Sega Corporation - Essay Example

2 Introduction 2 Sega: Background and Problems 2 Company Background 2 2.2 Problem Definition 3 3 Literature Review 4 3 Organizational Development 4 3.2 Learning Organizations 8 3.2.1 Environmental Alignment 8 3.2.2 Individual and Organizational Learning 9 3.2.3 Contextual Factors 10 3.2.3.1 Culture 11 3.2.3.2 Strategy 11 3.2.3.3 Structure 11 3.2.4 Senge’s Five Disciplines 12 3.2.4.1 Systems Thinking 12 3.2.4.2 Personal Mastery 14 3.2.4.3 Mental Models 14 3.2.4.4 Shared Vision 15 3.2.4.5 Team Learning 15 4 Applying Theory to Practice 16 5 Expected Outcomes 18 5.1 Employee Satisfaction 18 5.2 Product Quality 18 5.3 Customer Satisfaction 19 5.4 Strategic Business Performance 19 6 Conclusion 20 6 Bibliography 21 Abstract Learning organizations are those who look to the future; organizations which are constantly in touch with their market and one step ahead of their competition. Sega Corporation, unfortunately, is not a learning organization and, as such, has adhered to strategies which may have been successful in the past but which are no longer so. As Sega’s OD advisor, I have prepared a report which outlines the roots of its failures and argues the efficacy of its adopting a learning organizational model. The literature reviewed underscores the benefits of doing so and precisely articulates what is involved in doing so. Should Sega implement these recommendations, its business performance, as measured through both financial and non-financial indicators will experience discernible improvement. 1 Introduction The Chief Executive Officer (CEO) of Sega Corporation has decided to transform the company into a learning organization, believing that in so doing, Sega will eventually be in a position to confront its competitors and regain the market shares it lost throughout the past decades. Indeed, Sega’s persistent failure to accurately gauge and effectively respond to changing trends in the electronic home gaming market has resulted in the almost complete loss market shares, not to mention yearly net losses on sales from the mid-1990s to the present. Sega’s inability to confront its competitors or to reclaim its lost market shares reflects a problem within the organization itself. More specifically, it is expressive of Sega’s inability to adapt itself to its changing market environment and train its workforce towards more effective and efficient responsiveness to that environment. It is in the hope of addressing, even reversing this problem, that Sega’s CEO has hired an Organizational Development consultant, with the view of transforming the corporation into a Learning Organization. The particular problems confronting Sega, the extent to which OD tools may aid in their resolution and whether or not the company can benefit from its transformation into a Learning Organization are questions which the below report seeks to answer. 2 Sega: Background and Problems Prior to determining the nature of the OD intervention strategies required for the transformation of Sega into a Learning Organization and, indeed, whether or not this particular organizational change will benefit the company, it is imperative that the OD practitioner closely analyze the company and identify both the nature and source of its problem(s). 2.1 Company Background Originally a jukebox importer, Sega Corporation moved on to developing arcade machines, and then on to developing videogames consoles and software in the early 1980s. After enjoying considerable sales and success with their early consoles the Master System and its follow-up the MegaDrive, Sega then began to make a series of costly errors that have finally resulted in their announcement to pull out of console development altogether (Gantayat, 2000). Following that, Sega decided the time was ripe for a new generation of videogame system, named the Saturn. This was a console based on their existing arcade hardware, but included less memory and was CD based. The CD drive, however, was slow in comparison with what was available for PCs. The Saturn also faced three more problems, firstly software companies argued that Saturn was too difficult to program and thus game development costs rose and profits fell. As such software companies were reluctant to support Saturn; a second problem was pricing, Saturn launched in the US at approximately $700 (Harney, 2001). This was considered as exorbitant at the time and was seen as a major factor in why consumers moved away from Sega to Sony, consumers simply did not buy the Saturn in anticipation of Sony’s cheaper PlayStation, this being the third problem, PlayStation became popular very quickly. Sega, having being used to only one major competitor in the form of Nintendo, and having successfully fended off competition from companies such as Atari and 3DO, believed that Sony would also fall by the way side as Sega thought they had brand loyalty among consumers and Sony had no experience of videogames. This was a costly mistake, Sony spent tens of millions on marketing the PlayStation, something Sega continually neglected. Sony subsequently gained 65% market share with PlayStation. Having seen their market share eroded to a mere 20% in 1996, Sega decided to develop a new console (Harney, 2001) Since that date, Sega has been reporting substantial losses. 