Organizational Learning Became Imperative - Essay Example

?Executive summary Organizational learning became imperative when competition intensified and profits eroded. Organizational learning was recognized as a method that could change shared understanding and lead to competitive advantage. However, even though benefits to both the organization and the employee have been recognized, there is no widely accepted definition of organizational learning. Nevertheless, it is a process that leads to changes in organizational and individual behavior over time. Organizational learning is based on the assumption that organizations are goal-oriented, routine-based systems. There is tendency to repeat behavior that has been successful in the past. When this happens organizations remain satisfied with single-loop learning or adaptive learning but unless this is supported by double-loop learning or generative learning, no growth can take place. Organizational culture plays a vital role in organization learning towards improvement and growth. Organizations must provide an environment of empowerment, encouragement and flexibility for the individual employee to take risks and be creative. Failures too have to be celebrated. The environment should not stifle the employees. The organizational environment at Starbucks, the specialty coffee retailer, was looked into and it has been found that while they do encourage contributions from their employees, learning is stagnant. The workers are trained for 25 hours once they join but the same procedures and training is imparted. Growth and success of an organization is not measured by low staff turnover or high sales figures. Innovation and creativity ensures a long-term strategy whereas focus on sales is a short-term strategy. While the origin of the company lies in cognitive learning but no further innovation has taken place. The company has not yet been able to find a solution to the single-use paper cups in which coffee is served to those who do not wish to consume coffee in-store. The company has not provided an environment in which employees can find ways to develop a solution. There is reliance on legislation and government support but learning has to come from within. The employees have stock options and which most exercise. Hence, they should also be responsible for finding a solution for the cups. This can come through when the organization engages in double-loop learning and when personal mastery and team work is applied as organizational discipline. Suggestions for improving the organizational learning have been provided. These include training the front-line staff in convincing the customers and making it mandatory for the corporate executives to serve one shift at the counter every now and then. It is expected that these suggestion would bring about a change in the learning environment. When managers started facing competitive pressures and declining productivity, the traditional management practices were threatened. While the situation warranted new strategies and structure, the traditional habits, norms and assumptions became hindering blocks (Senge & Sterman, 1992). Change in strategy must be preceded by change in thinking. Managers and academics then recognized organizational learning as a process that could change shared understandings, and as a key to competitive advantage. Organizational learning can enhance the competencies of both employees and entire organizations. Learning has also been recognized as a route to achieve competitive advantage (Chaston, Badger, Mangles & Sadler-Smith, 2001). This is the reason that there have been contributions on the subject from the perspectives of psychology, management science, strategic management, production management, sociology and cultural anthropology (Chaston, Badger & Sadler-Smith, 1999). However, while all agree that organizational learning is a good thing there is little consensus on what organizational learning really is (Teare & Pantin, 2003). Being a complex concept, there is yet no widely accepted definition of organizational learning (Dawes, Lee & Midgley, 2007). Most definitions are complementary rather than fundamentally original or conceptually different (Wang & Ahmed, 2003). Organizational learning has been defined as the way the organizations build and organize knowledge and routines, and use the broad skills of their workforce to improve organizational performance (Dodgson 1993, cited by Nutley & Davies, 2001). Organizational learning focuses on improving the behavior and capability of individuals so that the organization can respond to its environment more effectively (Murray & Donegan, 2003). Argyris and Senge define it as better and smarter ways to learn which can bring about success at the workplace (cited by Murray and Donegan). To sum it up, organizational learning is a process that leads to changes in organizational and individual behavior over time. Such firms can create shared vision and it creates and environment in which people are encouraged to challenged the existing mental models. Organizational learning is based on the assumption that organizations are goal-oriented, routine-based systems (Lumpkin & Lichtenstein, 2005). They repeat behavior that has been found to be successful in the past and avoid those that is not. This is more of adaptive learning based on trial and error. Learning has to be undertaken and developed by individuals but organizational arrangements can foster or inhibit the process (Nutley & Davies, 2001). Organizations may know less than their members. Organizational learning is not the sum of individual learning because the organization as a whole may know less than the sum of the learning that individual members have. However, members may come and go but learning is retained within the organization. These remain embedded in the work structures, routines and norms. Hence