One HRD Manager recently narrated an interesting story. The top executives of his company had recently attended a seminar on Learning Organisation. The group was enthused by the concept, and at the end of the seminar, took the decision that they will build their organisation into a learning organisation. Six months later, no one was sure what was to be done. There had been a number of meetings to develop a plan of action, but each had ended in more confusion. There was a growing frustration and an emerging consensus that learning organisation, after all, is just another management fad with no practical value.
In many ways, learning organisation is still a concept in search of a definition. As Charles Handy observed in his book The Age of Unreason: "The learning organisation is a term currently in vogue. It is, however, less than obvious what it means, except that it is a good thing to strive for."
Handy's comment captures the essential problem which most managers (and even academicians) experience when dealing with the concept. There is considerable a mystique and awe which surrounds the term. The idea that corporate learning is a prerequisite to success is intuitively meaningful to most managers. But one is left with many unanswered questions: How do you build a learning organisation? How does a learning organisation work? How would you recognise a learning organisation, if you came across one?, and so on.
In this article, we will discuss a framework which describes some essential considerations in building a learning organisation. An implicit aim of this article is also to divest the concept of its needless mystery, and to recast it in more practical and implementable terms.
What Is a Learning Organisation?
Learning is a process by which we create and acquire new and valid knowledge. To learn, an organisation must create and use business-relevant knowledge on a regular basis. A learning organisation, therefore, would be one which has (1) developed capabilities and systems to learn continuously, and (2) learned how to leverage this knowledge to improve its performance.
Consider the following two examples:
* Modi Xerox conducts an employee satisfaction survey every year involving all the employees. The survey results are analysed to identify areas of improvement, and teams are organised around these issues to make and implement action plans before the next survey. The survey becomes a monitoring index, since the impact of the action taken can be seen in the next poll.
* Parle Agro's success with its soft drink, Frooti, can be largely attributed to company's unique IT network, PARB (Parle Agro Retail Barometer). This system allows the company to continuously monitor virtually every sale in almost 25,000 shops across 350 towns in the country. Information regarding the width and depth of distribution of the company's and competitors' products, sales and stock levels, pricing and promotion data, etc., are continuously fed to the company for taking marketing decision. Parle Agro uses this information to get its franchisee respond quickly to market conditions.
While different in many ways, both these examples describe how companies can generate and use knowledge to enhance their operational and competitive efficiency. While such systems exist in many organisations, smart learners develop and use such mechanisms more comprehensively and regularly.
It is, however, also important to appreciate that smarter learning is not just a function of building and using certain systems. To enhance the learning capabilities, organisations need to reconceptualise their design and to architect themselves differently.
To design a learning organisation, one needs to consider three basic questions:
1. How to develop and communicate a strategic intent to learn across the organisation ?
2. How to convert this intent into specific learning mechanisms ?
3. How to develop supporting structures and processes which enhance and facilitate learning ?
1. STRATEGIC INTENT TO LEARN
If an organisation aims to become a learning organisation, this intent must be visible and formally communicated to people within the organisation. Of course, few organisations couch their mission or strategy statements as that of becoming a learning organisation (with the exception of companies like Larsen & Toubro, whose vision statement explicitly states the intent "to become a vibrant learning organisation"). What is more important than statements is whether the strategic intent of the company implies its commitment to acquire new knowledge and capabilities (i.e., learning) or not.
The most essential prerequisite for corporate learning is the process of questioning the taken-for-granted assumptions about company's operations and strategies. Learning occurs, when a company's vision and strategy necessitate this questioning. For instance, when in 1989, the one-year old SSI, Core Healthcare, decided that its aim is to become a global leader in the parenetaral business, it forced the company to critically reevaluate its strategies and operating paradigm.
Similarly, when Amtrex Appliances fixed its aim to become a "100-percent OK Company" and a global player, the erstwhile laid-back air-conditioner manufacturer had to question and reinterpret its earlier ways of working. This process led to a variety of new initiatives, such as revamping the company's marketing strategies, benchmarking with the best in the industry, investment in IT, and building a designation-less organisation.
Studies on corporate visions show that the effective ones mostly focus on larger and challenging futures. They are often phrased in equivocal terms and, therefore, provoke and stimulate discussions and problem-solving activities within the organisation. HCL Corporation's aim to become a "fractal organisation" or Amtrex Appliances' "100-percent OK Movement" are good example of such visions.
Unfortunately, many visions (e.g., becoming a global company, customer-focused company, or a TQM company, etc.) have been used so indiscriminately and repetitively, that they have lost their impact and meaning. Many companies, therefore, use other methods to express their learning intent.
