Learning by design - organizational learning - The Mandate for Learning

Chief Executive, The, July-August, 1995

At the organizational level, learning can be a powerful tool for change, growth, and development. But only if it's planned, coordinated, and managed.

In 1990, Paul Allaire, Xerox's brand-new chief executive, took aim at the future. With a program called Xerox 2000, he asked executives to define and anticipate the coming competitive environment. This was a critical step - and a new process - for Xerox. Twenty years earlier, the name Xerox was synonymous with copy machines; the company controlled the lion's share of the global marketplace. But while Xerox clung to a notion of large, centralized copy machines, more nimble Japanese competitors rolled out smaller, faster, stand-alone units. These proved immensely popular, and Xerox was soundly trounced on its home turf and abroad.

With Xerox 2000, Allaire signaled his intention to prevent such a lapse from ever happening again. Examining broad social, economic, and technological trends and internal matters of structure, procedures, resource allocation, and employee motivation, Xerox changed the way it defined, grouped, and supported its business units. The resulting organization has been highly profitable, and the stock price has skyrocketed. But the company did not stop its learning process. Some 18 months after the initial reorganization, in a process led by Allaire, the company interviewed its top 40 executives to gauge the progress of Xerox 2000 and to fine-tune its direction.

Unfortunately, Xerox is the exception. Most companies don't learn nearly as much from experience as they could, largely because their efforts to do so are fragmented and unsystematic. There are several reasons for this haphazard approach, not the least of which is fear of the unknown: Organized learning, after all, threatens traditional bureaucratic structures. In a learning organization, information is shared rather than protected; problem solving is delegated rather than controlled; and systemic, structural causes of failure are rooted out and eliminated.

But more and more companies are finding that clinging to old ways means ceding competitive advantage. They are finding that learning itself is a process that can be managed, similar to manufacturing, marketing, and distribution. They are turning for guidance to customers, competitors, suppliers, employees, academia, and role models such as Xerox, Motorola, GE, Rubbermaid, and Emerson Electric.

The Organizational Context

It seems as if almost every business leader today has made some sort of commitment to managing change. And many of those leaders have suggested that "learning" at the organizational level might be the way to see that change occur. But good intentions don't always lead to the desired outcome. Maybe that's because, while business and academia alike have been getting a better handle on learning itself, it's still so difficult to get a consensus on how that can become an integral part of the corporate environment, that is, a "learning organization."

In terms of learning, companies such as GE, Motorola, and Rubbermaid have led the way - and often even demonstrated that learning has some clear and measurable paybacks. Motorola allocates about $100 million a year to training and development, and claims it gets a return of $30 for every dollar spent within three years. Rubbermaid has demonstrated how well it can convert market research into a steady stream of new and popular products. At GE's famous Crotonville management education facility in New York State, Chief Executive Jack Welch shows just how important learning is to his corporation through his frequent appearances in the "classroom." What these corporations have in common - in addition to the commitment and leadership of their chief executives - is their ability to use learning to improve performance. Learning for them is planned, not haphazard - active, not simply a passive classroom exercise.

"Learning has very little to do with just taking in information," notes MIT's Peter Senge, the best-known authority on organizational learning. Rather, he says, "most fundamentally, learning is about enhancing capacity. Learning is about creating and building the capacity to create that which you previously couldn't create. The learning organization is an organization that is continually expanding its capacity to create its future."

Senge's definition underscores learning's power and its potential to transform organizations. His best-selling 1990 book, "The Fifth Discipline," opens with theories about individual learning and connects with the concept of systems theory to develop a new understanding of how organizations learn. He identifies five "component technologies" - personal mastery, mental models, shared vision, team learning, and systems thinking - that can help individuals and organizations expand their capacity to learn.

Another learning expert, Harvard Business School Professor David Garvin, has explored organizational learning through its leaders. His definition: "A learning organization is broadly skilled at creating, acquiring, interpreting, transferring, and retaining knowledge, and at purposefully incorporating new knowledge into its behavior."