A comparison of two “organizational learning styles” shows why some compasses

are able to renew themselves in the face of rapid technological change.

Managem
in Learning
MICHAEL E. MCGILL JOHN W. SLOCUM, JR.

DAVID LEI
not as ideal

e
_R
ecall, for a moment, those extraordinary or single-loop learning focuses on solving
machines popularized by Shoshana problems in the present without examining
Zuboff in her 1988 book, In the Age of the Smart the appropriateness of current learning be-
Machine: The Future of Work and Power. Here, haviors.
Zuboff imagined, were computers equipped In recent years, senior managers and
with the artificial intelligence needed to business educators have decried the sti~i~g
change their inner workings in response to impact of traditional organizational struc-
new information. Now, apply that idea, tures on their efforts to improve organization
metaphorically, to organizations. Picture a effectiveness. The reality is that global com-
company that can respond to new informa- petition has thoroughly scrambled the
tion by altering the very “programming” by ner in which managers traditionally thought
which information is processed and evaluat- about designing and developing their orga-
ed. This, in brief, is the idea of the “learning nizations. As manufacturing, product delii
organization.” and other key managerial functions migrate
What sets a learning organization apart? to a company’s key markets around the
According to Peter Senge, author of the Fifth world, the need for top managers to learn
Discipline, these companies place emphasis and innovate assumes new urgency--and
on generative learning, called “double-loop new complexity. The more a company
learning” by Chris Argyris. Generative trates global markets, the more its WCC
learning emphasizes continuous experimen- pends on the ability to quickly an
tation and feedback in an ongoing examina- ly respond to a myriad of changes. Thus,
tion of the very way organizations go about there is a greater need for designing organi-
defining and solving problems. Managers in zations that can learn.
these companies demonstrate behaviors of But there are clearly different styles
openness, systemic thinking, creativity, self- learning, with the majority of companies s
efficacy, and empathy. By contrast, adaptive coping in an “adaptive” mode.
 ADAPTIVE LEARNING
AND INCREMENTAL CHANGE

We recognize an adaptive organization by its

focus on incremental improvements to exist-
ing products, markets, services, or technolo-
gies-often within the context of the firm’s
preexisting track record of success. Adaptive
learners (people as well as organizations) ex-
hibit characteristics of stimulus-response be-
havior; they react to environmental changes
with discrete, mechanistic actions that often
do little to address problems directly. Enforced
conformity, routine behaviors, and risk-avoid-
Michael E. (Mick) McGill is professor of ance block diversity of opinions, experimenta-
organizational behavior and administration tion, and risk-taking. Static intraorganization-
at the Edwin L. Cox School of Business, al relationships and long-standing practices
Southern Methodist University, Dallas, based on the organization’s success from a
Texas. After receiving his Ph.D. in 1971 previous time period (and a different compet-
from the University of Southern California, itive environment) make strategic redirection
he moved to Texas and began his career and regeneration extremely difficult. Adaptive
as a university professor and organizational organizations do change, but only within nar-
consultant at SMU. In his teaching, rowly defined ranges.
research, and professional practice, he has As a result, the adapters find themselves
been primarily concerned with issues of in the category of “learning disadvantaged”
personal and organizational development. when attempting to build new sources of
He has authored numerous articles and competitive advantage. A focus on incremen-
four books, the most recent being tal change becomes the basis for a predictable
American Business and the Quick Fix (Holt, future strategy, one that “smart” competitors

Hay
1988). He also serves as a consultant to a can easily decode. Adaptive learning also re-
variety of organizations. He has received tards the company’s ability to envision prod-
the Nicholas Salgo Distinguished Teaching ucts and markets that currently do not exist,
Award and the Rotunda Outstanding Faculty but whose introduction could redefine the
Award while on the faculty of SMU. bases and standards of competition within
- the industry.
For firms that cannot break the adaptive
learning habit, changing technologies, frag-
mentation of market demand, and new orga-
nizational forms hasten decline and resigna-
tion. This problem is especially salient for
those firms that once enjoyed prominent po-
S sitions in their industries. The now-outmod-

