What’s the biggest long-term competitive advantage an organisation can have? It’s the ability to adapt rapidly to changing circumstances. And for that, it needs to learn. That’s the Big Idea behind Peter Senge’s Learning Organisation.
The Learning Organisation sits at the confluence between two powerful forces for good:
Individual learning, development, and personal growth
Systems thinking that allows us to mentally connect up the network of parts into a complex whole
What it means is simple in concept, though fiendishly hard to achieve in practice. A learning organisation is one that continually develops and evolves so that everyone shares a consistent vision and collectively prepares themselves to meet the next challenge in achieving it.
James Dean or Kirk Douglas? Jimi Hendrix or Vera Lynn? Why do some people die young and other live long and productive lives? Arie de Geus, who himself is living a long and productive life, asked the same question of companies. And the answer he got was, like the long-lived companies, unexciting, cautious, yet robust.
Arie de Geus was born in 1930, in Rotterdam in the Netherlands. While studying for his doctorate in Business Administration at the Nederlandse Economische Hoogeschool (now, Erasmus University) in Rotterdam, he started working at Royal Dutch Shell to support himself through his studies.
His career at Shell was long and successful. Over 38 years he took a number of regional and corporate roles. They culminated with leadership of Shell’s Group Planning Department, famous for its innovations in Scenario Planning. There, he focused his attention on Portfolio Analysis and Organisational Decision-making. He concluded that organisational learning was a key to successful decisions and corporate longevity.
He developed this theme in a Harvard Business Review article in 1988, ‘Planning as Learning’. When de Geus retired from Shell in 1989, he rapidly got involved with the newly founded Center for Organizational Learning, at MIT, joining Chris Argyris, and Edgar Schein among its advisors, and Peter Senge, as its first Director. In 1997, he wrote the book that has brought him most prominence: ‘The Living Company’.
The Living Company
In his research, de Geus found that the average life expectancy of European and Japanese companies is 12.5 years. For large multi-nationals, it is between 40 and 50 years. Why then, are some able to last hundreds of years? De Geus argues that all have a potential life of 200 to 300 years, and he set out to learn the secrets of those who have achieved it.
His principal conclusion is simple. The problem is profits. Or, more accurately, it is a short-term focus on building profits, at the cost of a longer-term focus on all aspects of the business. Chief among the long-term aspect, de Geus highlights the need to nurture people. How a long life, a business needs to prioritise human capital over financial capital.
The title of his book arises from two hypotheses de Geus sets out:
A company is (in some ways) a living being
The decisions made by the company are a result of a learning process
Therefore, for the living being to thrive, it must continually learn, and build on what it has, rather than constantly seek to throw out the old, and with it, the organism’s accumulated wisdom.
Other factors he found, which characterise the long-lived companies he studied, are:
sensitivity to their environment
cohesive, with a strong sense of identity
tolerant of experimentation
frugal financing decisions
He uses these to carry forward his metaphor of companies being like living organisms, in suggesting that these characteristics also represent successful survival strategies for real living creatures.
Without a doubt, de Geus sets out a corporate, rather than entrepreneurial growth agenda. And his approach to human capital aligns him with other proponents of the human side of the enterprise, starting with people like Follett, Owen, Mayo, and McGregor.
His analysis is also more nuanced and less of a ready-recipe, than the book that followed it a few years later and also looked at long-lived companies: ‘Built To Last’ by Jim Collins and Jerry Porras. Perhaps the biggest difference is that, while de Geus saw average companies as lasting up to fifty years, and targeted longevity on 200-300 years. Collins was interested, in Built to Last, on those that make it past the 50 year mark. Maybe de Geus would see these as merely promising adolescents.
Donald Schön (Schon for the rest of this article) differs from other thinkers and managers in this series, because he was more a philosopher than a business thinker. Therefore, his ideas are subtle, but no less important for managers and professionals to understand; at least in outline.
Very Short Biography
Schon was born in 1930, in Boston and grew up nearby. In 1951, he gained his bachelor’s degree in philosophy from Yale and went to France to study music at the Sorbonne. He returned to the US to pursue philosophy at Harvard, where he earned his PhD in 1955.
After a short spell teaching philosophy at the University of California, Los Angeles and the University of Kansas City, he joined consulting firm Arthur D Little in 1957, and remained there until 1963 (AVGY).
From then on, he produced a series of books, joining the faculty of MIT in 1968 and becoming Ford Professor of Urban Studies and Education in 1972. It was in the years that followed this that he collaborated fruitfully with Chris Argyris.
Donald Schon’s Ideas
Within Schon’s writing are three big ideas that are especially relevant to managers and professionals.
