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What are the learning organization? and what are the four main activities of a learning organization? With an explanation of each activity?Discuss.
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PAR T 1 Introduction to Strategic Management and Business Policy
perspective is supported by research indicating that the decisions of a firm?s management have
at least as great an impact on firm performance as overall industry factors.30 Because of its
emphasis on managers making rational strategic decisions, the strategic choice perspective is
the dominant one taken in strategic management. Its argument that adaptation is a dynamic
process fits with the view of organizational learning theory, which says that an organization
adjusts defensively to a changing environment and uses knowledge offensively to improve
the fit between itself and its environment. This perspective expands the strategic choice perspective to include people at all levels becoming involved in providing input into strategic
decisions.31
In agreement with the concepts of organizational learning theory, an increasing
number of companies are realizing that they must shift from a vertically organized, topdown type of organization to a more horizontally managed, interactive organization.
They are attempting to adapt more quickly to changing conditions by becoming ?learning
organizations.?
Creating a Learning Organization
Strategic management has now evolved to the point that its primary value is in helping an
?organization operate successfully in a dynamic, complex environment. To be competitive
in ?dynamic environments, corporations are becoming less bureaucratic and more flexible.
In stable environments such as those that existed in years past, a competitive strategy
simply involved defining a competitive position and then defending it. As it takes less
and less time for one product or technology to replace another, companies are finding that
there is no such thing as a permanent competitive advantage. Many agree with Richard
D?Aveni, who says in his book Hypercompetition that any sustainable competitive advantage lies not in doggedly following a centrally managed five-year plan but in stringing
together a series of strategic short-term thrusts (as Apple does by cutting into the sales of
its own offerings with periodic introductions of new products).32 This means that corporations must develop strategic flexibility?the ability to shift from one dominant strategy
to another.33
Strategic flexibility demands a long-term commitment to the development and nurturing
of critical resources. It also demands that the company become a learning organization?
an organization skilled at creating, acquiring, and transferring knowledge and at modifying
its behavior to reflect new knowledge and insights. Organizational learning is a critical
component of competitiveness in a dynamic environment. It is particularly important to innovation and new product development.34 Siemens, a major electronics company, created a
global knowledge-sharing network, called ShareNet, in order to quickly spread information
technology throughout the firm. Based on its experience with ShareNet, Siemens established PeopleShareNet, a system that serves as a virtual expert marketplace for facilitating
the creation of cross-cultural teams composed of members with specific knowledge and
competencies.35
Learning organizations are skilled at four main activities:
?
?
?
?
Solving problems systematically
Experimenting with new approaches
Learning from their own experiences and past history as well as from the experiences of
others
Transferring knowledge quickly and efficiently throughout the organization36
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CH A PTER 1 Basic Concepts of Strategic Management
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Business historian Alfred Chandler proposes that high-technology industries are defined
by ?paths of learning? in which organizational strengths derive from learned capabilities.37
According to Chandler, companies spring from an individual entrepreneur?s knowledge,
which then evolves into organizational knowledge. This organizational knowledge is composed of three basic strengths: technical skills, mainly in research; functional knowledge,
such as production and marketing; and managerial expertise. This knowledge leads to new
businesses where the company can succeed and creates an entry barrier to new competitors.
Chandler points out that once a corporation has built its learning base to the point where it has
become a core company in its industry, entrepreneurial startups are rarely able to successfully
enter. Thus, organizational knowledge becomes a competitive advantage that is difficult to
understand and imitate.
Strategic management is essential for learning organizations to avoid stagnation through
continuous self-examination and experimentation. People at all levels, not just top management, participate in strategic management?helping to scan the environment for critical
information, suggesting changes to strategies and programs to take advantage of environmental shifts, and working with others to continuously improve work methods, procedures, and
evaluation techniques. The Toyota production system is famous for empowering employees
to improve. If an employee spots a problem on the line, he/she pulls the andon cord, which
immediately starts a speedy diagnosis. The line continues if the problem can be solved within
one minute. If not, the production line is shut down until the problem is solved. At Toyota,
they learn from their mistakes as much as they learn from their successes. Improvements are
sent to all factories worldwide.38
Organizations that are willing to experiment and are able to learn from their experiences are more successful than those that are not.39 This was seen in a study of U.S.
manufacturers of diagnostic imaging equipment, the most successful firms were those that
improved products sold in the United States by incorporating some of what they had learned
from their manufacturing and sales experiences in other nations. The less successful firms
used the foreign operations primarily as sales outlets, not as important sources of technical
knowledge.40 Research also reveals that multidivisional corporations that establish ways to
transfer knowledge across divisions are more innovative than other diversified corporations
that do not.41
Basic Model of Strategic Management
Strategic management consists of four basic elements:
?
?
?
?
Environmental scanning
Strategy formulation
Strategy implementation
Evaluation and control
Figure 1?1 illustrates how these four elements interact; Figure 1?2 expands each of these
elements and serves as the model for this book. This model is both rational and prescriptive.
It is a planning model that presents what a corporation should do in terms of the strategic management process, not what any particular firm may actually do. The rational planning model
predicts that as environmental uncertainty increases, corporations that work more diligently
to analyze and predict more accurately the changing situation in which they operate will outperform those that do not. Empirical research studies support this model.42 The terms used in
Figure 1?2 are explained in the following pages.
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