w should
ed trappings of success-reward systems and
cultural values, for example-become, in ef-
they change fect, the obstacles to transformation.
Until recently, many U.S. firms in high-
if it's
working technology industries engaged in consistent
patterns of adaptive learning. Consequently,
they were slow to recognize the importance
and latent strengths of new competitors. Gen-
era1 Electric is a case in point. Over a period of
twenty years, GE’s consumer electronics busi-
ness moved from a position of near global
ominance to complete surrender and abdi-
cation. By focusing solely on reducing labor
and material costs in color television sets for
the U.S. market, GE’s manufacturing and in-
novation capabilities slowly atrophied until it
decided to withdraw from the industry.
Adaptive learning led GE to engage in a
myriad of outsourcing decisions. Thus, its
businesses became progressively more reliant
on foreign partners and joint ventures to pro-
duce components for end products, such as
microwave ovens. Eventually, GE’s foreign John W. S/own, Jr. holds the 0. Paul
partners learned and internalized all of the Coriey Chair in Management at the Cox
core competencies and skills needed to com- School of Business at Southern Meth
pete with General Electric-not only in con- University, where he teaches orga~izat~o~a~
sumer electronics but also across a wide range behavior, organization design, and
of related businesses GE’s highly centralized management. He has written over ninety
and bureaucratic rules, which helped cement articles and five books covering such
the firm’s leading position in electrical prod- subjects as leadership, motivation, career
ucts at the turn of the century, became its own management, and the impact of corporate
nemesis in confronting a new environment strategy on human resources pr
driven by global competition and higher Slocum received his B.&A. fro
forms of technology. To complicate matters, ster College, his fvl.B.A. from Kent State
managers often focused on short-term finan- University, and his Ph.D. from the University/
cial criteria, thereby aggravating and reinforc- of Washington. Before joining the factilty
ing a series of adaptive decisions predicated at SMU, he was a member of the faculties
on outsourcing. Having surrendered its pres- at Ohio State and Penn State. He has
ence in consumer electronics, GE is now in no served as the 39th president of the Academy
position to learn and compete in such promis- of Management and editor of T/z ~~a~ern~
ing technologies as I-IDTV and multimedia. of Management Journal. He is currently
The problems that Sears Roebuck has the editor of Organiration Science and al’sa
confronted in reversing its steady slide in U.S. serves on the editorial boards of several
retailing also depict the special problems that other journals. He is a fellow in the Academy
adaptive learning organizations face when of Management and the Decision Science
changing from the age-old practices that once Institute, and he has served as a ~o~s~lta~t
contributed to success. As early as the mid- to numerous organizations in the area of
1970s, Sears’ management knew that special- human resources management.
ty boutiques, aggressive discount chains, and
changing demographics were slowly eroding
the firm’s image as a barometer of American
middle-class values. Its high-cost structure
and bureaucratic controls were the product of
an earlier era in which size and economies of
scale fueled growth. The rising pace of urban-
ization, changing consumer tastes, and spe-
cialty retailers eroded Sears’ once-dominant
market share. Bureaucracy inhibited even
 small changes at the store level, since every-
thing had to be cleared through corporate
headquarters. In the mid-1980s, Sears at-
tempted a multiple-niche strategy that even-
tually confused all types of customers by rely-
ing on both an earlier middle-class image and
a new, sexy, boutique-type appeal. By its
sheer size and reputation for high-quality
durable goods, Sears may survive the antici-
pated shakeout in U.S. retailing. However,
continued changes driven by adaptive learn-
ing practices are likely to render this erstwhile
giant an obsolete player.
David Lei is an assistant professor in
Adaptive learning organizations can con-
business policy at the Edwin L. Cox School
tinue their pattern of past success so long as
of Business, Southern Methodist Universi-
the competitive environment remains rela-
ty. He received his B.A. from Swarthmore
tively static. The danger of this approach is
College and his M.A. and Ph.D. from the
that, even when the competitive environment
Graduate School of Business at Columbia
changes dramatically, adaptive change blinds
University. Before joining SMU, he was a
companies to the need to examine the way
they define and resolve problems.
faculty member at the University of Texas
at Dallas. His teaching and research
interests include global strategy, strategic
planning, and manufacturing technologies. GENERATIVE LEARNING
He is currently examining the impact of AND TRANSFORMATION
diversification and global strategies on
organizational competitiveness and
Many companies have demonstrated the abil-
ity to learn how to learn. Senior managers at
performance. He and John Slocum recently
British Petroleum, Eastman Kodak,
published articles in Ogankational
Dynamics focusing on global strategic
Whirlpool, Arthur Andersen, and Gruppo
GFT, among others, have relied on generative
alliances.
learning to transform their organizations and
to markedly improve their effectiveness.
Arthur Andersen and Company, for ex-
ample, has led its industry in developing a new
business in information and technology con-
sulting. This business now accounts for more
than 40 percent of revenues. In essence, Arthur
Andersen reframed the definition of an “ac-
countant.” Traditionally, the auditing practice
required accounting firms to maintain an arm’s
length relationship with clients. Andersen au-
daciously undertook to forgo its once domi-
nant auditing business and supersede it with
specialty financial contract management. Un-
der this arrangement, a client can rent its chief
financial officer (or an entire finance depart-
ment) from Arthur Andersen, as British
Petroleum has done. The outsider has now be-
come the insider! Treasury, business planning,
institutional-investors relations, and all other Customers value food, service, and the phys-
sensitive financial functions are now entrusted ical appearance of the restaurant. ~~t~~~ %he
to an Andersen employee. customers first required that regional man-
Eastman Kodak is currently engaging in agers train and recruit store managers w-ho
large-scale experimentation with new tech- actually wanted to create or deliver goods that
nologies that move across the boundaries of customers value. The selection process now
traditional, silver-based film and into the area focuses on hiring store managers who
of electronic photography, made possible by positive attitudes toward responsibility, team-
high-resolution imaging. Realizing that future work, customer service, and sharing. Such in-
customers, especially large industrial and com- dividuals need fewer supervisors; in fact, t
mercial users, are likely to demand new capa- span of control has been reduced from one re-
bilities for altering and modifying static im- gional supervisor for every five stores in 1988
