Building LO Marquardt

P R A I S E F O R
Building the Learning Organization
“A very practical message based on a sound theory. Every CEO should

read this book and implement these concrete steps in order to renew
the organization, to create an organization that learns faster than its
competitors.”
—Pentti Sydanmaanlakka, Director of Change
Management, Nokia Networks; author,
An Intelligent Organization
4
“In today’s global and innovative corporations, we are fortunate to
have a lot of tools for communication and learning, but the challenge
is to implement the strategic learning vision throughout the organiza-
tion. Michael Marquardt takes us through this very important
process.”
—Lars Hellmér, Consultant and Associate Professor,
Department of Industrial Management, University of
Skövde, Sweden
4
“Marquardt’s book presents a landmark strategy for ensuring that
learning takes its premier place and is integrated systemically into
the full life of our local and global communities at all levels.”
—Francesco Sofo, Senior Lecturer, University of
Canberra, Australia
4
“This book offers excellent insights and guidance, with practical solu-
tions for people and organizations that want to develop a learning
culture.”
—Mohd Effendy Rajab, Executive Director and National
Training Commissioner, Singapore Scouts Association
4
“Organizations should transform themselves into e-learning organiza-
tions with new infostructures to become places where individuals can
continuously engage in new learning processes. This book provides a
comprehensive review of issues concerning learning organizations.”
—Badrul H. Khan, Associate Professor, George
Washington University
4
“Michael Marquardt’s five distinct subsystems of the learning orga-
nization provide a particularly practical framework for facilitating
corporate restructuring, change management, and building learning
organizations.”
—Goh Kim Seng, Management Consultant, Singapore
Building
the Learning
Organization
Building
the Learning
Organization
MASTERING THE 5 ELEMENTS
F O R C O R P O R AT E LE A R N I N G
4
SECOND EDITION
Michael J. Marquardt
DAVIES-BLACK PUBLISHING, INC.

Palo Alto, CA
Published by Davies-Black Publishing, an imprint of Consulting Psychologists
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Copyright © 2002 by Davies-Black Publishing, an imprint of Consulting
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duced, stored in a retrieval system, or transmitted in any form or by any means,
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Cover art © Pete Turner/Getty Images/The Image Bank
Davies-Black and colophon are registered trademarks of Consulting Psychologists
Press, Inc.
06 05 04 03 02 10 9 8 7 6 5 4 3 2 1
Printed in the United States of America
Library of Congress Cataloging-in-Publication Data
Marquardt, Michael J.
The learning organization : mastering the 5 elements for corporate learning
p. cm.
Includes bibliographical references and index.
ISBN 0-89106-165-7
1. Corporate learning. 2. Bla bla
HD00.0 .B000 2002
658.4′092—dc21
2002000000
SECOND EDITION
First printing 2002
Contents
Foreword ix
Preface xi
Acknowledgments xvii
About the Author xix
1 — The Emerging Need for Learning Organizations 1

2 — The Systems Learning Organization Model 23
3 — Building Learning Dynamics 35
4 — Transforming the Organization for Learning Excellence 73
5 — Empowering and Enabling People 111
6 — Knowledge Management in Learning Organizations 139
7 — Technology for Building the Learning Organization 177
8 — Becoming a Learning Organization 209
Appendix: Learning Organization Profile 237

Glossary 243
Bibliography 251
Index 259
vii
Foreword
WE LIVE IN A WORLD in which technology and globalization affect

every part of our lives. Learning has become the critical avenue for
understanding and adapting to the ever-increasing speed of change.
Organizations, like individuals, must adapt faster and better to their
changing, chaotic environment, or they are doomed to failure.
At the American Society for Training & Development (ASTD),
we realize that the current speed and level of change require a revo-
lution in the way we think, act, and learn as individuals and as orga-
nizations. We know that increased workplace learning is necessary to
enable firms to respond competently to the growing needs and
expectations of their customers and to compete successfully in
today’s global environment. Smart companies realize that a learning
plan is as much a strategic tool as a marketing or financial plan.
Recent ASTD research shows that investments in learning pay
off. In a major study of 575 U.S.-based publicly traded firms during
1996–1998, we found that those companies that invested more in
training improved their total stockholder return (TSR) by 6 percent
ix
x Building the Learning Organization
in the two following years. In addition, firms in the top quarter

of the organizations studied (which spent an average of $1,595 per
employee per year for training) posted 24 percent higher gross
profit margins. Thus, it is clear that a firm’s commitment to work-
place learning is linked directly to its bottom line.
Organizations must not only commit themselves financially to
workplace learning, they must find and develop ways of integrating
learning systematically into all elements of organizational life. One
of the best models for developing such learning is the systems-linked
model presented in this book.
ASTD was pleased to copublish the first edition of Building the
Learning Organization in 1996. Over the following years, thousands
of organizations around the world have learned about and applied
the model and strategies contained in that book. We are proud of the
fact that the book went on to win the Academy of Human Resource
Development’s Book of the Year Award in 1997.
Each of the model’s five elements—learning dynamics, organiza-
tional transformation, people empowerment, knowledge manage-
ment, and technology application—has been shown to be critical for
creating a successful learning organization. This new edition updates
the model, adds new strategies, and presents clear, easy-to-follow
steps for transforming companies into successful learning organiza-
tions. The best practices of many companies, including several from
ASTD’s Benchmarking Forum, exemplify the benefits of the
Marquardt model.
In today’s highly competitive business environment, learning
organizations hold a significant competitive advantage. Their ability
to harness the power of learning at all levels—individual, team, and
organizational—enables them to rapidly leverage new knowledge
into new products and services, new marketing strategies, and new
ways of leading the learning revolution.
Tina Sung
President and CEO, ASTD
Preface
AS WE ENTERED THE 21ST CENTURY, we began a new era in the evolu-

tion of organizational life and structure. Immense changes in the
economic environment caused by globalization and technology have
forced companies to transform themselves significantly in order to
survive in a new world and its new economy. Organizations with big
brains and the ability to learn quickly will become global leaders.
Organizations with the adaptability of dinosaurs will not survive in
the faster, information-rich environment of the new millennium.
Becoming bigger, heavier, and thicker skinned will be no substitute
for developing increasingly agile and more creative brainpower. Or,
to cite another biological metaphor, even a caterpillar with speedier
legs will never be able to equal the range and flexibility it achieves
after it transforms into a butterfly.
Put bluntly, organizations must learn faster and adapt faster to
changes in the environment or they simply will not survive. As in any
transitional period, the dominant but dying species (nonlearning
organizations) and the emerging, more adaptive species (learning
xi
xii Building the Learning Organization
organizations) presently exist side by side. Within the next 10 years,

I predict that only learning organizations will be left. Companies that
do not become learning organizations will soon go the way of the
dinosaur; they will die out because they were unable to adjust to the
changing environment.
Demanding New Learning
Manville (2001) writes how we now “demand of the new learning a

more nimble, more customized and more immediately relevant way
of working, yet one that also allows us to perform better and to do
so in a way that more quickly and effectively reaches the threshold
of making a difference” (p. 45). Learning thus becomes a critical
process, but only if it is both pursued strategically and embedded
operationally in real work. To attract and retain talent, the success-
ful global organization will use learning as a tangible offering to new
employees, saying, in effect, “Join us, and you’ll learn better, more,
and faster than you would with our competitors.”
This evolution is not happening accidentally. It is developing
through daily experiments and the “learning about learning” of
frontline managers and executives who know its importance and
push the envelope of its applications. And we are not talking about
simply changing the external elements of the organization—its prod-
ucts, activities, or structures—but, rather, about altering its intrinsic
way of operating: its values, mind-set, and even its primary purpose.
Why Are Learning Organizations So Important?
The demands placed on organizations worldwide now require that

learning be delivered with greater speed, at less cost, and more effec-
tively to workplaces and mobile workforces that are affected more
dramatically than ever by daily changes in the marketplace. And
what are some of the crucial issues facing today’s corporations?
• Reorganization, restructuring, and reengineering for success,
not just survival
• Increased skills shortages caused by schools that have not ade-
quately prepared people for work in the 21st century
Preface xiii
• Doubling of knowledge every 2 to 3 years

• Global competition from the world’s most powerful companies
• Overwhelming breakthroughs in new and advanced technologies
• Spiraling need for organizations to adapt to change
Learning that occurs throughout the corporation and across sys-
tems offers organizations the best opportunity of not only surviving
but succeeding. As foreseen by leaders of the Rover Automotive
Group in England, “The prospect that organizational learning offers
is one of managing change by allowing for quantum leaps. Contin-
uous improvement means that every quantum leap becomes an
opportunity to learn and therefore prepare for the next quantum
leap. By learning faster than our competitors the time span between
leaps reduces and progress accelerates” (Marquardt, 1996, p. xvi).
To obtain and sustain competitive advantage in this new
environment, companies will have to learn better and faster from
both successes and failures. They will need to continuously trans-
form themselves into learning organizations, to become places in
which groups and individuals at all levels continuously engage in new
learning processes.
Shoshana Zuboff, in In the Age of the Smart Machine (1998),
notes that today’s organization may indeed have little choice but to
become a “learning institution, since one of its principal purposes
will have to be the expansion of knowledge—not knowledge for its
own sake (as in academic pursuit), but knowledge that comes to
reside at the core of what it means to be productive. Learning is no
longer a separate activity that occurs either before one enters the
workplace or in remote classroom settings. Nor is it an activity
reserved for a managerial group. The behaviors that define learning
and the behaviors that define being productive are one and the same.
Learning is the heart of productive activity. To put it simply, learning
is the new form of labor” (p. 395).
What Is the New Learning in Organizations?
There must be a whole new mind-set regarding the concepts of work

and learning. Learning must take place almost as a by-product of
working, in contrast to acquiring knowledge before performing a
xiv Building the Learning Organization
particular task or job. In today’s environment, organizational learn-

ing represents a new form of learning in the following ways:
• It is performance based and tied to business objectives.
• It emphasizes the importance of learning processes, or learning
how to learn.
• The ability to define learning is as important as finding answers
to specific questions.
• Organization-wide opportunities exist to develop knowledge,
skills, and attitudes.
• Learning is part of everybody’s job.
The need for individuals and organizations to acquire more and
more knowledge will continue unabated. But the knowledge itself is
secondary to how, and how quickly, they can learn. Learning skills
will be more important than data. Penetrating questions will be more
important than good answers.
Emergence of Learning Organizations
The concept of organization-wide learning, and recognition of its

importance, can be traced in the research literature back to the
1940s, but not until the 1980s did a few companies began to realize
its potential for increasing organizational performance, competitive-
ness, and success.
In the 1980s, Shell Oil began to consider organizational learning
in relation to strategic planning. Teamwork and more extensive com-
munications were seen as crucial factors in creating a more respon-
sive, successful corporation. Shell spent 12 months experimenting
with work groups and researching the implications of the organiza-
tional learning concept. The company concluded that learning as an
organization did indeed prove valuable for both strategic planning
and corporate success and had enabled Shell to gain an advantage of
a year or two over its competitors.
During the 1990s, the number of firms committing themselves
to becoming learning organizations increased dramatically. Com-
panies such as General Electric, Johnsonville Foods, Quad Graphics,
Preface xv
and Pacific Bell in the United States; Sheerness Steel, Nokia, Sun
Alliance, and ABB in Europe; and Honda and Samsung in Asia were
among the early pioneers.
Peter Senge’s The Fifth Discipline and feature articles on learning
organizations in the Harvard Business Review, The Economist,
BusinessWeek, Fortune, and Asiaweek have led many other compa-
nies to begin considering the process of transforming themselves into
learning organizations. The ever-increasing changes of the 21st cen-
tury have made learning organizations ever more important.
A Comphrehensive Systems Aprroach

to Learning Organizations
Most organizations are still struggling with becoming learning

organizations, while many others still don’t grasp the importance of
the process or how it can actually work. Books that describe the
learning organization refer only to parts of the entity, depicting it in
a piecemeal manner similar to that of the five blind men in the
Indian folktale, each of whom described an elephant by whatever
portion he touched—the trunk, a foot, the tail, and so on. Likewise,
learning organizations have been described by a single attribute—the
learning dynamics of teams, organizational structure, knowledge, or
better application of new technology. Other perspectives totally mis-
construe even their limited focal points and confuse total quality
management (TQM), or reengineering, or better training as the
totality of organizational learning.
My experience over the past dozen years with more than 100 of
the top learning organizations worldwide and my analysis of the
myriad articles and books on learning organizations have led me to
conclude that before individuals or companies can adequately com-
prehend the richness of the learning organization, they must incor-
porate five subsystems: learning, organization, people, knowledge,
and technology. Without all five subsystems, they will have only a
partial appreciation of the processes and principles necessary to
move an organization from a state of nonlearning to learning.
This book presents each subsystem and explores how all five
interface with and complement one another. The core subsystem of
xvi Building the Learning Organization
the learning organization, of course, is learning—at the individual,

group, and organization levels—including the skills of systems think-
ing, mental models, personal mastery, self-directed learning. and dia-
logue. Each of the other subsystems—organization, people, knowl-
edge, and technology—are required to enhance and augment the
quality and effecctiveness of learning across the corporation.
Overview of the Book
Chapter 1 assesses rising social, political, and economic forces as

well as the new expectations of workers, customers, and even com-
munities that have necessitated the emergence of learning organi-
zations. The eight key forces causing this shift from institutions
based on manufacturing (manual labor) to those based on mentofac-
turing (mental labor) are discussed.
Chapter 2 introduces the total Systems Learning Organization
model with an overview and brief synopsis of the five subsystems:
learning, organization, people, knowledge, and technology. The
interactional and complementary nature of the subsystems is also
discussed.
The dimensions, principles, practices, and ideals of the five sub-
systems are explored in chapters 3–7. Each chapter contains exam-
ples of best practices from learning organizations around the world.
At the end of each chapter, I list 10 top implementation strategies for
building the subsystem under discussion. Chapter 8 provides a gen-
eral framework and guidelines, as well as 16 steps, for becoming a
learning organization.
Getting Started in Your Organization
Whether or not to become a learning organization is no longer the

question; becoming a learning company is required to remain com-
petitive. And, anyone who asks “when?” should be told “quickly”
because becoming this new species will soon be essential to survival
in the increasingly global environment. Answering the question
“how?” is the essence of this book. I hope these pages will provide
valuable guidance for you and your organization.
Acknowledgments
THIS BOOK OWES MUCH TO THE encouragement and assistance of

many people. First, to the people at Davies-Black Publishing: Jill
Anderson-Wilson, Connie Kallback, Lee Langhammer Law, and
Laura Simonds. This is my third book with Davies-Black, and I can
say with the utmost confidence and pride that there is no better pub-
lisher to work with in the world. The diligence and competence of
the editors at Davies-Black have greatly improved the content and
quality of each of my manuscripts.
I want to thank the people at ASTD for their support and guid-
ance in copublishing both editions of Building the Learning
Organization. Tina Sung, ASTD’s president and CEO, kindly
authored the preface to this second edition. Pat Galagan, Mark
Murrow, Nancy Olson, Edward Schroer, and Mark Van Buren all
helped in and contributed to my thinking and writing on the topic
of learning organizations.
I am especially grateful for the many superb insights and ideas I
received from people in organizations that practice organizational
xvii
xviii Building the Learning Organization
learning, who inspired much of this book: Karen Scott and Mary
Tomasello of Alcoa; Jim Eckels, Bethany Greene, and Nancy
Stebbins of Boeing; Pierre Gheysons of Caterpillar; Eric Charoux of
DCDM; Jim O’Hern of Marriott; Pentti Sydanmaanlakka of Nokia;
Keith Halperin and Skip Leonard of Personnel Decisions
International; and Nissim Tal of the United Nations Development
Program.
Also, special thanks to the many individuals who have energized
me with their thinking and experiences in organizational learning,
including Jerry Gilley, Orlando Greigo, Victoria Marsick, Joel
Montgomery, Barrie Octoby, Peter Senge, Karen Watkins, and Kevin
Wheeler, among others.
Over the years, many professors and students from around the
world have supported my research and writing in the field of learn-
ing organizations, especially Nancy Berger, Neal Chalofsky, Wong
Wee Chee, Lex Dilworth, Mary Futrell, Carol Hanson, Antony Hii,
Effendy Mohamed-Rajab, Viwe Mtshontshi, Ken Murrell, Linda
Raudenbush, Dave Schwandt, Somsri Siriwaiprapan, Frank Soffo,
Richard Swanson, and Marissa Wettasinghe.
Finally, I am indebted to my family and dedicate this book to
them: my wife, Eveline, for her love and patience as I spent many a
weekend and evening researching and writing; to my children—
Chris, Stephanie, Catherine, and Emily—who are proud of their
father, though I am even prouder of each of them; and to my grand-
children—Patricia, Hannah, and Milagros—whose presence has
caused me to realize that the greatest joy in the world is being a
grandfather.
About the Author
MICHAEL J. MARQUARDT, ED.D., is professor of global human

resource development at George Washington University and presi-
dent of Global Learning Associates. He has held a number of senior
management, training, and marketing positions with organizations
such as Grolier, World Center for Development and Training,
Association Management, Inc., Overseas Education Fund, TradeTec,
and U.S. Office of Personnel Management. Marquardt has trained
more than 45,000 managers in eighty-five countries since his first
international experience in Spain in 1969. His consulting clients
have included Marriott, DuPont, Pentax, Motorola, Nortel, Boeing,
United Nations Development Program, Xerox, Nokia, and
Singapore Airlines, as well as the governments of Indonesia, Laos,
Zambia, Egypt, Turkey, Russia, Jamaica, Honduras, and Swaziland.
Marquardt is author of fourteen books and more than fifty arti-
cles in the fields of leadership, learning, globalization, and organiza-
tional change. His titles include Global Teams, The Global
Advantage, Action Learning in Action, Global Leaders for the 21st
xix
xx Building the Learning Organization
Century, Global Human Resource Development, and Technology-

Based Learning. He has been a keynote speaker at conferences
throughout North America, as well as in Australia, Japan, England,
the Philippines, Malaysia, South Africa, Sweden, Singapore, and
India.
Marquardt is a recipient of the International Practitioner of the
Year Award from the American Society for Training & Development
and numerous other awards. He currently serves as a Senior Advisor
for the United Nations Staff College in the areas of policy, tech-
nology, and learning systems. He is a Fellow of the Academy of
Human Resource Development and a cofounder of the Asian Learn-
ing Organization Network.
C H A P T E R 1
The Emerging Need for

Learning Organizations
OVER THE PAST 10 YEARS, numerous economic, social, and technolog-

ical forces have intensified significantly, dramatically altering the
work environment. These changes have occurred so rapidly and
competition has increased so intensely that the large organizational
dinosaurs with small pea-size brains that flourished in the 20th cen-
tury cannot survive in this new world of the 21st century. The sur-
vival of the fittest is quickly becoming the survival of the fittest to
learn.
In his book Riding the Tiger: Doing Business in a Transforming
World (1991), Harrison Owen writes, “There was a time when the
prime business of business was to make a profit and a product.
There is now a prior, prime business, which is to become an effec-
tive learning organization. Not that profit and product are no longer
important, but without continual learning, profits and products will
no longer be possible” (p. 1). Unless an organization continuously
adapts to the environment via speedy, effective learning, it will die.
1
2 Building the Learning Organization
In short, external change and forces demand either organizational

adaptation or organizational extinction.
Only companies that can transform themselves into more intelli-
gent, proficient engines of change will succeed in the new millen-
nium. As Reginald Revans (1983), a pioneer of organizational learn-
ing, notes, “Learning inside must be equal to or greater than change
occurring outside the organization or the organization dies” (p. 11).
The new organization that emerges will need to possess greater
knowledge, flexibility, speed, power, and learning ability so as to
better confront the shifting needs of a new environment, more de-
manding customers, and smarter knowledge workers.
The successes are obvious. Organizations that learn faster will be
able to adapt more quickly and thereby achieve significant strategic
advantages in the global world of business. The new learning orga-
nization is able to harness the collective genius of its people at the
individual, group, and system levels. This capability, combined with
improved organizational status, technology, knowledge manage-
ment, and people empowerment, will enable organizations to leave
the competition in the dust.
Let us now examine the major winds of change that have com-
pelled organizations to either learn or face extinction, forces that
have altered the economic environment and the workplace as well as
workers and customers. The eight most significant forces that will
change the business world and necessitate company-wide learning in
the 21st century are
1. Globalization and the global economy
2. Technology
3. Radical transformation of the work world
4. Increased customer influence
5. Emergence of knowledge and learning as major organizational
assets
6. Changing roles and expectations of workers
7. Workplace diversity and mobility
8. Rapidly escalating change and chaos
Each of these forces must be understood and harnessed before the trans-
formation to a learning organization is possible. Let’s briefly explore
the influence of each one.
The Emerging Need for Learning Organizations 3
Force 1: Globalization and the Global Economy
We have entered the Global Age. We are an increasingly more

global people with many common values and practices, and we are
working increasingly for organizations with an international pres-
ence. Globalization has caused a convergence of economic and social
forces, of interests and commitments, of values and tastes, of chal-
lenges and opportunities. We can easily communicate with people
around the world because we share a global language (English) and
a global medium for communications (computers and the Internet).
The signs of the global marketplace are all around us. Consider the
following statistics.
U.S. corporations have invested $1 trillion abroad and employ
more than 100 million overseas workers; more than 100,000 U.S.
firms are engaged in global ventures valued in excess of $2 trillion.
For instance, McDonald’s operates more than 30,000 restaurants in
120 countries and is adding at least 1,200 new restaurants a year,
and Coca-Cola earns more money in Japan than in the United States.
In addition, more than 70 percent of the profits for the $30 billion
U.S. music industry is generated outside our country, and most big-
bucks movies depend on global viewers for big profits.
At the same time, 10 percent of U.S. manufacturing is foreign
owned and employs 4 million Americans. Mitsubishi USA is the
United States’ fourth-largest exporter, and Toyota has displaced
Chrysler as the third largest in U.S. auto sales. Foreign investment in
the United States has now surpassed $3 trillion. In fact, more than
one-third of U.S. economic growth has been due to exports, which
have provided jobs for more than 11 million Americans. In 1997, more
than half the Ph.D.s in engineering, mathematics, and economics
awarded by American universities went to citizens of other countries.
Worldwide, increasing numbers of companies, such as Inter-
Continental, Xerox, Motorola, Honda, Samsung, and Pentax, are
manufacturing and selling chiefly outside their country of origin; for
example, more than 70 percent of Canon’s employees work outside
Japan. We hardly know anymore if a company is French, Japanese,
Swedish, or American. The populations of many Gulf countries are
made up of more foreign-born workers than native residents.
Financial markets are open 24 hours a day around the world,
and global standards and regulations for trade and commerce,
finance, products, and services have emerged.
Four main forces have brought us quickly to this global age:

technology, television, trade, and travel. These four Ts have laid the
groundwork for a more collective experience for people everywhere.
People are watching the same movies, reading the same magazines,
and dancing the same dances from Boston to Bangkok to Buenos
Aires. We share tastes in food (hamburgers, pizza, tacos), fashion
(jeans), and fun (Disneyland, rock music, television). Growing num-
bers of us speak a common language, English, which is now spoken
by more than 1 billion people in over 100 countries, where it is
either the first or the second language. Like all languages, English
transmits culture and social values, and it is the global language of
media, computers, and business. In addition, nearly 2 billion passen-
gers fly the world’s airlines each year.
The global economy has in turn forced the creation of global
organizations, companies that operate as if the entire world is their
marketplace. They are fully integrated so that all their activities link,
leverage, and compete on a worldwide scale. Global firms emphasize
global operations above national or multinational ones. They use
global sourcing for human resources, capital, technology, facilities,
and raw materials. They deem cultural sensitivity to employees,
customers, and patterns as critical to organizational success. A
company is globalized when it develops a global corporate culture,
strategy, and structure as well as global operations and people
(Marquardt, 1999a).
Although certain industries globalized earlier than others (espe-
cially telecommunications, electronics and computers, finance and
banking, transportation, automotives, pharmaceuticals, petroleum,
and biotechnology), every industry now has global players. The
growing similarity in what customers want to purchase, including
quality and price, has spurred tremendous opportunities, as well as
tremendous pressures, to globalize. Even the largest firms in the
biggest markets can no longer compete in domestic markets alone.
Thinking and operating globally will be critical to organizational sur-
vival and growth in the 21st century.
Force 2: Technology
Welcome to the new technological workplace, with teletraining, in-

fostructures, and ubiquitous computers. Alvin Toffler (1990) writes
that the advanced global economy and workplace cannot run for
30 seconds without computers. Yet today’s best computers and
CAD/CAM systems will be Stone Age primitives within a few years.
The workplace will demand and require ever more technological
advancements and innovations.
We already have technologies such as optoelectronics, DVDs
(digital videodiscs), information highways, local area networks
(LANs) and wide area networks (WANs), groupware, virtual reality,
and electronic classrooms. Workplace computer technology has pro-
gressed from mainframe to desktop to laptop to hand held. A sig-
nificant proportion of a company’s operations requires computer-
generated automation and customization. These technologies have
become necessary for managing the data deluge so that we can learn
faster in rapid-change, turbo-charged organizations. In a global
economy—in which being informed, being in touch, and being there
first can make all the difference between achieving success and
failing—technology provides a big advantage indeed.
Organizational Impact of Technology

The impact of technology on organizations, management, and learn-
ing is mind-boggling. And it has only begun. The emerging power
and applicability of technology will turn the world of work on its
head. Because of technology, organizations will move toward being
virtual rather than physical. People will be more closely linked to
customers in Kuala Lumpur than to coworkers across the hall
because of technology. Technology has made learning, not work
itself, the prime purpose of business, and learning, as Zuboff (1988)
proclaims, has become “the new form of labor.”
Technology increasingly requires that managers manage knowl-
edge instead of people. Technology alters what, how, and why
workers learn. Employees now need to train themselves through
self-directed learning. And workplace learning no longer takes place
in groups, at fixed times, and in certain locations for just-in-case
purposes; instead, it is being implemented on the basis of exactly
what’s needed, just in time, and only where it’s needed. The tech-
nology that has already restructured work will force those who are
responsible for employee development to “create ever more flexible
and responsive learning and performance solutions” (Van Buren,
2001, p. 1).
We inhabit a world in which virtual reality and interactive mul-

timedia technologies will become commonplace. Personalized intel-
ligent agents (for example, handheld wireless computers) will soon
be available as built-in, online experts looking over our shoulders.
Artificial intelligence technologies (expert- and knowledge-based
systems, user interfaces that understand speech and natural lan-
guage, sensory perception, and knowledge-based simulation) will be
generally available. Intelligent tutoring systems will allow learner-
based, self-paced instruction. Personalized digitized assistants,
telecommunications and network advances, groupware, desktop
videoconferencing, and collaborative software/group systems tech-
nology will be prevalent in the next 5 years.
And the speed and impact of technology continue to accelerate.
Trying to figure out the capabilities and future directions of this rap-
idly changing technology is a mind-boggling challenge. Let’s look at
just a few of the already existing powers of technology.
Highly reliable, easily utilized, and affordable connectivity is
rapidly becoming available anywhere, anytime. Superconducting
transmission lines convey data up to 100 times faster than fiber-optic
networks: One line carries 1 trillion bits of information a second,
enough to send the complete contents of the Library of Congress in
2 minutes.
Neural networks advance computer intelligence by utilizing asso-
ciative “reasoning” to store information in patterned connections,
thereby sequentially processing complex questions and commands
using their own logic. Expert systems, a subset of artificial intelli-
gence, are beginning to solve problems in ways that resemble the
thinking processes of human experts.
The Internet is one of the most amazing and transforming tech-
nological additions to our lives. Its use is one of the fastest-growing
phenomena the business world has ever seen, built from a base of
less than 1,000 connected computers in the early 1980s to more than
200 million today.
Intranets (for in-company connections) are rapidly catching up.
Implementation of intranets is growing three times faster than elec-
tronic commercial applications, with more than 70 percent of major
corporations currently having or planning intranet applications. As
intranet sites continue to evolve, additional features will emerge. For

example, it is already possible to engage in real-time training that
combines a live mediator, online information, and remote attendees.
By the end of 2001, nearly 90 percent of businesses recognized the
critical value of developing comprehensive strategies for using both
intranets and the Internet.
Some of the new high-tech learning programs have been called
“the most powerful learning tools since the invention of the book.”
With virtual reality, our minds are cut off from outside distractions
and our attention is focused on powerful sensory stimulation (from
a light-sound matrix) that bombards the imagination.
Technology is increasingly a part of all products and the total
GNP, including aerospace, advanced industrial systems, and automo-
tive. Already, nearly 20 percent of an automobile’s value is in its elec-
tronics. The computer service and computer software market has
surpassed $600 billion, an increase of 50 percent in the past 4 years.
Information technology is expected to form the basis of many of the
most important products, services, and processes of the future.
In addition, an array of technological developments has recently
emerged for use in the home as well as in the office (Bates, 1995)
These developments include the following:
• Integration of television, telecommunications, and computers

through digitization and compression techniques
• Reduced costs and more flexible use and application of
telecommunications through developments such as integrated
services digital network (ISDN) lines, fiber optics, and cellular
radio
• Increased portability through use of radio communications
and miniaturization (cell phones, cameras, microphones, and
high-resolution display screens)
• Expanded processing power resulting from new microchips
and advanced software
• More powerful and user-friendly command and software tools
that make it much easier for individuals to create and commu-
nicate their own materials
The Promise of New Technologies

The commodification of ultra-high technology offers spellbinding
opportunities for creating new knowledge-exchange products. Brit-
ish Telecom, for example, thinks that future generations of portable
phones could be installed in the user’s ear. A person could talk and
simultaneously glimpse images or data pulled off the Internet and
projected onto a magnifying mirror positioned beside one eye.
The technology of the future will respond to our voices and
extend our senses. It will simulate complex phenomena—weather
patterns, stock market crashes, environmental hazards—solving
problems and predicting outcomes at a price anyone can afford.
Computers, or networks of them, will become even more wide-
spread as they are embedded in other objects or fixtures. These
machines will reconfigure themselves as new applications are
required. A whole new metaphor for computing is taking shape, pat-
terned on the natural resilience and elegance of biological organisms.
Computers will learn to diagnose, repair, and even replicate them-
selves (Gross, 1997).
To better prepare ourselves for the effects of technology on work,
workers, and the workplace, it is important to grasp and understand
the many emerging ideas and applications of technology. This under-
standing can help us direct that technology to increase the speed of
learning and of managing knowledge in the workplace. We will dis-
cuss how technology can augment the speed and quality of learning
as well as help us better manage knowledge in chapter 7.
Force 3: Radical Transformation of the Work World
The world of work and the workplace has been dramatically trans-
formed. Workers no longer occupy offices. Corporations collaborate
and compete with one another at the same time. Customers provide
supervision as well as dictate services. Fellow employees work
closely without ever meeting. Companies employ temporary part-
time CEOs and permanent full-time janitors. Corporate headquar-
ters staff may consist of less than 1 percent of the company’s work-
force, if there even is a headquarters.
Organizations have gone from the quality efforts of the 1980s
through the reengineering processes of the 1990s to the radical
transformation of the workplace itself as we entered the 21st cen-

tury. They have moved from focusing on reducing defects and
streamlining business processes to pursuing totally new forms that
will enable them to manage continuous, white-water change. In this
way, they have created work organizations in which routines are
reorganized, redesigned, or reengineered to improve performance.
The practice of breaking work into smaller and smaller tasks is com-
ing to an end. Instead, teams of employees will take charge of key
business processes from beginning to end. Impatience with the rate
of change will cause many organizations to revamp their key pro-
cesses by starting from scratch.
Structures Based on Core Competencies

Companies will focus on and organize around what they do best.
Therefore, they will be built on core competencies instead of prod-
ucts or markets, with peripheral tasks assigned to temporary and
contract workers. The organizational architecture of companies will
evolve around autonomous work teams and strategic alliances.
These firms will be virtual organizations, temporary networks of
independent companies, suppliers, customers, and even rivals linked
by information technology to share skills, costs, and access to one
another’s markets. For example, a manufacturer will produce an
item and rely on a product-design outfit to sell its output.
The advances in information technology described above are
providing faster transmission of data and expanded storage capacity
as well as greater computer power and clearer, more complex links
among users. Such innovations will permit greater control of more
decentralized organizations while enabling the information flow
needed to give local managers substantive decision-making author-
ity. Because of this technology, corporations will become cluster
organizations or adhocracies, groups of geographically dispersed
people—typically working at home—that come together electroni-
cally for a particular project and then disband. More organizations
will be composed of a minimal core of permanent employees sup-
ported by independently contracted professionals.
As more companies realize that the key resource of business is
not capital, personnel, or facilities, but rather knowledge, informa-
tion, and ideas, many new views of the organization are beginning to
emerge. Firms everywhere are restructuring, creating integrated or-

ganizations, global networks, and leaner corporate centers. Orga-
nizations are becoming more fluid, constantly shifting in size, shape,
and arrangement.
Coevolution and the Virtual Model

An emerging view rests on the concept of coevolution: the idea that
by working with direct competitors, customers, and suppliers, a com-
pany can create new businesses, markets, and industries. Companies
are urged to view themselves as part of a wider environment, a sort
of business ecosystem, so that they can evaluate business opportuni-
ties not simply as a solo player but as one player among many, each
coevolving with the others. Coevolution differs from the conven-
tional idea of competition, in which companies work only with their
own resources and do not extend themselves through the capabilities
of others. In the global market, companies must make use of the
other players—for capacity, innovation, and capital. Such a “best of
everything” organization could be a world-class competitor, with the
speed, muscle, and leading-edge technology to pounce on the most
fleeting of opportunities.
The virtual model could become the most important organiza-
tional innovation since the 1920s, which is when Pierre DuPont and
Alfred Sloan developed the principle of decentralization by which to
organize giant complex corporations. The virtual corporation will
have neither central office nor organizational chart; it will have no
hierarchy or vertical integration. Teams of people in different com-
panies will routinely work together. After the business is done, the
virtual organization disbands.
The emergence of these network-type organizations as replace-
ments for more traditional bureaucratic structures can be summa-
rized by the transformative organizational shifts shown in Table 1.
Force 4: Increased Customer Influence
Customers will become more influential in determining how orga-

nizations set strategies and carry out operations. They, rather than
workers, will be the focus of leadership attention and organiza-
tional priorities. On a worldwide scale, customers will continue to
T A B L E 1
Organizational Transformation
Dimension Old New

Critical tasks Physical Mental
Relationships Hierarchical Peer-to-peer
Levels Many Few
Structures Functional Multidisciplinary teams
Boundaries Fixed Permeable
Competitive thrust Vertical integration Outsourcing and alliances
Management style Autocratic Participative
Culture Compliance Commitment and results
People Homogeneous Diverse
Strategic focus Efficiency Innovation
push for new performance standards in quality, variety, customiza-

tion, convenience, time, and innovation. They will quicken the pace
at which companies are compelled to move beyond domestic mar-
kets. Organizations will have no choice but to shop the world for
customers, employees, resources, technology, markets, and business
partners.
New demands for quality, constant changes in taste, global fads,
and short product life cycles are forcing new global partnerships and
alliances. Challenges raised by new niche markets, new and emerg-
ing industries, deregulation, fights over market share, and aggressive
national competitors have created the need to merge global forces in
order to survive.
Global communications and marketing has increased consumers’
awareness of possible products and services, and global competition
has offered customers a more varied and higher quality of choices.
Together, these two forces created a convergence of consumer needs
and preferences. Consumers are now able to choose those products
and services that meet their standards of the following criteria:
• Cost: What is the least expensive, most economical

• Quality: Meets and exceeds expectations
• Time: Available as quickly as possible
• Service: Pleasant, courteous, and available, with products that
can be easily repaired or replaced
• Innovation: New, something not yet envisioned by the customer
• Customization: Tailored to specific needs
And, as Jorma Ollila, CEO of Nokia, notes, customers are much

more used to information and are naturally connected, culturally
conscious, international by nature, and proud of their backgrounds.
Companies able to increase their customer quality index by 1 point
every year for the past 5 years improved their annual returns on assets
by 11.33 percent (Bassi, Ludwig, McMurrer, and Van Buren, 2000).
Force 5: Emergence of Knowledge and Learning

As Major Organizational Assets
Technology and globalization have led to an economy based on knowl-

edge. Knowledge workers now outnumber industrial workers by 3 to
1. The workforce has moved from manufacturing to mentofacturing.
Continuous learning and knowledge provide the key raw materials
for wealth creation and have become the fountainhead of organiza-
tional and personal power.
The wealth of nations will depend increasingly on knowledge-
based, high-tech industries, such as biotechnology, health, environ-
mental products and services, tourism and hospitality, telecommuni-
cations, computer software and its applications, financial services,
and entertainment. These are all highly competitive global indus-
tries. Keeping even a few months ahead of the competition, in terms
of innovation and knowledge, is critical to survival. Information—
processed by human brainwork into knowledge, and then integrated
and intuited into wisdom—has quite suddenly become the world’s
most important resource. Knowledge will pay the proimary role in
the world’s future, a position claimed in the past by physical labor,
minerals, and energy.
Knowledge
Knowledge has become more important for organizations than fi-
nancial resources, market position, technology, or any other com-
pany asset. Knowledge is seen as the main resource used in per-
forming an organization’s work. The company’s traditions, culture,
technology, operations, systems, and procedures are all based on
knowledge and expertise. Knowledge is necessary to increase em-
ployees’ abilities to develop and implement improvements, thereby
providing quality service to clients and consumers. Knowledge is re-
quired for updating products and services, changing systems and
structures, and communicating solutions to problems. In the new
knowledge economy, individuals at every level and in all kinds of
companies will be challenged to develop knowledge, take responsi-
bility for their new ideas, and pursue them as far as they can go. The
job of the leader will be to create an environment that allows work-
ers to increase knowledge and act on it.
Knowledge is created continuously in every corner of the globe
and doubles every 2 to 3 years. One reflection of the growth of sci-
entific knowledge is the rate at which scientific journals are devel-
oped. The first two scientific journals appeared in the mid-1600s. By
1750, this number had grown to 10, and by 1800, to approximately
100. Today there are more than 100,000 such journals.
Brainpower is becoming a company’s most valuable asset, which
creates a competitive edge in the marketplace. We are challenged to
find and use it. Thomas Stewart (1991) asserts that “Brainpower . . .
has never before been so important for business. Every company
depends increasingly on knowledge—patents, process, management
skills, technologies, information about customers and suppliers, and
old-fashioned experience. . . . This knowledge that exists in an
organization can be used to create differential advantage. In other
words, it’s the sum of everything everybody in your company knows
that gives you a competitive edge in the marketplace” (p. 44).
Walter Wriston (1992) writes that, in the end, the location of the
new economy is not in technology, be it a microchip or a global com-
munications network, but in the human mind. Robert Reich (1991),
former U.S. Secretary of Labor, points out that “corporations no
longer focus on products as such; their business strategies increas-
ingly center upon specialized knowledge” (p. 8).
Work Equals Learning

Increasingly, work and learning are becoming the same thing.
Because the new global economy is based on knowledge work and
innovation, there is a convergence between work and learning.
While you perform knowledge work, you learn. And you must learn
minute by minute if you are to perform knowledge work effectively.
Learning is becoming a lifelong challenge as well as a lifelong
process.
In the new economy, the learning component of work is huge. It
includes everything from a software developer creating a new multi-
media application, to the manager responsible for corporate plan-
ning at a bank, to the consultant assessing a client’s markets, to the
entrepreneur starting up a new business, to a teaching assistant in a
community college setting up lab projects. We are now in the era of
knowledge workers. At the beginning of the new century, three-
quarters of the jobs in the U.S. economy involved creating and pro-
cessing knowledge. Knowledge workers have already discovered that
continual learning is not only a prerequisite of employment but a
major form of work. Learning has indeed become the new form of
labor in the 21st century.
Force 6: Changing Roles and Expectations of Workers
As society moves from the industrial era to the knowledge era, job
requirements are changing. We have entered an era in which pro-
duction involves the mind more than the hands. Employees are mov-
ing from needing repetitive skills to knowing how to deal with sur-
prises and exceptions, from depending on memory and facts to being
spontaneous and creative, from risk avoidance to risk taking, from
focusing on policies and procedures to building collaboration with
people.
As a result, the workforce is changing rapidly. In 2000, more
than 80 percent of all jobs in the United States were in knowledge
and service industries. Many of these jobs require a much higher
level of skill than in the past, especially in manufacturing and
resource-based fields. People in the new century will retain existing
jobs only if they are retrained to higher standards.
The organization of the future will be composed more and more

of knowledge workers, not only senior executives but also workers
at all levels. In the new postindustrial society, knowledge is not just
another resource alongside the traditional factors of production,
land, labor, and capital; it is the only meaningful resource. Given an
economy based on knowledge, the knowledge worker is the greatest
asset. In the successful organizations of the future (those offering
high value), only one asset becomes more valuable as it is used—the
knowledge skills of people. Unlike machinery that gradually wears
out, materials that become depleted, patents and copyrights that
expire, and trademarks that lose their ability to attract, the knowl-
edge and insights that come from the learning of employees actually
increase in value with use and practice.
The key assets of high-value enterprises are not tangible. They
are the skills involved in linking solutions to particular needs and
the reputations that come from being successful in the past. Webber
(1993) notes that the expected distinction between manufacturing
and services is becoming less real. The real impact of the information
economy is to create increasing similarity in the world of work.
A fascinating aspect of knowledge workers is that they do, in
fact, own the means of production, and they can take it out the door
with them at any moment. Therefore, managers have to attract and
motivate; reward, recognize, and retain; train, educate, and im-
prove; and, in the most remarkable reversal of all, serve and satisfy
knowledge workers. Organizations must provide a structure within
which knowledge workers can apply their knowledge. Specifically,
organizations must provide contact with other knowledge workers,
since it is through dialogue and interaction with their peers that they
refine and improve their ideas.
Temporary Workers
Temporary and part-time workers are an increasing element of the
present and future workforce. Temp outfits have added more than 1
million workers over the past 3 years, and their employment is ris-
ing at 17 percent annually, producing in excess of $50 billion in
revenue per year. The Bureau of Labor Statistics estimates that
employment in personnel-supply services will continue to grow by
4.3 percent every year. Organizations in the telecommunications,
computer, heavy manufacturing, and banking fields are the greatest

users of temp help. Businesses have made acquiring temporary help
an integral part of the hiring process as well as overall human
resources policy. Temporary workers allow organizations greater
flexibility—although at the expense of worker loyalty and knowl-
edge retention.
Telecommuting Workers
The more than 25 million telecommuters in the United States are
another growing segment of today’s labor force. Telecommuting
enables corporations to decrease office space and hire key talent that
might not otherwise be available, as well as reduce air pollution
caused by automobile use. Local phone companies offer ISDN lines
that transmit voice, data, and video simultaneously, making it easier
to telecommute. The entire 240-member core sales staff at American
Express Travel-Related Services Company is made up of telecom-
muters. Ernst & Young has implemented “hoteling,” in which up to
10 people share a single desk in a fully equipped office on an as-
needed basis; employees must reserve time in advance. Over the past
3 years, the accounting firm has slashed its office space requirements
by about 2 million square feet, saving roughly $25 million a year.
Ideal Workplace of the 21st Century

What would be the ideal workplace of the 21st century? According
to a recent Development Dimensions International (DDI) survey,
people consider the following characteristics desirable.
Leaders build an environment of trust by listening to and com-
municating with employees. They champion continuous improve-
ment, facilitate learning, and reinforce effective performance.
Leaders and associates work together to establish goals, expecta-
tions, and accountabilities. Clearly defined and communicated vision
and values help guide decision making, which occurs at the lowest
level.
Employees control resources, systems, methods, working condi-
tions, and work schedules. Individuals have the ability and data
to measure their own performance and progress, while perfor-
mance feedback comes from peers, customers, and direct reports.
Jobs are designed to promote employee ownership and respon-
sibility. Effective training builds skills at the appropriate, just-in-time

moment.
The ideal workplace encourages risk taking and treats mistakes
as learning opportunities. Systems—such as selection and promo-
tion, rewards and recognition, compensation, and information man-
agement—are aligned to reinforce and drive desired behaviors.
Force 7: Workplace Diversity and Mobility
The global workforce is becoming ever more diverse and mobile.

