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Developing a learning organization: a case study

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 DEVELOPING A LEARNING ORGANISATION: A CASE STUDY
Diana du Plessis, Michael du Plessis & Bruce Millett

ABSTRACT

This paper describes and discusses the practical steps taken by a medium sized
Australian company (referred to in this paper as ‘Exco’ in order to preserve
confidentiality of the material) to evolve into a learning organisation. The concept of a
learning organisation is defined, and the applicability of this concept to Exco is
explored through three different areas of strategic concern. First, the organisation’s use
of strategy as a learning process is reviewed. Second, the organisational structures and
systems in place at Exco are discussed in terms of whether they support the attributes of
a learning organisation. Finally, the role of leadership and teams, in the learning
processes at Exco are discussed in terms of their impact and influence on positive
learning outcomes. The data informing this paper are the result of the author
conducting a structured interview with the Exco HR Manager, as well as a literature
review.

INTRODUCTION

In his book The Fifth Discipline, Peter Senge (1990, p. 1) defined a learning organisation as
“… a place where people continually expand their capacity to create results they truly desire,
where new and expansive patterns of thinking are nurtured, where collective aspiration is set
free and where people are continually learning how to learn” (p. 1). Senge (1992) described
the core of a learning organisation’s work as based upon five learning disciplines which
represented lifelong programs of both personal and organisational learning and practice.
These include:

Personal Mastery — individuals learn to expand their own personal capacity to create
results that they most desire. Employees also create an organisational environment that
encourages all fellow employees to develop themselves toward the goals and purposes
that they desire.

Mental Models — this involves each individual reflecting upon, continually clarifying,
and improving his or her internal pictures of the world, and seeing how they shape
personal actions and decisions.

Diana du Plessis has degrees in politics, development administration, psychology and is currently completing a
thesis for a MBus in the area of recruitment and selection within SMEs in Australia. She is an experienced
academic researcher and organisational consultant. She has written numerous reports for companies, community
groups, presented at conferences, and published 10 papers in the open literature. Her areas of interest include
human resource management and the effective management of organisational development and change; Michael
du Plessis, BSc (Hons), MSc , PhD — Chemistry, University of Cape Town. He has worked in industrial
research and development in South Africa, UK and Australia. His current interests include technology
management, fast cycle time product development and commercialisation of new technology. He has more than
twenty publications in the field of chemistry and technology management; Bruce Millett (e-mail:
millet@usq.edu.au) is a lecturer in the Faculty of Business, University of Southern Queensland. Bruce lectures in
organisational change and development, organisational behaviour, and strategic management.

Journal of Management Practice 2 (4), 71-94

© D duPlessis, M du Plessis & B Millett
Journal of Management Practice Volume 2, No 4, 1999

Shared Vision — this involves individuals building a sense of commitment within

particular workgroups, developing shared images of common and desirable futures, and
the principles and guiding practices to support the journey to such futures.

Team Learning — this involves relevant thinking skills that enable groups of people to
develop intelligence and an ability that is greater than the sum of individual members'
talents.

Systems Thinking — this involves a way of thinking about, and a language for
describing and understanding forces and interrelationships that shape the behaviour of
systems. This discipline helps managers and employees alike to see how to change
systems more effe ctively, and to act more in tune with the larger processes of the natural
and economic world.

The McKinsey 7-S Framework provides a systems view for describing the major differences
between a traditional view of an organisation and a learning organisation (Hitt 1995). In the
McKinsey 7-S Framework, seven key elements of an organisation, namely, the structure,
measurement system, management style, staff characteristics, distinctive staff skills,
strategy/action plan, and shared values are identified. The first six elements are organised
around the organisations shared values. However, Hitt (1995, p. 18) adds an eighth element
— synergistic teams — that he describes as the ‘missing link’. It is this element which Hitt
regards as being at the core of the learning organisation. Synergistic teams provide the means
for the members of the organisation to learn together, developing collective intelligence that is
greater than the sum of the intelligence of the individual members. Table 1 below illustrates
the characteristics of the traditional view of an organisation and the characteristics of a
learning organisation.

Table 1: Eight Characteristics of the Traditional Organisation

Versus the Learning Organisation

Element Traditional Organisation Learning Organisation

Shared Values Efficiency Excellence
Effectiveness Organisational Renewal
Management Style Control Facilitator
Coach
Strategy/Action Plan Top down approach Everyone is consulted
Road map Learning map
Structure Hierarchy Flat structure
Dynamic networks
Staff Characteristics People who know (experts) People who learn
Knowledge is power Mistakes tolerated as part of learning
Distinctive Staff Skills Adaptive learning Generative learning
Measurement System Financial measures Both financial and non-financial
measures
Teams Working groups Cross functional teams
Departmental boundaries

Source: Hitt, W.D. 1995, ‘The Learning Organisation: Some Reflections on Organisational Renewal’,
Leadership & Organisation Development Journal, Vol. 16, no. 8, p.18.

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Developing a Learning Organisation du Plessis, du Plessis & Millett

The concept of a learning organisation is an idealised model of coping with organisational

change (Starkey 1996; Redding 1997). This approach “engages employees' hearts and minds
in a continuous, harmonious, productive change, designed to achieve results they genuinely
care about, and that the organisations stakeholders want” (Nayak, Garvin, Maira & Bragar
1995). The process of building a learning organisation unleashes individual creativity, and
fosters collective learning which is crucial for encouraging, and developing innovation and
rapid responsiveness to global competition (Millett 1998). In short, a learning organisation is
continually getting ‘smarter’ because learning is planned, systematic and in alignment with
the organisation's strategic goals.