ages, Kodak is designing a hybrid technology to one for every twenty stores today. The r
that enables users to store pictures on of the supervisor also changed from prov
videodiscs for future use and alteration. In ad- ing direction and control for the store
dition, this series of investments allows Kodak
use
er to coaching and support. Store m
to participate actively in multimedia technolo- now receive training and support in commu-
gies, a new core competence that is likely to nication, performance management, t
transform how consumers view their personal building, coaching, and empowerme~%,
computers, television sets, and other products. they can draw upon this training to i
For Gruppo GFT, generative learning has their human resource skills. These
led to the firm’s premier status as the worlds also need information that can help them
largest manufacturer of designer clothing. raise quality and sales, as well as monitor mis-
Gruppo GFT now handles more than nine la- takes. New computer systems have
bels, including Giorgio Armani, Baumler, store managers from mountains of no
Valentino, and Joseph Abboud. Its U.S. sales ductive paperwork, while providing their su-
have grown from $7 million in 1980 to more pervisors with real-time performance data on
than $300 million in 1990. Unlike its competi- costs, employees, and customer satisfaction.
tors, GFT chose not to think of globalization By outsourcing much of the preparation
in terms of standardized apparel with univer- work (shredding lettuce, chopping tomatoes,
sal appeal. Rather, it achieved success by de- and the like), Taco Bell has shifted i%sstore op-
signing products in response to a myriad of erations from manufacturing to assembly.
local differences in key markets around the With the more automated tasks ~e~forrne~ at
world. In the words of GFT Chairman Marco locations that generate economies of scale,
Rivetti, “To be global means to recognize dif- Taco Bell employees can focus on cu
ferences and be flexible enough to adapt to and their needs. By making these a
them.” Innovation occurs in each local market changes, management drove costs d
and learning flows in many different direc- shifted the focus of store employees from
tions. In effect, GFT has had to redefine the manufacturing to serving customers. As a re-
way it does business-how it identifies cus- sult, Taco Bell has enjoyed a 60 percent
tomers, how it develops and manufactures growth in sales in company-owne
products, and how it handles distribution and and its profits have grown by more %han 25
marketing. percent (compared with under 6 percent at
Taco Bell also provides an excellent ex- McDonald’s U.S. restaurants). All of this fi-
ample of generative learning. Over the past nancial success has taken place w
three years, the overall market for fast food prices dropped by more than 25 pert
has been flat to declining and subject to se- In a transformation of the w
vere price wars. In an attempt to transform its business, IBM recently intro
operations, managers at Taco Bell redefined new hardware and software
its business based on a very simple premise: endorsement of “open systems.” With this an-
nouncement, hailed by an IBM senior VP as
“representative of a paradigm shift,” IBM
concedes that there will always be some
equipment made by IBM’s competitors in ev-
g
ing organizations/managers learn from their
experiences rather than being boundby their
past experiences. What does it mean to learn
from experience? William Torbert, in Learning
ery company’s computer operation. This her- from Experience, writes, “Learning involves
alds a dramatic reframing of the way IBM becoming aware of the qualities, patterns,
thinks about its business, its customers, its and consequences of one’s own experience as
products, and its services. IBM’s commitment one experiences it.” Drawing upon Torbert,
to aggressively learn and apply new tech- one can define four different but related lev-
nologies and concepts, regardless of their ori- els of organizational experience: (1) the ex-
gin, has led the firm to engage in a selies of ternal world-environment, competitors,
proactive joint ventures across the United customers, and the like; (2) the organiza-
States, Europe, and Japan. Concurrent with tion/s/manager’sown actions-strategy, poli-
its own R&D efforts, IBM has linked up with cies and procedures, management practices,
many small U.S. upstarts to advance the state and so on; (3) the organization’s/manager’s
of knowledge in such areas as parallel pro- own problem-identification, problem-defini-
cessing, faster microprocessors, and new tion, and problem-solving processes-cul-
semiconductor materials. More recently, ture, expertise, and functional orientation, for
IBM’s alliances, with Motorola to design a example; and (4) organizational conscious-
new generation of microprocessors and with ness-the experience of all of the above.
Apple to create operating systems, signal how Adaptive organizations experience events
the firm intends to consolidate while advanc- onZyone level at Qtime, and this exclusive focus
ing its leadership in the computing industry. limits learning to that level. This is because the
In Germany, IBM’s technology development social architecture of adaptation rests to a large
agreements with Siemens in 16M and 64M extent on a bureaucratic hierarchy and a
chips will help the firm control a sizable share deeply ingrained emphasis on short-term
of future European markets in the face of measures of financial performance. Strong bu-
Japanese competitors. Ironically, however, reaucracies, extensive use of strictly defined
nowhere has IBM been more aggressive in numbers-based performance measures to
forming an array of learning-based joint ven- evaluate managers, and a largely vertical flow
tures than in Japan, where its partners are of information all help shape an organization
found in such disparate industries as banking divided into entrenched functions that miti-
(Fuji Bank), steel (Nippon Steel), factory au- gate learning. These problems further impede
tomation (Omron), and laptop computers the organization’s potential for competing in
(Toshiba). high-velocity environments. Management is
Generative learning alone is an insuffi- forced into an ongoing game of “catch-up” in
cient condition of corporate success. Refram- an arena where aggressive, generative learn-
ing an organization’s approach to its environ- ers are redefining both the industry and mar-
ment must be supported by an internal ket structure.
reframing of processes and managerial prac- What are the managerial practices found
tices that put these ideas into action. Our ex- in generative learning organizations? The abil-
amination of these practices and other "SUC- ity of an organization/manager to learn is not
cess stories” of learning organizations measured by what the organization or manag-
suggests how these organizations learn. er knows (that is, the pvodud of learning), but
rather by how the organization/manager
learns-the process of learning. Management
Management Practices practices encourage, recognize, and reward
in Learning Organizations those managers whose behaviors reflect five
The key ingredient lies in how organizations dimensions: openness, systemic thinking, cre-
process their managerial experiences. Learn- ativity, a sense of efficacy, and empathy.