Hispanics and Asians represent more than 25 percent of the total
U.S. workforce. At the time this book was written, nearly half the
workforce in California, Texas, and Florida was Black, Hispanic, or
Asian. Physicists at Bell Laboratories are as likely to come from uni-
versities in England or India as from Princeton or MIT. At research
centers around the world, the first language of a biochemist could be
German, Hindi, or Japanese. U.S. hospitals routinely advertise for
nurses in Dublin and Manila.
Corporations increasingly reach across borders to find the skills
they need. This movement of workers is driven by the growing gap
between the world’s supply of labor and demands for it. Much of the
planet’s skilled and unskilled human resources are in the developing
world. Yet most of the well-paid, high-skill jobs are generated in the
cities of the industrialized world.
William Johnston (1991), who completed an exhaustive study of
global work patterns, identified four major implications of the
mobile, culturally diverse workforce for global corporations:
• Relocation: A massive relocation occurs, as people, especially
the young and better educated, flock to urban areas around the
world.
• Competition for labor: More industrialized nations will come
to rely on, and even compete for, foreign-born workers.
• Improved productivity: Labor-short, immigrant-poor coun-
tries like Japan and Sweden will be compelled to dramatically
improve labor productivity in order to avoid slow economic
growth. The need for increased outsourcing of jobs to other
countries is escalating.
• Standardization: There is a gradual standardization of labor

practices around the world in the areas of vacation time, work-
place safety, and employee rights.
Johnston adds that nations with slow-growing workforces but

rapid growth in service sector jobs (such as Canada, Germany, Japan,
and the United States) will become magnets for immigrants. Nations
whose educational systems produce prospective workers faster than
their economies can absorb them (such as Argentina, Egypt, the
Philippines, Poland, and Russia) will export people.
The combination of a globalized workforce and massive mobil-
ity forces organizations to develop the ability to work with growing
numbers of people of differing cultures, customs, values, beliefs, and
practices.
Force 8: Rapidly Escalating Change and Chaos
For nearly three centuries, the world and the workplace have been
built on Newtonian physics: the physics of cause and effect, pre-
dictability and certainty, distinct wholes and parts, and reality as vis-
ible phenomena. Newtonian physics is a science of quantifiable
determinism, linear thinking, and controllable futures—in sum, a
world that does not change too quickly or in unexpected ways.
In the Newtonian mind-set, people engage in complex planning
for a world that they believe is predictable. They continually search
for better methods of objectively perceiving the world. This mecha-
nistic and reductionist way of thinking and acting dominates life
even though it was disproved more than 70 years ago by Albert
Einstein and others who introduced the scientific community to
quantum physics in the 1920s. Margaret Wheatley (1992) rightly
notes, however, that this old, disproved mind-set is, in today’s
world, “unempowering and disabling for all of us.”
Quantum physics deals with the world at the subatomic level,
examining the intricate patterns that give rise to seemingly discrete
events. Quantum physics recognizes that the universe and every
object in it are, in reality, vast empty spaces filled with fields and
movements that represent the basic substance of the universe. Thus,
relationships between objects and between observers and objects
determine reality. The quantum universe is composed of an environ-

ment rich in relationships; it is a world of chaos and process, not just
of objects and things. Quantum physics deals with waves and holo-
grams, with surprises rather than predictions.
In understanding quantum physics, organizations realize that
they cannot predict anything with certainty, that chaos is part and
parcel of reality. It forces us to change the way we think, the way we
attempt to solve problems, and the way we deal with order versus
change, autonomy versus control, structure versus flexibility, and
planning versus flowing.
Emergence of Learning Organizations
Albert Einstein once wrote that “No problem can be solved from the
same consciousness that created it; we must learn to see the world
anew.” The eight forces described above have altered the world of
work so dramatically that old dinosaur-like organizations can no
longer respond to or handle the new challenges. As Einstein warned,
we won’t be able to effectively attend to these new problems using
the same structures, mind-sets, or knowledge that worked for organi-
zations in the past.
Today, a growing number of organizational people are becoming
aware that the knowledge, strategies, leadership, and technology of
yesterday will not lead to success in tomorrow’s world. It has be-
come obvious to them that companies must increase their corporate
capacities to learn if they are to function successfully in an environ-
ment that includes continual mergers, rapid technological advances,
massive societal change, and increasing competition (Gavin, 2000).
With all these challenges and potential benefits to the organization,
it was just a matter of time before the new species of learning orga-
nization arrived (Easterby-Smith, Burgogne, and Aranjo, 1999).
To obtain and sustain a competitive advantage in this new world,
companies realized that they would have to evolve a higher form of
learning capability that enables them to learn better and faster from
their successes and failures. They would have to continuously trans-
form themselves into organizations in which everyone, groups and
individuals, could increase their adaptive and productive capabilities
by quantum leaps. Only by enhancing their capacity to learn would
they avoid the fate of the dinosaur, which was unable to adapt to its
changing environment.
In the early 1990s, a number of organizations began the process
of becoming learning organizations. Companies such as Corning,
Federal Express, Ford, General Electric, Motorola, and Pacific Bell
in the United States; ABB, Rover, and Sheerness Steel in Europe; and
Samsung and Singapore Airlines in Asia are among the early and suc-
cessful pioneers. These companies saw corporation-wide, systems-
wide learning, with its resulting product and service improvements,
as the best route toward not only surviving but succeeding.
As is the case with many evolutionary processes, some of the
organizations that began the process of adaptation and learning did
not accomplish enough to sustain long-lasting change. They were
not fully prepared to give up the security of their existing size and
successes, to fully and systematically metamorphose into that new
species, the learning organization. They chose to take on more mod-
est, safer changes, such as quality circles or reengineering, thus real-
izing only a portion of the full benefits of organizational learning.
Forces That Enable Learning Organizations
Fortunately, some of the same forces that created changes in the busi-
ness environment may also serve as the foundation for building the
learning organization. For example, the competitive and technolog-
ical forces that mandated a flatter, seamless organization enable that
company to move knowledge more quickly with less internal filter-
ing. Know-how workers with greater mobility and choices force an
organization to empower them so that they can be more productive.
Customer expectations and options require companies to continu-
ally learn new ways to create customer delight. The power of the
computer and telecommunications erases distance and time as it
facilitates information flow. Rapid and ongoing changes in the skills
required of workers compel them to be continuous learners who do
not have the luxury of waiting to be trained. The organization that
is able to capture all these forces and systematically synergize them
will be the one to advance up the evolutionary ladder to the next
stage of organizational life—the learning organization.
Learning speeds workers’ readiness to do their new jobs and fit

the roles needed, thus supporting better deployment of human cap-
ital. We now have a new metric, “time to competence.” Learning is
the foundation of professional development, the ongoing growth of
human capital with which companies drive more innovation, higher
levels of service, and greater margins. Learning is the key to adapt-
ing and surviving massive discontinuities in markets and competitive
environments (Manville, 2001).
Experience and research have shown that when companies
incorporate five distinct subsystems (learning, organization, people,
knowledge, and technology) into the process of becoming a learning
organization, they are quicker and much successful at attaining their
goal. Attempts to become learning companies without all five dimen-
sions will be insufficient and frustrating.
C H A P T E R 2
The Systems Learning

Organization Model
MOST ORGANIZATIONS NOW RECOGNIZE the critical importance of

becoming learning organizations: They must learn better and faster
or they will die. The challenge for them is, how? Many seek quick
and easy approaches. Others focus on only one or two aspects of
organizational change and learning, such as acquiring new skills or
technology. As a result of these shortcut attempts, most companies
have failed dismally. They neglected to take into account the chal-
lenging complexity of creating and maintaining company-wide
learning. They did not examine and implement the various inherent
components that make up the learning organization.
Based on the author’s experience with hundreds of learning
organizations over the past 15 years, it is clear that this kind of learn-
ing is not possible nor can it be sustained without understanding and
developing five related subsystems. These subsystems are learning,
organization, people, knowledge, and technology (see Figure 1). All
five are necessary to sustain viable, ongoing organizational learning
and ensuing corporate success.
23
Organization People
Learning
Knowledge Technology
Figure 1 Systems Learning Organization Model
The organization, people, knowledge, and technology subsys-

tems are necessary to enhance and augment learning, which, in turn,
permeates the other four subsystems. They are indispensable part-
ners in building and maintaining organizational learning and pro-
ductivity. The five subsystems are dynamically interrelated and
complement one another. If any one subsystem is weak or absent, the
others will be significantly compromised.
Learning Subsystem
Learning is the core subsystem of the learning organization. It takes

place at the individual, group, and organizational levels. The skills of
systems thinking, mental models, personal mastery, self-directed
learning, and dialogue are necessary to maximize organizational
learning. The learning subsystem refers to levels and types of learn-
ing that are crucial for organizational learning and the relevant orga-
nizational skills (see Figure 2).
Levels of Learning
Three distinct but interrelated levels of learning are present in learn-
ing organizations:
The Systems Learning Organization Model 25
Levels
• Individual
• Group/Team
• Organizational Skills
• Systems thinking
Learning • Mental models
• Personal mastery
Types • Self-directed
• Adaptive learning
• Anticipatory • Dialogue
• Action
Figure 2 Learning Subsystem
Individual learning refers to changes in skills, insights, knowl-

edge, attitudes, and values acquired through self-study, technology-
based instruction, and observation.
Group or team learning covers the increase in knowledge, skills,
and competencies accomplished by and within groups.
And organizational learning represents the enhanced intellectual
and productive capability gained through commitment to and op-
portunities for continuous improvement across the organization.
Types of Learning
Three methods of or approaches to learning are of significance and
value to the learning organization. Although each is distinctive, there
is often overlap and complementarity among them.
Adaptive learning occurs when we reflect on past experience and
then modify future actions.
Anticipatory learning is the process of acquiring knowledge from
envisioning various futures (an approach that moves from vision to
action to reflection). This approach to learning seeks to avoid nega-
tive results and experiences by identifying the best future oppor-
tunity and determining ways to achieve that future.
Action learning means inquiring about and reflecting on reality
on a present, real-time basis and applying that knowledge toward
developing the individual, the group, and the organization.
Skills for Organizational Learning

Five key skills are needed for initiating and maximizing organiza-
tional learning.
Systems thinking represents a conceptual framework with which
to make full patterns clearer and determine how to change them
effectively.
Mental models are the deeply ingrained assumptions that influ-
ence our views of and actions in the world. For example, our men-
tal model or image of learning, work, or patriotism influences our
interactions and behavior in specific situations that pertain to those
concepts.
Personal mastery indicates a high level of proficiency in a subject
or skill area. It requires a commitment to lifelong learning that leads
to expertise or exceptional, enjoyable proficiency in our organiza-
tional tasks or responsibilities.
Self-directed learning means that everyone is aware of and enthu-
siastically accepts responsibility for being a learner. Elements of self-
directed learning include knowing our own learning style, being able
to assess our needs and competence, and connecting business objec-
tives to learning needs.
Dialogue denotes a high level of listening and communication
between people. It requires the free and creative exploration of sub-
tle issues and the ability to listen deeply to another person while sus-
pending our own views. The discipline of dialogue involves learning
to recognize the patterns of team interaction that may promote or
undermine learning. For example, patterns of defensiveness are
often deeply ingrained in group or organizational dynamics. If such
patterns are unrecognized or ignored, they undermine learning, but
when recognized and surfaced creatively, they can actually accelerate
learning. Dialogue is the critical medium for connecting, inventing,
and coordinating learning and action in the workplace.
Organization Subsystem
The organization itself, the setting and body in which the process
occurs, is a subsystem of a learning organization. The four key di-
mensions or components of this subsystem are vision, culture, strat-
egy, and structure (see Figure 3).
Vision encompasses a company’s hopes, goals, and direction for

the future. It is the image of the organization that is cultivated
within the company itself and then transmitted to those outside the
organization. The culture of a learning organization supports an
evolving vision of the company, within which learning and learners
creating the company’s continuously new and improving products
and services.
Culture refers to an organization’s values, beliefs, practices, ritu-
als, and customs. It helps shape behavior and fashion perceptions. In
a learning organization, the corporate culture is one in which learn-
ing is recognized as absolutely critical for business success; in such an
organization, learning has become a habitual and integrated part of
all organizational functions. This rich, adaptable culture creates rela-
tionships and enhances learning by encouraging values such as team-
work, self-management, empowerment, and sharing. It is the oppo-
site of a closed, rigid, bureaucratic architecture.
Strategy relates to the action plans, methodologies, tactics, and
steps employed to achieve a company’s vision and goals. In a learn-
ing organization, strategies optimize the learning acquired, trans-
ferred, and utilized in all company actions and operations.
Vision
Structure Organization Culture
Strategy
Figure 3 Organization Subsystem

Structure includes the company’s departments, levels, and con-

figurations. A learning organization is a streamlined, unbounded, flat
structure that maximizes contact, information flow, local responsi-
bility, and collaboration within and outside the organization.
People Subsystem
The people subsystem of the learning organization includes man-

agers and leaders, employees, customers, business partners and
alliances, suppliers, vendors, and the surrounding community (see
Figure 4). Each group is valuable to the learning organization, and
all must be empowered and enabled to learn.
As learners, managers and leaders carry out coaching, mentoring,
and modeling roles with the primary responsibility of generating and
enhancing learning opportunities for the people around them.
Employees are empowered and expected to learn, plan for their
future competencies, take action and risks, and solve problems.
Customers participate by identifying needs, receiving training,
and establishing a connection to the learning of the organization.
Managers
Employees
and Leaders
Community People Customers
Suppliers Business
and Partners &
Vendors Alliances
Figure 4 People Subsystem

Business partners and alliances benefit by sharing competencies

and knowledge.
Suppliers and vendors receive and contribute to instructional
programs.
Community groups such as social, educational, and economic
agencies share in providing and receiving learning.
Knowledge Subsystem
The knowledge subsystem of a learning organization manages the

acquired and generated knowledge of the organization. It includes
the acquisition, creation, storage, analysis and data mining, transfer
and dissemination, and application and validation of knowledge (see
Figure 5).
The six knowledge elements of organizational learning are on-
going and interactive instead of sequential and independent.
Distribution of information occurs through multiple channels, each
with different time frames. Knowledge management is continually
subjected to perceptual filters as well as to proactive and reactive
Acquisition Creation
Application
and Knowledge Storage
Validation
Transfer Analysis
and and
Dissemination Data Mining
Figure 5 Knowledge Subsystem

activities. The management of knowledge is at the heart of building

a learning organization. Successful learning organizations systemati-
cally and technologically guide knowledge through each and all of
these six stages.
Acquisition is the collection of existing data and information
from within and outside the organization.
In creation, new knowledge is generated through a number of
different processes ranging from innovation to painstaking and elab-
orate research. It can also come through the ability to see new con-
nections and combine previously known knowledge elements
through complex inductive reasoning.
Storage refers to the coding and preservation of the organiza-
tion’s valued knowledge for easy access by any staff member, at any
time, and from any place.
Analysis and data mining involves techniques for analyzing data
as well as for reconstructing, validating, and inventorying this criti-
cal resource. Mining enables organizations to find meaning in their
data.
Transfer and dissemination is the mechanical, electronic, and
interpersonal movement of information and knowledge, both inten-
tionally and unintentionally, throughout the organization
Application and validation covers the use and assessment of
knowledge by members of the organization. This is accomplished
through continuous recycling and creative utilization of the organi-
zation’s rich knowledge and experience.
Technology Subsystem
The technology subsystem is composed of supporting, integrated

technological networks and information tools that allow access to
and exchange of information and learning. It includes technical
processes, systems, and structures for collaboration, coaching, coor-
dination, and other knowledge skills. It encompasses electronic tools
and advanced methods for learning, such as simulation, computer
conferencing, and collaboration. All these tools work to create
knowledge freeways.
The two major components of the technology subsystem apply
to managing knowledge and enhancing learning (see Figure 6).
Culture
Managing Enhancing
Technology
Knowledge Learning
Figure 6 Technology Subsystem
Technology for managing knowledge refers to the computer-

based technology that gathers, codes, stores, and transfers informa-
tion across organizations and worldwide.
Technology for enhancing learning involves the utilization of
video, audio, and computer-based multimedia training for the pur-
pose of delivering and developing knowledge and skills.
Characteristics of the Systems Learning Organization
The systems learning organization has tremendous power to engen-

der corporate success. What are some of the dimensions and charac-
teristics of such an organization?
First, learning is accomplished by the organizational system as a
whole, almost as if it were a single brain. Members recognize the
critical importance to current and future success of ongoing learning
that occurs throughout the organization. Learning is a continuous,
strategically used process that is integrated with and runs parallel to
work. In such a learning organization, there is a focus on creativity
and generative learning. Well-developed core competencies serve as
a launching point for new products and services. Systems thinking is
fundamental. Agility and flexibility are valued. An organization of
this type possesses the ability to continuously adapt, renew, and revi-
talize itself in response to the changing environment.
As we will see in chapter 5, there is a corporate climate that
encourages, rewards, and accelerates individual and group learning.
Employees network in an innovative manner that resembles a com-
munity both inside and outside the organization. Change is em-
braced, and unexpected surprises and even failures are viewed as
opportunities to learn. Everyone is driven by a desire for quality and
continuous improvement. Aspiration, reflection, and conceptualiza-
tion characterize day-to-day activities. People have uninterrupted
access to information and data resources that are vital to the com-
pany’s success.
The organization that incorporates and integrates all five subsys-
tems of this model will have tremendous capabilities to
• Anticipate and adapt more readily to environmental influences
• Accelerate the development of new products, processes, and
services
• Become more proficient at learning from competitors and
collaborators
• Expedite the transfer of knowledge from one part of the
organization to another
• Learn more effectively from its mistakes
• Make greater use of employees at all levels of the organization
• Shorten the time required to implement strategic changes
• Stimulate continuous improvement in all areas of the
organization
• Attract the best workers
• Increase worker commitment and creativity
Learning must be linked to fundamental business needs and the
results demanded by managers, customers, partners, and sharehold-
ers. They will be measuring effectiveness not by counting training
courses or classroom attendance but by business performance. In
these companies, learning underpins business outcomes such as tal-
ent acquisition, channel management, leadership capacity, decreased
cycle time, new-product rollout speed, merger and acquisition inte-
gration, risk management and legal compliance, and employee and

customer retention and satisfaction (Manville, 2001). Only organi-
zations that have embraced all five subsystems will be able to meet
these challenges.
Details and specific applications of the five subsystems that form
the Systems Learning Organization model will be presented and
applied in the remainder of this book. Together, the subsystems build
a sturdy structure that ensures global learning and success. Let’s now
explore each of these subsystems so that we can begin to design and
build our learning organization.
C H A P T E R 3
Building Learning
Dynamics
THE CORE SUBSYSTEM OF THE LEARNING ORGANIZATION is learning

itself. The speed, quality, and leverage of the learning processes and
their content form the medium that supports, nourishes, and extends
into the other subsystems of the learning organization.
Learning in Organizational Settings
The learning subsystem is composed of three complementary dimen-

sions: levels of learning (individual, group, and organizational),
types of learning (adaptive, anticipatory, and action), and skills (sys-
tems thinking, mental models, personal mastery, self-directed learn-
ing, and dialogue). The subsystem is illustrated in Figure 7.
Before examining these three dimensions of the learning subsys-
tem, it is important to understand and appreciate some basic princi-
ples, especially those that relate to organizational context. Learning
35
Levels
• Individual
• Group/Team
• Organizational Skills
• Systems thinking
Learning • Mental models
• Personal mastery
Types • Self-directed
• Adaptive learning
• Anticipatory • Dialogue
• Action
Figure 7 Learning Subsystem
has traditionally been defined as a process by which individuals gain

new knowledge and insights that result in a change of behavior and
actions. It comprises cognitive (intellectual), affective (emotional),
and psychomotor (physical) domains.
Principles of Learning
Throughout the past century, learning theorists have identified a
number of principles that encourage and enhance the learning
process.
They have found that we learn best when we are motivated to
achieve something as opposed to being motivated to learn. Thus,
performance-based learning that is tied to business objectives will be
more successful than abstract learning. Learning is also most thor-
ough when it involves the whole person—mind, values, and emo-
tions. And because learning is a cyclical, iterative process of plan-
ning, implementing, and reflecting on action, we usually learn best
when we have the opportunity to reflect on our immediate actions.
The ability to know what we must know and then to learn it on
our own is a critical survival skill. People tend to be more receptive
to learning that they have helped to create, and they will know the
information they acquire in this way better than anyone else. How-
Building Learning Dynamics 37
ever, learning about ourselves can be threatening and is often re-

sisted if it might lead to changes in self-image.
Learning is, in part, a product of the activity, context, and cul-
ture in which it is developed and used, yet the process can accom-
modate and challenge different learning-style preferences.
For example, to better prepare its sales force for a new technol-
ogy platform, Royal Bank of Canada developed a five-part learning
program entitled Enhancing Sales Performance, designed to meet the
wide range of learning styles and needs among an audience of dis-
parate experiences and abilities. Each component fulfilled a spe-
cific learning need via the most appropriate medium: print, com-
puter, video, or audio. Sessions were text based and facilitator led in
order to achieve maximum comprehension and retention. These
components allowed staff to practice skills on an ongoing basis, as
often and in as many variations as needed. The success of this tai-
lored learning program earned Royal Bank the ASTD 1999 Citation
for Excellence in Practice (American Society for Training &
Development [ASTD], 1999).
Levels of Learning
Learning in organizations can occur at three levels: individual, team

or group, and organizational. Learning organizations have devel-
oped the capacity to encourage and maximize all three levels.
Learning at Canadian Imperial

Bank of Commerce
Canadian Imperial Bank of Commerce (CIBC) is a highly diversified finan-
cial services company operating on a global basis with more than 6.5 million
individual customers and 10,000 commercial customers. The bank has more
than 47,000 employees and invests in excess of $40 million in employee
development each year. CIBC recently launched a major effort to develop the
necessary tools and techniques for capturing the intellectual capital that will
ensure its success. Its criterion for success was that the rate of learning by
individuals, teams, and the corporation as a whole must equal or exceed the
pace of change in the external environment.
The purpose of all knowledge management is improving output for the
customer. It is not knowledge for knowledge’s sake. At CIBC, knowledge
gathering proceeded on each of the three levels of learning—individual, team

or group, and organizational.
At the individual level, responsibility for continuous learning rests with the
worker. To assist, CIBC mapped the knowledge requirements of each position
in the organization—the theoretical understanding, skill sets, and experience
required for each job—and electronically posted the requirements of all vacant
positions. The company provided a variety of methods for acquiring the nec-
essary knowledge, which included classes, correspondence courses, semi-
nars, video and audio aids, reference material, and external courses.
Employees chose the method most suited to their needs.
At the team level, task-focused employee groups also take responsibility
for their learning. This demands a change in structures: Management respon-
sibilities and styles shifted from authoritarian to coaching and mentoring, bro-
kering team knowledge, and assessing knowledge needs across the organi-
zation. Compensation systems were redesigned to reflect team as well as
individual success. Teams were expected to find ways of ensuring that the
knowledge and ideas of all members were recognized and shared.
At the level of the organization, particularly across such a large, multina-
tional firm, “silos” of knowledge develop, which are useful to those on the
inside but are unavailable and therefore of little help to others. At CIBC, team
successes and achievements are viewed as one team’s potential contribution
to another and are shared through learning networks.
Individual Learning
Individuals are the basic units of groups and organizations. Peter
Senge (1990a) asserts that “organizations learn only through indi-
viduals who learn. Individual learning does not guarantee organiza-
tional learning, but without it no organizational learning occurs”
(p. 236). Argyris and Schön (1978) concur, noting that “individual
learning is a necessary but insufficient condition for organizational
learning” (p. 20). Individual learning, according to John Redding
(1994), is essential to the “continuing transformation of the organi-
zation, to expand the firm’s core competencies, and to prepare
everyone for an unknown future” (p. 3).
Therefore, each person’s commitment and ability to learn is
essential. Individual learning opportunities include self-managed
learning, learning from coworkers, computer-assisted learning, daily
work experiences, special assignments on projects, and personal
insights.
There are a number of important factors and techniques that

contribute to increasing the power and impact of individual learning
in the organization.
Locus and Focus of Individual Learning Learning should be a constant
in the work environment, whether through on-the-job coaching,
electronic performance support systems (EPSS), action learning, or
reflective planning. Classroom training, whenever possible, should
be designed for small “just in time” formats that provide immediate
application to the job.
Accelerated Learning The many, varied techniques of accelerated
learning augment the ability to learn more information in less time
and increase retention. Accelerated learning techniques engage all
parts of the brain and do so in conjunction with both conscious and
subconscious mental functions. This ensures that every means of
learning and retention is utilized as simultaneously and fully as pos-
sible. Accelerated learning has also proved effective at building inno-
vation, imagination, and creativity into the learning process.
The following learning accelerators are among the most
powerful:
• Mnemonics for greater recall and retention
• Music to engage the whole brain
• Metaphors and stories to engage the whole learner for concept
development and transfer of learning
• Peripherals to create a richer and more integrated learning
environment
• Lighting, color, and room arrangements that create receptive
learning states
• Mind mapping or information graphs to aid learning, recall,
concept formation, idea generation, and planning
Of course, different accelerators are more effective for different
people. Learning organizations should therefore provide a variety of
choices. To enhance accelerated learning, Gill and Meier (1989)
have identified a number of basic principles for enriching the learn-
ing environment:
• Provide a natural, comfortable, and colorful setting

• Help people eliminate or reduce fears, stresses, or learning
barriers
• Accommodate different learning styles, speeds, and needs
• Present material pictorially as well as verbally
• Treat learning as a collaborative effort of equals
Bell Atlantic is one learning organization that recently estab-
lished accelerated learning techniques for its customer service pro-
grams. The results were overwhelming. Training time was cut by more
than half, trainers and learners were much more satisfied, job per-
formance was higher, and costs were reduced by nearly 60 percent.
Personal Development Plan Individuals in learning organizations see
learning as a way of life rather than an occasional event. They rec-
ognize that employers cannot guarantee them lifelong employment
but will assist them in becoming lifelong employable. The organiza-
tion and the individual work together toward the employee’s long-
term career development. Organizations should be as up-front and
open as possible about future corporate directions and plans, and
then employees can create programs for self-development that will
make them valued assets to their companies. And if a firm moves in
a direction that no longer matches the skills or interests of an
employee, that individual will possess competencies and know-how
that are in demand at other organizations.
A number of learning organizations have developed excellent
personal development packages for their employees. Caterair
International has its Passports for Learning. Royal Bank of Canada
guides employees through Planning Your Career, while PPG
Industries offers the Professional Development Sourcebook.
Learning organizations constantly encourage, support, acceler-
ate, and reward individual learning through an organizational system
that promotes continuous self-development and employability.
Professional development opportunities are available to everyone in
the organization. Resources include courses, workshops, seminars,
self-learning materials, development groups, coaching, mentoring,
and data banks. Employees are expected to learn not only the skills
related to their own jobs but the skills of others in their units.
Learning is performance based—that is, closely tied to business

needs—and is also an integral part of all organizational operations.
Individual learning, whether creative or adaptive, is transferred to
the organization database for future application.
Group or Team Learning

Teams have become more and more important in organizations—
whether they are running cross-functional projects, working on
manufacturing lines, or reengineering business processes. In order to
equip these teams with the knowledge and skills they need, learning
organizations have taught them quality processes, problem-solving
techniques, and team interaction skills.
As organizations must deal with increasingly more complex
problems, they are discovering that they must become skilled in
group and team learning. Work teams must be able to think, create,
and learn effectively as an entity. Team learning can and should
occur every time a group of people is brought together, whether for
short-term specific purposes or to address long-term organizational
issues.
It is important to recognize that team learning differs radically
from team training because it involves more than the acquisition of
group skills. Team learning emphasizes self-managed learning, cre-
ativity, and the free flow of ideas. A successful team learning system
ensures that teams share their experiences, both negative and posi-
tive, with other groups in the organization and thereby promote vig-
orous corporate intellectual growth.
Teams learn to generate knowledge by analyzing complex issues,
taking innovative action, and solving problems collectively. They
become able to better learn from their own experiences and past
histories, to experiment with new approaches, and to quickly and
efficiently transfer knowledge among themselves and throughout
the organization. As teams learn, they may become microcosms for
learning throughout the organization. The team’s insights can be
put into action, while its newly developed skills are passed along to
other individuals and groups. A team’s accomplishments can set
the tone and establish a standard of mutual learning for an entire
organization.
Learning organizations seek to create a full range of teams,

including continuous improvement, cross-functional, quality man-
agement, and organizational learning teams. These groups take time
to reflect, to practice action learning. They serve as vehicles for fun-
damental organizational change and renewal. Teams are encouraged
not only to solve problems but, according to Redding (1994), to
“generate a fundamental new understanding of the business through
a process of collective learning.”
Team learning focuses on the process of aligning and developing
the group’s capacity to create the desired learning and results for its
members. Most groups do not learn. Frustration and wasted energy
are fundamental characteristics of relatively unaligned groups:
Individuals may work extraordinarily hard, but their efforts do not
translate into a team effort. By contrast, an aligned team develops a
commonality of direction, and the energies of individual members
harmonize. There is less wasted energy. In fact, as Senge (1990a)
notes, “a resonance or synergy develops, like the coherent light of a
laser rather than the incoherent and scattered light of a light bulb.”
Team learning meets the need to think insightfully about com-
plex issues. Through innovative, coordinated action, teams learn
how to tap the potential of many minds. Outstanding teams develop
operational trust, in that each team member remains conscious of
the others and acts in ways that complement their actions. This
is how outstanding sports teams and orchestras work and learn
together.
Team learning requires these three elements:
• The need to address complex issues through collective insight
• The need for innovative, coordinated action
• The ability to encourage and stimulate learning in other teams
Team learning occurs more quickly and fully if teams are re-
warded for their contributions to the organization. Learning at the
team level requires practice and reflection. High-level team learning
enables high-level collective thinking and communication as well as
the ability to work creatively and constructively as a single entity. As
will be discussed later in this chapter, action learning has proved to
be the most effective way of creating team learning (Marquardt,
1998).
Organizational Learning
Ray Stata (1988), president of Analog Devices, distinguishes organi-
zational learning from individual and team learning in two basic
respects. First, organizational learning occurs through the shared
insights, knowledge, and mental models of members of the com-
pany. Second, organizational learning builds on past knowledge and
experience—that is, on organizational memory, which depends on
mechanisms such as policies, strategies, and explicit models with
which to store knowledge.
Although the types of learning associated with individuals,
teams, and organizations are interrelated, organizational learning is
seen as more than the sum of individual and team learning. Individ-
uals and groups are the agents through which organizational learn-
ing takes place, but the process is influenced by a much broader set
of social, political, and structural variables. It involves the sharing of
knowledge, beliefs, or assumptions among individuals and groups
(Argyris, 1999).
One way to show the difference between individual and group
learning and organizational learning is to consider a performing
organization, such as an orchestra or sports team. A musical per-
formance or game win cannot be attributed to any individual or the
sum of every individual’s knowledge and skills, or even to any group,
such as the horn section or the defense. It is the result of the know-
how of the whole organization working in unison.
Types of Learning
There are three types of organizational learning: adaptive, anticipa-

tory, and action. They are not exclusive of one another in that an
individual, team, or organization may employ more than one type at
the same time.
Adaptive Learning
Adaptive learning occurs when an individual, team, or organization
learns from experience and reflection. Organizationally, adaptive
learning proceeds as follows: The company takes an action intended
to further an identified goal, the action results in some internal or
external outcome, the resultant change is analyzed for congruence

with the goal, and the company initiates a new action or modifies the
previous action based on the outcome. Adaptive learning moves from
action, to outcome, to results assessment, and then to reflection.
Adaptive learning may be either single loop or double loop.
Single-loop learning is focused on gaining information to stabilize
and maintain existing systems. It emphasizes error detection and cor-
rection. Single-loop learning is concerned with obtaining direct solu-
tions to immediate conflicts or obstacles, which are often symptoms
of underlying problems. This type of learning is by far the only kind
of loop learning used in most organizations today. Double-loop
learning involves in-depth questioning of the system itself to ascer-
tain why errors or successes occur in the first place. It looks at orga-
nizational norms and structures and raises questions about their
validity in terms of organization, action, and results (Argyris, 1987).
Schein (1992) notes that most organizations and individuals are
unwilling to engage in double-loop learning because it involves dis-
closure of errors and mistakes as well as the (often uncomfortable)
process of questioning existing assumptions, norms, structures, and
practices.
John Browne, CEO of British Petroleum (BP), expresses his core
philosophy on adaptive learning in these words: “Every time we do
something again, we should do it better than the last time. For exam-
ple, if each drilling operation is more efficient than the last, the com-
pany will improve on the $2 billion spent on drilling.” Indeed, since
1995, the average time BP has spent drilling a deep-water well has
decreased from 100 days to 42 (Prokesch, 1997, p. 148).
Anticipatory Learning
Anticipatory learning arises when an organization learns from antic-
ipating various futures. This approach seeks to avoid negative results
and experiences by identifying the best future opportunities while
discovering ways to achieve them. Royal Dutch Shell credits its
global learning and success to the “planning as learning” approach.
Anticipatory learning enabled the company to prepare for a sharp
drop in the price of oil. When the expected drop occurred, Shell was
the only oil company equipped with the appropriate organizational
skills and resources. Anticipatory learning thus moves from vision, to

reflection, and then to action.
In comparing adaptive and anticipatory learning, we can note
that adaptive learning is more a coping form of learning. Anticipa-
tory learning is a more generative or creative type of organizational
learning. Anticipatory learning greatly empowers the organization
because staff members are more proactive, reflective, and creative in
their learning. Organizational learning may start as reactions to
events, but the proactive organization soon takes charge of its learn-
ing to shape events.
Action Learning
Action learning involves working on real problems, focusing on the
acquired knowledge, and actually implementing solutions. It pro-
vides a well-tested method of accelerating learning that enables peo-
ple to learn better and handle difficult situations more effectively.
Used as a systematic process, it increases organizational learning so
that a company can respond to change more effectively.
Action learning is both a dynamic process and a powerful pro-
gram. As a process, it involves a small group of people focusing on
what they are learning and how their new knowledge can benefit
each individual and the organization as a whole. And, action learn-
ing is built on a well-tested framework that enables people to learn
effectively and efficiently as they assess and solve difficult, real-life
problems. It combines the generation and application of new ques-
tions to existing knowledge with reflection on actions taken during
and after problem-solving sessions (Marquardt, 1998).
The action learning program derives its power and benefits from
the six interactive and interdependent components discussed below.
The strength and success of action learning depends on how well
these elements are used and reinforced. Each component is necessary
to create the optimum capacity and potency of action learning.
Employed properly, action learning programs can catapult individu-
als, teams, and organizations to much higher levels of success.
The Action Learning Problem or Challenge Action learning is built
around a problem, project, challenge, issue, or task, the resolution
of which is of great importance to an individual, a team, and/or an
organization. The problem should be significant, be within the

responsibility of the group, and provide opportunity for learning.
Why is the selection of the problem so important? Because it is one
of the fundamental beliefs of action learning that we learn best when
we undertake an action, reflect on it, and learn from it—especially
when the action involves something real and valuable on which to
focus, a subject that is relevant and meaningful. It also creates an
opportunity to test our accumulated knowledge.
Action learning may focus on any of a number of issues, such as
reducing turnover in the workforce, reorganizing a department, clos-
ing down a production line, improving information systems and
reducing paperwork, increasing sales by a predetermined amount,
individual management problems or responsibilities, and individual
development of qualities, competencies, or behaviors.
The Action Learning Group or Team The core entity in action learning
is the action learning group, which is composed of four to eight indi-
viduals. Research has shown that this number is ideal because groups
of less than four members do not display enough diversity, creativ-
ity, and challenging dynamics, whereas groups of more than eight are
too complex and do not allow each individual enough airtime, an
important element in action learning. Ideally, the group’s makeup
should be diverse so as to maximize various perspectives and obtain
fresh viewpoints. Depending on the type of problem, groups may
contain individuals from across functions or departments. In some
situations, groups may be composed of individuals from other orga-
nizations or professions, such as the company’s suppliers, or even
customers.
The group should include people who have the power to carry
out the group’s recommendations, care about the problem, and
know something about it—in other words, those “who can, who
care and who know” (Revans, 1983).
The Action Learning Coach Facilitation helps the group slow its
process, allowing sufficient time for reflection. The action learning
coach may be a group member who is familiar with the problem
being discussed or an external participant who may not necessarily
understand the problem or organizational context but possesses the
requisite facilitation skills.
The coach guides participants toward reflecting on what they are

learning and how they are solving problems. He or she helps group
members think about their ways of listening, how they may have
reframed the problem, their feedback styles, their approaches to
planning and working, and the assumptions that may be shaping
their beliefs and actions. The coach also encourages participants to
focus on their achievements, their difficulties, the processes they are
employing, and the implications of these processes.
Participants also gain key organizational learning skills through
the action learning process. These include new ways of thinking
about the organization by addressing unfamiliar problems, improved
self-understanding gained from feedback from others in the group,
the ability to reflect critically on their assumptions and reframe to
initiate innovative and more effective action, and teamwork skills
derived from examining their behavior and working toward resolu-
tion of problems.
Insightful Questioning and Reflective Listening By concentrating on the
right questions rather than the right answers, action learning fo-
cuses on what we do not know as well as what we do know. Action
learning works through a process that begins with asking questions
to clarify the nature of the problem, reflecting on and identifying
possible solutions, and then taking action.
The procedure of asking questions rather than immediately pro-
viding solutions unfreezes the group and defuses defensiveness.
Asking the right questions when everything is uncertain and nobody
knows what to do next encourages outside-the-box creativity. The
insightful questions of action learning may lead to a wide array of
benefits, such as shaking up our underlying assumptions, opening us
up to greater learning, developing listening skills and thus more car-
ing and trust among group members, enhancing creativity, empow-
ering each team member, developing new mental models, and attain-
ing an elevated level of discernment and understanding that will lead
to better reflection and more effective action.
Action learning programs provide the time and space we need to
stand back and reflect, unfreeze our thoughts, rise above everyday
problems, and develop a common perspective. Reflection generates
mutual support within the group as each member listens intently and
draws out the others’ experiences and practical judgments. This
process of questioning and reflecting also encourages team members

to view one another as learning resources.
Taking Action For advocates of action learning, there is no real learn-
ing without action, for the effectiveness of ideas or plans can be
determined only after implementation: Practice tests ideas, revealing
whether they are effective and practical, whether any issues have
been overlooked, what problems might occur as a result, what to do
differently in the future, and how to apply these ideas to other parts
of the organization and other aspects of learners’ lives. Therefore,
members of the action learning group must have the power to take
action themselves or be assured that any appropriate and reasonable
recommendations will be implemented.
Action enhances learning by providing a basis for reflection, and,
indeed, the most valuable learning in action learning occurs when
participants “reflect on their actions, not just on their planning”
(Dixon, 1998, p. 46). By analogy, a beginning tennis player cannot
truly learn how to serve by developing a serving plan but must actu-
ally hit the ball and learn from experience. The “action in action
learning is not about developing a recommendation; it is about tak-
ing action” (p. 46).
Commitment to Learning Solving organizational problems results in
immediate, short-term benefits to the company. The more significant
and longer-term benefit, however, is the learning gained by each
group member and the application of the group’s new knowledge
throughout the organization. As stated in Dilworth (1998), the gains
of action learning are of greater strategic value to the organization
than are the tactical advantages of solving the immediate problem.
Action learning places equal emphasis on accomplishing the task
and on the learning and development of individuals and organiza-
tions. The action learning process results in powerful, transformative
learning due to a number of key learning principles.
• Greater learning occurs when we are allowed ample time and
space, when a sense of urgency exists, when we can see results,
when we are allowed to take risks, and when we are encour-
aged and supported in our deliberations.
• Critical learning occurs when we are able to question the
assumptions that underlie actions.
• Learning intensifies when we receive accurate feedback from

others, observe the results of our problem-solving actions, and
reflect on our actions.
• Action learning is most effective when learners examine the
organizational system as a whole.
• By working cooperatively on real issues, the group can move
to higher levels of learning relative to application, synthesis,
and evaluation.
• Action learning is built on the entire learning cycle: learning
and creating knowledge through concrete experience, observing
and reflecting on this experience, forming generalizations from
experiences, testing the implications of those generalizations
through new experiences, and beginning the process again.
General Electric and Action Learning

Several learning organizations have made extensive use of action learn-
ing sets in order to learn and achieve organizational success. For example,
General Electric (GE) has declared action learning a vital strategy in trans-
forming itself into a global-thinking, fast-changing organization.
GE’s action learning teams are built around real and relevant problems
that require decisive action. Formats may vary, but typically, two teams of five
to seven people from diverse divisions and functions within GE work together
on the project. GE has designed the projects so that participants receive feed-
back on strategies as well as on their leadership and teamwork skills. They
also have the opportunity to reflect on the total learning experience.
Along with team building, the organization’s action learning teams give
participants a context for dealing with multicultural and global issues. Global
action learning teams usually focus on potential GE markets. In a recent exec-
utive development course for global business leaders in Heidelberg, Germany,
the action set spent the first week building team and leadership effectiveness
as well as meeting with key European business leaders, opinion makers, and
government officials from France, Germany, and Sweden.
During the second week, the focus shifted to projects from GE’s plastic,
lighting, and electrical distribution and control businesses. One team looked
at the lighting strategy for Europe, reflecting the sharp rise—from 2 percent to
18 percent in 18 months—in GE’s share of the Western European consumer
lighting market, mostly resulting from GE’s acquisition of Tungsram in Hungary
and Thorn Lighting in the United Kingdom. The teams were encouraged to be
creative and think of serious ways in which GE could change the market and
create excitement among retailers and customers by adding value in new

ways. The participants traveled across Europe to conduct interviews and gain
firsthand experience of other cultures, languages, currencies, legislation, tax
laws, and consumer preferences. Between interviews, the participants de-
briefed one another and prepared their final reports for GE leadership, includ-
ing CEO Jack Welch.
James Noel, manager of executive education at GE at the time of these
projects, has stated that action learning was pivotal in building GE into a
learning organization. Action learning has made “participants active partners
in the learning process. Because the team projects provide value to GE’s busi-
nesses, it has an immediate return on investment. Action learning also pro-
vides a viable vehicle for dealing with issues of leadership and teamwork”
(Noel and Charan, 1992, p. 33).
Schein’s Types of Learning

Edgar Schein (1993) points out that before individuals or organiza-
tions can learn competently, they must understand that there are dis-
tinct types of learning, each operating within different time frames
and possibly applicable to different stages of a learning or change
process. He cites three types.
The first is habit and skill learning. This form of learning is slow
because it calls for practice, and learners must be willing to put up
with their own temporary incompetence. Learning of this type takes
hold when we are given opportunities to practice and make errors
and are consistently rewarded for correct responses.
The second, emotional conditioning and learned anxiety, has
become familiar through the work of Pavlov on the conditioning of
dogs. Once this type of learning has occurred, it will continue even
after the original stimuli are discontinued.
Knowledge acquisition is the third type of learning. Most learn-
ing theories imply that the essence of learning is acquiring informa-
tion and knowledge through various kinds of cognitive activities.
This point of view, according to Schein, ignores the following factors:
• Learning happens only if the learner recognizes a problem and
is motivated to learn.
• Even with insight, the learner often cannot produce the right
type of behavior or skill with enough consistency to solve the
problem.
• Insight does not automatically change behavior, and until be-

havior changes and new results are observed, we do not know
whether or not our cognitive learning is valid.
Peter Senge (1990) agrees that “learning has very little to do with
taking in information. Learning, instead, is a process that is about
enhancing capacity. Learning is about building the capability to cre-
ate that which you previously couldn’t create. It’s ultimately related
to action, which information is not” (p. 191).
Learning is essentially a social phenomenon—our ability to learn
and the nature of our knowledge are determined by the quality and
openness of our relationships. Our mental models of the world and
of ourselves grow out of our relationships with others. Dialogue,
which includes continuous critical reappraisal of our views, increases
the possibilities for learning. Learning and dialogue are incompatible
with self-sufficiency.
It is important to recognize that all learning is not equally valu-
able or applicable; some knowledge is impracticable, and some
insights or skills that might lead to useful new actions are often hard
to come by in a given organization.
Deutero Learning
Deutero learning occurs when the organization learns from criti-
cally reflecting on its assumptions. Chris Argyris and Donald Schön
(1978) call this “learning about learning.” When a company engages
in deutero learning, its members become cognizant of previous orga-
nizational contexts for learning. They discover what they did that
facilitated or inhibited learning, they invent new strategies for learn-
ing, and they evaluate and generalize on what they have produced.
The results become encoded and reflected in organizational learning
practice.
Learning Skills
Several organizational learning skills are necessary to maximize

learning company wide and attain ultimate business success: systems
thinking, mental models, personal mastery, self-directed learning,
and dialogue. We will explore these skills below.
Systems Thinking
At an early age, we are taught to break down problems, to fragment
the world. This initially appears to make complex tasks and subjects
more manageable, but we end up paying an enormous hidden price.
We lose our concept of, and intrinsic sense of connection to, the
whole; we also lose our ability to correlate actions and conse-
quences. When we then try to see the big picture, we attempt to
reassemble the fragments in our minds, to list and organize all the
pieces. The task is futile, much like trying to reassemble the frag-
ments of a broken mirror.
Systems thinking is a conceptual framework that helps us see the
overall patterns more clearly and thus improves our ability to change
them. It is a “discipline for seeing wholes,” says Senge (1990a), “a
framework for seeing interrelationships rather than linear cause-
effect chains, for seeing underlying structures rather than events, for
seeing patterns of change rather than snapshots” (p. 68).
High-leverage changes usually are not obvious to most partici-
pants in the system, who lack proximity to overt symptoms of prob-
lems. Systems thinking, however, shows that small, well-focused
actions can sometimes produce significant, enduring improvements,
if they are applied in strategic places. Solving a difficult problem is
often a matter of seeing which change will produce the maximum
effect while expending comparatively minimal effort.
Systems thinking—in particular, systems dynamics—can be a
powerful tool for facilitating organizational learning. Systems dy-
namics recognizes that organizations are like networks of intercon-
nected nodes. Changes, planned or unplanned, in one part of the
organization can affect other areas, with surprising, often negative,
consequences.
Mental Models
A mental model is our image of or perspective on an event, situation,
activity, or concept. It is a deeply ingrained assumption that influ-
ences how we understand the world and take action in it. For exam-
ple, each of us may have a different mental model of school or par-
ent or government, based on our experiences, previous perceptions,
or upbringing.
Mental models of what can or cannot be done in different situ-

ations vary tremendously from person to person and are often
entrenched and difficult to change. Senge (1990a) stresses that the
discipline of working with mental models starts with turning the
mirror inward, learning how to unearth internal pictures or images
of the world and then bring them to the surface and hold them up
to rigorous scrutiny. It includes the ability “to carry on learningful
conversations that balance inquiry and advocacy, where people
expose their own thinking effectively and make that thinking open
to the influences of others” (p. 9).
Personal Mastery
Personal mastery refers to a special level of proficiency, similar to
that of the master craftsman who is committed to lifelong learning
and continually improves and perfects his or her skills. It is a disci-
pline of constantly clarifying and deepening our personal vision,
energies, and patience. Senge (1990a) sees personal mastery as a cor-
nerstone of the learning organization because a company’s commit-
ment to and capacity for learning can be no greater than the sum of
those of each individual member.
Personal mastery entails a commitment to continuous learning at
all levels of the organization. This includes pervasive support for any
kind of development experience for all members of the organization.
Traditional training and development activities are not sufficient;
they must be accompanied by a conviction that no member is ever
finished with learning or practice.
Few organizations encourage personal mastery among all
employees. The result is a vast pool of untapped resources, people
who may have lost the commitment, sense of mission, and excite-
ment with which they began their careers. Yet this energy and spirit
are exactly what is needed to rigorously develop personal and orga-
nizational mastery.
Self-Directed Learning
All members of a learning organization should be aware of and
enthusiastically accept the responsibility both to be learners and
to encourage and support the learning of those around them. Our
purpose is not only to perform our present jobs as well as we can but
to continuously learn how we can function even more effectively.
In learning organizations, it is no longer possible for expert
supervisors to know everything that subordinates must know. We
must learn how to learn on our own, partly through knowing our
preferences regarding learning style in order to optimize our learn-
ing opportunities.
Dialogue
Dialogue is intense, high-level, high-quality communication based
on the free, creative, and mutual exploration of subtle issues; on lis-
tening deeply to one another; and on suspending our own views. By
applying the discipline of dialogue, we learn how to recognize
the patterns of team interaction that either promote or undermine
learning.
Dialogue is the critical medium for creating and coordinating
learning and action in the workplace because it promotes collective
thinking and communication. Dialogue improves the organization’s
ability to tap the collective intelligence of groups, equips us to see
the world as a whole rather than as fragmented parts, and encour-
ages us to focus on understanding how and why our internal per-
ceptions influence our views of reality. Schein (1993) discusses the
difference between dialogue and other communication processes
(see Figure 8).
Successful dialogue enables us to recognize leaps of abstraction,
or jump from an observation to a generalization; uncover what we
are not saying while engaged in conversation; balance inquiry and
advocacy; and recognize distinctions between espoused theories (what
we claim) and theories in use (the implied theory behind our actions).
Learning Capacity of Organizations
John Redding (1994) has identified three dimensions to consider

while building the learning capacity of the organization:
• Speed of learning
• Depth of learning
• Breadth of learning
Conversation
Deliberation
Suspension Discussion
Internal listening, accepting Advocating, competing,
differences, building mutual trust trying to convince
Dialogue
Confronting own and others’ Dialectic
assumptions, revealing feelings, Exploring oppositions
building common ground
Debate
Metalogue Resolving by logic and
Thinking and feeling as a overcoming differences
group, building new shared
assumptions and culture
Source: Adapted from Schein, 1993.
Figure 8 Ways of Talking Together
Speed of learning refers to how quickly the organization is able

to complete each learning cycle (planning, implementing, and re-
flecting) and to complete iterations of the cycle.
Depth of learning refers to the degree of learning the organiza-
tion achieves at the end of each cycle, which it accomplishes by ques-
tioning assumptions and improving its capacity to learn in the future.
Breadth of learning is concerned with how extensively the orga-
nization is able to transfer the new insights and knowledge derived
from each iteration of the learning cycle to other issues and parts of
the organization.
In learning organizations, we are now witnessing a paradigm
shift in emphasis from training to learning. Training signifies a one-
way transfer of established wisdom or skill from the expert instruc-
tor, whereas learning varies from this process in several important
ways. Learning involves not only absorbing existing information but
also creating new solutions to problems that are not yet fully under-
stood. Learning may take place with or without a teacher because it
is a personal, group, and organizational ability. Some of the signifi-
cant contrasts between training and learning are shown in Table 2.
T A B L E 2
Contrasts Between Training and Learning
Training Learning
From the outside in, done From the inside out, learner
by others motivated
Assumes relative stability Assumes continuous change
Focuses on knowledge, skills, Focuses on values, attitudes,
ability, and job performance innovation, and outcomes
Appropriate for developing Helps organizations and indi-
basic competencies viduals learn how to learn and
create novel solutions
Emphasizes improvement Emphasizes breakthrough
(metanoia)
Not necessarily linked to Directly aligned with organiza-
organization’s mission tion’s vision and require-
and strategies ments for success
Structured learning Formal and informal, long-term
experiences with future oriented, learner initiated
short-term focus
Walter Kiechel (1990) sees learning and training in these terms:

With training, the organization supplies information to employees;
with learning, the organization encourages employees to wonder,
question, and find their own answers.
The Learning Organization and Organizational Learning
It is important to note the difference between the terms learning

organization and organizational learning. In discussing learning
organizations, we are focusing on the what—the systems, principles,
and characteristics of organizations that learn and produce as a col-
lective entity. In discussing organizational learning we are concerned
with how organizational learning occurs—the skills and processes of
building and utilizing knowledge. As discussed below, organizational
learning is just one aspect of a learning organization.
Andersen Financial and

Organizational Learning
From its earliest days, Andersen Financial has striven consistently to hire
the best people it could find and then provide them with the best training
available. A high standard of service to customers has always been a com-
pany trademark. In addition, Andersen has long been an innovator among the
major accounting firms. The firm’s commitment to people, quality, and learn-
ing is expressed in its vision statement. Having a clearly defined vision,
Andersen believes, is critical to organizational learning and achieving business
success. To further assure and expand the learning quality of its staff, Ander-
sen opened its Center for Professional Education in St. Charles, Illinois, in the
early 1970s.
As the company entered the 1990s, it quickly recognized the changing
business environment and the need to improve the speed and thoroughness
of learning. Andersen’s leaders realized that a strategy of continuous learning
and improvement is critical to organizational success. Nothing was seen as
more important than enabling Andersen to exceed its clients’ expectations
and maintain its long-standing reputation for high quality and innovation.
Becoming a learning organization and a leader in learning dynamics was
therefore a natural evolution for Andersen. Let’s review the many excit-
ing steps the company has taken on its ongoing journey toward learning as
an organization.
Shifts from Business to Learning
The first major change Andersen made was requesting that staff make a
shift in their perceptions of their roles, environment, and everyday activities.
Everyone was encouraged to transform his or her old mental model of super-
visors, workers, activities, and the workplace to a new learning-oriented men-
tal model (see Table 3, which was printed on a 3-by-5 card and distributed
to staff).
T A B L E 3
Mental Model Shifts at Andersen
Old New
Supervisors Coaches
Workers Continuous learners
Activities Learning opportunities
Workplace Continuous learning environment
Focus Shifts from Training to Learning

Until recently, Andersen’s focus, like that of most companies, was on
more efficient instruction. Training concentrated on content and instructor,
pace, and getting the right answer. This “transmittal training” is based on the
following assumptions: All learners have the same basic knowledge and skills;
people learn in the same way; listening is the same as learning; and focusing
on observable behaviors, not on ways of thinking, is more effective at pro-
ducing change. This model is not really concerned with what is happening to
the learner internally, whether he or she is bored or overwhelmed with the
pace of instruction or understands the content well enough to apply it.
Several years ago, Andersen decided that it needed a new approach to
professional education. Only with a radical change in training methodology
and strategy could the company meet five newly identified training and
educational requirements: to develop broader and deeper skills, to build spe-
cialists capable of delivering seamless service to clients, to focus on business
process change and integration, to balance common and unique skills devel-
opment, and to adapt to complexity and continual change.
The new learning model at Andersen recognizes that learning the process
of getting the right answer is most important. The company’s critical task is to
make that learning more efficient and effective. The new model of staff devel-
opment at Andersen centers on learners who choose from among various
available tools and resources to acquire the skills and knowledge they
need for success. Those who formerly served as instructors have become
coaches, mentors, and facilitators.
According to Joel Montgomery, a former education specialist at Ander-
sen’s Center for Professional Education, learners are now “much more active
in the learning process, and are jointly responsible for their learning. Learners
are asked to use what they have learned rather than repeating or identifying
what they have been exposed to.”
Andersen now designs its learning programs to stimulate learners to
engage in activities that focus on the needs they have identified for them-
selves. In the process, they are given the tools to reflect on their actions, eval-
uate them according to specified standards, and give and receive feedback
on what they are doing and learning. After they have gone through the process
once, Montgomery notes, “we again stimulate them to reengage in learning,
bringing with them what they learned the first time, again reflecting on, evalu-
ating, and giving and receiving feedback on what they are doing and learning.
This ensures a greater depth of learning.”
This view focuses on the learner’s internal processes and encourages
increased sensitivity to the learner while instruction takes place. Instructional
approaches are adjusted to meet the individual learner’s needs. This repre-
sents a shift from a supply-push instructional approach to what we might call
a demand-pull approach.
Self-Study, Point-of-Need Learning

To promote and enable continuous self-development, Andersen focuses
on delivering self-study, point-of-need training that provides staff with oppor-
tunities to learn by doing as they develop individual skills. Because individual
needs typically derive from current job assignments, skills training that is
accessible on demand has become increasingly important.
Andersen’s training features built-in flexibility for developing critical job
skills at the individual level. It emphasizes the increasing need for and bene-
fits of individualized learner-paced instruction, which is increasingly provided
on a just-in-time basis because most learning is most effective when it occurs
immediately before it is to be applied.
By coupling technology with new learning strategies, Andersen has suc-
cessfully developed interactive, multimedia self-study training that is signifi-
cantly more effective than traditional instructor-led training. The firm has
demonstrated that effective skills building can be developed within a self-
study format.
A key pathway to personal mastery is the development of metacognitive
skills, which augments each learner’s ability to learn how to learn. Andersen
anticipates that such skills will be a key component in future success. The
more metacognitive skills an individual gains, the stronger are his or her
chances of keeping current with change.
Continuous Learning
Andersen has placed a major emphasis on learning from experience
(including reflection) at all levels of the organization; the company even con-
siders this type of learning the vehicle for building executive skills at the part-
ner level. Throughout the organization, there are efforts to move action learn-
ing from the training environment to the overall work environment.
Andersen’s coaching and continuous learning framework is one example
of the ongoing action learning built into the organization’s process. The frame-
work, which is structured around the coach and the learner, is illustrated in
Figure 9.
The framework begins with planning sessions between the coach and the
learner. This process should be as learner driven as possible. At this stage,
coach and learner
• Determine the gap between the learner’s existing skills and knowledge
and those demanded by the learning opportunity
• Develop learning objectives and a plan to meet them
• Identify and complete any preparatory learning
Responsibilities during the next stage, application, are divided between
the coach and the learner.
Planning
Coach Learner
Reflection Application
Shared responsibility
Open communication
Source: Copyright © Andersen Financial. Used with permission. All rights reserved.
Figure 9 Coaching and Continuous Learning Framework
The coach’s main responsibilities are to

• Coach the learner based on learning needs (job specific, functional,
adaptive)
• Provide the learner with the necessary opportunities to take risks
and learn
• Make sure the learner has access to references and tools
• Provide guidance and feedback when needed
The learner’s main responsibilities are to
• Apply the acquired skills and knowledge
• Make use of available resources
• Reflect on current learning
• Ask for assistance and feedback as needed
Coach and learner proceed during the last stage, reflection, to
• Take the time to reflect on lessons learned
• Determine how lessons learned can be applied in the future
• Provide feedback on the performance of each party in regard to coach-
ing and continuous learning
• Discuss areas for improvement and recognize and/or reward accom-

plishments
• Share what has been learned with others who might find the insights
useful
Collaborative Learning
Andersen has implemented the practice of collaborative learning, in
which the members of small groups learn from one another by working
together. This approach creates a rich learning environment by allowing par-
ticipants to take on various roles, including that of instructor. Collaborative
learning promotes the sharing of ideas and knowledge and gives learners the
opportunity to review one another’s work. It also allows them to coach, model,
teach, and learn by using the abilities of individual team members as well as
the team’s overall synergy as part of the learning process.
Learning from Others: Global Best Practices

Andersen has placed a high priority on developing and utilizing a global
best practices knowledge base. The knowledge base identifies and describes
best practices, best companies, engagement experiences, studies and arti-
cles, performance measures, diagnostics, process definitions, and Andersen
process experts. More than 1,000 CD-ROMs devoted to this knowledge base
have been distributed worldwide. Workshops on global best practices have
been conducted for Andersen staff in offices around the globe. This base rep-
resents a powerful tool for learning for Andersen staff and is a valuable ser-
vice for clients.
The company also seeks to partner with knowledge firms so as to
enhance its industry expertise. Recently, Senn-Delaney, an international firm
specializing in retail profit improvement, and Venture Associates, which spe-
cializes in the utilities industry, were contracted to work with Andersen.
Participation in Conferences and Associations

Andersen has a deliberate strategy for gaining and sharing knowledge
through training, research, and participation in professional and trade associ-
ations. To these ends, it produces publications for internal and external use,
such as “Retail Customer Satisfaction and Merchandising,” “Physician Health
Integration,” and “Vital Signs: Using Quality Time and Cost Performance
Measures to Chart Your Company’s Future.”
In order to maximize widespread conference participation throughout the
company, Andersen strives to have at least three staff members attend semi-
nars or conferences that are identified as valuable for the firm. The firm
encourages employees to serve as presenters at conferences because doing
so not only enhances an individual’s reputation but directs that person toward
quality preparation, research, and learning.
Excel Through Learning Strategy

Andersen developed the Excel Through Learning strategy as another
means of achieving its corporate mission. The company has incorporated
advanced technologies that enable diverse training development and delivery,
powerful and effective education theories, best-practices standards, and a
performance support approach, all of which ensure the timeliness and rele-
vance of its learning processes.
Goal-Based Scenarios
Andersen recently introduced Goal-Based Scenario (GBS) learning, orig-
inated by Roger Schank, director of the Institute for Learning Sciences at
Northwestern University. This specialized program is based on task simula-
tions that help participants pinpoint the skills they need and why, the problems
they are likely to encounter and when, and the most effective approaches to
dealing with those problems and why. Teaching and learning always take
place within the context of a clearly perceived need or as part of a larger task.
GBS provides a motivational framework that facilitates the acquisition of indi-
vidual skills and knowledge and enables learners to understand how they can
be applied to solve business problems.
GBS is more than a realistic simulation of a problem situation. As
Andersen associate partner Alan Nowakowski (1994) states, GBS is “an arti-
fice, carefully constructed to teach specific skills, lessons, knowledge, and
abilities. And it must be executed in a manner that will in fact ensure that these
things are learned by participants. For instance, this means that the unfolding
of the scenario must be controlled so that learners see all of the important
consequences of their actions, good and bad” (p. 6).
GBS contains the following components:
• Learners are presented with an end goal that is motivating and chal-
lenging.
• The goal is structured so that learners must build a predetermined core
set of skills and knowledge in order to successfully meet it.
• The environment is holistic, with skills and knowledge taught as part of
an integrated whole.
• The learning environment is designed to take advantage of the different
sets of experiences, cultural backgrounds, interests, and motivations of
the learners.
• Learners are able to explore and develop skills other than those of the
predetermined set.
• Learners are free to select their own strategies for meeting the end goal.
• Stress levels are managed by appropriate use of reflection, a genuine
focus on the learning, and easy-to-use resources that support learners
in their pursuit of their end goals.
• Learners use resources as needed, on a just-in-time basis.