In order to get smarter, the organisation needs to capture its organisational knowledge.
Prahalad and Hamel (1990) have described the process of how organisations learn, and
identify the outcomes of the process as the development of core competencies which are ‘…
the collective learning in the organisation’ (p. 82). This occurs at all levels and functions
within the organisation. As we will discuss below, it is not enough for Exco to identify the
company’s vision as being the international leader in the manufacture and application of its
products. In order to sustain market leadership, the company needs to strategically develop
and maximise its market share in terms of its core products, and its staff and technology. On
the surface, developing core competencies has an intuitive appeal, but it is an extremely
difficult process to maintain and manage, particularly as the organisation changes and adapts
to its environment.

Exco is attempting to develop a set of competencies consistent with the attributes of a learning
organisation. With reference to the eight characteristics of a learning organisation described
by Hitt (1995), and shown in table 1 above, Exco exhibits many of the features of a learning
organisation. Much of this has occurred during the past five years. During this period, Exco
experienced significant transformational organisation change aimed at ensuring that the
organisation is flexible and able to rapidly respond to the competitive market place. The
organisation structure has been flattened with an emphasis on cross-functional teams (see
Appendix 2). Much effort has gone into setting up programs that allow people to make a
greater contribution to the success of the organisation.

Table 2: Exco as a Learning Organisation

Element Learning Organisation Evidence at Exco based on

the HR manager's view
Shared Values Excellence Yes
Organisational renewal Yes
Management Style Facilitator Yes
Coach Yes – problematic
Strategy/Action Plan Everyone is consulted Consultation growing
Learning map Evolving
Structure Flat structure Yes
Dynamic networks Evolving
Staff Characteristics People who learn Yes
Mistakes tolerated as part of learning Yes
Distinctive Staff Skills Generative learning Limited
Measurement System Both financial and non-financial Yes
measures
Teams Cross functional teams Yes

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Journal of Management Practice Volume 2, No 4, 1999

There is a considerable body of literature on the concept of the learning organisation, but
much of it is theoretical or prescriptive. Little research has been undertaken about the
practical impleme ntation of these ideas in firms. This paper defines the concept of the
learning organisation and discusses the practical steps taken by a medium sized Australian
company (referred to as Exco) to evolve into a learning organisation. These steps are related
to three main themes significant to Exco's evolution. First, the organisation’s use of strategy
as a learning process is reviewed. Second, the paper looks at the organisational structures and
systems in place at Exco, and considers whether these support the development of a learning
organisation. Third, the paper explores the role of leadership and teams, as significant levers
that influence the learning processes at Exco. Information about Exco was obtained through
company documents by a structured interview with the Exco HR Manager. The format of the
interview is set out in Appendix 1.

Exco is a specialised manufacturer of products for mining, quarrying and construction

industries. It has a dominant market share in Australia, and growing exports to South East
Asia. The company was formed in the early 1980s and there are two manufacturing sites in
Australia. It currently employs approximately 350 people, equally spread across the two
manufacturing sites

STRATEGY AS A LEARNING PROCESS AT EXCO

Many of the challenges facing Exco are characteristic of most organisations in the 1990s. In
particular, they find themselves in a competitive environment characterised by rapid change.
Exco’s competitive edge depends on its ability to deal with change more effectively and more
rapidly than its competitors (Millett 1998). It is no longer appropriate for managers to take all
the responsibility for implementing organisational change in response to rapid and complex
changes within the environment. Each individual within the organisation needs to be
accountable and take responsibility for making the necessary changes within their individual
work areas. They also need to share their knowledge with others in the organisation thus
emphasising the notion of teams and teamwork. These are ideals typical of an organisation
aspiring to develop a learning organisation. Exco is a company that Senge (1990) describes
as ‘… continually expanding its capacity to create its future. It is not enough to merely
survive’ (p. 14).

Strategy is an integral part of the learning process for a learning organisation because it
focuses on the organisation's development of core competencies, both in the present and in the
future (Millett 1998). It also focuses the learning process on the desired future position that
the organisation would like to be in. To this end, Exco has engaged in a self-design change
strategy (Cummings & Worley 1997). Rather than focusing on only one aspect of
organisational change, the company has tried to develop a ‘… dynamic and iterative process
aimed at providing the organisation with a built–in capacity to change and redesign (itself)
continually as the circumstances demand’ (Cummings & Worley 1997, p. 490). This has
involved transformational change of the organisational structure, human resource practices,
and technology. This means that at all levels of the organisation, employees have been, and
are, involved in the processes of transformation improvement.

A graphic representation of the Exco planning process is in Appendix 3. The concept of

planning as a learning process is emphasised by Arie de Geus (1996). He refers to the way

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Developing a Learning Organisation du Plessis, du Plessis & Millett

one of the world's most successful companies, Shell, used the corporate planning processes as
a constructive and significant way to promote learning at the strategic and operational levels.

The company’s vision is central to defining and developing the organisation. It is ‘an
articulation of the core competence of the organisation’ (Millett 1998). Exco’s business
strategies are strongly driven by its vision and mission. The importance of the vision is
strongly emphasised in team meetings, regular feedback sessions to staff and other types of
communications. The vision and mission were developed after extensive consultation with
employees, including a competition within the company to find the best mission statement.
There is particular emphasis on the organisation's values. These were developed in
conjunction with the Covey 7-Habits Program (Covey 1994), and a comprehensive training
program in which more than eighty percent of employees were exposed to the Covey
principles.

An Employee Opinion–Climate Survey is conducted every eighteen months to determine the

extent to which people ‘buy in’ to the vision and mission, and to measure whether there is
congruence between organisational values and the beliefs of individual employees. The
results of the most recent Employee Opinion–Climate Survey are included in Appendix 4.
Furthermore, every employee in the organisation has access to information about the
company’s performance via a centrally located noticeboard that is updated every month.
Table 3 below articulates the company’s vision, mission and values. A graphic representation
of these is included in Appendix 5.