One common, and increasingly more popular, way of communicating the organisation's openness to self-reassessment is by fixing stretch targets for oneself. Stretch targets force companies to question and reevaluate their past practices. For instance, a couple of years back, Mahindra & Mahindra decided to increase its tractor production from 40,000 to 60,000 a year without any increase in plant, equipment or manpower. Once having fixed the target, the company had to work backward to question the existing work-systems and practices. This led to a radical redesigning of M&M's work processes and shopfloor operations.
Lastly, many companies express their learning intent not in what they say, but in what they do. These are strategic actions, which communicate a strong message that the organisation is open to a reevaluation of its operating and strategic paradigm. While expressed in different ways, these actions tend to challenge and violate the boundaries within which the organisation had been operating till then. For instance, an organisation may completely change the composition of the top team, often bringing in a large number of people from outside the industry at the senior levels (e.g., in the top team of Arvind Mills, a large number of executives have been recruited from unrelated industries, such as Asian Paints, Citi Bank, HLL, Pepsico, etc.). Similarly, when a company goes in for new markets (e.g., Mafatlal Industries' foray into global export market) or on a spree of entering into new businesses (e.g., HCL Corporation, within last one year or so), it sends a strong message to its people that new capabilities and work-practices are required within the company.
2. LEARNING MECHANISMS
For learning to actually take place, the learning intent must get translated into specific systems and mechanisms which enhance organisational learning. This is a very critical step in building a learning organisation, since it requires actual planning and implementation. Organisation can develop two kinds of learning mechanisms: those which focus outward and aim at acquiring new knowledge, and those which focus within and aim at creating new knowledge.
Learning from Others
Organisations which learn effectively view their environment with the curiosity and humility of a learner. They develop systems which enable them to adapt new insights and knowledge from diverse sources. Such companies scan and audit their environment on a regular basis, commission surveys, benchmark against competitors and best-in-the industry, reverse engineer their competitors' products, co-opt customers and suppliers, and so on.
Learning from Competitors: Obviously, learning about the competitors is the most common form of knowledge acquisition. For instance, a large number of companies (e.g., HLL, Titan, Amtrex, etc.) continuously monitors the actions of their competitors. Information about competitors help organisations in identifying their own shortcomings, defining new problems, and even in finding new solutions. One of the scanning mechanisms used by HLL is UNISON (Uni Lever On-Line Network), which is a global network. It helps the company to track a variety of trends across the world, e.g., what has been the competitor's strategy in similar situation elsewhere, how did a product fair in similar markets when launched in other parts of the world, which Uni Lever company can be taken as an internal benchmark for certain performance measures, and so on.
Smart learners, however, do not limit themselves only to learning about their competitors. They also learn from them. One of the Indian banks, for instance, found that CitiBank can process a cheque in just 24 hours. The bank carefully studied its competitor's processes to improve its own efficiency in handling cheques. Similarly, many companies (though they will not admit it) reverse-engineer their competitors' products on a routine basis, find out what features make these products more effective, and build these features in their own products.
Learning from Customers: Another major source of learning for a company is the customer. Aligning with the customers has at least three learning advantages for the organisations. Firstly, customers provide valuable feedback to the company about its own functioning. Videocon, for instance, tracks more than 50,000 households to find out customer expectations from the products. Similarly, Modi Xerox conducts dozens of customer surveys (post-installation survey conducted within 90 days of delivery, monthly, quarterly, and annual customer feedback surveys, etc.) to improve its service standards. Feedback from customers has helped the company to start many unique initiatives, such as site improvement programme for upgrading the machines at customers' location, critical machine handling programme for old machines, and so on.
Secondly, the customers are often the best and most objective source for learning about the competitors. After all, they are in the best position to objectively compare two competing products\services. Often customers provide information, which cannot be accessed from anywhere else. For instance, one of the most dangerous competition for Titan comes from the IMFQ (Indian Made Foreign Quartz) brands. IMFQs represent the highly dispersed local brands which are quick to duplicate Titan designs, are cheap, and (though often of lower quality) provide value for money to the customers. Being fragmented and localised, there is no consolidated data-base available on these brands. However, Titan is able to track these brands with reasonable accuracy, primarily because of the relationship it has cultivated with the dealers and retailers.
Lastly, customers are a prime source of ideas for product and service improvements and innovations. By co-opting the customers, organisations get useful insights in their developmental efforts. That is why, companies like Philips maintain a panel of housewives to help them in designing their products. Similarly, for 21 months before launching Scooty, TVS-Suzuki assigned a special task-force to probe the tastes of the potential customers. This task-force met hundreds of buyers and dealers through meetings and focus group interviews to evolve Scooty's specifications.