• The environment often includes real-world tasks, learners working in
teams, and coaches who are experts in both content and process.
Learning Coaches
One way Andersen demonstrates its commitment to becoming a learning
organization is by creating positions dedicated specifically to helping associ-
ates develop and learn. One such position is the Advanced Learning Coach,
which is described on page 64.
Job Description: Advanced Learning Coach in Tax Education
Dramatic and fast-paced changes are occurring in tax practice and in the field of learn-
ing. Tax education needs a focused way to provide leading-edge learning approaches
that will anticipate and meet the requirements of the tax practice and its clients.
In this age of high connectivity, we are no longer limited to the simple choices of self-
study, classes led by instructors, or on-the-job learning. We have available an almost
endless variety of learning approaches that can be integrated into our training strate-
gies to enhance the process for and improve the performance of our professionals.
Position Structure
The position of advanced learning coach is structured around
• Providing information on strategic educational practices
• Acting as sounding board and conduit for new ideas, strategies, and support
networks
• Actively supporting tax education vision
• Linking with other areas of professional education and development and the
external world of training and learning
The Advanced Learning Coach

The role of the advanced learning coach is to provide individuals with information
about strategic educational practices. This information is expected to serve as input
toward decisions that will have positive effects on the learner and the learning
processes. The coach addresses this goal through
• Targeting research and strategic thinking related to the advancement of tax-
practice products and services
• Focusing on specific opportunities in the design and development of new
programs
• Working within the tax-practice area, educating and keeping the firm current on
new strategies for learning
• Increasing tax education’s working knowledge of innovative strategies
• Stimulating team thinking by increasing opportunities for knowledge transfer
between individuals, project teams, and other key contacts
Time Allocation
The advanced learning coach will spend 50% of the time researching learning
approaches and maintaining and developing networks of individuals both inside and
outside the firm who can assist in bringing diverse, creative, and current thought on
learning to the organization’s projects. The remaining 50% of the time will be spent
participating on project teams and coaching individuals on new strategies for learning.
TOP 10 STRATEGIES FOR BUILDING LEARNING SUBSYSTEMS
1. Develop Modular, Reusable Learning Content

The shift to just-in-time learning and greater business owner-
ship is paralleled by another evolution that supports nimbler
learning processes. Content—expertise, knowledge, substance, or
ideas that enhance the knowledge worker’s performance—must
itself become nimbler. Leading-edge companies, such as Cisco
Systems, AutoDesk, and iPlanet, are developing learning content
around the concept of reusable learning objects, that is, chunks of
content or modularized training programs with pieces that may be
used on a stand-alone basis or combined with other chunks to pro-
duce a tailored program.
Chunkable learning is one of the great promises of e-learning;
in this approach, instructions may be divided into segments and
then viewed as needed. When combined with skill-specific assess-
ments, learning objects allow learners to address gaps in a timely,
accurate fashion instead of wading through quantities of material
they already know. For example, GE Power Systems allows for
precise targeting of knowledge about business policies, which fol-
lows a detailed architecture describing the knowledge needs of dif-
ferent categories of workers. Cisco chunks its product knowledge
to allow faster identification of specific skill gaps and rapid acqui-
sition of necessary knowledge (Manville, 2001).
Chunkable content is manifested in learning approaches that
are shorter, more concise, and segmentable according to need. In
addition, these approaches incorporate the understanding that
every piece of content can be considered for potential reuse. For
example, training for employees can also be used for training cus-
tomers, administrative communications can also be frontline tools,
executive presentations can be divided into critical analyses for
audience-specific applications, and FAQs can become knowledge
diagnostics for new employees (Manville, 2001).
2. Increase Ability to Learn How to Learn

Even though most of us attended school for 10,15, or even 20
years, we never learned how to learn. We struggled with remem-
bering facts and relationships, we forgot quickly, and we did not
understand the learning process. And yet, according to many lead-
ing learning organizations and researchers, a key pathway to per-
sonal mastery and more powerful and quicker learning is the
development of metacognitive skills, learning how to learn. Only
by increasing individual metacognitive skills will each learner be
able to stay abreast or ahead of change.
Several years ago, the American Society for Training & De-
velopment (ASTD) developed a program to help individuals with
the following key skills aimed at learning to learn:
• How to question new information
• How to break up complex ideas and large tasks into smaller
parts
• How to test ourselves to see how much we are learning
• How to direct our learning to meet specific goals
• How to accelerate learning
Metacognitive skills enable people to think through, under-
stand, and use new information quickly and confidently;
find patterns in information; and focus on the most important
information.
3. Develop the Discipline of Organizational Dialogue
The discipline of dialogue is central to organizational learn-
ing insofar as it enhances and augments team learning. Dialogue
forces new ways of viewing the organization’s assumptions and
creates a cool communications field within which to deal with the
hot issues of change and chaos.
Members of the organization can develop an environment
that favors dialogue by taking the following actions:
• Regard one another as colleagues
• Adopt a spirit of inquiry
• Suspend assumptions and certainties

• Observe the observer
• Slow down the inquiry
Employees should also have opportunities to practice dialogue
with a skilled facilitator who uses the following kind of format.
To begin, organize the physical space around a circle to pro-
mote a sense of equality among participants. Introduce the con-
cept of dialogue and ask participants to think about effective
communications they have experienced. Then ask them to share
these instances and identify the qualities that made them effective.
Finally, ask the group to reflect on these qualities, always allowing
the conversation to flow naturally and giving everyone the oppor-
tunity to explore and share.
A number of key points relative to initiating dialogue in your
organization will probably emerge. These might include
• How to avoid factors that prevent dialogue (defensiveness,
smoothing over, competitiveness)
• How to draw on diversity as a resource rather than a source
of conflict
• How to build shared visions and reflect on ways of looking
at the world
• How to improve observation, listening, and communication
skills
• How to utilize listening and feedback to minimize distortion
of information and blocked communication channels
• How to balance advocacy with inquiry as a means to over-
coming impasses
4. Design Career Development Plans for Employability

The pace of change requires each employee to take a proac-
tive stance toward learning. Every person should have a clearly
articulated career development plan that outlines a combination
of formal and informal learning activities to be completed and a
timetable for completing them.
Many learning organizations (notably, Royal Bank of Canada,

Saturn, Nokia, and PPG Industries) work closely with staff to
develop an individual development plan (IDP) that serves a num-
ber of purposes, such as the following:
• Allows individualized self-development of employees, using
methods such as courses, self-learning, and mentoring,
among others
• Provides sequenced learning that permits employees to learn
what they need to know just before they need to apply it
• Instills a commitment to self-management in each employee
• Holds each employee accountable for achieving his or her
learning goals
• Helps develop lifetime employability
The human resources department should be available to assist
in identifying available learning resources, such as courses, men-
tors, conferences, or agencies. Supervisors should encourage
ongoing learning, provide time and support for outside learning
opportunities, and assist in long-range planning.
5. Establish Self-Development Programs
Giving employees small cash allowances for their own self-
development perhaps best demonstrates a company’s commitment
to continuous learning. Boeing compensates its employees for
seeking academic degrees and certificates in whatever subjects
they choose. Another company has gone so far as to divide its
training budget by the number of staff members and to give indi-
viduals complete responsibility for spending these learning
allowances. Rover offers per annum tuition fees (called Rover
Employee Assisted Learning [REAL]) for lateral personal develop-
ment in business areas not specifically related to current job skills.
For example, an employee in production can learn French, com-
puter skills, or chess. Encouraging employees to develop personal
interests to their fullest potential creates people who enjoy learn-
ing and are better prepared to adapt to future personal and orga-
nizational change.
6. Build Team Learning Skills

Teams are to learning organizations as families are to the com-
munity. Teams form the connections between individual and orga-
nizational learning and enable the organization to recognize and
capitalize on latent resources within its workforce. Therefore, or-
ganizations must be committed to team learning, growth, and
development; they should seek to build teams that are able to cre-
ate and capture learning.
Team learning can occur every time a group of people is
brought together. It emphasizes self-managed learning and the free
flow of ideas and creativity among members. There are a variety
of ways in which teams learn, such as by generating knowledge
through analysis of complex issues, innovative action, and collec-
tive problem solving.
The following specific steps will enhance team learning:
• Establish team responsibility for learning
• Reward teams for the learning they contribute to the
organization
• Develop and practice team learning activities
• Build capability to achieve metalogue, a state in which the
team thinks and feels as a group, creates shared assumptions
and culture, and works as an organic whole
7. Encourage and Practice Systems Thinking

An absolutely critical skill for learning organizations is that of
systems thinking, the capacity to “see and work with the flow of
life as a system rather than dissecting and trying to fix the prob-
lematic parts” (Senge, 1990a). The ability to think about the big
picture while seeing the underlying, unexpected influences is rare
and difficult to develop, but it is an essential skill for “smart”
learning.
The following elements of systems thinking will be most valu-
able when practiced throughout the organization:
• Focus on areas of high leverage

• Avoid symptomatic solutions and concentrate on underlying
causes
• Distinguish detail complexity (when there are many vari-
ables) from dynamic complexity (when the connection
between cause and effect is not obvious or consequences are
subtle over time)
• See interrelationships, not things
• See process, not snapshots
• See that people and problems are part of a single system
• Recognize the difference between systems and fragmenta-
tion thinking
8. Utilize Scanning and Scenario Planning

A primary purpose of ongoing scanning of the environment is
to prepare for future changes that are most likely to affect the
organization. Organizations that are best at anticipating the future
and using planning as a learning opportunity are the ones that will
be most able and prepared to adapt. Developing scenarios about
possible futures is an excellent method for anticipatory learning.
By monitoring key trends, accessing strategic research, and ana-
lyzing the data, an organization has a better chance of determin-
ing what is important to learn.
Royal Dutch Shell (RDS) employed this technique in advance
of the oil crisis of the 1980s. When oil prices were still at $28 a
barrel, RDS created a scenario in which oil was $15 a barrel.
Corporate planners constructed strategies, determined learning
requirements, and identified the changes that would be necessary
to function well given the much lower price. When the actual
price drop came, RDS was already knowledgeable about the world
of $15-a-barrel oil. Anticipatory learning in the 1980s propelled
Shell from the bottom to the top of the roster of oil companies,
where it has since stayed.
9. Expand Multicultural and Global Mind-Sets and Learning

Learning organizations realize that different views and ways of
doing things are a source of richness, not a conflict. The more
open we are to the values, ideas, and perspectives of others, the
greater the possibilities for individual and corporate learning.
Diversity initiatives work best when they are integrated into a
larger system of business practices, such as total quality manage-
ment, team-building reengineering, and employee empowerment.
All share a commitment to continuous learning.
10. Change the Mental Model of Learning
Most people still retain a negative picture of learning, the one
they acquired in their school days—hard work, impossible tests,
tough teachers, irrelevant facts, control, memorization, drills, long
hours at desks, and so on. These mental models cause many to
resist a lifelong commitment to learning and belonging to a learn-
ing organization. Jim Gannon, vice president of human resource
planning and development at Royal Bank of Canada, states
that the bank is reluctant to use the term learning because of
employees’ negative associations with their school experiences
(Marquardt and Reynolds, 1994).
Unless the mental model of learning changes, efforts on the
part of senior management to build learning organizations will be
doomed to failure because workers will not practice new ideas.
The internal images held by employees will confine them to past
perceptions of learning institutions. Since mental models have a
powerful effect on our actions, it is important to change the mind-
set that equates learning with schoolroom and replace it with one
that envisions learning as an exciting, collaborative, highly re-
warding enterprise. The mental model for learning organizations
must be revitalized with feelings of energy, excitement, business
success, personal responsibility, fun, integration, sharing, and per-
sonal and organizational growth. Once this image is established,
individuals and organizations will want to jump quickly onto the
bandwagon.
Through training, management communications, and contin-

ual practice, organizations can help employees become more
aware of their mental models and acquire the means to better
reflect on, surface, and examine them. In doing so, these individ-
uals will be able to participate enthusiastically in the learning
efforts of their organizations.
C H A P T E R 4
Transforming
the Organization
for Learning Excellence
THE ORGANIZATION IS THE STRUCTURE and body in which and for

which individual, group, and overall learning occurs. To go from a
nonlearning to a learning organization requires a significant trans-
formation, similar to the metamorphosis from caterpillar to butter-
fly. The caterpillar undergoes some messy transitions on its way to
becoming a butterfly. The raw protoplasm in the cocoon re-forms
(reengineering, restructuring, refocusing) to become a butterfly, a
beautiful creature with the power to fly in all directions, to flow with
the wind or find safety from it.
A company’s structure and strategies must change in com-
parably dramatic ways before it can become a learning organization.
To flourish as this new kind of entity, the company must recon-
figure itself by focusing on the four dimensions of the organization
subsystem: vision, culture, strategy, and structure (see Figure 10).
Each of the four dimensions must change in purpose and design
from one focused solely on work and productivity to one that is
equally focused on learning and development.
73
Vision
Structure Organization Culture
Strategy
Figure 10 Organization Subsystem
Vision
Shared vision gives individuals and the organization “stars to steer

by.” It is hard to think of any organization that has achieved and sus-
tained some measure of greatness without a deeply shared vision.
Taco Bell’s vision is to become “number one in the stomach”;
Federal Express delivers packages “absolutely, positively overnight”;
Polaroid provides “instant photography.” Each of these organiza-
tions was able to bind people together around a common identity
and sense of destiny.
The first and probably most important step in becoming a learn-
ing organization is building a solid foundation based on a shared
vision of learning. Along with this, the company must understand
that unless it becomes a learning organization, it cannot achieve its
vision. There are many reasons why the shared vision of being a
learning organization is so important.
First, shared vision provides the focus and energy for learning.
Powerful, generative learning occurs only when people are truly
committed to accomplishments that matter deeply to them.
Second, vision impels people toward action. It represents their
hopes and dreams and provides meaning for them. Shared vision and
Transforming the Organization for Learning Excellence 75
values enable people to examine their established ways of thinking

and give them reason to surrender deeply held views and accept new
ways of thinking and acting. The loftiness of the target acts as a rud-
der that keeps learning processes on course should stresses or other
distractions develop.
Third, the pull toward a highly desired goal counteracts the
overwhelming force of the status quo. Vision establishes an over-
arching goal, and shared vision encourages risk taking and innova-
tion. Jim Gannon, vice president of human resource planning and
development for Royal Bank of Canada, underscores the decisive
importance of vision for learning as an organization when he says
that “visions are what energize the organization,” they are “the
dreams that pull us forward” (Marquardt, 1996, p. 89).
Fourth, shared values and meaning are important in determining
the kind of knowledge an organization stores and transfers. This
point will be examined in detail when we explore the knowledge
subsystem in chapter 6.
Vision can and should guide strategic thinking and planning as
well as lead to multiple strategies and procedures for becoming a
learning organization. This occurs when all stakeholders—managers,
employees at all levels, customers, partners, shareholders—are urged
to become involved in developing the vision.
Learning organizations are living organisms, not machines.
Much like human beings, they need a collective sense of identity and
a fundamental purpose. Visions should be exhilarating. They should
create the spark and excitement that empower the organization to
develop renowned, visionary products. Learning must be a part of
that vision. The following vision statement from Andersen Financial
expresses the aims of one learning organization.
Andersen’s Vision Statement

To be one global firm committed to quality by having the best people with
knowledge capital, partnering with best clients to deliver value. This vision
encompasses seven components:
One Global Firm. We blend the strengths of our national cultures with the
access to skills from around the world to serve clients anywhere. We provide
clients with the same high level of service no matter where they are located.
Commitment to Quality. Our number one goal in service delivery is qual-

ity. Our people are empowered and expected to contribute toward this goal.
Our success will be determined by the satisfaction of our clients.
Best People. Having the best people begins with attracting great people.
Once we attract the best, we further train and envelop them into an unparal-
leled team of outstanding professionals
Knowledge Capital. We share the knowledge that resides in each of our
people to assure our clients access to our best thinking. The focus of
our business is our creative knowledge and our ability to distribute it globally.
Partnering. We want our clients to view us as a part of their team as we
help them surmount their competitive challenges. As a partnership, we under-
stand the value of teamwork
Best Clients. We want to work with clients who want to get better, not
just maintain the status quo.
Deliver Value. We deliver practical, leading-edge solutions with reliability
and integrity. When we mutually agree that the client is better off for having
procured our services, we know that we are delivering value.
Culture
Just as nations have distinct cultures, organizations have distinct

ways of believing, thinking, and acting that are manifested by sym-
bols, heroes, rituals, ideology, and values. The nature of learning and
the manner in which it occurs are determined in large measure by
organizational culture.
The culture of most organizations is one of nonlearning, if not
actually anti-learning. Taking risks, trying new approaches, and shar-
ing information may be discouraged, whereas “not making waves”
may be rewarded. Before such a company can become a learning
organization, it must transform these cultural values.
Values complement the pulling force of an organization’s vision
by pushing the company to reach that vision. A corporate learning
culture is characterized by a number of values that push that orga-
nization up the learning ladder.
Valuing and Rewarding Learning

Learning organizations provide a facilitative climate that encourages
and prizes learning. Learners are the heroes. Learning is recognized
when performances are appraised, at award ceremonies, and in pay-
checks and incentive plans that compensate employees for acquiring

new knowledge.
In learning organizations, learning processes (learning how to
learn) are considered as important as, if not more important than,
the learning content. The ability to define learning needs is as impor-
tant as finding answers. Opportunities are created across the orga-
nization to develop knowledge, skills, and attitudes. Continuous
learning is essential for survival and success in today’s world.
3M Corporation provides an excellent example of a climate that
encourages and rewards learning. Employees are allowed to devote
up to 15 percent of their workday to their own projects. 3M has also
created the Pathfinder Award, which recognizes those who “develop
new products or a new application of a product for a particular
country or culture.” Over the past decade, hundreds of different
awards were conferred on different work teams; those creative ideas
resulted in billions of dollars in sales.
Shared Responsibility for Learning

Employees are responsible for their own learning as well as the
learning of others. They must also understand the relationship
between their responsibilities and the goals of the organization as a
whole. Employees are expected to teach and learn from their
coworkers. The entire workplace culture is geared to organizational
learning.
Linking Learning and Culture

at Shell Oil Company
Shell Oil Company of the United States (SOC), one of 300 Royal
Dutch Shell (RDS) operating companies, has more than 22,000 em-
ployees and generates revenues in excess of $30 billion. Because of the
common logo, it is widely assumed that there is one Shell and that its man-
agement philosophy and approach are global. To the contrary, RDS, based in
Europe, and SOC have quite distinct histories and identities that are revealed
in their different approaches to learning.
Recently, SOC undertook a transformation based on learning, planning,
and leadership changes. Internally, the organization’s focus was the human
system, and, externally, it was concerned with the immediate customer and
business environment.
The dominant culture at SOC was difficult to change because the com-
pany, like most organizations, tended to perpetuate its thinking by selecting
new members in its own image. While RDS had begun to hire systems
thinkers, people who see an organization’s current reality as only one of many
long-term possibilities, SOC was heavily populated with event thinkers, peo-
ple who view current developments as inevitable and corporate life as a series
of unrelated events. While the changing environment of the petroleum indus-
try cried out for a reexamination of mental models, little reexamination
occurred at SOC. Instead, the U.S. company was characterized by a pa-
rochial, short-term orientation that was typical of American corporations of the
1980s (Brenneman, Keys, and Fulmer, 1998).
Shell Oil Company clung tenaciously to its mental models, including con-
fidence in a continued price of $30 for a barrel of oil and a success model
based on cash generation through performance improvement achieved by
short-term cost reduction. In the 1980s, SOC was not a model of organiza-
tional learning, and little changed until the early 1990s, when a new CEO, Phil
Carroll, arrived on the heels of the worst business results in years. Carroll
wasted no time in seeking alternative paths for the company.
In the intervening years, Phil Carroll has led SOC toward a significant
transformation of its corporate culture. The new culture comprises a new
vision, a new business model, a new system of governance, a new concept of
leadership, and the use of learning both as the foundation of SOC’s transfor-
mation and as a permanent part of its culture. The transformation, initially
known as the Learning and Development Initiative, began with a process
designed to create a mission, with a vision and values powerful enough to
engage the minds and hearts of the company’s people.
The dialogue that emerged from this process also invited people to look
within themselves and discover their personal visions. The new business
model allows the company’s leaders to build winning strategies by recogniz-
ing the points at which they can exert the greatest leverage and add the most
value. When fully implemented, this model will give employees a better under-
standing of their individual contributions to the company.
To unleash the potential of SOC’s people, the company is moving toward
systems of governance that disperse authority and responsibility throughout
the organization and create a greater sense of ownership and enlarged oppor-
tunities for personal growth. Shell Oil Company believes that leadership skills
can be broadened and deepened in everyone. Through leadership develop-
ment workshops, the company is helping managers understand their own
potential and discover new ways of thinking and acting. These transforma-
tional activities are taking place under the Learning and Performance (LEAP)
program. This corporate initiative provides the framework within which both
individual and collective learning take place. The company believes that the
most powerful learning experiences, the ones that produce the fastest and
most lasting results, are those in which real people are engaged in finding real
solutions to real problems—in other words, an action learning process.
Throughout Shell Oil Company, conditions for learning must be created

by new or transformed power holders who articulate, model, and reinforce
learning attributes. Training or experiential workshops cannot replace these
conditions. Top management develops such workplace attributes as clearly
defined goals, roles, and expectations; openness; curiosity about alternatives;
respect; and attentive listening. Honesty about current cultural reality frees the
organization from unacknowledged factors that constrain learning and per-
formance. Management is expected to model accountability and insist on rig-
orous, fact-based, systemic reasoning instead of event thinking. These attri-
butes make up the company’s new corporate culture.
Shell Oil Company defines organizational learning competencies for lead-
ers as the ability to build shared vision, an in-depth knowledge of the busi-
ness, the skill to think systemically, and the ability to communicate through
open and honest dialogue. Although these competencies are established
at the corporate level, they are not viewed as edicts from on high. LEAP actually
works with the operating units to convince them of the expediency of these com-
petencies and on the need for each leader to build his or her own “teachable
point of view on leadership” (Brenneman, Keys, and Fulmer, 1998, p. 67).
Trust and Autonomy

In learning organizations, people trust and care for one another.
Inadequacies can be disclosed without fear of consequences. The cul-
ture encourages feedback and disclosure. There are daily opportuni-
ties to learn from experience. Managers see their prime task as facil-
itating members’ experimentation and learning from experience
and make time to seek feedback on their success with facilitating
learning.
Despite the high degree of interdependence, people are able to
make decisions on their own and are expected to do so because many
occasions will require autonomous action.
Incentives for Innovation, Experimentation, and Risk Taking

Learning organizations take brave, bold steps to encourage as many
people as possible to experiment, innovate, and get out of the habit
of asking for permission and waiting for instructions. They realize
that risks are a necessary part of achieving quantum leaps in product
and service quality.
To attain and sustain competitive advantages in this new envi-
ronment, organizations will have to learn better and faster from their
successes and failures. They must be able to continuously transform

themselves into learning organizations, to become places where
groups and individuals are constantly involved in new learning
processes. The organization promotes responsible risk taking and
being open to new approaches and processes. Mistakes are not only
allowed but valued because they can be the source of new ideas and
new ways of doing things.
In companies such as Ford and Harley-Davidson, core values
include intellectual curiosity, which means challenging the status
quo, looking for ways to improve learning, and pursuing new
approaches to meeting and exceeding customer expectations.
Financial Commitment to Training and Development

Learning companies make strong commitments to providing the
financial and human resources necessary to improve the learning
quality of their staffs. J. Y. Pillay, chairman of Singapore Airlines,
went so far as to state that “our company’s self-respect will be
eroded, if we do not pay attention to the training needs of all our
employees” (Marquardt and Reynolds, 1994, p. 294). The airline
commits more than 12 percent of total payroll costs to learning.
Learning organizations such as Federal Express, General Electric,
and Motorola are not far behind. A recent American Society for
Training & Development (ASTD) study demonstrated the correla-
tion between investments in training and overall business success
(Bassi, Ludwig, McMurrer, and Van Buren, 2000).
When Saturn was first established, the company spent significant
amounts of money on a comprehensive training program for
employees even before production began. Each worker received 300
to 700 hours of training before entering the assembly line. Training
is ongoing in technical and self-development areas. Saturn’s goal is
that workers spend at least 5 percent of their annual work time, or
92 hours, in formal training.
Collaborative Creativity, Variety, and Diversity

August Jacacci (1989) sees a learning culture as one in which there is
“collaborative creativity in all contexts, relationships and experi-
ences,” and the measure of success is the combined wisdom and the
synergy of the organization. The whole culture learns in a self-aware,
self-reflective, and creative way.
Operational variety is also encouraged so as to generate more
ways of accomplishing organizational goals. An organization that
supports variations in strategy, policy, process, structure, and per-
sonnel will be more adaptable when unforeseen challenges arise.
In learning organizations, different learning styles are recognized
and appreciated. No single style is necessarily deemed best because
an adaptive, innovative organization needs many styles, each of
which can mitigate any deficiencies of the others.
Commitment to Continuous Product and Service Improvements

Organizations committed to quality take continuous improvement
seriously because one question is always uppermost in everyone’s
mind: “How can we do this better?” Quality management requires a
comprehensive learning approach with all members of the organiza-
tion engaged in continuous learning. A learning culture seeks world-
class standards in quality and service. Its pride and high self-esteem
are linked to the high quality of its service, products, and operations.
Responsiveness to Change and Chaos

A learning culture does not fear constant change and chaos; instead,
it evidences an excitement and determination to vigorously and cre-
atively respond to new challenges. Chaos provides the opportunity
for higher levels of learning, innovation, and breakthrough technol-
ogy. As Harrison Owen (1991) notes, “Chaos creates the differences
that make a difference, through which we can learn” (p. 29).
Quality of Work Life

Learning organizations are committed to the development of the full
range of human potential in an environment that invites participa-
tion and enjoyment. Work is exciting and challenging because both
mental and physical talents are being tapped. The social and physi-
cal surroundings encourage respect for each person. People care
about one another.
Organizational Learning at Canadian

Imperial Bank of Commerce
Canadian Imperial Bank of Commerce (CIBC), a financial services com-
pany, is a global leader in credit card products and PC banking. With more
than 47,000 employees, it invests in excess of $40 million in employee devel-
opment each year, with emphases on skills enhancement, relationship build-
ing, and leadership training.
Michele Darling (1996), executive vice president of human resources,
describes the former barriers to creating a culture of organizational learning at
CIBC: “The formal decision to become a learning organization can yield some
very practical benefits, but it imposes additional demands” (p. 62). For exam-
ple, a direct focus on knowledge can “unchannel conventional thinking, but it
also questions conventional organization” (p. 62). It may also increase respon-
sibilities for some individuals and change those of management. Inevitably, it
focuses attention on recognizing barriers. Darling adds,
We all have heard the adage that “knowledge is power.” In most orga-
nizations, what this really means is that knowledge is saved and put on
display at the most opportune moment—likely when the boss is in the
room. Rarely is knowledge shared with others at an equivalent level in
other parts of the organization. Knowledge hoarding has the added
advantage of never having to expose the fact that your knowledge may
be partial or stale! People generally use their unique knowledge to reaf-
firm their position in the organization; if others knew what you knew,
then how valuable would you be to your organization? What happens to
your indispensability if you dump your knowledge into a pool, where
others can take it and make it theirs? There is also the all-too-familiar
phenomenon of “not invented here.” This is the Inevitable urge to dis-
parage the really insightful idea or insight that comes from outside our
organization or group simply because we did not think of it ourselves.
(pp. 62–63)
These reactions are understandable. The challenge is to break free of
such traditional approaches to learning and managing knowledge in the
organization. The first step is to create a knowledge culture. An organization’s
culture is not decreed by management memo and does not happen by acci-
dent. It is the collection of shared values and beliefs that accumulates
over time, the unstated consensus of common understandings and conven-
tions, or “the way things work around here.”
So, what is a knowledge culture? At CIBC, according to Darling (1996),
We do not yet have a neat, tight definition, but we have developed some
insights into its essential characteristics. A knowledge culture:
1. Values knowledge and puts that knowledge where needed. Knowl-
edge is placed directly at the customer’s service and into the hands
of the people who deal with the customer.
2. Democratizes knowledge. It is delinked from the individual holder,

transferred to others and valued according to its effectiveness in deal-
ing with problems and meeting customer needs.
3. Values diversity. It recognizes that new ideas and insights are not the
preserve of age, experience, race or gender.
4. Has a subversive effect on traditional management hierarchies.
Instead of operating in command-and-control mode, managers must
become coaches, advisers and cheerleaders for their teams, and
facilitators, brokers and networkers to link their teams with others in
the organization.
5. Always has its eye on what academics call the “knowledge grid.”
Succinctly, the knowledge grid examines what we know we know,
what we know we don’t know, what we don’t know we know, and
what we don’t know we don’t know. (p. 63)
Strategy
A number of powerful, leveraged strategies can quickly and success-

fully enable an organization to transform itself into a learning orga-
nization. In this section, we will explore 10 such strategies.
Align Organizational Learning with Business

and Personal Success
Probably the most important strategy for inspiring and motivating an
entire organization to move quickly and emphatically toward be-
coming a learning organization is to link increased learning with in-
creased organizational success. This shows that learning is the only
source of sustainable strategic advantage for the company.
Businesses know that, in the long run, strategic and competitive
advantages accrue to organizations with core competencies that
enable them to create new products or services swiftly and thus
adapt to rapidly changing conditions. These core competencies rep-
resent the collective learning of the organization.
Stephen Gill (1995) recommends that human resource develop-
ment professionals explicitly link learning events and outcomes to
business needs and strategic goals by undertaking the following
actions:
• Map out the relationship between strategic goals and areas

such as job behaviors, job skills, job success indicators, and
business objectives.
• Design prelearning activities, learning-event activities, and
postlearning activities that are integrated into key business
processes.
• Create an iterative process of delivery, feedback, and redesign
for achieving effective and timely learning that keeps pace with
shifting business goals.
Build Learning into All Operations

Learning organizations quickly and deliberately plan and structure
learning into all organizational processes, such as design, manufac-
turing, marketing, and accounting. After firms begin to incorporate
learning processes into practical work settings, they will see dra-
matic results.
For example, at Ford Motor Company, a car-development learn-
ing laboratory uses a computer simulator and related tools to aid
systems thinking and methods of enhancing reflection and conversa-
tion. The laboratory helped a development team assemble a manu-
facturing prototype at full line speed—a first at Ford—which
allowed advanced testing of assembly processes. The prototype was
voted the highest quality ever by Ford’s manufacturing organization;
with the exception of minor adjustments, the vehicle was completed
a record 10 months early.
The value chain of any organization should include a domain of
integrated learning. This means thinking of the value chain as an
integrated learning system. When considering each major step of the
work process, beginning with strategic planning and continuing
through to customer service, think of how to constantly engage in
learning experiments. Thus, structures and processes for achieving
outcomes may be viewed simultaneously as operational tasks and
learning exercises.
Organizations must fundamentally redesign work so that pro-
ducing and learning are inextricably intertwined. In such settings,
organizational work becomes a practice field that allows for the
kind of continual movement between performance and practice that
characterizes learning in sports and the performing arts. Saturn has

established such a setting at its Worker Development Center, a learn-
ing laboratory adjacent to the assembly line, which includes a com-
plete mock-up of the assembly process.
If learning occurs through planning and experience, it follows
that guided experiences will lead to more learning. Until companies
understand that organizing for production at any stage of the value
chain is a learning experiment as well as a production activity, learn-
ing will happen slowly. Managers must act like applied research
scientists even as they are delivering goods and services. When an
organization systematically and deliberately builds learning capacity
by integrating learning and production, it is also building perfor-
mance capability.
Develop Personnel Policies That Build Learning Organizations

Personnel policies that reward learning are among the most efficient
ways to introduce learning and learners into an organization.
Learning organizations recruit and hire people who continually
learn, who enjoy expanding and exploring their potential. Under
these policies, dedicated learners who enhance learning in others are
promoted to supervisory positions. Nonlearners are encouraged to
learn or seek employment elsewhere.
Recognize and Reward Learning

“That which gets rewarded gets done” is a valid and well-respected
maxim in learning organizations. Learners, especially learning teams,
are promoted and receive bonuses, recognition, and praise. New
ideas that lead to better services or products result in “royalties” for
their originators. People who collect and transfer knowledge from
internal or external sources are commended. Performance appraisals
evaluate learning acquired and distributed on an equal basis with
other factors. Teamwork is encouraged, and the ability to build and
motivate teams and team learning is generously rewarded.
Measure and Broadcast the Impact and Benefits of Learning

Companies that hope to become learning organizations should
develop a variety of ways to measure learning. Focusing only on the
typical measures of output (cost or price) ignores learning that

affects other competitive values, such as quality, delivery, or new
product introductions.
One of the most innovative and valuable tools for measuring
learning is the half-life curve, developed by Analog Devices, a lead-
ing learning organization. A half-life curve measures the time it takes
to achieve a 50% improvement in a specified performance measure.
By logic, companies that take less time to improve must be learning
faster than their peers, and, in the long run, their short learning
cycles will translate into superior performance.
South African Breweries (SAB) sought to demonstrate the eco-
nomic value added (defined as net operating profit less operating
costs) between learning and such areas as cost savings and profit lev-
els. SAB discovered that if its learning is focused and based on high-
performance systems, and if sound instructional design principles are
augmented by performance support factors such as leadership, learn-
ing culture, standards of operation, and feedback mechanisms, then
greater profits and success occur (American Society for Training &
Development, 2001).
Whirlpool and Learning Measurement

Whirlpool is another example of a learning organization that carefully
measures nonfinancial factors as well as financial ones (Marquardt, 1996). In
1991, CEO David Whitwam announced that the four value-creating objectives
of the organization (cost, quality, productivity, and customer satisfaction)
would be measured publicly on an annual basis. Continuously tracking these
objectives, Whitwam stated, “would become a powerful tool” in maintaining
Whirlpool’s learning power.
Whirlpool began building its measurement system by benchmarking com-
panies such as Fiat, Hitachi, Mitsubishi, and Nestlé so as to obtain appropri-
ate standards for world-class performance. “Unless you put visible measures
in place that you can quantify, it is very hard for people to manage them,”
according to Ralph Hake, then corporate controller for Whirlpool.
Nonfinancial measures are now analyzed at bimonthly board meetings,
not only to examine results, but to identify correlations between financial and
nonfinancial factors. Identifying areas for improvement and constantly devel-
oping the measurement tools are areas of intense focus. Hake proclaims that
“Whirlpool has significantly improved its learning and its performance” by
using nonfinancial measures. Board member Robert Burnett, retired chairman

and CEO of Meredith Corporation and a member of several other boards, says
that, relative to measurement, Whirlpool is “doing a better job than anyone
else in the industry.”
Create a Large Number of Learning Opportunities

Generally, an environment that contains greater opportunities for
learning produces more and better learning. Learning organizations
build in both the desire and the opportunity to learn. Action and
reflective learning is a regular part of day-to-day corporate activity.
Companies that favor learning call on renowned specialists from
inside and outside the organization, either in person or using media
such as video, audio, e-mail, and teleconferences. They design learn-
ing forums with explicit learning goals in mind. Strategic reviews
and planning are seen as golden learning opportunities for the whole
corporation. Learning also takes place as people examine the chang-
ing competitive environment and the company’s product portfolio,
technology, and market position. Systems audits offer yet another
opportunity for learning.
In addition, internal benchmarking reports, which identify and
compare best-in-class activities within the organization, may also
serve as learning opportunities. Outside activities include study
missions, to analyze and understand the performance and distinctive
skills of leading organizations around the world, and jamborees
or symposiums that bring together customers, suppliers, outside
experts, or internal groups to share ideas and learn from one
another.
Set Aside Time for Learning

Making time for learning is one of the most important steps in build-
ing a learning organization. Learners need time to reflect and ana-
lyze, think about strategic plans, dissect customer needs, assess cur-
rent work systems, and develop new products. Learning is difficult
when employees are harried or rushed and can easily be diminished
by the pressures of the moment. Frequent learning occurs only when
top management explicitly frees up employees’ time for it.
Create a Physical Environment Favorable to Learning

We all know that the physical environment has an effect on the qual-
ity and quantity of learning. We simply don’t learn well in noisy,
crowded, dreary surroundings.
Companies can create environments that serve learning in a
number of ways, including removing dividing walls, constructing
colorful and open central courtyards, atriums, and balconies, and in-
stalling many large windows. Changes such as these create physical
settings that encourage sharing and demonstrate corporate commit-
ment to continuous experimentation as a means of institutionalized
learning.
Maximize On-the-Job Learning

Most organizations now recognize that up to 90 percent of learning
occurs at work. It is therefore highly productive for managers and
other employees to not only appreciate the learning that occurs but
also create ongoing learning opportunities and strive to build a
learning-reflecting mentality (Marsick and Watkins, 1999). Ernst &
Young maximizes on-the-job learning through its Continuous
Workplace Learning model.
Ernst & Young’s Continuous

Workplace Learning
Ernst & Young has developed a successful model, Continuous Workplace
Learning, that attempts to capture as much on-the-job learning as possible.
The two complementary components of the model are shown in Figures 11
and 12. The first component guides employees in self-managing their own
learning. The second component guides staff in helping others learn. At Ernst
& Young, this part of the model is not for supervisors only but is used by any
employee who is helping another employee, particularly a coworker, learn.
Ernst & Young distributes to its employees the following directions for
using both models:
The reasons for developing and improving our learning skills are com-
pelling—the world is smaller and yet more complex, there is too much
to be learned, information is easily accessed, and the business environ-
Workplace Learning Process

Use assignments, business problems, and
experiences as learning opportunities
Transfer Plan
Record lessons Identify what needs
learned and share to be learned to deal
with others with new and
unfamiliar situations
Ask questions;
identify and use tools
Managing and resources to gain
Self knowledge
As a Learner
Reflect Reflect
on Action on Plan
Obtain and use Restructure problems
feedback to improve by incorporating
performance different perspectives
Act
Source: Copyright © 1993 Ernst & Young LLP. Used with permission. All rights reserved.
Figure 11 Ernst & Young’s Continuous Workplace

Learning Model: Managing Self As a Learner
ments are constantly changing. Since the majority of our learning takes
place on the job, we need to get consistently better at this kind of
learning.
The Continuous Workplace Learning model provides a process for
turning work assignments and business problems/opportunities into
learning experiences. And what could be a better metaphor for this than
the kaleidoscope—a lens for viewing a series of patterns through the
reflection of an image produced by mirrors. Through planning, reflection,
and feedback, we can develop a series of different “pictures” of how to
deal with new, unexpected, and complex challenges facing us.
The continuous learning skills can help us respond to our clients’ needs
with better, quicker solutions if we consciously and intentionally learn
from past experiences and new opportunities. By asking questions,
looking at problems with different lens, developing plans of action and
reflecting on them, acting and then seeking feedback and reflecting
again, and documenting what we learned, we can develop a systematic
way of using the workplace as a laboratory for learning.
Workplace Learning Process

Use assignments, business problems, and
experiences as learning opportunities
Transfer Plan
Record lessons Establish an environment
learned and share conducive to workplace
with others learning
Assist others in setting
and meeting goals
Help others identify tools
Helping
and resources
Others
Learn
Reflect
on Action Reflect
Encourage on Plan
reflection Help others restructure
Provide feedback to others problems by incorporating
on learning accomplishments different perspectives
Act
Source: Copyright © 1993 Ernst & Young LLP. Used with permission. All rights reserved.
Figure 12 Ernst & Young’s Continuous Workplace

Learning Model: Helping Others Learn
Make Learning “Just in Time,” Not “Just in Case”

As business speeds up and the demands of customers, partners, and
other value contributors change with greater speed, workers need
the relevant knowledge more quickly. One-week training courses
and off-site programs become harder to justify due to their decreasing
ability to provide immediately usable learning. As mentioned earlier,
promptly applied learning is usually retained for maximum benefit.
The answer is to tilt toward just-in-time learning. Increase invest-
ment in flexible learning tools and support for frontline staff who
need knowledge for customer-related value on demand. Make con-
tent modularized and reusable.
Manville (2001) notes that just-in-time learning is “tricky for any
organization to implement. It requires a foundational technical infra-
structure that is multifaceted, flexible, and scalable, one that is able

to deliver documents, learning programs, virtual product samples,
and personalized expertise over broad domains and often beyond
the boundaries of the traditional organization” (p. 40). In addition,
just-in-time learning requires sophisticated knowledge inventory and
content-owner management to ensure smooth and responsive deliv-
ery and output. Fundamentally, it requires a deep, overall organiza-
tional capability to “develop content quickly and adapt it to front-
line needs rapidly through a process of ongoing experimentation,
feedback, and refinement” (p. 40).
Just-in-time learning must be balanced by the understanding that
classroom and formal instruction may also have their uses: For
example, at Ford, employees still participate in instructional labs on
repairing engines. Organizations should also determine the best
methods of leveraging just-in-time learning with the use of other,
supporting processes.
For example, take the case of the Dow Chemical Company,
which won the 2001 ASTD Organizational Learning Award for its
overall strategy for building a learning organization. Realizing that it
needed a clear strategy to help employees at all levels understand the
reasons behind a recent corporate reengineering effort and to pro-
mote alignment among staff, Dow created the Leadership Devel-
opment Network (LDN), a “revolutionary approach to training
based upon adult learning strategies that stimulate thought pro-
cesses and discussion.”
Dow’s goals include increased knowledge of business fundamen-
tals, company strategy, and critical business issues, as well as recog-
nition of each employee’s contributions to company success.
Outcomes are measured by employee surveys, which show that the
LDN program is a positive learning experience: Employees are
retaining information acquired in LDN sessions well after the semi-
nars are over; and employee morale, satisfaction, and business
knowledge have increased. Although it is difficult to link organiza-
tional learning directly to financial outputs, Dow Chemical’s finan-
cial results have outperformed historic levels and analysts’ predic-
tions for the past 3 years (ASTD, 2001).
Structure
Structure imposes a powerful directive on a company’s life and peo-

ple. It determines the work organization, performance monitoring,
lines of communication, decision-making processes, and degree of
internal control that will exist in the firm.
Although form should follow function, the opposite is often the
case; as a result, the form or structure of many organizations pre-
vents them from ever beginning the journey toward corporate-wide
learning. Rigid boundaries, bulky size, disjointed projects and
tasks, and bureaucratic restrictions all help kill rather than nourish
learning.
The structural characteristics of learning organizations, however,
exhibit flexibility, openness, freedom, and opportunity. Boundaries
are highly permeable, thus maximizing the flow of information and
exposing the organization to its experiences. The firm’s structure is
based on the need to learn, and the driving organizing principle is to
put the necessary freedom, support, and resources in the hands of
the people who need them. As tasks, needs, and people change, the
structure changes so that employees and customers alike can respond
and grow. Ultimately, what best allows and supports learning estab-
lishes the guidelines for building corporate structure.
Flat, Streamlined Hierarchy

Tall, rigid hierarchies with impregnable department silos are a bane
to learning because they block the fast and unimpeded flow of
knowledge that is essential to being competitive. Power and author-
ity cannot extend to the point of greatest impact, further diminish-
ing the organization’s interest in and ability to learn. A flat, stream-
lined structure that incorporates team collaboration and few modes
of control maximizes the flow of knowledge and learning.
British Petroleum’s Streamlined

Structure
John Browne, CEO of British Petroleum (BP), insists on an organizational
structure that is flat, and team based, and thus designed to promote learning.
The company’s headquarters employs less than 350 people, compared to
4,000 in 1990. Decision making has been pushed down to the individual busi-
ness units so that learning may flow more freely. One of the reasons for divid-
ing the company into numerous smaller units was to give individuals the
opportunity to see the results of their work and experience a sense of owner-
ship that is unusual for employees of large organizations. This aspect of the
structure also allows people to work face-to-face and form deep personal
relationships, which are critical in a learning organization (Prokesch, 1997).
Browne has encouraged the formation of learning communities in which
peer groups work on mutual problems and learn together as equals. He
observes that working as peers discourages the politics inherent in hierarchi-
cal structures. Peers are more open with one another and are freer to com-
municate, share knowledge, and openly disagree.
Seamless, Open-Ended, and Holistic

A learning organization should feature fluid, unbounded structures
with no divisional barriers. Boundaries inhibit the flow of knowl-
edge; they keep individuals and groups isolated and tend to reinforce
preconceptions, distrust, and bias.
A culture that focuses on maximizing organizational learning
capability builds learning that crosses all boundaries. Employees pos-
sess a holistic, systemic view of organizational life and all its systems,
processes, and relationships. There is integration and intimacy be-
tween management, employees, customers, competitors, and com-
munity. These factors make it possible for learning organizations to
better understand and appreciate the changing needs and successes
of people within and outside the organization.
Project-Based Organization and Implementation

In the future, an increasing majority of work will be done by project
teams, which are more capable of responding to and serving the
needs and interests of customers. The life of a project team may be
indefinite or only a few hours. Dynamic, short-lived project config-
urations will be commonplace, and employees may work with four
to five project teams a year, with the same or different colleagues
forming the teams. The smaller size, quickness, and accountability of
project teams encourage greater efficiency in learning processes and
more applicable knowledge.
Networking
Effective learning organizations understand the critical need to col-
laborate, share, and synergize with resources both inside and outside
the company. The network structure—which may include global
alliances, informal ties among teams that work across functions, and
new means of sharing information—uses a variety of connecting
tools such as management information systems and videoconfer-
ences. These methods provide a form and style that is fluid and
adaptable.
A traditional corporate structure, no matter how much it reor-
ganizes or downsizes, cannot muster the speed, flexibility, and focus
needed in today’s highly competitive marketplace. Networks are
faster, smarter, and more flexible, functioning as small companies
within large companies, which is indispensable for organizational
learning and global success. Networks differ from teams or task
forces in three ways: They are not temporary, they solve problems
that have been assigned to them as well as act on their own initia-
tive, and they are able to make substantive operating decisions for
themselves.
Small Units That Think Entrepreneurially

Learning organizations, no matter what their size, are structured to
operate with the dynamism and entrepreneurial spirit of new, small
companies. Why? Because when a working unit becomes too large,
and communications and commitment are lessened, knowledge and
empowerment are lost.
Asea Brown Boveri (ABB) is an excellent example of a large
learning organization that has achieved the advantages of a small
company, or many small companies. With more than $30 billion in
sales per year and about 200,000 employees worldwide, ABB is
streamlined into 5,000 autonomous profit centers, each containing
no more than 50 people.
Eliminate Bureaucracies
General Electric, a successful learning organization, has stated that
“a passion for excellence requires hatred of bureaucracy and all that
goes with it.” Royal Bank of Canada believes that an organization
should centralize paper but decentralize people. Staff should clear

out meaningless forms and policies that create gridlock and strangle
learning. Fewer boundaries and bureaucracies allow the lifeblood of
knowledge to flow quickly and freely throughout the organization.
Hewlett-Packard, an innovative company that had in recent
years become something of a lumbering dinosaur, decided to dis-
mantle its growing bureaucracy—which had become so cumbersome
that three dozen committees oversaw every decision, delaying new
products and crushing learning, speed, and innovation. Employees
were urged to rethink every process from product development to
distribution. The new sleek learning organization is now called a
“gazelle” by industry leaders.
Changing the Organizational Paradigm
As a result of the dramatic changes undertaken to develop a new

learning vision, culture, strategy, and structure, companies transform
their rigid, management-focused, short-term competitive orienta-
tions and become dynamic learning organizations. Table 4 provides
a comparison of these paradigms.
T A B L E 4
Changing Organizational Paradigms
Present Paradigm New Paradigm

