Business Success: The Learning Organization Part II

Mon, Jun 10, 2013 @ 10:52 AM

In the last post, we discussed the first two of the five disciplines.  If you missed it you can find it here.

Mental Models

Senge defines mental models “as deeply ingrained assumptions, generalizations, or even pictures or images that influence how we understand the world and how we take action.” A majority of these models are unconscious and have existed since childhood. Yet they pervade every thought, word, and action.

The first step in dealing with mental models is to look within oneself. Then the organization must create a safe place for members participate in compassionate scrutiny and influence through the process of “inquiry and advocacy.”

Building Shared Vision

sacred_imagesOne thing that all successful organizations have in common is a shared vision. Made up of shared goals and values, a shared vision has the capacity to bring “people

together around a common identity and sense of destiny,” according to Senge. It unleashes creative energy and fuels innovation by rallying diverse members in a shared vision that galvanizes the organization. It “involves the skills of unearthing shared ‘pictures of the future’ that foster genuine commitment and enrollment rather than compliance.”

Team Learning

The success of organizations to learn is based on the ability of the teams to learn. The team must connect and share through dialogue while suspending assumptions and learning to trust each other. Blocks such as fear, apathy, and defensiveness can undermine learning. Therefore, safe and open communication is essential.

Team learning has the power to enhance capabilities for innovation and creativity. But to maximize the benefits, the learning must be shared. Many teams of brilliant individuals have produced mediocre results due to lack of interaction and integration.

Practicing team learning is not about copying a model. Many new management innovations emerge as “best practices.” But most organizations adopt and implement the ideas in a piecemeal fashion. Toyota is a great example of a company that uses a systems approach. Many companies copy Toyota’s kanban system. But they fail to see how all the parts work together in a way that is unique for Toyota.

The Fifth Discipline

Senge points out that “It is vital that the five disciplines develop as an ensemble.” This is truly a time when the total is greater than the sum of its parts.

Based on that truth, “systems thinking is the fifth discipline.” Without a systemic approach, the coherence necessary to be adaptable is lost. “For example, vision without systems thinking ends up painting lovely pictures of the future with no deep understanding of the forces that must be mastered to move from here to there.”

Organizations that embrace systems thinking must also practice “the disciplines of building shared vision, mental models, team learning, and personal mastery to realize its potential.”

Each of these disciplines plays a role in powering the system. Shared vision builds a group commitment to the future. Mental models provide the openness necessary to unveil the limitations present in the organization. Team learning improves the members’ skills to create and take action on an organizational level. And personal mastery encourages the self-reflection, healing, and personal growth necessary to fully participate in an adaptable organization.

Finally, learning organizations offer amazing potential for creating their future. Based on the new science, a learning organization is creating its future by shifting how individuals perceive themselves and their world.

Making Creativity Your New Competitive Advantage

In today’s digital economy, if it’s linear, it’s usually automated or outsourced! Think about it: What were you doing 10 years ago that’s now accomplishable at the push of a button? Campaign management? Performance analytics? Data management and storage? Do you see a trend? So where are we headed?

creativity

Technology forecasters predict hundreds, if not thousands, of new products will enter the market over the next decade to handle routine activities. In data mining alone, we have seen incredible changes. Years ago, we spent weeks building predictive models by hand. Today, predictive modeling software delivers more powerful models through streamlined, menu-driven processes that take minutes!
So what does that mean to us? If our competitive edge is based on linear processes, our competition may be able to buy software that accomplishes the same thing within a few years. What can we do to stay competitive? Quit using half our brains!
In today’s highly complex, competitive economy, our challenge is to create an environment that encourages “whole brain” thinking. To emphasize the importance, let’s look at a simplified model of how the brain works. To understand its function, the brain is divided into quadrants: The left cerebral mode handles the logical, analytic, and quantitative functions; the left limbic mode handles sequences (remember linear?), planned and detailed functions; the right cerebral mode handles the intuitive, integrative, synthesizing functions; and the right limbic mode handles the emotional, kinesthetic, feeling-based functions.

brain-sectionsMost problem-solving occurs in the brain’s left hemispheres. We begin in the left cerebral mode, where we memorize the correct answer. Then we move to the left limbic mode, where we make plans based on memorized rules and norms. This works well for many routine data-mining tasks, such as finding the average income of your customer base or calculating the response rate of a campaign. But if you are facing a new challenge like unexpected account attrition or a spike in insurance claims — events for which you have no rules — the left side of the brain can’t provide a solution. We completely miss the right-brain functions of intuition, integration, and synthesis, and so are unable to incorporate our emotions or feelings into solving a problem. By skipping the right side of the brain, we diminish our ability to think creatively.