Benchmarking: One of the most potent tools for learning from others, used by an increasingly large number of companies, is benchmarking. Benchmarking allows companies to compare and evaluate their own performance and processes with the best in the industry, and even outside the industry. Unfortunately, many companies limit their benchmarking activities to comparisons of inter-company performance indices. Greater learning occurs when the organisations benchmark not only the performance, but also the processes which lead to differences in performances.
To become an effective learning tool, benchmarking requires careful planning on the part of the organisations. Firstly, organisations must do considerable homework to map and measure their own processes before embarking on visits to other better performers. Without this preparation, benchmarking visits are quite likely to degenerate into industrial tourism.
Secondly, it is necessary that the benchmarking team includes those who would be directly involved in implementation of learning. This requires not only a reevaluation of organisational protocols (organisational norms often don't allow the shopfloor worker to go on major industrial visits, even though finally he would be directly involved in implementation), but also identification of benchmarking team right in the beginning. Careful identification and thorough training of benchmarking team is an important prerequisite of effective benchmarking.
And lastly, crucial learning often occurs when organisations benchmark their processes against companies outside the industry. Benchmarking against best-in-the-class (as compared to best-in-the-industry) is not only easier, but also has the advantage that company may acquire new knowledge which its competitors within the industry do not possess. That is why, when Amtrex discovered that its income from after-sales service was far below that of its rival, Carrier Aircon, it benchmarked its service process not against its competitor, but against Modi Xerox, which is known for its superior service standards.
Learning from Within
Valid knowledge does not reside only outside the organisation; in most organisations there is abundant knowledge which lies untapped in the minds of isolated individuals and informal groups. A service engineer, for example, often knows about many defects in the product. His knowledge, however, is rarely utilised in designing and improving products.
Learning organisations develop mechanisms which tap such pieces of critical knowledge, and convert them into collective learning of the organisation. While the exact form of these mechanism may differ across organisations, they share two common characteristics: one, they are "boundary-spanning" in nature (i.e., they cut across the traditional hierarchical, functional and divisional boundaries); and two, they focus on the learning potentials of individuals within the organisation. Let us look at some of the most popular such mechanisms:
Informating: While many organisations are still struggling to understand the potential of information technology, smart learners realise that IT is more than just a tool for automation and coordination. It is also a tool for capturing the intangible knowledge-base of the organisation and making it visible.
Consider, for instance, how Colgate Palmolive uses IT. Its 300 odd salepersons are networked to its 19 computerised warehouses and the HQ through their laptops and modems. This automation, of course, increases the efficiency of order-processing and stocking. But more than that, it also allows the company to generate additional knowledge, e.g., about logistics, areas and brands requiring thrust, high performing salepersons, emerging trends, etc., on a real-time basis.
IT also allows the organisation to network its knowledge-base and distribute its learning. For instance, HCL-HP uses an on-line data-base which records all service problems, and their solutions, encountered by the engineers anywhere in India. Thus, if a problem has been encountered and solved by one service engineer, that solution becomes the collective learning of the organisation.
Developing Connectivity: Apart from intelligently using IT, smart learners also create other mechanisms to enable knowledge to travel across the organisation. According to K.N. Shenoy, CEO, ABB India, in the emerging competitive environment, "...knowledge networking will be a critical success factor." Developing mechanisms which increase internal linkages within the organisation facilitate transfer of learning and availability of knowledge at the point where it is needed.
Such connectivity stimulates different units of the organisation to learn from each other. This is particularly so when such linkages are created between the knowledge-creating (e.g., R&D) and knowledge-using (e.g., marketing and production) functions. Many companies (e.g., Arvind Mils, Mukund, Praj Consultant, etc.) develop sound mechanisms to link their R&D with marketing and production functions. Mukund Iron and Steel, in fact, does not even have a metallurgical lab, because shopfloor is considered to be the lab. Its research projects are decided in consultation with the marketing and production executives.
Large multi-product, multi-divisional organisations have a distinct advantage in facilitating learning through connectivity. Since divisions are relatively autonomous, they develop their own unique practices. However, being part of the same conglomerate it is easy for the divisions to access each other's knowledge-base. For instance, the RPG group of companies have a unique system called the Knowledge Improvement Process (KIP). All 35 companies of the group participate in this process which involves benchmarking each other on 12 specified parameters. This system enables the companies to learn from each other.
Problem-Based Training: Training is obviously the most common tool for promoting learning within the organisations. Unfortunately, in most organisations the training systems are focused more on individual learning than on organisational learning. They assume that individual's learning will automatically get transferred to organisation - which most often does not happen.