Short-term goals Corporate and individual vision
Rigid culture Flexible culture
Product orientation Learning orientation
Regional emphasis Global emphasis
Management direction Employee empowerment
Procedure bias Risk bias
Analysis only Analysis, creativity, intuition
Competition Collaboration and cooperation
Corporate Learning
at Motorola University
For more than 70 years, Motorola has been recognized as a world-class
leader in a wide range of communications and electronics markets. Its repu-
tation for quality, innovation, and customer service has resulted in numerous
awards, including the Malcolm Baldridge award for quality and being named
Top Training Company by the ASTD. In addition, Electronic Engineering Times
recently named Motorola the leading supplier in the worldwide embedded
systems industry for its worldwide launch of the Digital DNA brand. The com-
pany won this award by being best in class for 16 supplier attributes, includ-
ing documentation, pricing competitiveness, application support, customer
orientation, and technology leadership—a truly phenomenal achievement.
Since the early 1980s, companies from all over the world have made pil-
grimages to Motorola’s headquarters in Schaumburg, Illinois, to explore the
high-performance work practices at Motorola. They have discovered that
Motorola’s success is built on a foundation of corporate-wide learning that is
leveraged to create new products and services, delight new and existing cus-
tomers, quickly respond and adapt to the rapidly changing global environ-
ment, and develop high-impact teams. The cornerstone for this corporate
learning is Motorola University, an institution that has helped propel the firm to
its position among the top global companies as we enter the 21st century.
Commitment to Quality and Continuous Innovation
The commitment to ongoing innovation in products and services contin-
ues to the present day. Motorola’s successes over the years cannot be
ascribed purely or even primarily to the desire to beat the competition,
although that has often been the outcome. The company’s most important
motivation is the technical objective of constantly trying to improve its per-
formance. Mobilizing the entire firm around apparently impossible goals has
long been a central part of Motorola’s corporate strategy.
Since quality is a way of life at Motorola, everything from the antenna on
a two-way radio to accelerometers on automobiles is subject to the compa-
ny’s drive to attain perfection. Targets such as the Six Sigma quality goal of
reducing the error rate in every process to fewer than 3.4 mistakes per million
operations have helped create a common vocabulary and sense of purpose.
Even more important, workers who are constantly thinking of ways to improve
the company’s performance fuel Motorola’s momentum and search for new
opportunities.
A Culture of Learning and Training
Some of the best training in the world takes place at Motorola. The tradi-
tion of training began in the 1920s and has continued to grow in importance.
Until the early 1980s, Motorola Corporation had its own array of traditional
employee development activities, of which training was a key component. The

firm’s decision in 1980 to build its own university outside the corporation’s
human resources department was a radical one. The university was not
intended to replace training within the company; rather, training would con-
tinue as a department within the human resources area.
By the end of the 1980s, Motorola University had expanded its operations
in the United States and around the world. The university also began offering
new and more comprehensive services, such as on-line learning systems,
translation and cultural training, and an expanded portfolio of executive edu-
cation programs. Nearly all Motorola training organizations are integrated and
serving businesses. Today, Motorola University operates 99 sites in 23 coun-
tries on five continents; they deliver more than 100,000 days of training per
year to employees, suppliers, and customers.
At Motorola University, factory workers study all types of business-
related topics, from the fundamentals of computer-aided design to robotics,
from communication skills to customized manufacturing. They learn not only
by reading manuals and attending lectures but by inventing and building their
own products. The university does not employ many professors. Instead, it
relies on a cadre of outside consultants—including engineers, scientists, and
former managers—to teach most of its courses. The instructor’s role is to
guide people into thinking as well as remembering. In a class on reducing
manufacturing cycle time, for example, senior managers formed teams to
devise new ways of getting a product to market faster. Motorola later orga-
nized a course that dramatically reduced time spent on product development.
Thousands of workers have learned skills at Motorola University that help
create new, or improve existing, businesses. As a result, hot-selling products
pour off Motorola’s assembly lines. The company became the first American
electronics firm to defeat the Japanese, even in their home market.
Training and Business Success

It was determined early on that Motorola University was to have its own
board of trustees (general managers of the corporation) and would be char-
tered to address issues of imminent business need. The university’s job was
not so much to educate people as to be an agent of change, with emphases
on retraining workers and redefining jobs. Thus, while other companies may
also offer generous amounts of training, Motorola stands out in its aim of bind-
ing education to business targets, as when it set the goal of reducing product-
development time and then created a course on how to do it.
In corporate circles, Motorola’s training program is considered a model
because of its strong link to the company’s business strategy. “Motorola’s
whole system is driven from the shop floor,” explains Antony Carnevale,
a labor economist with the Committee for Economic Development in
Washington, D.C. “The company trains to solve performance problems. It
doesn’t just put a little red schoolhouse in the workplace.”
Experts also point out that Motorola extends its training programs to
every worker worldwide. In contrast, most companies provide training only for
certain employees, such as general managers or technicians. Motorola is fur-
ther recognized for the way it monitors its training programs. For example, in
order to move training efforts closer to operations, the company now offers an
increasing number of on-the-job apprenticeships.
Motorola calculates that every $1 it spends on training delivers $30 in pro-
ductivity gains within 3 years. Since 1987, the company has cut costs by $10
billion—not by taking the usual route of firing workers but by training them to
simplify processes and reduce waste. Motorola executives believe that the
company’s sizable training commitment has contributed to strong financial
results. In 1999, Motorola spent more than $300 million to deliver a minimum
of 80 hours of training to each of its 132,000 employees. Altogether, the com-
pany lays out more than 4 percent of its payroll for training, far above the
1 percent average invested by American industry. Over the past 5 years,
Motorola has seen annual sales increase by an average of 18 percent, while
annual earnings growth has soared at a 26 percent clip. Productivity meas-
ured by sales per employee has climbed 139 percent during the same period.
Three Key Principles of Learning
Over the years, Motorola University recognized three key principles about
learning and how it can affect business success.
The first principle is that learning and change must go hand in hand.
Motorola’s early experience with training initiatives yielded little or no change
in business operations. Why? Employees were uninterested in change be-
cause they did not see why it mattered. In addition, mixed messages from
managers regarding quality principles undermined the momentum of change.
The company addressed these problems by letting employees know that
unwillingness to change was considered poor performance. Accountability, or
what was termed “shared responsibility for change,” was developed across
the entire organization, including the top levels. Motorola firmly believes that
change must begin at the top. With the help of Motorola University, the orga-
nization began to see change, not as a requirement mandated by some for the
benefit of a few, but as a collective effort undertaken for the benefit of the
whole.
The second principle is that innovation is much likelier to occur when
people participate in the solution instead of having it handed to them.
Although change affects an entire organization, everyone must be responsible
for the details that apply to his or her sphere. Senior managers may be
accountable for setting a strategic direction, but they are too far removed from
daily operations to dictate the specific changes that will achieve the firm’s
strategic objectives. In the mid-1980s, for instance, Motorola established an
18-month time frame for designing a new product, down from its standard of
3 to 7 years. The firm developed a 2-week course that brought marketing,
product development, and manufacturing managers together to meet, argue,

and reach agreement about the needs of the market, the right new product,
and the schedules and responsibilities of each production group. This action
learning format overcame the problems that traditionally arose when the three
departments met and agreed on plans but proceeded with their work as if they
had made no agreements. Action learning did not begin as an effort to
improve educational delivery systems but as an outgrowth of the firm’s strate-
gic agenda. Motorola wanted to use the training to send a message about
achieving quality by integrating efforts across functions, a message that went
beyond quality of product to include the quality of people, service, and the
total organization. Thus, organizational context dictated learning strategy,
which in turn evolved models of educational implementation.
The third principle is that it’s important to balance single-mindedness of
purpose within the organization against a broader frame of reference that
extends beyond the organization. Learning is about inquiry, and even within
an organization as large as Motorola, the internal conversation may become
fairly one-sided, with questions that all begin to sound the same and lead to
uncreative answers. Without balance, intense focus may also lead to tunnel
vision (Baldwin, Danielson, and Wigglehorn, 1997).
Employee Development and Business Redefinition
Throughout most of the 1980s, Motorola University built credibility within
the organization by developing educational experiences that addressed a
number of imminent business needs. Education was linked to key strategic
objectives, such as reductions in operating costs, product improvements, or
acceleration in new product development.
In today’s uncertain and turbulent business environment, Motorola
University concentrates on raising questions before answers exist. The uni-
versity’s role—which parallels the changing competency requirements of indi-
viduals within the organization—is to raise the level of inquiry inside the com-
pany through a diversely structured dialogue with customers, experts, and
industry representatives such as suppliers, regulators, policy-makers, and
special-interest groups.
Motorola University’s initiatives in recent years look more like new busi-
ness development activities than classic educational programs. Developing
new business in an era of discontinuous change is not the same process it
was in the past. And while it appears at first blush that Motorola University is
merely serving as an incubation center for the company’s entrepreneurial
activities, knowledge creation is a more deeply rooted focus of change. In
raising questions that have no answers, Motorola University is creating a
forum for exploring beyond the boundaries of the company’s existing busi-
ness and industry. The university’s objective is to develop the company’s crit-
ical competencies so that it can generate new models or maps with which to
make sense of uncertain or ambiguous business environments.
Research
Motorola University is also creating a research agenda that resembles the
classic university charter, but an agenda based on the evolution of learning
within the corporation. As the company shifts its inquiry into its future outside
the context of its well-defined customers and into ill-defined or even unde-
fined markets, it must develop a correspondingly critical set of new compe-
tencies within the organization and among its stakeholders.
In 1995, the university hosted its first research conference, in Malaysia;
this gathering looked much like the conferences organized by academic uni-
versities: a sharing of new knowledge derived from the research of individuals
and colleagues. All presentations were delivered by Motorola employees for
Motorola employees and invited guests. A similar research conference was
held at the Motorola University facility in Arizona in 1997.
Technology for Global Learning and High Performance

A recent important initiative at Motorola University has created an institute
that develops educational delivery systems around satellite, Internet, and vir-
tual reality technologies. Learning solutions include CD-ROMs, Web-based
systems, instructor-led training, online communities of practice, video, and
satellite conferencing with Motorola employees worldwide. The College of
Learning Technologies (CLT) is a department of Motorola University and
employs a cadre of experts in instructional, multimedia design, and educa-
tional technology. The institute develops courses, learning tools, and method-
ologies and conducts applied research to ensure that its services are the best
available. Through CLT, Motorola is exploring ways to develop a new world-
wide market in educational products for Motorola technology.
As Motorola University continues to pursue its comprehensive learning
strategy, CLT is at the forefront in providing learning solutions for all Motorola
employees with “the right knowledge, at the right time, anywhere in the
world.” Today, Christopher Galvin, who is Motorola’s president, and Gary
Tooker, the company’s chief executive, carry on the commitment to education.
Employee training is now so deeply ingrained at Motorola that all employees—
from top executives to factory workers—are responsible for identifying courses
they want to study every year. If supervisors spot performance deficiencies
during annual reviews, they offer recommendations and develop appropriate
remedial plans. CLT makes ongoing individual learning possible for every
Motorola employee (Rucker, 1999).
Self-Managed Work Teams

In today’s complex marketplace, customers expect seamless responses
to their requests, which makes self-managed work teams absolutely essential.
Motorola has committed itself to the development and use of such teams and
attributes much of its success in quality, customer satisfaction, and overall
business to their existence. Initiatives such as Six Sigma, Designing for

Manufacturability, and Cycle-Time Reduction Through Cross-Functional
Process Mapping require empowered teams for effective implementation.
As a mechanism for developing and promoting the use of teams to serve
global customers, Motorola initiated Total Customer Service (TCS) team com-
petitions in 1990. Now, more than 4,000 teams participate annually, represent-
ing disciplines such as design engineering and customer support—and even the
administrative and executive units at Motorola’s Schaumburg headquarters.
ROOTS, a pager manufacturing team from Tianjin, China, was one of the
recent winners of TCS team competitions in Orlando. At ROOTS, 80 to 90 per-
cent of the employees are now on teams. ROOTS impressed the Motorola
judges with its efforts to boost the local content of paging devices produced
in Tianjin. A representative of the sourcing operations unit, it employed three
basic strategies to help develop 63 local supplier companies: providing cross-
sector support for existing suppliers, relocating high-tech suppliers to China,
and finding and developing new local suppliers. As the team leader noted,
“We like to have suppliers located nearer to our factory.” Having suppliers in
close proximity reduces procurement time and total cycle time. “Also,” he
points out, “if there is a quality problem, it is easier to work with your suppli-
ers to solve the problem if they are located nearby” (International Labor
Organization, 2000).
Another team winner, the Eagles, came from Motorola’s Monterrey plant,
in Mexico. All of the plant’s 2,000 employees are involved in team projects. Ed
Raygada, plant manager, notes, “We have 2,000 employees and 2,000 teams.
But they aren’t one-person teams. Most of our employees participate in mul-
tiple teams. You can be a leader of one team and a member of another team.
Our goal is to have every employee serving on five teams” (International Labor
Organization, 2000). The Eagles team used a variety of analytical techniques,
including failure-mode effects analysis, to resolve a recurring quality problem
with surface-mount ceramic capacitors. After implementing a statistical-
process control system along with a new sealing method, quality-related com-
plaints dropped to zero for a 5-month period. In addition, downtime and costs
for scrap and spare parts were dramatically reduced.
Another TCS winner, the World Surf’n team, is a cross-functional group
from Motorola headquarters that included customer and supplier representa-
tives. It developed a common Internet-based infrastructure, linked to a
Motorola Web site, to support the global collection, consolidation, and distri-
bution of financial information. As a result of the team’s efforts, financial ana-
lysts who track Motorola’s performance now have real-time access to the
company’s latest financial data.
TNT, a design engineering unit from Plantation, Florida, representing the
Land Mobile Products Sector, reached the TCS finals with its development of
a low-cost, low-battery-drain, liquid-crystal-display unit for the TalkAbout
two-way radio. The TNT team used a predictive software modeling tool to
evaluate potential solutions and came up with a new technology that was well
below the cost target. Two U.S. patents are pending for the TNT technology.
A team of eight employees at the automotive and industrial electronics
group in Northbrook, Illinois, set out to speed up the processing of requests
for goods and services. The team called itself ET/VT=1 because it wanted to
ensure that all elapsed time (the hours it took to handle a requisition) was
value time (hours spent on necessary work). Before they started their project,
ET/VT members enrolled at Motorola University and took a 2-day class called
High Commitment, High Performance Team Training. Topics included setting
priorities, conducting focused meetings, and learning how to disagree with
colleagues without insulting them. The team managed to cut the number of
steps involved in handling a requisition from 17 to 6. Team members reduced
average elapsed time from 30 hours to 3, enabling the purchasing department
to handle 45 percent more requests without adding workers.
These teams at Motorola, as elsewhere, prove that empowered employ-
ees working together, from the lowest position to the highest, can have a sig-
nificant influence on the worldwide success of a global company.
Restructuring for Quick and Agile Crisis Response
The 1990s created tremendous challenges for Motorola. The European
telecom giants Nokia and Ericsson were rapidly leapfrogging past Motorola in
telephone technology and design. The Asian financial crisis affected manu-
facturing and sales for many Motorola products. The company responded
quickly by instituting several renewal programs built around four processes.
First, Motorola sought global leadership in core businesses by realigning
its business groups to provide even better customer experiences. The restruc-
turing enabled greater market-focused delivery of products.
Second, the company encouraged fuller participation in partnerships and
alliances. Motorola recognized that it could no longer provide total customer
satisfaction on its own. Today’s customers are wary of becoming trapped in
an inflexible relationship or a single-technology road map. The future belongs
to those who view the business world as an ecosystem—a business commu-
nity that thrives or dies by virtue of the overall health of its participants. An
increasing number of Motorola’s corporate customers indicated that in order
to stay competitive, the company needed both competition and more coop-
eration with its suppliers and partners.
Third, Motorola built platforms for future leadership. The company recog-
nized that the days of closed, turnkey architecture were gone and began
switching to an open, extensible structure on which other companies could
build and add value. As a result, Motorola has recently and successfully cre-
ated more integration components.
And, fourth, Motorola has undertaken additional initiatives to improve
quality and reduce cycle time. Global competition has resulted in renewed
urgency, both in terms of the manufacturing process and the time involved in
creating new products and bringing them to market. The Six Sigma quality
standard has been extended to the realm of consumer preference.

Thanks to these tremendous innovations and the agility created by its
corporate learning culture and enhanced by Motorola University, the com-
pany successfully weathered various crises over the past several years.
Preparation for Future Crises and Chaos
Motorola realizes that it must be prepared for ongoing challenges and
crises in the highly competitive and chaotic telecom field of the 21st century.
Thus, leaders and staff throughout the company are continuously assessed
and trained in a large variety of categories such as overall performance, team-
work and cooperation, vision and strategy, communication skills, creativity
and risk taking, flexibility, integrity, objectivity and practical intelligence, com-
pany loyalty, initiative and commitment, diversity, empowerment, customer
satisfaction, humility, and business knowledge. They are challenged to con-
sider the following questions:
• What will our organizational structure look like in 2025?
• What structural changes must we make in order to support our vision?
• What new technologies will we need?
• What skills should our managers develop for the growth and world
changes we are experiencing?
• How can we attract the worldwide talent we need for this outstanding
growth?
Motorola’s formula for success has been quite simple: Generate and
maintain an extensive knowledge base that enables the company to project
the most effective areas and methods for leveraging current core competen-
cies in light of trends in both supply and demand. Then, search constantly for
ways of improving your product lines, processes, and people so that you can
capitalize on identified trends and opportunities. Finally, have the courage and
passion to reinvent your company or product line by putting knowledge into
action.
Learning and an emphasis on quality are not the only reasons for
Motorola’s bottom-line success, but experts contend that the company’s
focus on continuous education and innovation are crucial advantages in
today’s marketplace. “Training,” declares Carnevale, “is the strongest variable
we see contributing to higher returns, and its importance grows over time.”
And there is growing financial proof at Motorola that continuous learning may
be one of the smartest investments employers and employees ever make. By
investing heavily in its belief that better-educated employees are better com-
petitors, Motorola is staying on the cutting edge (International Labor Orga-
nization, 2000).
TOP 10 STRATEGIES FOR BECOMING A LEARNING ORGANIZATION
1. Use Future-Search Conferences to Develop Vision

Changing an organizational vision may feel like changing the
tire on a moving car, but it is a critical first step. To begin, involve
leadership and as many shareholders as possible—employees, cus-
tomers, suppliers, and partners—in re-creating the company as a
learning organization. Future-search conferences are one method
of doing this. Such conferences can, as Marvin Weisbord and
Sandra Janoff (1993) note, “bring people together to achieve
breakthrough innovation, empowerment, shared vision, and col-
laborative action” (p. 3).
Leaders should consider a number of principles and proce-
dures as they plan and conduct a search conference.
• Explore—together—the whole system, its history, ideas,
constraints, opportunities, global trends, sources.
• Try to achieve common ground without using force or com-
promise, emphasize validating rather than reconciling polar-
ities, and remain focused on mutual development.
• Reinforce learning before and after the future search.
• Implement and maintain learning through understanding
and capitalizing the resources of the entire environment and
all systems.
• Create structures that facilitate relationships.
• Act locally to cause change in large systems because every-
thing is connected.
Before future-search conferences begin, companies should
confirm the necessary core values. The corporate culture must
ensure that knowledge can be collectively and meaningfully orga-
nized by people—who are, in fact, extraordinary sources of infor-
mation about the real world. People in such companies are
empowered and enabled when creating their own futures. They
want opportunities to engage their heads and hearts as well as
their hands. Cooperation, equality, and empowerment help them
feel more knowledgeable about and in control of their futures.
Well-planned and well-managed future-search conferences can

be an effective tool in shaping learning organizations. A new
shared vision will undoubtedly influence organizational policies
and practices, align learning with organizational goals, and maxi-
mize knowledge to improve product and service quality.
2. Gain Support from Top-Level Management

Once the company has decided to become a learning organi-
zation, it is important to disseminate this vision and its correspond-
ing values within and outside the organization, using methods
such as announcements, posters, newsletters, videos, and symbols.
Assign financial and human resources to the task of making the
vision a reality.
Top managers should not only articulate the vision but be
active early participants in its actualization. Senior-level managers
acting as advocates of corporate-wide learning efforts are the most
powerful means of informing and inspiring others within the
company.
3. Create a Corporate Climate of Continuous Learning

A corporate environment that supports and rewards learning
encourages people to participate enthusiastically in the rigorous
challenges of a learning organization. The following factors are
helpful in developing such a climate:
• Establish learning as the key to the organization’s purpose
and success.
• Create a culture of continuous improvement.
• Value mistakes and performance shortfalls, both for the
effort expended and for the learning gained.
• Problems and errors should be shared and not hidden.
• Show concern for development of the whole person.
• Widen the accessibility of information.
• Help make learning a habit.
4. Reengineer Policies and Structures Around Learning

Learning organizations work best when boundaries are mini-
mized so that knowledge and ideas can move quickly and effi-
ciently within and outside the organization. Reengineering to
increase learning involves the following actions:
• Cut unnecessary restrictions and procedures.
• Shrink the size of working units.
• Decrease restrictive control of policies and allow greater
flexibility.
• Streamline structures and create a company with fewer
boundaries.
• Flatten hierarchy.
• Move toward project-based operations.
• Enable departments and units to act on their own initiative.
• Root out bureaucracy and unecessary rules.
5. Reward Individual and Team Learning

“That which is rewarded gets done” is one of the most pow-
erful management principles in the world. We should also be
mindful of its antithesis: “That which goes unrewarded is soon
abandoned.” Therefore, it is vital for an organization to identify
as many ways as possible of rewarding individual and, even more
important, team learning. Reward actions that directly or indi-
rectly contribute to organizational learning, such as risk taking,
commitment to learning and personal mastery, teamwork, encour-
aging new experiences and ideas, being a teacher or trainer, and
transferring acquired knowledge to teammates and the broader
network.
Rewards can and should be financial whenever possible. But
doesn’t learning have to be measured before it can be rewarded?
Yes, and surely an individual’s or a team’s learning and the
bottom-line effect of that learning are measurable—much like
many elements evaluated during performance appraisals. The
quantity and quality of learning that benefits the company can be
seen in terms of new and improved products, services, and rela-

tionships as well as documented knowledge acquired, created,
stored, and/or transferred by individuals and groups.
6. Incorporate Learning in All Policies and Procedures

In order to systematically transform a company into a learning
organization, it is absolutely essential to integrate learning as an
automatic part of all operations, including production, marketing,
managing, finance, and human resources, among others. The fol-
lowing policies exemplify this integrative approach:
• Learning acquired from all projects is captured and trans-
ferred throughout the company.
• Managers are hired or promoted based on their learning
and their ability to enhance the learning of those around
them.
• All employees are responsible for acquiring and transferring
information.
• The firm recruits employees who have the characteristics of
good learners, such as desire for personal mastery, initiative
and persistence, listening ability, and openness to change.
• All employees are trained in core workplace competencies,
including learning capability, creative thinking and problem
solving, self-development, and leadership and vision.
7. Establish Centers of Excellence and Demonstration Projects

Centers of excellence are a valuable strategy used by many
learning organizations. By practicing systematic job rotation into
and out of the centers, companies are able to develop and circu-
late best practices and know-how throughout the organization.
Demonstration projects in all areas of the organization are a
related approach. In these locations, the company can devote
more energy to experimenting with different ideas, policies, pro-
cedures, products, or services.
8. Measure Financial and Nonfinancial Areas As a Learning Activity

“That which can be measured gets done” is another key prin-
ciple of management. Therefore, learning organizations measure
the relationship of expenditures on learning not only to financial
areas—profits, return on investments, expenditures—but to other
sectors such as quality and customer satisfaction. Motorola, for
example, calculates a 3 to 1 return on each dollar spent on train-
ing and actually seeks to spend as much as possible on learning; it
knows these expenditures will increase the bottom line and the
quality line.
In addition, discourses about metrics—for example, whether
they should be focused internally or externally, the degree of
specificity sought, the use of custom-built or standard measures—
are all-important learning activities. And the process of searching
for the most appropriate metrics can in itself be a valuable aspect
of learning.
9. Create Time and Space for Learning

Organizational learning cannot be pushed. Despite a person’s
natural creativity, there are times when the necessary idea doesn’t
emerge immediately. Pushing too hard for innovative ideas may
create stress that inhibits, rather than helps, the desired break-
through.
Although a committed group may want to move quickly to
reach its learning destination, it is important to remember there
are some inherent speed limits. People need time to plan and
reflect; they need physical, social, and mental space in which to
listen and be creative. Sometimes, slowing down leads to faster
resolutions. In their commitment to providing time for reflection
and learning, some firms have gone so far as to offer 3- to 12-
month sabbaticals during which staff may visit, work with, or
study at academic institutions and the sites of industry leaders.
Recognize also the importance of architecture and physical
surroundings in creating an environment that is more conducive
to thinking, learning, and sharing knowledge.
10. Make Learning Intentional at All Times Everywhere

There are a variety of other ways to make learning a way of
life throughout the organization.
• Institute success-sharing meetings.
• Practice action learning as much as possible.
• Set aside time at meetings and programs to reflect on accu-
mulated knowledge.
• Introduce new ideas into the organization by hiring or con-
tracting outsiders for key positions.
• Generate as many explicit learning strategies as possible that
are appropriate for your organization.
C H A P T E R 5
Empowering and
Enabling People
THE NEED TO PURSUE WORK-RELATED LEARNING in today’s knowledge

organization is among the many revolutions of the New Economy.
The heart, growth, innovation, and distinctiveness of learning orga-
nizations derive from the ability to utilize human capital. And the
fundamental business challenge is how to attract, deploy, develop,
adapt, and retain it better than anyone else. The strategic argument
has shifted from “managing knowledge” to “managing people with
knowledge” and acquiring and growing that knowledge superbly
(Manville, 2001).
People are pivotal to learning organizations because only people
have the capacity to learn. People are the masters who take informa-
tion and transform it into valuable knowledge for personal and orga-
nizational use. In the Systems Learning Organization model, the peo-
ple subsystem includes the following six elements: managers and
leaders, employees, customers, business partners and alliances, sup-
pliers and vendors, and the community (see Figure 13).
111
Managers
Employees
and Leaders
Community People Customers
Suppliers Business
and Partners &
Vendors Alliances
Figure 13 People Subsystem
In order to contribute to organizational learning, each of these

groups must be empowered and enabled. If they are empowered but
not enabled, they will have the necessary resources at their disposal,
but not the knowledge to effectively use them. Groups that are
enabled but not empowered will have the necessary knowledge, but
not the ability to apply it. Let’s explore some ways in which each
group can become qualified for and proficient at organizational
learning.
Managers and Leaders
Many leaders whose tactics may have been acceptable to organiza-

tions in the past will find the same approaches are unacceptable in
learning organizations of the future. Hard-nosed managers who
single-handedly determine team direction, make key decisions, and
push employees may prove destructive in today’s organizations.
Such managers have not realized that the organization has evolved
from a structure based on steady-state control to one that thrives on
learning, empowerment, and continuous change (see Table 5).
Empowering and Enabling People 113
T A B L E 5
The Move From Steady-State to Continuous Change
From To
Continual change Transformation
Quality improvement Process engineering
Matrix Network
Performance appraisal Performance management
Technophobia Application of technology
Functions Process
Control Empowerment
Employment Employability
Managers must abandon controlling in favor of empowering,

become less commanders than stewards, and exchange approaches
of transitional managers for those of transformational leaders. The
new organization requires a new type of leader who can play new
kinds of roles with new kinds of skills.
New Leadership Roles
Let’s explore the many new roles required of managers in a learning

organization.
Instructor, Coach, and Mentor The most important responsibility for

managers today is enabling others to learn. This task requires a vari-
ety of approaches, those of instructor, coach, and mentor. The
choice of role in any situation depends on the focus of help, time
available, approach to helping, associated activities, and ownership,
as shown in Table 6.
T A B L E 6
Managers as Instructors, Coaches, and Mentors
Dimension Instructor Coach Mentor

Focus Task Results of job Development of
of help person throughout
life
Time Day or two Month or year Career or lifetime
available
Approach Show and tell; Explore Act as a friend;
to helping supervised problem listen and question
practice; set up together to enlarge
opportunities awareness
to try out
new skills
Associated Analyze task; Jointly identify Link work with
activities give clear problems; other parts of life;
instructions; create clarify broad and
supervise development long-term aims
practice; opportunities; and purpose in
provide review life
feedback on
results
Ownership Instructor Shared Learner
Knowledge Manager Since the learning organization will increasingly

consist of knowledge specialists, it will be an organization of equals,
of colleagues and associates. No knowledge or area will necessarily
rank higher than another; each will be judged by its contribution to
organizational learning and success. Information-based, egalitarian
companies require leaders who motivate and assist colleagues in the
collection, storage, and distribution of knowledge inside and outside
the unit. Knowledge managers will help select data for organi-
zational memory, confirm mechanisms for gathering and coding
knowledge, and encourage people to both use and share this valu-
able information.
Co-Learner and Model for Learning Leaders are not there simply to tell
others what to learn. They encourage, motivate, and assist workers
in learning and continuously improving their skills as well as their
learning abilities. Managers assist workers in identifying learning
resources. Leaders must be devoted learners themselves, taking time
for and demonstrating a love for learning. By practicing action learn-
ing, taking risks, seeking innovative answers, and asking fresh ques-
tions, managers display solid learning practices and skills to others.
Architect and Designer Given the new technologies, structures, envi-
ronments, and resources of learning organizations, leaders must be
architects who can fit or sculpt these elements into a system that will
thrive in the rapidly changing marketplace. Leaders help redefine
their organizations, reshape networks and teams, and reinvent new
methods for selecting, training, and rewarding people so that every-
one can participate in the global business environment. Leaders must
also help create and design new and appropriate policies, strategies,
and principles.
Coordinator Like an orchestra conductor who enables each musician
to play his or her instrument more magnificently, the learning leader
empowers people to perform their best. A leader is also like the
coach of a soccer team who melds players into a cohesive unit so that
each player is responsible for the team’s success and at the same time
understands how his or her play affects the game.
Advocate for Learning Processes and Projects Robust organizational
learning requires more than one advocate, or champion, if it is to
succeed. This is particularly true of learning that will lead to changes
in a basic value or long-cherished approach. The greater the number
of advocates for a new learning idea or program, the more rapidly
and extensively organizational learning will take place. Although it
should be possible for anyone to champion learning processes and
projects, managers are often the best and most likely candidates;
they should welcome, even solicit, the opportunity to be learning
advocates.
John Browne, CEO of BP, says that learning is “at the heart of a
company’s ability to adapt to a rapidly changing environment. A
company has to learn better than its competitors and apply that
knowledge faster and more widely than they do” (Prokesch, 1997,
p. 168). Browne believes that a key role of top management is “to
encourage learning, and to make sure there are mechanisms for
transferring the lessons.” In addition, to Browne, “leadership is
about catalyzing learning as well as better performance. He knows
that top management must demonstrate their own involvement in
sustaining a learning organization. You can’t say ‘Go do it’ without
participating. Learning is my job too” (p. 168).
New Leadership Skills

In addition to taking on new roles in learning organizations, man-
agers must accomplish new tasks.
Build Shared Vision Learning leaders must envision, along with fellow
employees, the type of future the company desires, one that is excit-
ing and challenging enough to attract and retain the best and bright-
est knowledge workers. The extent to which managers are able to
build a vision of shared goals for an organization determines em-
ployees’ commitment and willingness to carry out the vision. Leaders
should attempt to blend extrinsic and intrinsic visions, communicate
their own vision, encourage the personal visions that give rise to a
shared vision, and maintain an ongoing vision process.
Coordinate Multiple, Task-Focused Teams Due to the learning organi-

zation’s increased use of project teams, managers are likely to be
leading and coordinating a number of different task-focused teams,
each carrying out a variety of activities on different schedules.
Managers must be able to quickly enter into and become trusted
partners of the teams. Planning and managing these multiple respon-
sibilities requires an agile, caring, and well-organized individual.
Acknowledge and Test Mental Models Many of an organization’s best

ideas are never put into practice because they conflict with estab-
lished mental models or processes. Leaders must be able to confront
existing assumptions without provoking defensiveness or anger. Spe-
cific abilities in this area include balancing inquiry and advocacy, dis-
tinguishing between what is espoused and what is practiced, recog-
nizing and dismantling defensive routines, and seeing and testing

leaps of abstraction.
Engage in Systems Thinking Leaders in learning organizations must
help people see the big picture, with its underlying trends, forces,
and potential surprises. They must be able to engage in systems
thinking, which enhances their ability to foresee the effects on the
organization of both internal and external factors. Deciphering and
analyzing massive amounts of sometimes contradictory information
demand patience and persistence. Some key capabilities include
avoiding symptomatic solutions and focusing on underlying causes,
distinguishing detail complexity from dynamic complexity, seeing
processes instead of snapshots, focusing on areas of high leverage,
seeing interrelationships rather than things, and realizing that we
and the causes of our problems belong to the same system.
Encourage Creativity, Innovation, and Risk Taking Jack Welsh, CEO of
General Electric, challenges his managers with the following ques-
tions: Are you dealing with new things? Are you coming up with
fundamentally new approaches for getting work done? Are you gen-
erating new programs?
For GE and other learning companies, a constant flow of new
ideas is the lifeline to continued success. Although everyone is en-
couraged and expected to be creative, managers are best equipped to
create this environment by encouraging risks as well as protecting
and supporting those whose risks have not led to successful out-
comes. Managers can be leaders in trying out new ideas and chal-
lenging old ways.
Conceptualize and Inspire Learning and Action The ability to concep-
tualize complex issues and processes, simplify them, and inspire
people to learn and succeed is a necessary competency for the trans-
formational leader. Charisma may be helpful, but leading by show-
ing concern for and confidence in employees and associates is more
effective. Leaders require solid facilitating and coordinating skills if
they are to gain workers’ participation in challenging, sometimes
unenjoyable, tasks. And no task is more important than encouraging
and inspiring learning (Belasen, 2000).
Employees
There are several principles and guidelines to consider when

empowering and enabling employees.
The first step toward becoming a learning organization is to treat
employees as adults with the innate capacity to learn, who have the
skills necessary to handle problems, and who enjoy responsibility
and recognition.
Once employees are perceived as capable learners, they need
freedom and support. Enthusiastic and energetic employees are
more creative and committed to learning and productivity. Peter
Senge (1990a), whose ideas on the subject of learning organizations
have attracted wide attention, has described these organizations as
places where people can “continually expand their capacity to create
the results they truly desire, where new and expansive patterns of
thinking are nurtured, where collective aspiration is set free, and
where people are continually learning how to learn together”
(p. 3).
Honda’s Success on the Factory Floor

At Honda, the saying goes that there is “more knowledge on the factory
floor than in the office.” Therefore, the allocation of power is commensurate to
the high level of commitment, creativity, and intellectual capacity of associ-
ates. (As at many learning organizations, all Honda employees, including the
company president, are called associates.) But Honda does not just talk
empowerment, it permits people to actually create a new car. That’s empow-
erment, enablement, and a whole lot more!
Honda managers believe that associates are the people most qualified to
decide how their jobs should be done. If managers notice a problem, they ask
associates for their input, involvement, and advice. The Honda attitude toward
worker-learners is “We have a goal here. If you can do it better—do it. If you
fail, we’ll pick you up, dust you off, and encourage you to keep trying.”
One key to Honda’s success is gemba, a Japanese word that means “The
place of action,” which is commonly the shop floor. At Honda, gemba means
that the people involved with a particular project or process gather together
when they need to take some action. This is more than simultaneous engi-
neering and cross-functional teamwork. It is instead more like spontaneous
action learning.
The power and effectiveness of gemba were demonstrated at the
Marysville, Ohio, plant during the development of the Honda wagon. At some
point in the initial development process, workers discovered that installing the
wiring harness in the tailgate required 10 minutes, which was too long. All the
Honda people involved—design engineers, assemblers, and employees from
stamping—arrived in the area where the prototype was being built. It was up
to them to make the changes needed to install the harness quickly and effi-
ciently. They soon discovered a solution, which involved switching to a differ-
ent wiring harness and changing the diameter of the hole through which the
wiring was fed.
People at Honda talk often about the concept of matching power with
ability. Confidence, responsibility, pride, and, most of all, accomplishment are
also important factors on the factory floor. Robert Simcox, plant manager at
Marysville, says that Honda people are learning together. He attributes their
success to the fact that “they have been given the opportunity to use their
own creativity and imaginations” (Marquardt and Reynolds, 1994, p. 57).
Delegate Authority and Responsibility

Learning organizations reduce dependency and push as much
responsibility as possible toward the point of action and decision
making. Power and learning are thus located where the best infor-
mation and the greatest need exist. Operations and power are decen-
tralized and delegated to equal the responsibility and learning capac-
ity of the individuals and teams involved.
It is important to realize that accountability and empowerment
have not been correlated in most companies. Too many organiza-
tions have assigned accountability without ensuring empowerment.
For Jim Gannon of the Royal Bank of Canada, empowerment is deter-
mined “by the amount of influence, trust, and ability to get exceptions
that the employee has” (Marquardt and Reynolds, 1994, p. 114).
Involve Employees in Developing Strategies

In this increasingly dynamic, interdependent, and unpredictable
world, it is simply no longer possible for someone at the top to fig-
ure it all out. The old model of organization leadership—the top
thinks and the bottom acts—must give way to a structure in which
everyone is thinking and acting at all levels at all times. Sharing
power with employees makes business sense as well as personal
sense.
Accordingly, employees should be empowered to participate in
the development of strategy and tactics, especially in areas that affect
them professionally. Learning organizations clearly realize that

empowered workers can make decisions that are as good as, if not
better than, those of managers, simply because they have the best
information.
Balance Individual and Organizational Needs

Learning organizations balance the individual’s and the organiza-
tion’s development needs in order to properly address both.
Organizational productivity and profits matter as much as the qual-
ity of employees’ working lives. Leadership fully recognizes that bet-
ter organizational results are built on happy, productive individuals.
Companies should seek to develop the full range of human
potential—to respect social and spiritual needs as well as econ-
omic ones. Learning organizations have a high regard for human
dignity and delight in (not merely tolerate) ethnic and cultural
differences.
Workers often feel overwhelmed with all they need to learn for
their jobs, especially as knowledge demands grow exponentially. An
organizational learning culture helps ease those feelings because
learning responsibilities are shared equitably within the organiza-
tion. Also, when organizations support continuous growth and
learning, the possibility of greater self-actualization and fulfillment
at work increases.
Learning organizations are also aware of the growing pressures,
and conflicts, of family and job obligations, so they try to develop
pro-family company policies, such as flexible work arrangements,
dependent-care services, and wellness programs. Capital One,
Hewlett-Packard, and Texaco, for example, have made such pro-
grams integral parts of their human resources and learning support
policies.
The balance model in Figure 14 demonstrates equilibrium
between the needs of the individual and those of the organization. In
order to perform, the organization must continually build the per-
formance capability of individuals along with that of the organiza-
tion. Performance and performance capability should therefore be
viewed as two separate but integrated dimensions that are in balance.
Balance
Individual
Organization
Performance
Performance
Capability
Figure 14 Balance between Individual and Organization
Knight-Ridder and the

Challenges of Change
With more than 20,000 employees worldwide, Knight-Ridder is the
nation’s second-largest newspaper publisher; its products are available in
print and online. The company publishes 31 daily newspapers in 28 U.S. mar-
kets, with a readership of 9 million daily and 12.6 million on Sundays. Knight-
Ridder is seeking to further organizational learning by building on both inter-
nal and external environments.
• Change is accelerating and the transformation of Knight-Ridder must
keep pace. Our abundant challenges are more than matched by
opportunities that dwarf our past. Our future is bounded only by our
ambition. The commitment we make is to provide the highest stan-
dards of service to our customers and communities and to assure
continued prosperity for our company and shareholder.
• Our success will stem from providing innovative and essential content
and services to readers and advertisers. These strategies require a
company with capacities for rapid change, flexibility, creativity, market
focus, strategic thinking, and strong marketing and technology
skills. We stand for excellent service to customers and communities
and a respectful, safe learning environment for all our employees (ex-
cerpted from www.kri.com).
All staff are expected to develop and display the following attributes
in building organizational learning at Knight-Ridder (Wishart, Elam, and
Robey, 1996):
1. External focus for gathering information: Use market information to
create tools for information gathering and analysis. Build relationships
and form partnerships with current and potential advertisers, readers
and other information consumers—general market or business. Be
personally involved in community activities or interaction with the
community and use that knowledge to inform business strategy.
Strategic business knowledge: Continually scan business and iden-
tify global and market trends.
2. Collaboration: Ask for and hear feedback and data from others that
challenge assumptions and behaviors.
3. Sharing learning: Take responsibility for acquiring and sharing new
skills, behaviors, and competencies. Coach others through the devel-
opment process, share learning broadly throughout the organization
and vacillate learning from new opportunities and settings.
4. Nurturing innovation: Foster an environment that inspires others to
deal creatively with business and people problems. Reward and rec-
ognize innovation; develop capacity for identifying effective solutions.
5. Urgency: Demonstrate sense of purpose by taking prompt action as
issues emerge, pushing for closure and results. Share information
while ideas are evolving.
6. Communicate vision: Provide clearly articulated goals, values and
performance expectations that are integrated across levels, func-
tions, work processes and other boundaries.
7. Flexibility: Modify behavior effectively in new, changing or ambiguous
situations as needed.
8. It is sometimes easier to see the effects of enactment at the industry
level. For example, the early 1990s saw the insurance industry, pri-
marily the health insurance industry, become very active in trying to
influence the federal government’s attempt to intervene at limiting
health-care costs. Their actions, through public forums and other leg-
islative processes, prevented, in their eyes, a very harmful regulatory
move by the federal government. A more negative example can be
seen in the tobacco industry’s efforts to promote the use of tobacco
products. In this case, the industry relied on massive public relations
and advertising to rebut, and in some cases suppress, evidence that
the use of their product could be harmful to human health. In both of
these examples, the organizations were enacting their environments
through their actions in the Environmental Interface Subsystem
(pp. 7–20).
Customers
Learning organizations recognize that customers can be a fertile

source of information and ideas and should be closely linked with
organizational learning systems and strategies. Conversing with and
gathering information from customers invariably provide new
knowledge, for customers, after all, have direct knowledge about
their purchases and behavior. They can provide up-to-date product
information, competitive comparisons, insights into changing pref-
erences, and immediate feedback about service and patterns of use.
Learning organizations typically adopt one or more of several
approaches toward educating their customers. They may provide
ongoing, accessible training and learning opportunities (video train-
ing, embedded technology, classroom instruction) to educate cus-
tomers about their products. This not only creates informed
customers who can provide better ideas and insights on improve-
ments to products or services but cultivates greater loyalty among
fellow learners and partners. Canadian Bank of International
Commerce (CBIC) recognizes the critical importance of customer
learning. While the bank’s staff requires information about cus-
tomers and their evolving needs, customers may also benefit from
learning about the bank’s products. For example, derivatives are a
complex and valuable set of risk management tools that often are
poorly understood, even by sophisticated corporate finance man-
agers. In the past year, more than 3,400 clients have attended a for-
mal derivatives school organized and run by CBIC’s Wood Gundy.
Taking customer education a step further, the Dana Corporation
and Ford Truck offer courses to improve their customers’ business
performance. Dana’s program addresses generating repeat busi-
ness, and Ford’s covers consultative selling skills.
Learning organizations also encourage and support customers’
expectations of improved quality, innovation, and greater speed,
which serve as incentives to constantly improve and therefore learn.
Milliken’s staff accompanies the first shipment of every company
product in order to observe its use; they are then better able to de-
velop further improvements to products.
Another strategy is to actively seek feedback and suggestions
from customers and suppliers. Senior executives at Motorola,
including the CEO, meet personally and regularly with customers.