In whole-brain problem solving, we begin in the left cerebral mode with the memorized answer. But we then move to the right cerebral mode and create a mental picture or image. This gives us a nonlinear view of the problem. When we move the problem into the right limbic mode, we may think of some atypical solutions or even have an “aha” experience. From there, we move back into the left limbic mode to formulate a solution.
So why is it so difficult to use creativity? First, creativity produces variance and decreases predictability. So if management has a high need for control, encouraging creative thinking is difficult. Another reason is that tapping into our creativity takes concentration. If our work environment is noisy and distracting, accessing the right side of the brain is difficult. And, finally, creative thinking requires some “downtime” to get the juices flowing. Did you ever notice how you get great ideas in the shower or while exercising? You might argue that you do not have the time or it is not cost-effective. But creative ideas that lead to small improvements to a marketing campaign can save or make millions.
How can we encourage whole-brain thinking? This can be difficult if it requires a drastic change in the company culture. But we can take several steps to facilitate it for ourselves and our staff:
Encourage group discussions where ideas are embraced. Brainstorming is an excellent way to get the creative juices flowing.
Change old habits: Use your non-dominant hand for routine tasks; take a different route to work.
Create a workspace that helps you stay balanced: Play music; fill your office with objects d’art; spend a few minutes in silent contemplation each day. It’s not a waste of time. It’s incubation time for the next million-dollar idea!
Webster’s defines genius as “Great mental capacity and inventive ability; esp., great and original creative ability in some art, science, etc.” So the next time you effectively use your whole brain, they might call you a genius!
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Business Success: Benefits of Communication

Innovation occurs for many reasons, including greed, ambition, conviction, happenstance, acts of nature, mistakes, and desperation. But one force above all seems to facilitate the process. The easier it is to communicate, the faster change happens.

—James Burke, Connectionsbusiness_communications_

Many leaders have the notion that communication is a “soft” issue, having very little effect on profit. The enormity of communicating in today’s interconnected economy can be overwhelming, given the number of different languages, technologies, industries, and markets across the globe

Consider the experience of a measurement instrument company that hired a consulting company to improve its process of getting new products to market. The research began with a meeting of about 40 senior engineers.

The meeting was designed to gather information from the engineers on what they considered to be the main barriers to getting their products to market. They divided themselves into small groups and began to create lists. Then, as a group, they labeled the barriers as either technical or social.

After tallying the chart scores, they determined that 81 percent of their barriers were social. One manager said,“We’re always trying to take waster out of our technical processes, but in 22 years I’ve been here, we have never even looked at taking waster out of our interactions with people.”

The engineers worked on their communication skills and cut their development cycle in half. The project’s sponsor commented that if they had made these changes five years earlier, they would have saved $50 million.

There are numerous examples of costly failures as a result of poor communication. The Challenger disaster is a tragic example. The banking failures beginning in 2008 can be highly attributed to a lack of information being shared with deserving parties.

Statistics on the success of mergers, acquisitions, and alliances also show that today’s leaders are no better at communicating than they were many years ago. Studies by some of the top accounting firms show that most mergers and acquisitions fail. The average statistics are:
• 60 percent of merged companies lose value after five years.
• 30 percent have no increase in value.
• 10 percent are successful at increasing value.

This is after billions have been spent on Business Intelligence software and hardware systems to connect, integrate, disseminate, and more.

While the risk of this problem is higher in companies involved in mergers and acquisitions, there are similar challenges within more stable organizations. Consider interdepartmental conversations such as the exchange of information, needs, and ideas between information technology (IT) and marketing. Some people experience the other department as speaking a different language.

These chasms of understanding exist between many departments with specialized workers whose thinking patterns may be different. Similarly, important conversations take place with entities outside the organization, such as vendors, suppliers, investors, auditors, and authorities. The style of communication may vary among all these interested parties.