10
 OPENNESS. Learning requires that orga- that the U.S. market would no longer be the
nizations and managers be truly open to the world’s largest. Growth would be outsid.e of
widest possible range of perspectives in order the U.S., particularly in Eastern Europe and
to identify trends and generate choices. In Asia. Whirlpool leadership, however, had al-
particular, this openness assumes two forms, ways focused on things it had done well-
both of which are rare in organizations today. namely, adapting to changes in the ~eri~a~
First, openness requires that managers be market. Today, Whirlpool has oriented itse
willing to suspend their need for control. The to a new vision: growing a transnational com-
need for control, characteristic of so many pany and creating value for stakehoIder~. To
managers, narrows consideration of experi- translate vision into action, the company has

earning requires that. . .managers be tru

open to the widest possible range of perspecti
in order to ident@y trends andgenerate c&o

ence because only those elements in the man- indicated that all its senior managers will
ager’s most immediate environment (i.e.,
closest in time and space) can offer even the addition, it create
hopeof being controlled. In adaptive organi-
zations, control focuses on detail. Managers started joint ventures in India and Mexico. To
feel that they must get to know the answer to build shared cross-cultural values,
every possible question just in case someone 1990 Whirlpool staged a worldwi
asks. Any narrowing of the consideration of ship conference in Montreux, Switzerlan
experience limits potential learning. Consid- One-hundred forty managers got to kno
er, again, the Taco Bell example. Increasing each other and understand each other’s cul-
the span of management at the divisional lev- tural backgrounds. To achieve a “one compa-
el increased store managers’ ability to man- ny” culture, it established fifteen crass-n
age their own operations more effectively. tional/cross-functional teams to est~b~s~ a
The need for common values replaces the implement specific plans of action.
need for detailed information and micro- At British Petroleum, managers use an
management. “upward appraisal” system where
The second form of openness is cultmral- ees have the opportunity to provi
functional humility. In order to process multi- and confidential feedback to their
ple levels of experience, managers must be on a whole range of issues, not the least of

