The second generation learning organizations: New tools for sustaining competitive advantage
Organizational Dynamics; New York; Autumn 1998; Robert M FulmerPhilip GibbsJ Bernard Keys

Volume: 27
Issue: 2
Start Page: 6-20
ISSN: 00902616
Subject Terms: Organizational learning
System theory
Competitive advantage
Classification Codes: 2500: Organizational behavior
9130: Experimental/theoretical treatment
Geographic Names: US
Abstract:
Since the phrase "organizational learning" was first used 25 years ago, the thinking behind it has evolved. Companies have realized the competitive benefits to come from organizational learning and learning tools and techniques. But as the evolution of organizational learning continues, we will see existing learning tools used more often for new purposes and the development of other learning tools to increase corporate competitive advantage. This is the challenge for the second generation of organizational learning. As management theorists and practitioners suggest that organizational learning may be the source of the only sustainable competitive advantage, the tools of organizational learning have grown. Organizational learning can be said to be in its second generation, and to the earlier tools of organizational learning can be added 6 new tools - tools that seem to be associated with leading companies.

Full Text:
Copyright American Management Association Autumn 1998
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Caption:

As we begin the second generation of studying of the concepts and applications of organizational learning, there are new opportunities for competitive advantage with six new learning tools as well as with more efficient and more pervasive use of the learning tools of the first generation.

Since the phrase "organizational learning" was first used 25 years ago in a book by Chris Argyris and Donald Schon, the thinking behind it has evolved. Companies have realized the competitive benefits to come from organizational learning and learning tools and techniques. But as the evolution of organizational learning continues, we will see existing learning tools used more often for new purposes and the development of other learning tools to increase corporate competitive advantage.

This is the challenge for the second generation of organizational learning.

As management theorists and practitioners suggest that organizational learning may be the source of the only sustainable competitive advantage, the tools of organizational learning have grown. Organizational learning can be said to be in its second generation, and to the earlier tools of organizational learning can be added six new tools-tools that seem to be associated with leading learning organizations.

Before discussing these new tools, let's look at the evolution of organizational learning and those tools of the first generation, including some neglected ones that could help in anticipation of problems or trends in the future.

THE EVOLUTION OF ORGANIZATIONAL LEARNING

Chris Argyris and Donald Schon, in their book Organizational Learning II, raised the question that began the pursuit of "learning as strategy": "What is an organization," they asked, "that it should learn?" Since that exploratory question, many efforts have been made to define and categorize learning and to explore the various dimensions of learning.

One answer came from Reg Revans, a physicist turned manager. A continent away, he wrestled with the problem of organizational turbulence in the coal fields of England. It was during WWII, and he and his fellow administrators were attempting to accommodate the rapid changes brought about by the war years. They found that no expert or body of knowledge existed that had the answer. He voiced the thought that organizations that did not learn (and change) as rapidly as their environment were doomed.

Revans advocated the formation of action learning teams and concentration on "questions" to generate learning rather than the use of preexisting knowledge. He introduced action learning with the thought, "When in the epoch of change, tomorrow is necessarily different from yesterday, and so new things need to be done-what questions need to be asked before solutions are sought?"

Revans, good physicist that he was, provided a formula for action learning. In his terms, Learning = P + Q. The "P" stands for programmed learning that comes from books, lectures or secondary sources, whereas the "Q" represents the learning that comes from asking questions, looking at evidence, and discussing or drawing conclusions based on experience. Action learning, Revans emphasized, "builds primarily on Q." His basic idea was to organize teams so that every team had two jobs: One was to solve a problem or to complete a project, the other was to learn from the job. Afterwards, the learning was to be written down, shared, and submitted to the planning group or CEO.

CORPORATE CULTURE AND LONGEVITY

Another thread in the evolution of organizational learning can be found in the work of Arie de Geus. In the Foreword of de Geus' provocative book The Living Company, Peter Senge writes that it was de Geus who, with Argyris, first provided him with a serious appreciation of the significance of organizational learning. While serving as coordinator of worldwide planning at Royal Dutch Shell, de Geus was struck by the fact that the average life expectancy of most companies, from birth to death, was less than 40 years. Yet some firms were alive and vigorous after more than 200 years.

De Geus professed that most corporations die prematurely-from learning disabilities. They are somehow unable to adapt and evolve as the world around them changes. In its study of corporate longevity, the Shell team studied in detail 27 firms, all as old and as large as Shell. The goal was to determine if there were commonalities among these long-lived companies. Ultimately, the study found that these healthy senior citizens of the corporate world possessed four common traits:

1. A sensitivity to their environments (and potential changes in it), which represented their ability to learn.

2. A strong degree of cohesion and identity (culture), which were considered to be essential aspects of a company's ability to build a community and persona for itself. Values are often the foundation of this characteristic.