2.2 Problem Definition The challenges confronting Sega effectively underscore its increasing inability to confront the challenges posed by its competitors or to respond to ever-changing market trends and consumer demands. The real challenge for the OD practitioner is to uncover the root causes of the identified problem. Following an analysis of the company’s performance and its organizational structure, as derived from published reports, it was determined that many of Sega’s problems are due to top management team failings and organizational factors which determine continued adherence to strategies which may have worked in the past and which were at the root of Sega’s earlier success but which are unsuited for the present. Sega’s past performance (pre-1995) was very good, sales were high and market share was high. But this was being biased, as there were really only two companies in the market, Sega and Nintendo. In effect this biased their decisions to go ahead with the failed Saturn console and to supersede this with the Dreamcast. Sega, in a turbulent environment, made external attributions for the failings of Saturn blaming recession in Japan and general decline in global demand. Saturn’s poor performance, however, was very much the fault of Sega in making it hard to develop games for it, thus reducing third party support for the console, and the lack of marketing compared with its chief rival, Sony (“Where Sega Went,”2001) . Gordon et al (2000) has associated such external attributions for poor performance in turbulent environments with adherence to failing strategies, and Hambrick et al (1993) directly relates such bias to commitment to the status quo. Console development also requires millions to be spent on research, development and production, the vast resources Sega had put into both Saturn and Dreamcast served to escalate the top management team’s commitment to the strategy. The implications of the above-stated are clear. The root of the problem lies in Sega’s adherence to strategies which, although previously successful, were currently failing. Furthermore, consequent to both its inability to respond to the market and develop products which satisfying current tends and demands, concomitant with its persistent failure to rethink its strategy, Sega lost billions of dollars. Unless Sega rethinks its corporate strategy and utilizes such OD tools as would transform the corporation into a learning organization, it will possibly continue to lose many more billions of dollars. Precisely how and why the aforementioned can help Sega will be answered through a review of the relevant academic literature on OD theory and Learning Organizations. 3 Literature Review This section shall present a review of the literature on both Organizational Development and Learning Organizations. This review shall inform the concluding section on research findings. 3.1 Organizational Development In precise terms, organization development is the application of a blueprint for planned, as opposed to unplanned, change aiming towards maximization of the organization’s effectiveness. That is, the improvement of the organization as a whole, included performance but, as compared to other strategies which focus on performance alone. It is for such a reason that the parameters of OD are expansively defined as “systemwide.” The discipline, or the practice, addresses a wide range of organization activities and concerns, as relating to the unit’s structure, strategies and processes, diagnosing potential and/or existing problems and devising a framework for the implementation and stabilization of change. Organization development has a relatively short history, extending back a mere five decades. However, within that somewhat brief time-span, organization development has evolved tremendously and, apparently, continues to do so. OD, as defined and currently practiced, has five discernible stems or points of evolution. These are Laboratory Training Action Research/Survey Feedback, Participative Management, Quality of Work Life and, Strategic Change. Mention of these is not only important as a means of expanding upon the definition or illustrating its rapid evolution but, further as a way of highlighting both the tools and the multidisciplinary dimension of OD (Applebaum and Batt, 1994). It is as such that definitions of OD emphasize its social and behavioural science infrastructural base and, the influence of social psychology, psychotherapy, industrial/organizational psychology, sociology, participative management theory, group dynamics theory, etc. upon it. While such a range of influences might lead to the assumption that OD is neither a focused nor a firmly structured discipline, one might dispute this by stating that OD is comprehensively structured to address as many aspects of organization strategies, structures and processes, as possible, driven by the understanding that the heath of the entire body is dependant upon the status of each of its parts. Definitions of OD fall under five categories, as determined by the aspect of OD that each aims to highlight. Firstly, it is defined as a systemwide approach, applied to the strategy, structure and processes of the entire organization or single departments within and, designed to apply change programs aiming towards the maximization of efficiency. Secondly, while OD does place a high value on improving the economic status of an organization, its approach is not confined to economic or technical analysis as, for instance, is operations management. Instead, even as OD embraces these same concerns, it expands its parameters to include the social and psychological aspects of the organization (Collins, 2001). Accordingly, as inferred from this definition, OD is fundamentally based on the behavioural sciences. The third definition maintains that OD is ultimately focus upon the management and implementation of change, as based on diagnosis of problems and the characteristics of each client system. It adopts a flexible approach to change, as in plans that are open to modification (Harvey and Brown, 2001). Fourthly, OD is geared towards the improvement of organization effectiveness, based upon the