Af
able to see their own values, background, which is how the manager is
* and experiences as not necessarily better or against culturally related beha
worse than the values, background, and ex- thinking, personal impact, empowered, and
periences of others. Cultural-functional nar- networking). Also, BP manager
rowness and/or ethnocentricity results in an to a pluralistic development p
educated incapacity that reduces the ability chides mentorship, job rotatio
of organizations and managers to learn. and external educational expe~~e~~~s. In
In 1987, Whirlpool undertook an analysis workshops, top managers are
of its markets and structure and concluded only on the meaning of these cul
 ed behaviors, but also on how these behaviors network requires managers to be sensitive to
would be used in the workplace. the flow of information, power, and trust that

g Where learning is concerned, the belief

that one’s own background or area of exper-
tise is superior to others is a fatal flaw. On the
shapes how trade-offs are made. It requires
managers to identify legitimate disagree-
ments between functions and product lines
one hand, today’s businesses have made and to make astute trade-offs quickly and
great strides in sensitizing managers to issues skillfully. Network managers encourage em-
of cultural diversity. As a result, there is an ployees to redirect their energies toward the
emergent cultural tolerance among managers substance of disagreements rather than to-
(though it is still far from cultural humility). ward personality clashes or politics.
On the other hand, progress lags in correcting Management practices that encourage
organizations ruled by functional-centricity- systemic thinking include:
“engineering is everything” or “marketing ??Sharing of accurate (not whitewashed)

makes the difference.” Managers in learning organizational histories to promote a

organizations must be open to experience in sense of temporal continuity.
all of its various forms. Firms need to legit- ??Recognizing the importance of rela-
imize a wide variety of ideas, concepts, and tionships based on information, goods
mindsets emanating from their set of core and services exchanges, and feelings (i.e.,
skills and talents. liking each other), in addition to tradi-
The loss of an open, system-wide ap- tional, line authority-based relationships.
proach to looking at new technologies, prod- ??Removing the artificial distinction be-

ucts, and services limits the organization’s tween line and staff.
learning span. Here are some managerial ??Explicit attention to the interrelation-

practices that promote openness: ships between actions across the organi-
??Commitment to cultural-functional di- zation and between the organization and
versity in selection, development, and external forces.
promotion. CREATWU’Y. Of all the requisite skills.
??Use of multi-functional and cross-func- and abilities for learning, creativity is the most
tional work groups. widely and readily acknowledged. It is also
??Absence of jargon, turf, and “expert” the most difficult to develop. Two aspects of
domains. creativity are particularly important for learn-
0 Conflict-surfacing, conflict-resolving ing: personal flexibility and a willingness to
skills. take risks.
??Ready availability of all information to Although other attributes, such as toler-
all members. ance for ambiguity, are also associated with
SYSTEMIC THlNKliVG. Systemic think- creativity, the surest behavioral evidence is
ing is the ability to see connections between (
personal flexibility. This is the ability to alter
issues, events, and data points-the whole one’s own behavior to the vagaries of current
rather than its parts. It means framing struc- realities.& Behavioral change is evidence of
tural relationships that resemble dynamic learning, and managers in learning organiza-
networks, as opposed to static, patterned in- tions must be able to set aside habits and in-
teractions or relationships predicated on grained routines and then expand their be-
one’s position in the hierarchy. With systemic havioral repertoire into uncharted areas.
thinking, the collective learning of an organi- Inflexibility dealt a devastating blow to
zation becomes the basis of future competi- the American radio industry. Managers at
tive advantage. The foundation of a network General Electric, RCA, and Emerson, among
and its social architecture in generative orga- other U.S. electrical manufacturers, had al-
nizations differs vastly from the typical orga- ways believed that radios would follow a
nization structure found in adaptive organi- natural growth curve, eventually reaching
zations. Conceiving the organization as a maturity and decline, In the early 198Os,