Mickey Connolly and Richard Rianoshek, in The Communication Catalyst, offer a three-part conversational model that is useful for enhancing important activities such as “teamwork, planning, accountability, and learning”:

1. Align. Conversation facilitates the sense of shared purpose, enhances creativity, and promotes smart planning.

2. Act. Conversation clarifies accountabilities and initiates action.

3. Adjust. Conversations evaluate performance and acknowledge successes or launch corrective action.

When these three related elements are effective, work is meaningful, satisfying, and fast. We infuse work with meaning, galvanize teams, and inflame loyalty among customers, employees, and investors. When these elements are ineffective, we decelerate our high-speed ambitions. We render work meaningless, destroy teamwork, and inflame discontent among customers, employees and investors.

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Business Success: Morphing Current Businesses

Business Success: Morphing Current Businesses

Many traditional businesses are adapting their business models based on customer behavior. Amazon.com, the online bookseller, has grown into an Internet giant while many brick-and-mortar bookstores have closed. The publishing world has seen a change as authors enter the market independently using print-on-demand services.new-business-model

Many small businesses are now gaining access to world markets. And larger, more established retail businesses, especially those with a traditional catalog presence, are creating sophisticated shopping experiences for their customers on the Web.[i]

Why are Amazon.com, Lexus, and Disney partnering with lesser-known online companies to sell products? According to Wiredmagazine’s Ian Mount, the large companies are moving toward the manufacturing-as-a-service model to stay competitive. It has become necessary to compete with the small entrepreneurs who are producing and distributing products on demand. The production of products has become a commodity.  Because of the low cost of entry, anyone with a good idea can compete in this market.

New businesses that leverage this model are popping up everywhere, and many have global reach. Jeffrey Wegesin, a furniture designer, advertises his designs on the Web. Upon receiving an order, he contracts with an on-demand manufacturing service in New Zealand to create and ship each piece. He has no inventory or other up-front costs. His business is pure profit.

Designers of clothing, jewelry, robots, you name it! The model is inherently charming because of its efficiency and simplicity. Individual musicians and authors can market their goods without any up-front investment. With little more than a product idea and a good design, anyone can become an instapreneur.[ii]

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[i]             Bradley and Nolan, Capturing Value in the Network Era, 7-8

[ii]             Ian Mount, “Upside of the Downturn: 5. The Rise of the Instapreneur: Manufacture and Sell Anything in Minutes,” Wired (April 2008), 129

Use Organizational Instability to Catalyze Learning

Organizations that succeed in leveraging instability unleash enormous amounts of energy for fueling innovation and adaptability. As situations present themselves—such as a new competitive threat or loss of investment money—management must maintain a delicate balance between reacting too quickly and resorting to old patterns.

Working in a culture of constant instability can be stressful, especially when it is new to the organization. Because of years of experience with the stable, predictable model, many managers resist moving to a model of permanent instability. What is required is a delicate balance between maintaining enough discomfort for learning and productivity to be optimized while avoiding the risk of demotivation, paralysis, and complacency.

Some tactics are well suited for fueling innovation and adaptability. One is to make sure that every member of the organization knows the truth about the difficulties facing the company. Holding people accountable is important. Doing so might include publicizing risk taking to highlight successes and explain shortcomings while avoiding blame. During times of stress, typically 20 percent of employees step up to be change agents. Another 20 percent resist or retreat. By raising the visibility of the change agents, the other 60 percent typically follow their lead.

Encouraging diverse points of view enhances adaptability. Discussions that support opposing points of view often trigger ideas that can be advance warnings of needed transformation.
To maintain the energy and loyalty essential to adaptability, organizations should design and share relevant metrics. A strong vision accompanied by clearly communicated roles and responsibilities will lead to accountability. With distributed decision making in a rapidly changing environment, success metrics must be clear and equitable.

Come back for the last Principle on Leading a Dynamic Organization! Feel free to comment with questions, insights, or additions to this post. 

Christopher Laszlo and Jean-François Laugel, Large-Scale Organizational Change (Boston: Butterworth Heinemann, 2000).

 

A Dynamic Organization Principle #7

Design Decision-Making Systems for Self-Organization

model_change_management_
An efficient and effective decision-making system is critical to survival in a complex, volatile economy. Organizations must develop processes that encourage self-organization. Doing so requires an open sharing of the vision, the free flow of information, and strong communication between all levels of management on down.