Worthington Steel machine operators make periodic trips to cus-
tomers’ factories to gather firsthand knowledge about their needs.
Business Partnerships and Alliances
The growth of global competition and virtual organizations has dras-

tically increased the occurrence of short-term alliances and partner-
ships among companies. Most companies use these alliances and
partnerships to increase profits and market share or to cut expenses,
time, duplication of services, and political maneuverings.
Learning organizations, however, seek to add another important,
long-term benefit to the alliance: learning. At the beginning of their
relationships, learning companies consider the possible knowledge
to be gained from their allies, such as customer intelligence, process
and operations policies, and cultural nuances. They may even build
these learning objectives into their agreements. Learning companies
then provide for adequate exchange of personnel so that valuable
learning is captured and brought back to their organizations. The
short-term partnership therefore becomes a profitable, long-term
investment that can be used to leverage future successes.
Suppliers and Vendors
Learning organizations realize that success depends to a large extent

on the success of a company’s entire business network, not just its
employees and customers. When others in the business chain are
learning together about commitments and policies as well as appro-
priate management or technical skills, the results can be especially
beneficial in the long run. Companies may offer staff learning
resources to their valuable, long-term partners. Rover, the British
automobile manufacturer, provides numerous learning opportunities
for its dealers in areas of quality, leadership, and staff development.
Manville (2001) notes that organizations must embrace the
extended enterprise. Companies have become increasingly virtual
through such mechanisms as outsourcing, focus on core competen-
cies, and a host of alliances, joint ventures, and partnerships.
People—be they employees, suppliers, vendors, or partners—work

together in value chains that deliver goods and services to customers.
Although the chains are linked by contractual bonds, they are also
defined by relationships, knowledge exchange, and other intangi-
bles. Learning has become a critical process that occurs across
boundaries as well as within them.
This means that suppliers, vendors, partners, and others are all
part of an overall learning environment, along with core employees.
Companies that recognize this new reality are using certifications to
qualify their suppliers and vendors as well as their own staff mem-
bers. Ford provides learning to ensure appropriate procedures, tech-
nical expertise, and brand management among its dealerships.
Anheuser Busch trains distributors in the handling of food and bev-
erage products in the interests of maintaining quality and brand
integrity. Cisco Systems is creating higher customer satisfaction and
support for faster product rollout by offering learning programs and
tools to its channel partners, who provide 70 percent of revenue.
Toyota pioneered the use of learning in qualifying and aligning its
suppliers, and the “work with us, learn from us, teach us” principle
now governs thousands of manufacturing and supplier relationships
around the world.
In the new economy, companies are beginning to see that train-
ing, learning, and knowledge services must be developed, pursued,
and packaged as part of their overall relationship with customers and
partners. And as we will explore in chapter 7, they are using the
Internet and management systems to systematically provide, track,
and integrate learning into those relationships.
Community
Learning organizations are aware of the many benefits that accrue

when communities become part of the learning process. Positive
results include enhanced image in the community, greater interest
among residents in working for or buying from the company,
improved quality of life in surrounding areas, preparation of a future
workforce, and the opportunity to exchange and share community
resources.
Learning organizations might engage in the following types of

community education efforts: encouraging teachers, housewives,
and other interested community members to participate in corporate
training programs; tutoring or co-teaching in classrooms; sponsoring
learning events in partnership with other corporations, academic
institutions, or agencies.
National Semiconductor, in Santa Clara, California, has actively
involved the community in its organizational learning efforts. The
company runs numerous programs for local schools, county school
superintendents, high school teachers, and elementary school science
teachers. By being a good community member, National Semicon-
ductor learns and gains as well. Early entrance into a new market can
build a good image for the company. The company established a
branch of National Semiconductor University, which trains the
upcoming workforce in the school system and thus prepares future
engineers for semiconductor technology. In this way, according to
Kevin Wheeler, director of National Semiconductor University, “We
have a trained workforce ready, willing, and able to work for
National. The community benefits by learning about technology,
electronics, and American management styles. And National benefits
by learning a lot about the local culture and needs of people in that
culture” (Marquardt, 1996, p. 148).
The demarcations between management and employees, depart-
ments and units, employees and customers, the company and its
vendors, and even the company and its competitors have become
less permanent and more flexible. Empowering and enabling
these various groups of people extend and strengthen the learning
enterprise.
Whirlpool Corporation
Founded in 1911 in Benton Harbor, Michigan, Whirlpool Corporation is
the world’s leading manufacturer and marketer of major home appliances. The
company manufactures in 11 countries and markets products in more than
140 countries under brand names such as Whirlpool, KitchenAid, Roper,
Estate, Bajknecht, Ignis, Laden, and Inglis. Whirlpool has more than 40,000
employees worldwide. For the year 2000, revenues exceeded $10 billion.
Commitment to People
One of Whirlpool’s greatest achievements as a company has been its
commitment to people—its 40,000 employees, its millions of customers, its
numerous partners, and the global community. This commitment to develop-
ing and caring for everyone inside and outside the company and helping them
learn is expressed clearly in Whirlpool’s values statement.
Whirlpool Values Statement

We, the people of Whirlpool, aren’t “in” the company; we “are” the company. As such,
we recognize our individual responsibility to assure our collective success by practicing
and promoting the following values.
Business with Integrity
We will pursue our business with honor, fairness and respect for both the individ-
ual and the public at large . . . ever mindful that there is no right way to do a wrong thing.
Quality as a Quest
Success depends on our ability to deliver a level of excellence respected by all
who rely on us. We will lift the quality and value of our products and services above the
expectations of those who receive them . . . always recognizing that our best today can
be bettered tomorrow.
Customers as the Focus
We will dedicate ourselves to anticipate the changing needs of customers and to
create innovative and superior products and services, faster and more effectively than
our competitors.
Commitment to the Common Good
We will serve responsibly as members of all communities in which we live and
work, respecting cultural distinctions throughout the world. We will preserve the envi-
ronment, prudently utilize natural resources and maintain all property we are privileged
to use.
Power of Trust
A mutual and inspiring trust, nurtured by honest and open communication and
equal opportunity, should unite our actions and relationships with one another . . . pro-
viding a foundation for teamwork, confidence and loyalty.
Learning to Lead
Our competitive edge in the marketplace ultimately depends on how our skills and
expertise measure against the world’s best. To lead the best, we must cultivate our tal-
ents through continuous training . . . confident that we will be provided every opportu-
nity to widen our horizons.
Spirit of Winning
At the heart of the company values lies company spirit. It encompasses the deter-
mination, resourcefulness, boldness and vigor by which we work. Collectively, we
believe this urgent and relentless drive will enable us to shape the future of our industry
. . . and deliver the performance that earns us success in the marketplace.
Whirlpool hires and develops employees who demonstrate the following

five attributes:
• Integrity: Behave honestly
• Commitment: Express their full potential and energy at work
• Reliability: Can be counted on consistently to do what is expected or
required
• Initiative: Originate new ideas or methods without being asked
• Cooperativeness: Work together for a common purpose
These valuable qualities all contribute to being a learning employee and
building a learning organization.
Commitment to Quality Learning for All Employees
Whirlpool believes that it cannot expect continuous improvement in its
key business processes without investing in the systematic education and
training of all its people at all levels. Whirlpool’s just completed, state-of-the-
art, $5.5 million Corporate Development Center near corporate headquarters
in Brandywine Creek, Michigan, is a manifestation of its conviction.
Tom Helton, former director of human resources and the driving force
behind the center’s development, describes it as a critical “vehicle to help fur-
ther the business agenda of the corporation and carry out our company’s
strategic design. Through this construction, Whirlpool has demonstrated its
commitment to the lifelong learning of its employees” (Marquardt, 1996, p. 117).
The 56,000-square-foot building features video and broadcast systems,
breakout rooms, and an amphitheater with a computerized projection screen.
Proximity to Whirlpool’s administrative center allows executives to teach
classes at the center; in fact, half the classes are taught by headquarters lead-
ership. Helton praises the involvement of top-level managers in guiding the
learning process: “It sends a tremendous message about the importance of
learning to participants when they see the CEO of a company teaching.”
The major mission of the Corporate Development Center is to provide
Whirlpool with a visible point from which to drive a single, integrated, world-
wide training and education agenda. It develops highly effective individuals,
teams, and organizations capable of winning in every region and market in the
world. The site also enables professionally competent leaders of character to
serve the company’s customers, shareholders, and other stakeholders.
Inherent in this mission are three goals: to develop a global mind-set; to
align the organization with Whirlpool’s vision, strategic design, and business
strategies; and to build the knowledge and skills necessary to win.
Whirlpool’s learning programs, according to Helton, contain a “bold, new
strategy” of consistent application, organizational impact, and rapid execu-
tion. Acquiring, leveraging, and transferring knowledge, skills, capabilities,
and best practices will be critical for learning throughout the organization.
One program at the Corporate Development Center is the Whirlpool
Leadership Academy, which offers a core curriculum designed to provide the
knowledge and skills necessary to develop and strengthen leadership capa-

bilities. The Whirlpool Excellence Academy is another major program,
designed to support the Whirlpool Excellence System and other business
strategies by enabling people to acquire, improve, and maintain job-related
knowledge and skills.
Empowering Whirlpool’s People

Whirlpool has set a high standard of commitment to its employees and
expects the same level of commitment in return. The company’s High-
Performance Partnership represents a promise to all employees that Whirlpool
will encourage and enable contributions and commitment from each indi-
vidual and team and will provide a dynamic and diverse work environment that
is valued by all. Whirlpool has set a clearly defined goal of achieving 85 (out
of 100) on the corporate people commitment index, which represents a high
level of mutual company and employee commitment. For Whirlpool, people
commitment means living shared values in the workplace, recognizing and
rewarding performance, training and educating, listening to concerns and
ideas, and contributing and sharing ideas.
As CEO Dave Whitwam notes, “One of the approaches we’re using to help
employees feel like owners is to give them responsibility. We need their heads
thinking as well as their hands working. In some of our factories today, there is
no supervisor on the floor. Teams made up of hourly workers hire new em-
ployees, create production line layouts, decide on production levels, and even
make employee termination recommendations. They drive the quality process.
That’s a real change from how industrial companies have traditionally been
managed.”
Another demonstration of Whirlpool’s commitment to empowering and
enabling employees is its compensation system, which is driven by the prin-
ciple of “pay for performance.” Essentially, all Whirlpool employees received
stock options in 1991. Some operations provide gain-sharing programs that
allow employees to benefit directly from their own productivity and quality
improvements. Being stockholders as well as stakeholders has given workers
even more incentive to become active learners.
In a recent corporate annual report, Whitwam remarked that the commit-
ment and effort of the 40,000 people employed by Whirlpool worldwide “were
crucial to our performance this past year, and we have many programs in
place to further encourage going forward. Whirlpool Excellence Systems
(WES) has helped our men and women understand the need to make deci-
sions and carry out their jobs for the purpose of satisfying customers—and to
challenge those decisions that they believe fall short of the mark. So, too,
have innovative performance-based compensation systems at all levels with-
in the corporation. Whirlpool has made substantial progress toward becoming
an integrated global home-appliance company, one in which its people share
the best of what they know and do with colleagues worldwide” (Marquardt,
1996, pp. 117–120).
Whirlpool seeks to tap the creativity and skills of its employees around the
world to provide quality and competitive prices for all its customers. Cost and
quality improvements, higher customer satisfaction, and the efficiencies re-
sulting from sharing best practices in areas such as product development,
engineering, procurement, manufacturing, marketing, sales, and distribution
contribute to Whirlpool’s strong global performance.
Employee Learning for Company Success
At Whirlpool, line managers run action learning groups composed of
frontline workers. Close to 100 percent of line managers actually conduct the
action training. The role of training and HR people has become largely one of
training line managers to be trainers.
Whirlpool is dedicated to building a perfect product for its customer. With
that as the point of departure, you can indeed take the notion of satisfying the
customer to a completely different plane, and that’s where breakthrough
learning has become possible for Whirlpool.
In the company’s most recent annual report, employees from around
the world were cited for significant benefits to Whirlpool customers resulting
from their knowledge and initiative: A cross-functional team developed
Whirlpool’s award-winning, super-efficient refrigerator, a learning group de-
vised a just-in-time system to supply product kits and components, a project
team leveraged knowledge captured in North America into a new dryer
designed for European customers, and cross-functional employee groups in
Europe refined complex manufacturing processes.
Empowering Customers
Whirlpool has emphasized the importance of learning from its customers
if the company is to develop the ability to delight them. According to
Whitwam, success means understanding better than anyone in the industry
the present and future needs of consumers and trade partners. Whirlpool
believes that its research in these areas is the most exhaustive in the home-
appliance industry.
By paying consumers to “play around” with appliances at its Usability Lab
in Comerio, Italy, Whirlpool discovered that microwave oven sales would
improve if it introduced a model that browned food. The result: Whirlpool
developed the VIP Crisp, now Europe’s best-seller, and recently began pro-
ducing it in the United States.
Whirlpool realizes that doing business successfully in a given geographic
region requires a thorough understanding of consumers and the market as a
whole. In Asia, for example, Whirlpool recently conducted focus group ses-
sions with 1,000 consumers in nine countries, surveyed 6,500 households,
engaged in 700 consumer discussions in four countries, and performed other
extensive research studies with economic, diplomatic, and regulatory
sources. Whirlpool also benchmarked other Western companies that have
been successful in the Asian region: among them, AT&T, Emerson, Hewlett-
Packard, McDonald’s, Motorola, Procter & Gamble, and Westinghouse.
Learning with and from Partners
Whirlpool has also developed close learning relationships with organiza-
tions in related businesses, such as Procter & Gamble and Unilever. In these
and other partnerships, Whirlpool not only exchanges basic information and
ideas but shares more intensive involvement at developmental, engineering,
and technological levels.
Whirlpool is a world leader in establishing trade partnerships; it maintains
strategic agreements with three of the top four major domestic retailers in
North America, three of the top five in Europe, and most leading retailers in
South America. These partnerships have produced significant learning and
driven Whirlpool’s business success.
People and the Corporate Competitive Advantage
As a result of its learning prowess, Whirlpool has had significant global
success. Whirlpool people know, says Whitwam, that the company’s vision of
“reaching worldwide to bring excellence home” depends on their ability to
provide “continuous quality improvement and to exceed all of our customers’
expectations. We will gain competitive advantage through this, and by build-
ing on our existing strengths and developing new competencies.”
This vision and those capabilities are becoming more of a reality every
day for this emerging learning organization. Whitwam and the people of
Whirlpool have wisely recognized that “continuous change is the essence of
the global market,” and that only by empowering and enabling people from
throughout the organization and across the business chain can they achieve
worldwide success (Marquardt, 1996, p, 122).
TOP 10 STRATEGIES FOR EMPOWERING AND ENABLING PEOPLE
1. Encourage Leaders to Model and Demonstrate Learning

Because actions usually speak louder than words, managers
can demonstrate their appreciation and love of learning by their
attitude and behavior. Spending time reading, listening, reflect-
ing, studying, and attending learning programs sets a good
example. And the important leadership skills of visioning, men-
tal models, and systems thinking require consistent development
and practice.
Leaders should learn from employees and take their ideas
seriously. It’s important not to filter out bad news; instead, lead-
ers must remain open to data about the organization, industry,
markets, competition, and customers. When channeling infor-
mation to the appropriate employees, it’s best to pass it along
without adding managerial spin. Networks of learners and lead-
ers from learning organizations can provide inspiration. Leaders
must be able to acknowledge and be open about their own mis-
takes and those of others. Mistakes are best viewed as opportu-
nities for learning.
2. Invite Leaders to Champion Learning Processes and Projects

The primary responsibility of managers in learning organiza-
tions is to create a climate that promotes learning. Managers can
develop such an environment in some of the following ways:
• Encourage employees to volunteer problem-solving ideas.
• Respond to employee ideas and suggestions in a timely way.
• Support the people you have empowered.
• Promote partnerships and teams that include you.
• Commit to openly discussing differences and working
through conflicts.
• Advocate and reward learning.
• Encourage experimentation and reflection on acquired
knowledge so that new knowledge can be created.
• Talk publicly and often about learning.

• Generate and enhance learning opportunities wherever and
whenever possible.
• Listen to your staff, but don’t always provide the answers;
encourage them to solve problems themselves.
• Avoid teaching and controlling.
• Slow down and encourage reflection.
3. Empower Employees to Learn and Produce

Empowerment is often nothing more than a slogan espoused
but not practiced by top management, particularly when major
planning and decision making are under way. Employees quickly
grasp this distinction and put less energy and creativity into imple-
menting company operations. The organization’s brainpower is
barely tapped.
Learning organizations, however, empower and educate their
workers about financial, technical, and other pertinent data that
can lead to wiser decisions. These companies then entrust employ-
ees with the responsibility of achieving success. Truly empowering
organizations realize that it is essential to place responsibility as
close as possible to points of action. They involve employees in
planning, evaluating, and determining responsibilities and profits.
Saturn, a division of General Motors (GM), is a good corpo-
rate example of employee empowerment. The Saturn factory in
Spring Hill, Tennessee, was actually conceived by GM as a labo-
ratory for the development of innovative ideas. And one of the
most revolutionary ideas is Saturn’s approach to employee
empowerment. Each Saturn work team manages itself without
direct oversight from top management. This includes taking
responsibility for its own budget, inventory control, and hiring.
With this kind of empowerment, employees make better and
faster decisions than could their office-bound managers. The
added responsibility has also made workers more accountable,
and absenteeism is at 2.5 percent, much less than the 10 to 15 per-
cent that prevails at other GM plants. And Saturn, since its incep-
tion, has been GM’s most successful and innovative division.
4. Institute Personnel Policies That Reward Learners

Many organizations do not practice their stated value of
recruiting and rewarding people who are learners. In learning
organizations, however, people who learn and help people around
them to learn are promoted, rewarded financially, and given bet-
ter career opportunities. The company looks for potential leaders
among staff who take advantage of learning opportunities, ask
fresh questions in attempts to optimize learning from experience,
and learn well in team settings.
5. Create Self-Managed Work Teams

Probably the most direct way for an organization to demon-
strate its confidence in the level of employee empowerment and
enablement is by using self-managed work teams (also known
as self-directed work teams or high-involvement teams). Several
learning organizations—GM, Colgate, and Glaxo-Wellcome—
have had great success with this kind of unit. Self-managed work
teams are built and supported by a number of important factors.
For team members, these include
• Clear goals and a thorough understanding of the team’s
power and decision-making authority
• Well-defined time frames
• Strong intergroup skills
• Understanding of group processes and functions
• Well-defined procedures for working within and communi-
cating outside of the group
For the organization, these include
• Policies, procedures, and systems that are compatible with
team-based management
• The confidence to react with equanimity to the team’s mis-
takes or slow pace
• The flexibility to allow the team to explore beyond its orig-
inal boundaries
6. Balance Learning and Development Needs

A learning organization must continually build the perfor-
mance capabilities of individuals along with those of the company.
It is important to ensure that organizational requirements do not
overwhelm the personal and performance capabilities of employ-
ees. Otherwise the “well-learned” person will either collapse or
leave for another company.
In respecting the whole person—personally, physically, spiri-
tually, socially, and economically—as well as his or her family
needs, a learning organization tries to be humane and family
friendly. Wellness and physical fitness programs, counseling ser-
vices, flexible work arrangements, and dependent care services all
enable workers to focus energies on being more proficient learn-
ers and more productive workers.
7. Encourage and Enhance Customer Participation

Customers are a vital source of information and represent a
tremendous impetus toward quality and continuous improvement.
Learning companies get help with continuously improving ser-
vices and products by actively sharing information with customers
in order to obtain their ideas and inputs. Learning companies
encourage customers to be part of their organizations. As fellow
team members, customers can help identify needs and inadequa-
cies, offer recommendations, and ensure quality.
To maximize their customers’ involvement in learning and
knowledge exchange, companies must offer opportunities to learn
about products, services, vision, and collaboration options.
Banks can provide information about different types of loans and
investments. Zoos can educate the public about the environment
as well as the care and feeding of animals. Computer compa-
nies can use embedded technology to train, as well as learn from,
customers.
Learning exchanges such as these not only build customer loy-
alty and profits in the short term but also augment the learning
resources of the organization in the long term.
8. Maximize Learning from Business Partners and Alliances

For most American firms, forming alliances with other com-
panies represents primarily an opportunity for increased profits
and greater market share over a limited period of time. Learning
companies, however, see a much greater long-term benefit of
partnerships—the opportunity to acquire valuable learning. To
maximize their learning, they
• Make up-front assessments of the alliance’s learning poten-
tial, which might include such considerations as specific
kinds of knowledge to be gained, core skills that could be
built during the process, and the best approaches to devel-
oping these skills
• Build learning objectives into the agreement, and specify
responsibilities for learning
• Involve human resources staff in facilitating learning
• Arrange for exchanges of personnel who can bring back
learning
9. Build Long-Term Learning Partnerships

with Suppliers and Vendors
Members of a company’s business chain represent resources
for new ideas, information, and programs as well as opportunities
to explore programs or services that the company itself cannot try
out, due to financial, political, or human resources reasons.
Purchasing educational resources, contracting expertise, and
renting facilities can often be not only feasible but much more
cost-effective when undertaken with partners. Reflecting with
partners on experiences and possibilities can also add to overall
learning.
10. Provide Educational Opportunities for the Community

There are a variety of ways in which companies can provide
learning opportunities for the communities in which they operate.
Learning organizations can include local teachers and community
workers in in-house management and technical courses. The
diversity of perspectives will enrich the discussion. They can invite

membership from outside the organization into action learning
groups (described in chapter 3). They can jointly sponsor learning
events with other corporations, academic institutions, and gov-
ernment agencies. They can also identify community learning
needs that can be provided by corporate staff. Community service
opportunities can be highly motivating and can give workers a
greater sense of purpose.
Providing learning opportunities for the community benefits
both the company and the community. The organization’s image
is enhanced and appreciated. There is greater interest in working
for or buying from the company. The quality of life in the com-
munity may be enhanced. Resources can be shared rather than
hoarded or unnecessarily consumed. As a result, learning becomes a
community-wide as well as a company-wide endeavor.
C H A P T E R 6
Knowledge Management in
Learning Organizations
THOMAS STEWART, IN Intellectual Capital: The New Wealth of

Organizations (1997, p. ix), writes, “Simply put, knowledge has
become more important for organizations than financial resources,
market position, technology, or any other company asset.” In today’s
world of work, knowledge is seen as the primary resource for per-
forming work in an organization. The organization’s traditions, cul-
ture, technology, operations, systems, and procedures are all based
on knowledge and expertise.
Companies need knowledge in order to increase their ability to
improve products and services, thereby benefiting clients and con-
sumers. Improved products and services must be accompanied by
changes to systems, structures, and ways of communicating solutions
to problems (Davenport and Prusak, 1998). Knowledge is the food
of the learning organization; its nutrients enable the organization to
grow. Individuals may come and go, but if valued knowledge is lost,
the company will starve to death.
139
An organization’s use of technology to manage knowledge has

quickly emerged as the most important discriminator between suc-
cess and failure in the intensely competitive global economy. Nonaka
and Takeuchi (1995) proclaim that a company’s ability to create,
store, and disseminate knowledge is absolutely crucial for staying
ahead of the competition in areas of quality, speed, innovation, and
price. Only by developing and implementing systems and mecha-
nisms to assemble, package, promote, and distribute the fruits of its
thinking will a company be able to transform knowledge into cor-
porate power.
Yet, most companies are incompetent at managing knowledge. It
is totally uncharted territory. Managing know-how may be different
from managing cash or buildings, but “managing the intellectual
investments of a company needs to be treated every bit as painstak-
ingly” (Stewart, 1997). Acquiring the ability to manage knowledge
should become the primary job of every worker.
Organizations must learn how to manage the mechanics of
knowledge, just as they learned how to manage the mechanics of
production in the industrial era. In the next chapter, we will discuss
steps and strategies for managing knowledge that are only possible
through the adroit use of technology. To better understand and apply
these steps, however, we first need to look at different ways of defin-
ing knowledge.
Hierarchy of Knowledge
Unless and until a company determines its own definition of knowl-

edge and identifies the kind of knowledge that is organizationally
important, it will not be able to manage its corporate knowledge.
Obviously, not all knowledge is of equal value. Figure 15 presents a
hierarchy or continuum of knowledge. At the upper levels of the
hierarchy, there is an increase in breadth, depth, meaning, conceptu-
alization, and value. Let’s briefly examine each level, beginning at
the bottom.
Data include texts, facts, interpreted images, and uninterpreted
numeric codes without context and therefore without meaning.
Information is data imbued with context and meaning, whose
form and content can be applied to a particular task after being for-
malized, classified, processed, and formatted.
Knowledge Management in Learning Organizations 141
Capability
Expertise
Knowledge
Information
Data
Source: Liebowitz and Beckman, 1997.
Figure 15 Hierarchy of Knowledge
Knowledge comprises bodies of information, principles, and

experience that actively guide task execution and management, deci-
sion making, and problem solving. Knowledge enables people to
assign meaning to data and thereby generate information. With
knowledge, people can deal intelligently with available information
sources and then take action.
Expertise is the appropriate and effective application of knowl-
edge in order to achieve results and improve performance.
Capability encompasses the organizational capacity and exper-
tise to create a product, service, or process at a high level of per-
formance. It requires the integration, coordination, and cooperation
of many individuals and teams. Capability is more than just current
performance; it is the ability to learn, innovate, and create.
Types of Knowledge
Knowledge can also be classified by type:

• “Know what”: Knowing which information is needed
• “Know how”: Knowing how information must be processed
• “Know why”: Knowing why certain information is needed
• “Know where”: Knowing where to find certain specific infor-

mation
• “Know when”: Knowing when certain information is needed
Wiig (1997) further distinguishes knowledge as

• Goal-setting or idealistic: Vision, “care why” knowledge, or
self-motivated creativity
• Systematic: “Know why” knowledge for acquiring systems
understanding
• Pragmatic: “Know how” knowledge for acquiring advanced
skills
• Automatic or tacit: “Know what” knowledge for routine
working
While developing the organization’s knowledge-based system or
corporate memory, it is important to recognize different kinds and
values of knowledge. Companies that are prepared with such an un-
derstanding will be able to effectively address the needs of their
organizations.
A Systems Model for Managing Knowledge
Let us now look at a comprehensive systems approach to managing

corporate knowledge. The knowledge subsystem involves six stages,
which cover the transition of knowledge from source to use:
• Acquisition
• Creation
• Storage
• Analysis and data mining
• Transfer and dissemination
• Application and validation
The knowledge subsystem is illustrated in Figure 16.
Organizations learn efficiently and effectively when these six
processes are ongoing and interactive. They are not sequential or
independent: Information should be distributed through multiple
Acquisition Creation
Application
and Knowledge Storage
Validation
Transfer Analysis
and and
Dissemination Data Mining
Figure 16 Knowledge Subsystem
channels, each with often differing time frames. The management of

knowledge must be subjected continually to perceptual filters as well
as both proactive and reactive activities. Managing knowledge is at
the heart of building a learning organization. Successful learning
organizations systematically and technologically guide knowledge
through each and all of these six stages.
Knowledge Acquisition
People increasingly need an overwhelming volume and variety of

knowledge from all over the world in order to adequately perform
their work. Organizations build their knowledge bases by collecting
information from many internal and external sources.
Internal Collection of Knowledge

One major complaint of workers is that their organizations do not
tap a significant portion of their knowledge. Companies are often
startled to discover the amount of intellectual capital present in the
brains of their own employees, what Nonaka (1995) calls “tacit
knowledge.”
Sources of tacit knowledge include an individual’s expertise,

memories, beliefs, and assumptions, all of which may be valuable to
the organization. This kind of knowledge is usually difficult to com-
municate or explain but can result in tremendous benefits to
companies. Alcoa, Matsushita, and McKinsey & Company have
demonstrated remarkable capability and creativity in collecting the
knowledge of their workers.
Organizations may also adopt either an active or a passive mode
of scanning their internal environments. On the one hand, they may
allow information to percolate up or trickle down through the
organization; on the other, they may actively scan their own internal
environments for information, reflect on it, and convert it into
usable knowledge. An excellent example of the latter approach is
3M Corporation, which has developed its ability to ascertain infor-
mation from bench scientists within the organization. Through flex-
ible structuring and reinforcement of the value of sharing work data,
the company has benefited from a wealth of information, which in
turn has been converted into innovative knowledge and marketable
products.
The ability to learn from activities in other parts of an organiza-
tion can become a principal source of added value for corporations.
Organizations may acquire knowledge internally by tapping into the
knowledge of their staffs, learning from shared experience, and
implementing continuous change processes.
External Collection of Knowledge

The pace of change is so rapid today that no single organization can
ever control all effective operating practices and good ideas. Being a
marketplace leader requires an organization to look outward for
constant improvement and new ideas. The old school of thought,
which held “if it isn’t invented here, it can’t be any good,” is a curse
in today’s high-velocity markets. Organizations don’t need to rein-
vent what others have done: Today’s rallying cry is “acquire, adapt,
and advance.” Companies can capture external information using
some of the following methods:
• Benchmarking other organizations
• Attending conferences
• Hiring consultants
• Reading newspapers, journals, and on-line materials
• Viewing television, video, and film
• Monitoring economic, social, and technological trends
• Collecting data from customers, competitors, suppliers, and
other resources
• Hiring new staff
• Collaborating with other organizations, building alliances, and
forming joint ventures
One of the most popular and valuable external sources of knowl-
edge is benchmarking. Let’s examine this widespread approach in
more detail.
Benchmarking Companies generally assign benchmarking teams to
look far and wide for better operating practices. Benchmark teams
sound the alarm at the first sign that an organization has fallen
behind the competition or failed to take advantage of important
operating improvements developed elsewhere. The search for best
practices quickly draws a firm outside the confines of its own culture
and personal habits.
Best-practices benchmarking provides an organization with the
rationale and process for accepting change as constant, inevitable,
and beneficial. Organizations that engage in ongoing adaptation
of best practices are often able to avoid being ambushed by unex-
pected change. They speed up their rates of improvement by sys-
tematically studying others and comparing their own internal oper-
ations and performance with the best practices of highly innovative
and successful companies. This kind of benchmarking is strategi-
cally oriented and represents a pragmatic approach to change man-
agement and performance improvement. Other kinds of bench-
marking may be process oriented—focused on discrete processes and
work systems—or performance oriented—focused on assessment of
their competitive position through product and service comparisons.
Tomorrow’s best practices will inevitably evolve beyond or
diverge from those of today. By their nature, best practices are dy-
namic and progressive. For this reason, best-practices bench-
marking is often called an evergreen process because it renews the
organization each time it is repeated. As an ongoing business

process, it integrates fully with continuous improvement in the
organization.
Benchmarking benefits organizations in
• Setting and refining strategy
• Continuously improving work processes and business systems
• Setting goals
• Solving problems
• Education and idea enrichment
• Comparing and evaluating market performance
• Acting as a catalyst for change
Many of the learning companies mentioned in this book—such
as Whirlpool, Caterpillar, National Semiconductor, and Andersen
Financial—consider benchmarking one of their most effective tools
for acquiring high-quality and highly relevant knowledge.
There are two important points to keep in mind relative to
knowledge acquisition. First, information, whether acquired from an
internal or external source, is subject to the perceptual filters of cor-
porate norms, values, and procedures. These filters influence the
organization’s decisions on the relevance and usefulness of collected
information. Second, acquiring knowledge is not always intentional;
much of it is accidental or a by-product of organizational actions.
Learning organizations tend to be intentional about acquiring
knowledge.
Gathering Knowledge at
PricewaterhouseCoopers
In 1998, Price Waterhouse and Coopers & Lybrand merged to form
PricewaterhouseCoopers (PWC), the world’s largest professional-services
organization, with more than 140,000 representatives in 152 countries. PWC
estimates that up to 99 percent of its revenue is generated from knowledge-
based professional services and products. Its employees spend up to 80
hours a year “creating and sharing knowledge” (American Productivity and
Quality Center, 1998, p. 99).
Why is knowledge management so critical to PWC? Among many signif-
icant reasons, the company’s geographic dispersion and global clientele
require timely coordination and information sharing among the different sub-
sidiaries. Employees must be familiar with previous projects and work
conducted in other areas of the organization. Similarly, rapidly changing infor-
mation on topics such as tax polices, legislation, banking, and financial
requirements must be quickly captured and disseminated to appropriate sec-
tors. Another driving force is an employee turnover rate of 15 to 25 percent
per year, which means PWC requires systems for storing knowledge instead
of letting it walk out the door. Knowledge management also enables PWC to
discover and constantly share best practices throughout the firm. A tendency
toward silos of knowledge activity would create inefficiencies and duplication.
KnowledgeView, PWC’s proprietary best-practices repository of informa-
tion, contains over 4,500 entries gathered from more than 2,200 companies
worldwide, with references to more than 350 internal and external bench-
marking studies. KnowledgeView’s goal is to “support the firm’s core compe-
tency of being business advisors: including the accumulation, analysis, cre-
ation, and dissemination of value-added information and knowledge that PW
professionals can use to improve business performance of clients, and ulti-
mately increase the value of PWC’s services” (American Productivity and
Quality Center, 1998, p. 101).
KnowledgeView is Lotus-Notes based rather than CD-ROM based, which
permits daily information updates as well as the capacity to access and share
knowledge instantaneously worldwide. The databases in KnowledgeView in-
corporate the following information:
• Best practices as identified in PWC and non-PWC programs
• Benchmarking studies from internal and external sources
• Expert opinions synthesized from both the industry and process subject
matter
• Abstracts of books and articles on business improvement
• PWC database of staff biographies with résumés, arranged by country,
industry, skills, language, etc.
• Views and forecasts from PWC experts
KnowledgeView is classified by industry, process, enabler, topic, and
measurement so that PWC consultants can target and find the knowledge
they are seeking. The format used for containing the information is an impor-
tant feature of KnowledgeView. For example, in the best-practices database,
the format is set up to answer the following questions:
• What caused the change?
• What old process needed improvement?
• What is the new process?
• What is the new performance and how is measured?
• What lessons were learned?
• What are the future directions?
KnowledgeView is maintained and updated at four knowledge centers

located in Dallas, London, Sao Paulo, and Sydney. Offering local staff imme-
diate access, these regional centers help stimulate knowledge sharing. In
1996, PWC received the Best Practices Award from PC Week magazine for its
KnowledgeView technology.
Knowledge Creation
Knowledge can be created through a number of processes ranging

from daring innovation to painstaking and diligent research. It can
also arise from the “uncanny ability people have to see new connec-
tions and combine previously known knowledge elements through
complex inductive reasoning” (Wiig, 1997). The kind of knowledge
discovered through problem-solving, experimental, and demonstra-
tion projects might be most valuable for organizations.
Whereas knowledge acquisition is generally adaptive, knowledge
creation is generative. This kind of knowledge is imperative for
learning organizations, according to Peter Senge (1990a). Creating
new knowledge involves not only group-developed external infor-
mation but tacit and highly subjective individual insights and intu-
itions as well. It is about using ideals as well as ideas to fuel innova-
tion. Creating new knowledge is traditionally thought to be the
province of the research and development department, but the task
truly belongs to every unit and person in the organization.
For example, at National Semiconductor, management knows
that it must shape and move knowledge throughout the organization
if it is to be a leader in shaping and moving technologies. The com-
pany has initiated ongoing efforts to identify best practices and new
concepts from all over the world, which are then systematically dis-
seminated organization wide. National uses the following keys to
encourage innovation:
• A corporate culture that emphasizes diversity in ideas, skills,
and people and that makes innovation a top corporate goal
• Open attitudes that tolerate risks and convert failure to a
learning opportunity—in other words: projects fail, people
don’t
• A clear, funded, and supported innovation process
• Corporate labs where development of patents and other intel-

lectual property is highly valued
• Project champions who work with small, dedicated, multi-
functional teams
• A workplace that stimulates new ideas and does not minimize
any contribution
• Innovation measurement performed at all levels and consid-
ered important to corporate success
• Reward systems that provide clear-cut, significant, and timely
benefits—such as money, position, or control—for innovators
Four Patterns of Knowledge Creation

Ikujiro Nonaka (1995), professor of management at Hitotsubashi
University in Tokyo, writes that “successful companies are those that
consistently create new knowledge, disseminate it widely throughout
the organization, and quickly embody it in new technologies and
products.” He goes on to state that knowledge creation should be at
“the epicenter of a company’s corporate strategy” (p. 96).
Nonaka has identified four patterns of interaction between tacit
knowledge and explicit knowledge in building or augmenting orga-
nizational knowledge. Tacit knowledge is the knowledge we hold
inside and may have difficulty expressing. Explicit knowledge is for-
mal, systematic, easily shared knowledge, such as product specifica-
tions, scientific formulas, and computer programs.
Tacit to tacit: This form of knowledge growth occurs when an
individual passes on knowledge to another individual, as in a master-
apprentice relationship. By working closely with the master, the
apprentice absorbs the master’s tacit knowledge. This is a limited
form of knowledge creation because the knowledge of both people
is never made explicit and cannot be leveraged by the organization
as a whole.
Explicit to explicit: This kind of knowledge comes from com-
bining and synthesizing existing explicit knowledge, as when the
company controller gathers and synthesizes company information.
This pattern represents a limited form of creating new knowledge
because it uses learning that already exists.
Tacit to explicit: This pattern of knowledge creation occurs

when an individual takes existing knowledge, adds his or her tacit
knowledge, and creates something new that can be shared through-
out the organization, as when the company controller comes up with
a new system of budget control.
Explicit to tacit: This form of knowledge creation takes place
when new explicit knowledge is internalized by the members of the
organization to create new tacit knowledge, as when the controller’s
new budgeting process becomes the company’s standard way of
doing business.
In the knowledge-creating company, all four patterns exist and
work dynamically together in a kind of knowledge spiral. These pat-
terns become a powerful force for creating new knowledge as the
various interactions generate much personal commitment and energy.
Knowledge-Creating Activities
An organization may engage in a number of activities to promote
knowledge creation.
Action Learning This approach to knowledge creation, which is dis-
cussed in more detail in chapter 3, involves working on real prob-
lems, focusing on the learning acquired, and then implementing
solutions. The equation for action learning is Learning =
Programmed Knowledge (knowledge in current use) + Questioning
(fresh insights into what is not yet known). Action learning builds on
the experience and knowledge of an individual or group by adding
skilled, reflective questioning that results in new knowledge.
Systematic Problem Solving Although most problem-solving pro-
grams and tools are relatively straightforward and easily communi-
cated, the “necessary mind-set,” according to Garvin (1993), is “more
difficult to establish. . . . Employees must become more disciplined in
their thinking and more attentive to details.” They must continually
press for accuracy and “push beyond obvious symptoms to assess
underlying causes, often collecting evidence when conventional wis-
dom says it is unnecessary” (pp. 81–82).
Xerox is a learning company that has mastered this approach to
advancing its knowledge base. All employees have been trained in
problem-solving techniques and using appropriate tools in four
areas: generating ideas and collecting information, reaching consen-

sus, analyzing and displaying data, and planning actions.
Experimentation This form of knowledge creation differs from action

learning and systematic problem solving because it is motivated not
by current situations or difficulties but by opportunity and expand-
ing horizons. Examples of experimentation include the development
of original innovations through research and development, pilot
projects, and automomous, on-the-side research efforts (i.e., “skunk
works”). Experimentation may take the form of ongoing programs
or one-of-a-kind demonstration projects.
Ongoing programs involve a continuing series of small experi-
ments that are designed to produce incremental gains in knowledge.
This form of knowledge creation is the mainstay of many programs
for continuous improvement and total quality and are usually found
on the shop floor. Learning organizations such as Corning and
Chaparral Steel have successfully created new technologies through
this technique.
Demonstration projects are usually larger and more complex;
they generally require holistic, systemwide changes undertaken with
the goal of developing new organizational capacities. Garvin (1993)
notes that demonstration projects share a number of distinctive char-
acteristics:
• Systematic principles and approaches that will be adopted later

on a larger scale
• Learning by doing and making midcourse corrections
• Severe tests of commitment for employees who may be won-
dering if rules and operations have, in fact, changed
• Development by multifunctional, multilevel teams
• Explicit strategies for transferring learning required to produce
significant effects (p. 83)
Learning from Past Experiences Learning companies create knowledge

by reviewing their successes and failures, subjecting them to system-
atic assessment, and transferring and recording what is learned in a
way that will be of maximum benefit to the organization.
According to Garvin (1993), research on the development of

new products shows that the knowledge gained from failure was
often “instrumental for organizations in achieving subsequent suc-
cess. . . . In the simplest terms, failure is the ultimate teacher” (p. 89).
Boeing is one learning company that expects its managers to sys-
tematically think about the past and learn from successes and mis-
takes. The company’s 737 and 747 planes were introduced with seri-
ous problems. To ensure that those problems would not be repeated
for the upcoming 757 and 767 planes, Boeing commissioned a high-
level employee group, called Project Homework, to examine the
development processes of the 737 and 747—as well as the 707 and
727, two of the company’s most successful planes. After 3 years, the
group identified hundreds of improvements that were then transferred
to the 757 and 767 start-ups. Guided by the review, Boeing was able
to produce the most successful, error-free launches in its history.
While some companies build much of their success on acquiring
knowledge from others and improving on it, other companies focus
almost entirely on creating new knowledge. These organizations—
such as Merck, Rubbermaid, 3M, and Wal-Mart—find success by
being innovators rather than imitators.
Matsushita Electric Industrial Company

Matsushita Electric Industrial is the world’s largest consumer electronics
maker, selling audiovisual and computer products, home appliances, house-
hold equipment, electric motors, and air conditioners in more than 180 coun-
tries. The Matsushita group includes more than 200 overseas affiliates in
about 45 countries and more than 200,000 employees.
Matsushita decided to become “a possibility-searching company” with
goals in the following four areas:
• Human innovation: Business that inspires new lifestyles based on cre-
ativity, comfort, and joy in addition to efficiency and convenience
• Humanware: Technology for human innovation businesses
• Active heterogeneous group: A corporate culture based on individual-
ity and diversity
• Multilocal and global networking management: A corporate struc-
ture that enables both localization and global synergy
Nonaka and Takeuchi (1995) describe how Matsushita took the knowl-
edge it created in various projects and spiraled the information throughout the
company. Learning that took place in the Cooking Appliances Division even-
tually affected corporate strategy. Matsushita was thus better able to identify
the type of knowledge required in the changing competitive environment and
could continuously enhance the enabling conditions.
Leveraging the tacit knowledge base of an individual and making use of
socialization to transfer it throughout the organization is a highly valuable
activity. For example, a head baker’s kneading skill led to the development of
Matsushita’s bread-making machine. By its very nature, tacit knowledge is
hard to communicate but is nonetheless critical. Socialization is an important
means of sharing tacit knowledge between individuals. Tacit skills are learned
by observation and imitation, and engineers had to experience the actual
bread-making process to learn kneading skill. Nonaka and Takeuchi (1995)
postulated that the company’s success points out four key aspects of knowl-
edge creation.
First, amplifying knowledge creation across different levels in the organi-
zation led to the creation of Human Electronics and a series of successful
products embodying that concept. Only by cross leveling can companies
obtain the true benefits of organizational knowledge creation. The knowledge
created in developing the Home Bakery unit spiraled beyond the unit to cre-
ate new knowledge at the corporate level.
Second, enhancing enabling conditions promotes the four patterns of
knowledge conversion. Matsushita increased redundancy and variety by pro-
viding research and development with up-to-date sales information, bringing
autonomy to the divisions by restructuring the organization, and instilling
intentions and creative chaos by setting challenging goals such as shifting to
multimedia or improving productivity by 30%. Redundancy helped team
members by providing a common language with which to share their tacit
knowledge.
Third, continuously creating knowledge requires uninterrupted innovation.
Because the competitive environment and customer preferences are always
changing, existing knowledge quickly becomes obsolete. Constant upgrading
of organizational intentions or values is important because new knowledge
must be measured constantly against the company’s latest intention.
Fourth, Matsushita recognized the value of self-organizing teams to the
organizational learning process. Knowledge creation begins when members
of each team share tacit knowledge on the types of work the employees at
Matsushita should and should not do to fully utilize their creativity. The teams
also analyzed existing work patterns and uncovered causes of inefficiencies.
Matsushita realized that teams must be given full autonomy to develop ideas
for improvement.
Knowledge Storage
Before organizations begin to store knowledge for later retrieval,

they must identify important information and determine the best
method for retaining it. Organizations give meaning to data through
reflection, research, and experimentation. Knowledge storage uti-
lizes technical systems, such as records and databases, and human
processes, such as collective and individual memory and consensus.
A knowledge storage system should have
• A structure that permits the system to find and deliver infor-
mation quickly and correctly
• Categories such as facts, policies, or procedures divided on a
learning-needs basis
• Ability to deliver requested information in a clear and concise
form
• Content that is accurate, timely, and consistently available
Knowledge storage systems are not new. In fact, the concept first
emerged in the 1980s. The thought was that after data were in place
and cataloged, managers could help themselves to whatever slice of
the data pie they needed at that moment. The idea sounded good. In
practice, however, the size and complexity of the resulting data
warehouse meant that maintenance costs were too high for everyone
except a few banks and airlines.
Within the past few years, the concept of data warehousing has
reappeared, and it is now traveling quickly around the world. Why?
The answer has to do with competition as well as dramatic reduc-
tions in cost and increases in the power of today’s computers. Thus,
comprehensive repositories—online, computer-based storehouses of
expertise, information, experience, and documentation in which
knowledge is collected, summarized, and integrated across all
sources—are emerging in organizations around the world. Cheaper
UNIX systems are replacing the expensive proprietary mainframes
of first-generation data warehouses. Web technologies such as
ActiveX, CGI, Java, and JavaScript as well as GB Oracle databases
have also emerged.
With a knowledge storage system, an organization is capable of
retaining knowledge; it becomes company property. It doesn’t go
home at night or become lost to the company when an employee

leaves. Unfortunately, knowledge (also referred to as intellectual
capital), although far more important than physical material, may be
scattered, hard to find, and liable to disappear without a trace
because it is not stored. Storage is obviously important, but what
kinds of knowledge should be stored?
Which Knowledge to Store

Stewart (1997) has proposed five general categories for knowledge
storage.
• Corporate yellow pages: Capabilities of employees, consul-
tants, and advisers to the organization—who speaks Thai, who
knows JavaScript, who has worked with certain clients.
• Lessons learned: Checklists of successes, mistakes, or failures
that might be applied to other projects.
• Competitor and supplier intelligence: Continuously updated
company profiles and news from commercial and public
sources and wire services, call reports from salespeople, atten-
dees’ notes from conferences and conventions, an in-house
directory of experts, and news about regulations.
• Company experiences and policies: Process maps and work-
flows, plans, procedures, principles and guidelines, standards,
policies, performance measures, stakeholder and customer
profiles, products and services (including features, functional-
ity, pricing, sales, and repair).
• Company products and processes: Technologies, inventions,
data, publications and processes, strategies and cultures, struc-
tures and systems, effective organizational routines and
procedures.
How to Store Knowledge

Knowledge is nothing more than unusable data unless it is coded and
stored in a way that makes sense to individuals and their organiza-
tions. Many companies are overwhelmed, inundated with the
vast amounts of data that clutter up the information highway.
Irretrievable, distorted, fragmented, or inaccurate information will
not produce learning. To determine what data can be used, organi-

zations must determine what is of value and then code the data based
on learning needs and organizational operations. In addition, com-
panies must establish well-defined criteria for identifying new
knowledge, develop plans for formulating knowledge, and select
efficient storage locations.
Store acquired learning by methods that enable workers to
• Decide which coworkers might have the knowledge needed
for a particular activity
• Decide which coworkers would be interested in a lesson
learned
• Enter a lesson learned into the corporate memory
For example, Cigna Corporation, a leading insurance company,
knows that excellence comes from making knowledgeable choices.
Cigna realizes that significant latent knowledge and expertise exist
throughout the organization but, until recently, did not have a good
means of extracting and publishing this know-how. The company
assigned home-office managers the job of building and maintaining
a knowledge base—basically a collection of checklists, rules of
thumb, formal guidelines for risk assessment, and names of experts.
The collected knowledge was installed in the software used by
underwriters to process applications. Now, if a nursing home in
California wants insurance, the custom-built software tells the agent
the location of the nearest geological fault line along with estimates
of its threat level provided by the company’s experts. When new
information comes in, if it is sound, the managers evaluate it and
promptly add it to the database.
Challenges in Storing Knowledge

It is important to repeat that knowledge storage involves both tech-
nical and human processes. As organizations become physically and
geographically diffused as well as more specialized and decentral-
ized, their storage systems and memory may become fragmented,
and the corporate benefits of the knowledge may be lost. And as
work becomes more computer oriented, information from different
occupational specializations is potentially available across functional
boundaries. Networked information technology must be utilized so

that fragmented information can be reinterpreted and readily
exchanged internally and externally.
Given the fact that new technology is able to store and provide
more information, consideration must be given to the potential of
data deluge or information overload. The amount of information
stored should not exceed the company’s human capacity to process it.
Analysis and Data Mining
Over the past 30 years, organizations have become skilled at captur-

ing and storing large amounts of operational data. Until recently,
however, we have not seen corresponding advances in techniques for
analyzing this data, to reconstruct, validate, and inventory this criti-
cal resource. Manual analyses with report and query tools are still
the norm, but this approach fails with increased data volume and
dimensionality. New approaches and tools are therefore needed to
analyze large databases and interpret their contents.
Data mining is the latest analytical tool to enable organizations
to find meaning in their data. By discovering new patterns or fitting
models to data, employees can store and later extract information to
aid in developing strategies and answering complex business ques-
tions. Software is being developed that can analyze huge volumes of
data and identify hidden patterns. Whereas OLAP (on-line analytical
process) can answer the questions managers ask, data mining soft-
ware answers the questions managers haven’t even thought of yet.
There are several data mining tasks, such as classification, regres-
sion, clustering, summarization, dependency modeling, and change
and deviation detection. Data mining methods include example-
based methods, decision trees and rules, nonlinear regression and
classification, probabilistic graphical dependency models, relational
learning, and intelligent agents.
Data Mining Tools

A number of data mining tools are being developed for navigating
data, discovering patterns and creating new strategies, and identify-
ing underlying statistical and quantitative methods of visualization.
Platforms to support these tools, techniques for preparing the data,

and methods for quantifying the results are also emerging. For exam-
ple, visualization products include AVS/Express, SGI MineSet, and
Visible Decisions Discovery. DataMind and IBM’s Intelligent Miner
are extremely helpful for integrating data mining products. Data
mining is being utilized by a growing array of organizations.
Retailers: The universal adoption of EPOS and the spread of loy-
alty cards are fueling rapid need for knowledge analysis. Key bene-
fits are the abilities to understand customers’ buying behavior and
rapidly identify unprofitable lines. W. H. Smith is reported to have
weeded out 20,000 of its least profitable products as a result of
knowledge analysis, and the biggest U.S. retailer, Wal-Mart, is invest-
ing in the world’s biggest data warehouse to handle data on cus-
tomer buying patterns from its 2,900 stores.
Financial services organizations: These institutions have long
seen the potential of knowledge analysis to obtain an integrated view
of their customers. High-payoff areas include targeted database
marketing-and-risk analysis. Capital One Financial Corporation has
virtually revolutionized the credit card business by using data mining
to do highly sophisticated customer profiling and targeting. As a
result, it has been able to develop a portfolio of literally hundreds of
segmented credit card products.
Manufacturers: Some of the latest data mining techniques are
being used by manufacturers. Downtime—for instance, when a
paper roll breaks in a paper mill—is expensive, but by analyzing the
data from previous stoppages, companies have been able to predict
the combinations of circumstances that are likely to result in down-
time. Organizations then match this knowledge with current opera-
tional conditions and act to avoid potential breakdowns, which rep-
resents prevention rather than a cure.
Telecom companies: These firms generate huge volumes of cus-
tomer and operations data. Telecom operators analyze call data in
ever more sophisticated ways for the purposes of determining com-
petitive pricing, developing new price tariffs, and designing highly
segmented marketing campaigns. Knowledge analysis technologies
have also been applied to improving network utilization; for exam-
ple, a company can analyze the amount of uncompleted calls to spe-
cific customers that may result from an insufficient number of lines.
The Holistic Approach at AMS

Headquartered in Fairfax, Virginia, AMS is an international business and
information technology consulting firm that employs more than 8,500 people
worldwide. AMS prides itself on being a leader in applying the power of in-
formation technology and takes a holistic approach to linking people, pro-
cesses, projects, and functions to achieve breakthrough performance for each
client.
AMS and a banking client in the United Kingdom sought to analyze more
than 267,000 records from 132,000 customers to find correlations among cus-
tomer behavior, demographics, and profitability. AMS used sophisticated sta-
tistical and visualization techniques to look at these large volumes of data
across 152 business dimensions. These include scatter-plot matrices and par-
allel coordinate plots employed in conjunction with brushing, cutting, and
high-dimension rotation.
Applying these techniques provided analysts with new perspectives on
their data. They rotated and twisted a multidimensional image to search for
relationships among groups of data and discover new patterns or trends. In
this case, AMS was able to find correlations between channel usage (checks,
branch visits, ATM sites), age, and occupation to help the bank zero in on
the most profitable segments of bank customers. High-payoff uses include
credit card scoring, risk analysis, product profitability analysis, retail site plan-
ning, and manufacturing.
AMS Center for Advanced Technologies

AMS attributes a major part of its success to the AMS Center for
Advanced Technologies (AMSCAT), which includes a network of more than
600 technologists who continuously create and share information and exper-
tise. Let’s look at how the center assists in managing knowledge for AMS and
its clients.
AMSCAT describes its mission as “putting innovative technologies to
practical use in client environments.” A number of collaborative research pro-
grams are ongoing throughout AMS, seeking to increase the breadth and
depth of research across all industry practices, research technologies of
mutual interest, and broadly share that knowledge. Sharing knowledge is
done by such means as publications, databases, and seminars. Over the past
several years, the center has developed and shared a number of knowledge
management technologies with its worldwide clients.
Web Technologies
A key question of many AMS clients is “How do I evolve an information-
system infrastructure to leverage Internet technologies?” AMS is exploring rel-
evant issues, including the following areas:
• The architectural complexity of connecting customers, customer ser-

vice personnel, and legacy and external systems through the Web,
which involves the study of underlying technical issues concerning the
Internet, intranets, protocols, and architectures
• Security and technologies such as cryptographic techniques that will
make electronic commerce possible over the Internet
• Exploration of the strengths and weaknesses of Web development envi-
ronments such as ActiveX, CGI, Java, JavaScript, and plug-ins
AMSCAT recently applied this technology at a British bank, where cus-
tomers can apply for mortgages over the Web and receive responses within
minutes. This demonstrates that a business can reach out to a large base of
potential customers and forge close, service-oriented relationships with them.
The bank is also able to leverage the data in its back-end systems via Web-
based applications and not only provides on-line decision-making services
but tailors cross-selling strategies for related products to specific customers
based on profiles and historical data from other commercial activities.
Data Mining
Over the past 30 years, organizations have become skilled at capturing
and storing large amounts of operational data. Unfortunately, we have not
seen corresponding advances in techniques for analyzing this data. Until
recently, manual analysis with report and query tools was the norm, but this
approach is inadequate when the volume and dimensionality of data in-
creases. New approaches and tools are needed to analyze large databases
and mine their contents. Data mining enables organizations to find meaning in
often overwhelming and confusing data. By discovering new patterns in or fit-
ting models to the data, professionals can extract information needed to
develop strategies and answer complex business questions.
AMS has taken a leadership role in the field of data mining, which involves
navigating data, discovering patterns and creating new strategies, using un-
derlying statistical and quantitative methods of visualization, employing plat-
forms to support the tools, identifying techniques to prepare the data, and
quantifying the results.
Visualization tools used by AMS include AVS/Express, SGI MineSet, and
Visible Decisions Discovery. Data mining products are integrated through
tools such as DataMind, IBM’s Intelligent Miner, and research technologies
such as neural networks, decision trees, clustering, association, and rule
induction.
Team-Learning Technologies
In today’s global workplace, companies rely increasingly on project teams
whose members are dispersed worldwide. Technology, especially communi-
cations networks, extends the enterprise beyond its traditional walls and
enables these organizations to share information, resources, and knowledge.
Working and learning together require effective use of collaborative technolo-

gies. AMS has employed intranet groupware such as Netscape Collabra and
Lotus Domino as well as desktop conferencing products like White Pine’s CU-
SeeMe and Intel’s ProShare.
Electric Commerce
Organizations look to leverage the opportunities of electronic commerce
using sources such as e-mail and on-line catalogs. Businesses that provide
multiple channels are likely to be more successful because they offer cus-
tomers the following advantages:
• Choice: Ways to interact with the organization
• Convenience: The most appropriate channel at any given time and
place
• Customization: Goods and services tailored to individuals through
such technologies as interactive voice response (IVR) menus that put a
customer’s usual choice first, or Web pages that adapt to the cus-
tomer’s browser and line speed
In order to bridge separate systems via transactional processing middle-
ware, AMS uses Web/Java connectivity tools to relational and object data-
bases, Web/Java gateways to middleware (like MQSeries and Tuxedo) and
back-end systems, Java-to-Java communications via remote method invoca-
tion and object streaming, publish-and-subscribe middleware interfacing with
Java, Object, and Web technologies, and integration of Web and Object
Request Brokers (like VisiBroker), which determines the best products for
increasing the efficiency of data transfer, standardizing processing requests,
and integrating existing agency systems.
Database Management
AMS needs to store and manage large amounts of data, as do other com-
panies competing in the global marketplace. The company has examined the
impact of advances in databased technologies on both online transaction pro-
cessing and systems and data warehouses. In 1996, AMS began building a
large data warehouse in conjunction with its Federal Financial System. The ini-
tial implementation was a 20-GB Oracle database on the Pyramid platform.
Knowledge Transfer and Dissemination
Knowledge transfer and dissemination involves the organizational

and technological movement of information, data, and knowledge.
An organization’s capacity to move knowledge is also the capacity to
transfer and share power and is indispensable for corporate success;
knowledge must be disseminated accurately and quickly throughout

the organization or the company fails (O’Dell and Grayson, 1999).
Knowledge retrieval may be either controlled or automatic.
Controlled retrieval utilizes individual and group records and mem-
ories; automatic retrieval is triggered by various events or situations.
Weick (1993) warns that information retrieved from organizational
memory may bear little resemblance to the original material due to
the transformational nature of storage and retrieval processes, the
normal integration of human memory, the impact of perceptual fil-
ters, and the loss of supporting rationales. It is therefore mportant to
develop a corporate memory and design processes that ensure accu-
rate and timely knowledge retrieval.
Accessing required information just in time extends an individ-
ual’s long-term memory and reduces workload memory require-
ments. The corporate knowledge base consolidates information in a
central location, thus liberating a person’s working memory from
such menial data as resource location. This creates the right condi-
tions for rapid sharing of knowledge and sustained, collective knowl-
edge growth. Lead times between learning and knowledge applica-
tion are shortened throughout the organization. Human capital will
also become more productive through structured, easily accessible,
and intelligent work processes.
When structuring knowledge, it is important to consider how
and why the information will be retrieved by different groups of
people. Functional and effective knowledge storage systems are cat-
egorized with the following elements in mind:
• Learning needs
• Work objectives
• User expertise
• Function or use of information
• Location and method of information storage
Global Knowledge Networks at Skandia