Table 3:
Exco’s Vision, Mission and Values

Our Vision (Where we want to be)

q International leaders in the manufacture and application of ourproducts

Our Mission (How we will get there)

q Innovation: applying the creative talents of our people

q Excellence: setting higher standards in all our activities
q Service: focusing on the needs of our customers

Our Values (Guiding our decisions and actions)

q Trust and respect for people

q Personal growth and leadership
q Teamwork with customers, employees and suppliers
q Ethical and honest beha viour in safety, environment, health, and business
q Profitability with all activities adding value

Exco’s mission emphasises learning principles of innovation and excellence. These concepts
are reinforced in the organisation through mission awards that aim to recognise exceptional
contributions in the fields of innovation, excellence and service. Particular emphasis is given
to team recognition.

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Journal of Management Practice Volume 2, No 4, 1999

A process of organisational renewal, described by Dunphy & Griffiths (1998), was started in
Exco in 1994 with the implementation of a flatter organisational structure. The process
continues through alignment of the organisation to the Exco vision and mission by
encouraging individual teams to develop their own purpose (mission statements) that align
with the company vision.

The implementation of business plans, aimed at moving the company towards its vision, is
managed under the umbrella of Critical Success Factors (CSFs) and associated strategies.
The CSFs represent the core competencies of Exco. Each CSF is associated with a number of
key performance measures. These measures are both financial (for example, profit) and non-
financial. Examples of non- financial measures are:

q level of participation of people in continuous improvement projects;

q number of mission awards presented; and
q level of employee satisfaction as measured in the employee culture survey.

Two CSFs in particular (1 and 5) are relevant to the evolution of Exco as a learning
organisation, namely:

Critical Success Factor 1: People

We must attract, motivate and develop talented people who are committed to our values
and vision.

Strategies supporting the CSF include:

q the establishment of a working environment attractive to employees;

q taking action to enable employees to develop their full potentia l; and
q the commitment to developing effective leadership.

Progress in this area has been positive. The Covey 7 Habits Program is being used as a
foundation for developing people as individuals, fostering Senge’s self mastery, and as a
launching point for team development. The Covey program is seen as important in helping
people to cope with significant organisational changes that have been implemented in recent
years. For managers, a coaching skills program is being introduced to build on the learning,
using a ‘management for performance’ program. The mission award process that recognises
individual and team performance has wide acceptance. The development of team purposes
(mission statements) is being evolved to obtain greater involvement of all employees in
continuous improvement, and to achieve a shared vision. The Employee Opinion – Climate
Survey will provide feedback on the above.

Critical Success Factor 5: Continuous Improvement

We must entrench a culture of continuous improvement in everything we do.

Strategies supporting this CSF include:

q the identification of improvement opportunities by measuring and analysing work

processes;

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Developing a Learning Organisation du Plessis, du Plessis & Millett

q enabling all employees to play an effective role in continuous improvement; and

q benchmarking key work processes.

This CSF is a driver for cross- functional teamwork in the organisation. It encourages people
from different departments to work together to solve specific problems. Teams are
encouraged to take a systems approach to problem solving and to use collective thinking skills
to build on the experience and creativity of individuals. There are a number of cases where
cross- functional teams have implemented innovative solutions to long-standing problems
previously attempted on an individual basis.

The development of the Exco business strategy occurs on an annual basis. It is a ‘bottom- up
process’ in which individual teams come together to formulate future plans, based on their
understanding of the needs of the business. Individual team plans are then consolidated by the
management team, refined and communicated back to individual teams, prior to being
finalised at an annual management conference which takes place in October. The strategic
planning process is reviewed annually and its effectiveness is measured in a survey.

The Exco vision, mission, and values encourage a process of personal commitment on the part
of the employees. It also develops a collective sense of identity with the organisation and its
mission.

Exco has many of the characteristics of an evolving learning organisation. They appear to use
strategy effectively as a learning process. This is illustrated by various initiatives such as:

Encouraging employees participation in the building of a shared vision, mission and value
statement. Employees ‘buy- in’ to this process via:

• the organisation of a competition to find the best mission statement supporting the
vision;
• extensive consultation with staff through team meetings and feedback sessions during
the values development process; and
• the annual mission award process recognising individual and team effort in activities
contributing to the achievement of the vision, mission and values.

Facilitating Personal Mastery

Much of this has centred around the use of the Covey 7-Habits program to help employees
achieve personal mastery in their personal and working lives. Measuring the effectiveness of
this aspect of the Covey program has not been easy. Informal feedback from employees to
team leaders, the management team and the HR Manager indicates that employees feel the
Covey program has helped them to cope with change in their personal lives, as well as in the
workplace. The HR Manager also felt that the program had influenced a number of
individuals who were previously resistant to change in work practices to support such change
and even, in some instances, to drive the change.

Encouraging and developing team work

Change in the structure of the organisation has resulted in the development of a team-based
structure. Team work is reinforced via the performance management system which assesses
individual and team performance. Members of all teams participate in an annual review
process where they complete a standardised questionnaire relating to their perceptions of each

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Journal of Management Practice Volume 2, No 4, 1999

of their fellow team members’ performanc e. Feedback from other team members is given to
the team as a whole, and the individual, at their annual performance assessment interview.
There is also an extensive training program, facilitated by the HR manager and other members
of the organisation, to help employees improve their team collaboration skills.

Flattening the organisational structure

The flatter organisational structure has allowed a larger number of employees to contribute to
the development of the business strategy. This is done on an annual basis using both a
‘bottom up’ and ‘top down’ process. Individual teams develop strategies and plans for
functional areas which are then incorporated and formalised as an integral part of the
strategies and plans developed by senior management. The flatter organisational structure has
effectively facilitated the communication process required to align business objectives with
functional team plans.

