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As we all know, to stay ahead of competitors, companies must constantly enhance the way they do business. But more performance-improvement programs fail than succeed. After all, how can organizations respond creatively to new challenges shifts in customer preferences, market downturns without first discovering something new—then altering the way they operate to reflect new insights? Without learning, companies repeat old practices, make cosmetic changes, and produce short-lived improvements.
To transform your company into a learning organization, Garvin recommends mastering five activities:. Instead, generate hypotheses, gather data to test your hypotheses, and use statistical tools such as cause-and-effect diagrams to organize data and draw inferences. Systematically search for and test new knowledge. Use small experiments to produce incremental gains in knowledge. For instance, specialty glass manufacturer Corning experiments continually with diverse raw materials and new formulations to increase yields and provide better grades of glass. Use demonstration projects to produce knowledge you can use for systemwide changes.
General Foods experimented with self-managing teams at its Topeka plant with the aim of adopting this approach across the company later. Review your successes and failures, identify lessons learned, and record those lessons in accessible forms. Boeing compared the development processes of its and planes models that had serious technical problems to those of its and two profitable programs.
It then compiled a booklet of lessons learned. Several members of the learning team were later transferred to two start-up programs—the and To transfer knowledge quickly and efficiently throughout your organization, move experts to different parts of the company—across divisions, departments, and facilities—so they can share the wealth. Continuous improvement programs are sprouting up all over as organizations strive to better themselves and gain an edge.
The topic list is long and varied, and sometimes it seems as though a program a month is needed just to keep up. Unfortunately, failed programs far outnumber successes, and improvement rates remain distressingly low. Because most companies have failed to grasp a basic truth. Continuous improvement requires a commitment to learning. How, after all, can an organization improve without first learning something new? Solving a problem, introducing a product, and reengineering a process all require seeing the world in a new light and acting accordingly.
In the absence of learning, companies—and individuals—simply repeat old practices. Change remains cosmetic, and improvements are either fortuitous or short-lived. A few farsighted executives—Ray Stata of Analog Devices, Gordon Forward of Chaparral Steel, Paul Allaire of Xerox—have recognized the link between learning and continuous improvement and have begun to refocus their companies around it.
Yet despite the encouraging signs, the topic in large part remains murky, confused, and difficult to penetrate. Scholars are partly to blame. Their discussions of learning organizations have often been reverential and utopian, filled with near mystical terminology. Paradise, they would have you believe, is just around the corner. Sound idyllic? Without question. But does it provide a framework for action?
The recommendations are far too abstract, and too many questions remain unanswered.
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How, for example, will managers know when their companies have become learning organizations? What concrete changes in behavior are required? What policies and programs must be in place? How do you get from here to there? Most discussions of learning organizations finesse these issues. Their focus is high philosophy and grand themes, sweeping metaphors rather than the gritty details of practice.
Three critical issues are left unresolved; yet each is essential for effective implementation. First is the question of meaning.
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We need a plausible, well-grounded definition of learning organizations; it must be actionable and easy to apply. Second is the question of management. We need clearer guidelines for practice, filled with operational advice rather than high aspirations. And third is the question of measurement.
Without this groundwork, progress is unlikely, and for the simplest of reasons. For learning to become a meaningful corporate goal, it must first be understood. Surprisingly, a clear definition of learning has proved to be elusive over the years. Most scholars view organizational learning as a process that unfolds over time and link it with knowledge acquisition and improved performance. But they differ on other important matters. Scholars have proposed a variety of definitions of organizational learning. Here is a small sample:. Marlene Fiol and Marjorie A. Some, for example, believe that behavioral change is required for learning; others insist that new ways of thinking are enough.
Some cite information processing as the mechanism through which learning takes place; others propose shared insights, organizational routines, even memory. And some think that organizational learning is common, while others believe that flawed, self-serving interpretations are the norm.
How can we discern among this cacophony of voices yet build on earlier insights? As a first step, consider the following definition:. A learning organization is an organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights. This definition begins with a simple truth: new ideas are essential if learning is to take place. Sometimes they are created de novo, through flashes of insight or creativity; at other times they arrive from outside the organization or are communicated by knowledgeable insiders.
Whatever their source, these ideas are the trigger for organizational improvement. But they cannot by themselves create a learning organization. Without accompanying changes in the way that work gets done, only the potential for improvement exists. This is a surprisingly stringent test for it rules out a number of obvious candidates for learning organizations.
Many universities fail to qualify, as do many consulting firms. Even General Motors, despite its recent efforts to improve performance, is found wanting. All of these organizations have been effective at creating or acquiring new knowledge but notably less successful in applying that knowledge to their own activities. Total quality management, for example, is now taught at many business schools, yet the number using it to guide their own decision making is very small. Organizational consultants advise clients on social dynamics and small-group behavior but are notorious for their own infighting and factionalism.
