The first step to learning is to challenge those ways of thinking

that worked so well in the past.

Unlearningthe
Organization
MICHAEL E. MCGILL JOHN VZ SLOCUM, Jr.

or years, the morning scene at the San Diego
F Zoo has been the same. A convoy of buses
releases streams of schoolchildren eager for a
face-to-face learning encounter with a moun-
tain gorilla, reticulated boa, or sulphur-crested
cockatoo. These days, the lunch-box-toting kids
are likely to be joined by briefcase-toting execu-
tives from Sony, Pacific Bell, or Northern Tele-
corn. They have come for a face-to-face learning
experience with the Tiger River or Gorilla Trop-
ics team. The San Diego Zoo, long acclaimed for
its innovative presentation of animals in their
natural habitats, is now drawing attention as a
prototype learning organization.
The zoo has dedicated itself to becoming
not a modern-day menagerie, but an organiza-
tion that educates visitors about animals and
their habitats, and that propagates conserva-
tion. This learning mission has led zoo man-
agers to design new formats, such as Tiger Riv-
er and the Gorilla Tropics-total environment
areas that house the most natural displays pos-
sible. It has also led the zoo to find new ways of
coordinating the complex work required in
these formats. To bring together a wide variety
of skills and functions, the zoo makes extensive
use of cross-functional teams. Managers and
employees find they are more productive than
ever, with teams setting their own budgets and
schedules and participating in hiring processes.
The goal of becoming an educational organiza-
tion has also led to the development of a new
approach toward visitors, who keep coming
back because they learn something new with
each visit. A trip to the San Diego Zoo has also
become the latest outing for managers who are
serious about creating learning organizations.
Frustrated by changes upon changes that
have produced little improvement, managers
have been drawn to the concept of organiza-
tion learning-the process by which they be-
come aware of the qualities, patterns, and
consequences of their own experiences, and
develop mental models to understand these
experiences. Learning organizations discover
what is effective by reframing their own ex-
periences and learning from that process.
Learning organizations are self-aware, intro-
spective organizations that constantly scan
their environments. By contrast, other organi-
zations merely adapt. They attend only to
those experiences that may redirect them to-

The authors would like to thank Joan Brett, Marshall Sashkin, Randy Schuler, Chuck Snow, and Al
Vicere for their constructive comments on an earlier draft of this manuscript. The Bureau of Business
Research at the Cox School, Southern Methodist University, provided funding for this research project.

67

Michael E. (Mick) McGill is professor of orga-
nizational behavior and administration at the
Edwin L. Cox School of Business, Southern
Methodist University, Dallas, Texas. After re-
ceiving his Ph.D. in 1971 from the University of
Southern California, he moved to Texas and
began his career as a university professor and
organizational consultant at SMU. In his teach-
ing, research, and professional practice, he
has been primarily concerned with issues of
personal and organizational development. He
has authored numerous articles and four
books, the most recent being American Busi-
ness and the Quick Fix (Holt, 1988). He also
serves as a consultant to a variety of organiza-
tions. He has received the Nicholas Salgo Dis-
tinguished Teaching Award and the Rotunda
Outstanding Faculty Award while on the facul-
ty of SMU.
68
ward their goals, and encourage their man-
agers to make only those changes that fit the
current structure. It is increasingly evident
that adapting is an inadequate response to to-
day’s turbulent competitive environment.
Learning is imperative. But few organizations
truly learn from experience.
In this article, we differentiate four kinds of
organization learning and describe the associat-
ed policies, practices, and possibilities for action.
THE KNOWING ORGANIZATION:
BY THE BOOK
The knowing organization is the oldest of or-
ganization models. Its lineage can be traced to
concepts dating from the early 20th century:
England’s Adam Smith and his division of la-
bor, German sociologist Max Weber’s “bu-
reaucracy,” American engineer Frederick W.
Taylor and his “scientific management,” Gen-
eral Motors executives Mooney and Riley’s
“principles of management,” and French the-
orist Henri Fayol’s “administrative theory.”
These management theorists shared the belief
that whatever there was to do, there was one
best way to do it-a best way to do a job, a best
way to manage employees, and a best way to
organize tasks. Further, they believed that the
best way was either known or knowable-
hence, the knowing organization.