Critical Success Factors (CSF) and Key Performance Measures

Apart from the overall CSFs for the organisation, each team has developed a ‘sub-set’ of
financial and non-financial CSFs applicable to their functional area. Team performance is
assessed on the achievement of key performance measures supporting their team CSFs.
Functional teams are, therefore, able to determine the impact of their activities on the success
of the team and hence the overall business.

Exco has already successfully implemented a self–design change strategy. The strength of
this approach is that it does not focus only on one aspect of the organisational transformation,
but includes many aspects of the organisation such as the organisational structure, human
resource practices, and technology. Exco has tried to use this process as ‘… a dynamic and
iterative process aimed at providing the organisation with a built–in capacity to change and
redesign themselves continually as the circumstances demand’ (Cummings & Worley 1997,
p. 490). At this stage they need to continue on their path of ‘continuous improvement’ using
the strategies they ha ve in place.

LEARNING STRUCTURES AND SYSTEMS AT EXCO

The organisation’s structure and systems are an integral part of fostering the development of a
learning organisation. It is not possible to change one without affecting change in the other.
The structure and systems, in place within the organisation are linked. For example, change
in the organisation’s systems such as the information systems, human resource practices,
remuneration and rewards procedure, and policies and production systems would all have an
impact on the organisation’s structure and this would, in turn, affect the development of the
organisation as a learning organisation (Millett 1998).

If the structure of the organisation is highly mechanistic, formal, and the decision making
centralised, then individual learning and organisational learning will not be developed (Burns
& Stalker 1961, cited in Millett 1998). However, an organisational structure which is organic
is more likely to develop an effective open communication flow between management,
employees, customers and competitors (McGill & Slocum 1993). Sharing knowledge
horizontally and vertically is a fundamental aspect of the learning organisation (Millett 1998).
Rather than focussing on individualism, employees need to share knowledge and information.
Without the structure to support performance management and appropriate reward systems,
individuals are more likely to compete with each other, than share their knowledge. Openness

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Developing a Learning Organisation du Plessis, du Plessis & Millett

and sharing needs to be encouraged. In a recent DDI Asia Pacific survey, Gill (1998) found
that there were five ways of building trust within an organisation. These were:

q communicating openly and honestly with employees, without distorting

information;
q showing confidence in employees’ abilities, treating them as skilled and competent;
q listening to and valuing what employees say, even though management may not
agree;
q keeping promises and commitments; and
q cooperating with staff and looking for ways that each could help the other (p. 14).

Innovation and experimentation is also an integral part of the learning organisation because
instead of waiting for a problem to occur, a learning process of continuous improvement is
encouraged. Failure is part of the learning process if, when it occurs, evaluation takes place
and the same mistakes are not repeated (Ward & Victor 1996, cited in Millett 1998). If the
organisational structure is formal and highly bureaucratic, it severely restricts individual
autonomy and decision making. Instead of reducing the need for supervision and control
mechanisms, this need is increased. However, in keeping with the concept of a learning
organisation, the organisation structure is flatter, and the manager coaches, rather than directs,
employees (Millett 1998). All employees, inc luding those in the middle and lower levels of
the organisation, should not feel isolated but part of the structure (Black & Synan 1996).

Table 4: Characteristics of the Exco Organisational Structure as a Learning Organisation

Element Characteristics of a learning Evidence of characteristics of a

organisation learning organisation at Exco
Organisational Flat hierarchy, decentralised Flat structure
structure Dynamic networks Cross functional teams
Autonomous team leaders
Availability of Systems in place to make information Business computer system
information freely available Extensive use of e-mail
Trust culture High level of trust Covey 7-habits practised
Self mastery practised
Communication Decentralised communication processes Open communication process
Flat structure
Innovation Innovation and risk taking encouraged Innovation part of mission
Mission awards process
Dynamic cross-functional teams
Opportunity for Improvement
System (OPI)
Managers style Facilitator Facilitate cross-functional team
Coaching style processes
Coaching skills training
Learning systems Continual learning and double loop Continual learning encouraged
learning 12-step process for team work
and shared vision
Covey program supports Senge’s
5 disciplines
Learning process developing

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Journal of Management Practice Volume 2, No 4, 1999

As can be seen in the summary provided by Table 4, Exco has many of the structural and
system characteristics discussed above which are supportive of the development of a learning
organisation. This has not happened overnight, but it has been developed over a period of
approximately four years. During this period, the Exco organisational structure has been
flattened, and a team-based structure has been established. Critical business functions like
production, quality assurance, and purchasing are managed by cross- functional teams led by
nominated team leaders. A communication process has been established to ensure that all
teams have access to the information they need to do their job.

A new business computer system has recently been installed. An extensive network of
computer terminals ensures that everyone has access to critical information. Employees at
Exco now have access to a vast range of information, some of it of a sensitive business nature.
A comprehensive training program is currently underway to ensure that all Exco employees
are able to use the new information system effectively.

The effectiveness of Exco’s information and analysis processes is reviewed annually using a
process based on the Australian Quality Council Awards (AQA) methodology. The objectives
include trying to continually improve the company's score in the process on the journey to
best practice.

