Proceedings of 7th European Business Research Conference 15 - 16 December 2016, University of Roma Tre, Rome, Italy ISBN: 978-1-925488-203-4
Implementing Learning Organisation: from Theory to Practice Vittorio D'Amato*, Francesca Macchi** and Elena Tosca*** This study aimed to investigate the concept of learning organisation, and how it has changed in the course of time, to outline a practical strategy for becoming a learning organisation and to consider which is the learning organisation's management model. Our proposal is based on a wealth of experience and integrates many of the accepted best practice approaches on the theme of learning organisation with the latest robust academic researches on long-lived and visionary companies and with an analysis conducted through open interviews with 6 CEOs of companies that have demonstrated to be learning organisations during the time. The study is completed by an analysis of their management models.
JEL Codes: M10, M12, M50, M53, O15, O31, O35 Key words: management innovation, learning organisation, change
1. Introduction The business world is in a constant state of flux. New technologies, a new generation of employees and new competitors from emerging economies are all factors that contribute to what is often called a VUCA (Volatile-Uncertain-Complex-Ambiguous) world (Bennett and Lemoine 2014; Birkinshaw 2010; Horney, Pasmore and O’Shea 2010; Johansen 2012). The collapse of the defensibility of the competitive advantage, which is becoming a transient competitive advantage, is giving us a new economic order (Day and Schoemaker 2005; Druker 1999; Vermeulen 2010; Hamel 2012). These trends led to a fundamental change. There is a lot of experimentation underway in terms of how companies should be organised and how leaders should act (Hall 1993; Lubit 2001) . Today the firms succeed not just on the basis of efficiency, but mainly of innovation, speed, flexibility, collaboration and their ability to learn faster than their competitor (Hamel and Prahalad 1994; De Geus 1997; Santos-Vijande, López-Sánchez and Trespalacios 2012; Hogan and Coote 2014). The amount of things that people care, is passionate about and trust, engages them in their work and has a direct effect on the creation of a sustainable competitive advantage on company's expected lifespan (Garvin 1993; Fiol and Lyles 1985; Gratton 2010). The learning organisations of the future need a management model in which groups and individuals are constantly engaged in new learning processes and where the main purpose of the management is not to do things in a good way or to know how to deal with _______________________________ *Prof. Vittorio D'Amato, Department of Economics & Management, LIUC - Università Cattaneo, Corso Matteotti 22, 21053 Castellanza (VA), Italy, tel. 0039-331-572484 email:
[email protected] ** Dr. Francesca Macchi, Department of Economics & Management, LIUC - Università Cattaneo, Corso Matteotti 22, 21053 Castellanza (VA), Italy, tel. 00039-331-572557 email:
[email protected] *** Prof. Elena Tosca, Department of Economics & Management, LIUC - Università Cattaneo, Corso Matteotti 22, 21053 Castellanza (VA), Italy, tel. 00039-331-572484 email:
[email protected]
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Proceedings of 7th European Business Research Conference 15 - 16 December 2016, University of Roma Tre, Rome, Italy ISBN: 978-1-925488-203-4 complexity, but to get the most out of employees (Hamel 2012; Birkinshaw 2013). Accordingly, transforming organisations into learning ones is a response to the mentioned changing situations and requirements. (Day and Shoemaker 2004; Marquardt 2002; Prahalad 1995; Huston 2004). This study aimed to investigate the concept of learning organisation, how it has evolved, what is the concrete path for becoming and remaining over time a learning organisation and which is the learning organisation's management model. Our proposal is based on a wealth of experience and integrates many of the accepted best practice approaches with the latest robust academic researches and with an analyses conducted through open interviews with 6 CEOs of companies that have demonstrated to be learning organisations during the time.