Skandia is a global leader in insurance and investment products.
Headquartered in Stockholm, the organization maintains subsidiaries in more
than 25 countries. For many years, Skandia has tapped the expertise of its
many different companies. To stimulate networking and foster better sharing

of solutions among different business units, the Skandia Open Business
Exchange (OBX) was created in 2000. Jan Hoffmeister, head of OBX, states
that “the mission of OBX is twofold: (1) to be a catalyst and resource for
renewal and development of Skandia and (2) to support the use of our collec-
tive knowledge and creativity” (Ray, 2001, p. 9).
The goal of Global Knowledge Networks is to create a virtual and physi-
cal environment so that people working in the same field can get together and
exchange ideas across the organization. By sharing knowledge about what
they are doing and the challenges they face, employees leverage each local
unit’s investment in creating solutions for business challenges. So far, OBX
has acted as a catalyst for two Global Knowledge Networks: Customer
Service and Training and Development. The aim is to support the development
of the learning community through technology (videoconferencing, Web casts,
and intranets), templates and tools, and face-to-face interactions. Each area
of expertise is headed by a “champion” who serves as subject-matter expert
and works with OBX to create the kinds of events and technology that will
best serve the needs of that profession.
Intentional Transfer of Knowledge Within the Organization

Knowledge may be transferred intentionally by a variety of means.
Written methods include individual communications such as memos,
reports, and open-access bulletin boards as well as internal publica-
tions of all kinds, using video, audio, and print media. Internal con-
ferences, briefings, mentoring, and training with internal consultants
or perhaps in formal courses offer additional opportunities for ex-
changing information. Job rotation or transfers can be planned to
disperse knowledge to other areas of the organization, although large
corporations comprising many divisions may provide short-term tours
tailored for specific audiences and needs.
Unintentional Transfer of Knowledge Within the Organization

Organizations may also transfer knowledge unintentionally in a
number of ways. Routine job rotation, stories and myths, task forces,
and informal networks all send knowledge to different areas of the
organization. Much informal learning takes place as a function of
daily and often unplanned interactions among people. The less
intentionality or planning there is to the process, the more potential
knowledge is lost.
Knowledge Sharing Rallies

at National Semiconductor
National Semiconductor has created a culture in which each employee
“shares, learns from each other, recognizes, and creates a cycle of continu-
ous learning.” One powerful and vibrant technique (learned from the Milliken
Company) is the “sharing rally,” which is held at every site, with winning ideas
moving up to regional and, eventually, global levels. Sharing rallies are con-
ferences at which employees or teams are encouraged to share their improve-
ment programs, successful and unsuccessful risks, and quality enhancements
with fellow employees.
Here’s how a National Pursuit of Excellence Asia Pacific Regional Rally
Sharing was described in the company newsletter, International News,
March/April 1995:
From the welcoming drum beats and dancers to the emotional closing
ceremony, employees shared and, yes, stole ideas shamelessly at the
first National Pursuit of Excellence Asia Pacific regional sharing rally,
held in Cebu, Philippines, January 8–10. . . . Since July 1994, sharing
rallies have been held at every Asia Pacific site, involving 200 teams and
2,500 employees. In addition to the 12 National Semiconductor presen-
tations, a team from Texas Instrument, Philippines, presented details of
their training program for manufacturing specialists. (p. 19)
The team from Malacca, Malaysia, noted, “[We] realize that each of us
contributes to the success of our corporation.” Other participants com-
mented favorably on the enlightening nature of the experience and stated that
the enormous array of employee-generated learning helped make National an
exceptional work environment. (p. 23)
Barriers to Sharing and Transferring Knowledge

Insofar as releasing information releases power, the transfer of
knowledge is indispensable for learning organizations. Knowledge
should be disseminated appropriately and quickly. However, three
major conditions create bottlenecks in the timely and effective trans-
fer of knowledge:
• Critical business processes are available only to a few people
• Knowledge is not available at the appropriate place and/or
time
• Transfers and restructuring increase the difficulty of securing
knowledge
Several companies, however, have made great strides in develop-

ing their knowledge-sharing systems. Anderson Consulting, for
example, uses Knowledge Xchange, which allows more than 17,000
professionals located in 47 countries to utilize the system to access
knowledge bases and share knowledge. Chevron employs intranets,
groupware, data warehouses, networks, bulletin boards, and video-
conferencing to distribute stored knowledge. In addition, Chevron
utilizes knowledge bases, lists of experts, information maps, corpo-
rate yellow pages, custom desktop applications, and other systems.
GTE uses CYLINA (Cyberspaced Leveraged Intelligent Agent),
which acquires knowledge through interactions with large numbers
of users. The company supplements this approach with Auto-FAQ, a
system that helps users retrieve knowledge from CYLINA in
response to their questions.
Barriers to Retrieving and Transferring Knowledge

Four factors may limit the transfer of knowledge within organiza-
tions and thereby affect its availability, form, accuracy, and meaning:
cost, cognitive capacity of the recipient, message delay caused by pri-
oritized sending, and intentional or unintentional message modifica-
tion or distortion of meaning.
One learning company, Blanchard Training and Development
(BTD), has become a leader in knowledge transfer. Each year, the
company sponsors a conference for its international licensees. One
of the biggest payoffs has been the wealth of knowledge exchange
and sharing of techniques for enhancing the effectiveness of man-
agers. “It becomes truly a mind-expanding experience,” according to
Dale Truax, director of International Operations (Marquardt, 1996,
p. 139).
BTD also sponsors staff exchanges. Under this program, an em-
ployee from a licensee organization works for a 6-month period at
BTD. This fosters a better understanding of Blanchard’s approaches,
products, and personnel. Likewise, BTD places its employees at var-
ious internships with licensee organizations, where they can learn
more about those companies, their programs and products, and the
organizational and local cultures.
Other corporate examples of knowledge transfer include Digital
Equipment’s use of the company’s electronic bulletin board system
and Eastman Kodak’s regular interactive sessions at which more than

1,000 senior staff members share their knowledge about issues such
as transfer results and metrics.
Michele Darling (1996), executive vice president of human
resources at Canadian Imperial Bank of Commerce, notes that much
of the firm’s corporate knowledge is not collected: “It rests in peo-
ple’s heads. It is more than just facts; it includes experience and
instinct, management style, and the corporate culture. Organizing
it—mapping it, making it available to others, seeking ways of
increasing its usefulness—begins with lining up all the corporate sys-
tems against that goal, many of them logically rooted in human
resource management and development” (p. 62).
John Browne, CEO of BP, recognizes that knowledge may come
from many sources—experience, contractors, suppliers, customers,
and other industries—but the real value of information is realized
when it is leveraged “by replicating it throughout our company so
that each unit is not learning in isolation and reinventing the wheel
again and again” (Prokesch, 1997, p. 148).
Knowledge sharing and management has always been a major
part of the corporate learning culture at Arthur Andersen.
Previously, the company relied on individual and team knowledge
sharing via a network of strong personal relationships. With the
advent of technology, however, the firm extended its focus through
groupware technologies and the creation of knowledge-sharing
applications. In addition, Andersen created four interrelated teams
to disseminate and diffuse knowledge: the People Team, which con-
tinues to evolve the firm’s understanding of the competencies, roles,
rewards, measures, and learning needed to support knowledge shar-
ing; the Process Team, which concentrates on knowledge-sharing
processes and their integration into business processes, along with
the functional requirements and design of KnowledgeSpaceSM; the
Technology Team, whose mandate is to define the technical archi-
tecture to support Andersen’s knowledge-sharing needs; and the
Leadership Team, whose task is to implement the required struc-
tures, processes, and technology and to serve as role models.
Technological Modes of Transferring Knowledge

A comprehensive, wide-scale transfer of knowledge is accomplished
most efficiently through the intelligent use of technology, which
makes knowledge available anywhere, anytime, and in any form.

Information communications software—including e-mail, bulletin
boards, and conferencing—enables interactions in person and
among dispersed groups. It also provides an electronic learning envi-
ronment in which all members have equal access to data and are able
to communicate freely. (See chapter 7).
Search engines now allow for searches of all files located on a
LAN or WAN, using criteria found in many Web browsers. Current
groupware offers the incorporation of expert or decision-support
systems into a standard graphical user interface and enables individ-
uals to access imported knowledge as well as capture congenital and
experiential knowledge within the organization.
Knowledge Sharing at Hewlett-Packard

Headquartered in Palo Alto, California, Hewlett-Packard (HP) quickly
passed $50 billion in annual sales, employs more than 130,000 people world-
wide, and operates in over 120 countries. In 1998, Fortune magazine recog-
nized HP as America’s Most Admired Computers/Office Equipment Company.
Lew Platt, HP’s former chairman, president, and CEO, recently stated that
“successful companies of the 21st century will be those who do the best jobs
of capturing, storing, and leveraging what their employees know.”
In keeping with this philosophy, the firm’s consulting unit, HP Consulting,
has undertaken a knowledge management initiative, aimed at transforming
the decentralized knowledge of its consultants from a latent asset into a
resource available to everyone within the organization. Previously, knowledge
sharing at HP Consulting was informal and serendipitously based on per-
sonal networks or accidental encounters at meetings. But the unit recognized
that success was highly dependent on the ability to manage and leverage
organizational knowledge—and that this knowledge, appropriately leveraged,
was as valuable as financial assets.
In order to accomplish greater dissemination and diffusion of knowledge,
HP Consulting had to create an environment in which everyone is enthusias-
tic about sharing knowledge. As Martiny (1998) observes, “the human side of
knowledge management is the hard part—it involves creating a strong foun-
dation where an organization moves from individual knowledge to organiza-
tion knowledge, where it energizes itself to create knowledge sharing and
reuse behaviors to tap its collective wisdom” (p. 77). HP Consulting had come
to believe that sharing, leverage, and reuse of knowledge had to become part
of its culture.
HP Consulting’s knowledge management initiative has three key
objectives:
• To deliver increased value to customers by bringing more intellectual

capital to solutions, not by adding work hours
• To create an environment in which everyone is enthusiastic about shar-
ing knowledge and leveraging the knowledge of others
• To leverage and reuse knowledge
The third initiative required organizational change, especially on the part
of leadership.
Jim Sherriff, HP Consulting’s general manager, recognized a significant
opportunity to improve both the value delivered to customers and the organi-
zation’s profitability by tapping into the knowledge of the more experienced
consultants—or, in his words, “to make the knowledge of the few the knowl-
edge of the many” (Martiny, 1998, p. 71). He was firmly convinced that all con-
sultants must feel and act as if they have the knowledge of the entire organi-
zation at their fingertips when they are interacting with customers.
HP Consulting launched its knowledge management initiative using pilot
programs that focused on the following behavioral elements:
• Taking time to reflect and learn from successes and mistakes
• Creating an environment that encourages sharing of knowledge and
experiences among consultants
• Encouraging the sharing of best practices and reusable tools and solu-
tions that can be leveraged by other consultants
Leadership also identified four attitudes that sustain knowledge sharing,
leverage, and reuse at HP Consulting. First, leveraging other people’s knowl-
edge, experience, and deliverables is regarded as desired behavior. Second,
the results of innovation, both successes and failures, are equally shared.
Third, time spent increasing personal and group knowledge and confidence is
considered a highly valued activity. And fourth, consultants who actively share
their knowledge and draw on the knowledge of others dramatically increase
their worth.
The results have been extremely profitable for HP. Along the way, knowl-
edge management has progressed from being an initiative to becoming a
means of leveraging HP Consulting’s transformation into a knowledge-based
business.
Knowledge Application and Validation
Stewart (1997) notes that systematic application of “intellectual cap-

ital creates growth in shareholder value.” This is accomplished
through the continuous recycling and creative utilization of the orga-
nization’s rich knowledge and experience. Technology enables opti-
mum application of corporate knowledge. A company’s ability to

provide customer service through diagnosis and troubleshooting is a
good example of knowledge application and validation.
With a well-developed knowledge system, a company can put its
best people at the front line and keep their expertise available to the
entire organization. Charles Paulk, chief information officer of Ac-
centure, notes that, because of Knowledge Xchange, “when one of
our consultants shows up, the client gets the best of the firm, not just
the best of that consultant.” Paulk lists the following among the many
benefits of Accenture’s knowledge management system (Schwandt
and Marquardt, 2000):
• Savings in areas such as shipping costs of physically transferring
knowledge
• Improved ability to tap into colleagues’ knowledge
• Capacity to work globally
• Forum for mapping corporate brainpower
• Ability to cope with growth and staff turnover, since new-
comers who quickly learn organizational knowledge can con-
tribute that much faster to its success
TOP 10 STRATEGIES FOR KNOWLEDGE MANAGEMENT
1. Share Responsibility for Collecting and Transferring Knowledge

In learning organizations, everyone is encouraged to become
adept at gathering data. All employees should be aware of the kind
of knowledge that might benefit the organization so that they can
capture it as it goes by. This knowledge may be obtained through
formal channels such as conferences, the Internet, or newspapers
and journals as well as through informal channels such as social
gatherings, museums, and movies.
Some companies promote and reward research among staff,
realizing that in-depth analysis can be leveraged into significant
learning power. One learning organization even encourages em-
ployees to use part of their vacation time to augment corporate
learning. For example, a hospital asked an employee who was
vacationing in Singapore to visit hospitals and learn about their
personnel policies. Of course, the company paid for part of the
employee’s airfare.
2. Systematically Capture Relevant External Knowledge

Learning organizations avoid the “not invented here” syn-
drome and systematically look outside themselves to gather valu-
able information. These external ventures may include initiating
study missions designed to understand the performance and dis-
tinctive skills of other organizations, benchmarking best practices
in the industry, and attending conferences and forums.
For example, Whirlpool, which has made benchmarking an
important tool of knowledge acquisition, benchmarks the world’s
most successful and admired companies: those in the top 25 per-
cent in areas such as total quality, people commitment, innovation
and growth, and customer satisfaction.
3. Organize Internal Learning Events

Learning organizations have developed many tactics to
encourage the sharing of internal learning. As noted earlier in this
chapter, National Semiconductor has organized sharing rallies at

every company site, encouraging employees or teams to share
their best practices and ideas for improving programs, products,
and services. Other approaches include
• Strategic reviews that examine the changing competitive
environment in light of the company’s product portfolio,
technology, and market position
• Systems audits to review the effectiveness of large, cross-
functional processes and delivery systems
• Internal benchmarking reports, which identify and compare
best-in-class activities within the organization
• Jamborees or symposiums that bring together customers,
suppliers, outside experts, and internal groups to share ideas
and learn from one another
4. Be Creative About Thinking and Learning

Albert Einstein once wrote that “imagination is more impor-
tant than information.” Increasing a company’s knowledge by
learning only from others generally leads to gradual, quantitative
improvement. However, quantum improvements result when an
organization generates new thinking and consequent knowledge.
Consider some of the following activities to encourage gener-
ative thinking and creative learning in your organization:
• Install small-scale experiments and feedback loops to in-
crease learning process and achieve continuous improve-
ment.
• Reward imaginative and risky efforts.
• Conduct workshops on creativity and right-brain thinking.
• Encourage brainstorming a multitude of ideas to produce
one good one.
5. Encourage and Reward Innovation

“Companies will die unless they can create a continuous
stream of new products and services,” declares Alvin Toffler
(1990). Survival in the global marketplace means continually

creating new ways of producing better products and services.
Inventions and innovations will be imperative because no exist-
ing market share is permanent and no product life is indefinite.
Yet, too few of our organizations have stressed the critical sig-
nificance of inventing new knowledge. Kenichi Ohmae of
McKinsey & Company laments the fact that people have for-
gotten how to invent.
Learning companies emphasize the vital role played by gen-
erative learning in achieving organizational learning and success;
based on this understanding, they encourage experimentation
and reflection. 3M allows employees to devote up to 10 percent
of their time to inventing. Chaparral Steel encourages experi-
mentation whenever possible. Sony sets a “sunset,” or end-of-
life, date whenever it introduces a new product, thereby trigger-
ing immediate work on developing replacement offerings. The
company’s objective is to create three new products for every
one that it phases out, whether incrementally improved old
products, new spin-offs from the original, or an entirely new
product.
6. Train Staff in Knowledge Storage and Retrieval

Many of us are still computer illiterate. We barely appreciate,
much less understand, the tremendous power of computers for
coding and storing organizational knowledge. Because we are not
fully aware of the memory and value systems of the organization,
we do not know which data to retain and which to store in cen-
tralized information systems. Finally, we may not realize the
potency of knowledge and therefore do not take the time either to
add knowledge to the organization or to seek it inside and outside
the company’s computer base.
Learning organizations keep their employees informed about
the kind of knowledge required, their values and memory systems,
and their resources for storing knowledge. Their employees know
how to connect with knowledge centers as well as access data
from all over the world.
7. Maximize Knowledge Transfer Across Boundaries

Job rotation and team mixing are two of the most effective
ways to transfer knowledge in an organization because the people
involved not only carry knowledge with them but are in place to
assure successful transmission of their knowledge.
Another benefit of people transfer is the fresh approaches and
perceptions that transferees bring to their new situations. They are
likely to raise the “dumb” questions that lead to new insights.
8. Develop Knowledge Base Around Organizational Values and

Learning Needs
Knowledge is ineffective unless it is coded and stored in a way
that makes sense to individuals and organizations. Too many com-
panies are overwhelmed by vast amounts of data. Organizations
must identify useful information by assessing its value and then
coding it based on learning needs and organizational operations.
The stored knowledge should be easily accessible across func-
tional boundaries. Store the knowledge not only by topical cate-
gories but also according to learning needs of staff, organizational
goals for continuous improvement, and user expertise.
9. Create Mechanisms for Collecting and Storing Learning

All too often, valuable learning never leaves the minds of the
individuals or groups involved. Learning organizations know how
to capture this knowledge through various methods of positive
and negative reinforcement. Consider some of the strategies used
by global consulting giant McKinsey & Company, considered by
many one of the best knowledge management companies in the
world:
• A director of knowledge management coordinates company
efforts to create and collect knowledge.
• Knowledge transfer is seen as a professional responsibility
and part of everyone’s job.
• Knowledge development is included in the personnel evalu-
ation process.
• An employee does not get a billing code without preparing

a two-page summary of how and what he or she has learned
from the project.
• Every 3 months, each project manager receives a printout of
what he or she has added to the company’s Practice Infor-
mation System.
• An on-line information system called the Practice Develop-
ment Network is updated weekly and now has more than
6,000 documents. In addition, the Knowledge Resource
Directory, McKinsey’s yellow pages, is a guide to who
knows what.
• Each of McKinsey’s 31 practice areas maintains a list of
members, experts, and core documents.
• Each practice area publishes a bulletin two to three times a
week, featuring new ideas and information that it wants the
rest of the company’s staff to know.
10. Transfer Classroom Learning to On-the-Job Utilization

According to Mary Broad and John Newstrom (1992), less
than 10 percent of classroom learning is ever transferred to the
job. This percentage can be significantly increased by implement-
ing a deliberate strategy that includes specific steps for managers,
participants, and trainers. Examples of possible actions include
For managers:
• Before: Become familiar with the course and plan use of
learning.
• During: Protect learners from work-related interruptions.
• After: Develop opportunities for learners to use new behav-
iors immediately.
For learners:
• Before: Confer with manager and previous trainees on
course objectives, content, process, and application to job.
• During: Record key concepts and applications to the job.
• After: Regularly assess your performance and acknowledge
any progress made.
For trainers:
• Before: Confer with supervisors on possible barriers to on-
the-job transfer of training and identify ways to reduce or
eliminate them.
• During: Help learners form mutual support groups for
learning together and helping one another back on the job.
• After: Maintain contact with learners and provide support
and help with transferring new skills to their jobs.
C H A P T E R 7
Technology for Building

the Learning Organization
BRIAN QUINN, AUTHOR OF The Intelligent Organization (1992), calls

technology the most important ingredient for managing organiza-
tional knowledge. Effective use of technologies requires an under-
standing not only of information technology and computer science
but of the arts and sciences of learning, discovery, and communica-
tions as well. Organizations that know how to harness technology to
enhance their learning capacity have a decided competitive advan-
tage over those that are still using relatively Stone Age tools.
The technology subsystem of the Systems Learning Organization
model is made up of supporting, integrated technological networks
and information tools that enable access to and exchange of infor-
mation and learning. It includes technical processes, systems, and
structures for collaboration, coaching, coordination, and other
knowledge skills. It also comprises electronic tools and advanced
methods such as computer conferences, simulation, and computer-
supported collaboration. All these elements work to create knowl-
edge freeways.
177
Culture
Managing Enhancing
Technology
Knowledge Learning
Figure 17 Technology Subsystem
In this chapter, we will explore the two key dimensions of tech-

nology as they support learning organizations:
• Technology to manage knowledge: Computer-based technol-
ogy for gathering, coding, processing, storing, transferring and
applying data among machines, people, and organizations
• Technology to increase the speed and quality of learning:
Video, audio, and computer-based multimedia training for
delivering and sharing knowledge and skills anywhere, any
time
Figure 17 illustrates the technology subsystem.
Technology to Manage Knowledge
Information technology presents organizations with new strategic

opportunities for learning throughout the corporation. It enables
companies to automate, educate, and transform themselves. Infor-
mation technology permits the redistribution of power, function,
and control to locations where they will be most effective. Produc-
tion, coordination, and management can be accomplished more effi-
ciently and thoroughly.
Technology for Building the Learning Organization 179
Technology allows organizations to break many old rules of

management, change, development, and learning. Added capabilities
include the following:
• Information appears simultaneously in as many places as it is
needed
• Generalists are able to do the work of experts
• Organizations can reap the benefits of both centralization and
decentralization
• Decision making becomes part of everyone’s job
• Field personnel can send and receive information from any
location
• Plans can be revised instantaneously
Technology and Knowledge Flow

Technology can be a key mechanism for improving organizational
communication and knowledge transfer.
Information technology in particular improves communication
by blurring the boundaries within the company and increasing the
range of possible relationships beyond hierarchies. It also permits
easier direct communication across time and space by electronic bul-
letin boards, mail, and conferencing. Communications software cre-
ates electronic learning environments in which all members have
equal access to data. With every personal computer networked
through the mainframe, with relevant external systems, any person
in the organization can take part in gathering and transferring
knowledge. Remote access to national and global knowledge net-
works is available at any time.
Information technology reduces the number of management lev-
els needed in the hierarchy, yet at the same time provides enhanced
potential for span of control. Empowered with information, front-
line workers gain increased autonomy. For example, Buckman Lab-
oratories, a leading-edge chemical company, has made the front line
the focus of almost all its knowledge management and e-learning.
Cisco equips sales representatives on their way to client meetings
with new product information via Internet, teleconferencing, and
even wireless transmission.
Information technology contributes to flexibility. A computer-

mediated communications systems utilizes its own storage, process-
ing, and retrieval capabilities for internal and external communica-
tions. Databases, texts, articles, reports, manuals, and directories can
be held for quick and easy access by all workers. For example,
according to an advertisement in BusinessWeek, 100 percent of Cisco
Systems’ sales and technical staff learn online. The company’s
approach keeps employees constantly up-to-date and has reduced
training expenses by 60 percent.
Sharing information on a real-time basis and encouraging wider
access to information requires the following strategies:
• Creating online databases for use across functional boundaries
• Hooking into online databases and electronic bulletin boards
outside the organization, such as those at universities and
other learning centers
• Installing an e-mail culture where its use is widespread
• Using electronic data interchange to create comprehensive net-
work systems
Prudential’s LaunchPad
Training Program
Through its LaunchPad Training Program, Prudential equipped more than
13,000 field associates with laptop computers and provided a custom-tailored
training program to help them incorporate the new technology into their daily
business practices. With laptop computers, representatives are able to con-
duct business with customers while maintaining access to current informa-
tion, thus ensuring customer satisfaction, increasing customer loyalty, and
encouraging repeat business.
LaunchPad achieved unprecedented success in workplace learning and
development, as demonstrated by the following statistics:
• 100 percent of the field force now uses a single technology platform
• Satisfaction rate of 93 percent for workplace learning and development
among the field force
• $500,000 annual savings through elimination of paper-based record-
keeping system
• Industry recognition in 11 prestigious national awards
According to the American Society for Training & Development Award

Committee (ASTD, 1999), LaunchPad has set a new standard for workplace
learning and development by creating the best technically trained field force
in the financial services industry.
Organizational Effects of Technology

Michael Morton (1991) identifies six major effects of information
technology on the workplace and workplace learning:
• Fundamental changes in work processes
• Integration of business functions at all levels within and among
organizations
• Shifts in the competitive climate of many industries
• New strategic opportunities to reassess missions and operations
• Basic changes in management and organizational structure
• Organizational transformation by managers
Let’s examine each of these effects below.
Changes in Work Processes Information technology results in basic

changes in production, coordination, and management areas.
Production is affected by physical supports such as robotics, pro-
cess control instrumentation, and intelligent sensors. Other changes
may include information production through data processing and
introduction of knowledge resources such as CAD/CAM tools.
Coordination changes when distance and time differences
become irrelevant. The organization’s memory (command database)
can be maintained over time, accept contributions from all parts of the
organization, and be available to a wide variety of authorized users.
Management becomes more flexible because information tech-
nology can better sense changes in the external environment and
maintain close contact with members’ ideas and reactions. Pertinent,
timely information represents crucial input for the organization’s
direction-setting process.
Technology also allows more control of two key aspects: mea-
suring the organization’s performance against the appropriate criti-
cal success factors and interpreting such measures in relation to the
plan in order to determine future actions.
Integration of Business Functions Business functions can be integrated

at every level within the organization and among organizations. This
integration takes four forms.
Links within the value chain extend the team concept to all parts
of the organization. For example, Xerox connects design, engineer-
ing, and manufacturing personnel within its system of local area net-
works to create a team that focuses on one product. This type of
team finishes tasks in less time and with greater creativity while
maintaining higher morale.
End-to-end links of value chains connect organizations through
just-in-time and electronic data interchange.
Value chain substitution is effected via subcontract or alliance.
Electronic markets are the most highly developed form of elec-
tronic integration. For example, travel agents may perform price
comparisons and reserve seats electronically.
These four forms of electronic integration effectively remove
buffers, to varying degrees. They also leverage organizational and
individual expertise.
Shifts in the Competitive Climate Many industries experience climate
shifts. Information technology heightens the importance of such crit-
ical functions as scanning and monitoring the business environment.
Effective scanning and monitoring enable an organization to deal
proactively with the turbulent world of technological changes.
New Strategic Opportunities Technology offers organizations the abil-

ity to easily reassess their missions and operations. Automating
processes will reduce production costs, and utilizing technology to
informate will inevitably increase efficiency and generate new infor-
mation as a by-product. In these ways, organizations will be able to
transform themselves.
Basic Changes in Management and Structure When successfully

applied, information technology affects management and organiza-
tional structure. Morton (1991) sees information technology as a
critical enabler in the re-creation and redefinition of the organiza-
tion as we know it. Information technology redistributes power,
functions, and control to the most effective locations according to
each company’s mission, objectives, and culture. For instance, an
organization may link all its engineers on the same network, allow-
ing individuals to share information, ask for help, or work collabo-

ratively on projects. In this way, information technology increases
the speed of information transfer and decision making.
Organizational Transformation by Managers Information technology
enables and compels managers to lead their organizations through a
process of complete transformation in order to prosper in a globally
competitive environment.
Organizational Transformation at
Compaq Computer Corporation
In order to sustain a competitive advantage in the global economy,
Compaq realized its workforce had to reach required levels of capability and
refresh its knowledge and skills in a minimum amount of time. To address
these challenges, Compaq created a Web-based tool designed to work in tan-
dem with an innovative learning process that leverages its worldwide reposi-
tory of online training and documentation. The testing tool may also be used
as a pre-test for lectures and other learning events, allowing instructors to tai-
lor material to the specific needs of an audience. This dual system allows
employees to access learning materials that are appropriate for them from any
location and at any time. It also eliminates redundant training.
As a result, training time has been significantly reduced, and increased
employee efficiency has yielded tremendous cost savings and high produc-
tivity. Short-term benefits include decreases of 20 percent in time spent on
self-paced curriculums and 60 percent in time spent reviewing content. In the
long term, the system has provided the technical infrastructure for a 21st-
century learning organization, thereby preparing Compaq to address global
testing and learning standardization, stay current with rapid changes in infor-
mation, and sustain a competitive advantage (ASTD, 2001).
Technological Support for Knowledge Management

To assure effective collection, storage, and transfer of knowledge,
learning organizations must implement the following four proce-
dures, in sequence.
First, establish a networked infrastructure of information tech-
nology for all employees. The platform should support knowledge
systems across the organization, enabling every worker to communi-
cate electronically with all other employees, both individually and in
groups. Provide each employee with a workstation that can handle

complex computational, informational, and communication needs.
Powerful exploration and system navigation tools that use flexible
keyword search, hypermedia, dynamic visual querying, and decison
trees should be available along with a range of standard office
automation software such as text processing, presentation graphics,
spreadsheets, rational DBMS, Web browsers, and e-mail.
Second, create enterprise-wide data, object, and knowledge
repositories. At this stage, learning companies are creating and regu-
lating relational and object models and data dictionaries across the
organization. Reformat existing on-line information before inserting
it into the company-wide databases. Smart data-entry templates
should be available to check for validity, consistency, and accuracy.
Include software for translating media into text.
Third, automate and enable operations, management, and sup-
port activities. With the aid of electronic systems, automate all oper-
ations within the organization. For example, in marketing and sales,
use technology to more accurately match products to customer
needs, and increase profit margins through improved pricing.
And fourth, develop integrated performance-support systems
and applications for knowledge discovery and data mining. In this
last stage, learning organizations form centers of expertise that are
responsible for collecting, storing, analyzing, and distributing knowl-
edge. Additional tasks include training and certifying workers in
their specialties and providing qualified on-line and on-site workers
and consulting services.
The most dramatic and successful applications result from the
deployment of integrated support systems that provide employees
with coordinated task information, advice, training, job aids, refer-
ences, and administrative resources. These centers of expertise serve
several purposes, such as
• To create, research, improve, and manage the knowledge
repository
• To establish and enforce standards, methods, and practices
• To align and coordinate interests with related centers
• To assess workforce competency and performance
• To identify gaps and remedy deficiencies in the content and
processes of the knowledge repository
• To provide training and consultancy services

• To supply competent workers for staff projects and processes
Technology-Based Learning
Workplace learning in the new millennium will be just in time, just

what’s needed, and just where it’s needed. In other words, it will be
customized, digitized, and optimized for each individual, thanks to
the ever-increasing power of technology and its growing applicabil-
ity to learning in the workplace.
At the Boeing Training Center in Seattle, Washington, for exam-
ple, pilots and ground crew technicians utilize integrated CD-ROMs
and laser disks. Training modules are downloaded into the network.
Each training carrel is equipped with a Windows-based PC, where
laser animation and audio can be overlaid on a computer-generated
graphic to simulate changing scenery or weather conditions. Other
programs simulate pilot–copilot interaction for flight training; the
modules are so realistic that pilots can be certified for flight without
ever logging a minute in the air. According to Jack Hide (Marquardt
and Kearsley, 1999), Boeing computer training technologist, this
form of technological learning achieves “maximum training flexibil-
ity in a constantly changing environment.” The old method of using
trainers and training manuals is too cumbersome, unreliable, and
expensive in today’s competitive marketplace. Technology, says
Hide, “simply does the job faster and better” (p. 57).
Increased Use of Learning Technologies

One of the most striking workplace phenomena as we enter the 21st
century is the unrelenting demand for increased knowledge and
speed of learning. A small but growing number of companies world-
wide are recognizing technology as the key to achieving better and
faster learning. Corporate e-learning in the United States alone is a
$1.2 billion market and is expected to grow to $7 billion by 2003.
According to ASTD’s State of the Industry Report 2001 (Van
Buren, 2001), firms projected an average 117 percent increase in the
use of learning technologies between 1999 and 2002. Internet train-
ing grew from 3 percent in 1997 to 38 percent in 1999. Intranet use
grew from 3.5 percent to nearly 40 percent.
Companies now invest in a wide variety of rapidly diversifying

electronic-learning technologies. Use of computer-delivered training,
Internet- and network-based distance learning, electronic perfor-
mance support systems (EPSS), and interactive or multimedia
computer-based training is surging. Organizations are spending more
than $4 billion a year on software for intranets. And, thanks to rapid
technological advances, once separate learning technologies are no
longer as distinct in process and capabilities as in the past (Baron, 1999).
Types of Learning Technologies

Learning technology includes both presentation and distribution.
Let’s look at the various presentation and distribution learning tech-
nologies as categorized and defined by the ASTD (American Society
for Training & Development, 1998).
Presentation technologies include
• Electronic text or publishing: Disseminating text via elect-
ronic means
• CBT: Computer-based training
• Multimedia: Computer application that uses text, audio, ani-
mation, and/or video
• Television: One-way video that may be combined with two-
way audio or other electronic response systems
• Teleconferences: Instantaneous exchange of audio, video, or
text between individuals or groups, at two or more locations
• Virtual reality: Computer application that provides an interac-
tive, immersive, and three-dimensional learning experience by
using fully functional, realistic models
• Electronic performance support system (EPSS): An integrated
computer application using expert systems, hypertext, embed-
ded animation, and/or hypermedia to provide assistance in
performing tasks
Distribution technologies include
• Cable TV: Transmitting television signals via cable technology
• CD-ROM: A format and system for recording, storing, and
retrieving electronic information on a compact disc that is read
by an optical drive
• Electronic mail (e-mail): Exchanging messages through

computers
• Extranet: A collaborative network that uses Internet technol-
ogy to link organizations with suppliers, customers, or other
organizations that share common goals or information needs
• Internet: A loose confederation of worldwide computer net-
works that are connected through several overarching net-
works
• Intranet: Computer networks within an organization
• Local area network (LAN): A network of computers sharing
the resources of a processor or server within a relatively small
geographic area
• Wide area network (WAN): A network of computers sharing
the resources of one or more processors or servers over a rel-
atively large geographic area
• Satellite TV (also called interactive business TV): Transmission
of television signals via satellites
• Simulator: A device or system that replicates or imitates a real
device or system
• World Wide Web: All Internet resources and users employing
hypertext transport protocol (HTTP)
Each presentation technology could use a number of distribution
technologies. For example, computer-delivered training could be
accomplished using LANs or WANs, the Web, the Internet, intranets,
CD-ROMs, and computer disks.
Interactive Television for

Training at JCPenney
JCPenney, a national chain of department stores, has used business tel-
evision and videotape to distribute information for many years. In 1996, how-
ever, it radically changed its methods of training associates. The company
made a strategic decision to close its corporate university and discontinue the
practice of having managers travel to its headquarters in Plano, Texas, for
training. It also chose to stop printing, warehousing, and mailing paper-based
training materials. The reduction in costs was used to convert to distance-
learning technologies, and by 1997, more than 1,100 stores had the ability to
undertake instruction via interactive keypads. The new delivery system, which
was named the Learning Place, included One Touch response units to permit
two-way interaction. Each store has a television set in its training room along
with the necessary satellite downlink and reception equipment. Small groups
of employees can watch a program and identify themselves and respond to
questions in real time using the One Touch units.
According to Deborah Masten, manager of human resource development
(HRD), the interactive television system has proved effective and is a remark-
able change agent. She cites a specific promotional campaign in which stores
that received training via interactive television showed sales gains almost
twice as high as stores that used printed sales materials. Furthermore, the
interactive television system is viewed as a strategic business element by
groups within the company who want to use it to get their message out to
employees. The interactive television medium, Masten notes, is “just in time,
just down the hall, and just enough” (Marquardt and Kearsley, 1999, pp.
96–97).
In the course of a year, JCPenney delivers hundreds of programs from a
single studio in Plano. Programs typically range from 15 minutes to about 2
hours in length. The costs of designing and delivering programs are kept low
through the use of an automated studio that allows the instructor to control
inputs such as cameras, computer slides, and video clips. A team of nine
experienced instructors produces the programs in conjunction with context
experts from different departments. They may also work with other members
of the HRD department if the program includes CBT, multimedia, or Internet
components.
One of the more interesting aspects of the Learning Place is its extracur-
ricular application. The system is used after hours for personal development
classes in areas such as English-language proficiency or SAT preparation. The
classes are free to employees and are delivered by outside specialists.
JCPenney’s interactive television program illustrates how a distance-training
delivery system can be used quite broadly for employee education beyond
specific job skills and knowledge (Marquardt and Kearsley, 1999).
Advantages of Learning Technologies
Learning technologies are growing in popularity because they in-

crease the quality, relevance, and speed of learning. They also offer
the following advantages.
Available as needed and just in time: Unlike traditional training,
which is just in case, this type of training gives individuals the infor-
mation they need when they need it. Employees don’t have to wait
for an appropriate class; learning is ready when they are. Flexibility
is such that the learning content can be a work in progress.
Learner-controlled: Employees have the freedom to initiate the

types of learning experiences they need to achieve professional
improvement. They also control where they learn, often at their
work sites rather than in a distant corporate classroom. More and
more courses are being automated using online documentation sys-
tems. Why is it so important for employees to control their own
learning programs? Because most jobs within the corporation
are becoming ever more complex and require higher levels of skills,
only the workers are fully aware of what they need and why they
need it.
Self-paced and user friendly: Learning technologies are becoming
more accessible and easier to manipulate, which is essential to
encourage worker use. Intranet applications, for example, typically
utilize an interface that is conducive to simple point-and-click
navigation. Learners can proceed at the pace they choose.
Accessibility over a wide geographic area: One of the greatest
benefits of learning technology is its ability to provide learning when
instructors and training sources are at some distance from learners.
Learning via technology allows accessibility to any number of geo-
graphic areas from different offices to different countries.
Individuals and groups may engage in training at home, in the office,
or on the road. In determining which distance-learning technology
to employ, consider elements such as the learners’ demographic, edu-
cational, and socioeconomic profiles and their level of motivation.
Hands-on interactivity: Technology such as touchpads, the
Internet, and intranets permit hands-on, direct, and immediate inter-
action with instructors and/or fellow learners. Groupware, chat
rooms, and other two-way communication tools can also be inte-
grated easily into learning programs.
Uniformity of content and delivery: Consistency is improved
because the same program is being offered by the same person
and/or system throughout the company. Centralization of informa-
tion and databases also helps assure this uniformity.
Adjustment to individual learning styles: It is important to take
into account participants’ multiple learning styles, orientations, and
preferences for problem solving. A number of models have been
developed to classify learning styles, but among the best is Honey
and Mumford’s (1989) system of classification:
• Activist: Involves self fully in new experiences; enjoys the here

and now; open-minded; finds implementation and longer-term
consolidation boring
• Reflector: Stands back and ponders experiences from many
different perspectives; collects data and thinks before reaching
conclusions; values analysis; cautious and thoughtful; listens
before commenting
• Theorist: Good at adapting and integrating observations; takes
a logical, step-by-step approach; a synthesizer and systems
thinker; displays rational objectivity
• Practitioner: Interested in trying out new ideas, theories, and
techniques; acts quickly on attractive ideas; practical; sees
problems as challenges
The wide variety of technologies enables the development of
programs that appeal to each learning style and sometimes several at
the same time. For example, artificial intelligence, which attempts to
replicate the thought process of the human brain, can observe, guide,
and coach users and modify its instructions according to the input it
receives. It can adapt to each user’s cognitive style, providing cus-
tomized help that corresponds to the needs of trainees.
Adjustment to learners’ motivation levels: Materials can also be
adapted to learners’ motivation levels. The best technologies for
motivated learners appear to be videos, workbooks, audiotapes, and
CDs. For these enthusiastic participants, self-paced programs, simple
and low-key materials, and self-explanatory or self-help content will
suffice. Less motivated learners prefer videoconferences, cable tele-
vision, two-way audio, satellite broadcasts, interactive CDs, and
kiosk systems. In designing programs for these students, it is impor-
tant to incorporate monitoring and additional interactions with
instructors and other participants. Mandatory attendance may be
necessary, and content can be expanded and varied based on partic-
ipant questions.
Safety and flexibility: Delivering training modules via virtual
reality technology is especially useful when it allows trainees to view
objects from a perspective that would be impractical or impossible in
actuality. For example, it is not practical or safe to turn a drill press
on its side in order to see the bottom as a front view. Cyber-training
has applications beyond manufacturing or traditional blue-collar
tasks, as in brokerage firms that now use virtual reality to train

brokers.
Ability to update continuously: Technologies, especially those
that deliver via the Web, allow organizations to update easily and
provide information to all employees. Intranet sites can also be
amended inexpensively as often as needed.
Availability of both push and pull approaches: Too often, em-
ployees are provided with more information than they can possibly
process or retain. Technologies like intranets allow companies to
provide access to as little or as much information as employees wish
to pull onto their desktops.
Cost-effective: Technology-based learning is significantly lower
in cost. Brandon Hall, editor of Multimedia Training Newsletter, pre-
dicts that technology will reduce the time required to deliver train-
ing by 30 to 60 percent. Savings occur because a smaller number of
instructors are able to reach many more participants, whether at the
same time or at different times, which reduces travel expenses and
downtime. The process of developing and maintaining learning
packages, databases, and intranet sites with a minimum of costs and
time is also becoming easier and simpler (Marquardt and Kearsley,
1999).
Using Technology for Learning

at Ford Motor Company
Ford Motor Company is the world’s largest producer of trucks and the
second-largest producer of cars and trucks combined, selling more than 7
million vehicles per year. Ford employs nearly 350,000 people worldwide and
is the market leader in Australia, Britain, Spain, and Taiwan. Earnings for 2001
exceeded $180 billion. Ford recognizes that creating customer value starts
with delivering value, and high value begins with highly skilled workers and
dealers.
Ford set the challenging goal of becoming the world’s leading auto-
maker. One strategy was to launch a record number of new or significantly
improved vehicles. In the past two years, Ford has introduced 18 new cars
and trucks. In fact, new models have been rolling off the assembly lines faster
than Ford’s training division could provide instruction about them to service
technicians, sales, marketing, and other dealer employees. The situation was
complicated further by the fact that more than one-third of the dealers were
more than 100 miles away from a Ford training center, thus making it difficult,
time-consuming, and costly to train service technicians.
“Automotive engineering has become so complex that it is impossible to

get the job done with group-based classroom training anymore,” says Ford’s
Larry Conley (Marquardt and Kearsley, 1999, p. 271). He and other senior Ford
managers acknowledged that before Ford cars could gain acceptance from
the general public, the company needed a well-informed sales force and tech-
nicians who were highly skilled and experienced in the new automotive
technology. Dealerships could not afford poorly trained staff if they wanted to
compete in the marketplace.
Faced with the paradoxical objective of reducing the cost of dealer train-
ing and communications while providing more learning within a shorter cycle,
Ford elected to implement its own learning information superhighway on its
FORDSTAR Communications Network.
Ford’s Learning Technology Network
FORDSTAR was initially created more than 10 years ago to improve inter-
nal communications with employees. Today, it broadcasts to at least 250
regional sales offices and is believed to be the most comprehensive internal
daily television news service in the world. Yet, FORDSTAR does much more;
it has become the learning network of Ford.
Ford has spent more than $100 million to build this all-digital satellite
communications network for training its dealers’ employees throughout
Canada, Mexico, and the United States. While the idea of company-to-dealer
television networks is not new to the automotive industry, no other company
is equipped to send more than one television signal at a time, none uses high-
speed compressed digital video technology, and none is equipped to use
interactive voice and data as the basis for training and communication. FORD-
STAR can broadcast up to eight video channels simultaneously on a single
transponder (eight different training courses can be delivered at the same
time) and has another transponder dedicated to data transmissions.
FORDSTAR’s Facilities and Resources
Each FORDSTAR classroom is equipped with a television, satellite recep-
tion equipment, and interactive keypads, which students use to call the
instructor and answer multiple choice, yes/no, and numeric questions.
Student interaction computers also monitor the sites and capture questions
and quiz results from each student attending the broadcasts. The Dearborn,
Michigan, learning center provides eight channels of training-oriented pro-
gramming. Dealerships downlink the telecourses and learning materials so
that technicians, salespeople, and other personnel may learn on-site.
The instructor’s desk and broadcast facility put him or her in complete
control of the various multimedia sources available, which include the follow-
ing components:
• Standard computer for graphics and other computer-generated teach-
ing aids
• Laser disc player for videos and other graphics
• Overhead camera to display props and other objects

• Switching console to show various tools
• Telestrator pen to write on the screen
• Camera focused solely on the instructor
Ford publishes the monthly Star Guide for dealerships, listing course
descriptions and noting intended audiences and different time zones, making
it easy for dealers to decide which courses best match their employees’ needs
and schedules. Course topics range from new-model overviews and warranty
and policy administration to anti-lock brakes and service department town
hall meetings.
On-Site Coordination
On-site facilitators fill several important roles in implementing
FORDSTAR’s learning programs. Among other functions, facilitators may con-
duct orientation sessions designed to acquaint participants with the technol-
ogy and methods they will use to interact with instructors. They sometimes
act as contact persons to whom instructors send course materials and may
communicate any issues or concerns that arise later during classes.
Facilitators often administer and grade tests, review results with students, and
summarize test results for instructors. Instructors can then use these sum-
maries to identify areas in need of review during the next broadcast, while
questions are still fresh in the students’ minds.
Interaction Is Key to FORDSTAR’s Success

FORDSTAR utilizes an interactive distance learning (IDL) system that fea-
tures an automated, multifunctional control desk. To maximize interactivity,
the control desk (multimedia interactive platform, or MIP) is operated by an
instructor, and the response keypads allow continuous interaction with learn-
ers. According to Conley, FORDSTAR’s programs are designed to “call for
some form of interactivity every 10 minutes” (Marquardt and Kearsley, 1999,
p. 274). This interactive capability is a key feature in FORDSTAR’s success.
Here’s how it works.
Employees log in on response keypads at the beginning of class, thereby
creating automated attendance records for Ford and the instructors. During
class, instructors encourage interactivity by issuing pre-formatted questions
from the host station. Employees view each question on their TV monitors and
select from possible answers on their keypad displays. When instructors
receive results from all participating classrooms, they broadcast these results
back to their students. With the correct answer highlighted, learners are able to
gauge their progress in relation to others in classrooms throughout the network.
In addition to monitoring the progress of the entire class, instructors can
monitor each student’s achievements. Student response to every question is
logged in on the instructor’s computer, making the system an effective tool for
courses that require certification or grading. Individual performance records
enable instructors to offer additional assistance to students in specific areas,

thus ensuring overall success.
Laura Thurman, consultant to FORDSTAR, notes that the keypads also
“provide data feedback from the dealerships, creating a valuable audio link
between the students and the instructor” (Marquardt and Kearsley, 1999, p.
275). If students have questions or comments, they press the call buttons on
their keypads to electronically raise their hands. The instructor recognizes
callers by name and location within seconds and activates student micro-
phones using the system’s touch screen. The ability to have two students on
the air at once facilitates interaction between the sites.
Improved Delivery and Performance at Less Cost
Conley reports that instructors are able to cover 20 to 30 percent more
material during a telecourse, student grades are 20 percent better, and time
away from dealership premises has been reduced by as much as 50 percent.
Through FORDSTAR, the HRD staff is now able to reach the more than 45,000
technicians and 50,000 salespersons in a matter of days. Learning tech-
nology has cut classroom training from an average of 31 days to just 9, and
larger numbers of people can be trained simultaneously.
There is also a higher quality of performance in the classroom because
establishing a disciplined and consistent learning process is easier when
information comes from a single course instead of from numerous courses
throughout North America. In addition, instructors tend to be more organized
when designing for distance learning, perhaps due to high expectations and
substantial initial costs. It is wise to optimize the advantages of distance-
learning technology by preparing for large numbers of learners who will
be participating at the same time. Between January and October 1997,
FORDSTAR delivered 4,277 courses totaling 11,968 broadcast hours. Atten-
dance was more than 300,000 logged-in students (Filipczak, 1997).
Another benefit to delivering courses led by multiskilled instructional
teams is that leader-experts in particular fields are accessible to all partici-
pants, while other instructors are available both during and after courses.
Students also tend to be more prepared and participative. Instead of experi-
encing several hours of classwork and lectures at a single time, they can learn
at an incremental pace in the familiar surroundings of their offices.
Electronic distribution reduces the costs of course materials, and utiliza-
tion of satellite networks and CD-ROMs decreases per-student costs of fac-
ulty and facilities. Conley notes that an automotive electronics course for all
of Ford’s dealer technicians that might cost $3.5 million in classrooms can be
provided for $1 million on CD-ROM (Marquardt and Kearsley, 1999).
Future Worldwide Expansion
Ford is now looking to expand into Australia, Europe, and South America.
To spread distance learning to these sites more quickly, Ford plans to expand
training via the network to employees at manufacturing and design plants.