Decision making is one area where rigor and precision are beneficial in an otherwise fluid atmosphere. Respect for people’s time must be balanced with ensuring that everyone has a voice. Creative incentive packages, such as the ones discussed in Business Intelligence Success Factors regarding collaboration, enhance emergence of self-organization.

Complex organizations require a variety of decision-making styles. Some are designed for day-to-day operations while others focus on long-term issues. For example, formal decision making regarding important issues of management and predefined time periods, such as strategic planning, annual budgeting, and executive committee meetings, is typically well designed and structured. Formal, nonperiodic decision making designed to handle unexpected situations may also follow a set format. Formal decision making is used when a decision is needed with regard to a major restructuring, new directions, or investments and crisis management. Since formal decision making covers a variety of areas and are not planned very far in advance, the attendees may not be known ahead of time. These types of meetings are more common in complex organizations that aim to adapt quickly to market changes. Informal decision making can happen anywhere. It is important for leaders to be aware of the effect of limited input on their decisions. Managers who want to promote self-organizing, team-based, distributed decision making must recognize their power to influence through their conversational style and remind others that their opinion is just one of many that deserves consideration.

To foster self-organization, a company must guide its decision making to resemble that of an entrepreneurial enterprise. For example, reducing the presence of top management in the day-to-day operations is a good first step. Combined with an effective information exchange through every level of the company hierarchy, this shift ensures that the flow of information goes beyond the typical sharing of knowledge to include daily insights, ideas, and issues as they arise.

Self-organizing companies need teams that have a broad range of skills that represent a microcosm of the company. Such companies can adapt more quickly due to competent leadership and decision making at many levels.

Learning by doing serves large companies by reviving the entrepreneurial spirit. New challenges inspire people to connect with others to find solutions and increase learning. This leads to faster adaption of new ideas that energizes the workforce and unleashes innovation.
Complex organizations that share decision making and accountability must also share compensation. Many financial instruments to associate compensation with performance exist, such as employee stock purchase plans, cash bonuses, and stock options. One creative practice by Thermo Electron is the practice of spinouts. The company “hands over day-to-day control of newly formed subsidiaries and fistfuls of share options to the staff. The stock has returned 20% per year since the practice began.”[i]

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A Dynamic Organization Principle #6

Develop Ambitions Greater than Means

The limits you create will be real to you until you learn to step beyond them. Then, you  will look back at the reality you used to inhabit, wondering how you were able to stand  its narrow confines. —Paul Ferrini, Author and spiritual teacher

Companies looking to engage in perpetual transformational opportunities are most successful when they set their ambitions much higher than their means. As people participate in the vision, energy is released that inspires innovative ways for reaching the goal.

People who feel passionate about the vision step up to be leaders. Others wait until the goal seems more tenable before they engage. Abusiness_intelligence_success_ few resist and may add to the instability. However, if handled skillfully, the contrasting tensions can assist the transformation.

It is becoming increasingly apparent that companies that do not stretch their vision will be surpassed by the competition. These actions can assist companies to stretch their vision and prepare people for perpetual transformation:

  • Express a vision or strategic intent to members of the organization that leads to breakthrough thinking and action. By allowing the participants to embrace a grand vision, leaders naturally align themselves and move beyond what was once considered impossible.
  • Disperse control. The complexity of a major shift in vision requires top leadership to disperse control. By sharing the vision and empowering the participants, the idea takes on an energy of its own. The role of leadership is to continually share the vision, provide support, and celebrate accomplishments.
  • Stay focused and harness energy. In large, complex organizations, many transformative processes may be happening at the same time. The key to success is to stay focused and harness the energy created by the overall goal. A simple rallying cry, slogan, or watchword is helpful to thread the varying activities and maintain high spirits.
  • Discuss change and introduce points of inflection. Introducing a new vision when most members of an organization are satisfied with the status quo may prove to be futile. Most organizations are more susceptible to major shifts in focus during times of crisis. Starting a conversation about what might happen if the market shifts drastically can begin to prepare members for change. Introducing an artificial point of inflection is another option for stimulating receptivity.

Come back for the next 4 Principles on Leading a Dynamic Organization! Feel free to comment with questions, insights, or additions to this post. To receive alerts when the next blog is published, click on the RSS feed at the top left of the page to subscribe.
__________
[i] Christopher Laszlo and Jean-François Laugel, Large-Scale Organizational Change (Boston: Butterworth Heinemann, 2000), 79.