2. Literature Review Various definitions and models about learning organisations have been proposed by organisational theorists (Argyris and Schon 1978; O' Reilly 1981; Snell 2001; Ortenblad 2002; Fiol and Lyles 1985; Stata 1989). Furthermore, some scholars tried to check the concept of learning organisations practically besides the theoretical discussions through designing conceptual models and their implications in the real environment of organisations. (Senge 1990; Thurbin 1994; Marquart 1996; Garvin 2000; De Geus 1997; Zirak 2015) (see Fig. 1). Figure 1: Definitions of Learning Organisations
Peter Senge, in his book The Fifth Discipline: The Art and Practice of the Learning Organization (1990), p. 3, says: “The tools and ideas presented in this book are for destroying the illusion that the world is created of separate, unrelated forces. When we give up this illusion we can then build learning organisations...”. To achieve these ends, Senge suggests the use of five disciplines: Systems Thinking, Personal Mastery, Mental 2
Proceedings of 7th European Business Research Conference 15 - 16 December 2016, University of Roma Tre, Rome, Italy ISBN: 978-1-925488-203-4 Models, Shared Vision and Team Learning. Systems Thinking is a framework for seeing interrelationships rather than things, for seeing patterns of behaviour rather than static structures (Forrester 1968; Goodman 1980; Lyneis 1980). Personal Mastery is the discipline of continually clarifying what is really important for us and deepening our personal vision (Fritz 1984). Mental Models represent a person’s view of the world (Argyris and Schön 1996; Cope 2003; Huff 1990). When individuals makes their mental models explicit through qualified discussion or communication (Langfield-Smith and Wirth 1992; Levine, et. al. 1993), this allows individual mental models to be shared with others. Shared Vision is the representation of a possible future that we want to create. A Shared Vision creates a sense of community that permeates the organisation and gives coherence to diverse activities (Coolins and Porras 1996). Team learning is the ability of a team to function as a whole, where there is a commonality of purpose and where people are encouraged to complement each other (Hirst, Van Knippenberg and Zhou 2009). Robert Dilworth (1995) identifies five principal barriers to organisational learning. First, there is a tendency to treat learning as an individual phenomenon, rather than as something that can involve a group of people (Kim 1993; Antonacopoulou 2006). Second, there is a fixation with formal training with scant attention given to informal learning (Marsick and Watkins 2001; Dabbagh and Kitsantas 2011). Third, business and learning processes are considered separately. The fourth barrier refers to non-listening working environments (Riege 2005; Mustajoki 2008). Non-listening blocks communication and the exchange of ideas which is necessary to promote organisational learning. The fifth barrier is created by hierarchical and bureaucratic management style and generates an atmosphere of distrust, fear, blocked communications and stultification of organisational learning (Schein 1996; Easterby-Smith 1997). In order to overcome these barriers, Dilworth identifies some specific strategies: cross functional teams, job rotation, action learning, succession planning, carer pathing, mentoring programs, employee-exchange program, distributive learning, formal training, celebrations of success, self-directed teams. Learning becomes embedded in the day-to-day working activity (Levitt and March 1988; Brown and Duguid 1998; Argote 2012). He says that, once created a learning organisation, people have to develop an ability to design a strategic architecture that brings business and learning processes together as part of a single system. Garvin, in his article Building a Learning Organisation (HBR, July-August 1993), says: “Learning organisations are skilled at five main activities: systematic problem solving, experimentation with new approaches, learning from their own experience and past history, learning from the experiences and best practices of others, and transferring knowledge quickly and efficiently throughout the organisation.” Any company that wishes to become a learning organisation can begin by taking a few simple steps. First, fostering an environment that is conducive to learning; second, reflecting about strategic plans, dissecting customer needs, assessing current work systems and inventing new products; third, opening up boundaries and stimulate the exchange of ideas. Together, these efforts help to eliminate barriers that impede learning and move learning higher on the organisational agenda (Joo 2002). He also suggests a subtle shift in focus, away from continuous improvement and toward a commitment to learning. Coupled with a better understanding of the “three Ms” - meaning, management, and measurement of learning -, this shift provides a solid foundation for building learning organisations. Another model is the Marquardt's systematic model (Marquardt 1996). According to it, four influential 3