Using technology has indeed lifted learning, performance, and corporate suc-
cess to world-class heights for Ford Motor Company.
Supplementing Classroom Training and E-Learning

As business speeds up, the demands of customers, partners, and
other value contributors change quickly, and workers need faster and
more relevant knowledge at the front line. Several new trends are
emerging, such as the perception of learners as customers.
Companies that take this view design programs and systems centered
on learners, providing choice and customization in balance with
business needs. Another development is increasing use of the
Internet for learning applications that supplement classroom learn-
ing: e-content matters, along with e-management, e-collaboration,
e-mentoring, e-simulations, and Webinars. Learning in general has
evolved into a holistic culture of learning activities that involves
much more than classroom activity. Training programs and class-
room instruction will not disappear but will be complemented by
many other approaches to learning and development, including self-
study, simulations, coaching, and teamwork.
Manville (2001) notes that leading companies such as Amazon,
Cisco, Ford, and Procter & Gamble are combining learning offerings
through Internet portals with programs, assessments, and learner
profiles tracked and delivered by learning-management systems
organization wide. These companies take a learner-centered per-
spective and blend different opportunities to create a rich, mutually
reinforcing blend of programs, information, and resources driven by
each individual knowledge worker’s needs.
Learning organizations are also combining skill listing, compe-
tency models, and focused curricula with both electronic and face-
to-face learning. Experiences emphasizing individuals and groups,
development and knowledge-transfer, both formal and structured as
well as informal and unstructured, are appearing. Examples include
Cisco’s certification in new technology for its salespeople, or partic-
ular competencies achieved by dealers in the maintenance of cars
and trucks at Ford (Manville, 2001).
Electronic Performance Support Systems

The electronic performance support system (EPSS) is one of the
most powerful and effective uses of technology for managing knowl-
edge and increasing the efficiency of learning. EPSS uses databases
(text, visual, or audio) and knowledge bases to capture, store, and
distribute information throughout the organization in order to help
workers reach the highest level of performance in the shortest possi-
ble time, and with minimal personnel support. The system consists
of several components, including, but not limited to, interactive
training, productivity and application software, and expert and feed-
back systems.
EPSS has been called by many the learning tool of the 21st cen-
tury. It is certainly essential to maximizing the power of the learning
organization. But many of us are not familiar with the term, much
less with the system’s capabilities or even what EPSS looks like. So
let’s explore how this resource can support corporate-wide learning.
The system, according to EPSS guru Gloria Gery (1991), can
“provide whatever is necessary to generate performance and learn-
ing at the point of need.” To do that, EPSS can take on many forms,
including everything from computer systems that help a line worker
in a potato chip factory run and repair any part of the manufactur-
ing process to a customer service workstation that anticipates cus-
tomers’ problems and prompts the worker to ask the system the right
questions.
EPSS Components It is important to remember that EPSS technology
cannot work alone. Experts (internal or external) must be available
to provide other than computer-related advice. The combination of
human and machine blends creativity with vast information
resources. According to Scott Levin (1995), a strong EPSS includes
nine key components.
Competency profiles are cumulative records of such factors as
knowledge, attitudes, skills, and performance levels and may include
performance appraisals. These profiles serve two functions: to en-
sure that workers with the right credentials, authorization, or train-
ing are engaged in decision making and to help HRD departments
evaluate employees for new positions, assess performance problems in
existing jobs, and identify employees who are ready for additional
training or development.
Expert knowledge bases contain external information—such as

industry, market, customer, and competitor data—and internal
information—such as employee, policy, process, and financial data.
Before it is stored in knowledge bases, all information must be
arranged in formats that are usable by the electronic systems and the
workers. This process is called mapping and structuring the data.
Online help provides screen- and field-specific assistance for
each program or application of the EPSS and may be linked to any
computer-based training or reference material in the knowledge
base. Workers must be able to access online help through a simple,
intuitive user interface.
Integrated training and job aids are part of an EPSS and include
any items an employee might need to perform a particular proce-
dure. The system may include explanations as to the reasons for cer-
tain decisions and the analytical steps involved in making those deci-
sions. In this way, the EPSS serves as both a decision-support system
and a problem-solving system.
Electronic integrated reference systems are capable of performing
powerful online searches. These systems store an organization’s
complete documentation, including equipment maintenance manu-
als, detailed procedures, and process guides. References might also
include names, phone numbers, and addresses of experts who can
help workers gather new information or act as coaches. Users should
be able to quickly and easily search any of this material as well as
integrate it with other training or performance support before apply-
ing the referenced information. Information in the system should be
organized around specific work requirements.
Online documentation includes any continuous improvements
devised by employees. As new materials are created or updated,
operators can quickly map, structure, and integrate the data into
existing knowledge bases.
Monitoring, assessment, and feedback systems check user activity
and evaluate its appropriateness. Employees can find out immedi-
ately if something is wrong or out of specification and correct the
problems. By accessing competence profiles, these systems may also
indicate how well specific individuals fit particular jobs or tasks and
may then offer suggestions for improving skills.
Links to external applications allow workers to jump easily
from one application or software package to another. For example,
workers should be able to use a word processing program to draft a

report, draw in information from an existing database to make a
spreadsheet, and then print, transmit, or store a final report.
System information utilizes user cues and tools to update the vast
amounts of information in the knowledge base, including system
changes, enhancements, and new products. Since all new informa-
tion has to be mapped and structured, the EPSS should contain a
utility that allows system administrators or end users to format infor-
mation before it is entered. Maintenance tools should also provide
information on how the system is being used, what works, what
doesn’t work, and what upgrades may be needed.
Using Expert Systems for Retirement

Planning at T. Rowe Price
EPSS can be productively applied in the area of financial analysis and
planning. Because so many variables are involved in financial decisions, an
expert system offers great benefits. T. Rowe Price, headquartered in Balti-
more, Maryland, is one of America’s largest investment management firms.
Retirement planning represents an important segment of its business, and the
company offers a number of analytical software tools to customers. Users
provide background on their financial situations and goals by answering ques-
tions and choosing among options. The program then presents their best
options as determined by the rules of the expert system. Such systems allow
T. Rowe Price customers to explore various options independently and with-
out the pressure of real-time, face-to-face interaction.
Expert systems for consumer decision making and evaluation of options
is an important, but relatively untapped, application of EPSS. The T. Rowe
Price software is an interesting prototype that we may see more frequently as
organizations look for ways of distributing their expertise throughout their cus-
tomer base. For more information, visit www.troweprice.com.
EPSS and Organizational Learning Intelligent and appropriate use of

EPSS increases organizational learning in a number of ways. It
improves job performance as it enhances knowledge by providing
help just in time and just where workers need it. The system fur-
nishes instant access to information, methods, tools, and decision-
making aids, and users may also utilize computer technology to
leverage the expertise of coaches or mentors, thus increasing their
self-sufficiency and sense of empowerment. EPSS accelerates on-the-

job training and improves learning retention while significantly
reducing training time, cost, and paper documentation such as user
manuals, tests, and evaluations. Companies will also appreciate their
increased flexibility with worker assignments and the ability to train
employees located at remote or distant sites.
An EPSS can be valuable in building a learning organization
because it provides the infrastructure necessary for effective func-
tioning. Its performance-centered design propels individuals to the
required level of performance quickly and as independently as pos-
sible. Here are some of the most direct benefits.
Performance: An EPSS leverages a worker’s inherent intellectual
and social skills by presenting information, knowledge, advice, and
support at the moment of need.
Individual learning: Workers who use an EPSS learn in three
ways: changing behavior due to negative or corrective feedback from
the system; reviewing EPSS modules on the job just before using
them; and reviewing EPSS modules off the job when mistakes are
less dangerous and costly.
Generation of new knowledge: Workers will develop new tech-
niques, methods, and procedures on the job beyond those that were
part of the organization’s original knowledge base. In this way, learn-
ers create new knowledge.
Knowledge capture: As individuals or teams gain new knowledge,
an EPSS captures it through a formal process, such as mail messages,
shared databases, or interviews with expert workers.
Balancing Organizational and Worker Needs for Technology

Manville (2001) notes the difficult but important task of balancing
increased demand for collective innovation and output from the
organization on one hand and increased demand for freedom and
autonomy from workers on the other. Both demands are valid and
necessary. Balancing entrepreneurial initiative with measurable cre-
ativity across the organization presents a formidable challenge.
Workers want to be able to take a course, attend a Webinar,
or work with a community of practice with the sole stipulation be-
ing that they receive certification or meet performance objectives.
Predefined curriculum paths and tailored objectives help structure

learning while allowing a generous degree of individual initiative.
E-learning offers many new options to the worker—the freedom
to engage in a class or online exercise at work or at home, after
hours, in installments—and, depending on schedule, convenience,
and opportunity—to choose between immediate, performance-
driven learning and longer-term developmental growth. There are
also different methods for those who are visually oriented (simulations
or Web-based instruction) or those who need to interact with other
people or learn best through conversation (communities of practice).
Technology also holds out the promise of personalization and
mass customization. For example, Cisco’s learning system allows
movement from basic content delivery, to aggregation through portals,
to role-specific portals, to profiling for individual learners based on
their backgrounds, needs, and aspirations as well as on changing
business requirements.
Technology Subsystems
and Federal Express
Federal Express is the world’s largest express transportation company.
Headquartered in Memphis, Tennessee, the company delivers more than 2
million items in 186 countries each working day. All the numbers at FedEx are
large and growing—with more than 120,000 employees, FedEx flies into more
than 325 airports and maintains 1,400 staffed facilities and more than 30,000
drop-off locations. Sales for fiscal year 2001 approached $20 billion. The com-
pany prides itself on setting the standards in the shipping industry for reliabil-
ity, innovative technology, logistics management, and customer satisfaction.
FedEx has received numerous awards, including the Malcolm Baldridge
National Quality Award.
Under the guidance of CEO Fred Smith, the company has made a con-
scious effort to build a learning organization. Since 1991, many staff members
have worked with Peter Senge at the MIT Center of Organizational Learning.
FedEx leaders quickly point out that in becoming a learning organization, the
company has boosted intellectual capacity, agility, and resourcefulness.
FedEx has devoted considerable resources to technology subsystems
and attained significant success. Since its founding, the company has devel-
oped and implemented several new technologies with the goal of distinguish-
ing all aspects of its business from those of its competitors. In addition, FedEx
made a huge investment in interactive training resources—more than $40 mil-
lion in 1,200 systems in 800 field locations. Each is stocked with 30 interactive
videodisc programs, which have been used to train many of the company’s
more than 30,000 couriers and 5,000 customer service employees.
Technology-Based Learning for Customer Service

In recent years, FedEx replaced some of its classroom training programs
with a computer-based system that features interactive video on workstation
screens. This training system captures and interprets input from learners to
determine whether a task is being performed correctly. If a learner makes a
mistake, the system recognizes the error, points it out, and shows the proper
method.
The interactive video instruction system presents training programs that
combine television-quality full-motion video, analog audio, digital audio, text,
and graphics using both laser disc and CD-ROM. Learners interact with the
system using touch screens or keyboards.
The interactive video training correlates closely with job testing. Using the
system, employees can learn about their jobs, company policies and proce-
dures, and customer service issues by reviewing various courses. Currently,
there are more than 1,200 interactive video instruction units placed at more
than 800 FedEx locations. All workstations are linked to the Federal Express
mainframe in Memphis. Each location has 21 videodiscs that make up the
customer-contact curriculum. There is virtually no subject or job-related topic
that customer-contact workers cannot find on the interactive video instruction
platform.
Once the CD-ROM courseware is written, FedEx knows that it must be
updated. The workforce relies on the system to provide accurate and current
information. For them, out-of-date information is worse than no information at
all. For this reason, a new CD-ROM is sent to each location every 6 weeks.
This CD-ROM updates the curriculum through text, PC graphics, and digital
audio. More than 1,000 updates are made yearly.
Improvement Programs for Customer Service

FedEx’s customer service representatives get thousands of telephone
calls a day, all demanding ready answers. In the past, company representa-
tives handled questions by passing along customers and problems to
another representative. The EPSS, however, has enabled FedEx to resolve
problems “immediately and proactively without passing off any customers,”
says Bart Dahmer, manager of technology services and technical training at
Federal Express in Memphis (Marquardt and Kearsley, 1999, p. 269).
The EPSS permits customer service representatives to enter another
computer application without closing down the first. For example, represen-
tatives do not have to exit the billing screen before accessing the customer
service screen. They can retrieve information from several databases and
place it promptly on their computer screens so they can address their cus-
tomers’ specific problems. Through prompts, the system enables workers to
provide instructions on topics such as measuring a box and even converting

pounds to kilograms.
Recently, FedEx created a mandatory performance improvement program
for all employees who deal with customers face-to-face or over the phone. Its
primary goals were to completely centralize the development of training con-
tent while decentralizing delivery and to audit employees’ abilities to retain
what they learned. The program consists of job knowledge tests linked to an
interactive video instruction (IVI) training curriculum. FedEx customer-contact
employees around the country are required to take the tests every year via
computer terminals at their worksites. The tests measure knowledge of spe-
cific jobs and are reflected in annual employee evaluations, making up about
one-tenth of the performance ratings.
By testing customer-contact employees on product knowledge, services,
policies, and various aspects of their jobs, FedEx obtains two major benefits,
according to William Wilson, manager of training and testing technology. First,
all employees operate from the same book, which means that customers
receive accurate and consistent information. This helps maintain the compa-
ny’s high service levels and commitment to quality. Second, managers have
an objective method of measuring the job knowledge of all customer-contact
employees (Marquardt and Kearsley, 1999, p. 268).
FedEx offers many incentives to encourage workers to quickly increase
their learning. For example, employees are paid for 2 hours of preparation
before each test, 2 hours of test time, and 2 hours for post-test study.
Currently, workers use the IVI program for approximately 132,000 hours
per year. In terms of traditional training, this is equal to approximately 800
days of classes of 20 employees each. Yet no trainers are necessary, and no
travel costs are incurred.
Validating Electronic Test Programs
Federal Express also developed a test program called QUEST (Quality
Using Electronic Systems Training) to ensure that all its learning tests are valid,
relevant, and fair, and meet appropriate standards. The company imple-
mented the program by creating focus groups composed of trainers, man-
agers, and employees. The focus groups designed the tests, which consist of
multiple-choice questions pertaining to all vital aspects of employees’ jobs.
Based on their collective knowledge, the focus groups created surveys
covering the critical tasks for each job. Workers were then asked to rate their
own tasks in order of importance. The focus groups wrote the test questions
based on those evaluations, being careful to include only questions that per-
tained directly to specific workers’ actual activities.
Pilot testing was the final step before implementation. At this phase,
subject matter experts and an on-staff industrial psychologist examined any
questions that might be construed as unfair based on the number of workers
who missed them. The entire process—from focus group formation through
test validations to implementation—took approximately 15 to 18 months.
To keep the tests timely, FedEx scheduled quarterly meetings of the orig-
inal focus groups. Group members discuss test questions to determine if they
are still valid and also write new questions. Over a period of time, FedEx has
built up a bank of several hundred questions for each test. Invalid questions
are replaced with equally weighted questions on the same topics.
FedEx has found that the QUEST program saves hours in clerical and
administrative activities because the computer does all the scoring, record
keeping, item analysis, and score reporting. Additional features of the program
are real-time registration, real-time score reporting, and item analysis.
Success of E-Learning
Federal Express has invested large amounts of money on technology-
based learning but is quick to point out the many benefits and even greater
savings that have resulted for the company. Internal studies at FedEx show
that its system for just-in-time training is effective: Instruction time on some
modules has been reduced by 50 percent, with no loss in retention or quality
of training. Since the implementation of interactive video training, job knowl-
edge test scores have increased an average of 20 points. Locations that
make greater use of interactive video training report higher scores. When cor-
relating scores and performance evaluation ratings, FedEx learned that the
employees with the highest test scores are generally the company’s better
performers.
FedEx firmly believes that its philosophy of training to the job, performing
to standards, and testing for competency provides customers with a value-
added insurance program that translates into outstanding service, which gives
the company a competitive edge. Well-trained, knowledgeable, and empow-
ered employees support this philosophy as well as the company’s goal of 100
percent customer satisfaction.
Technology and Learning in Organizations Around the World
Technology utilization is a powerful resource in organizations. Infor-

mation and multimedia technology, from CD-ROMs to networked
programs and computer-based applications, are to the economy of
today’s world what the railroad was to 19th-century America. New
technologies and their innovative use have enabled learning organi-
zations to quickly leapfrog over their competitors. Organizations
around the world are finding new ways of integrating multimedia in
order to provide enhanced learning in ways that are more efficient,
less costly, and more flexible than ever before.
TOP 10 STRATEGIES FOR TECHNOLOGY APPLICATION
1. Encourage and Enable Staff to Connect to the Information

Highway
Many organization members, especially older employees, are
afraid of computers or are unwilling to regard them as an impor-
tant resource for personal and corporate success. A learning
organization will dedicate time and energy to these people; after
all, many are in senior positions and may be unintentionally slow-
ing the use of technology, thereby limiting a company’s ability to
store and transfer knowledge. In doing so, they limit the firm’s
capacity to learn faster and better.
The information available in such abundance from electronic
sources is too valuable to be neglected by even a few employees.
Learning organizations encourage staff to tap into external online
databases and electronic bulletin boards, such as those maintained
by universities, vendors, partners, and other learning resources.
They can also examine research findings and new practices re-
lated to neuroscience, adult development, and psychology while
keeping abreast of advances in computer software and hardware
that may facilitate teamwork across geographic and discipline dif-
ferences.
2. Develop Multimedia, Technology-Based Learning Centers

Many learning organizations maximize their formal learning
efforts by incorporating computers, multimedia, interactive video,
and distance learning into their facilities. Technology is being used
to create and support learning environments that powerfully inte-
grate art, music, and visuals, blending the most effective educa-
tional theories with state-of-the-art technologies.
In these learning centers, computer-assisted programs and
tutorials greatly enhance the flexibility of individual learning,
while group efforts enhance interpersonal, critical thinking, and
generative learning skills.
With the vast array of learning technologies available, select-
ing the best medium becomes important. As a general rule of
thumb, computer-based training and CD-ROMs are more effec-

tive for knowledge skills, whereas interactive technology usually is
more effective for behavioral training.
3. Develop and Use a Variety of Distance-Learning Technologies

With its FORDSTAR program, Ford has successfully demon-
strated the power and value of using a variety of distance-learning
technologies. Here is a quick checklist to consider when develop-
ing distance learning for a given organization:
• Verify that distance learning is the right choice for the
organization.
• Be prepared to define distance leaning and communicate its
benefits to key stakeholders within the organization.
• Integrate distance learning into the overall training strategy.
• Identify course objectives and methodology during the
instructional design phase in order to select the appropriate
technology.
• Form a course development team that includes the instruc-
tional designer, developer, trainer, and technological sup-
port. Identify a management sponsor, distant site facilita-
tors, and materials and facilities support.
• Adapt traditional courses to fit distance-learning platforms
based on technology needs.
• Use dress rehearsals and a pilot to test distance-learning
classes.
• Use comprehensive evaluations systems to assess learning.
• Use cost-benefit calculations to illustrate the benefits of
action learning.
4. Use Technology to Capture Internal and External Knowledge

and Ideas
Using technology to gather knowledge from people both
inside and outside the organization should be a high priority.
Corning’s human resources department, for example, videotapes
interviews with acknowledged experts; the tapes are then made

available to staff who might benefit from the expert’s knowledge,
ideas, and inspiration. Corning’s Bill Whitmore even created a
new name, tecknowledgy transfer, for this process, which is
designed to identify technical experts, capture their knowledge,
and then transfer that knowledge to strategic sites within the
organization (Marquardt and Reynolds, 1994).
Royal Bank of Canada also uses technology to expedite
knowledge transfer through communication channels such as
videoconferences between offices, a weekly worldwide conference
call known as the President’s Forum, a corporate video network,
and weekly exchanges of videocassettes.
5. Acquire and Develop Competencies in Groupware

and Self-Learning Technology
Improving the quality of group decision making while
decreasing the time required for the process is a valuable accom-
plishment for learning organizations. To this end, it makes sense
to become familiar with various groupware software packages that
can help manage group processes and learning in areas such as
project planning, team development, and meetings management.
Other specific software applications are designed to promote
learning and assist with individual problem solving and decision
making.
6. Install Electronic Performance Support Systems

The EPSS must be understood by people across the organiza-
tion before it can be developed and used properly. Requirements
include an adequate technological infrastructure, appropriate
skills among employees, and management support for develop-
ment and implementation.
All nine components of a comprehensive and solid EPPS
must be developed. In brief, these are competency profiles; expert
knowledge bases; online help; integrated training and job aids;
electronic integrated reference system; online documentation; a
system for monitoring, assessment, and feedback; links to external
applications; and system information.
7. Plan and Develop a Just-in-Time Learning System

Much like the just-in-time inventory concept, the reasons
behind just-in-time learning are to reduce waste and cost and
increase productivity by making sure learning happens as close as
possible to the time when workers need it. This is especially
important because the shelf life of much current knowledge has
become shorter than ever, often less than a few months in certain
technical and service areas. Thus, the pressure is on learning
organizations to develop innovative ways of providing learning at
the most effective moments. To construct a just-in-time learning
system, companies must integrate high-tech systems, coaching,
and actual work on the job into a single seamless and rewarding
process.
8. Build Internal Courseware Technology and Capability

Learning organizations should acquire the technology and
capacity to design software systems that support individual and
collective learning. These might include self-development systems,
open learning catalogs and live resources, career development sys-
tems, diagnostic instruments, decision-making aids, opinion sur-
veys, and even methods of achieving instant and continuous feed-
back about the learning of teams, departments, or the company as
a whole. These systems can then be integrated with other software
tools, such as project managers, spreadsheets, databases, and word
processors and become part of the everyday activity, language, and
know-how of the organization.
9. Use Intranets for Training

Learning organizations reap tremendous benefits from using
intranets for learning purposes. Positives include consistency, cen-
tralization, and convenience because the same training materials
are drawn from a single database to be used by employees when
and where they prefer. The interactive quality of tools such as Java
and Shockwave enliven Web-based training, making it fun and
engaging. Most intranets can be created and maintained with min-
imal programming expertise, and once systems are established,
updating intranet learning materials is easier and less expensive

than revising print-based resources. And, as bandwidth increases
and new technologies emerge, the potential of intranets continues
to evolve. Last but not least, new learning technologies help
organizations stay current with the younger workforce.
10. Increase Capabilities of Management

and Human Resources Staff
To maximize the power of technology and enhance organiza-
tional learning capacity, managers and HRD staff should be
knowledgeable about technology-based learning. They should also
be prepared to assume key leadership roles in the following areas:
• Operating technological systems that support organizational
learning
• Managing large and continuous organizational change processes
• Facilitating outsourcing processes for technological resources
• Facilitating structured on-the-job learning systems
C H A P T E R 8
Becoming a
Learning Organization
BECOMING A LEARNING ORGANIZATION demands an understanding of

and a commitment to mobilizing all five subsystems of the Systems
Learning Organization Model featured in this book. Taking the spe-
cific steps to build a learning organization requires well-orchestrated
planning on the part of many people in the organization.
It is also important to remember that being a learning organiza-
tion is not a static condition. Change is constant, and the need for
learning is never finished. Initiatives such as continuous process
improvement are just part of a learning organization’s overall goal:
for everyone in the company to learn as much and as often as possi-
ble in order to increase productivity. Specifically, this means that
learning organizations practice and improve learning skills and prin-
ciples throughout the organization as well as up and down the busi-
ness chain. Maintaining this new, higher level of learning power is,
perhaps, as challenging as initiating the process of becoming a learn-
ing organization.
209
There is no single, guaranteed way to become a learning organi-

zation. Each company must develop a structure and style that is best
suited to its own people, history, skill base, technology, mission, and
culture and then develop an appropriate learning structure and style.
Watkins and Marsick (1993) refer to this process as “sculpting” the
organization in the way that best releases the inner potential of its
technology, people, and resources.
Given these caveats, there are some clear guidelines and direc-
tions that can be of help to companies seeking to begin this journey.
Analysis of the steps implemented by companies that have become
learning organizations reveals a number of common strategies and
sequences of action that enabled them to climb the organizational
learning ladder (see Table 7). Intentionality and commitment to
becoming a learning organization, not luck or circumstances, made
their journey successful. However, it is important to remember that
these strategies are intended as possibilities, not prescriptions. It will
be up to you to determine exactly which pathway and choices might
work best in your organization. As you review each step, ask your-
self the following questions:
• Does your organization do this? If not, could it?
• What are the barriers that might prevent your organization
from taking this step?
• What is needed to enable your organization to complete this
step?
Commit to Becoming a Learning Organization
The first step is for leadership to commit themselves to transforming

the company into a learning organization. Whether the impetus for
change comes from a single charismatic leader or a critical mass of
managers, the organization must understand that business success
depends on learning success. The reason is simple: A learning orga-
nization can rapidly transform its new knowledge into new products,
marketing strategies, and ways of doing business. As an added bene-
fit, a learning organization can be an exciting, enjoyable, and fulfill-
ing place to work. Such an organization attracts and retains top peo-
Becoming a Learning Organization 211
T A B L E 7
16 Steps in Building a Learning Organization
1. Commit to becoming a learning organization.

2. Form a powerful coalition for change.
3. Connect learning with business operations.
4. Assess the organization’s capabilities on each subsystem
of the Systems Learning Organization model.
5. Communicate the vision of a learning organization.
6. Recognize the importance of systems thinking and action.
7. Leaders demonstrate and model commitment to learning.
8. Transform the organizational culture to one of continuous
learning and improvement.
9. Establish corporate-wide strategies for learning.
10. Reduce bureaucracy and streamline the structure.
11. Extend learning to the entire business chain.
12. Capture learning and release knowledge.
13. Acquire and apply the best technology to the best learning.
14. Create short-term wins.
15. Measure learning and demonstrate learning successes.
16. Adapt, improve, and learn continuously.
ple, thus bringing even more learning, productivity, and success to

the company.
Most successful change efforts begin when individuals or groups
within the organization take a serious look at the company’s com-
petitive situation, market position, technological trends, and/or fi-
nancial performance and realize that either a great crisis or a great
opportunity looms. This first step is essential because establishing a
strong sense of urgency does much to gain the active cooperation of
many individuals.
More than 50 percent of companies never get their transforma-

tion efforts off the ground because they fail at this first phase. There
are any number of reasons for this failure. For example, executives
sometimes underestimate the difficulty involved in moving people
out of their comfort zones and may discover that they lack the
patience to handle the preliminaries. Or they may be afraid of the
risks involved in creating a new system of operations. Possible down-
sides include defensiveness on the part of senior employees, a drop
in morale, the change process spinning out of control, or negative
impact on short-term business results.
A key strategy at this point is to portray the status quo as more
dangerous than launching into the unknown. Unless people see the
situation as critical, the transformation process will not succeed.
Form a Powerful Coalition for Change
Although the aspiration may begin with just one or two people, suc-
cessful transformation into a learning organization requires at least a
certain number of individuals who are truly committed to this goal.
John Kotter (1995), a Harvard professor with extensive experi-
ence in assisting organizations in major change efforts, notes that “in
successful transformations, the chairman or president or division
general manager, plus another 5 or 15 or 50 people, come together
and develop a shared commitment. . . . In my experience, this group
never includes all the company’s most senior executives because
some people just won’t buy in, at least not at first. But in most suc-
cessful cases, the coalition is always pretty powerful—in terms of
titles, information, expertise, reputations and relationships” (p. 62).
Where to begin transforming a company into a learning organi-
zation? Is there a starting point? It is generally preferable to begin by
acquiring the commitment of top leadership. However, this is not
always possible, particularly in the early stages. Some leaders need to
be shown that the transformation works, even if only at the unit
level. Senior managers always form the core of the coalition, but the
guiding light may often be a board member, a representative from a
key customer, or even a powerful union leader.
But if organizations are, in fact, organisms, then each small
part—every department or site—has the capacity to affect the whole
organization. Any area may foster experimentation, get people to

work together on real problems that will release their ideas and ener-
gies, tackle flaws in the system, and learn collectively.
The degree of difficulty you experience in effecting organiza-
tional change often depends on your position in the company. If you
feel that you are working in the middle or at the margins, take action
through committees and other structures that provide avenues for
exerting indirect influence over decision makers. Clarify your situa-
tion by answering the following questions:
• What is your company’s level of organizational learning?
• What is your position in the organization?
• What avenues and resources could you use to transform your
company into a global learning organization?
The sense of urgency helps assemble a guiding coalition, but
making progress requires a person who can bring these people
together, help them develop a shared sense of the critical nature of
becoming a learning organization, and develop the necessary level of
trust and communication. Off-site retreats are especially valuable at
this stage.
Companies that fail in this first step have usually underestimated
both the difficulties involved in producing change and the impor-
tance of a powerful guiding coalition. Or their coalition may be un-
able to work as a team: Without a strong guiding coalition, a com-
pany may make progress for a while, but, sooner or later, other
significant issues will emerge and block the efforts for change.
Connect Learning with Business Operations
Leaders who decide to build a learning organization must clearly and

explicitly link the process and products of learning to the organiza-
tion’s strategic goals. Companies that succeed at becoming learning
organizations are those that realized they would not be able to con-
vince others to share their commitment until they defined and
achieved measurable benefits from being learning organizations.
Connecting learning to improved business operations is persuasive
proof of the importance of taking this new direction, in spite of the
initial difficulties and challenges.
One way to link learning with organizational strategy is to estab-

lish an advisory learning team that reviews the overall direction of
learning. This team ensures that learning fits and promotes the orga-
nization’s strategic goals. Some of the following points may help
convince doubters in the organization.
First, make clear that learning is an important job task. In fact, it
is as much an organizational task as are the production and delivery
of good and services. Productivity and profits, of course, are still
important, but company-wide learning is the only way to improve
them.
Second, explain how learning can and must fit into daily opera-
tions. Organizations can learn as they produce, without sacrificing
speed and quality while doing so. Every activity—from planning
through execution to assessment—is an opportunity to learn. Pro-
duction systems can also be learning systems.
Third, point out that learning and the resulting knowledge will
be stored with the organization, even if key individuals leave.
Learning organizations are equipped to develop comprehensive and
systematic ways of maintaining and using this knowledge for short-
term and long-term business success.
Assess the Organization’s Capabilities
As in most change efforts, a critical early step is to identify existing

strengths as well as weaknesses, resources as well as gaps. Many
organizations have done this informally, but more and more compa-
nies are realizing the importance of a comprehensive, systematic
examination of their organizations’ learning competence.
The Learning Organization Profile (LOP), in Appendix A, is one
tool for assessing your company’s status. This instrument has under-
gone extensive field testing and has been used successfully by more
than 100 organizations from every part of the world. The LOP con-
sists of 10 questions that address each of the five subsystems of the
Systems Learning Organization model. Individuals or teams rate
their organizations on a Likert scale from 4 (highest) to 1 (lowest) on
each question. (For further information on the Learning
Organization Profile, contact Learning Organization Associates at
[email protected].)
Communicate the Vision
Once your company commits itself to becoming a learning organiza-

tion, it must communicate this vision to all employees and stake-
holders. When everyone has the same goal, the new organizational
vision will enjoy unparalleled enthusiasm and support.
A vision gives employees and the entire organization an over-
arching goal that helps guide strategic thinking and planning. In
addition, people are more inclined to accomplish tasks that serve a
purpose they understand and embrace. Vision generates powerful,
creative learning that leads to high-quality products and services. It
also provides a focus that keeps learning processes and efforts on
course in the face of stress, frustration, and impatience.
Jim Gannon, vice president of human resource planning and
development for Royal Bank of Canada, underscored the absolute
importance of communicating the vision of corporate-wide learning
by stating that “visions are what energize the organization; they are
the dreams that pull us forward.” The learning vision, like any
vision, must be communicated effectively, since even “the most
sophisticated vision is of no use unless it can be clearly understood
by others” (Marquardt, 1996, p. 69).
Successful transformation requires a vision of the future that can
be communicated readily and appeals to employees and other stake-
holders. Without this vision, efforts may easily dissolve into confus-
ing and incompatible projects that lead in the wrong direction, con-
flicting directions, or nowhere at all. Kotter (1995) cites a useful rule
of thumb: If you can’t communicate the vision in 5 minutes or less
and get a reaction that signifies both understanding and interest, you
are not yet done with this phase of the transformation process.
Executives who communicate well incorporate the vision into
their hour-by-hour activities. For example, in routine discussions
about business problems, they may talk about whether or not pro-
posed solutions fit the goal of a learning organization, or, during reg-
ular performance appraisals, they may explain how certain kinds of
behavior help or undermine the vision.
Corporate leaders use every available communication channel to
broadcast the vision. Company newsletters that were once boring
and probably unread can be enlivened with dynamic articles about
the vision. Routine and tedious management meetings become excit-

ing discussions of the company’s transformation into a learning
organization. Courses that focus on the new vision replace old-style
management classes. And, most important, these leaders consciously
attempt to become living symbols of the new corporate culture of a
learning organization.
Recognize the Importance of Systems Thinking and Action
A company cannot become a learning organization unless people in

the company recognize the value of a systems approach. In other
words, they must refrain from focusing on just one subsystem or one
part of the organization.
Systems thinking helps organization members clarify patterns
and identify more effective approaches to changing them. Recogniz-
ing and understanding the links between actions enables them to
explore the reasons behind successes, challenges, and failures.
Systems action helps people focus on high-leverage changes that
may not be obvious and create archetypes of successful actions for
others in the organization to follow. Companies such as Alcoa,
Boeing, Procter & Gamble, and Wal-Mart have encouraged their
workers to adopt the techniques of systems thinking and systems
action.
Maintaining a learning organization requires a broad systems
perspective that recognizes the interdependence of organizational
units and activities. It enables people to see problems and solutions
in terms of systemic relationships among processes and to under-
stand the connection between the needs and goals of units and those
of the organization as a whole.
Learning organizations realize that there is more than one way to
accomplish business objectives and work goals. An organization that
supports variation in strategy, policy, process, structure, and person-
nel will be much more prepared to adapt to unforeseen problems.
This appreciation of diversity provides more options and, perhaps
even more important, allows for greater stimulation and richer inter-
pretation for all organizational members. A variety of methods, pro-
cedures, and approaches will enhance future learning in a way that a
single approach cannot.
Leaders Demonstrate and Model Commitment
Learning organizations need the commitment, modeling, and in-

volvement of all leaders. Especially in the early stages of becoming a
learning organization, leaders should have one aim: pursuing im-
proved overall performance by implementing long-term learning by,
and continuous improvement of, all individuals and teams.
Creating vision is not enough. Organizational leaders must be
able to articulate the learning vision and become engaged in its
hands-on implementation. Active involvement includes eliminating
barriers created by layers of management, remaining visible at every
level of the organization, and participating in early learning efforts.
As top managers become convinced of the learning organiza-
tion’s value, they must become models, eager to learn for themselves
and encourage others to learn as well. Managers should view them-
selves as coaches, facilitators, and advocates who promote, encour-
age, and reinforce learning.
Leaders can create a corporate learning culture in a number of
ways. They should provide opportunities for training and practice in
organizational learning. At the same time, company norms must
encourage staff members to overcome their fear of making errors
and support those who make mistakes in pursuit of progress.
Employees at all organizational levels should be recognized for their
efforts and rewarded for innovative thinking and experimentation.
When many people promote a new idea, learning takes place more
rapidly and far more extensively. Effective learning environments
utilize both top-down and bottom-up initiatives for enhancing orga-
nizational awareness or developing new competencies.
Nokia’s CEO Makes Commitment

to Learning
Nokia CEO John Ollila has a strategy that calls for continuous learning at
all levels, which he believes best prepares the company for anticipated expec-
tations. “As the level of uncertainty in our environment grows,” he noted in the
1998 annual report, “knowledge empowers us to act with purpose and confi-
dence. And investment in continuous learning is reflected in a company’s per-
sonnel and product developed. Nokia will substantially invest in continuous
learning.”
Nokia recognizes competence development as a critical factor in its suc-

cess in the rapidly changing business environment. The company encourages
continuous learning by providing a wide range of training, from induction,
skills, and technology training to management and leadership development.
Training programs are local or global. Nokia believes that most learning occurs
outside the monitored learning environment, favors action learning in many of
its programs, and offers new assignments and opportunities for growth and
job rotation. Employees spend an average of 11 working days per year on
training; new employees receive 20 days in their first year at Nokia.
Ollila is improvising a brand-new style of high-tech management, replac-
ing the usual “slip and you die” thinking with a “slip and you grow” philoso-
phy. In his view, failures are learning opportunities. He shuns comfort and
complacency, looks for challenges instead, and plunges into the unknown and
unconquered. For example, just when Nokia seemed to be performing in high
gear, Ollila switched the jobs of all his top managers, removing them from their
comfort zones. The upheaval was designed to sharpen their skills and inject a
sense of urgency into a successful operation. According to BusinessWeek, he
“lives by the plunge.” Ollila believes that “it takes a dive into the unknown, or
a push, to tap into employees’ strongest instincts—those that guide survival”
(Baker, 1998).
Learning must be an inherent part of the organization, not an event but an
ongoing process. “You can’t issue instructions every day or run a company
like a conductor runs an orchestra. Whatever it is, has to be deep within the
organization—almost in its genes. It is all about the ability to scan ideas, the
willingness to take new ideas on board. It’s about not having any of the ‘not
invented here’ syndrome” (Marquardt and Berger, 2000, p. 173). Nokia’s cor-
porate culture is receptive to change and new ideas. Part of the learning
process is to get out of the office, pick up information from colleagues, and
expect to be able to challenge the truths or assumptions of other colleagues.
Ollila involves top managers and employees in strategic reviews because
he sees these occasions as learning opportunities. By engaging more people,
the ability to implement strategy becomes more visible. Such reviews force
managers to look for the convergence of different technologies and try to
anticipate their effect on the company.
The most tangible benefit of learning to date is Nokia’s recent “smart car”
unit, in Germany, which was created to develop products for the automotive
industry. The company hopes to use its expertise in cellular networks to
design products such as integrated systems for navigation and road guidance
functions.
“The smart-car project needed a multitude of disciplines to master the
solution that will win in the future,” said Ollila. “The think-tank approach
addressed this challenge effectively” (Marquardt and Berger, 2000, p. 173).
Nokia’s top executive team now meets monthly with a strategy agenda. And
the line managers—who, for 6 months, spend a quarter of their own time on
the exercise—now have the training and perspective to make strategy a reg-
ular part of their jobs (Byrne, 1996).
Nokia’s ability to maintain its leadership position in the fastest-growing
telecommunications segments is based on the learning of its employees. In
Ollila’s words, the key is “Getting the right people, mobilizing them, and put-
ting in place a concept of continuous learning. You have to have something in
your organization to attract people who are willing to achieve something dif-
ferent. And then you will have to reward people who get things done—people
who learn from their mistakes” (Marquardt and Berger, 2000, p. 173).
Transform the Organizational Culture
Companies on their way to becoming learning organizations under-

stand that they must transform their cultures in many significant
ways. Let’s explore several effective approaches.
Continuous Learning
When building a learning company, ongoing learning should become
a habit, a joy, and a natural part of work for everyone. Learning
should occur as an automatic and integral part of production, mar-
keting, problem solving, finance, customer service, and every other
company operation.
Pledge to provide numerous opportunities for learning, includ-
ing formal educational programs, speakers, coffee klatches, panels,
tours, videoconferences, and monthly programs. By focusing on con-
tinuous learning rather than on one-time training events, you will
forge a new relationship with employees, one that demonstrates
your belief in them and their learning. Ensure a supportive and
interesting environment, in which continuous learning yields
reflections, insights, and new ideas that can be translated into
action throughout the organization.
Maintain the high level of power in a learning organization by
demonstrating ongoing commitment to lifelong education at all lev-
els of the organization and clear support for the growth and devel-
opment of all members. Communicate a palpable sense that learning
and practicing are never finished. This factor is another way of
expressing what Peter Senge (1990a) called “personal mastery.”
Continuous Improvement
Commitment to continuous improvement is a driving force for all
learning organizations that strive to “delight the customer.” Learning
organizations thrive in a culture of continuous improvement because
one important question is constantly on every person’s mind: “How
can we do this better?” This is why companies that believe in and
practice total quality management (TQM) are already on the path
toward corporate-wide learning. Quality management requires a
comprehensive learning approach that encourages everyone to im-
prove performance. A culture of continuous improvement is clearly
a learning one.
Motorola began its transformation into a learning organization
when the company committed itself to the Six Sigma improvement
process, a standard of quality that allows no more than 3.4 defects
per 1 million parts in manufactured goods. Reaching that goal,
which Motorola has currently exceeded, called for constant atten-
tion to improving every action and interaction in the organization. It
forced the company to find ways of continuing to improve—and that
made them better learners and a smarter organization.
Empowered Employees
Employees must be empowered with the necessary freedom, trust,
influence, opportunity, recognition, and authority as well as enabled
through the necessary skills, knowledge, values, and ability so that
they can contribute to the organization at their optimal levels. Vogt
and Murrell (1993) contend that empowerment is critical in build-
ing a successful learning environment, since it “sparks exceptional
learning and performance.”
Leadership should place decision-making power and account-
ability at the level closest to the action point. This freedom to serve
the customer includes the ability to spend significant sums and cross
functional borders.
Learning organizations understand that empowered and enabled
employees are essential for global success. They therefore make gen-
erous allocations of time, money, and people toward increasing skills
not only for present jobs but for future, unforeseen challenges. Some
companies spend more than 5 percent of payroll on learning pro-
grams. Employees are much more comfortable with carrying out the
company’s vision and hopes when they have a major role to play and
the skills to do it.
Establish Corporate-Wide Strategies for Learning
Quantum leaps in learning require strategies and tactics for expand-

ing individual, team, and organizational levels of learning across the
corporation. Some of the following strategies may be helpful.
Encourage and provide time for experimentation. Since learning
comes through experience, increased numbers of guided experiences
at any stage of the value chain will lead to more learning. Managers
in learning companies continue to act like applied research scientists
even as they deliver goods and services. Sustained learning organiza-
tions support the practice of trying new things and being curious
about how things work. Motorola University, for example, has been
an experimental venture from the start and constantly tries out new
learning approaches. At Wal-Mart stores, about 250 experiments are
being conducted on any given day in areas such as sales promotion,
display, and customer service.
Develop company-wide systems that reward learners and learn-
ing. People who attempt new and different things, who try and fail
but learn much, become the new organizational heroes, not those
who never take risks.
Recognize the importance of accessibility of information.
Companies that continue to grow as learning organizations con-
stantly expand open communications within and throughout the
organization. Problems, errors, and lessons are shared, not hidden.
Debate and conflict remain acceptable ways of solving problems.
Much informal learning takes place during daily, often unplanned
interactions among people.
Schedule regular meetings to exchange information, mingle,
hold informal gatherings, and share learning experiences. National
Semiconductor, for example, holds annual events at which teams of
employees present their best projects, experiments, and innovations.
Other companies write case studies about their successes and failures
and use these studies at meetings and training programs.
Gain real business leverage by applying new learning in hundreds

of different places throughout your organization. Free up and moti-
vate all workers to use internal and external learning, and reward
those who can apply the insights of others as well as those who come
up with new ideas of their own.
Encouraging Learning at all Levels

A learning organization promotes learning at three levels: the indi-
vidual worker, the group or team, and the organization itself. All
three levels complement and invigorate one another, so none should
be neglected when it comes to learning. Here are some ways to
encourage, expect, and enhance learning at each level.
Make learning a part of the job for individuals. Learning orga-
nizations clearly state that every person in the organization has two
jobs: his or her current job and learning how to do it better. Promote
responsibility by expecting all departments and people to take the
initiative when it comes to their own learning. Organizations should
provide continuous learning packages that encourage everyone to
view learning as an everyday experience and to use all available
opportunities for learning and development.
Team learning is vital because teams, like families in a commu-
nity, are the basic learning units in learning organizations. Use a vari-
ety of ways to develop team learning, such as new job assignments,
team projects, in-house activities, and group assessment of learning
efforts. Robert Waterman (1987) sees the movement of people in
and out of the various functions and businesses of an organization as
a key to developing a learning organization. Calhoun Wick and Lu
Stanton Leon (1993) believe that building learning teams is the
means to as well as an end for corporate-wide learning.
Organization-level learning is most conducive to systems think-
ing and learning. Leveraging of knowledge is greater at this level
because the connections among learning, resources, and organiza-
tional power are clearer. Learning organizations realize that sound
learning cannot continue unless they are aware of their environ-
ments, and they maintain their interest in external happenings and
the nature of surrounding circumstances. They persevere in gather-
ing information about conditions and practices outside their own
industries or geographic areas.
Learning More About Learning Organizations

Understandably, gathering information about learning organizations
will help companies focus on learning. There are many ways to ap-
proach this task.
Locate and read the growing literature about learning organiza-
tions. Attend conferences and workshops on the subject. Invite the
leader of a learning organization or a consultant or researcher in
organizational learning theory and practice to speak on the topic.
Arrange in-house workshops and discussions with a panel of people
who work in or are leaders of recognized learning organizations.
Create or become part of a consortium of firms that are seeking
to become learning organizations. Identify successful learning orga-
nizations from your industry and geographic region as well as from
other industries and other parts of the world. Talk to people in these
organizations and listen to their ideas. Benchmark their learning
skills and systems. Consider joining the American Society for Train-
ing & Development (ASTD) Benchmarking Forum, which provides
the opportunity to network and learn from some 70 to 80 of the top
learning organizations in the world.
Reduce Bureaucracy and Streamline the Structure
Bureaucracy is the bane of any organization that hopes to develop

the power of learning in the workplace. It kills energy, creativity, and
the willingness to take risks—all qualities that nourish the learning
process. Forms and regulations for every possible scenario choke off
learning. Tom Peters declares in Thriving on Chaos (1987) that
“demolishing” their own bureaucracies is an absolute priority for all
learning organizations.
Begin streamlining your organization with some of the following
methods:
• Reengineer: Eliminate business processes that decrease learn-
ing, the flow of knowledge, or empowerment of employees.
This includes hard bureaucratic structures, such as vertical and
horizontal barriers, and unnecessary policies and restrictions.
• Refocus: Build structures around projects and customers
rather than traditional functional silos.
• Decentralize: Move power to the point of action—and learn-

ing—as much as possible.
• Introduce fluidity: Build the organizational capacity to quickly
recognize and serve the needs of the marketplace.
• Bond: Combine all former functional activities into a seamless
whole that works in a highly integrated fashion.
Organizations might also consider following the lead of Royal
Bank of Canada, which encourages people to eliminate the bureau-
cracy by challenging unnecessary forms and rules, exposing and
eliminating systems and processes that discourage learning, and
rewarding and recognizing only those actions that promote knowl-
edge and improved quality and service.
Eliminating Obstacles
Successful transformations inevitably require the removal of obsta-
cles. The main obstacles to organizational learning are
• Bureaucracy, which values policies, regulations, forms, and
busywork above change
• Competitiveness, which emphasizes individuals at the expense
of teamwork and collaboration
• Control, which may provide a “high” for those who wield it
but is always a “low” for organizational learning
• Poor communications resulting from filters such as conscious
and unconscious biases, selective listening, and delays
• Poor leadership from managers who neither preach nor prac-
tice learning and are most concerned with protecting their turf
• Rigid hierarchies that force people and ideas to go up and
down narrow silos
In the early stages of becoming a learning organization, few com-
panies may have the momentum, power, or time to get rid of all
obstacles. But as growing numbers of people become involved and
change progresses, major barriers can be confronted and moved.
Action is important, both to empower individuals and to maintain
the credibility of the change effort throughout the organization.
Extend Learning to the Entire Business Chain
Learning organizations can truly tap into all potential sources for
knowledge and ideas if they expand the benefits to all stakeholders,
including customers, vendors, suppliers, and surrounding communi-
ties. These groups have a vested interest in the outcome of an orga-
nization’s learning and can assist in validating relevant areas such as
needs analysis, learning goals, design of learning packages, and the
link between learning and business goals.
Learning organizations should schedule activities that fit the time
frames and learning styles of these stakeholders. Companies can also
help train customers on applying the new knowledge to their work-
places.
Capture Learning and Release Knowledge
People at every level of a learning organization will be challenged to

develop new knowledge, take responsibility for their ideas, and pur-
sue those ideas as far as they can. The organization’s key challenge
is to create an environment that allows workers to accomplish these
goals.
Learning organizations provide an array of opportunities to cap-
ture learning. They create structures, systems, and time to capture
and audit learning. Learning audits measure whether structures,
time, and other resources are available to create, enhance, and cap-
ture knowledge to the greatest extent possible. They also explore
methods of linking new learning to organizational productivity.
Everyone in a learning organization is encouraged to seek infor-
mation, ideas, and insights from other successful companies as well
as from leading researchers. Manville (2001) notes that greater line
ownership and leadership of programs makes learning part of day-
to-day business processes, which means integrating skills develop-
ment and acquisition into recruiting and deployment plans, per-
formance management, and succession planning. Learning thus
“becomes part of the overall process of new product development,
sales and efforts to increase customer satisfaction and retention”
(p. 40).
Transferring knowledge between people or from databases to

people infuses energy and vigor into the body of the organization.
Knowledge transfer based on mechanical, electronic, and interper-
sonal movements of information diffuses knowledge quickly
throughout the organization—before it becomes dated misinforma-
tion. Workers who are encouraged to use new knowledge will apply
innovative ideas and new approaches to their work.
Learning organizations thrive on quality knowledge and com-
munications. Therefore knowledge should be easily accessible
whether received from people or through information technology.
It should flow up as well as down throughout the organization.
Encourage open discussion and conversation throughout the com-
pany. Consider adopting the type of “lessons learned” meetings that
are held regularly at the Nuclear Regulatory Commission. There,
managers share their experiences and any new ideas that emerged
on their most recent trips. National Semiconductor holds “sharing
rallies,” where workers release their best knowledge to the rest of
the company.
Acquire and Apply the Best Technology to the Best Learning
Organizations that lack information technology or the capability to

use it are at a severe disadvantage in the acquisition, storage, and
transfer of knowledge. If knowledge is the journey, then technology is
the road. Without it, you will not go anywhere quickly enough.
Technology also affects the quantity and quality of learning. It
speeds the flow of information and stores more data than nonelec-
tronic methods. It is easier to update, provides better access to more
people, and makes organizational learning more exciting for work-
ers. Learning centers with multimedia technology are stimulating
and challenging for both individuals and groups. Not only will the
caliber of learning processes be higher, the costs will be lower.
Electronic performance support systems (EPSS) are becoming
increasingly popular with organizations. An EPSS enables people to
learn whenever and wherever is best for them. Because the EPSS
responds with explanations, definitions, descriptions, demonstra-
tions, practices activities, assessments, feedback, and other resources
as needed, workers can truly learn at the same time they are pro-
ducing or serving customers.
Create Short-Term Wins
Because it takes much time and effort to become a learning organi-

zation, momentum may be lost without short-term goals that pro-
vide successes to celebrate. The learning coalition must actively look
for clear performance improvements and reward those involved with
recognition, promotions, and financial compensation.
After a few months of hard work, when the first signs of trans-
formation appear, learning organization advocates may be tempted
to declare victory. Celebrating progress is fine, but “declaring the
war won can be catastrophic,” declares Kotter. “Until changes sink
deeply into a company’s culture, . . . new [changes] are fragile and
subject to regression” (1995, p. 66).
So leaders of successful learning efforts use the credibility afford-
ed by short-term gains to tackle longer-term goals. They go after sys-
tems and structures that are inconsistent with the new vision and
have not been confronted yet and pay more attention to how people
are being developed. Becoming a learning organization takes years,
not months. Even then the process is never truly finished.
Measure Learning and Demonstrate Learning Successes
Learning organizations expend considerable effort on defining and

measuring key factors when venturing into new areas. They strive
for specific, quantifiable measures. Discourse on metrics is seen as a
learning activity and includes such issues as whether measures are
internally or externally focused, degree of specificity, and use of
custom-built or standard measures. This preliminary discourse is
itself a critical aspect of learning, almost as important as the learning
gained from metrics feedback.
Use business rather than training metrics. Focus on specific meas-
urable outcomes of business values, such as customer satisfaction,
product rollout speed, and talent retention. Learning organizations
see performance shortfalls as opportunities for learning. As learning
organizations examine the gap between targeted outcomes and ac-
tual performance, they proceed to experimentation and the devel-
opment of new insights and skills. Well-established organizations
with a long history of success often are not good learning systems
because the feedback they experience is almost exclusively positive.
Ironically, the lack of disconfirming evidence is often a barrier to

learning.
One or more members of the learning organization may visual-
ize something that was not noted earlier. This often leads to an
awareness of additional needs or of assumptions that are no longer
functional.
Adapt, Improve, and Learn Continuously
As noted at the beginning of the chapter, companies that are on their

way to becoming learning organizations realize that they will never
reach a state of perfection that will allow them to stop learning.
Learning organizations are, by definition, always learning, knowing
that knowledge is not finite and is always changing.
These firms are aware of what happened to many of the “excel-
lent companies” identified in Peters and Waterman’s 1982 In Search
of Excellence: They ended up failing in terms of profits and customer
satisfaction or, in some cases, they were bought out by their com-
petitors. Their fatal flaw? They stopped being excellent; they stopped
learning.
Learning organizations realize that they must always keep learn-
ing, always be hungry for new knowledge. They know the vital
importance of continually uncovering, analyzing, and adapting the
best practices of other organizations as well as their own. These
companies employ all resources and stakeholders in their business
chain. They learn continuously and consistently.
In the final analysis, the reality of the learning organization sticks
when it becomes institutionalized, when it is incorporated into the
essence of the company’s identity. Until new behaviors are rooted in
social norms and shared values, the learning organization’s subsys-
tems will be vulnerable to retrogression as soon as the pressure for
change is removed.
Two factors are particularly important in institutionalizing
change in the corporate culture. Successful learning companies make
a consistent effort to show people how the new approaches, behav-
iors, and attitudes have helped improve performance. And these
organizations take the time to ensure that the next generation of
management personifies the new approach.
Action Learning and the Learning Organization
The experience of many learning organizations has shown that the

most effective way of dramatically increasing systemwide learning is
to encourage and enable everyone to become involved in action
learning. With this approach, participants spend time reflecting on
actions planned and then identifying their learning, whether it is
derived from successes or failures or is of a technical or process
nature. An action learning program might begin in one area or
department and later filter throughout the company, thus serving as
a catalyst for change and learning across the entire organization. In
general, action learning programs are most effective if they begin
where significant learning is possible and needed.
Peter Senge, recognized as Mr. Learning Organization by many
people around the world, states that a learning organization must be
able to integrate work with learning and that only through continu-
ously reflecting on its activities does a company become a learning
organization. As Revans (1982) notes, action learning creates con-
stant learning opportunities for people. It builds a culture of and
morale for learning. Lex Dilworth (1995) has called action learning
“the DNA of a learning organization” because it both enables and
forces a company to learn continuously across the organization,
which enhances its ability to adapt to the continuously changing
business environment.
Although action learning was originally designed as a manage-
rial learning process, it offers excellent opportunities for promoting
strategic organizational learning. Two significant events occur
within action learning groups that help to create learning organiza-
tions. First, team members resolve problems, pass the solutions along
to clients, and themselves acquire relevant information and knowl-
edge of processes that will be valuable for future problem-solving
episodes. Second, the body of institutional knowledge increases and
the pace of institutional learning accelerates in user organizations.
Many elements of action learning contribute to the building of a
learning organization. Action learning is outcome oriented and prob-
lem focused, not hierarchically bound. It helps develop “learning
how to learn” skills, such as those of critical reflection and refram-
ing, and strengthens the ability to generate information. By its very
nature, it enables people to learn by doing, mostly on the job,

thereby modeling simultaneous working and learning. It promotes a
culture of continual learning that encourages experimentation and
allows for mistakes within networks where people feel free to share
knowledge, offer support and feedback, and challenge assumptions.
Its systems-based design facilitates the transfer and application of
knowledge throughout the organization, breaking down barriers
between people and across traditional organizational boundaries. All
these qualities help move an organization away from a culture of
training, in which someone else determines and provides for our
development, and toward a culture of learning, in which we are
responsible for our own learning.
Now let’s examine action learning’s beneficial effects on the five
subsystems of the Systems Learning Organization model.
Action Learning and the Learning Subsystem