assertion that such effectiveness translates into top-notch performance and high quality work life, ultimately enabling the organization to channel energies into the realization of key goals. The significance of organization development correlates to each of the stated definitions. As one may surmise, the sum total of these definitions yields a comprehension of OD as a fundamentally human and social oriented, data-driven, process for increasing organization efficiency. The significance of OD partly stems from the afore-mentioned humanistic approach which, in itself, is an ultimate concession to the fact that the status and health of an organization is fundamentally determined by the work force which undertakes its activities. The satisfaction, values and commitment of this work force directly impacts the organization, whereby solutions to diagnosed problems cannot, for instance, merely focus on the technological status but needs to consider the attitudes of those who will power that technology; it cannot confine itself to the external environment’s effect on the organization’s performance while ignoring those who are responsible for reacting to that environment.. Therefore, the significance of organization development partially emanates from its normative and humanistic approach, not to mention its total systems approach to change. Organization development contains a large, and ever-increasing number of intervention strategies, designed to enhance organization effectiveness. OD interventions may assume the form of job enrichment or participative management, as two examples of a multitude of others. However, prior to selecting and enacting interventions, the OD process must proceed with diagnosis (Collins, 2001). This diagnosis is not only intended to identify the problem but to clarify its nature and uncover its roots, as an inarguable prerequisite to effective selection of the appropriate intervention strategy. Diagnosis of organization problems need first proceed with an identification of the level from which the problem arose. The three different levels, organizational, group and individual, are simultaneously connected and exclusive. To explicate upon this apparent contradiction, one may state that in complex organization systems, problems are likely to be caused and reinforced by a multitude of factors, spanning more than one level (Harvey and Brown, 2001). For instance, employee dissatisfaction may relate to position within the organization’s structure, inability to comprehend organization strategies, conflicts between group members, and the belief that work does not challenge individual potential. Therefore, all three levels are identified as relevant to the problem mentioned. Nevertheless, and despite interconnectivity, there are sets of circumstances which compel diagnosis to focus on one level, rather than on others. The question now is, what are the circumstances that deem organization level diagnosis to be more appropriate than either group or individual level diagnosis? Diagnosis at the organizational level, as with the others, involves analysis of inputs, design components and outputs. The first comprises general environment and industry structure while, the second embraces organization strategy, technology structure, and culture, in addition to human resource and management systems. As regards output, it basically relates to organization effectiveness (Applebaum and Batt, 1994). Therefore, on the most superficial level, one may state that diagnosis at the organizational level is appropriate should indicators highlight culture as stagnant, the general environment as unhealthy, or the design components as not inductive to organization effectiveness. Apart from that, any analysis of the system, or attempt to gather valid data on it, in preparation for the data analysis integral to later feedback (individual level) predetermines the appropriateness of organizational level diagnosis. 3.2 Learning Organizations Organizational learning has been defined by OD scholars and theorists as “the growing insights and successful restructuring of organisational problems by individual reflected in the structural elements and the outcomes of the organisation itself” (Fiol and Lyles, 1985: 803). The quoted definition, one which Fiol and Lyles (1985) present as popularly accepted among OD scholars, highlights two aspects of Organisational Learning. The first is that learning is definable as the insights which key organizational members gain into their organisation’s operations an business processes, as would allow them a more articulate understanding of the source’s f the entity’s success and failure. In other words, it refers to the knowledge acquired from within the organisation itself and through its study and observation. The second aspect of the definition highlights organisational learning as the implementation of the organization-specific knowledge acquired for the purpose of restructuring the organization’s processes and maximizing the opportunities for the attainment of strategic objectives. Therefore, on the basis of the presented definition, organizational learning emerges as the processes of both new-knowledge acquisition and the strategic implementation of knowledge gained. While valid and popularly accepted by OD scholars, the above discussed definition tends towards the deceptive insofar as it obscures the complexities inherent in either process. Indeed, as outlined by leading organizational development theorists such as Chandler (1962) and Katz and Kahn (1966) organizational learning is a multi-componential phenomenon, comprised of environmental alignment, individual learning and organisation-wide learning, framed by a set of contextual factors. This can best be explained through a brief overview of the mentioned components. 