A rising tide - creating a learning organisation

These days, unless you happen to work for a tech-native firm, you will struggle to avoid being drawn into some form of digital transformation initiative. From manufacturing digitalisation to the creation of wholly digital customer interaction channels and everything associated with websites or mobile apps, digital transformation is a veritable cash cow of the management consultancy industry. Globally it is worth over $50 billion a year in revenues [1] and this is forecast to grow to over $200 billion by 2031.

Yet there is something that I find profoundly odd how these same consultancies are approaching digital transformation. Consider a definition of the term offered by McKinsey [2]. “A digital and AI transformation is the process of developing organizational and technology-based capabilities that allow a company to continuously improve its customer experience and lower its unit costs; and over time sustain a competitive advantage.” The crucial activity in this definition is the “process of developing organisational and technology-based capabilities“. Yet the provides only a cursory mention of skills development, and more words are spent on ‘machine’ learning and ‘training the user’! Yet how is it possible to develop new organisational capabilities without a cross-organisational focus on developing skills? In case you think that this is a rare misstep by a single consultancy, consider Accenture’s six action steps to digital transformation [3]. Although Accenture tells us that “companies often need to build new skills” (what do you mean by just often?), none of its six steps cover skills development, learning or training.

The interplay between transformation and learning

This leaves me to reflect that despite advocates of digital transformation framing it as a process of organisational change, the need to invest in an organisational-wide approach to skills development is under-played. A transformation journey that requires the reimagining of how technology is used, and the reshaping of processes, products and operating models is at its heart a collective learning journey. It is only by absorbing, embracing and embedding new skills, work practices and culture can these initiatives even have a chance of succeeding.

So how do you go about instilling mechanisms to institutionalise a learning culture within your organisation? Thirty years ago, in a seminal paper [4], the late professor David Garvin suggested that “A learning organisation is an organisation skilled at creating, acquiring, and transferring knowledge, and at modifying its behaviour to reflect new knowledge and insights.” Implicit in this definition is that transformation and learning are interdependent. Transformation cannot exist without learning, and learning without transformation has no impact. Garvin went on to outline how learning organisations are adept at five main activities: systemic problem-solving, experimentation with new approaches, learning from their own experience and history, learning from the experiences of others, and transferring knowledge quickly and efficiently throughout the organisation.

Transformation cannot exist without learning, and learning without transformation has no impact.

Research also suggests that taking a skills-based approach is even more important when dealing with culture change. A recent paper [5] shows that culture change programmes implemented through the commonly-used approach of short, standardised workshops give participants the false belief that they can assess the utility of the new skills after taking part in a single workshop or course. The embedding of change requires people not only to learn new skills but also to put them into practice on real problems and to experience their benefits. Without linking skills directly to outcomes, it is otherwise difficult to overcome scpeticism that either the change being proposed is not needed or would otherwise not work. Instead, transformational change should be approached as a skills development activity. It can be more effective to implement deeply within a single part of the organisation, seeing the skills being put successfully into practice, thereby acting as a powerful reinforcing and embedding mechanism. This provides “proof” that the skills work in the existing organisational context.

Having hopefully convinced you of the interplay between transformational change and organisational-wide learning, I will now explore some approaches to creating a learning culture.

Learning from your own successes and mistakes

All organisations hold a wealth of knowledge that is generated from their past activities, whether they are things that were done well, as well as from mistakes made. Although these successes and failures (or mistakes) provide invaluable intellectual capital, most organisations fail to maximise them. When something goes really well, it is all too easy to move on to the next project, ignoring what could be crucial lessons for other project teams. Similarly, inspecting mistakes is often equated with searching for someone to blame, and so is often avoided. Crucial learning is often hidden from the rest of the organisation, before being lost from institutional memory.

As team membership in most organisations changes quite rapidly, it is crucial to capture and disseminate this know-how, to allow the organisation to keep on improving. Agile cultures adopt retrospectives [6] within sprints or other cycles to understand what went well, what could be improved, and commitments to improve. Psychological safety is crucial. Acknowledging that mistakes are inevitable not only allows for employees to take risks in the first place, but also when something goes wrong, allows emphasis to be on identifying the root cause of the problem to prevent it from happening again. In other words, the focus is on why something happened, not on who is responsible. Prof Ben Laker [7] explains that companies need to provide the means to help employees capture and share best practices and learnings with colleagues right across the company, whilst ensuring failure or problems can be raised without fear of punishment or other career-impacting consequences. Amazon has a deeply embedded culture of using a Correction of Error (COE) process [8] to understand the root cause of issues, be it a technical, operational or process problem, and then make these assessments available for everyone to access. Learning is further embedded through periodic reviews by broader teams of COEs that are considered to have pertinent findings or have relevance to a wider part of the organisation.