organizational learning is collective learning. It is built upon past knowledge and experience. Almost all definitions of organizational learning contain both cognitive and behavioral changes (Dawes, Lee & Midgley, 2007). Organizational learning can be more effective when they help the managers develop a more systemic and dynamic perspective (Senge & Sterman, 1992). The challenge lies in the application of tools and processes that help managers to reconceptualize the complex issues and design better operating policies. Organizational culture and structures shape the way in which individuals engage with the learning process (Nutley & Davies, 2001). Four kinds of learning can take place: learning about things (knowledge), learning to do things (developing skills), learning to become ourselves (personality development), and learning to achieve things together (collaborative inquiry). Developing learning processes should be aimed at improving managers’ shared mental models so that they become more dynamic (Senge & Sterman, 1992). It should also enhance the managers’ abilities to view new situations systemically and dynamically. This requires that managers have to become the role model and challenge the assumptions. Challenging mental models is difficult as the managers’ beliefs are questioned. Argyris (1995) contends that individuals adhere to theories which govern their actions and these assumptions and theories, unknowingly and unintentionally, create organizational defensive routes that inhibit learning. Human beings create and store their own designs and retrieve these designs to guide them when they want to achieve their intentions. However, Argyris finds that people deviate from their own assumptions and beliefs when it comes to application of the design to achieve want they want to achieve. These deviations in an organizational context are, to a large extent, dependent upon the organizational culture. When the basic assumptions are not challenged, managers exhibit what is known as single-loop learning or adaptive learning (Aygris & Schon, 1978 cited by Chaston, Badger & Sadler-Smith, 1999). All actions and improvements are based on past experience as in the case of Sony Corporation. The engineers at Sony Corporation wanted to produce a small portable, non-aural recorder to be used by reporters for recording interviews. The final design that emerged had no room for a recording system, and the product design remained a tape recorder. Sony’s founder, finding that the instrument produced excellent sound, suggested that the speakers could be replaced with headphones and then it could be used as a portable device for listening to music. However, the engineers and the managers were resistant to the idea that the product would have any commercial use. The founder used his authority and insisted that the product be put to commercial production. This marked the beginning of the walkman product. The resistance of the engineers was because they based their decision based on past experiences. They did not want to question the fundamental assumption that recorders must record. The primary orientation of the development team was to improve upon the existing product forms. They, hence, only applied the prior experience and knowledge to analyze the problem and concluded that the product had no commercial potential. The insistence and suggestion by the founder demonstrates double-loop or ‘generative’ learning approach to solving problems. This means that when a problem arises, new knowledge should be sought and introduced into the situation. This example highlights that appropriate learning style should be adopted by organizations. Single-loop learning works in stable markets where standardized products and services suffice. In an increasingly competitive world, this is not an appropriate learning style. Again, learning may not be positive and may not be contributive. Employees learn how to avoid responsibility and minimize effort. Such learning is not positive as it does not enrich their knowledge base (Field, 1997). Even if learning does enhance the knowledge base, it brings about no positive change to the organization and hence not contributive. Moreover, individuals learn but keep the knowledge to themselves. Hence, collaborative learning is encouraged as it extends beyond individual learning. Firms with a strong learning culture can create, acquire and transfer knowledge; they can even modify behavior to reflect new knowledge and insight (Murray & Donegan, 2003). Cultural values facilitate organizational learning, contend Nutley and Davies (2001). This is based upon their findings from the studies of Mintzberg and Schein. The organizational culture should encourage the celebration of success. If the existing values promote avoidance of failure, people would not be keen to take risks or experiment. It would reinforce cycles of single-loop learning. Hence each failure should be openly discussed so that learning can be deduced from it but this requires a culture of tolerance of failure. Again, such organizations do not wait for the worse to take place before they get down to action. They constantly seek newer and innovative ways of doing the existing things. People drive success, people acquire knowledge and an organization depends upon people. Hence, the culture of the organization should be such that they value their workers, recognize potential and provide an environment for growth and development (Nutley & Davies, 2001). This is the culture of empowerment, referred to by Field (1997). If employees feel empowered to act, they learn in the process. This learning becomes a reference point in subsequent action and learning. This gives the employees autonomy to work and the flexibility to interpret, absorb and apply knowledge. However, such superior learning environment does not just happen. It should allow the people