Proceedings of 7th European Business Research Conference 15 - 16 December 2016, University of Roma Tre, Rome, Italy ISBN: 978-1-925488-203-4 factors - people, technology, knowledge and organisation in the role of subsystems and learning process in the role of main system - were recognised. Learning takes place at the individual, team and company level. In people subsystem, managers, employees, customers, suppliers and society are studied. In organisational subsystem, perspective, culture, structure and strategy are studied. In technology subsystem, knowledge management, accessibility to information and information exchange are investigated. Finally, in knowledge subsystem, knowledge generation and knowledge management, storing, analysing, and exploring data are studied. Moreover, Marquardt believes that, in order to implement the following ten strategies to build a learning subsystem, it is necessary to namely develop modular and reusable learning plans (Sanchez and Mahoney 1996), increase people’s capability to learn how to learn, develop organisational dialogue (Isaacs 1993), design development plans based on employees’ capability (Maurer, Pierce and Shore 2002; Orlikowski 2002), design self–grooming plans, execute systemic learning skills, encourage and execute systemic thinking approach, use scenario planning for learning (Schoemaker 1995), expand domestic and universal intercultural mindsets and learning, and finally increase employees’ intervention and contribution. All the subsystems indicated by Marquardt must be strictly interconnected to each other. If any subsystem is weak or absent, the effectiveness of the others is significantly weakened. We want also to explore the contributions that management gurus like James Collins and Jerry Porras (1994), Arie De Geus (1997) and James Collins (2007), with their robust researches on the theme of long-lived and visionary companies, provide to better understand which are the main pillars of a learning organisation and how to transform a company into a learning organisation, concretely. We don't have found such a comparison in any other study, actually, we are strongly convinced that a learning organisation, by definition, must be also a long-lived and visionary company, which means that the real purpose of a learning-living-visionary organisation is to survive and thrive in the long run involving people in the continuous development of the company (Senge 1990; Watkins and Marsick 1993; Wheatley 1993; De Geus 1997; Druker 1999; Gratton 2004; Garvin 2008). We choose these three practical researches for their academic respectability and robustness. The first study is that of James Collins and Jerry Porras, who, between 1988 and 1994, asked 700 chief executives of US Companies to name the firms they admired the most. From the responses, they culled a list of 18 visionary companies, most of which existed from more than 60 years. Collins and Porras compare these companies with key competitors and look at differences. The second one is Arie De Geus's research, at that time coordinator of planning for the Royal Dutch/Shell Group, which examined the question of corporate longevity. The study considered 27 companies of large dimension that were older than Shell, founded in 1890. The study wanted to find out whether these companies had something in common which could explain why they were such successful survivors. The third study is the research Good to Great conducted by Jim Collins. He identifies 11 companies, among many others on the field, that for 15 years have had total equity annuity equal to or lower than the general stock market and then, from a point of transition from Good to Great, for the next 15 years, rent at least three times higher than the market.
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Proceedings of 7th European Business Research Conference 15 - 16 December 2016, University of Roma Tre, Rome, Italy ISBN: 978-1-925488-203-4 In Fig. 2, we report a comparison of all the elements that the authors considered as the main pillars of the long-lived, visionary companies. In order to reach the final objective of our research, that is identifying the main traits of a learning organisation and studying its management model, we have classified the contributions from the mentioned studies into two clusters: Business Model and Management Model. The Business Model is the way in which a company develops its own business and achieve values for its clients, shareholders, staff and partners (Drucker 1999). The Management Model can be defined as the set of choices done by executives of a firm, regarding how they define objectives, motive efforts, coordinate activities and allocate resources (Birkinshaw 2010, D’Amato 2015). A management model has to clearly specify the main principles on which the company sets its behaviour and consequently the main managerial choices. It is immediately clear that investing time and energy in defining the management model is a matter of fundamental importance, since a sustainable competitive advantage and longevity doesn't only come from a good business model, but also from a valid management model.