3.2.1 Environmental Alignment There is popular consensus among organisational development scholars that one of the predominant aims of organizational learning is the attainment of environmental alignment (Sinkula, 1994). If an organization is both to survive and succeed within the market, defined as its external environment, it must have knowledge about that environment. This knowledge pertains to the identity of the competition, the performance of competitors, market demands, the criteria by which customers/consumers evaluate products and future trends. The learning organisation is one which is in possession of such knowledge, is constantly renewing its knowledge and more, importantly, structures its processes around this knowledge, thereby ensuring that the products it develops can meet the challenge posed by the competition and will attain customer approval (Sinkula, 1994). Interestingly, the concept of environmental alignment entails both learning and unlearning. Fang and Wang (2006) clearly emphasize this in their explanation that past practices and strategies may not be suitable for the present and that, due to the mercurial nature of the external environment, past knowledge about it most probably will not be applicable to its present state (Fang and Wang, 2006). The implication, therefore, is that not only does knowledge pertaining to the environment have to be constantly renewed but so must the strategies informed by that knowledge. Alignment, in other words, is a constant undertaking, founded upon learning and unlearning. In direct reference to Sega Corporation, it is evident that it could benefit from this component of organisational learning, insofar as one of the key reasons for its failing performance lies in its inability to unlearn past lesson and its persistent implementation of old knowledge, lending to environmental misalignment. 3.2.2 Individual and Organizational Learning Granted that some OD theorists have not established a distinction between organizational and individual learning, Sinkula (1994) asserts the presence of precisely such a distinction. Organizational learning, as he explains, is not simply the sum-total of its members’ knowledge and learning but an entire system which embraces organizational culture, values and ethics, organizational-specific knowledge and employee learning motivators and enablers. Organizational learning is all of the stated and the method/mechanisms by which the identified are communicated to employees (Sinkula, 1994). It exists independent of employees. As regards individual learning, it is an undeniably fundamental component of organizational learning as a whole. It refers to the knowledge, the know-how which individual organizational members bring to the organization and emphasizes continued individual learning, especially in technology-based forms, as not only a key component of the learning organization but, one of the more fundamental sources of organizational success (Sinkula, 1994). In applying the stated to the case study, one might assume that both organizational and individual learning are virtually absent in Sega or, at least, are not at the requisite level. This assumption is based upon two considerations. In the first place, had Sega the mechanisms to communicate its organizational culture to its workforce, the value of innovation, which had once been a core component of the organizational environment, would have been emphasized and learnt. In the second place, were Sega a learning organization it would have established the mechanisms for the facilitation and motivation of employee learning. Indeed, if it had done so, it is quite probably that its workforce would not have forwarded plans for and actively engaged in the development of products which were not only over-priced but inferior to the competitions’ products. On the basis of the stated, not only can it be assumed that Sega lacks these two components of learning Organizations but the argued absence is a primary source of performance failure. 3.2.3 Contextual Factors OD scholars have argued that organizational learning is either facilitated or obstructed by a set of contextual factors. Their presence facilitates the evolution of the learning Organization and their absence undermines an organisation’s efforts to evolve into the aforementioned. In the following, a brief overview of these factors shall be provided. 3.2.3.1 Culture Organizational culture directly influences the probability of the occurrence of learning. According to Fang and Wang (2006) organizational culture refers to the beliefs and values particular to an organization with those beliefs and values in turn influencing the factor of flexibility. A culture which is flexible enough to be responsive to a changing environment is one which is likely to facilitate learning. A static culture, however, implying lack of flexibility and responsiveness, will not. Consequently, the very nature of an organization’s culture impinges upon organizational learning (Fang and Wang, 2006). 3.2.3.2 Strategy An organization’s strategy impinges upon its learning potential. Strategy, insofar as it defines an organization’s goals and objectives, in addition to the mechanisms for their attainment, can either identify organizational learning as a key to the successful fulfilment of the identified objectives or, overlook this component (Hale, 1996). Strategy, therefore, facilitates or obstructs the development of organizational learning, either by acknowledging its value or overlooking it. 3.2.3.3 Structure Organizational structure is a key determinant of whether or not an organization is, or can become, a Learning Organization. Mechanistic organizational structures, insofar as they are inflexible, neither allow for the assimilation and dissemination of new knowledge, nor for the exploitation of that knowledge for the re-engineering of organizational structure. In comparison, decentralized organizations allow for precisely that and, indeed, function to identify learning as the responsibility of the workforce. It does so because it awards some decision-making powers to individual employees and holds them accountable for their performance (Hale, 1996). 