Learning Organization-Creating a Learning Organization and Leading it

The Concept of Learning Organization

Principles of Learning Organizations

Learning Organization in Practice

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These people believe themselves as part of larger creative process (refer to exhibit 4). They are convinced that they can influence the creative process but not completely control it. They are clearly aware of their ignorance, incompetence, and growth areas. Yet they are deeply self-confident. They see the journey itself as the reward.

Exhibit 4

The life of Gilbert Kaplan shows how strict reliance on conscious learning can enhance level of mastery so dramatically. Gilbert Kaplan was a successful publisher & editor of a popular investment periodical. In 1965 he happened to listen to Mahler’s second symphony. He recollects “I found myself unable to sleep. I went back for performance and walked out of the hall a different person.
It was the beginning of a long love affair.” That is where most of the people will stop. They will correlate and analyze whether their career and new found passion will go together? They rationalize and conclude that now they can’t do any thing. Then they look at events in life and assume that success has determined what they truly wanted (as they are successful that field is suitable
for them). But Kaplan thought differently. Though he had no musical training what-so-ever he was drawn towards conducting symphony. He invested lot of time, energy, and money. He risked his success and career. But today his symphony performances are rated among the best in the world. They receive highest praise by critics all over the world.

The New York Times rated (in the year 1988) his recording of the symphony with London Symphony Orchestra as one of the 5 finest classical recordings of the year. This example shows what can be accomplished in the pursuit of something truly important.

Source: The fifth discipline: the art and practice of the learning organization, by Peter M. Senge, Currency doubleday (1990), p166.

Systems Thinking

The word system originates from a Greek word “sunistanai.” This Greek word means “to cause to stand together.” Thus a system can be defined as a whole whose elements “hang together” because they continually affect each other over time and operate toward a common purpose. Atmosphere, chemical reactions, communities, families, teams are systems only.

Systems thinking is useful in augmenting and changing the way people think and talk about complex issues. It helps in identifying the effects and trade-offs of the actions. It employs a body of methods, tools, and principles aimed at understanding interrelatedness of forces that influence performance of organizations and seeing them as part of common process. Exhibit 5 shows how Shell Oil Company used systems thinking to embrace the future.

Exhibit 5
Systems Thinking at Shell

Fluctuations in the world economy determine the behavior of world oil system. To understand the forces that are causing fluctuations, strategy planners at Shell took a closer look at important players in the Shell’s business environment: consumers, oil producers, and competitors. They observed that all these players are primarily driven by self-interest and are certainly to behave in the way that fitted them the best.

First they analyzed the major oil-producing countries. In 1971, major producers like Iran, Saudi Arabia, and Nigeria had different interests. First they studied Iran. Then Iran was discovering new oil reserves. And hence the planners felt that Iran’s 5 years production starting from 1971 would be less than the new reserves discovered. And next five year production would overtake the new discoveries. As a result oil policy of Iran would change. Iran would start increasing its oil price instead of increasing its production. This was mainly dictated by the national interest.

Then the planners considered Saudi Arabia. The country was in a different situation. The revenue from oil production in Saudi Arabia was more than what the government could spend purposefully. As a result government preferred not to reduce its production and keep its reserves unexploited.

Similarly the planners studied other oil producers. The analysis was based on two variables: oil reserves, and need and ability to spend oil income productively. They came to the conclusion that no country has got both ample reserves and absorptive capacity (motivation to produce these reserves). For example, Saudi Arabia had great reserves but no large population to absorb the income. On the other hand, Indonesia had large population to absorb but meager resources.

Planners at Shell also analyzed oil-consuming countries. They observed that demand for the imported oil was increasing at 2 million barrels per day. In the US oil supply peaked (domestic oil) and then stagnated. And then there was incremental demand for oil, which was met by natural gas. Natural gas supply also stagnated due to regulated pricing mechanism. Coal production was supposed to meet the demand gap but expectation that nuclear power generation would fit in shunted the growth of coal production. But the no of nuclear plants that were built finally was too small to meet the demand. Even 3 to 4% increase in the US energy demand would create great demand for imported oil.

The study also involved Japan, whose economy was growing at a breakneck speed of 11 to 12%. As a result of that growth, annual demand for oil was growing at 20%. After conducting all these analyses they got a glimpse of forces that are going to determine the shape of future oil system.

Source: Scenarios: shooting the rapids, by Pierre Wack, Harvard business review, Nov/Dec 1985.