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Proceedings of 7th European Business Research Conference 15 - 16 December 2016, University of Roma Tre, Rome, Italy ISBN: 978-1-925488-203-4 Figure 2: Comparison between Three Researches on Long-Lived and Visionary Companies
What emerges from all these three researches is that for the 100% of the studied companies, (In Fig. 2, it is indicated by symbol (*)), the main pillars of a long-lived and visionary company are: Core Ideology - clear and shared mission, vision and values. Sensitivity for the world around them - these companies remain always in harmony with the world around them. Facts are better than dreams – this means the living companies are highly persistent and work on translating day by day their vision into concrete objectives, strategies and actions. In only two of the three studies (In Fig. 2, it is indicated by symbol [¤]) appear elements like: tolerance for new ideas – people have time for free experimentation; first who than what – it is fundamental to choose the right people to get on board; home growth management – visionary and long-lived company develop, promote and select managerial talents grown principally from inside; continuous process improvement – the critical question asked by a visionary company is “how can we do better”; cult like cultures – visionary and long-lived companies have a set of values and practices that are more consistently than in the comparison company. Concerning the 6
Proceedings of 7th European Business Research Conference 15 - 16 December 2016, University of Roma Tre, Rome, Italy ISBN: 978-1-925488-203-4 others elements that appear just in only one of the studies we don't know the reason. It could be that these studies has been conducted in different time, different industry or dimension and therefore company’s needs have changed, or that some companies give for sure elements like organising for learning, BHAG-Big Hairy Adacious Goals, focus on what you do best and conservatism in finance.
3. The Methodology and Model Concerning the methodology, we have combined the contributions of the most robust publications on how to build a learning organisation (Senge 1990; Thurbin 1994; Garvin 1994; Marquardt 1996), with the main robust researches on the theme of long-lived and visionary companies (Collins and Porras 1994; De Geus 1999; Collins 2007), with our research which has been principally focused on identifying the phases to become a learning organisation and which is the learning organisation's management model. The research has been based on open interviews, lasted between 60 and 150 minutes, with 6 CEOs - Giampaolo Arosio, President Region EMEA Festo and CEO Festo Italy; Massimo Pizzocri, Vice President Consumer Sales Epson Europe and Managing Director Epson Italy; Alberto Capponi, Chief Financial Officer and Board Member Angelini Group; Andrea Pontremoli, CEO and General Manager Dallara Automobili; Simone Binda, Managing Director Binda Group; Maurizio Mazzieri, Deputy Managing Director Toyota Material Handling Italy - of companies that for their longevity, their management model and also for their results can be considered learning organisations (D’Amato 2015). This is also certified by the AIADS-Italian Association of Systems Dynamic, which is well recognised from the scientific community. All the interviews have been taped and transcribed. We consider the mentioned interviews very precious for our research, due to the 25-years managerial experience of the interviewees, their responsibilities in different countries and the proved efficiency of the business and management models which are applied in the company they lead. The best way for knowing how to transform a company into a learning organisation is to conduct an open interview with these CEOs. In Fig. 3 we report the results of the analysis of the transcripts, in order to find some similarities. In Fig. 3 we have collected the most interesting extracts from CEOs’ interviews and we have clustered them on the basis of the dimensions of the management model.
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Proceedings of 7th European Business Research Conference 15 - 16 December 2016, University of Roma Tre, Rome, Italy ISBN: 978-1-925488-203-4 Figure 3: Results from CEOs’ Interviews
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Proceedings of 7th European Business Research Conference 15 - 16 December 2016, University of Roma Tre, Rome, Italy ISBN: 978-1-925488-203-4 4. The Findings We want to start giving our definition of learning organisation: “A learning organisation is a living being in continuous development, where sense and meaning is given to what people do, where people actively participate and engrave on the creation of a sustainable future for all.” Through an in-depth analysis of the main publications, research studies and also in our research we have identified three main steps that a company has to put in place for becoming a learning organisation: First - create a strong sense of identity, second - define business strategy and execute strategy one step at a time, third - work on the management model. All the publications (Senge, et. al. 1994; Senge 1990; Argyris 1991; Burdett 1993; Cohen and Austin 1994; Richards 1994, Marquardt 1996; Dilworth 1995), the researches (Collins and Porras 1994; De