3. Tolerance for new or different ways of thinking or acting (often associated with decentralization), which provides an openness for learning and creates a willingness to look objectively at the total ecology of the organization, according to de Geus and his team. 4. Conservative financing as a critical corporate attribute.

Long-term health seemed to be strongly connected with an organization's ability to manage its own growth and evolution effectively.

Firms with these traits, de Geus believes, have a much higher life expectancy. He called them "living companies." Firms that stress only increasing shareholder wealth were called "economic companies." These firms were less likely to possess the DNA for truly long-term survival.

Still another thread in the unraveling of the concepts of organizational learning can be found in the work of Edgar Schein. A longtime member of the board of directors for the MIT Center for Organizational Learning, Schein is well known for contributions that span the entire discipline of organization theory. But relevant here is his work in describing disabling learning dysfunctions that stem from subcultures within organizations. Schein identified three subcultures:

1. The operator culture, whether in a manufacturing plant or airline cockpit, usually requires some ingenious assumptions and perhaps even rule violations to get the job done. Operators rarely believe that the management system will support the necessary assumptions that they feel they need to make.

2. The engineering culture, in Schein's scheme, are designers and guardians of technology. They believe that "problems have abstract solutions and that those solutions can, in principle, be implemented in the real world with products and systems free of human foibles and errors."

3. The executive culture is based on assumptions that CEOs and their immediate deputies possess. It is composed of a world of quarterly reports, board meetings, and yearend results. This culture continually feels pressed to know what is going on; however, operating from remote positions, it often creates a strong bias for control systems.

FROM SKILLED INCOMPETENCE TO SYSTEMS THINKING

Organizational learning took a decided leap forward-"a leap of learning"-when Peter Senge published The Fifth Discipline in 1990. Building on the need for dialogue, openness and other concepts articulated by Argyris, de Geus, Revans, Schein and others, Senge's book was subtitled The Art and Practice of the Learning Organization. It articulated the five disciplines of a learning organization and emphasized that organizational learners suffer from several learning deficiencies. Some may even be learning disadvantaged. They suffer from "functional myopia," a disability that can lead to the potentially terminal illness of "becoming one's position." Agryris had called the dilemma "skilled incompetence"; in his research, he had discovered that the more intelligent and highly trained a professionalfor example, a Harvard MBA or a professional management consultant-the greater his skill at defensive routines that prevent open dialogue.

Skilled incompetence and fear of change may prompt learning that holds on to a dysfunctional status quo. Other disabilities seem to freeze action for many managers and prevent them from experimenting in organizations. Further, managers frequently fail to see "the big picture," often missing the critical connective elements of cause and effect within decision making and strategy sessions. This concept was based in the emerging science of "Systems Dynamics," founded by Senge's mentor at MIT, J.W. Forrester, and may have been the most unique contribution of Senge to the field of organization behavior.

Learning in organizations, Senge suggested, may be thought of as a system or, perhaps more precisely, a flow process that often needs to be unblocked or released within individuals and organizations. As articulated by J. W. Forrester and his colleagues and disciples, system thinking helps individuals see patterns and creates the ability to reinforce or change these patterns when needed. Unfortunately, most individuals focus on isolated parts of the systems instead, then wonder why efforts at solving problems or perpetuating success fail. Systems thinking clarifies the "big picture" and assists in understanding the patterns of interrelationships. It is an antidote for feelings of helplessness that overwhelm when we feel, "It's the system; I have no control."

Before an industry group prior to the quality revolution, a former vice-president of manufacturing for Ford Motor Company, for instance, explained his disappointment with short-term thinking: "It's not just Ford's planning horizon... U.S. businesses are very short term in their thinking...A U.S. company will say, `We are going to have a bad quarter; our shareholders will tear us up. Maybe we will just delay maintenance for a quarter."' He continued by explaining that when the next quarter came along, if the problem was not better, the company would delay maintenance again. These short-term solutions led to major longterm problems in the automobile industry.

Happily the "new" Ford Motor Company is using systems theory to understand learning blockages with concepts like the "tragedy of the commons." In an agrarian society, a common ground for feeding sheep existed in each community. Individual incentives and sub-optimization, such as one family's attempt to increase the size of its flock, could eventually destroy the commons for all. Using systems archetypes, a Ford team has been able to conceptualize the interdependencies involved in achieving optimal systems. The learning laboratory at Ford is identifying commons early and developing management systems to prevent "overgrazing."

HOW DO ORGANIZATIONS REALLY LEARN?