12
 these organizations believed that radios had by indicating that change and expe~me~ta-
passed the maturity stage. Thus, they divert- tion (generative learning) would be constant-
ed their profits to other product lines. ly needed to maintain HP’s competitive e
Japanese radio manufacturers, most no- in the marketplace. The new structure isn’t
tably Sony, saw different possibilities. Be- simply a matter of “better sameness.” Rather,
lieving that they could create a new market, it requires employees to think different1
twisting the product cycle in a new direction, about problems. The important point fro
they aggressively and innovatively entered HP’s experience, and from other organiz
the arena. They studied when, where, and tional failures, is that employees in these or-
how people listened to radios. From their ganizations feel that they have the permissive
analyses, they created a product that focused to fail productively and that ex~e~e~ta~io~
on people’s needs-the Sony Walkman. in and of itself will be rewarded.
The creativity needed to “de-mature” a Managing in a learning organization re-
product required both flexibility and a will- quires an orientation which sees failure as
ingness to take risks-the second important feedback contributing to further creativity.
ingredient of creativity. In the context of This orientation is fostered by managerial
learning organizations, the underside of risk practices that promote personal ~exibi~~~
taking-the willingness to fail-is often the 0 Long-term reward policies.
more significant dimension. As much as 0 Mobility across divisions and functions.
many businesses encourage risk-taking, the a Growth-oriented personal deveI~p~e~t.
sanctions against failure are so great that * A supportive “clan” culture.
managers, for the most part, restrain them- PERSONAL EFFKACY+ The commit-
selves to prudent risks. Willingness to take ment to learning felt by managers in learning

fire
rs
[ prudent risks abounds. The willingness to fail
is a rare commodity.
For many managers, the very prospect of
organizations comes from a sense of
efficacy. Managers with a strong sen
sonal efficacy feel that they can an
learning appears fraught with failure. Freeing learn to significantly influence their world.
managers to be creative means freeing them These managers are (1) actively self-aware
from this fear. This is as much a personal and (2) proactive problem-solvers.
agenda as it is an organizational one. Those It is essential that managers
who are willing to fail focus not on the accu- organizations have a firm sense o
racy of their actions, but on the fact that they values and goals and an ability
are acting and will continue to act. The rest&s selves accurately. This degree of self-aware-
of their actions, positive or negative, are ness is fostered by a clear organizational vi-
viewed not as success or failure, but as feed- sion that gives direction for the critical choices
back to be used to learn and to formulate fur- that learning requires, as well
ther action. feedback about those choices. T
Campbell Soup, 3M, Procter and Gamble, agers of today do have a stron
Corning, XEROX, and Hewlett-Packard, own values and goals, but have
among others, have had failures. For exam- cess/openness to feedback from o
ple, when John Young, the CEO of HP, real- the impact of their behavior.
ized that an important project was bogged sort of managerial anomie so frequently
down by an unwieldy bureaucracy, he and found in bureaucratic orga~i~atio~§~ Self-
his team drastically restructured the compa- awareness that comes solely from reflective
ny. As earnings plunged, Young and his team introspection is incomplete and often inaccu-
kept experimenting with new forms of struc- rate. Learning requires that
ture until they found the right alignment for actively seek information abou
getting work out faster. More importantly, their behavior on others an
Young believes that the restructuring paved portant to others as a means to maximize their
the way for the next generation of managers own effectiveness.
 EXHIBIT 1
CHARACTERISTICS
OF TYPESOF LEARNING ORGANIZATIONS

ADAPTIVE GENERATIVE
S T R A T E GIC C H A R A C T E RIS TIC S
Core competence Better sameness Meaningful difference
Source of strength Stability Change
output Market share Market creation
Organizational perspective Compartmentalization (SBU) Systemic
Developmental dynamic Change Transformation

S T R U C T U R A LC H A R A C T E RIS T I C S
Structure Bureaucratic Network
Control systems Formal rules Values, self-control
Power bases Hierarchical position Knowledge
Integrating mechanisms Hierarchy Teams
Networks Disconnected Strong
Communications flow Hierarchical Lateral

HUMAN RESO URC E PRA C TIC ES

Performance appraisal system Rewards stability Flexibility
Reward basis Short-term financial Long-term financial and human
resource development
Focus of rewards Distribution of scarcity Determination of synergy
Status symbols Rank and title Making a difference
Mobility patterns Within division or function Across divisions or functions
Mentoring Not rewarded Integral part of performance
appraisal process
Culture Market Clan

MA N A G ERS ’ B E H A VIORS
Perspective Controlling Openness
Problem-solving orientation Narrow Systemic thinking
Response style Conforming Creative
Personal Control Blame and acceptance Efficacious
Commitment Ethnocentric Empathetic