3.2.4 Senge’s Five Disciplines Peter Senge (1990), an OD scholar and researcher, maintains that in order to make the transformation into a learning organization and sustain that status, organisations must integrate five basic disciplines, or principles, into their operational framework. These disciplines, identified and discussed separately in the below, when adopted by the organisation and integrated into its operational framework, are primarily “concerned with a shift of mind from seeing parts to seeing wholes, from seeing people as helpless reactors to seeing them as active participants in shaping their reality, from reacting to the present to creating the fiture” (Senge, 1990, 36). 3.2.4.1 Systems Thinking It is hardly surprising that Senge (1990) identifies the systems approach, or systems thinking, as the first of his five disciplines and the one which integrates and embraces the other four. In order to better understand the extent to which systems thinking is integral to , not just the evolution of the learning organisation but, to the maintenance of its status as such, it would be quite useful to review the literature on systems thinking and define this particular management paradigm while identifying its contributory value to other management frameworks. Churchman (1968), popularly regarded as one of the founders of the systems approach, attempted to overcome the challenge of defining systems theory through an allegorical explanation. Referring to the fable in which several blind men, gathered around an elephant, attempted to guess the nature of the beast by touching specific parts of it, and ultimately failing Churchman (1968) contends that the systems approach derives from this concept. In other words, the systems approach may be defined as an organisational development/management paradigm which is founded upon the belief that an organisation/firm/corporation is a living organism which exists, as does any other living creature, within a larger environment. In order to be able to understand the workings of that organism and to correct problems therein, it is necessary to look at both the whole and the external environmental context within which it exists (Churchman, 1968). Consequently, from this perspective, the systems approach emerges as a managerial concept which is premised on a particular definition of the business organisation. Affirming the validity of the above articulated definition, Chen (1975) defines the systems approach as a management theory which is predicated on the assumption that an organisation has to be managed as a single, coherent and cohesive unit. Piecemeal managerial approaches have effectively negated themselves insofar as their tendency to regard management strategies in departmental, rather than organisational-level terms, has often defeated coordinated management attempts since the various component of the system/organisation work despite, and against, one another, rather than with one another (Chen, 1975). The systems approach is, thus defined as a management paradigm which, while it recognises and explicitly acknowledges the value of each component within the system/organisation and concedes to the influences that the external environment may have on the operation and activities of the unit and components therein, maintains that the organisation must be regarded as a whole. A review of the literature on systems theory exposes two facts. In the first place, and even though it comprises a viable management and organisational development and change theory in its own right, its value, as Easton and Jarrell (1998) contend, primarily lies in its utility as a support system for other management theories and a blueprint for the design of management paradigms and the articulation of implementation strategies. In the second place, and as noted by Reed, Lemak and Montgomery (1996), the inherent value of the systems approach lies in its diagnostic capacities and in the tools it provides for the dissection of an organisational unit for the purpose of identifying the factors which might mitigate against change and those which could function to facilitate it. In other words, it allows for both the design of a framework for the transformation of an organisation into a learning one and the implementation of that framework. 3.2.4.2 Personal Mastery Senge’s (1990) definition of this discipline immediately allows an appreciation of its vitality for both the development and sustenance of learning organizations. As he writes, personal mastery references the process of “continually clarifying and deepening our personal vision, of focusing our energies, of developing patience, and of seeing reality objectively" (Senge, 1990, 7). It contributes to the evolution of sustenance of a learning organisation insofar as it calls upon individuals within to continually evolve. In other words, recognizing that on organisation is the sum-total of the individuals within it, this discipline is premised on the assumption that were the various parts/individuals of the organization to engage in continued learning and the fine-tuning of their vocational and work-skills, not only will the organization make the successful transition to a learning one but would be in a position to sustain that status. 