Business 101: Principles of Management

In today's knowledge economy, it is imperative that organizations and their members find ways to acquire, share, and apply new knowledge; a notion that is highly characteristic of a learning organization. In this lesson, you will learn what it means to be a learning organization and the benefits of becoming one.

Processing Information in Learning Organizations

The sponge is unlike any other kitchen tool. It can adapt and transform to any shape needed for maximum functionality and efficiency. Because of this adaptability, the sponge can soak up a great deal of fluid. Just think about your kitchen sponge; it's likely that you've had spills around the house, and you've reached for that handy sponge because you knew that it would suck up any type of liquid. You might be asking yourself: what does the sponge have to do with management?

Perhaps you've heard the phrase 'to absorb information like a sponge'. Much like the sponge, the learning organization goes through the same process of absorption and adaptation to reach maximum functionality and efficiency, but instead of fluid, the learning organization processes information and knowledge. This lesson will define what it means to be a learning organization and provide a list of benefits to becoming one.

All members take an active role in identifying and resolving work-related issues.

Characteristics of the Learning Organization

The learning organization symbolizes a company where its members are constantly learning from everything that they do. Experience, from both successes and failures, is used to improve the company's performance and to reach organizational objectives. New knowledge is continuously acquired, shared, and applied among organizational members in decision making and work processes. All members take an active role in identifying and resolving work-related issues so that the individual and organizational goals can be accomplished. In the learning organization, people are able to create the results they truly desire through personal expansion of creativity, appreciation for new ways of thinking, collaborative efforts, and shared vision.

The idea of the learning organization became popular largely by Peter Senge's book The Fifth Discipline, which was first published in 1990. Senge is the director of the Center for Organizational Learning at the MIT Sloan School of Management and is considered an authority on organizational learning. Senge proposed that the following five disciplines are characteristic of a learning organization:

1. Personal mastery of the individual worker who must have personal professional development goals in which to focus energy, and the organization must recognize and nurture these goals.
2. Mental models refer to the generalization and assumption we use to make sense of the world and how we react to it. In this context of the learning organization, we can look at mental models as the organization's culture being one that is mindful and respectful of the intricacies and theories that provide the framework for how effective organizations function.
3. Building a shared vision implies that the organization and its members have a shared vision; that is, the organization consciously blends individual aspirations with company goals.
4. Team learning stresses the importance of collaboration, shared dialogue and decision making, and mutual accountability in work groups.
5. Systems thinking , also known as the Fifth Discipline in that it integrates the previous four, acknowledges that organizations are complex systems made of interrelationships. That is, marketing depends on finance, finance depends on IT, IT depends on research and development, and so on. Senge believed that these interrelationships must be carefully examined and understood to uncover opportunities, problems, and possibilities within them.

Peter Senge popularized the idea of the learning organization.

Comparing Different Types of Organization

A simple way to understand what it means to be a learning organization and its benefit is by comparing it to a more traditional organization. We can examine two organizations in the same industry; let's take the automotive industry for example.

ABC Automotive is a traditional organization. They pride themselves on continuing to manufacture and sell the same vehicle models, with a few adaptations, that they did from the moment they opened their doors. The management of ABC live by the saying, 'If it ain't broke, don't try to fix it.' They believe what enables them to be successful in the automotive industry is the consistency in the products ABC continues to offer their loyal customer base. ABC sees no need to put fancy bells and whistles on their products just for the sake of doing so. Because the culture of ABC is so traditional, employees spend their days maintaining the status quo and carrying out business as usual. Many of the employees have been working at ABC for over 10 years and most plan to retire with ABC.

The culture of ABC Automotive is traditional and employees maintain the status quo.

XYZ Automotive is a learning organization. Unlike ABC, XYZ thrives on continuous improvement and innovation. A great deal of resources is spent on discovering, developing, and selling novel vehicles. Even with a great deal of success, XYZ knows that they must work ten times harder than its competition in order to maintain a competitive advantage in the marketplace. To accomplish this, management at XYZ works closely with the employees to brainstorm, research, and create unique product lines that are reflective of customer demands.

Knowledge is shared frequently between departments to ensure that the most up-to-date information is being disseminated throughout the organization. Some of the most innovative ideas have come from the most unsuspecting areas of XYZ, making it imperative to keep the lines of communication open and flowing. At XYZ, each employee is considered a valuable asset with distinctive qualities, insight, and goals. These unique characteristics are acknowledged, nurtured, and aligned with organizational objectives to maximize the success of the individual and the success of the organization.

Management works closely with employees to brainstorm, research, and create.

Benefits of Becoming a Learning Organization

Now that we understand each organization, let's look at the benefits of being a learning organization over a traditional organization. The traditional organization maintains the status quo and remains relatively stable over time. XYZ is much like that sponge we talked about earlier - working to absorb information and adapt to reach maximum functionality and efficiency. Because of this continual reinvention, XYZ is superior to competitors, such as ABC, in that XYZ is capable of imagining and developing a product line of the future. XYZ is a learning organization, which means that each employee's ideas and perspectives are appreciated and welcomed. Information is communicated freely, and it is assumed that everyone 'needs to know'. Such an inclusive culture promotes a sense of ownership and appreciation among all employees, regardless of their position within the organization.

Being an industry leader who promotes innovation also allows the learning organization to attract and retain the best talent the industry has to offer. Once a part of a learning organization, members are encouraged to improve their personal skills and qualities so that they can continue to learn and develop alongside the organization. The team learning aspect allows members to learn a variety of skills, making it possible for employees to perform and appreciate the roles and tasks of others; it also promotes improved social interaction and interpersonal skills in employees.

The team learning aspect allows company employees to learn a variety of skills.

These are just a few of the benefits of becoming a learning organization. While it might seem logical for all organizations to become learning organizations, it is a complicated process. Becoming and maintaining a learning organization status requires a great deal of dedication, commitment, education, time, energy, and other resources. Many organizations get frustrated when any of these aspects do not go according to plan and simply give up. Still, there are many organizations that have withstood these tests and have persevered as learning organizations for many years, including General Electric, Pizza Hut, Honeywell, Microsoft, Apple, and the Toyota Motor Company. The long-term success of these companies as learning organizations serves as a testimony that with a little work, the benefits of continually learning are what set them apart from the competition.

Lesson Summary

Let's review. The learning organization symbolizes a company where its members are constantly learning from everything they do. New knowledge is continuously acquired, shared, and applied among organizational members in decision making and work processes. All members take an active role in identifying and resolving work-related issues so that the individual and the organizational goals can be accomplished.

The idea of the learning organization became popular largely by Peter Senge's book The Fifth Discipline. Senge proposed the following five disciplines are characteristic of a learning organization: personal mastery, mental models, developing a shared vision, team learning, and systems thinking.

The benefits of becoming a learning organization include:

• Being superior to competitors
• Being capable of imagining and developing a product line of the future
• Each employee's ideas and perspectives are appreciated and welcomed
• Information is communicated freely
• Promotes a sense of ownership and appreciation among all employees
• Promotes innovation
• Allows the organization to attract and retain the best talent
• Members are encouraged to improve their personal skills and qualities
• Members learn a variety of skills, making it possible for employees to perform and appreciate the roles and tasks of others
• Promotes improved social interaction and interpersonal skills in employees

Becoming and maintaining the learning organization status requires a great deal of dedication, commitment, education, time, energy, and other resources. Many organizations are not up to the challenges associated with being a learning organization. However, organizations, such as General Electric, Pizza Hut, Honeywell, Microsoft, Apple, and the Toyota Motor Company, have had long-term success as learning organizations and serve as testimony of the benefits of continually learning.