At Whirlpool, for example, the assessment er level of management. Basic accountabilities

of managerial talent is multiple and done on a for the manager-once-removed include over-
world-wide basis. The evaluations include seeing the quality of leadership exercised
self-assessment and assessment from the man- throughout the company, judging the capa-
ager’s peers, subordinates, and the manager- bilities of subordinates-once-removed, and
once-removed. Under the manager-once-re- measuring and guiding the career develop-
moved plan, an individual is not assessed by a ment efforts of such persons. These assess-
direct supervisor, but rather by the next high- ments are done once a year and are not per-

14
 formance reviews, but instead focus on peo- capable of) repairing strained rela~o~s~i~~~
ple’s potential and capability. The reason for commitment to learning implies a conce
implementing such a program is a belief that bettering the human condition over time.
managers should not select their own succes- This long-term perspective broadens man-
sors or make promotion decisions to their own agerial vision to include the full range of those
managerial level. If a manager decides to pro- who might, in the future, be
mote a direct subordinate, that person wiIl be tions in the present. This bro
at the manager’s peer level. In order to get a for manifest and latent cons
clearer judgment, the person who is going to ens sensitivity to the issues
be the subordinate’s boss should make a judg- parties far beyond those immediately impact-
ment on that person’s capability. ed by a given course of action. Learning is
Another dimension of feedback comes linked to larger purposes beyond day-t~-da~7
from “business fundamentals,” such as finan- problem solving.
cial results. These provide managers with a There is no more convin
vehicle that shapes their dialogues and de- empathy than the motivation
bates. The rapid growth and learning orienta- repair relationships, and no qu
tion of Canon, Toro, Bell Atlantic, Johnson portant for learning. Repair skills are used to
Controls, Merck, or Komatsu is fostered by positively resolve breakdowns in uni-
managers communicating a clear vision that cations, losses of confidence and and
gives employees the sense that what they do dissolution of relationships. It is reasonable to
makes a difference in specific ways. Over assume that just as these conditions have
time, making visible economic progress on dered learning in the past and do so in
specific business visions provides feedback present, they will continue to binder learning
for employees. This generates emotional en- in the future. Indeed, in the more complex
ergy and builds heightened commitment to world with intricate webs of rel~tio~~~~~s
an underlying strategic intent. among managers in global orga~za~o~s, in-
The second element of self-efficacy, a formal networking relationships
proactive problem-solving orientation, is the even more frequent.
behavioral manifestation of the assumption
that learning can be acted upon and that ac- agers are to blame others when
tion will produce positive results. In the sim- wrong and to resign themselves to
plest terms, a proactive problem-solving ori- less-than-desirable situations. Le
entation means that managers try to act on not allow managers such a cavalier
problems before they are problems. They do
so because they think they cun act and be-
lieve they should. This does not mean that
managers are constantly “doing” some-
thing-rather it means that when managers
learn, they learn with an intent to act, and ing for new dimensions to the other person or
they act with an intent to improve-because the situation) to accomplish the task Repair is
they can. the responsible, proactive strate
Personal efficacy and proactive problem- with significant breakdowns.
solving are promoted by:
0 Clear vision.
e Celebrating what people do that makes
a difference.
0 Linking learning to action.
EmATHy. Managers in learning organi-
zations must be sensitive to and concerned
for human nature, and be interested in (and
 ployee contributions outside the work- accept, embrace, and seek-not simply
place. change-but transformation.
??Willingness to take responsibility for re- Despite the inroads made by Japanese and
lationships, other competitors into new technologies,
Organizational learning is the ability of an many U.S. firms still remain on the forefront
organization to gain insight and understand- of product and process innovation in a great
ing from experience. It involves experimenta- many industries. New industries are forming
tion, observation, analysis, and a willingness every day, while many others are converging
to examine both successes and failures. At the and consolidating. These changes represent
core of effective organizational learning is a opportunities for U.S. managers bent on be-
perspective that enables generative learning coming fast and aggressive learners. Organiza-
to take place. This mind-set can be translated tions that foster generative learning as part of
into managerial practices that are illustrated in their underlying reward system and culture
Exhibit 1. These practices encourage, foster, are able to improve their sources of competi-
recognize, and reward openness, systemic tive advantage because mistakes are translated
thinking, creativity, personal efficacy, and em- into valuable learning experiences.
pathy. In turn, these behaviors result in learn- Given the fervent pace of technology dif-
ing, in as much as they expand rather than fusion and change, firms need to be able to
limit managerial experience. experiment with a host of different ap-
proaches to product and process develop-
ment, some of which may not be initially
successful. But, given a learning orientation,
SUMMARY
all of these approaches will provide new in-
Organizational learning will become even sights that could be applied to future endeav-
more critical as organizations face permanent ors. Yet, generative learning in many ways
“white water.” Peter Vaill, who coined this works against the experience and training of
term, indicates that, in the old days, man- managers accustomed to reward systems
agers could simply paddle their canoes and cultures that foster adaptive learning.
around on calm, still lakes and go anywhere The process of “un-learning” previous
they wanted to go. Today, those same man- mindsets is a difficult task in itself. Inculca-
agers have hit white water, and there is no tion of such organizational features as em-
end in sight. pathy, humility, and personal efficacy are
Building learning organizations requires vital first steps to help the firm move away
that leaders develop employees who see their from static, risk-averse patterns of behavior
organization as a system, who can develop to proactive, risk-taking learning.
their own personal mastery, and who learn
how to experiment and collaboratively re-
frame problems. Regrettably, too many lead-
ers focus their attention on “adaptation”-a 1
If you wish to make photocopies or
patterned response to events based on “old
obtain reprints of this or other
programming” (to return to Zuboff’s machine
articles in ORGANL?X~ONALDI~WUCS,
metaphor). Not only do they practice adaptive
please refe to the special reprint
learning, they also reward it. In generative
service instructions on page 80.
learning organizations, leaders and employ-
ees give up these reference points and learn to L I