Action learning programs encourage and enable significant levels of
learning at the team and individual levels. There may be no greater
demonstration of true team learning than meetings during which the
team develops common basic assumptions, a common understanding
of the problem, and common growth in creating new knowledge. At
the end of the meeting, the group seeks to identify ways in which
its learning can be applied to the organization and thereby create
organization-wide learning.
Action learning programs strive for and develop the other two
types of learning, adaptive and anticipatory (see chapter 3). Adaptive
learning occurs when, in reflecting on past actions, the group
attempts to develop a new action that represents a better response to
the environment. Through its analysis of a variety of possible future
scenarios or probable effects of different actions, the group acquires
anticipatory learning skills. Action learning sets generate innovative,
creative knowledge, and the time allowed for deep and frequent
reflection provides the avenue for single-loop, double-loop, and
even deutero learning. Action learning gives people in the organiza-
tion the opportunity to build each of these learning disciplines.
Revans (1982) notes that it is the “social dimension of action
learning that provides the challenge to misconceptions and ingrained
mental schemata which predispose a person to overlook the ways in
which he/she needs to change.” In action learning, we explore real
problems in a nondefensive way with colleagues who criticize, sup-

port, question, and advise. According to Dilworth (1998), action
learning promotes a depth and intensity of dialogue that is uncom-
mon in the normal life experience. Inherent in this approach is the
ability to acknowledge that we frequently act in ways that may be
incongruent with the values and opinions we espouse.
Alan Mumford (1995) has identified 10 necessary learning
behaviors, all of which can be developed with action learning
programs:
• Asking questions
• Offering suggestions
• Exploring options
• Taking risks and experimenting
• Being open and up front
• Converting mistakes into learning
• Reflecting and reviewing
• Talking about learning
• Taking responsibility for our own learning and development
• Admitting to inadequacies and mistakes
Action Learning and the Organization Subsystem

Action learning programs create a culture in which learning is the
most important and valuable objective. The action learning process
places emphasis on how the group can continue to expand upon and
speed up its knowledge and learning capacities. Members are
encouraged and expected to take risks. They recognize that many of
the greatest leaps in learning have resulted from mistakes or failures.
Garratt (1991) remarks that action learning is particularly valu-
able in helping organizations develop a vision and culture commit-
ted to continuous learning. Schein (1993), a pioneer in understand-
ing organizational culture and organizational change, notes that for
change to occur, the organization must “unlearn previous beliefs, be
open to new inputs and relearn new assumptions and behaviors.”
Action learning is a powerful tool for changing values and creating
new visions.
Action learning organizations favor reflection-in-action. The ca-

pacity to quickly take action and generate information is a crucial
one for companies. Senge (1990a) observes that learning cannot
exist apart from action, that action provides the basis for the critical
dimension of reflection. It is the expressed strategy of an action
learning program to integrate time, space, and opportunities for
learning. And action learning programs represent a powerful impe-
tus toward fostering learning across the organization.
The structure of an action learning set is fluid and flexible.
Keeping the flow of questions and knowledge as clear and complete
as possible is vital in processes such as reframing the problem,
identifying possible actions, and providing frank feedback to one
another. Needless protocol and bureaucracy are discouraged. Lead-
ership flows easily throughout the group.
Action Learning and the People Subsystem

Action learning recognizes the importance of involving people
throughout the business chain in the problem-solving process.
Action learning sets are most effective when customers, suppliers,
and interested community members come together to ask fresh ques-
tions and share different perspectives.
Empowering people to take responsibility for themselves rather
than relying on others’ expertise is a key value of action learning.
Limerick, Passfield, and Cunningham (1994) point out that there is,
within action learning programs, the explicit recognition that man-
agement’s role is to provide continuous opportunities for employees’
self-development.
Pedler (1991) notes that a primary task of learning organizations
is to facilitate the staff ’s learning through experience. With action
learning, managers recognize the importance of making time for
seeking feedback, obtaining data from a variety of perspectives, and
encouraging new approaches to old and new problems. They also see the
value of questioning their own ideas, assumptions, attitudes, and actions.
Learning alliances help organizations achieve continuous im-
provement and develop the capacity to cope with discontinuous
change. Knowledge gleaned from fresh sources is as critical for suc-
cess in action learning as it is for success in organizations.
Added members create an enlarged range of continuous envi-
ronmental scanning, analytical range, and range of assumptions, so
that discontinuities are more likely to be recognized. New partners

help members recognize and overcome defensive routines, thus en-
abling them to be more transcendent. Learning takes place at multi-
ple levels within alliances and improves learning for all. Opening the
organization’s borders makes possible completely new organiza-
tional forms, constantly receptive to chaos and prepared to evolve
new forms of order.
Action Learning and the Knowledge Subsystem

Action learning within organizations contains effective mechanisms
for managing all aspects of the knowledge subsystem.
When it comes to acquiring knowledge, action learning organi-
zations are information rich. Members participating in action learn-
ing sets recognize the importance not only of acquiring information
from external resources but of tapping the tacit, internal wisdom and
experience of one another. The internal networks developed in
action learning sets heighten awareness of organizational resources,
facilitate exchanges of ideas, and generate knowledge.
Participants in action learning programs understand that they
must discover new ways of solving old problems because the old
ways may no longer be sufficient. Thus, members constantly create
new knowledge and encourage innovation within the set. Nonaka
(1995) suggests that information creation is a fundamental require-
ment for the self-renewing (learning) organization. An autonomous
self-organizing group begins to coalesce when members have the
freedom to combine thought and action at their own discretion. The
action aspect of action learning clarifies and generates meanings.
Deciding which knowledge to store and why depends on the
organization’s ability to make sense of the data. The company must
then develop categories for coding and retaining value-added knowl-
edge. Through ongoing reflection on learning and the knowledge
acquired, action learning programs lend themselves well to the
Kantian school of thought that “positions sense-making above mere
sensing” (Botham and Vick, 1998). By reflecting on action, the set
develops the ability to make meaning of its collected and stored data.
During reflection periods, self-learning becomes more explicit
and intentional. Set members capture and store for themselves the
knowledge and wisdom that will help them improve in their profes-
sional and personal lives. Action learning groups continuously seek
ways in which to transfer the learning, wisdom, and experience

gained in resolving problems to the organizations and communities
in which they work.
Action Learning and the Technology Subsystem

Action learning has the power to energize and augment both com-
ponents of the technology subsystem: enhancing learning and man-
aging knowledge. Technology alone will not enable an organization
to take advantage of the new strategic opportunities to increase its
learning and utilize its knowledge. Individuals and especially teams
are needed to optimize the development and application of technol-
ogy. Developing the best e-learning hardware and software requires
a keen understanding of how individuals and groups learn; how they
can access, transfer, and apply knowledge; and how their learning
and knowledge can lead to corporate success.
Action learning groups are thus necessary in examining the tech-
nological needs of the organization and the impact of technology on
corporate culture. They are needed to design and develop appropri-
ate technology-based learning systems and knowledge management
systems of the learning organization. Action learning will lead to
analysis and utilization of a wide range of learning technologies and
will help the company develop technology that is user-friendly,
adaptable, and readily available.
Technology and action learning also interact in other ways.
Action learning teams can examine how and why knowledge is or is
not flowing throughout the organization. Electronic Performance
Support Systems can be designed and applied more fruitfully when
developed by action learning groups. And technology plays an
important role when action learning groups must meet virtually, a
situation that is occurring with increasing frequency and proving to
be very successful.
Caterpillars, Cocoons, and Butterflies:

Transition to a Learning Organization
A company must pass through several stages on its journey to becom-

ing a learning organization. The transformational journey of the
caterpillar may serve as an enlightening metaphor.
Organization People
Learning
Knowledge Technology
Figure 18 Butterfly with Four Wings and Learning Center
The caterpillar, representing the nonlearning or slow-learning

organization, survives and gradually grows to a size and speed ap-
propriate for caterpillars. It is limited in movement and can crawl in
only one direction, usually pulling back slightly in order to proceed
forward. It is vulnerable to predators (other organizations) that are
more agile and powerful. Giving it more legs or increasing its rate of
speed (like reengineering or TQM for organizations) is a patchwork
remedy and does not enable it to reach its full potential; it is still
earthbound.
At some point, the caterpillar enters into a cocoon, where an
amazing process takes place. The caterpillar quite literally dissolves
and then re-forms to emerge as a butterfly, a completely different
creature with the power to fly in any direction.
So, too, a company may make the transition from its earthbound
nonlearning status to become a powerful learning organization with
an enhanced capacity to change and transform itself. The learning
organization empowers its people, integrates quality initiatives with
quality of work life, creates free space for learning, encourages col-
laboration and sharing of gains, promotes inquiry, and fosters con-
tinuous learning opportunities. This kind of learning changes per-
ceptions, behaviors, beliefs, mental models, strategies, policies, and
procedures in people and organizations. All five subsystems serve as
the body and wings to carry the organization skyward!
The superstars of organizational learning explored in this book
are companies that have gone from being reasonably competent
caterpillars to beautiful, powerful butterflies. They have metamor-

phosed and adapted themselves to the changing environment and
workplace, to a changing workforce and customers, and have be-
come leaders in their respective industries, across the world.
Learning organizations are places where global success is more
possible, where quality is more assured, and where energetic and tal-
ented people want to be. I wish you the best of success in building
your learning organization!
A P P E N D I X
Learning Organization
Profile
Below is a list of various statements about your organization. Read each

statement carefully and decide the extent to which it applies to your orga-
nization. Use the following scale:
4 = applies totally
3 = applies to a great extent
2 = applies to a moderate extent
1 = applies to little or no extent
I. Learning Dynamics:
Individual, Group or Team, and Organizational
In this organization . . .
____ 1. We see continuous learning by all employees as a high business

priority.
____ 2. We are encouraged and expected to manage our own learning
and development.
237
____ 3. People avoid distorting information and blocking communica-

tion channels by actively listening to others and providing them
with effective feedback.
____ 4. Individuals are trained and coached in learning how to learn.
____ 5. We use various accelerated learning methodologies (mindmap-
ping, mnemonics, imagery, music).
____ 6. People expand knowledge through adaptive, anticipatory, and
creative learning approaches.
____ 7. Teams and individuals use the action learning process—that is,
they learn from careful reflection on the problem or situation
and apply their new knowledge to future actions.
____ 8. Teams are encouraged to learn from one another and share what
they learn in a variety of ways (via electronic bulletin boards,
printed newsletters, or intergroup meetings).
____ 9. People are able to think and act with a comprehensive, systems
approach.
____ 10. Teams receive training in how to work and learn in groups.
Learning Dynamics (maximum score: 40)

TOTAL SCORE
II. Organization Transformation:

Vision, Culture, Strategy, and Structure
____ 1. The importance of being a learning organization is understood

throughout the company.
____ 2. Top-level management supports the vision of a learning
organization.
____ 3. There is a climate that supports and recognizes the importance
of learning.
____ 4. We are committed to continuous learning in pursuit of improve-
ment.
____ 5. We learn from failures as well as successes, which means that
mistakes are tolerated.
____ 6. We reward people and teams for learning and helping others
learn.
Appendix 239
____ 7. Learning opportunities are incorporated into operations and

programs.
____ 8. We design ways to share knowledge and enhance learning
throughout the organization (systematic job rotation across
divisions, structured on-the-job learning systems).
____ 9. The organization is streamlined, with few levels of management,
to maximize the communication and learning across levels.
____ 10. We coordinate our efforts across departments on the basis of
common goals and learnings, rather than maintaining fixed
departmental boundaries.
Organization Transformation (maximum score: 40)
TOTAL SCORE
III. People Empowerment:

Manager, Employee, Customer, Partners, Suppliers, and Community
____ 1. We strive to develop an empowered workforce that is able to

learn and perform.
____ 2. Authority is decentralized and delegated in proportion to respon-
sibility and learning capability.
____ 3. Managers and nonmanagers work in partnership to learn and
solve problems together.
____ 4. Managers take on the roles of coaches, mentors, and facilitators
of learning.
____ 5. Managers generate and enhance learning opportunities as well
as encourage experimentation and reflection on new knowledge
so that it can be used.
____ 6. We actively share information with our customers and at the
same time obtain their ideas and input in order to learn and
improve services and products.
____ 7. We give customers and suppliers opportunities to participate in
learning and training products.
____ 8. Learning from partners (subcontractors, teammates) is maxi-
mized through up-front planning of resources and strategies
devoted to knowledge and skill acquisition.
____ 9. We participate in learning events with suppliers, community

groups, professional associations, and academic institutions.
____ 10. We actively seek learning partners among customers, vendors,
and suppliers.
People Empowerment (maximum score: 40)
TOTAL SCORE
IV. Knowledge Management:

Acquisition, Creation, Storage, Retrieval, Transfer, and Utilization
____ 1. We actively seek information that improves the work of the

organization by incorporating products and/or processes that
are outside our function.
____ 2. We have accessible systems for collecting internal and external
information.
____ 3. We monitor trends outside our organization by looking at
what others do; this includes benchmarking best practices,
attending conferences, and examining published research.
____ 4. People are trained in the skills of creative thinking, innovation,
and experimentation.
____ 5. We often create demonstration projects as a means of testing
new ways of developing a product and/or delivering a service.
____ 6. We have developed systems and structures to ensure that impor-
tant knowledge is coded, stored, and made available to those
who need and can use it.
____ 7. People are aware of the need to retain important organizational
learning and share such knowledge with others.
____ 8. Cross-functional teams are used to transfer important learning
across groups, departments, and divisions.
____ 9. We continue to develop new strategies and mechanisms for shar-
ing learning throughout the organization.
____ 10. We support specific areas, units, and projects that generate
knowledge by providing people with learning opportunities.
Knowledge management (maximum score: 40)
TOTAL SCORE
Appendix 241
V. Technology Application:
Knowledge Information Systems, Technology-Based Learning, and
Electronic Performance Support Systems
____ 1. Learning is facilitated by effective and efficient computer-based

information systems.
____ 2. People have ready access to the information highway via, for
example, local area networks, the Internet, and an intranet.
____ 3. Learning facilities incorporate electronic multimedia support
and an environment based on the powerful integration of art,
color, music, and visuals.
____ 4. Computer-assisted learning programs and electronic job aids
(just-in-time and flowcharting software) are readily available.
____ 5. We use groupware technology to manage group processes such
as project, team, and meeting management.
____ 6. We support just-in-time learning, a system that integrates high-
tech learning systems, coaching, and actual work on the job into
a single process.
____ 7. Our electronic performance support systems enable us to learn
and perform our jobs better.
____ 8. We design and tailor our electronic performance support sys-
tems to meet our learning requirements.
____ 9. People have full access to the data they need in order to do their
jobs effectively.
____ 10. We can adapt software systems to collect, code, store, create,
and transfer information in ways best suited to meet our needs.
Technology Application (maximum score: 40)
TOTAL SCORE
5 subsystems (maximum score: 200)
GRAND TOTAL
Glossary
Many special terms are used in defining and describing a learning organi-
zation. In addition, some terms have different connotations in reference to
organizational learning.
accelerated learning: A learning system designed to improve rate of learn-
ing and overall retention by incorporating creative, sensory-rich techniques
action learning: Deliberate, conscious effort to review and reflectively
inquire into actions of the individuals, teams, or organizations and thereby
increase learning
adaptive learning: An individual’s, team’s, or organization’s learning from
experience and reflection.
ADL (advanced distributed learning): Developing interoperability across
computer- and Internet-based learning courseware through a common tech-
nical framework that contains content in the form of reusable learning
objects.
anticipatory learning: Knowledge acquired by individuals or organizations
in order to meet potential needs. The sequence of anticipatory learning is
vision, reflection, action.
243
application software: Programs such as word processing, spreadsheets,

databases, and desktop publishing.
assessment: The process of systematically evaluating a learner’s or team’s
skill or knowledge level.
assistive technology: Hardware or software designed to help handicapped
individuals.
asynchronous learning: Interactions among instructor and learners occur
intermittently with a time delay. Examples are self-paced courses taken via
the Internet, Q & A mentoring, on-line discussion groups, and e-mail.
ATM (asynchronous transfer mode): A network technology for high-speed
transfer of data.
audioconference: Voice-only connection of more than two sites using stan-
dard telephone lines.
authoring tool: A software application or program that allows people to
create their own e-learning courseware.
blended learning: Learning events that combine aspects of on-line and face-
to-face instruction.
browsers: Software that allows users to find and view information on the
Internet (Netscape Navigator, Internet Explorer).
CAD/CAM (computer aided design/computer aided manufacturing):
Software tools for the design and production of parts or structures
CBT (computer-based training): Using computers for instruction and man-
agement of teaching and learning processes. Also referred to as
computer-assisted instruction, or CAI.
CD-ROM: A format and system for recording, storing, and retrieving elec-
tronic information on a compact disc that is read in an optical drive.
CoD (content on demand): Delivery of an offering, packaged in a media
format, anywhere, anytime, via a network.
competency: An area of capability that enables a person or organization to
perform tasks or fulfill responsibilities.
competitiveness skills: Skills that provide for future needs, such as systems
thinking, team learning, visioning, and mental models.
computer-based learning: Umbrella term that includes all forms of com-
puter use that support learning (see also technology-based learning).
contiguous learning culture: The milieu or environment in which people
are encouraged and enabled to learn on an ongoing basis.
Glossary 245
convergence: A result of the digital era in which various types of digital

information (such as text, voice, and video) and the delivery mechanisms
(television, telecommunications, and consumer electronics) are combined
in new, more closely linked forms.
core competencies: Competencies based on what companies do best instead
of according to product or market.
CRT (cathode-ray tube): The conventional display unit of televisions and
desktop computers (compare to LCD).
desktop videoconference: Videoconferencing on a personal computer.
deutero learning: Individual or organizational learning that occurs through
critical reflection on assumptions; an examination of how the learning is or
is not occurring.
dialogue: Denotes a high level of listening and communication between
people; involves the free and creative exploration of subtle issues, listening
deeply to one another, and being willing to suspend one’s own views.
digital: Transmitting information in discrete (binary) units. Digital signals
are transmitted faster and more accurately than analog signals.
distance learning: Learning situation in which instructors and learners are
separated by time, location, or both.
double-loop learning: In-depth organizational learning that looks at the
norms and structures behind the company’s methods of functioning.
Double-loop learning questions the system itself and tries to determine why
errors or successes occurred in the first place.
DVD (digital videodisc): A form of compact disc with the capacity to store
substantial amounts of video.
e-learning: Delivery of content via Internet, intranet/extranet (LAN/WAN),
audiotape and videotape, satellite broadcast, interactive TV, and CD-ROM.
electronic performance support system (EPSS): A system that utilizes data-
bases (text, visual, or audio) and knowledge bases to capture, store, and dis-
tribute information throughout the organization. The system consists of
several components including, but not limited to, interactive training, pro-
ductivity and application software, and expert and feedback systems.
electronic text or publishing: Dissemination of text via electronic means.
explicit knowledge: Formal, systematic, and easily shared knowledge.
extranet: A collaborative network that uses Internet technology to link
organizations with their suppliers, customers, or other organizations that
share common goals or information.
FTP (file transfer program): Software used to upload or download files

between networks and PCs.
generative organizational learning: The learning that an organization gen-
erates or creates from its own reflections, analyses, or creativity.
group or team learning: The increase in knowledge, skills, and competency
that is accomplished by and within groups.
HTML (hypertext markup language): The coding language used to create
hypertext documents for use on the Web.
hypermedia: A program that contains dynamic links to other media, such as
audio, video, or graphics files.
hypertext: A system for retrieving information from servers on the Internet
using World Wide Web client software.
individual learning: The change of skills, insights, knowledge, attitudes, and
values acquired by a person through self-study, technology-based instruc-
tion, and observation.
informate: Using computer-generated data collected during implementation
for planning and decision making. For example, checkout data scans pro-
vide information—what foods were bought, who buys them, when they
were bought—that enable the store owner to plan advertising, hiring, pur-
chasing, and inventory control.
information architecture: A description or design specification for methods
of handling and organizing information.
intranet: A network that links an affiliated set of clients behind a firewall or
behind several firewalls connected by secure networks.
ISDN (integrated services digital network): Service that provides high-
capacity digital transmission; allows communication channels to carry
voice, video, and data simultaneously.
know-how: Value-added information.
know-how company: An organization that produces and sells information,
ideas, and complex problem-solving services to others. Key features include
nonstandardization, creativity, and high degree of reliance on the knowl-
edge of individuals.
knowledge acquisition: The process by which existing knowledge is col-
lected or obtained. Knowledge can be purchased, borrowed, or stolen.
knowledge architecture: The repository for shared knowledge and collec-
tive intelligence that is organized for easy access by any staff member, any-
time, anywhere. For example, a database that collects key learning of indi-
viduals or an online newsletter that systematically gathers, organizes, and
disseminates the collective knowledge of the organization’s members.
Glossary 247
knowledge creation: The development of new knowledge through innova-

tion, problem solving, insights, or adaptation.
knowledge management: Capturing, organizing, storing, transferring, and
utilizing knowledge and experience within and outside of the organization.
This information is stored in a special database called a knowledge base.
knowledge retrieval: The acquisition of knowledge that is already in the
organization and stored in various systems, such as human and computer,
and in written documents.
knowledge storage: The coding and preservation of the organization’s val-
ued knowledge for easy access by any organizational member.
knowledge transfer: The process of moving and sharing information
throughout the organization utilizing individuals and groups across various
functions; accomplished by personal, mechanical, and electronic means.
LAN (local area network): A network of computers sharing the resources
of a single processor or server within a relatively small geographic area.
LCD (liquid crystal diode): Flat display formats used with laptop comput-
ers and video projection devices (compare to CRT).
learning management system: Software that automates the administration
of learning events.
learning object: A reusable, media-independent chunk of information used
as a building block for e-learning content. Learning objects are most effec-
tive when organized by a meta data-classification system and stored in a
data repository.
learning organization: A company that learns effectively and collectively
and continually transforms itself for better management and use of knowl-
edge; empowers people within and outside of the organization to learn as
they work; utilizes technology to maximize learning and production.
learning portal: Any Web site that offers learners or organizations consoli-
dated access to learning and training resources from multiple sources.
mental model: An image of reality. In organizational learning, refers to a
person’s values and beliefs regarding learning.
mentofacturing: Production of goods and services through the efforts of the
mind. Mentofacturing (Latin, mento: mind) stands in contrast to manufac-
turing, (Latin manus: hand).
metalogue: A high level of dialogue in which a group thinks and creates
together.
mission statement: The operational, ethical, and financial guiding direction
of a company; not simply mottoes or slogans. The mission statement artic-
ulates a company’s goals, dreams, behavior, culture, and strategies.
multimedia: Encompasses interactive text, images, sound, and color.

open space technology: An innovative approach that enhances individual
and group performance by bringing as many as 400 people together to
organize and manage multiday meetings and conferences around complex
issues.
organizational architecture: Structural form of organizations that evolves
around autonomous work teams and strategic alliances.
organizational learning: The enhanced intellectual and productive capabil-
ity gained through corporate-wide commitment to and opportunity for
continuous improvement. It differs from individual and group learning in
two basic respects. First, organizational learning occurs through the shared
insights, knowledge, and mental models of members of the organization.
Second, organizational learning builds on past knowledge and experience—
that is, on organizational memory, which depends on institutional mecha-
nisms such as policies, strategies, and explicit models used to retain knowl-
edge (see also group or team learning and individual learning).
organizational memory: System established by the organization to store
knowledge for future use. Memory is retrievable and can be lodged in indi-
viduals or in technology.
organizational transformation: Large-scale organizational change that
affects mission, values, structure, and systems.
patterns of organizational learning: Four learning patterns based on tacit
and explicit knowledge and their interaction: tacit to tacit, explicit to
explicit, tacit to explicit, and explicit to tacit.
personal mastery: High level of proficiency in a subject or a skill area.
quantum improvement: Doing entirely different things better (versus grad-
ual improvement, which is greater improvement along a continuum).
RAM/ROM (random access memory/read only memory): The two funda-
mental forms of computer memory that define the machine’s capacity.
reengineering: Restructuring organizations around outcomes, not tasks or
functions. It involves a fundamental rethinking and remaking of business
systems that includes an overhaul of job designs, organizational structures,
and management systems.
satellite TV (also called business TV): Transmission of television signals via
satellites.
scanner: Device used to convert printed matter into digital form.
server: A computer with a special service function on a network, generally
to receive and connect incoming information traffic.
Glossary 249
simulator: A device or system that replicates or imitates a real device or system.

single-loop learning: Gaining information to stabilize and maintain existing
operational systems.
social architecture: The cultural, symbolic orientation toward relationships
that enhances learning by encouraging teams, self-management, empower-
ment, and sharing. Social architecture is the opposite of a closed, rigid,
bureaucratic architecture.
synchronous learning: Interaction or transmission of information and
knowledge in real-time (compare to asynchronous learning).
synergy: The sum is greater than the parts.
systems learning: Learning that emphasizes interrelationships.
systems thinking: A conceptual framework that includes a body of knowl-
edge and the tools to make complex patterns clearer and identify effective
ways of changing them.
tacit knowledge: Internal knowledge that is difficult to express (compare to
explicit knowledge).
TCP/IP (transmission control protocol/Internet protocol): Protocol for
information transmission over the Internet.
technological architecture: The supporting, integrated set of technical
processes, systems, and structure for collaboration, coaching, coordination,
and other knowledge skills. Technological architecture may include such
electronic tools and advanced methods for learning as computer confer-
ences, simulation software, and computer-supported collaboration, all of
which work to create knowledge freeways.
technology-based learning: Video, audio, and computer-based multimedia
training for off-site delivery and sharing of knowledge and skills.
teleconference: The instantaneous exchange of audio, video, or text
between two or more individuals or groups at two or more locations.
template: A predefined set of tools or forms that establishes the structure
and settings necessary to create content quickly.
training: Instructional experiences for learners, planned and delivered by
trainers, generally in a formal setting (compare to learning, in which change
is the responsibility of the learner).
URL (uniform resource locator): The standard way to give the address of
any Internet resource that is also part of the World Wide Web.
virtual reality: A computer application that provides an interactive, immer-
sive, and three-dimensional learning experience through fully functional,
realistic models.
vision statement: The intended hope and long-term goal of an organization;

for learning organizations, a picture of what they wish to achieve in terms
of learning.
WAN (wide area network): A network of computers sharing the resources
of one or more processors or servers over a relatively large geographic area.
WAP (wireless application protocol): Specification that allows Internet con-
tent to be read by wireless devices.
WBT (Web-based training): Delivery of learning content through a Web
browser over the Internet, an intranet, or an extranet.
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Index
accelerated learning, 39–40 advanced learning coach, 64

action learning: action taking, 48; alliances: business-related, 29, 124,
benefits of, 48–49, 229–230; coach, 136; learning, 232
46–47; commitment to learning, American Society for Training &
48–49, 229–231; company example Development, 223
of, 49–50; components of, 45–49, anticipatory learning, 25, 44–45, 70
229–230; definition of, 25; empow- automating of operations, 182, 184
erment and, 232; focus of, 46; autonomy, 79
group, 46; knowledge created using,
150; knowledge subsystem benefits benchmarking, 145–146, 223
of, 233–234; organization subsys- boundaries, 92–93
tem benefits of, 231–232; people brainpower, 13
subsystem benefits of, 232–233; Browne, John, 44
problem or challenge associated bureaucracies, 94–95, 223
with, 45–46; questions asked dur- business functions, 182
ing, 47; reflective listening, 47–48; business operations: automating of,
technology subsystem benefits of, 182, 184; learning integrated into
234; vision-building benefits of, all areas of, 84–85, 213–214, 225;
231 trust in, 42
activist, 190 business partnerships and alliances, 29,
adaptive learning, 25, 43–45, 228, 230 124, 136
259
capabilities: assessment of, 214; ment of, 117, 171

description of, 141; technology culture for learning: action learning
effects on, 179 effects, 231; assessment of,
career development plans, 67–68 238–239; autonomy, 79; change,
centers for excellence, 107 81; characteristics of, 76; collabora-
change: coalition for, 212–213; com- tive creativity, 80–81; continuous
mitment to, 212–213; example of, product and service improvements,
121–122; factors that affect, 228; 81; definition of, 27; example of,
learning opportunities, 32; rapid 77–79, 82–83, 96–97; innovation,
pace of, 18–19; responsiveness to, experimentation, and risk taking
81; steady-state to continuous, encouraged in, 79–80, 221; leader’s
112–113; systems thinking for role in creating, 217; quality of
identifying, 52; types of, 2 work life, 81; rewarding of learning
chaos, 81 in, 76–77; shared responsibility for
chunkable learning, 65 learning, 77; training commitment,
classroom learning and training: 80; trust, 77; valuing of learning in,
description of, 39, 174–175; 76–77; variety, 81
technology-based learning as customers: data mining to analyze buy-
supplement to, 195 ing behavior of, 158; educating of,
coach: action learning, 46–47; 123; expectations of, 20, 123; feed-
advanced learning, 64; learning back of, 123–124; global communi-
organization function of, 60–61; cations effect, 11–12; learning
manager’s role as, 113–114 organization role of, 28; organiza-
coevolution, 10 tional influence of, 10–12; partici-
collaborative creativity, 80–81 pation by, 135; shopping criteria
collaborative learning, 61 for, 11–12
commitments: to change, 212–213; to
continuous improvement, 220; lead- data, 140
ership, 217–219; to learning orga- data mining: company example of,
nization transformation, 210–212 160; description of, 30, 157–158;
communication: barriers to, 224; by organizations that use, 158–159;
leader, 215–216; vision, 215–216 performance-support systems for,
communications software, 179 184
community: assessment of, 239–240; data warehousing, 154
description of, 29; educating of, demonstration projects, 107, 151
125–126, 136–137 deutero learning, 51
competency profiles, 196 dialogue, 26, 54, 66–67, 231
competitiveness, 224 distance learning, 205
continuous improvement, 209, 220 diversity of employees, 17–18, 70–71
continuous learning, 59–61, 105, double-loop learning, 44
219–220, 228
Continuous Workplace Learning Einstein, Albert, 18–19
model, 88–90 e-learning, 65, 195, 200, 203, 234
coordinator, 115 electronic mail, 187
core competencies, 9–10, 31 electronic performance support system:
corporation: traditional structure of, benefits of, 196, 206, 226; compo-
94; virtual, 10 nents of, 196–198, 206; description
creativity: activities for, 171; collabora- of, 186, 196, 234; organizational
tive, 80–81; manager encourage- learning and, 198–199
Index 261
emotional conditioning, 50 global mind-set, 70–71

employee(s): assessment of, 239–240; global organizations, 4
authority and responsibility dele- globalization, 3–4
gated to, 119; autonomy of, 79; goal setting: short-term, 227; vision
classroom learning for, 174–175; and, 75, 215
company example of, 118–119, goal-based scenario learning, 62–63
126–131; decision-making opportu- group: action learning, 46; empower-
nities, 220; development of, 99; ment of, 112; learning in, 25, 41–42
diversity of, 17–18, 70–71; elec- groupware, 206
tronic performance support system
benefits, 199; empowering of, habit learning, 50
118–119, 129–130, 133, 220–221, half-life curve, 86
232; expectations of, 14–15; ideal hierarchies: knowledge, 140–141;
workplace for, 16–17; Internet use organizational learning impeded by,
by, 204; knowledge skills of, 15; 224
knowledge storage and retrieval
training, 172; knowledge transfer individual development plan, 68
by, 170; learning organization role individual learning: accelerated, 39–40;
of, 28, 118; learning style of, definition of, 25; encouraging of,
189–190; mistakes by, 217; mo- 222; factors that affect, 39–41;
tivation levels of, 190; needs of, focus of, 39; importance of, 38;
120–121, 135, 199–200; roles of, opportunities for, 38, 219; personal
14–15; self-managed work teams, development plans, 40–41, 67–68;
100–102, 134; strategy develop- professional development and, 40;
ment by, 119–120; technology rewarding of, 106–107; self-
effects on, 5, 199–200; telecom- development programs, 68
muting, 16; temporary, 15–16; information, 140
vision communicated to, 215–216 information sharing, 180
empowerment, 118–119, 129–130, information technology: business func-
133, 220–221, 232 tions integrated by, 182; company
entrepreneurial structure, 94 example of, 183; description of, 7,
environment, 88, 132–133, 217–219 9; flexibility benefits of, 180; infra-
EPSS. See electronic performance structure to support, 183–184; man-
support system agement changes associated with,
experimentation, 79–80, 221 181–183; organizational effects of,
expert knowledge base, 197 181; strategies opportunities offered
expert systems, 6 by, 178; work processes affected by,
expertise, 141 181. See also technology
explicit knowledge, 149–150 innovation, 79–80, 117, 148–149,
extranet, 187 171–172
integrated learning, 84
future-search conferences, 104–105 Internet, 6, 185, 187, 204
intranets, 6–7, 185, 187, 207–208
Gannon, Jim, 71
generative learning, 171–172 job rotation, 163, 173
Gill, Stephen, 83–84 just-in-time learning, 90–91, 188, 207
global economy, 3–4
global knowledge base, 61 knowledge: accessibility of, 173, 221,
global learning, 100 226; acquisition of, 30, 50–51,
knowledge, cont’d anisms and methods for, 155–156,

143–148, 233; action learning ben- 173–174, 233; retention benefits,
efits, 233–234; analysis of, 30, 157; 154–155; staff training in, 172;
application of, 30, 168–169; base system elements, 154, 162
of, 173, 197; capture of, 199, knowledge transfer and dissemination:
205–206; company example of, barriers to, 164–165; company
152–153; creation of, 13, 30, 140, example of, 164; description of, 30,
148–155; data mining of. See data 140, 161–162, 226; intentional,
mining; definition of, 141; descrip- 163; maximizing of, 173; responsi-
tion of, 29; dissemination of. See bility for, 170; technological modes
knowledge transfer and dissemina- for, 166–167, 179; unintentional,
tion; experimentation for creating, 163
151; explicit, 149–150; external Kotter, John, 212, 215
collection of, 144–146, 170; hier-
archy of, 140–141; importance of, LAN. See local area network
139; internal collection of, leader: advocate role of, 115–116,
143–144, 170–171; management of. 132–133; coach role of, 113–114;
See knowledge management; past co-learner role of, 115; commitment
experiences for creating, 151–152; to learning by, 217–219; communi-
problem solving for creating, cation by, 215–216; conceptualizing
150–151; retaining of, 154–155; and inspiring of learning and action
retrieval of. See knowledge retrieval; by, 117; coordinator role of, 115;
schematic diagram of, 143; stages culture of learning created by, 217;
of, 29–30, 142–143; storage of. See empowerment by, 113, 119; encour-
knowledge storage; systems model aging of learning by, 115–116, 132;
for, 142–143; tacit, 143–144, instructor role of, 113–114; knowl-
149–150; team-based, 41; techn- edge, 114; learning organization
ology for managing, 31, 140; trans- role of, 28, 79; mental models
fer of. See knowledge transfer and tested by, 116–117; mentor role
dissemination; types of, 141–142; of, 113–114; roles of, 113–116;
validation of, 30, 168–169; value of, search conferences by, 104; skills of,
12–13 116–117; support of, 105; systems
knowledge management: assessment thinking by, 117; vision building by,
of, 240; company example of, 116. See also manager
146–148, 159–163; description of, learned anxiety, 50
140; strategies for, 170–175; tech- learning: action. See action learning;
nology for, 31, 140, 178–185 adaptive, 25, 43–45, 228, 230;
knowledge manager, 114 anticipatory, 25, 44–45, 70; assess-
knowledge retrieval: barriers to, ment of, 237–238; audits of, 225;
165–166; description of, 162; staff behaviors necessary for, 231;
training in, 172 breadth of, 55; business operations
knowledge sharing: barriers to, integrated with, 84–85, 213–214,
164–166; company examples of, 225; business outcome benefits of,
159–161, 164, 167–168; methods 32–33; capture of, 225; case studies
of, 221; systems development, 165 of, 37–38; classroom, 174–175,
knowledge storage: accessibility, 173; 195; collaborative, 61; conceptualiz-
challenges associated with, ing of, 117; continuous, 59–61,
156–157; description of, 30; history 105, 219–220, 228; customer par-
of, 154; knowledge for, 155; mech- ticipation in, 135; definition of, 24;
Index 263
depth of, 55; deutero, 51; distance, learning organization profile, 214,
205; double-loop, 44; employee 237–241
benefits, 21; encouraging of, learning skills: description of, 26; dia-
115–116, 222; environment con- logue, 26, 54; mental models. See
ducive to, 88, 132–133, 217–219; mental models; personal mastery,
goal-based scenario, 62–63; group, 26, 53, 66; self-directed learning,
25, 41–42; habit, 50; individual. See 26, 53–54; systems thinking, 26,
individual learning; integrated, 84; 52, 69–70
just-in-time, 90–91, 188, 207; levels learning technology. See technology-
of, 24–25, 37–43; measuring of, based learning
85–87; methods for, 66; multicul- local area network, 187
tural, 70–71; on-the-job, 88–90;
opportunities for, 38, 87, 219; orga- manager: advocate role of, 115–116;
nizational. See organizational learn- assessment of, 239–240; change
ing; point-of-need, 59; principles of, supported by, 212–213; classroom
36–37, 48–49, 98–99; producing learning for, 174; coach role of,
and, 84–85; reusable objects, 65; 113–114; co-learner role of, 115;
rewarding of. See rewarding of conceptualizing and inspiring of
learning; Schein’s types of, 50–51; learning and action by, 117, 232;
self-directed, 26, 53–54; self- coordinator role of, 115; creativity
reflection and, 36–37, 48, 232; encouraged by, 117; empowerment
shared responsibility for, 77; single- by, 113, 119; encouraging of learn-
loop, 44; skill, 50; speed of, 55, ing by, 115–116, 132; information
185; style of, 81, 189–190; successes technology effects on, 181–183;
in, 227–228; team. See team learn- instructor role of, 113–114; knowl-
ing; technology effects on. See tech- edge, 114; learning organization
nology-based learning; time for, 87; role of, 28, 79; mental models
training vs., 55–56, 58; types of, 25; tested by, 116–117; mentor role
valuation of, 51; work and, 14 of, 113–114; roles of, 113–116;
learning organization: building of, skills of, 116–117; support of, 105;
20–21, 210–228; capacity of, 32, systems thinking by, 117; technol-
54–56; characteristics of, 31–33; ogy effects, 179; vision building by,
commitment to, 210–212; culture 116. See also leader
of. See culture for learning; elec- measuring of learning, 85–87, 108,
tronic performance support system 227–228
benefits, 198–199; emergence of, mental models: changing of, 71; defini-
19–20; enabling forces, 20–21; tion of, 26, 52; individual variation
examples of, 57–63, 96–103, in, 53; manager's role in, 116–117;
121–122; identity of, 75; informa- negativity in, 71; relationships and,
tion gathering, 223; model of, 24; 51; testing of, 116–117
organizational learning vs., 56–63; metacognitive skills, 66
overview of, 23–24; paradigm
changes, 95–103; quality manage- networking, 94, 179
ment in, 81; skills for. See learning Newtonian physics, 18
skills; steps for building, 210–228;
strategies for building, 65–71; struc- Ollila, Jorma, 12
ture of. See structure; subsystems of. on-the-job learning: example of,
See subsystems; transformation into, 88–90; importance of, 88
20, 212 operations. See business operations
organization: adaptation of, 2, 228; practitioner, 190

capabilities of. See capabilities; problem solving, 150–151, 233
coevolution of, 10; competitive project-based structure, 93
advantage for, 19; composition of,
15; core competency focus of, 9–10, quality management, 81, 220
31; culture of. See culture for learn- quantum physics, 18–19
ing; customer influence on, 10–12; Quinn, Brian, 177
definition of, 26; dialogue, 66–67;
learning. See learning organization; reflective listening, 47–48
needs of, 120–121, 135, 199–200; reflector, 190
operations of. See business opera- research, 100
tions; paradigm changes, 95–103; restructuring, 102
people involved in, 28–29; project- reusable learning objects, 65
based, 93; strategies of. See strate- Revans, Reginald, 2
gies, for learning organization; tech- rewarding of learning: culture that
nology effects on, 5–7, 181–183; promotes, 76–77; financial, 106;
transformation of. See transforma- importance of, 85; individual learn-
tion; values of, 173; vision of. See ing, 106–107; innovation, 171–172;
vision leader’s support for, 217; personnel
organizational learning: business and policies, 85, 107, 134; team learn-
personal success aligned with, ing, 106–107
83–84; definition of, 25, 43; risk taking, 80
description of, 35–37; electronic
performance support system for, scenario planning, 70
198–199; encouraging of, 222; Schein, Edgar, 50–51
learning organization vs., 56–63; self-development programs, 68
obstacles to, 224 self-directed learning, 26, 53–54
outcomes, 84 self-learning, 233
Owen, Harrison, 1–2 self-managed work teams, 100–102, 134
self-reflection, 36–37, 48, 232
past experiences, 151–152 Senge, Peter, 51, 53, 118, 148, 219,
Paulk, Charles, 169 229
people subsystem: action learning shared vision, 74, 116
benefits, 232–233; assessment of, sharing of knowledge. See knowledge
239–240; business partnerships and sharing
alliances, 29, 124, 136; community, simulator, 187
29, 125–126, 136–137; company single-loop learning, 44
example of, 126–131; customers. skill learning, 50
See customers; description of, standardization of work, 18
28–29, 111; employees. See employ- strategies, for learning organization:
ee(s); manager. See manager; model assessment of, 238–239; centers for
of, 112; suppliers, 29, 124–125, excellence, 107; continuous learning
136; vendors, 29, 124–125, 136 environment, 88, 105; demonstra-
performance appraisals, 85, 106 tion projects, 107; description of,
personal development plans, 40–41, 27; employees’ involvement in
67–68 developing, 119–120; establishing
personal mastery, 26, 53, 66, 219 of, 221–223; information tech-
personnel policies, 85, 107, 134 nology effects, 182; just-in-time
point-of-need learning, 59 learning, 90–91, 188, 207; learning
Index 265
involved in all operations, 84–85, nizational effects of, 5–7, 181–183;

109; management support, 105; presentation, 186; strategies for,
measuring learning, 85–87, 108; on- 204–208; types of, 186–187
the-job learning, 88; opportunities technology subsystem: action learning
for learning, 38, 87, 219; organiza- benefits, 234; assessment of, 241;
tional learning aligned with business company example of, 200–203;
and personal success, 83–84; per- description of, 30–31; elements of,
sonnel policies, 85, 107, 134; time 177–178; knowledge managed
allocated for learning, 87, 108; using, 31, 140, 178–185; knowl-
vision, 104–105 edge transfer using, 166–167, 179
structure: assessment of, 238–239; technology-based learning: accessibility
boundaries effect, 92–93; bureau- of, 189; advantages of, 188–191;
cratic, 94–95, 223; description of, assessment of, 241; classroom learn-
28, 92; entrepreneurial, 94; exam- ing supplemented by, 195; company
ple of, 92–93; networking, 94; example of, 191–195, 200–203;
project-based, 93; streamlining content uniformity, 189; cost-
of, 223–224; types of, 92–93 effectiveness of, 191; description of,
subsystems: description of, 21, 23–24; 5, 31, 185, 226; distance-based,
knowledge. See knowledge; learning. 205; electronic performance sup-
See learning; organization, 26–28, port system. See electronic perfor-
231–232; people. See people sub- mance support system; flexibility
system; technology. See technology benefits of, 190–191; global use of,
suppliers, 29, 124–125, 136, 239–240 203; human resources staff familiar-
systems thinking: benefits of, 216; ity with, 208; increased use of,
description of, 26, 52, 69–70; 185–186; individual learning styles
importance of, 216; manager’s role addressed using, 189–190; internal
in, 117; organization-level learning development of, 207; manager
and, 222 familiarity with, 208; strategies for,
204–208; technologies for, 186–188;
tacit knowledge, 143–144, 149–150 updating of, 191; user friendly ben-
team learning: characteristics of, efits, 189
41–42; definition of, 25; encourag- tecknowledgy transfer, 206
ing of, 222; rewarding of, 106–107; telecommuting employees, 16
tips for building, 69 teleconference, 186
team mixing, 173 temporary employees, 15–16
technology: action learning group theorist, 190
assessments of, 234; advances in, Toffler, Alvin, 4–5, 171–172
4–5; capabilities added by, 179; total quality management, 220
communications software, 179; training: example of, 97–98; financial
company example of, 180–181, commitment to, 80; learning vs.,
183; distribution, 186–187; ele- 55–56, 58; technology for, 187–188
ments of, 177–178; future of, 8; transformation: assessment of,
home-based uses of, 7; information, 238–239; description of, 20, 212;
7, 9; Internet, 6, 185, 187, 204; metaphor for, 234–236; short-term
intranets, 6–7, 185, 187, 207–208; goal setting, 227; stages of,
knowledge capture using, 199, 234–236; steps for, 219–221
205–206; learning centers, trust: building of, 16; operational, 42;
204–205, 226; learning effects of. organizational culture promotion
See technology-based learning; orga- of, 79
vendors, 29, 124–125, 136 Wheatley, Margaret, 18

virtual corporation, 10 wide area network, 187
virtual model, 10 work: learning and, 14; quality of, 81;
virtual reality, 6–7, 186 standardization of, 18
vision: action learning effects, 231; workers. See employee(s)
assessment of, 238–239; benefits of, workforce: changes in, 14; expecta-
215; communicating of, 215–216; tions of, 14–15; roles of, 14–15.
definition of, 27; development of, See also employee(s)
104–105; example of, 75–76; workplace: diversity of, 17–18; ideal
future-search conferences for, characteristics of, 16–17; informa-
104–105; goal setting and, 75, 215; tion technology effects on, 181;
importance of, 74–75; shared, 74, mobility of, 17–18; transformation
116 of, 8–9
WAN. See wide area network

Waterman, Robert, 222

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P R A I S E F O R

Building the Learning Organization

“A very practical message based on a sound theory. Every CEO should

DAVIES-BLACK PUBLISHING, INC.

1 — The Emerging Need for Learning Organizations 1

Appendix: Learning Organization Profile 237

WE LIVE IN A WORLD in which technology and globalization affect

in the two following years. In addition, firms in the top quarter

AS WE ENTERED THE 21ST CENTURY, we began a new era in the evolu-

organizations) presently exist side by side. Within the next 10 years,

Demanding New Learning

Manville (2001) writes how we now “demand of the new learning a

Why Are Learning Organizations So Important?

The demands placed on organizations worldwide now require that

• Doubling of knowledge every 2 to 3 years

What Is the New Learning in Organizations?

There must be a whole new mind-set regarding the concepts of work

particular task or job. In today’s environment, organizational learn-

Emergence of Learning Organizations

The concept of organization-wide learning, and recognition of its

A Comphrehensive Systems Aprroach

Most organizations are still struggling with becoming learning

the learning organization, of course, is learning—at the individual,

Overview of the Book

Chapter 1 assesses rising social, political, and economic forces as

Getting Started in Your Organization

Whether or not to become a learning organization is no longer the

THIS BOOK OWES MUCH TO THE encouragement and assistance of

MICHAEL J. MARQUARDT, ED.D., is professor of global human

Century, Global Human Resource Development, and Technology-

The Emerging Need for

OVER THE PAST 10 YEARS, numerous economic, social, and technolog-

In short, external change and forces demand either organizational

Force 1: Globalization and the Global Economy

We have entered the Global Age. We are an increasingly more

Four main forces have brought us quickly to this global age:

Welcome to the new technological workplace, with teletraining, in-

Organizational Impact of Technology

We inhabit a world in which virtual reality and interactive mul-

intranet sites continue to evolve, additional features will emerge. For

• Integration of television, telecommunications, and computers

The Promise of New Technologies

Force 3: Radical Transformation of the Work World

transformation of the workplace itself as we entered the 21st cen-

Structures Based on Core Competencies

emerge. Firms everywhere are restructuring, creating integrated or-

Coevolution and the Virtual Model

Force 4: Increased Customer Influence

Customers will become more influential in determining how orga-

Dimension Old New

push for new performance standards in quality, variety, customiza-

• Cost: What is the least expensive, most economical

And, as Jorma Ollila, CEO of Nokia, notes, customers are much

Force 5: Emergence of Knowledge and Learning

Technology and globalization have led to an economy based on knowl-

Work Equals Learning

Force 6: Changing Roles and Expectations of Workers

The organization of the future will be composed more and more

computer, heavy manufacturing, and banking fields are the greatest

Ideal Workplace of the 21st Century