Much learning in organizations by individuals can be classified as maintenance learning. We learn daily how to accomplish tasks, plan for the short term, or improve tactics. The process is ongoing, with everyone working at learning how to do the same things better. Crisis or shock learning is a form of learning for U.S. companies that depends on reactive strategies. Argyris classified maintenance and shock learning as "single-loop learning." Argyris differentiated single-loop learning, whose emphasis is on doing things more efficiently, from organizational learning, referring to the kind of nondefensive behavior and open dialogue by managers in which managers examine the underlying structure of thinking and decision making as "double-loop learning."

Learning to examine the way in which one learns and consequently to learn differently has been called "triple-loop learning" by William Isaacs.

Another learning classification is "anticipatory learning."

Anticipatory Learning

The term "anticipatory learning: comes from co-author Robert M. Fulmer and is strategic learning in anticipation of problems or trends for the future. Strategic learning includes learning for the long run and learning across the organization, vertically, horizontally, and diagonally.

Fulmer and Marshall Sashkin identified and defined 20 specific learning tools in interviews with over 200 executives in six countries. Subsequently, members of AMA's Presidents Association were surveyed concerning their use of these learning tools. The participants were asked to classify their organizations' use of each technique. They were also asked the extent of their organizations' use and the perceived importance of each learning technique in their organization.

Fulmer and Sashkin recognized that all the learning techniques could potentially be used in multiple ways. However, the survey responses yielded some surprises-several of the tools were used in unexpected ways. Instead of fitting neatly into the learning matrix, many of the techniques were used for more than one purpose.

Four categories of learning tools emerged from the survey results:

Maintenance tools (i.e., predominately used for "creating agreement" strategies),

Anticipatory tools (i.e., predominately used for "creating the future" strategies),

Crossover tools (i.e., used equally for "creating agreement" and for "creating the future"), and

Utility tools (i.e., applied across all strategies).

Further, the survey found that most of the learning techniques were used by an overwhelming majority of the companies and were viewed as important learning tools by almost the same number. The Delphi technique, content analysis, scenario analysis, and impact analysis-anticipatory tools-emerged as "stepchildren" among learning tools; they were less widely used or valued by the executives surveyed. Maintenance tools were the most widely used, whereas crossover tools were the most valued. The increased use of anticipatory learning and the effective use of anticipatory tools are the challenges for the second generation of organizational learning.

MAINTENANCE TOOLS

Employee suggestion systems, self-directed work teams, statistical process control, benchmarking, and workout programs are used predominately as maintenance tools. Certainly, the simplest tool is the well-known employee suggestion system, which requires little more than pencils, paper, and a box. Self-directed work teams are a more sophisticated approach to organizational learning, involving people making incremental improvements by giving them real, increased involvement and control over their work. Statistical process control, a specific tool associated with total quality management, is also used to implement maintenance learning strategies. Benchmarking and workout programs are more recently developed learning techniques.

In benchmarking, best practices from outside the organization are studied intensively with the aim of adapting the best approaches to one's own organization or situation. General Electric's workout program was developed specifically to involve groups at all levels in identifying work inefficiencies and in making operational changes.

There was unanimous agreement among frequent users in the survey that these learning techniques were valuable to their organizations. Although these tools can produce incremental improvements in the current organization, they are rather ineffective at either anticipating or dealing with major changes.

CROSSOVER TOOLS

Transferring innovations, effective interventions, business process re-engineering, task forces or ad hoc groups, and internal management development make up the crossover tool category.

Transferring innovations is a sophisticated approach for diffusing the successful methodology of one group throughout the organization. Similar to "best practice" programs, effective intervention depends on understanding complex social processes within the organization.

Business process re-engineering (BPR) is a high-impact tool used to create substantial and discontinuous changes. With BPR, work processes are not simply modified in minor ways but are analyzed and redesigned completely. To the extent that BPR is internalized as a way of thinking and acting in the organization, it helps organizations anticipate and even influence the future.

[Table]
Caption: LEARNING TOOL MATRIX

Task forces or ad hoc groups are often used to deal with specific problems. Commonly they are assigned current tactical problems, but occasionally they are used to tackle strategic issues. Perhaps because of their lack of structure or organizing method or maybe due to their overuse or inappropriate use, task forces seem to be perceived as less effective organizational learning tools than others.

Total quality programs, popular in the 1980s, are another form of crossover tool that appears to be declining in importance.

As crossover tools, these learning approaches are applied both to maintenance strategies and anticipatory strategies. It appears that business process re-engineering and internal management development are usually employed for participative learning.

Internal management development is more frequently focused on team development and on addressing specific questions of concern to the organization than on creating awareness or knowledge. Business process re-engineering is becoming more internalized and accepted as a way of learning in organizations rather than the previous practice of relying on an outside consultant working on a one-time project.