16
 SELECTED BIBLIOGRAPHY

Several sources greatly contributed to our “Whirlpool Reaching the World to Bring Excel-
thinking. These are Shoshana Zuboff, In the Age lence Home,” a paper presented at the Consor-
of Smart A&chines (New York: Basic Books, Inc., tium of University Executive Frogram Direc-
1988); Chris Argyris, “The Executive Mind and tors, Fountainebleau, France, April 1992. For
Double-Loop Learning,“ Organizational Dynam- some insights into networking organizations,
ics, Autumn 1982, pp. 5-22; Chris Argyris, Over- see John Bush, Jr. and Alan Frohman, “Com-
coming Organizational Defenses (New York: Pren- munication in a ‘Network’ Orga~a~o~~~’ Or-
tice-Hall, Inc., 1990); Peter M. Senge, The Fifth ganizational Dynamics, Autumn 1991, pp 23-36
Discipline: The Arf and Practice of the Learning Or- and Charles G. Snow, Raymond Miles, and
ganization (New York: Doubleday, 1990); Stan Henry Coleman, Jr., “Managing 22st Century
Davis and Bill Davidson, 20.20 Vision: Transform Organizations,” Organizatiortal Dynamics, Win-
Your Business Today to Succeed in TomorrowS ter 1992, pp. 5-15.
Economy (New York: Simon & Schuster, 1991); John Slocum also participated in a work-
William Torbert, Learning From Experience (New shop sponsored by the Consortium of Universi-
York Columbia, 1973); Stephen S. Roach, “Ser- ty Executive Program Directors, cited above. It
vices Under Siege-The Restructuring Impera- was during that conference that Clive Dilloway
tive,!’ Harvard Business Review, September-Octo- and David Simon, senior managers from British
ber 1991, pp. 82-93; Ram Charan, “How Petroleum Company, Al Vicere from Penn
Networks Reshape Organizations-For Re- State, and Alan White from M.I.T. discussed
sults,” Harvard Business Review, September-Oc- managerial practices of learning organizations.
tober 1991, pp. 104-115; Kathleen Eisenhardt Alan White’s paper, “Organizational Transfor-
and L. D. Bourgeois III, “Politics of Strategic De- mation at BP: An Interview with C~ai~a~ and
sign-Making in High-Velocity Environments: CEO Robert Horton” clearly explicates how BP
Toward a Mid-Range Theory,” Academy ofMan- is changing its culture to become a learning or-
agemerzf Journal, December 1988, pp. 737-770; Ira ganization. Comments from Richar
Magaziner and Mark Patinkin, “Cold Competi- retired CEO of Allstate, Paula Hill,
tion: GE Wages the Refrigerator War,” Harvard SMU’s Cox School’s Leadership Center, Tom
Business Review, March-April 1989, pp. 114-129; Helton of Whirlpool, Steve Raps, Chuck Snow,
William Weitzel and Ellen Johnson, “Reversing and Dan Weston of King Chapman Br~~ssar~
the Downward Spiral: Lessons from W.T. Grant & Gallagher, helped crystallize our
and Sears Roebuck,” Academy OfManagement Ex- and gave us scintillating insights into
ecutiveT August 1991, pp. 7-22; and Tom Helton, ganizations learn,