And GM, with a few exceptions like Saturn and NUMMI , has had little success in revamping its manufacturing practices, even though its managers are experts on lean manufacturing, JIT production, and the requirements for improved quality of work life. Organizations that do pass the definitional test—Honda, Corning, and General Electric come quickly to mind—have, by contrast, become adept at translating new knowledge into new ways of behaving. These companies actively manage the learning process to ensure that it occurs by design rather than by chance.
Distinctive policies and practices are responsible for their success; they form the building blocks of learning organizations. Learning organizations 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 organization. Each is accompanied by a distinctive mind-set, tool kit, and pattern of behavior.
Many companies practice these activities to some degree. But few are consistently successful because they rely largely on happenstance and isolated examples. By creating systems and processes that support these activities and integrate them into the fabric of daily operations, companies can manage their learning more effectively.
This first activity rests heavily on the philosophy and methods of the quality movement. Its underlying ideas, now widely accepted, include:. Most training programs focus primarily on problem-solving techniques, using exercises and practical examples. These tools are relatively straightforward and easily communicated; the necessary mind-set, however, is more difficult to establish. Accuracy and precision are essential for learning.
Employees must therefore become more disciplined in their thinking and more attentive to details. They must push beyond obvious symptoms to assess underlying causes, often collecting evidence when conventional wisdom says it is unnecessary. Xerox has mastered this approach on a company-wide scale. Employees are provided with tools in four areas: generating ideas and collecting information brainstorming, interviewing, surveying ; reaching consensus list reduction, rating forms, weighted voting ; analyzing and displaying data cause-and-effect diagrams, force-field analysis ; and planning actions flow charts, Gantt charts.
They then practice these tools during training sessions that last several days. The result of this process has been a common vocabulary and a consistent, companywide approach to problem solving. Once employees have been trained, they are expected to use the techniques at all meetings, and no topic is off-limits.
This activity involves the systematic searching for and testing of new knowledge. Using the scientific method is essential, and there are obvious parallels to systematic problem solving. But unlike problem solving, experimentation is usually motivated by opportunity and expanding horizons, not by current difficulties. It takes two main forms: ongoing programs and one-of-a-kind demonstration projects.
Ongoing programs normally involve a continuing series of small experiments, designed to produce incremental gains in knowledge. They are the mainstay of most continuous improvement programs and are especially common on the shop floor.
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Corning, for example, experiments continually with diverse raw materials and new formulations to increase yields and provide better grades of glass. Allegheny Ludlum, a specialty steelmaker, regularly examines new rolling methods and improved technologies to raise productivity and reduce costs. Opportunity motivates experimentation. Corning, for example, continually strives to increase yields and provide better grades of glass.
Successful ongoing programs share several characteristics. First, they work hard to ensure a steady flow of new ideas, even if they must be imported from outside the organization. In large part as a result of these initiatives, Chaparral is one of the five lowest cost steel plants in the world. Successful ongoing programs also require an incentive system that favors risk taking. Evolves to suit your KYC needs. Forge partnerships.
Expert opinion. Read the survey. Latest thinking. Our latest thinking. Explore related topics. KYC policy and the path to standardization.
July 20, Strategies for fighting financial crime. September 03, Product focus. See product details. Find out more. Relevant products. Explore all products. An alliance could help your company negotiate better supply deals, share costs such as advertising or take advantage of costly technology. Increasing your productivity could also mean getting into new markets with new products and services, extending your market reach or accelerating research and development by sharing costs and resources.
Start or buy a business Business strategy and planning Define your strategy Manage your business Manage your growth Innovate Money and finance Marketing, sales and export Employees Operations Technology Change of ownership Entrepreneurial skills Entrepreneur's toolkit Blog. Search articles and tools. Ask yourself: Is the current equipment giving you good results? Do you need to replace several pieces of equipment with more efficient machinery? Can the equipment you are replacing be used elsewhere in your company? Will its acquisition be a long-term investment?
Would it be better to rent equipment? Will you use all the features, or are they simply gadgets? Have you considered the costs of training employees on new equipment? Use technology to improve your operations Web-based technologies enable you to dramatically improve how you run your business.
Here are some examples: E-purchasing online buying is an alternative vehicle you can use to get your materials from suppliers. This technology enables you to get more competitive pricing as you are no longer limited to local merchants. Generally, the cost of transaction processing is reduced and there is less paperwork.
Smart inventory control systems can help you reduce inventory levels, improve profitability and speed up customer response time. Online and order management systems integrate inventory information with your organization's purchasing, accounting and e-business systems, so you can easily track order status and the movement of inventory within your company.
You will also be able to identify peak and low periods, allowing you to adjust supply purchases and better manage working capital. Review your existing setup Look at your processes from the point of view of a potential investor. Implement a continuous improvement approach Improving productivity is an ongoing activity. Here are some suggestions for setting up a continuous improvement plan: Start by assessing the competition and the best practices in your industry, also known as benchmarking. But don't copy plans of other businesses—develop one that works for your company.
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