Geus 1999; Collins 2007) and also our research demonstrate that all the learning organisations have to define and share first of all mission, vision and values (see Fig.2 and Fig.3). If we want our company to become a learning organisation, where should we begin from? Collins and Porras 1996 p. 219 say: “First and above all else, pin down your core ideology. Starting by articulating your organisation's core values… Also try to pin down the second component of core ideology: purpose.” All the CEOs that we have interviewed identify the importance to start defining clearly mission, vision and values (see Fig.3). This work has to be done with the contribution of all the members of the management team and in a second phase has to be communicated to all the employees (D’Amato 2015; D’Amato and Macchi 2016). The second important step in creating a learning organisation, as demonstrated by 100% of the companies involved into the studies (see Fig. 2), is to translate mission and vision statements into concrete goals, strategies, actions and results (Nonaka and Toyama 2005; Nonaka 2008). Quoting Collins and Porras 1996 p. 201: “The core of a visionary company comes in the translation of its core ideology and its own unique drive for progress into the varying fabric of the organisation-into goals, strategies, tactics, policies, processes, cultural practices, management behaviour, building layouts, pay systems, accounting systems, job design - into everything that the company does. A visionary company creates a total environment that envelops employees, bombarding them with a set of signals so consistent and mutually reinforcing that it's virtually impossible to misunderstand the company's ideology and ambitions”. In this second step we include also “sensitive to their environment” that appears in the 100% of the three studies and represents a company strategy in order to remain constantly in tone with the business environment. (Day and Schoemaker 2005; Vermeulen 2012). The third step in building a learning organisation is to work on its management model. The companies of our study, after having created and communicated their mission, vision and values and developed a clear business model (goals, strategies, action plan) have clearly identified and worked on their management model (D’Amato 2015). A learning organisation has clearly understood that managers must learn to work on the business model and the management model simultaneously, if they want to survive the test of time (De Geus 1999). The management models of many companies, that aren't learning 9
Proceedings of 7th European Business Research Conference 15 - 16 December 2016, University of Roma Tre, Rome, Italy ISBN: 978-1-925488-203-4 organisations, are characterised by high levels of hierarchy and decisions are concentrated in the hands of few people. Objectives are focused mainly on the short term and top-down imposed. Motivation is mainly based on money, while information isn’t often shared or communicated. Training and learning proacesses are usually individual and focused on few people. This kind of management model can’t be suitable for the current business world and doesn't represent the management model of a learning organisation, as our research (see Fig. 2 and 3) and the most recent publications and researches demonstrate (Gratton 2004; Malone 2004; Peters 2013; Hamel 2012). Our research, and also the three studies previously analysed (see Fig. 2 and 3) show that decisional processes should be based on new concepts of shared responsibility (Nonaka 2005; Nonaka 2008) and shared company knowledge (Posner, Kouzes and Schmidt 1985; Cremér 1993; Huffman 2001). Decisions making are implemented with a double approach: top-down and bottom-up. Coordination and control policies are shared too, since people and teams could become more self-directed and managed. Also the definition of objectives bases itself on a double top-down and bottom-up approach: while vision and strategic aims still rely on top management, operative tasks should be set with the help of employees directly involved in targeted activities. Moreover, objectives can’t be uniquely monetary and focused on the short term. Motivation is strongly personal and related to individual needs and perceptions. It can’t be only influenced by economic aspects; it should be determined by a higher level of commitment and a higher job quality, instead (Elliot 1994; Ryan and Deci 2000). In all the companies we have analysed, information are shared and transparently communicated inside the company. Another important element of the management model are the learning and growth processes which have to be planned at the organisational level, devoted to all employees and enlarged to cross-functional competences (D’Amato and Macchi 2016). Actually, two of the six companies studied (Festo and Gruppo Angelini) have internally developed a company Training School and Festo has also a second Level Master Degree in Mechatronics & Management for the new people joining the group. The last element of the management model is the context, the working environment. As Andrea Pontremoli, CEO Dallara Automobili, said: “The working environment is crucial, both the physical and social. It is the working environment which makes the difference; we changed from a closed office model to an open