to question and challenge the paradoxes that are generally institutionalized as standard behavior (Murray & Donegan, 2003). Such standardized or repetitive learning would remain as single-loop learning or lower-level learning. Development of competence can be seen in organizations that have the culture of allowing the employees to challenge the existing norms and learn through the double-loop or the higher levels of learning. The environment should not stifle the employees where the learners are conditioned to act out behaviors imposed upon them (Murray & Donegan, 2003). They lack the opportunity to explore, discover and experiment with the environmental stimuli. At the same time, caution is necessary, as employees can use their knowledge and skills to harm the organization. For instance, they can undermine the management wishes and intentionally underutilize company technology to avoid work and the pressure (Nutley & Davies, 2001). Moreover, even when opportunities are provided, many may just ignore it. They do not want to get involved and do not feel excited about learning something new. Opportunities to innovate can threaten the traditional needs for security and dependency. They may also wish to avoid the possibility of hostility and blame from colleagues or managers. Organizations recognize that people closest to the process have the most intimate knowledge of the potential as well as the flaws (Nutley & Davies, 2001). A learning culture would hence value tacit knowledge and not in empowerment. In developing the learning capacity, an environment where knowledge can be shared openly has to be fostered. This sharing is achieved through informal channels and personal contacts. These channels are more effective than written reports. Informal exchange also takes place through cross-disciplinary and multifunctional teams, on-site inspection, staff rotation and experiential learning. In addition, a culture of mutual trust is essential for organizational learning. Staff must have the confidence that failures and errors would not be lead to embarrassment or reprimands; the managers too must have the trust that staff would apply discretion in the use of time, space and resources. Learning also takes place through observing the competitors and other stakeholders such as the suppliers. They also need to have a deep understanding of the clients’ needs. Starbucks, the specialty coffee retailer, has the clients’ needs at its heart and ensures their partners at the stores are well trained to attend to the customers. However, they have grown too quickly and they have not taken time to create their Starbucks culture at each of their stores (Royer, 2008). Moreover, they have diversified their product range too quickly and entered into music and food business, thereby losing focus on their core business of coffee. Lumpkin and Lichtenstein (2005) discuss of three types of learning in organizational learning that plays an important role in the learning processes of new ventures. These are cognitive learning, behavioral learning and action learning. This paper would restrict to cognitive learning because examples of cognitive learning are evident from the origins of Starbucks. Cognitive learning focuses on the content of learning rather than on the behavior outcomes. It focuses on the processes that improve the creation of knowledge in the organization, on the utilization of knowledge to improve creativity. With the right processes, the organization can transform data into information and information in to knowledge which in turn helps to generate organizational knowledge. Organizational learning can lead to competencies in a firm; an organization would have the sense and capacity to seize opportunities. This is precisely what occurred at Starbucks Corporation as the coffee industry was reconceptualized by its founder Howard Schultz. Starbucks took shape following the visit of Schultz to Milan who wanted to bring the Italian Coffee Bar culture in the US. Coffee drinking was reframed into a social experience by providing a high-end product in a personalized environment for customers that could afford luxury (Lumpkin & Lichtenstein, 2005). Starbucks has grown from a single store in Seattle 33 years ago to 5945 outlets in the US and another 2392 stores in 28 countries (Isidro, 2004). In the past some large companies competed on price and offered low quality coffee that could be made at home. Schultz gained the knowledge from external sources and developed a new framework. He gained several strategic assets through cognitive learning (Lumpkin & Lichtenstein, 2005). Again, the management of the human resources at the stores of Starbucks differs from the traditional retailers. They are much better paid and Schultz learned that a personalized experience was the biggest motivator for the customers. As such, the front-end employees are trained to learn the names and the preferences of their frequent customers. In addition, the company pays HR benefits that are previously unheard of in the industry. They even provide benefits package for the part-time workers in addition to stock options for most of their employees. They offer a full week of paid training for every worker. Following the radical growth strategy, the founder invested in employees. They believe that the quality of workforce provides them with sustainable competitive advantage. Schultz remains confident that his employees work harder and are smarter because they have a stake in the outcome. However, what must be noted is that more than half the sales-force and partners at the stores are part-timers (Sandelands, 1997). They are mostly young and the company feels that the success of the company rests on the part-timers. Part-timers and that too the youth, will not last long with any company and this would give rise to retention of tacit knowledge within the organization. The