Effective leaders know that succcessful organizations learn and grow in the same way that students learn and grow, by explicitly detecting and correcting errors.
Imagine the race for affordable energy sources – finding it, mining it, processing it and shipping it across the world to be distributed to millions of users in homes, offices, and every space in between being home and being out. One Senior Manager at Royal Dutch/Shell, wrote that the “only competitive advantage the company of the future will have is its managers’ ability to learn faster than their competitors” (Arie de Geus, 1988. p. 74). This is why Peter Senge, noted expert in management, lists General Electric, Shell and Coca-Cola among some of the most successful companies of all time – because they use learning concepts throughout their organization.
Organizational learning according to Argyris (in Clegg, Kornberger & Pitsis, 2011) is
“the process of detection and correction of errors… Organizations learn when the knowledge that their members have is explicitly known and codified by the organization… If members leave, the explicit knowledge that they developed in their jobs should stay” (p. 334).
As we look around and see many organizations strategizing to take the lead in their sector, from politics and education to sports and media, we cannot ignore the power of an organization that learns how to use its knowledge to gain a competitive advantage.
In tribute to Jack Welch (1935-2020) for the risks he took as an industry leader in the 1980s, let’s consider the organizational learning that honed GE into the success that it became. History reveals that GE became successful after World War II because the engineers who ran it, essentially produced whatever they thought that consumers needed. As much of the world’s industrial capacity outside the United States had been devastated, excited consumers absorbed everything that GE manufactured (Bolman & Deal, 2003).
But, Welch, knew when he took the reins as CEO in 1981 that the stereotypical old-fashioned hierarchy could not last. So, his mission became building a culture that emphasized “quality, entrepreneurship and candor. … He insisted that every GE business be number one or number two in its industry. If not, said Welch, ‘we’ll fix it, sell it, or close it’ ” (p. 230). This strategy resulted in a third of GE’s businesses that he had inherited being sold off, and resources reinvested in areas showing more potential. Controversial though it was, Welch cut GE’s payroll from 400,000 to about 330,000 over four years, earning him the derogatory nickname “Neutron Jack;” after a bomb that devastated people but left buildings intact. Not immune to scandal, but still producing successful returns, allowed Welch to remain as the CEO of GE.
So, with him steering the wheel, in ten years, from 1982 to 1992, GE’s market value increased from $21.6 billion to $73.9 billion, and more than doubled in another ten years to more than $300 billion by 2002. So that you know how uniquely successful Welch’s strategies were, for comparison, let’s contrast the market position with another industry leader, IBM. In just ten years, Welch’s steering of GE allowed him to overtake IBM. In 1982, IBM’s market value was twice the value of GM. But, ten years later, their positions were reversed (pp. 230-231).
Seeing value and potential in an individual or an enterprise is only the beginning. Effective leaders know that they have to harness the lessons that are evident in the errors that they have made and correct them for building a successful future. The world is undoubtedly watching this play out as they watch China’s response to the Novel Coronavirus (COVID – 2019) outbreak and the World Health Organization’s response to activate their protocols on declaring a “Public Health Emergency of International Concern” (UNICEF, 2020; https://www.unicef.org/appeals/files/coronaviruspdfhac4.pdf). And, all stakeholders are onboard as more than 25 nations now grapple with the virus, and the number of cases outside China have surpassed those at the center of the outbreak. With more than 1,500 deaths reported, community spread across the United States, Italy, and South Korea are just a few places of increasing concern.
With every opportunity to lead, there is also an opportunity to learn. Welch challenges all of us to be good managers by learning and growing. So, what’s your strategy for steering organizational learning? How are you harnessing the knowledge that you have gained in keeping your family and community safe? How are you harnessing the knowledge that you have gained over several months (years) of study? How are you harnessing the knowledge of those who have left your organization?
If none exists, start your documentation process today. You may be surprised who will pick it up long after you are gone. For more, see https://www.amazon.com/Black-Gold-Mitchell-Keisha/dp/3659761052/ref=sr_1_1?keywords=black+gold+by+keisha+mitchell&qid=1583340380&s=books&sr=1-1 and http://www.lulu.com/spotlight/KeishaAMitchellPhD .
Remember, we’re working for a brighter tomorrow for the children.