3.2.4.3 Mental Models According to Senge, (1990, 8) "Mental models are deeply ingrained assumptions, generalizations, or even pictures or images that influence how we understand the world and how we take action.” As may be inferred, in order to undertake the successful transformation into a learning organization, it is incumbent upon those engaged in the design and implementation of the change process to acquire a general understanding of the mental models which are particular to that organisation (its human resources0 and to design an organisational culture and change process which addresses and incentivizes these mental models. In other words, it is necessary to integrate those models into the organization’s overall vision and structure in order to create a sense of affinity and belonging with and to the organization among its work force. 3.2.4.4 Shared Vision Much of the literature on leadership emphasises it as the primary source of, and motivator for, shared vision. As Switchenberg (2002) explains, leadership is identified as the key to organizational success insofar as leadership styles, talents and competencies are the primary instigator of a cohesive organisational culture, a committed, loyal and, therefore, productive and motivated workforce and of a dynamic and well-run organisation. Within the context of his fourth disciple Senge (1990) makes a similar argument. As he writes, "if any one idea about leadership has inspired organizations for thousands of years, its the capacity to hold a shared picture of the future we seek to create” (Senge, 1990, 10) Building upon the previous discipline, Senge maintains the imperatives of leadership’s acting towards the creation of a convergence between the various mental models within the organisation and the organisation’s vision. When an organisation’s human resources embrace their organization’s vision and perceive of it as a shared one, it follows it will work towards the realization and sustenance of that vision. 3.2.4.5 Team Learning According to Serge (1990, 10) "team learning is vital because teams, not individuals, are the fundamental learning unit in modern organizations.” An organization is ultimately comprised of teams, individuals working as one for the purposes of designing, implementing and managing projects. Indeed, successful organizations are ultimately nothing other than cohesive teams working together to implement an organizational vision, and realize its strategic goals and objectives. Learning organizations, insofar as they are firms who are in a constant state of evolution, forever moving towards the future, are organizations whose members are constantly learning and communicating that which they have learnt to their team numbers in order to realize full potential. As may be determined from the foregoing review on the definitional and conceptual framework of Organizational Learning, it embraces a number of key issues. These are (1) strategies for attaining competitiveness; (2) mechanisms for ensuring that the organization is aligned with its external environment; (3) the implementation of best business practices; (40 the transformation of an organization from a mechanistic to a flexible and decentralized one; (5) workforce development through learning; (6) the incitement of workforce learning consequent to the factor of accountability; and (7) the implementation of such strategies and mechanisms as would help ensure that an organization responds to market demands and, hence, attains customer satisfaction, leading to the maintenance or even expansion of its existing market share. 4 Applying Theory to Practice Within the context of organizational learning and development, total quality management (TQM) emerges as a fundamental concern. Indeed, according to Prajogo and Sohal (2004) organizational learning is a key component of Business Excellence and TQM, and the implementation of organisational learning, implies the gradual transformation of a business entity into a TQM organisation. Therefore, the issue which requires consideration at this point is whether or not Sega will benefit from, or even needs to, transform itself into a Learning Organization, implying the gradual implementation of TQM and, if so, how will the implementation process proceed. On the basis of the facts outlined in the case study discussion, Sega Corporation most definitely needs to transform itself into a Learning Organization. Granted that there are drawbacks to Learning Organizations, such as the tendency to focus on learning as opposed to performance, implying that involvement with learning overshadows other priorities, or the constant nature of the changes Learning Organizations experiences as a direct implementation of new knowledge, the fact remains that such organizations tends towards better business and market performance than non-learning organizations (Sinkula, 1994). As regards the reasons why Sega should implement a learning organization paradigm, the reasons are quite self-explanatory. To reiterate, however, Sega’s market performance is indicative of misalignment with its environment; betrays the fact that the corporation has neither gathered nor processed new knowledge regarding market trends and the nature of its environment; and underscores the fact that the organization is not conducive to workforce learning for, had it been, proposed projects and development thereof would neither have produced goods which are not in demand and would not have produced those goods at the excessively high cost that they did. As such, I would unhesitatingly advise Sega’s CEO to implement an organizational Learning framework. As pertains to the particulars of the implementation process, the three concerns are identical to the contextual factors earlier discussed. Accordingly, it is imperative that Sega adopt an organizational culture which highlights the value of both innovation and learning, in addition to the implementation of mechanisms for the communication of these two values. It is additionally important that Sega re-engineer its organizational structure towards the adoption of a decentralized format. Moreover, it is equally necessary that Sega encourages workforce learning, both by adopting learning/training workshops and by holding individuals within accountable for performance. Last, but not least, Sega must reassess its strategic position towards the articulation of objectives which acknowledge that realization is intimately connected with learning. Only when Sega implements the following steps can it develop into a Learning Organization. 