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Creating A Learning Partnership: A Key To Competitive Advantage

Author: Dr Peter Lorange, President and Maucher Nestlé Professor, IMD, Lausanne
First published: 1997

"Organizational learning can be hampered by vested interest, concern for power or the fear of losing face by trying something new. A willingness to experiment is at the heart of the discovery process."

In recent years, there has been a significant shift in many companies' approach to competitiveness. While, in the past, strategic advantage has often been based on a unique technology or on outstanding products, today it is increasingly embedded in the underlying quality of a company's people and their cutting-edge experience.

As a result, a distinct change has occurred in the attitude and emphasis companies give to human resources development. Top management increasingly sees a commitment to executive development as an essential element in strategy implementation. It is now accepted that there is a clear link between executive education and the company's ability to meet the strategic challenges it faces. In light of this new priority, the question is: how can executives be trained most effectively? Even more, how can they gather experiences and learn as a company rather than simply as individuals? In other words, how can a company become a learning organization?

Four essential characteristics of organizational learning

Two complementary elements: discover and adapt

The first side of organizational learning is the discovery dimension, focusing on the acquisition of new knowledge. It requires key executives to be genuinely interested in uncovering new truths and an openness to the possibility of improving what has worked well in the past. In short, it requires people who are inherently curious. If there is a strong belief that 'we know best', or that the critical assumptions behind one's business are allowed to remain unchallenged, then many new learning opportunities may be missed.

The second essential element of organizational learning is a willingness to apply the new knowledge. Again, some organizations are too entrenched in their own past success, too trapped by their own heritage, to recognize the urgency to adapt to changes. Rigid and segmented internal structures of some companies (even small kingdoms) further diminish the firm's ability to embrace change and to pick up new insights to accelerate competitive advantage. The corporate culture is not conducive to adaptation.

These two elements are complementary. The willingness to learn and adapt - ie to discover, with the possibility of continuous change - is key.

Organizational learning: both inwardly and outwardly focused

Organizational learning is concerned partly with improving the company's approaches through critical examination of how things are done - including learning from one's mistakes. Top management's main change agenda - its vision - is often shaped in this way. But the learning process should also be stimulated by comparing the company with others, looking at what succeeds elsewhere and understanding why. Benchmarking is critical because home-grown managerial findings are rarely universally applicable and it is important to understand their limitations. A particular management approach may, for instance, take on a different shape when applied in a financial services organization, a heavy-equipment manufacturing corporation or a high-tech electronics company. The realization of why these different approaches work well in one sector and less well in another leads to added depth of understanding.

A deliberate, planned process

To be effective, organizational learning requires appropriate balances: between discovery and adapting to new knowledge; and, between learning alone and learning by comparison. The determination of the appropriate balances will depend on what critical organizational challenges the organization faces; what are the critical competencies to strengthen and secure long-term success. Since these balances rarely emerge automatically, organizational learning is much more effective as a planned set of activities. It is also important that the people who will drive the process are clearly identified in a deliberate way, to create strong internal learning networks.

Learning networks of executives are key

An external catalyst can ensure objectivity and fresh insights. A learning process is of value only when it leads to ongoing change and adaptation. Objectivity is critical for the process to be effective but organizational learning is best achieved when it is inspirational, seeking out new impulses and ways to create value by 'making good even better'. An external catalyst can assist in contributing fresh research and analytical insights and should act as a real 'turbocharger'. Both leading consultants and academics can play this role. In order to be efficient learning agents, however, the external catalyst must build trust with the learners. This trust can only be based on intellectual integrity and a lasting relationship. Dogmatic formulae do not work.

How can this approach be used? A framework of four parts is proposed (see Table 4.1).

The strategic agenda

Learning and management development must be linked to the strategic challenges facing the corporation. Making this link successfully is part of top management's responsibility and must be driven by the critical issues on their strategic agenda, as articulated by the CEO. It is helpful to ask what might be the most critical organizational bottlenecks, given the long-term vision and ambition of top management, ie focus on positive challenges; not problems! Here are examples of typical change issues that can arise in a corporate setting. Here, the hypothetical case is a global consumer products firm:

• introducing new products on a global basis when each country manager is chiefly concerned with maintaining his or her overall bottom-line performance, thus relying on the more established products rather than embracing the new;
• modifying the company's distribution system to cope with an increasing number of non-branded products and new channels of distribution;
• improving the cost-efficiency of the global marketing and distribution functions by building upon the organizational learning that has already occurred in other areas of the firm's particularly efficient manufacturing practices.