space. What is important is generating a coherent social model which enables people to feel good.” (Fig. 4). Prior researches (Popova and Cseh 2015; Ghahremani 2001; Senge 1990; Marquardt 1996; Garvin 1994; Thurbin 1994) confirm what we discover in our study, that the fundamental organisational redesign necessary for creating learning organisations is the reconfiguration of a hierarchical-based organisation into a participative leadership organisation. Team-based organisations possess two fundamental characteristics: selfdirection and cross-functionality (Field 2006). Team-based organisations possess very flat structures thereby avoiding entrenched bureaucracy and rigid lines of authority. Flat structures also aid team members in developing creative dialogue, sharing information and in formulating and implementing strategy at the work team levels (Goh 1998). Multifunctional teams facilitate horizontal work flows, team-oriented action learning and create 10
Proceedings of 7th European Business Research Conference 15 - 16 December 2016, University of Roma Tre, Rome, Italy ISBN: 978-1-925488-203-4 shared knowledge and experiences that transcend traditional functional boundaries (Schein 1985; Garratt 1990). Figure 4: Learning Organisation's Management Model
5. Summary and Conclusions The main purpose of this study was to investigate the concept of learning organisation, how it has changed during the time and, finally, to outline a practical guidance for becoming a learning organisation and also which is the learning organisation's management model. The major findings of our study reveal that the definition of learning organisation is profoundly changed during the time and clarify which are the practical phases that a company has to put in place for becoming a learning organisation. According to the findings of the study, analysis of the main publications, research studies and also in our research we have identified three main steps that a company has to pass through for becoming a learning organisation: 1) reach a strong sense of identity, 2) define business strategy and execution strategy one step at a time, 3) work on the management model. We have also focused our study on the objective of identifying a possible learning organisation's management model that enable people to bring out their emotions, to vibrate the energy and passion that lie within them, in order to obtain more human and more sustainable organisations. Furthermore, in learning organisations, as in a living beings, the management model can play a vital role in creating a common identity and in supporting learning, since it shares the effectiveness of knowledge inside the organisation. 11
Proceedings of 7th European Business Research Conference 15 - 16 December 2016, University of Roma Tre, Rome, Italy ISBN: 978-1-925488-203-4 The present study is not free from limitations. Its very first limitation relates to the small number of companies involved and to the fact that all the companies are located in Italy, even if all the interviewed CEOs have responsibilities on different countries and have collaborators in different countries. In order to strengthen and back up the findings and conclusions of this study, it is essential to implement further research to analyse the concrete steps necessary for becoming a learning organisation.
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Proceedings of 7th European Business Research Conference 15 - 16 December 2016, University of Roma Tre, Rome, Italy ISBN: 978-1-925488-203-4 Santos-Vijande, M L, López-Sánchez, J A and Trespalacios, J A 2011, How organizational learning affects a firm's flexibility, competitive strategy and performance, Journal of Business Research, Vol.65, No.8, pp.1079-1089. Schein, E H 1985, Organizational Culture and Leadership, San Francisco CA: Jossey Bass. Schen, E H 1996, Three Cultures of Management: The Key to Organizational Learning, Sloan Management Review, Vol.38, No.1, pp.9-20. Schoemaker, P J H 1995, Scenario planning: a tool for strategic thinking, Sloan management review, Vol.36, No.2, pp.25-40. Senge, P 1990, The Fifth Discipline: The Art and Practice of the Learning Organization, New York, NY: Doubleday/Currency. Senge, P et. al. 1994, The Fifth Discipline Fieldbook, New York, NY: Doubleday/Currency. Snell, S R 2001, Moral Foundations of the Learning Organization, Human Relations, Vol.54, No.3, pp.319-342. Stata, R 1989, Organisational learning-the key to management innovation, Sloan Management Review, Vol.30, No.3, pp.63-74. Stuart, A B, Ashforth, E and Dutton, J E 2000, Organizational Identity and Identification: Charting New Waters and Building New Bridges, The Academy of Management Review, Vol.25, No.1, pp.13-17. Thurbin, P 1994, Implementing the Learning Organization, London UK: Pitman Publishing. Van de Ven, A H and Polley, D 1992, Learning while innovating, Organization Science, Vol.3, No.1, pp.92-116. Vermeulen, F 2010, Business exposed: The naked truth about what really goes on in the world of business, Harlow Essex UK: FT Prentice Hall. Watkins, K E and Marsick, V J 1993, Sculpting the learning organization: Lessons in the art and science of systemic change, San Francisco CA: Jossey-Bass. Wheatley, M 1993, Leadership and the New Science, San Francisco CA: Berrett-Koehler.
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