Knowing organizations have been and
continue to be among the most successful of
American businesses. Walt Disney, UPS, Toys-
R-Us, 4-Day Tire Stores, Blockbuster Video,
Avis, U-Carco, and thousands of other com-
panies have discovered something that works,
committed it to memory, and repeated it over
and over. . . and over again. At Disneyland in
Anaheim, DisneyWorld in Orlando, Tokyo
Disneyland in Japan, and EuroDisney in Paris,
the spiel on the Jungle Boat River Cruise is ex-
actly the same-ad libs included-albeit in
different languages. UPS drivers are given de-
tailed route instructions-order of stops,
length of red lights, even recommended
length of stride! Blockbuster Video pioneered
the display of tapes “live” on the shelf, three-
day rentals, and bar coding to track inventory
 and speed checkout. It parlayed these formu-
las to become the largest and most successful
video rental company in the world.
The most visible and successful of all
knowing organizations is McDonald’s. In any
of the 13,000-plus McDonald’s worldwide, con-
sumers experience firsthand the best of what
knowing organizations have to offer-efficien-
cy, predictability, and control-in production
and customer service. From his earliest days
selling milkshake machines in San Bernardino,
California, McDonald’s founder, Ray Kroc,
made a religion of (and a fortune from) discov-
ering and duplicating the best way to manu-
facture and market fast food. Operations man- John W. Slocum, Jr., holds the 0. Paul
uals spell out what every employee needs to Coney Chair in management at the Cox
know to perform his or her task in an efficient School of Business at Southern Methodist
manner. Employees know exactly how to University, where he teaches organizational
draw milkshakes, grill hamburgers, and fry behavior, organization design, and manage-
potatoes. The manuals specify cooking times ment. He has written over ninety articles
for all products and temperature settings for all and five books covering such subjects as
equipment, as well as standard portions on ev- leadership, motivation, career management,
ery food item, down to the quarter ounce of and the impact of corporate strategy on hu-
onions placed on each hamburger patty. man resources practices. Slocum received
Kroc was not satisfied with seeking his B.B.A. from Westminster College, his
knowledge about “the best way” in manuals, M.B.A. from Kent State University, and his
curricula, and classroom training. Nor was he Ph.D. from the University of Washington.
willing to rely totally on people (read Before joining the faculty at SMU, he was a
teenagers) and their potential for unpre- member of the faculties at Ohio State and
dictability. McDonald’s “engineered in” Penn State. He has served as the 39th
knowledge, designing machines that make it president of the Academy of Management
virtually impossible to overcook the hamburg- and as editor of The Academy of Manage-
ers, underserve the amount of fries, or short- ment Journal. He is currently the editor of
change the customer. In short, the food at Mc- Organization Science and also serves on
Donald’s can be prepared and served only in the editorial boards of several other jour-
the way that McDonald’s knows is best. nals. He is a fellow in the Academy of Man-
The distinguishing characteristics of know- agement and the Decision Science Insti-
ing organizations have changed little from the tute, and he has served as a consultant to
ideal, machine-like models of 100 years ago. numerous organizations in the area of hu-
The philosophy of a knowing organization is man resources management.
rationality; it values efficiency above all. Know-
ing organizations focus on standardized poli-
cies, procedures, rules, and regulations, and
they do things “by the book.” A manager’s pri-
mary responsibility is to control employees’ be-
havior by enforcing the rules. Customers of
knowing organizations must either accept ser-
vice by the rules or do business elsewhere.
Knowing organizations change in reac-
tion to changes in their environment, making
69
incremental improvements to existing pro-
cesses, products, services, or technologies-
improvements that are always within the
boundaries of the company’s proven track
record. Inasmuch as these changes are not the
product of learning, they often have little to
do with the root causes of business problems.
Knowing organizations-with their high
level of control, enforced conformity, routine
behaviors, and risk-avoidance-are “learning
disadvantaged.” Their need to know gets in the
way of their ability to learn from their experi-
ence. What was once “the best way’ becomes
simply “the company way.” These organiza-
tions-often described as adaptive or single-
loop-can be successful only so long as the na-
ture of the marketplace (the technology,
competition, customer demand, regulation,
and other environmental forces) remains rela-
tively mature and static. That is, knowing orga-
nizations can be successful so long as they don’t
need to learn. Real learning would require man-
agers to give up control, predictability, and ef-
ficiency, and to open the organization up to an
examination of its own experience.