Learning from others (1) – Benchmarking

No matter how valuable insights are gained from learning from your past experiences, the knowledge held within your organisation will always be dwarfed by that available in the outside world. For this reason, bringing in insight, experience, practices and know-how from outside your organisation is essential if you are to avoid progressively losing your edge. There are several ways to achieve this. You can, for example, recruit new talent from within or outside your industry to inject new ideas, but this is often more expensive than training your current staff and can take time.

One approach I have used several times is to identify appropriate benchmarks, examples of best practices to which to inspire products my teams were building or ways they were working. Often, the best benchmarks are to be found outside of the industry you are working in. For example, most car companies assiduously compare their vehicles to those of their competitors. However, when it comes to digital infotainment systems (encompassing voice, mobile apps, and in-car entertainment), customers are not particularly bothered by how good another car may be. Instead, their expectations are set by the likes of Netflix, Alexa and social media apps. It is only by learning how these tech-native companies produce their digital customer experiences, can car companies stand a chance of creating digital experiences that delight their customers.

Learning from others (2) – Open Innovation

Where the depth and complexity of skills required to succeed in your market exceed your ability to retrain your teams, particularly where time is a critical factor, then you have few options but to bring in external know-how. Corporate venturing and acquisitions are popular routes for companies to rapidly build expertise in potentially-disruptive technologies without building internal capabilities from scratch. For example, corporate venturing in the AI space this year exceeded global venture investment as large tech companies scrambled to hoover up as much AI talent as possible and accelerate their products to the market. [9]

However, simply buying access to external expertise is not a feasible approach for most organisations. This is where open innovation comes into play – the collaboration with external companies, often start-ups on a win-win basis to gain access to their know-how and technology at low cost, while at the same time providing the start-up with improved routes to market. Done properly, Open Innovation can help companies build and extend their own innovation capabilities, but only if knowledge is allowed to flow into and across the organisation.

This month, Henry Chesbrough, the professor who introduced the concept of Open Innovation twenty years ago, wrote a reflective piece [10] on its impact over the past two decades. Chesbrough explicitly describes open innovation as a process of organisational learning, “an innovation process involving knowledge flows across organisational boundaries.” While he claims that organisations with more external sources of knowledge achieve better innovation results than those that don’t, he added that the main barriers come from internal silos. A recent study of open innovation practices at NASA showed that although crowdsourcing allowed NASA to significantly improve their ability to predict solar flares, engineers within NASA’s Johnson Space Centre were troubled by this. They felt that their sense of identity, the way their expertise was valued and their very roles within NASA were threatened by this outside innovation.

Chesbrough argues that organisational structures designed around functional specialism act as boundaries to the flow of information between different functions. Intel solved this problem in its New Business Initiatives (NBI) unit that worked with startups by placing team members from the business unit tasked with commercialising the innovation. Another approach is to create an internal and external market where products and services can be procured from both within and outside the organisation, replacing the monopoly of internal silos. This can also create the sense of urgency, that I feel is essential to inject pace into your organisational learning.

Embrace urgency

The COVID-19 pandemic, whilst causing unspeakable human suffering, also demonstrated the rallying and galvanising power of an emergency. Too often, business processes, designed for business-as-usual operations and incremental change create an organisational pace that is simply at odds with the demands being made by the outside environment. The large-scale, life-or-death crisis ushered by the pandemic forced governments, regulators and businesses to tear up their rulebooks. Patient care systems were digitalised at a breakneck speed, introducing vaccine passports linked with patients’ health records, numerous companies threw themselves at creating alternatives to expensive medical ventilators, and above all, vaccine development took place at an unprecedented pace, with the first patient receiving the vaccine only one year from when the virus was first sequenced. The war in Ukraine is demonstrating the same effect, where technologies and tactics are rapidly evolving on both sides. Arguably, the new forms of aerial and maritime drone warfare employed have had a greater impact on armoured warfare and naval warfare than arguably any other change in the past few decades.