Moreover, often the conventional training activities are also segregated from the central strategic concerns of the company. It is important, therefore, for learning organisations to fashion relevant linkages between training and its utilisation. Many companies do so by identifying one or two strategically critical areas of training and then training a large number of people in those areas. This not only clearly communicates the strategic concerns of the company to its members, but also creates a supporting environment for individual learning to thrive. For instance, having identified customer service as the strategic focus, Sterling Resorts trained almost all their executives in a two-day workshop, entitled "Putting People First." This helped creating a shared perspective among the executives, who could now interact with each other about similar issues in common language.
Another strategy adapted by many organisations is by blending training contents with application. If training design simultaneously allows the participants to test out concepts and techniques, the learning is more likely to get transferred to practice. For instance, in many senior level training programmes of ITC, TELCO, etc., executives are also given projects to work on as a part of training. These projects are selected because they are strategically critical to the company. Working on them gives the executives the opportunity to apply the concepts they are learning, while simultaneously creating bridges for transfer of learning.
Many companies ensure effective organisation-wide learning by evolving new and innovative training strategies. The Jhalawar units of PGR Corporation have developed many unique training mechanisms, besides the conventional classroom training. For instance, one practice is "one minute training" which allows any employee, who has learned a new skill to hold a one-minute impromptu class and share the summary of his insights with his colleagues. Similarly, the company has formed many "study circles" of employees who periodically meet and discuss articles and books which they may have read.
3. SUPPORTING STRUCTURES AND PROCESSES
While learning mechanisms determine the quality of information created and acquired by the organisation, it is also important to ensure that this information is productively used by the organisation. Organisations need to develop corresponding structures and processes which facilitate dissemination and utilisation of knowledge. In fact, development of such structures and processes is a precondition for creating a learning organisation.
Process-Based Structures: For knowledge to travel and disseminate in an organisation, it is necessary to smoothen its flow. Unfortunately, the traditional structures, with their functional or task-based segmentation, create too many barriers for knowledge to circulate freely. Thus, learning of one part of the organisation does not often reach others.
For instance, while the shopfloor employees may be aware that defects in a batch have been reworked. This information, however, rarely reaches the service engineers, who should be prepared for the possible customer complaints due to the rectified defects. The division between the shopfloor and the after-sales service is artificial, because essentially both are contributing to the same business process.
That is why, learning organisations need to structure themselves around core work-processes, and not around isolated functional tasks. This task requires a radical redefinition of how the organisation performs its business. For instance, looked as a process, materials planning is not just a function performed by the materials department. Rather, it is a practice which requires inputs from many other departments, such as marketing, finance, and production. To design a process-based structure, an organisation will have to undertake a major exercise for identifying its core work-processes.
Creating a process-based organisation also often requires some radical steps. Many companies (e.g., Amtrex, Comnet, UBEST, etc.) realise that one of the main factors which inhibits knowledge-flow is the system of designations in the organisation. These organisations have abolished the designations, so that people can come together in natural groups to perform the work.
Cross-Functional Synergy: One of the direct implications of the process-based view of the organisation is the necessity of developing cross-functional activities and competencies within the company. It requires people to move and perform beyond their functional boundaries. At Mahindra and Mahindra, for instance, the shopfloor engineers visit the customers once a month and interact with them. Often they videotape their interactions so that it can be played back to their colleagues at the plant.
Companies create such cross-functional synergies in many ways. One of the most common method is by creating cross-functional teams. In a large number of companies, such teams are formed for a specific task, and are disbanded after the project is completed. It is possible, however, to extend this practice to comprehensively restructure the organisation on the process-based lines.
Another method for achieving cross-functional synergy is by encouraging multiskilling and acquisition of multifunctional competencies by the employees. PGR Corporation, for example, has developed a system of cross-functional promotion for its employees (e.g., a finance person can opt to shift to marketing). Similarly, many market-focused companies create systems by which all employees, irrespective of their functional expertise, must put in a stint in the market. Many companies also practice job rotation to enable their employees to learn new functional skills.
Empowerment and Self-Management: For learning to get translated into practice, employees must feel encouraged and empowered to try out their insights. It is common, however, that people do not feel enthused to act and experiment with new learning. There are two major obstacles which inhibit people from implementing what they know: the hierarchical organisational structure and the reward systems.
Most organisations are structured as tall, control and command hierarchies. Tall hierarchies, however, aim to control, not encourage, action. For a learning organisation, a flat, decentralised structure is an essential precondition. In fact, one of the first concrete action for creating a learning organisation is to get rid of the unnecessary layers, whose only value is to control.
To encourage people to practice their learning, it is also necessary to review the reward systems of the organisation. Most companies reward conformity to system, while penalising experimentation. It is quite common to lose a promotion or an increment for a failure, while being ignored for successfully taking a risk. Moreover, most companies reward performance (as they should) but have no system for rewarding learning (gaining a new skill, contribution to one's profession, etc.). One of the major challenges for designing a learning organisation would be to innovate such reward systems.
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