UTILITY TOOLS

Customer surveys, external advisory groups, and content analysis find application in all four cells of the learning matrix. Customer surveys are used extensively and effectively. The means for gathering relevant information from a key constituency, they can be used either on current issues with limited involvement of people in the organization or, at the other extreme, on future-oriented actions involving both customers and members of the organization. External advisory groups or consultants may serve in a variety of roles, from helping the organization address specific, near-term problems with minimal involvement of organization members to assisting management in formulating and implementing far-reaching programs within the organization that help shape the future for the organization.

Content analysis is a more sophisticated tool-in "creating the future," it can be classified as an anticipatory tool. It involves comprehensive monitoring of news media to pinpoint, track, and evaluate important issues and trends. Such information is assembled into reports formatted in a usable form for key players in the organization. Various employees within the organization may perform the analyses or they can be done by outside organizations. The focus of the surveillance, depth of analysis, and breadth of distribution of the information can vary widely, depending on the intended use of the information.

Content analysis was not used widely in the organizations surveyed, but those organizations that did use it ranked it as an important learning tool. Those companies that choose to use it may benefit from doing so.

ANTICIPATORY TOOLS

Decentralized strategic planning, scenario analysis, joint ventures/strategic alliances, external management development, the Delphi method, and impact analysis are used predominately as anticipatory learning tools.

In joint ventures and strategic alliances, typically, people are assigned to a new organization created with some external firm. The new organization is charged to pursue a common aim drawing on key individuals and units within the parent organization for support. When the process works well, learning occurring in the joint venture/strategic alliance is transferred to the parent organization. Traditional external management development programs are usually low involvement. Managers are often "sent" rather than as an active engagement or personal choice. Recently, management development programs have been evolving into an anticipatory learning tool as companies send intact teams of managers to work on specific organizational issues.

Scenario analysis helps teams of individuals recognize potential external events in advance of their occurrence and plan how they might best adapt to them. The Delphi method has been found to be effective in forecasting future events and in generation consensus. It eliminates committee activity, and it replaces it with a carefully designed program of sequential individual interrogations interspersed with information and feedback on results from earlier stages in the program. Impact analysis is often used in connection with scenarios, Delphi, or content analysis.

While scenarios, Delphi, and content attempt to detect trends and forecast future events, impact analysis involves key managers in evaluating the impact of trends on business operations.

STEPCHILDREN AND LEARNING CHALLENGES

Scenario analysis, Delphi method, and content analysis were the least used and least valued of the potential anticipatory learning tools among respondents in the Fulmer/Sashkin study. Yet those firms that said they used these techniques extensively valued them highly. Why haven't these tools become more widely employed? Are these tools limited in their application? Or are they more difficult to use and misunderstood? What do frequent users know that the rest of us need to know? Capturing the great learning potential of these anticipatory tools presents a major challenge as we enter the second generation of organizational learning. We believe that the limited degree of their use confirms the notions of Gary Hamel and C. K. Prahalad, as well as Robert Fulmer and Solange Perret, that most of organizational learning is focused on single-loop or maintenance issues. As learning efforts evolve and mature, we believe that the following second-generation tools will be more widely employed.

SECOND GENERATION TOOLS

Our work with several "best practice" learning organizations convinces us that six secondgeneration learning tools are being utilized more frequently among the most successful learners than by most of their competitors. In most instances, the tools are not being used in exactly the way they were originally envisioned by their originators, but they have been adapted to fit the specific needs of the user.

DIALOGUE

As originally suggested by physicist David Bohm, "dialogue is a process of collective thinking and inquiry, a process for transforming the quality of conversation and, in particular, the thinking that lies beneath it." It enables a group to reach a higher level of consciousness and creativity through the creation of shared meanings and common thinking processes.

At the executive level, dialogue is difficult since it must stimulate free-flowing conversations, and often raises issues involving mistakes or errors. At that level, many executives are hesitant to reveal weaknesses. Senior teams, says Bill Brenneman of Shell Oil, "rarely become effective learning systems until they are humbled by unsatisfactory results."

At the Society for Organizational Learning (SoL), dialogue is enhanced by seminars on personal vision and mental models. Dialogue is regularly practiced in SoL meetings and encouraged in a variety of sponsor activities. In one project, SoL dealt with union workers and management at a major steel mill where relationships were poor largely due to deep employee cuts. The dialogue group entered the organization and heard stories of chairs being thrown, people storming out of meetings, and planned slow-downs in work. Rather than bargaining or arbitration, the project groups began attempts to create a dialogue.

The project leaders explored ways that team members were projecting blame and taught basic inquiry skills such as how to detect and clarify unduly abstract statements and how to explain thinking, interpretations, and conclusions along with metaphorical ways to contain feelings and "cool the conversation." In this case, a steel "crucible" emerged as a powerful container for dialogue. Building on the familiarity of steel workers with the ability to manage intense heat and pressure in the steel mill, participants learned to speak abstractly of how a "meeting got hot," or someone got "burned"-without losing sight of the purpose of the meeting.

