Seven points on how to implement a learning organisation to increase your business success

• In today's 'VUCA world', the ability of organisations to learn is becoming a critical success factor

• However, a lack of – or misunderstood – leadership, organisational boundaries and bureaucratic processes often prevent the transformation into learning and customer-oriented companies

• Zühlke's many years of organisational consulting experience have resulted in seven practical tips for improving the ability of organisations to learn and perform

What is the most sustainable way to optimise your company's competitive edge and business success? Various studies show that organisational skills in particular are difficult to imitate. But what are the skills and capabilities of an organisation? How can we ensure that they drive the company's strategy and support its financial results?

A constantly learning and evolving organisation continually transforms its capabilities, keeping them relevant to your customers and the success of your business. How can this goal be achieved? Here are a few specific tips.

Real learning extends beyond the mere accumulation of knowledge. Much more often, it influences the evaluation of situations and changes the actions and behaviour of those involved. This is true not only for individuals, but also for organisations. To be relevant, learning must be aligned with and support the goals of the organisation and its stakeholders. This is not always easy and requires a sound understanding of how organisations work.

Learning means acquiring new skills

Every organisation, whether it is a company, an association or a public authority, is a structured system of socially interacting people with a defined purpose. Like the individual members acting within it, the organisation as a whole has the ability to perform and achieve results ('run the business'). Because the environment is continually changing and new demands are constantly being placed on the organisation, it must continue to develop and acquire new skills, just like any individual ('change the business'). It needs to learn and adapt. In today's fast-paced and uncertain times (keyword VUCA), the speed with which an organisation can respond to new challenges is crucial to its success. But why do many find this difficult?

Organisations leverage the capabilities of their members for the benefit of stakeholders

The capabilities of an organisation should be more than the sum of the capabilities of its members. This characteristic is strongly determined by the interactions of the members in the organisation. The relationships can be formal in nature and documented in rules, processes, etc. At the same time, they have a strong informal character and to a greater or lesser degree are consciously 'lived' within the organisation. The network of relationships controls the actions and limits the degrees of freedom of those acting within it. The performance of the resulting operating and learning mode is reflected in how well the results meet the organisation's goals, the stakeholders' requirements and expectations, and the environmental conditions.

A certain resistance to change is not necessarily a bad thing. The secret of high-performance organisations lies precisely in finding an optimal balance between stabilising standardisation and innovative change. But when contradictory rules and the defence of old habits and status dominate, when the organisation reacts inadequately to new challenges or constantly fails to achieve its own goals, then it is time to give new impetus to the ability to change. But what hampers adaptability?
 

Silos, hierarchies, bureaucracy and fear of responsibility hinder organisational learning

Let's say a customer has an unusual request for a business and tells his contact person about it. The latter cannot fulfil the request on his/her own and needs support from various units in the organisation. Nor is this request covered by the business's defined processes and services. It doesn't take much imagination to understand how departmental boundaries, hierarchical application- and authorisation-procedures, the size and complexity of the organisation or bureaucratic regulations will hamper the fulfilment of the customer's request, even if that fulfilment would not involve any extraordinary stretching of existing means and skills.

This is where 'agility' brings the elements of Value Stream and Self-Organisation into play: based on targets agreed with management and understandable by all, a cross-functional, autonomous team decides if the customer's request can be met, and how. This seems simple and logical, and yet it is difficult to implement in practice. Why is that?

• Defining consistent, transparent and sufficiently action-steering goals for all teams in the organisation is a very challenging skill for an organisation. It is just as critical to success for agile companies as for traditionally managed ones. Few achieve excellence here.
• The decision-making autonomy of the teams can only extend as far as they can oversee and take responsibility for the effects of their decisions. The ability and willingness to make decisions and bear responsibility vary between teams and individuals.

An absence of – or misunderstood – leadership, organisational boundaries and bureaucratic processes obstruct the route to a learning and customer-oriented company that reacts flexibly to new customer demands. But does an organisational tree structure help to implement a strategic realignment in changing markets? Is one word from the CEO enough here for the whole organisation to then follow in a new direction and acquire the necessary skills?

There would hardly be so much literature on Change Management if it were so simple. Until everyone in the organisation knows and has internalised what the change means for him or her personally and how one's own actions need to be adapted, a lot of work needs to be done on defining, specifying and persuading. The same factors that were mentioned at the beginning in the case of the customer requirement also hamper reorientation and further development here.

Seven tips on how your organisation will learn faster and become more successful

The above considerations, as well as our many years of organisational consulting experience, yield the following practical pointers for improving the learning ability and the adaptability of organisations in the pursuit of higher performance:

1. The Outside-In perspective determines the need for change and new skills. Fast-learning organisations detect changes in customer requirements, the markets or the environment at an early stage and adapt to them on an ongoing basis.
    
2. Organisations learn bottom-up as well as top-down. It takes purposeful and constructive interaction to embed new skills in the organisation. Good leadership identifies goals and general requirements in an understandable way and leaves enough room for change and adaptation.
    
3. Existing performance measures and incentives are often very effective in hampering constructive collaboration, the curiosity of employees to try out new things, or going above and beyond just working to the rules. Regularly reviewing the formal and informal incentives in the company is essential for promoting desirable behaviour.
    
4. Just like bureaucratic processes, organisational fault lines in the form of silos or hierarchical boundaries limit organisational development by putting up many internal barriers. Modern organisations are networks that are continually reconfiguring and adapting to the situation. Here, the balance between a stabilising standardisation and an innovating agility must be constantly re-explored.
    
5. The skills of the employees are an important part of the organisation. Often, the focus is on promoting 'high potentials' and acquiring new skills through new hires or outsourcing. In expanding the capabilities of the organisation, this is expensive on the one hand, and on the other it creates frustration in the core workforce. With targeted encouragement and deployment in the right job, many employees demonstrate previously unsuspected skills and performance, which can accelerate the development of the organisation.
    
6. Decentralisation, autonomy and self-organisation promote the learning ability and the adaptability of organisations. It is important to ensure that those who make decisions are fully aware of their consequences and can take responsibility for them. Otherwise, chaos threatens.
    
7. Cooperation in the sense of co-creation, respectful interaction, transparency and the constructive handling of mistakes create the cultural framework and space for organisational learning. They give employees the security and support they need when venturing into unfamiliar territory.

Authors: Sebastian Bahner & Rolf P. Maisch

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