Building a Learning Organization

As we all know, to stay ahead of competitors, companies must constantly enhance the way they do business. But more performance-improvement programs fail than succeed. That’s because many managers don’t realize that sustainable improvement requires a commitment to learning.

After all, how can organizations respond creatively to new challenges (shifts in customer preferences, market downturns) without first discovering something new—then altering the way they operate to reflect new insights? Without learning, companies repeat old practices, make cosmetic changes, and produce short-lived improvements.

To transform your company into a learning organization, Garvin recommends mastering five activities:

• Solving problems systematically

• Experimenting with new approaches to work

• Learning from past experience

• Learning from other companies and from customers

• Transferring knowledge throughout your organization

Woven into the fabric of your company’s daily operations, these activities help your organization make enduring improvements that translate directly into measurable gains—including superior quality, better delivery, and increased market share.

The Idea in Practice

Garvin offers these suggestions for mastering five organizational learning practices:

Solving Problems Systematically

Don’t try to solve problems by relying on gut instinct or assumptions. Instead, generate hypotheses, gather data to test your hypotheses, and use statistical tools (such as cause-and-effect diagrams) to organize data and draw inferences.

Experimenting

Systematically search for and test new knowledge. Use small experiments to produce incremental gains in knowledge. For instance, specialty glass manufacturer Corning experiments continually with diverse raw materials and new formulations to increase yields and provide better grades of glass.

Use demonstration projects to produce knowledge you can use for systemwide changes. General Foods experimented with self-managing teams at its Topeka plant with the aim of adopting this approach across the company later.

Learning from Past Experience

Review your successes and failures, identify lessons learned, and record those lessons in accessible forms. Example: 

Boeing compared the development processes of its 737 and 747 planes (models that had serious technical problems) to those of its 707 and 727 (two profitable programs). It then compiled a booklet of lessons learned. Several members of the learning team were later transferred to two start-up programs—the 757 and 767. They produced the most successful, error-free launches in Boeing’s history.

Learning from Others

Look outside your immediate environment to gain new perspectives. Consider these sources:

• Other companies. Identify best-practice organizations (even in other industries), use site visits and interviews to study how they get work done, and generate ideas for improving your own practices.

• Your customers. Meet regularly with customers to gather knowledge about products, competitors, consumers’ preferences, and the quality of your service. Also observe customers using your products, to identify problems and generate ideas for improvement.

Transferring Knowledge

New knowledge carries maximum impact when it’s shared broadly. To transfer knowledge quickly and efficiently throughout your organization, move experts to different parts of the company—across divisions, departments, and facilities—so they can share the wealth. Example: 

Time Life’s CEO shifted the president of the company’s music division (who had orchestrated years of rapid growth and high profits through innovative marketing) to the book division, where profits were flat because of continued reliance on traditional marketing concepts.