THE UNDERSTANDING
ORGANIZATION: VIRTUE IN VALUES
In the 198Os, many once-successful knowing
organizations sensed the need to do things dif-
ferently. With foreign competition eroding
market share, customers demanding higher
quality and more personalized service, and
technology changing at an ever-increasing
pace, these companies became aware that a
continued focus on the one best way was not a
sure way to succeed. The challenge that know-
ing organizations faced was twofold. On the
one hand, they urgently needed to search for
alternatives to established routines in order to
preserve their identity; on the other, they
could not allow their new responses to cast
doubt upon their ability to know, or dilute
their capacity for predicting and controlling
others’ behaviors. Many companies chose to
address these challenges by pursuing only
those changes compatible with the basic cul-
ture of the company, its core values and beliefs.
70
Bank of America is an excellent example of
a company that eschewed knowing in favor of
understanding. Founded by A. P. Giannini to
provide banking services for the Italian immi-
grants of San Francisco, the bank, in its early
years, pioneered many service innovations in-
tended to make banking more “customer
friendly.” Advertising, branch banking, and
inviting buildings attracted thousands of small,
personal accounts and forced competitors to re-
spond. At the same time, Giannini took corpo-
rate-level risks, such as backing bond and loan
programs for projects as diverse as the Golden
Gate Bridge and Walt Disney’s movie, “Snow
White and the Seven Dwarfs.” The Bank of
America discovered a great many things that
worked over the years, and by the late 1970s
and early 198Os, it had institutionalized these
discoveries, creating bureaucratic routines. Its
resulting efficiency and predictability gave rise
to a new set of assumptions: Don’t risk failure;
take a short-term view; don’t be frank when
evaluating products or programs; seniority is
more important than performance; study a
new idea to death; protect your own turf. In the
198Os, however, business reversals, a loss of
market share, and a hostile takeover attempt
left Bank of America in a weakened position,
just when it needed to respond to increased
competition in a deregulated market. What it
had “known” no longer worked.
Rather than responding with new rules
and regulations, Bank of America chose to
reemphasize its core values and to promote
change via a new, widespread comprehension
of its original company culture. Its core values
included putting the customer first and re-
specting, recognizing, and rewarding both cus-
tomers and bank employees. The culture
change began with the CEO. Via meetings,
publications, and training programs, the com-
pany communicated the new culture through-
out the organization. Coupled with a change in
business strategy and an aggressive acquisition
program, the new culture returned Bank of
America to a position of banking preeminence.
In recent years, the same story has been
repeated in hundreds of companies, from For-
tune 500 giants to small family owned and op-
erated firms. In the 19805, corporate culture
was to companies what the “one best way”
had been for the previous 100 years. Culture
offered predictability and control, not
through excessive regimentation, but through
a fundamental understanding of what the
company valued. Strong-culture companies,
like Digital Equipment, IBM, Apple, and
Johnson & Johnson, were exalted, examined,
and emulated. Procter & Gamble’s value-
based culture, in particular, was often cited as
a key to that company’s success. The compa-
ny’s founder, William Cooper Procter, set
forth Procter & Gamble’s most basic core val-
ue in straightforward terms: “Always try to do
what is right.” Other values embraced by
Procter & Gamble-including “The customer
is important,” and “Things don’t just happen,
you make customer interests our own”-have
served as a model for many companies.
The understanding, strong-culture organi-
zation guides strategy and action by using a set
of core values, described by some as the “ruling
myth.” A ruling myth’s function is to give
meaning to experience, but it can also constrain
the organization from taking action. Strong-cul-
ture organizations, such as GM, IBM, and Sears,
tend to build moats around their castles to pro-
tect themselves from real learning. Sears and
GM thought their economies of scale protected
them from competition; IBM thought that since
it had installed so much equipment, its cus-
tomers would be forced to seek out IBM com-
patibility in their next orders. In these organi-
zations, the culture surrounding the
decision-making process was all-consuming.
For example, Sears spelled out procedures
for decision making in an elaborate library of
bulletins that storehoused the glory days of
past years. The worshipping of retired “heroes”
who were dedicated to maintaining the
majesty of the culture fostered a practice of se-
lecting internal “long-service” candidates for
the CEO position. The company’s strong cul-
ture hindered each successive CEO and other
top managers from executing radical improve-
ments. In the early 197Os, when its growth
slipped as Kmart and Wal-Mart grew, Sears did
not recognize the change going on in customer
preferences, and did not develop a strategy to
address it. Ignoring this change, it opened its
monument to its past, the Sears Tower, in 1973.