When organizations must "unlearn" previously unsuccessful patterns, dialogue offers a path to follow. As companies move to global operations, dialogue becomes even more important in driving the planning process. Sue Canney Davison in The Journal of Management Development describes one such operation:

The...CEO managing a Finnish/UK merger stresses team spirit, common language, consensus through debate. He encourages managers to participate in the debates outside their areas of responsibility and to tell when he is wrong.... Although the headquarters are based in Finland, only the CEO and the financial controller are based there. The other three top vice presidents were free to choose any European headquarters as their operating base. It works because there is a high level of trust and a very disciplined communication pattern. Every month they have a board meeting at one of the regional headquarters or company offices somewhere in the world. Between meetings they have a telephone conference every Monday to share information and conduct a very organized set of telephone conferences... The benefit of being geographically dispersed is that the top team is always out in the company, encouraging networking and cross-fertilization and bringing a first-hand knowledge of events to the board meetings.

2. SCENARIO PLANNING

Planners at Royal Dutch Shell contributed at an early date to the learning movement by evolving a major remedy for the contemporary emphasis on short-term thinking. Scenario planning involves thinking through strategic alternatives-not just one alternative for the future. These strategic alternatives are assembled from wide ranging role players and a breadth of data and information, to form alternative stories about the future of a company. De Gues and the Shell planning group discovered from the work of David Ingvar, head of neurobiology at the University of Lund (Sweden), that the human brain is constantly attempting to make sense of the future. The brain attempts to anticipate what will happen or what it should schedule for the next moment, the next few minutes, next week, or month. These plans are sequentially organized into "what if" analyses. We visit the futures and remember our visits. In other words, we make "memories of the future."

De Geus believes that the same kind of process occurs with collective memory from organizational learning. Perception requires the deliberate effort of management groups to "visit the future." Otherwise these observations and data will have no meaning. Hence, smart companies often have difficulty navigating major turning points in strategy. Automobile companies of the 1970s missed the significance of small Japanese cars dotting the roads in California. American steel mills stuck with large- scale integrated mills that operated 24 hours per day, 365 days a year, expecting economies of scale to carry the day while nimble small electric steel mills with flexibility and quick setups developed competitive advantage. U.S. electronics producers failed to anticipate that Japanese suppliers of small parts would work their way up and down the supply chain until they could mimic end products superior with better quality and lower prices.

No company is hard-wired to produce this kind of futuristic organizational memory. Management must plan specifically for anticipatory memory. Scenario forecasting by General Motors could have prevented the recent rebellion on the part of Saturn employees from disenchantment with management due to its failure to anticipate decline of gas prices and demand for smaller sports vehicles. The 1970s should have convinced them that alternatives need to be projected for low and high cost fuel alternatives.

In the early 1990s, over 100 Johnson & Johnson executives were interviewed to solicit their ideas about how to cope with potential changes in the health care industry. After these ideas had been crafted into a future-oriented case, Johnson & Johnson 2002, the top 700 executives in the company debated the assumptions and used a modified Delphi Technique to calculate the consensus probabilities that various developments in the scenario would actually occur.

Scenario building is more than just projecting. To build a good scenario, executives in a company must come together and participate in the story line. Planning groups usually assist by starting with a "what-if " case study. Then as the executives project possibilities, financial, marketing, and operational projections are made. An organization and its executives prepare for the future by visiting it in advance.

3. THE MERLIN EXERCISE

Futuristic thinking may need "seeding" or prompting in organizations. One of the most interesting and effective ways to reinvent problem-solving or a strategic plan in an organization is through the use of the Merlin Exercise. One of the co-authors has used this approach with several companies, including Johnson & Johnson, Hoechst Celanese Corporation, and Bertlesmann (BMG Entertainment). The Merlin Exercise is a combination of free-form simulation and scenario planning. The concept is based on a whimsical account by T. H. White about how Merlin meets the future King Arthur and knows to set a table and prepare a meal for his guest. To explain his preparation, Merlin says:

...Now ordinary people are born forwards in time, if you understand what I mean, and nearly everything in the world goes forward too. This makes it quite easy for ordinary people to live.... But fortunately I was born at the wrong end of time, and have to live backwards from in front, while surrounded by a lot of people living forward from behind.

The Merlin Exercise process proceeds by asking participants to project themselves into some future period-say, ten years from now, to the year 2008. They imagine that their organization has become the leading organization in the nation (or world) competing in its market.