company no doubt spends on training for every new member employed, but then this only adds to their costs, and ultimately the profitability. Moreover, their training budget has reduced even as the number of stores keeps climbing. Staff turnover at Starbucks is the lowest in the industry and the high-touch personalized experience has resulted in word-of-mouth publicity increasing their sales manifold (Lumpkin & Lichtenstein, 2005). The front line employees are empowered to constantly suggest and implement new improvements. Knowledge-creation at Starbucks is an on-going process. They claim to have a superior and involved workforce as they send out their executives to gather ideas through open forums in a dozen cities every quarter (Sendelands, 1997). The purpose is to gather information and address the environmental concerns and update marketing techniques. While all these efforts sound fine, cognitive learning works in the initial stages but then an organization has to think beyond and make organization learning a continuous process. Organizational success cannot be measured by low staff turnover or customer satisfaction. Organizational learning has to address the environmental concerns. They have been making claims that their executives tour every quarter to address such concerns but no solution has yet been found for the 3 billion single-use paper cups that are thrown into the dumps every year bearing the Starbucks logo. Organizational learning should improve organizational performance (Nutley & Davies); it should improve the behavior and capability of individuals so that the organization can respond to its environment more effectively (Murray & Donegan, 2003). Organization learning should lead to changes in individual and organizational behavior over time but none of these have been addressed by Starbucks. Their focus has been on repetitive action on employee training aimed at customer satisfaction, on new product development again aimed at customer satisfaction. Organizational processes have not been improved upon; organizational capabilities have not been enhanced. They are pursuing the strategy of repeat behavior that has been found to be successful in the past, as has been stated by Lumpkin and Lichtenstein. Environmentally also the company has its attention on procuring 100% fair-trade and Coffee and Farmer Equity-certified coffee by 2015 (Kamenetz, 2010). Its international supply chain effects both resource use and climate change. Thus, their focus is on profitability even though they acknowledge that from the customers’ standpoint, the cup is their number 1 environmental liability. Starbucks cannot be called an innovative organization that promotes organizational learning. They would have worked on this issue and found no solutions yet towards sustainable environment. They also recognize the importance that the customers give to this issue and hence ignoring this concern only demonstrates a short-term vision. Starbucks must recognize that the paper cups are important to their branding (Kuo, 2010). It is iconic to see someone walk down the road with a cup bearing the Starbucks logo but it is detrimental to their image when these cups are disposed off just anywhere. While they do offer coffee in ceramic cups for those who wish to enjoy coffee in-store, most prefer to walk out with the iconic cup in hand. Moreover, with success their prices have exceeded beyond the affordability of average consumers. Organizational learning cannot take place in an environment where most of the front-line staff is part-time workers, who usually work as a stop-gap measure. Starbucks claims to be a master at deploying training programs to their partners ( as they address their front-line employees) before their latest marketing campaign, but they have not been able to use this core competency to their advantage (Kuo, 2010). Thus, while Starbucks does provide a positive environment where the workers are encouraged to suggest ideas and even gather information from different sources, this information is not converted to effective knowledge. This implies that organizational learning is not enhanced as no improvement in organizational behavior has taken place. Success is not just book profits or low staff turnover. The brand image is what matters and this being adversely affected due to the disposal of 3 billion cups in the open. They treat their people like partners as most have exercised stock options but they need to be provided with incentives and rewards for unusual contribution. As the company expands, it is faced with challenges. The company needs to continue to reinforce its value system and live its strong culture. It is growing larger but it needs to maintain its small company feel that is has often boasted of. Starbucks needs to challenge the status quo, take risks and be innovative. They would have to alter their vision and look beyond employee and customer satisfaction. Section B Higher level learning management routines is more prominent in smaller firms because smaller firms see themselves as entrepreneurs. They are constantly engaged in adding value to their business and driving change agendas. Situations change rapidly and hence firms that are flexible, adaptive and productive will excel (Senge, cited by Smith, 2001). This requires that organizations must learn to quickly tap people’s commitment and capacity to learn. People may have the capacity to learn but the environment may not be conducive to reflection and engagement. At Starbucks, the environment is conducive towards learning but only focusing on product diversification and customer satisfaction. The strategy is short-term and hence not sustainable. Senge contends that real learning should get to the heart of the human. They must be able to re-create themselves. Adaptive learning is necessary but this should be supported by generative learning. Starbucks