5 Expected Outcomes Should Sega implement a Learning Organization paradigm, implying the gradual adoption of TQM, it can expect the following benefits. 5.1 Employee Satisfaction Spector (1997) defines employee satisfaction as the degree to which employees are committed to their job. Studies indicate that employee satisfaction is a dynamic, not a static state. It is influenced by a variety of forces which exist from both within and without the individual employee (Spector, 1997). As regards the external forces, the most influential have been identified as the relationship between the individual and the organisation, expressed in the extent t which the organisation seeks the inclusion, rather than marginalisation, of its work force in decision-making, and the degree to which the organisation expresses its appreciation for is employees in the form of promotion opportunities, benefit packages, pay structure and job security (Spector, 1997). Studies have further indicated that employee satisfaction is a key determinant of organisational performance and productivity. Satisfied employees are more productive and committed to their job than dissatisfied ones. Research, according to Spector (1997) has conformed the presence of an inextricable link between organizational learning and employee satisfaction insofar as the former acknowledges the importance of employees, invests in their learning and admits to the centrality of employees to organizational success. In other words, learning organizations are committed to their employees, consequent to the acknowledgement of their value and, in turn, engender commitment among employees (Spector 1997). 5.2 Product Quality Quality, according to Feigenbaum (1991) is the total composite product/service and not simply the final output. Consumers define product quality in terms of marketing, product engineering, manufacture, price and post and pre-sale service and consumer support (Feigenbaum, 1991). Reliability, maintainability, serviceability and user-friendliness comprise important quality criteria from the consumer perspective (Ishikawa, 1985; Feigenbaum, 1991). Quality is, therefore, a multidimensional phenomenon. Empirical evidence establishes a direct correlation between learning organization and product quality insofar as the former implies alignment with the environment. In other words, learning organizations have the requisite knowledge regarding the demands of their environment for the production of goods which consumer can subsequently identify as quality goods (Feigenbaum, 1991). 5.3 Customer Satisfaction Consumer satisfaction is the driving force behind the implementation of learning models and the ultimate goal of the learning organization. Spector (1997) maintains that there are two conceptualisations of consumer satisfactions. The first is transaction-specific satisfaction whereby consumer-satisfaction is defined as a post-purchase evaluation of the product/good/service, measured through price versus utility, serviceability, maintainability, ease of use. The second conceptualisation of consumer satisfaction is termed as cumulative satisfaction and is measured according total purchase and consumption experience, taking into consideration the firm’s past and present consumer-specific performance (Spector, 1997). There is a direct correlation between learning organizations models and customer satisfaction. This is simply because the attainment of consumer satisfaction is predicated on knowledge pertaining to consumer needs and demands. The learning organization is one which constantly updates this particular area of knowledge and implements it to product development and pricing. 5.4 Strategic Business Performance Strategic business performance is measured in terms of annual sales, sales growth, profits, and market share. It is a quantitatively measurable construct. It is more importantly defined as the ultimate measurement of a corporate entity’s market survival capabilities (Feigrenbaum, 1991). What the company is doing right is reflected in its strategic business performance indicators and what it is doing wrong is similarly reflected. Accordingly, the penultimate goal of any business firm is not simply the maintenance of its strategic business performance indicators at a market-survival level but the raising of those indicators to a level which reflects continued and sustainable corporate (Feigenbaum, 1991). Accordingly, the attainment of the requisite strategic business performance levels is dependant upon both learning and unlearning, a trait particular to Learning Organizations. 6 Conclusion In the final analysis, and even while conceding to the presence of some drawbacks to the adoption of Organizational Learning models and conceding to the complex nature of the implementation process, Sega needs to transform itself into a Learning organization. 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