Delineation of the learning activities agenda

The specific mix of activities of a learning agenda must be delineated, as follows. Here are some specific examples of what these 'interlinked dimensions' might imply:

The discovery dimension:

• research activities: introspective discovery of new knowledge;
• benchmarking workshops: joint, comparative discovery with other companies.

The adapting dimension:

• in-company retreats, management programmes, etc;
• introspective adaptation to change, typically with a focus on accelerating the uses of new knowledge;
• open executive programmes, conferences, etc;
• providing exposure to new knowledge with executives from other companies.

Since a principal objective of the organizational learning approach is to help the company to increase the speed of strategic change, it is key to develop a tailored programme of action-learning activities (see Figure 4.1).

Who should take part in what aspects of learning? Learning networks

The third step in the planning process is to determine which executives should participate in what learning activities. While relatively few people can take part in more than a small selection of the learning activities, either in-house or in external open programmes, an understanding of the accelerated concept of change can be spread throughout the company via learning networks.

Organizational learning does not happen by setting up a number of random activities for individuals. Networks of executives should be identified and empowered to spread the complementary aspects of new learning with the others. These networks must be carefully selected to be representative and balanced. Are certain divisions or certain functions absent? Are some geographic regions missing? This should only be the case by deliberate decision.

Figure 4.1 A menu of organizational learning

Measuring organizational learning

The fourth, and final, planning step is the measurement of results. It is difficult to measure learning progress with accuracy but some monitoring can be done to give the organization a better sense of the results. It is possible to assess progress on various activities:

• Participant satisfaction, typically recorded at the end of specific programmes, can be measured again one year later. The implementation of learning over the course of the year is probably more revealing of the real organizational learning.
• Measurement of organizational attitudes and general competence can be achieved through annual employee surveys, a potentially important indication of how well organizational learning is being applied.
• The organizational network learning assessment involves a qualitative review of the overall patterns of learning activities across the network. If it shows that they are random, partial or sporadic, it is unlikely that organizational learning is happening. If, on the other hand, it reveals a systematic joint effort, with complementary tasks carefully assigned and driven by a network of empowered executives, then effective organizational learning is probably taking place.

The role of a catalyst

The learning partnership process can be supported by an outside catalyst organization. Selection of the right catalyst should be based on compatible 'chemistry', mutual trust and respect and dedication to a long-term relationship.

An academic institution can provide a sense of objectivity: it can challenge unrealistic self-referencing patterns, it can help executives identify issues which they might miss, if unquestioned and it can point out organizational issues that need to be readdressed. The academic institution has competencies to delineate specific learning programmes.

The catalyst organization must have a high degree of integrity. Hence, it is advantageous if it also provides objective research inputs. The capability to link up the firm with other companies for benchmarking discussions is an important feature achieved at IMD through a series of briefing workshops on our latest research - discovery.

It is important that the catalyst has enough breadth to cover most aspects of its interaction with a leading global business organization. It is virtually impossible for an individual professional or consultant to offer the same breadth of knowledge as a full-fledged team of faculty members within an academic institution.

Conclusion

Organizational learning must concentrate on what are likely to be the critical success factors for each particular company. It must be based on a deliberate set of inter linked dimensions which result in focused learning activities within the firm, as well as on interactions with other companies.

While learning actually takes place in each individual's mind, organizational learning can only occur through planned networks of individuals who pursue learning through an appropriate balance of complementary activities.

Progress must be continuously assessed and, where possible, measured for both individual and organizational learning. This can lead to refining the balance and selection of interactive learning dimensions and the patterns of learning networks. Above all, modifications can take place in response to changing strategic needs. IMD's learning partnership approach is evolving all the time and is key to competitive advantage. It is, perhaps, the most promising vehicle available to the CEO who wishes to accelerate a strategic agenda by strengthening creative, opportunity-seeking business development with an implementation focus throughout the company. Organizational learning is an important investment and definitely an agenda item for the CEO.