has not demonstrated generative learning. They have been repeating the same behavior and this has not contributed towards improvement of processes and performance of the organization. Thus, the management at Starbucks must encourage workers to reflect and contribute towards growth. Merely collecting information is not sufficient. For the growth of the organization, Senge suggests that certain basic disciplines should become part of the system. These include personal mastery, systems thinking, mental models, building shared vision and team working. This only requires a shift in the mindset – instead of thinking of parts they should learn to think of the whole. They should also learn to visualize themselves as active participants in shaping their reality. Senge further contends that people can and do learn on a continuous basis. The organization is made up of individuals so the organization takes up the learning capability as well. Starbucks has been making attempts in recycling the cups but Senge emphasizes that an organization must continually extend its capabilities to create the results it truly desires (cited by Smith, 2001). They must nurture new patterns of thinking and learn how to learn together. Changing mental models is difficult but not impossible. As of now Starbucks encourages people to buy tumblers or take a discount if they bring their own tumblers. Starbucks should encourage their front-line staff to become the brand ambassadors in changing the mind set of people. They should train these employees through in-store videos on how to motivate the customers into buying tumblers. Maybe some incentive or reward towards the sale of each tumbler would encourage the workers to exert effort into it. They already have a leading-edge compensation and benefits program in place. Perhaps this makes the workers complacent. While their total rewards system is excellent and gives them an edge over competitors, while it may be a powerful lever (Wilson, 1999), it cannot be isolated from other aspects of management. Hence an incentive attached to the sale of tumblers could go a long way in reducing the environmental impact of the cups, thereby also enhancing the brand image of the organization. They should gain personal mastery on the subject, and this discipline according to Senge is essential for organizational learning. Senge states that individual learning does not guarantee organizational learning but without individual learning no organizational learning occurs (Smith, 2001). Personal mastery is again a lifelong discipline. When people attain mastery they become conscious of their incompetence, their ignorance and their growth areas. This itself sets the route to continual learning. The problem is compounded because most are part-time workers that leave after some time. Continuity is not maintained which results in fresh training costs. To maintain continuity and to keep costs low, Starbucks should focus on having more of full-time committed workers instead of part-time workers. While this may increase the costs initially, but in the long run, this would save on overall costs as the recruitment and training costs would reduce. Once the staff is permanent, they should be provided training in conversing with the customers about the environmental impact that the cups create when disposed in the open. These small efforts would be more effective than making efforts to change the legislation and introduce recycling. Starbucks can also have videos running at the stores demonstrating the ways in which individuals can contribute towards sustainable environment. The staff should be able to draw the attention of the customers towards the video. Another area where organization learning can be encouraged is the corporate employees. While the corporate employees are encouraged, it is not imposed as of now that they work in a store for one shift during the holidays (Weber, 2005). This should be made mandatory so that they know what is happening at the grass root level. First-hand experience is always better than employee feedback from the stores. Moreover, this would promote team learning when the corporate executives work hand-in0hand with the front-line staff. Team learning is one of the disciplines endorsed by Senge. People need to have opportunity to act together. When they learn together the organization gains with better results and the members grow faster than they would otherwise (Smith, 2001). Team work would enable members to attain insights which may not be possible individually. Senge further argues that when dialogue is joined with systems thinking, it may become easier to deal with complexities and focus on deep-seated structural issues. Thus, what Starbucks needs to enhance organizational learning is to make a shift in its traditional form of leadership. It needs new leadership and a long-term vision. The company should be satisfied with satisfied customers and sales figures or even profitability. If they want to achieve what they desire, they have to take steps towards a long-term strategy. This is possible only when the organizational learning process is enhanced. Focus should be on personal mastery and team work. Personal mastery enables each individual to enhance his or her own capability which enhances the capability of the organization as a whole. To achieve this empowerment is not sufficient. They staff needs further training on conversing and encouraging the customers. The corporate executives must necessarily spend time with the front line staff. The management has to look beyond the regulations and government support to dispose the cups. This should primarily be the responsibility of the company and this can be achieved through planned organizational learning. Starbucks must have long-term vision and work towards achieving its vision. 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