The lesson here is that where the need for change is urgent, you should ask yourself whether your business-as-usual processes are serving you well, and whether the cadence, rhythm, and collective bureaucracy will deliver the organisational capability you need to meet your goals. If the answer is no, then it may well be time to tear up (at least part of) the rule book, or at least change it to allow you to create the innovation capability you need in the time you need it. In doing so, you be cautious to create a positive sense of urgency, and not fall into the trap of creating a culture of fear associated with expressions such as ‘burning platform’. [11]

The role of leadership

Learning is only going to be effective if people are given the space and time to learn away from the operational pressures of their day-to-day responsibilities. Equally, they will only really be incentivised, if they are allowed to put their learning into practice. The role of leadership is to provide staff with this time and space. Greg Satell [12] recommends companies adopting what he calls a 70/20/10 learning model, where 10% of learning is through formal instruction such as in-person and online courses, 20% on social learning such as mentoring, coaching or peer-to-peer interactions such as communities of practice, with the remaining 70% on in-work experience. This can include retrospectives and lessons learned mechanisms described above, but crucially through the feedback from colleagues and managers.

To be successful, managers need to embrace their role as coaches and not simply be a taskmaster. Like many other aspects of providing direction, there is a balance to be had. Kelly Palmer recommends [13] that managers and leaders should be “hands-on” enough to build cultures that support learning for their employees, whilst being “hands-off” to allow employees to choose the method and content of learning that suits them best. Finally, like with any initiative that is driven from the top, organisational learning only has credibility if leaders practice what they preach, and make that visible, by sharing what they have learnt.

The role of the individual – knowledge sharing

Organisations with a strong culture of learning place responsibility for knowledge-sharing on everyone, not just on a cadre of experts. Knowledge-sharing is an activity that should be undertaken deliberately, as otherwise barriers to the flow of information emerge, ranging from the creation of information islands in different silos to situations where critical knowledge is held by a single individual.

Any tech company that has scaled successfully has managed to grasp the challenge of knowledge sharing. Google, for example, [14] places a strong focus on creating a culture of psychological safety both within a person’s team as well as in large groups. This is intended to encourage Googlers to be willing to learn from others, be they individual coworkers or group forums where no question is “too simple”. Likewise, everyone has a responsibility to share their knowledge. This takes place through creating and maintaining clear documentation, holding tech talks and classes, participating in code reviews as well as mentoring and coaching peers and more junior staff. Crucially, Google’s compensation mechanisms encourage and reward knowledge-sharing through performance reviews and promotion criteria. These expectations are codified in Google’s role descriptions, with the requirement to have influence beyond your area of responsibility increasing in line with seniority.

Learning as a collective responsibility

Although there is a clear individual responsibility towards one’s own learning plan, organisations with effective learning cultures recognise that learning is more effective when people learn together and from each other over time, creating shared beliefs that are more likely to embed within the organisation’s fabric. A paper by the Spanish Business School IESE [15] argues that workplace rituals such as shared chat channels, communities of interest and of practice can help create the shared realities and social bonds that are “the glue that holds organisations together”. As an example, Greg Satell [8]describes how executives from Wipro, an Indian-headquartered multinational IT services firm went to a literary festival to learn storytelling. Each night they attended a structured workshop, after which they received peer mentoring. By supporting each other, they not only helped create the skills but also created the shared reality described above. I have found this approach particularly effective. In agile transformations that I have shaped, I deliberately ensured that entire leadership teams of the business units involved also participated in the training, so as to create the ‘shared mindset’ necessary to embed the required change.

Some final thoughts

When I started writing this blog post, at first I thought I was exploring approaches on how best to instil a learning culture in an organisation. It instead became clear to me that organisational change, innovation, and skills development are intrinsically interlinked, even more so in high-skill environments. No digital transformation initiative can take root without embedding new ideas, ways of thinking and working practices, which together constitute the outcome of a cultural change programme. At the same time, none of this is achievable without learning new skills (both technical as well as ‘soft’ skills) at an organisation-wide scale, which requires a systemic approach to skills development. We have seen that while the responsibility for creating a learning culture lies with an organisation’s leadership, everyone has a role to play, whether it is to further their own knowledge, or to codify, share and disseminate their know-how. Finally – and most pertinently to any organisation in the technology space – anyone who believes that knowledge and ideas creation can be a solely internally generated activity is severely deluded. Ideas, expertise and know-how can often be found where you least expect them, meaning it is essential to implement means of bringing in ideas, expertise and innovation from outside the organisation.

A rising tide – creating a learning organisation