LEADERSHIP, TEAMS AND THE LEARNING PROCESSES IN EXCO

Millett (1998) identified two major differences between the traditional view of leadership and
the leader in a learning organisation. The traditional view of leaders was that individuals were
charismatic and had certain personality traits that promote followship. The leader also made
decisions for the organisation via their own learning experiences, which they then used to
influence other members in order to achieve company goals (Senge 1996). However, in a
learning organisation the leader is seen to be more of a facilitator of learning, leading by
example, and encouraging and motivating individuals to learn themselves. The leader in a
learning organisation also needs to be a team player, taking on a mentoring and coaching role,
rather than a planning and controlling role. Rather than viewing leadership being the
‘responsibility’ of a single individual, Senge (1997) suggests that an organisation needs to
build a community of leaders within the company. The community of leaders comprises of:

q local line leaders/managers with significant bottom- line responsibility, such as

business unit managers, who introduce, and implement ideas;
q executive top-level leaders/managers who mentor the local- line leaders, and who
influence cultural change by setting an example by changing their own behaviour
and that of the top- level teams; and
q internal networkers — often these employees have no formal authority, however,
they move through the organisation fostering commitment to new ideas and
practices.

In the Exco Leadership Model, as well as in the data collected, there is evidence of Exco
developing a community of leaders. The Exco leadership model is based on Covey’s
Principle-Centered Leadership (Covey 1992). This approach is one in which everyone in the
organisation understands and acts according to a consistent set of principles, thus giving the
organisation a consistent sense of direction (alignment). The Principle-Centered Leadership
model (PCL) is shown in figure 1.

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Developing a Learning Organisation du Plessis, du Plessis & Millett

Figure 1: The Covey Principle – Centered Leadership Model

Customer & Other

Stakeholder Needs

STRATEGY

STRUCTURE SYSTEMS

PRINCIPLES
ORGANISATIONAL Shared Mission, ALIGNMENT
Vision and
Values

STYLE SKILLS EMPO

IAL WER
AGER MEN
MAN T
PEOPLE
NAL TRUS
ER PERSO T
INT SELF TRUSTW
L ORT
ONA HY
PERS

Source: Covey, S.R. 1992, Principle Centered Leadership, Fireside Press, New York.

The PCL Model states that the role of leaders is to:

q create an exciting vision for the organisation;

q achieve and maintain a wise and renewing balance between professional and
personal areas of life;
q empower and unify everyone in an organisation around a shared vision;
q create team spirit and harmony among disparate factions in the organisation;
q maintain stability while encouraging change, flexibility, and continuous
improvement;
q turn a company mission statement into a collective and personal constitution; and
q cultivate trustworthiness, which is foundational to trust in business relationships
(Covey 1992).

McBain and Kusy (1997) define a team as:

a collection of individuals who are interdependent in their tasks, who share

responsibility for outcomes, who see themselves and who are seen by others as an intact
social entity embedded in one or more larger social systems … and who manage their
relationships across organisational boundaries (p. 21).

There are three broad types of teams in Exco, viz. site based production teams, cross-
functional business management teams and project management teams (particularly in the

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Journal of Management Practice Volume 2, No 4, 1999

area of new product development and engineering). The production and business management
teams are relatively stable in their composition. Project teams are dynamic and come together
for the duration of a project, and then disband at the end. Appendix 2 illustrates the cross-
functional teams operating across functions on the two sites.

Self-directed production work teams were established about five years ago (Wellins 1994,
cited in Millett 1998). Production shifts have been divided into a number of teams rotating
around the various manufacturing operations. The teams are multi-skilled to ensure that
appropriately skilled operators are available to respond to a flexible production schedule.
Each team has a team leader reporting directly to the production manager. This approach
eliminates a layer of management and empowers the operators.

An external consultant was hired to facilitate the implementation of the production teams.
Training sessions were held to teach people about how to work in teams. The proposal to
change to a team based structure was not enthusiastically received by operators. Many were
comfortable with existing working arrangements and felt threatened by the changes.
Individual and group counselling sessions were arranged to assist people to embrace
teamwork. A permanent facilitator assists the team leaders to plan their work, deal with
performance and conflict issues, and to provide on-going training in teamwork. Training
mentors have been appointed within the teams to assist the team leaders in occupational
health and safety, quality system and work process training. At this stage the production
teams are considered a success. It has led to a more flexible work force, but the individual
teams need ongoing support. Cross- functional business management teams have only been in
place for about eighteen months and senior and middle management are providing ongoing
support to ensure that team effectiveness continues to improve.

Project teams have been particularly successful at Exco (du Plessis 1995). At the end of each
project a learning project is set up to review the effectiveness of the project and to lock in the
organisational learning which is used to improve the effectiveness of the next project (du
Plessis 1996). A project approach such as this has the effect of stimulating effective learning
within the organisation (Millett 1998).

The process of establishing a team-based culture at Exco took place in parallel with the
implementation of the Covey 7-habits program. This was aimed at building trust between
people in the organisation (Employee Opinion–Climate Survey results had shown that there
was a relatively low level of trust between individuals, teams and functions in Exco). A core
part of the Covey program is to teach people to learn personal mastery, to take control of their
working environment and contribute in a meaningful way to the effectiveness of Exco.
Personal mastery is an essential prerequisite of building trust in the organisation (Senge
1992).

Innovation is a core element of the Exco mission and individuals and teams are rewarded for
these activities through mission awards (includes financial rewards). The Opportunities for
Improvement (OFIs) System, is also a process encouraging experimentation and
empowerment of the individuals and teams. With the OFI system, individuals and teams are
able to participate in the ongoing evaluation and cha nge of any aspect of the business. They
are, therefore, learning how to learn—rather than simply receiving training in a particular area
(Prusal 1997, cited in Millett 1998). Exco is trying to become a ‘knowledge-creating’
company whose business is continuous innovation (Nonaka 1996).

