ask him what the hell he’s doing, and if the unfortunate replied, ‘Thinking,’ he’d prob­ably be advised to stop thinking and get back to work.”
Although there is now widespread recognition of the need to think harder- and, on the other side of the coin, to learn and adapt more quickly-managers still suffer from that conditioning referred to in the quote. In fact, this conditioning is stronger the higher up you go in the organization. According to Harvard Business School professor Chris Argyris:

Any company that aspires to succeed in the tougher business environment of the 1990s must first resolve a basic dilemma: success in the marketplace increasingly depends on learning, yet most people don’t know how to learn. What’s more, those members of the organization that many assume to be the best at learning are, in fact, not very good at it. I am talking about the well-educated, high-powered, high-commitment profession­als who occupy key leadership positions in the modern corporation.
In this view, it is senior management that stands in the way of organizational learning and adaptability, and thus in the way of success in the marketplace. The problem, according to Argyris, is that people habitually reason defensively, uncon­sciously protecting themselves, maintaining their control, and suppressing conflict and negative views. Their behavior blinds them and their organizations to challenges and opportunities that truly open-minded, productive reasoning and learning would reveal. Thus effective, lasting change in any organization must start at the top with self-examination and behavioral change by the leaders.
The effects of the new strategic planning and the market challenges that drive it put this issue front and center. As Rosaheth Moss Kanter, another Harvard Business School professor, sees it, “Competitive pressures are forcing corporations to adopt new flexible strategies and structures.” And this is forcing changes in the nature of man­agement’s work:

The old bases of managerial authority are eroding, and new tools of leadership are tak­ing their place. Managers whose power derived from hierarchy and who were accus­tomed to a limited area of personal control are learning to shift their perspectives and widen their horizons. The new managerial work consists of looking outside a defined area of responsibility to sense opportunities and of forming project teams drawn from any relevant sphere to address them. It involves communication and collaboration across functions, across divisions, and across companies. .. . Thus rank, title, or official charter will be less important factors in success at the managerial work than having the knowl­edge, skills, and sensitivity to mobilize people and motivate them to do their best.

An example of this concept in action is provided by Raymond Gilmartin, CEO of medical equipment maker Becton-Dickinson, “We’re creating a hierarchy of ideas. You say, ‘This is the right thing to do here,’ not ‘We’re going to do this be­cause I’m boss.”‘ This means the vision still comes from the top, but strategies well up from Becton-Dickinson’s 15 divisions, and Gilmartin must be content to sit back and let this more informal approach to strategy work.
When GE pushed down planning to the line managers, this was not simply the outcome of a struggle for authority between corporate staff and operating divisions (as many saw it at the time). It was the beginning of the transformation of managerial work that Kanter speaks of. And when, in words that proved prophetic, Michael Naylor of GE declared in 1984 that line managers had to be catalysts of change through their planning, he was anticipating the new strategic role of the manager. This role requires flexibility and rapid learning, and it requires that managers teach these traits to oth­ers, for these are the traits that a company needs today to identify and implement suc­cessful strategies.
Xerox’s benchmarking is an example of adaptable, accelerated learning, in that it casts a broad net in the effort to learn how to do something better. The fact is that Xerox can learn from L.L. Bean, and vice versa-insight can and must come from all available sources. The truly interesting thing about the new strategies is the way they are pushing (in some cases, dragging) management along this path. As the new strate­gic planning unfolds in the 1990s, two things are bound to become clear. First, it is management (starting at the top) that is the greatest obstacle to change, and that can become the greatest catalyst. (Stata’s quest led Analog Devises to superior perfor­mance, logging an incredible 50 percent improvement in product failure rates every three to six months, for example.) Second, the entire thrust of the many new strategic directions and organizational changes is toward the marketing concept. Managerial companies are struggling to learn and adapt in order to serve customers better-bet­ter than they did before, better than their customers expect, and better than their competitors do.
This implies a never-ending process, and never-ending change. It is a frightening thought-this notion of chasing a moving finish line-and it takes strategy well be­yond the bounds of yesterday’s comfortable matrices. Yesterday’s solutions become today’s problems. Take Xerox’s benchmarking against L.L. Bean to speed up delivery of products. It was an exciting innovation in the copier business last year, but this year Xerox is already looking beyond it. Although Xerox learned to deliver products faster than its competitors, studies showed that customer satisfaction was still suhoptimal- only 70 percent. The problem was that customers wanted to know exactly when their copiers would arrive. Speed was fine, but uncertainty remained a problem. A new team was convened, with people from distribution, accounting, sales, and so forth, and a new solution developed. Xerox now tracks the progress of every copier through the distribution process so that salespeople can tell customers exactly when they will re­ceive their products, thus providing speed and predictability. Now customer satisfac­tion with product delivery measures at 90 percent instead of 70 percent.
But satisfaction still is short of 100 percent, and if it ever reaches 100 percent, competitors may innovate and push it down-satisfaction is, after all, a relative con­cept. So Xerox cannot stop now-it must search for and explore the next frontier. This is the nature of the new strategic planning. As PepsiCo’s CEO, Wayne Cal­loway, explains.,” The worst rule of management is ‘If it ain’t broke, don’t fix it.‘ In today’s economy, if it ain’t broke, you might as well break it yourself, because it soon will be.”

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