On the first day of the exercise, managers build pictures, write stories, and engage in conversation with each other about what this actually would look like and a bit about how they got there. On the second day they might write a statement of strategic intent for the invented future-the real game they will be playing over the next ten years to make their future actually happen. Managers then walk back from year 2008 to the present, identifying key milestones that must be met during the decade to make the success they have envisioned a reality. Once the milestones are identified, teams assess their strengths and weaknesses and how they are going to compete to make their desired future happen. Much of this step is traditional strategic planning-but only after teams have forced themselves to set goals and objectives based on an unrestricted look at the future.

In the first Merlin planning sessions, many managers are skeptical and negative about spending time on an imaginative exercise. But after a number of sessions and the conclusion of the exercise, most organizations become quite positive, especially if they receive positive feedback from a top executive. In some firms, new businesses have actually been started as a result of this activity.

4. ACTION LEARNING

Although the current practice of action learning varies from firm to firm, the process is so basic and simple that its elegance escapes the new initiate. Essentially, action learning involves asking participants to organize or work in teams and attack real problems. In the process of resolving a real challenge, they acquire and use new skills, tools, or concepts. They learn, apply the learning, then learn from their experience with the application. The major steps are:

Organize into a team with ownership of problems,

Use diversity in team formation when possible,

Allow few planned inputs (P), but require much (Q) questioning,

Use a team advisor if needed, but no lecturer,

Meet regularly to discuss solutions to the problem(s)-(dialogue),

Once problems are solved, continue to meet to focus on learning, and reflection, and

Conclude action learning only when all relevant learning is gleaned from the projects.

Action learning has become more common in Europe than in the U.S. It is particularly appropriate in promoting a learning focus in teams, the primary learning unit for the learning organization. The most notable uses of action learning in the United States come, not surprisingly, from three of our best managed firms. The "Work Out" Program at GE, which has involved well over 200,000 employees during the past decade, is one of the most comprehensive action learning programs ever undertaken. On any given week, some 20,000 GE employees may be involved in working out solutions to real problems in real time. More recently, GE has continued its emphasis on action learning with major initiatives on the Six Sigma Quality and Change Acceleration Process (CAP).

At Motorola teams of 20 to 25 senior managers from various parts of the company focus on real-time problems defined by the CEO and COO to whom the groups report. Problem solving begins by focusing on quality, and expands to suppliers, customers, learning consortia, and rewards and recognition programs to reinforce learning. The third generation of the Johnson & Johnson Executive Conference is using a learning format that includes feedback about individual performance issues and facilitated learning around actual problems articulated by very senior executives who commit to acting on the recommendations generated by the action learning team-or explaining why the recommendations are not viewed as actionable.

In August 1998, a global benchmarking study of leadership development (sponsored by the American Productivity and Quality Center and American Society for Training and Development) concluded that strategically oriented action learning was one of the major emphases of firms designated as "best practice partners."

5. PRACTICE FIELDS

A previous Organizational Dynamics article explored the need for practice fields to generate learning in organizations. As Fred Kofman and Peter Senge point out, "Attorneys have `moot court,' theater groups and symphony orchestras have rehearsals, and doctors have the practice cadaver. But where-or how-do managers rehearse?" Unfortunately, these authors say, managers "seldom practice, they only perform...(yet) we need virtual learning spaceswhat have come to be known at the (MIT) Learning Center as 'managerial practice fields."

J. Bernard Keys, Robert M. Fulmer, and Stephen Stumpf have classified the most prominent practice fields in use today as "microworlds," using a term coined by Seymour Papert, MIT media technology professor, to describe complex behavioral simulations. "Simuworld" is a term that we devised to designate laboratories developed from management game architecture-competitive corporate games that are driven by a computer algorithm and often played with decision support systems. Teams in the practice fields study complex case and game backgrounds and industry environments, accept starting positions with defined resources, and play out strategy implementation over several simulated years of operation.

Used appropriately, practice fields can assist in providing "big picture" learning, encourage experimentation without the high risk incurred in real organizations, promote understanding of systems theory and dynamic interdependencies, and promote futuristic planning. These simulations mirror top management challenges, including behavioral conflict, organizational politics, cultural elements and other behavioral dimensions of strategy formulation and implementation.

Practice fields promote experimentation and, with proper coaching and prompting, can spur risk taking and learning in organizational dimensions that regular fieldwork seldom does. Connections and contradictions in strategy can be detected by practicing systems thinking within these highly realistic environments. J. Bernard Keys, who used The Multinational Management Game with a Baldridge award-winner, has seen many of these factors played out by middle management teams. Middle managers from around the world form diverse teams in terms of international origin and functional specialty and manage a $200 million microcomputer company for four days (six simulated years). By focusing with a "wide angle lens" across functions within an industry different from their own, there is less tendency to focus on "the way things are."