The Learning Society
The rapid pace of technological change means that our systems and technologies no longer provide a stable base for society or its organisations. This means that we need to be constantly learning. This idea was picked up by Peter Senge in his writing on the ‘Learning Organization’. We need to be constantly learning lessons as we go and the same is true for society as a whole and organisations within it. Yet governments and organisations both like to centralise their policy making processes, isolating them from the people who have the experiences to understand and therefore solve the new problems that emerge.
Schon wrote about how powerful a metaphor can be in framing the professional response to an issue. Schon suggested that the challenge is often less in problem-solving, and more in problem-setting. How we state a problem dictates the type of solution we find. So, for example, if the problem of poor communication is fragmentation, then we look for a solution of co-ordination. An example he gave from the social sphere was when we refer to the problems of a neighbourhood as a ‘blight’ and therefore frame our response as a treatment for disease. This is something that is the subject of current research, not least by Paul H Thibodeau and Lera Boroditsky. I have written about the dangers of metaphor choice elsewhere.
Reflection in Action
Perhaps Schon’s most important contribution was in thinking about the process of learning. In addition to his collaboration with Argyris – which led to three books and the idea of double loop learning; he also focused on reflection.
He started by setting out reasons why what he termed ‘technical rationality’ is a poor model of professional learning. This is the process of filling new students and professionals-to-be with knowledge at the start of their careers, and expecting them to apply that knowledge. The common response to this approach was then ‘reflection on action’. This is the process of stepping back after each piece of work, project, or experience, and reflecting on what we have learned from it.
We know that this is an excellent route to developing wisdom, but Schon argued that professionalism requires something else, as well: the ability to think o our feet. For this, we require the ability of ‘reflection in action’ – reflecting while we are carrying out our tasks and exercising our skills. This seems to me to be intimately linked with both Csikszentmihalyi’s idea of ‘flow states’ (in which we lose ourselves in activities where we are able to constantly monitor our progress) and Kolb’s idea of ‘Experiential Learning’(in which we learn through a constant cycle of experience, reflection, generalisation, and application).
If business strategy is the search for competitive advantage, then the Journal of Business Strategy would seemed to have endorsed one strategy above all others. In naming Peter Senge as their ‘Strategist of the Century’ they implicitly set his concept of The Learning Organisation on a strategic pedestal. Indeed, they described Senge as someone who ‘had the greatest impact on the way we conduct business today’.
Peter Senge was born in California, in 1947. He attended his local university, Stanford, where he earned a BS in Engineering. He moved to MIT where he studied Social Systems Modelling for his MS, followed by a move to the MIT Sloan School of Management in 1970, where he gained a PhD in management that he completed in 1978. He stayed on, continuing his research into how we learn, within organisations.
the foundation of the Centre for Organizational Learning – now Society for Organizational Learning – a non-profit member organization pursuing development of people and institutions.
What is The Learning Organisation?
The learning organisation is one that encourages continued learning for both groups and individuals, as a source of competitive advantage. People at all levels from shop floor to senior management will be continually developing their skill levels, knowledge and experience. It is like building an institutional ‘growth mindset’ by increasing the creative capacity.
In The Fifth Discipline, Senge describes five core components of personal development. This book is often viewed as highly theoretical, so his follow-up Fifth Discipline Fieldbook set out practical answers to the questions he received about ‘how’ to implement these ideas.
The five means of development, that create a Learning Organization, are:
Individual, continuous, life-long learning. Senge also emphasises the importance of spiritual development. This, he argues, allows us to understand the tension between reality and vision. He suggests this is the source of creativity.
Senge suggests that we carry implicit mental models of our world and our organizations. We need to understand and challenge them. In the Fieldbook, he offers the tool of a ladder of inference, that climbs up from observation of data, to selection of the data, to applying meanings to them, to making assumptions, from which we draw conclusions, from which we adopt beliefs, that drive our choices of actions. This process helps us to analyse our values, beliefs and actions.
When team members create a vision that they share and jointly own, this brings them together, serves as a basis for creativity, and readies them for change.
Senge believes that group development will outpace individual development in driving team performance. He also distinguishes between dialogue (an exploratory process) and discussion (a process for narrowing and selecting from options).
This is the ‘fifth discipline’. It requires us to see an organization as an inter-connected whole, with a complex set of inter-relationships. Processes do not work as simple chains of cause and effect, but as complex interacting feedback loops that reinforce or counteract each other.
Two Videos of Dr Senge Describing his Central Ideas
Introduction to Organizational Learning
Introduction to Systems Thinking