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Developing a Learning Organisation du Plessis, du Plessis & Millett

The role of managers in the team-based organisation has changed from one of control to that
of facilitation and coaching. The role of middle and senior managers is to facilitate the work
of cross- functional teams and to act as coaches and mentors to individuals. Millett (1998)
feels the term ‘action learning’ most accurately describes management’s role in the process of
linking action, experience and learning. The managers need to be able to self-develop
individually and learn from their colleagues while working on real projects within the
organisation. The skills they develop include fact finding, diagnosis, creativity, decision
making, and negotiating (Weekes 1980, p.12 cited in Millett 1998, p. 10.9). To ensure that
managers have the skills for these new roles, a coaching skills program is being introduced.

Table 5: The Exco 12-Step Team Development Process

Step 1 Define the team’s boundaries

Step 2 Determine how the team will work within the boundaries
Step 3 Explore how the team will manage information
Step 4 Focus on team leadership issues
Step 5 Investigate individual and team motivators
Step 6 Establish the skills – technical and teamwork required for success
Step 7 Work out how the team will manage equipment and technology
Step 8 Work out how the team will manage confusion and tension
Step 9 Invent a team maturity matrix to plot team growth
Step 10 Learn how to hold team meetings
Step 11 Examine external boundaries and how the team interacts with other teams
Step 12 Develop ways to monitor and measure team performance

Source: McInerney, R. 1997, The 12-Step Team Development Process, Best Practices Pty.
Ltd., Organisational Consultants, Sydney.

To ensure ongoing support of both cross-functional business project and self-directed

production teams, the Exco management team, has recently implemented a 12-step team
training process facilitated by an external consultant (McInerney 1997). The elements of the
12-step process are listed in Table 5.

The objective of the Exco 12-Step Development Process is to ensure that teams have:

q clear, and well understood, purpose/mission (a reason for being a team);

q clear, realistic and achievable goals;
q high performance standards set by the team;
q ability to learn from experience;
q effective communications of ideas and feelings; and
q the team takes control of their work quality — they can, and do, improve things.

Experience with the Exco 12-Step Development Process shows that although it has been
effective in establishing team purposes, goals and alignment, teams have not been able to
master team learning processes. Team learning processes like the 12-Step Development
Process have tended to be formal, learning ‘facts’ about how teams should work together.
Team learning and innovation, springing from collective learning, has yet to develop. It is in

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the area of team learning that Exco has the most work to do in order to become a highly
effective learning organisation.

Successful team learning is a purposeful approach, designed to create knowledge and a

learning climate which, in turn, becomes effective action. Bohlin and Brenner (1995) have
identified practices which support the team learning process:

q generating shared awareness. Continually assimilating internal and externa l

information about problems and opportunities;
q creating a common understanding. Converge on a common understanding of the key
problems and opportunities and openly discuss options for action, using common
tools;
q producing aligned action. Ensuring that pla ns and actions are aligned with the
organisation’s goals;
q performing joint review. In a spirit of openness measure and review previous results
and look for learning on how to do it better in the future;
q conducting collective reflection. Reflect on past and present activities and seek
improvements in learning processes (p. 60).

Bohlin and Brenner (1995) have also developed a useful tool to summarise current learning
practices. Table 6 shows the instrument, which can be used by either an external or internal
consultant to determine the inventory of an organisation’s or team’s use of specific learning
practices. The resulting profile, shown in Table 6, provides a sense of assessing where the
teams perceive gaps between the current position and the desired position. The size of the gap
indicates the priority for corrective action. Table 6 has only been used to illustrate the model,
and is not a reflection of priority areas for a specific team at Exco.

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Developing a Learning Organisation du Plessis, du Plessis & Millett

Table 6: The Bohlin & Brenner Learning Practice Profile

Learning practice profile Presence of specific learning practices

Low
High
Creating shared
awareness

Developing common
understanding
Taking aligned action

Conducting joint review

Conducting collective
reflection

Perceived Desired future

current position position

Source: Bohlin & Brenner 1995, ‘Measuring Learning: Assessing and Valuing Progress’, in
Prism, The Learning Organisation: Making it Happen, Making it Work, Third Quarter, Arthur
D. Little, Cambridge, USA.

Using this model with any team in the organisation provides a valuable snapshot of the
perceptions of the team members of their team’s learning practice profile. Its major strength
is that it effectively performs an analysis of the team's strengths and weaknesses. This
information guides the development of strategies to improve the team learning processes.
According to Senge (1990), team learning has three critical dimensions:

q the need to think insightfully about complex issues (many minds are more
intelligent than a single mind);
q the need for innovative coordinated action; and
q understanding that most outcomes are achieved in collaboration with other teams
and a learning team fosters other learning teams and spreads the practices and skills
of learning teams more widely.

Team learning does not occur in isolation. Individual and group skills, leadership, the support
structures, individual attitudes and the culture within the organisation can either encourage or
hinder learning. It is in this area that Exco needs an intervention strategy. For this reason, it is
recommended that Exco use the behavioural approach described by Bohlin and Brenner
(1995), as well as Cummings and Worley (1997), as the most practical intervention strategy.
This approach looks at how tasks are managed and how the relationships are managed within
the organisation. This includes holding a series of group and ind ividual interviews to
determine how four key relationships are managed — company—wide, manager-subordinate,
peer, and interdepartmentally. The same process is used to consider how six managerial tasks
are handled within the organisation. These tasks include innovating, decision-making,

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Journal of Management Practice Volume 2, No 4, 1999

communicating, organising, monitoring, and appraising/rewarding (Cummings & Worley

1997).

The group interviews are conducted with team members where the purpose of the interview is
to recall incidents where change took place rapidly, and the team was able to master the new
process. Alternatively, the team can be asked to illustrate, with an example, when best
practice was successfully diffused rapidly throughout the organisation.

A single member of each team conducts individual interviews, after they have been trained in
the principles of learning. These individuals then conduct structured interviews with their
other team members with the view to identifying learning practices and climate factors. An
action plan is developed by the team members, using the information gathered, as well as the
insights gained by the team member who underwent the initial training.