Some learn from successes. Others learn from their mistakes. First-time experiences are demonstrated as is premature entry into overseas markets. Teams must continually strive for balance in marketing, operations and finance-allowing team members to "peer over" the subculture walls that exist in the real organization. Participants must also balance global operations and strive for low cost combinations around the world. What about learning to learn? To be sure, some participants frustrate themselves by trying to force the simulated environment to reflect the business world as they have experienced it, rather than as it exists in the simulated environment. Often participants attempt to sub-optimize by manipulating stock price or cutting price to dump inventory-later recognizing these short-term solutions as folly. Led to experiment and "play" by the safe environment of the simulation. many become much better environmental scanners, anticipatory learners, and systems thinkers.

6. KNOWLEDGE MANAGEMENT AND MAPPING

Much of the knowledge capital possessed by an organization is not readily and widely available. As pioneered by Hewlett-Packard, knowledge management is a process for identifying what knowledge is needed within an organization what gaps exist, and what skills are required to solve a problem or complete a project. An effective knowledge map concludes with a collective view of the knowledge and skills required to successfully perform each step in delivering a solution. The key to the process is a framework the company uses to organize knowledge so that it can be identified and retrieved when needed.

Learning histories might be described as historical scenarios that focus on learning projects or groups. Information is gleaned from reflective interviews with persons with different perspectives on the learning project as well as from documentation. George Roth and Art Kleiner describe the process as follows: "We assemble transcripts of past events and relevant artifacts, until we have accumulated a 'mess of stuff."

The information is carefully distilled into themes and stories, orienting the historians to research rigor, mythic story-telling and pragmatic consultation. The results are cast in twocolumn format reminiscent of the live casework of Argyris, and balanced by questions and commentaries in the left-hand column. The document is validated with the people interviewed, and then it is disseminated in workshops throughout the company. Through this process a company generally builds a better understanding of the systems and cultural issues it faces.

Improved reporting and measurement techniques can provide reinforcement to an organization's effort to become a learning organization. There has been a growing number of attempts to measure the "return on investment" generated by learning expenditures. Motorola has reported a 30:1 return on its quality initiatives. Shell reports that the goal of a 25:1 return on the cost of its LEAP program "may have been too easy a target."

SUMMARY

No organization can afford to be-or admit to be-an organization that isn't interested in learning. Yet many continue not to make learning a priority required for long-term success. Perhaps one test of an organization's commitment to learning would be the degree to which its executives and managers recognize the following statement, developed by the Center for Managerial Learning and Business Simulation:

MISSION STATEMENT FOR THE LEARNING ORGANIZATION

The world changes and we cannot stop it, Our products will change, our markets will change, our customers will change, and some of our employees will move on-we hope to greater things.

But these things will not change

We will learn faster than our competitors,

We will learn across our organization from each other, and from teams,

We will learn externally from our suppliers and our customers,

We will learn vertically from top to bottom of our organization,

We will ask the right questions; and use action learning.

We will anticipate the future and create scenarios to learn from it,

We will practice what we learn, and learn from practice,

We will learn faster than our environment changes,

We will learn where no man or woman has learned before,

Therefore we will survive and prosper.

[Reference]
SELECTED BIBLIOGRAPHY

[Reference]
Organizational Dynamics has published a collection of distinguished articles on this subject, including pieces by Fred Kofman and Peter Senge, Chris Argyris, William Isaacs, Edgar Schein, Dave Ulrich, Todd Jick and Mary Ann Von Glinow, Michael McGill, John Slocum, and David Lei. See The Learning Organization in Action: A Special Report From Organizational Dynamics, American Management Association, 1994. To view the work that spurred worldwide discussion and development of learning in organization, see Peter Senge's Fifth Discipline: The Art and Practice of the Learning Organization, Doubleday, 1990. The work and contributions of Arie de Geus are summarized in Arie de Gues' The Living Company, Harvard Business School Press, Boston, 1997. See Sue Canney Davison in Executive Development and Organizational Learning for Global Business (J. Bernard Keys and Robert Fulmer, International Business Press, 1998). For a splendid rationale for learning as competitive advantage, see John W. Slocum, Jr., Michael McGill and David T. Lei, "The New Learning Strategy: Anytime, Anything, Anywhere," Organizational Dynamics, 23 (2), 33-47.The concept of dialogue is based on David Bohm's essay, "On Dialogue," and based on a meeting that took place, November 6, 1989 in Ojai, California. Our understanding of "The Tragedy of the Commons" is based on the article by that title that appeared in Science (162:1243-1248, 1968).
For more rationale on the need for learning in organizations, see R. W. Revans, "What Is Action Learning?" The Journal of Management Development, 15, 3, 1982, 64-75; M. Pedler, J. Burgoyne, and T. Boydell, The Learning Company, McGraw-Hill, Maidenhead, 1991; P. Hawlins, "Organizational Learning: Taking Stock and Facing the Challenge," Management