A Dynamic Organization: Principle #3

Compete for Industry Sustainability

The longevity of any company is dependent on the sustainability of the industry. Measures to increase the sustainability of suppliers, distributors, subcontractors, and even direct and indirect competitors promote the long-term viability of the industry. While there is still competition between businesses on certain levels, the overall win-at-all-costs model is giving way to a more win-win philosophy. For example, companies have been known to request legislation that limits all players from certain practices that put the industry at risk.

A win-win approach to business will ultimately enhance industry sustainability. The pursuitleadership_development_systems_ of profit that ignores the health of the community or the environment ultimately destroys the entire system

Companies can take several steps to improve industry sustainability. Forming partnerships to enhance collaboration among competitors can be very effective for tasks such as technology development, financing, and setting standards. In addition to adding benefit, partnerships can increase flexibility, free resources, inspire innovation, and disperse risk.

As industry sustainability degrades, companies may be subjected to increased regulation and possible negative publicity. By projecting these costs and incorporating them into their planning, companies are in a position to set the standards for their industry. This can lead to a positive company and industry image while improving long-term industry sustainability.
Companies can create their own standards that look to the future needs of their industry. In an age of instant communication and corporate scrutiny, companies that establish policies for the long-term benefit of the industry get the immediate benefit of positive press. With the recent awareness of corporate malfeasance, consumers often reward companies that “do the right thing.” As other companies adopt the behavior, the market increases and everyone wins.

Come back for the next 7 Principles on Leading a Dynamic Organization! Please comment with questions, additions and ways where you have been successful competing for sustainability within your Industry. To receive alerts when the next blog is published, click on the RSS feed at the top left of the page to subscribe.

Christopher Laszlo and Jean-François Laugel, Large-Scale Organizational Change (Boston: Butterworth Heinemann, 2000)

A Dynamic Organization: Principle #2

Maintain Long-term Identity while Repositioning

Advances in technology and global connectivity have combined to unleash a host of new opportunities for companies of all sizes. As organizations become adept at morphing their strategies to take advantage of these opportunities, they gain strategic benefit by business_change_model_ establishing and maintaining a long-term identity that speaks to their core strength. This ability to change also protects companies from failure if their existing business is marginalized or deemed untenable by government legislation, new technological innovation, or other unforeseen events. By building and communicating an identity vision, organizations are able to leverage their ability to “differentiate themselves from competitors, motivate their employees, and build lasting relationships with customers.”[i]

Several approaches can help leaders reposition their business while maintaining their overall identity. Defining a transcendent vision allows a company to redefine aspects of its business while maintaining its overall identity. SAS, for example, is a global Business Intelligence Solutions company that started out creating software for statistical analysis. A SAS user was someone who knew how to write SAS code. Today, SAS has broadened its scope and evolved into a leader in Business Intelligence solutions with an emphasis on business analytics. With SAS, anyone within the organization can access information to gain knowledge about their business through simple graphical user interfaces (GUIs). But the vision of the company as one that helps businesses turn data into knowledge still rings true for SAS.

To ensure success when adapting strategies, organizations should keep an eye on customer value while taking advantage of all the internal knowledge as well as market indicators to determine which new activity or group of activities will serve future needs of customers.

Another consideration is to reduce reliance on forecasting tools and statistical methodologies. In a volatile economy, these tools are only marginally useful. Companies that are thriving today are leveraging the concepts of chaos theory and complexity science. These concepts include “better monitoring of trends in the external environment, regular reevaluation of the broader industry configuration to see where margins are highest (to see which players are making the most money), scenario planning, pattern recognition, improved ability to pick up weak signals in the environment, and rapid and coordinated decision making.”[ii] By focusing on the future rather than on past patterns and accomplishments, the application succeeds by tapping into the innovative spirit of the organization.

Look for the next 8 Principles on Leading a Dynamic Organization! Feel free to comment with questions, additions and ways in which you have had to morph your strategies in order to take advantage of new opportunities!

Feel free to comment with questions, insights, or additions to this post. To receive alerts when the next blog is published, click on the RSS feed at the top left of the page to subscribe.

[i] Christopher Laszlo and Jean-François Laugel, Large-Scale Organizational Change (Boston: Butterworth Heinemann, 2000), 57.
[ii] Ibid., 62.

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