The purpose of both the group interviews and the individual interviews is to look for patterns
of consistently broken learning cycles. Three possible patterns of learning could emerge –
‘analysis paralysis’, ‘ready, fire, aim’ and ‘reinventing the wheel’ (Bohlin & Brenner 1995, p.
66). In the case of ‘analysis paralysis’, information is always being gathered, but nothing
actually happens with it. The ‘ready, aim, fire scenario’, infers there is plenty of action, but
little analysis and planning, and in the case of ‘reinventing wheels’ the organisation takes
action, but does not seem to learn from the results. This could be because the organisation
does not have the appropriate or adequate measurement, review, and feedback systems.

Figure 2: Incomplete Learning Cycles

Analysis Paralysis Ready, Fire, Aim Reinventing Wheels

no feedback
no action awareness action awareness awareness
action

no common
understanding
understanding understanding

Source: Bohlin & Brenner 1995, ‘Measuring Learning: Assessing and Valuing Progress’, in Prism, The
Learning Organisation: Making it Happen, Making it Work, Third Quarter, Arthur D. Little, Cambridge,
USA, p. 66.

A learning assessment exercise such as the behavioural approach described above provides a
baseline of learning practices against which to evaluate progress. Without establishing
effective team dialogue the team will continue to operate as individuals and not explore the
reasoning of others to discover new possibilities (Levine 1994, p. 217 cited in Millett 1998).

However, the learning process should be an everyday activity within a learning organisation.
In the case of the teams though, the managers play an important linking and facilitating role.
Millett (1998) feels the term ‘action learning’ most accurately describes management’s role in
the process of linking action, experience and learning. Managers are able to self-develop
individually and learn from their colleagues while working on real projects within the

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Developing a Learning Organisation du Plessis, du Plessis & Millett

organisation. The skills they develop include fact finding, diagnosis, creativity, decision
making, and negotiating (Weekes 1980, cited in Millett, 1998). Through a process of coaching
and mentoring, they are then able to facilitate organisational and team learning.

There is a strong commitment to the PCL model in Exco by all employees. Most managers
have attended an external leadership course in which feedback is given about their own
leadership style. Managers are encouraged to adopt a coaching and mentoring style, rather
than a directive style of leadership. The leadership in Exco has been very effective in uniting
the organisation around a shared vision and enhancing the spirit of teamwork in the company.
These observations are confirmed by the positive trends in the Employee Opinion-Climate
Survey (see Appendix 4). Exco does appear to be fostering the development of a community
of leaders (Senge 1997).

However, the cross- functional management teams and self-directed teams have needed more
support. An external consultant was employed by Exco to assist with team training and
development. The consultant used the 12-Step Team Development Process, which was
effective in establishing team purposes, goals and alignment, but did not develop the team
learning processes. For this reason it is suggested that Exco use the Bohlin and Brenner
Learning Practice Profile (1995), with each team to provide a snapshot of each teams
perceptions of the gaps in their use of specific learning practices. The size of the gap will
indicate a specific team’s priority for corrective action.

The most practical intervention strategy recommended for use by Exco is the behavioural
approach described by Bohlin and Brenner (1995) as well as Cummings and Worley (1997).
This approach looks at how tasks are managed, and how the relationships are managed within
the organisation. This includes holding a series of group and individual interviews to
determine how four key relationships are managed – company—wide, manager-subordinate,
peer, and interdepartmentally. The same process is used to consider how six managerial tasks
are handled within the organisation. These tasks include innovating, decision-making,
communicating, organising, monitoring, and appraising/rewarding. A learning assessment
exercise such as the Behavioural Approach also provides a baseline of learning practices
against which to evaluate progress.

SUMMARY/CONCLUSIONS

Exco exhibits many of the attributes of a learning organisation, namely:

q Personal mastery — providing people with new life skills through the Covey
7-habits program.

q Shared Vision — the deployment of the company vision, mission and values is
enthusiastically promoted by management, and employee support is high (confirmed
in regular climate surveys).

q Team Learning — an organisation structure which promotes teamwork and training

in team skills.

q Mental Models — this aspects is less developed, but is being promoted through
training in team skills

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Journal of Management Practice Volume 2, No 4, 1999

q Systems Thinking — this aspect is the least developed of all the attributes.

The Exco management team has taken a practical, long-term approach to develop the
company into a learning organisation. The organisation structure has been flattened and a
team approach is encouraged. It has an effective business planning process based on clearly
articulated Critical Success Factors (CSFs) with their associated key performance measures,
including both financial and non- financial measures.

Further work is required to encourage teams and individuals to use team learning to develop
skills in systems thinking. The development of competencies in these two areas will allow
Exco employees to make an even greater contribution to fostering the development of a
learning organisation and the future success of the company.

It is clear that Exco has done a great deal to establish a structure, system, and culture to
encourage an ongoing learning process. From the data gathered it appears that the company
has been less effective at encouraging teams and individuals to use team learning. The main
reason for this is because there is great skill variability in terms of coaching and mentoring
amongst the middle and senior management group. The company is trying to address this
issue, with the coaching skills program.

REFERENCES

Black, D.H. & Synan, C.D. 1996, ‘The Changing Practices of Organisational Development’,
Management Accounting, Vol. 74, no. 5, pp. 34-35.

Bohlin & Brenner 1995, ‘Measuring Learning: Assessing and Valuing Progress’, in Prism,
The Learning Organisation: Making it Happen, Making it Work, Third Quarter, Arthur D.
Little, Cambridge, USA.

Covey, S.R. 1992, Principle Centered Leadership, Fireside Press, New York.

Covey, S.R. 1994, The 7 Habits of Highly Effective People, The Business Library, Melbourne.