[Reference]
Learning,. 25, 1,1994, pp. 71-82. For new and emerging practices in organizational learning and leadership development, see Robert M. Fulmer, "The Emerging Paradigm of Leadership Development," Organizational Dynamics, Summer, 1997; Albert A. Vicere and Robert M. Fulmer, Leadership by Design, Harvard Business School Press, 1998; Robert M. Fulmer and Albert A. Vicere, "Executive Development: An Analysis of Competitive Forces," Planning Review, January, 1996;Robert M. Fulmer and Solange Perret, "The Merlin Experience: Future by Forecast or Future by Invention?" The Journal of Management Development, Volume 12, No. 6, 1993; Robert M. Fulmer, "The Tools of Anticipatory Learning," The Journal of Management Development, Volume 12, No. 6,1993; "Tools for the Global Learning Organization" (with Marshall Sashkin), American Journal of Managment Development, Volume 1, No. 3, 1995; Robert M. Fulmer and Albert A. Vicere, "The Changing Nature of Executive Development and Leadership Development," The American Journal of Management Development, Volume 1, No. 2, 1995; Robert M. Fulmer and Jack Goodwin, "The System Dynamics of Executive Education," Executive Development, Volume 8, No. 4, 1995; and Robert M. Fulmer, "A New Model For How Organizations Learn," Planning Review, (June,1994) . For more information on the development of scenarios for organizational learning, see John A.Gutman, "Creating Scenarios and Cases for Global Anticipatory Learning," American Journal of Management Development, Vol. 1, No 3, 1995. Also see, Robert M. Fulmer (SME), Leadership Development: Building Executive Talent, APQC International Benchmarkking Clearinghouse, Houston, TX, 1998.

[Author note]
Robert M. Fulmer is currently the W. Brooks George Professor of Management at the College of William and Mary. Fulmer previously was a Visiting Scholar at the Center for Organizational Learning at MIT and taught Organization and Management at Columbia University's Graduate Business School. For six years, he was Director of Executive Education at Emory University where he directed the Executive MBA program as well as public and customized programs for general and functional managers.
Fulmer received his first endowed chair at Trinity University and has served as Director of Corporate Management Development for Allied Signal, Inc., with worldwide responsibility for management development ranging from first-line supervision to senior executives. He has also served as president of two management consulting firms specializing in human resource issues.
Dr. Fulmer's writings have been widely read in both academic and professional circles. He is author of four editions of The New Management (Macmillan), and co-author of four editions of A Practical Introduction to Business (Richard D. Irwin, Inc.), Crafting Competitiveness (Capstone), Executive Development and Organizational Learning for Global Business and Leadership by Design (Harvard Business School Press). His MBA is from the University of Florida and his Ph.D. from UCLA.

[Author note]
Philip Gibbs is an assistant professor of management at the College of William & Mary. Dr. Gibbs has over ten years' experience teaching at major universities, including Georgetown University, Boston University, and Massachusetts Institute of Technology. He teaches courses in strategic management, mergers and acquisitions, and corporate governance at the executive and graduate levels. His expertise is mergers and acquisition strategies and the role of the board of directors in strategic change.
Prior to entering academia, Gibbs spent over 15 years in industry: as a principal with Hay Management Consultants where he implemented strategic management, organization development, and reward management projects; as a manager of financial analysis and of marketing planning at FMC Corporation; and in various career development positions in R&D, technical service, marketing, and strategic planning at Allied-Signal, Inc.
Dr. Gibbs has a Ph.D. in strategic management from Massachusetts Institute of Technology, an MBA in finance from the University of Chicago, and a BS in chemical engineering from The University of Texas at Austin. He has published in the Strategic Management Journal, and serves as a reviewer for the Academy of Management Journal and the Business Policy and Strategy Division of the Academy of Management.

[Author note]
J. Bernard Keys is Fuller E. Callaway Professor and Director of the Center for Managerial Learning and Business Simulation, College of Business Administration, Georgia Southern University. Previously he served as Associate Dean for graduate programs at The University of Memphis. His clients have included numerous Fortune 1,000 firms such as Phillips Petroleum, Kodak, Xerox, and Allied-Signal, and governmental organizations such as the Southeastern National Park Service. He has served as Erskine Fellow at the University of Canterbury, Christchurch, New Zealand and as organizational learning consultant to ELEA, a division of Olivetta, Florence, Italy. Throughout this past year, Keys served as Visiting Scholar at the MIT Center for Organizational Learning (now Society for Organizational Learning) directed by Peter Senge.
Dr. Keys has served as editor to the journals Executive Development and The Journal of Management Development. He has co-authored eight books, three published management games, and over 50 journal articles and book chapters.
Dr. Keys is known worldwide for his work with management simulations, including the well-known Multinational Management Game, used by Fortune 1,000 companies and universities world-wide.



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