Cummings, T.G. & Worley, P. 1997, Organisational Development and Change, 6th edn.,
South-West Publishing Company, Cincinnati.

De Geus A. 1996, ‘Planning as Learning’, in K. Starkey. (ed.), How Organisations Learn,

International Thomson Business Press, London, pp. 92-99.

du Plessis, M.P. 1995, ‘Reengineering the Product Development Function’, Proceedings of

the First Asia Pacific Conference on Rapid Product Development, Brisbane, Australia
September 1995.

du Plessis, M.P. 1996, ‘Learning from Product Development Projects’, Proceedings of the
Second Asia Pacific Conference on Rapid Product Development, Brisbane, Australia
September 1996.

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Developing a Learning Organisation du Plessis, du Plessis & Millett

Dunphy, D. & Griffiths, A. 1998, ‘The Organisational Renewal Movement: From Heresies to
Orthodoxies and Beyond’, Chapter 1 in The Sustainable Corporation, Allen & Unwin,
Sydney, pp. 1-15.

Gill, A. 1998, ‘Drive Out the Fear’, HR Monthly, The Australian Human Resource Institute,
Melbourne, Australia, November, pp.14-15.

Hitt, W.D. 1995, ‘The Learning Organisation: Some Reflections on Organisational Renewal,
Leadership & Organisation Development Journal, Vol. 16, no. 8, pp. 17-25.

McBain, R. & Kusy, M. 1997, ‘On Team Effectiveness, Team Learning and Learning
Organisations, Manager Update, Vol. 9, no. 2, pp. 20-31.

McGill, M.E. & Slocum, J.W. 1993, ‘Unlearning the Organisation’, Organisation Dynamics,
Autumn.

McInerney, R. 1997, The 12-Step Team Development Process, Best Practices Pty. Ltd.,
Organisational Consultants, Sydney.

Millett, B. 1998, Managing the Processes of Organisational Change and Development: Study
Book, University of Southern Queensland.

Nayak, P.R, Garvin, D.A., Maira, A.N. & Bragar, J.L. 1995, ‘Creating a Learning
Organisation’, in Prism, The Learning Organisation: Making it Happen, Making it Work,
Third Quarter, Arthur D. Little, Cambridge, USA

Nonaka, I, 1996, ‘The Knowledge-creating Company’, in How Organisations Learn, K.

Starkey (ed.), International Thomson Business Press, London.

Prahalad, C.K. & Hamel, G. 1990, ‘The Core Competence of the Corporation, Harvard
Business Review, Vol. 90, no. 3, pp. 79-91.

Redding, J. 1997, ‘Hardwiring the Learning Organisation’, Training and Development, Vol.
51, no. 8, pp. 61-67.

Senge, P. 1990, The Fifth Discipline: The Art & Practice of the Learning Organisation,
Doubleday/Currency, New York.

Senge, P. 1996, Leading Learning Organisations, Executive Excellence, Vol. 13, no. 4, pp. 10-
11.

Senge, P. 1997, ‘Communities of Leaders and Learners’, Harvard Business Review, Vol. 75,
no. 5, pp. 30-32.

Senge, P. 1992, The Fifth Discipline Fieldbook, Doubleday/Currency, New York.

Starkey. K. 1996, How Organisations Learn, International Thomson Business Press, London.

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Journal of Management Practice Volume 2, No 4, 1999

Appendix 1

Structured interview with the Exco HR Manager

Are you familiar with the concept of a learning organisation?

What do you understand by the concept of a learning organisation?

Does Exco have a vision?

What is the organisation trying to achieve?

What sort of organisation is Exco trying to build?

How is Exco trying to achieve this?

Can you give me some examples?

What role does planning play at Exco? Is it effective ? Does the organisation stick to its
plans?

Do employees have responsibility for their own learning? Do they have autonomy to make
decisions re their own work processes? As well as in other parts of the organisation?

Do you feel that the team structure in operation at Exco works well? Why? How was the team
structure developed?

Do you use a system of mentoring at Exco?

How would you describe the organisational culture at Exco? Do you have any means of
measuring this at Exco?

Would you characterise Exco as having a high trust culture encouraging employee
experimentation with work processes & practices? Why?

Do you believe Exco is continually evaluating how it does things with respect to all parts of
the organisation and its operation? How? Does it make a difference?

Do you believe the organisational structures and systems at Exco encourage effective learning
at Exco at an individual level? A team level? And the organisation as a whole?

Do you believe Exco effectively accesses the knowledge and skills of all of its employees?
How? Is this important?

How would you characterise communication at Exco between

Management
Employees
Customers

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Developing a Learning Organisation du Plessis, du Plessis & Millett

Competitors

How would you describe the leadership styles of managers at Exco?

19. Have the managers undergone any training recently?

Appendix 2

The Cross-Functional Team Structure at Exco

Exco Management Team

Cross Functional Production Team

Business Development
Quality Assurance
Human Resources
Accounting

Purchasing
Safety

R&D

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Journal of Management Practice Volume 2, No 4, 1999

Appendix 3

The Exco Planning Process

CSFs
People

Customers

Growth
Leadership Benchmarking
Technology

Continuous
Improvement
Vision Measures of
S.H. & E. Performance

Value
Adding

Relations

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 Developing a Learning Organisation du Plessis, du Plessis & Millett

Appendix 4

Results of the Exco Employee Opinion-Climate Survey

Survey Feedback
Leadership
Involvement

Work Perf.
Year 1
Environment
Year2
Reward
Teamwork

Learning

0 10 20 30 40 50 60 70 80 90
Percentage (%)

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 Journal of Management Practice Volume 2, No 4, 1999

Appendix 5

Exco Vision, Mission and Values

Vision
Values Values
CSF's

Plans

Innovation Excellence Service

94

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