The very nature of a strong-culture orga-
nization limits its capacity to learn from its ex-
perience. The philosophy of an understand-
ing organization is that a clear statement of
assumptions and basic beliefs is an adequate
and appropriate guide to action for managers
and employees. Understanding organizations
maintain that their values should be compre-
hended by all employees and should be evi-
dent in every action taken. Management
practices are intended to clarify, communi-
cate, and reinforce the company’s culture. As
one Sears manager said, “God forbid there
should be a problem that comes up for which
there isn’t a bulletin. That means the prob-
lem’s new.” For their part, employees are sup-
posed to let their understanding of the com-
pany’s culture guide their behaviors.
Oftentimes, the culture encourages them to
learn about their own jobs and divisions, but
not about the relationships among other jobs
and divisions. The understanding organiza-
tion wants its customers to experience the
company’s cultural values in all interactions,
which are peppered with references to the
company’s long history and years of commit-
ment to core values. Customers can expect to
be reminded of how much they are “valued
by the company,” regardless of what their im-
mediate experience tells them.
An understanding organization can appre-
ciate only those changes that are consistent
with its core values or ruling myth. Change oc-
curs within a circumscribed context. Compa-
nies involved in promoting their own culture
are unlikely to be open to enhancing and ex-
panding experiences, as learning requires; they
cannot escape the rule of their own myths.
THE THINKING ORGANIZATION:
FROM ANALYSIS TO ACTION
The banners appeared on Monday in the
break areas and cafeterias of every store in the
company: “T.L.C.,” printed in bold red letters.
Speculation was rife among employees as to
what T.L.C. meant and, more specifically,
what it meant for them. “Tender Loving
71
Care” seemed too obvious and not at all cor-
porate. Some thought the company was go-
ing the discount route with “Totally Low
Cost.” Most agreed it could mean “Too Little
Commission” but probably didn’t. Whatever
it meant, T.L.C. was clearly the newest man-
agement campaign at Foley’s Department
Store, the Dallas-based retailer owned by Fed-
erated Department Stores. By the second
week, when T.L.C. lapel pins were being
passed out to all sales associates, interest had
peaked. Management held meetings in every
store detailing Foley’s new customer service
program, “T.L.C.-Think Like a Customer.”
In the ensuing weeks, more T.L.C. banners,
along with coffee mugs, pencils, and memo
pads, appeared throughout the stores.
The T.L.C. program was Foley’s response
to declining sales and eroding market share.
Originally known as Sanger-Harris, this full-
line department store had ridden the crest of
the Southwest’s dynamic growth, adding
stores and chalking up successive years of sales
growth. With the economic downturn of the
Southwest, the fortunes of Sanger-Harris also
turned. The continued slump, the aggressive
entry of Target, Wal-Mart, and other discoun-
ters into the market, and the pressure to meet
Federated’s aggressive targets spurred Foley’s
to reestablish its role in the marketplace. The
T.L.C. campaign was a carefully orchestrated
rollout of a company-wide effort to refocus
employee attention on the customer. At the
same time, the company implemented major
cost-cutting measures. It closed stores, let sales
associates go, consolidated departments, and
discontinued merchandise lines. As one em-
ployee observed, “T.L.C. was absolutely neces-
sary. With fewer stores, fewer goods, and few-
er associates, we got fewer customers. Those of
us who were left had to think like customers
because there were no customers around to tell
us what they were thinking!”
The T.L.C. campaign at Foley’s represents
the best and worst of the problem-solving
management practices that have become so
popular in recent years. On the positive side,
these practices result in quick diagnosis of a
business problem, focused analysis, and mobi-
lization of resources for a concentrated pro-
72
gram of action. Business executives are trained
to identify, analyze, and fix problems as they
occur. Many management-sponsored pro-
grams, such as new customer service initia-
tives, support the value of this training. But
what was lacking in Foley’s approach, and in
much of the problem-solving practiced by
thinking organizations, is a more comprehen-
sive understanding of causes, a willingness to
experiment, and an ability to foresee problems
and develop integrative possibilities that do
not yet exist. A reliance on reactive programs
to solve business problems foreshortens man-
agerial perspective and frustrates learning.
Customer service programs are often prob-
lem-solving run amok. Every company seems
to have made a crusade out of telling customers
just how important they are. Customer service
comment cards are placed on tables at restau-
rants, in cars at the service garage, and in the
pockets of jackets back from the cleaners. Cus-
tomer service “800” phone lines have become a
requisite for retailers and manufacturers alike.
However, as customers have learned, the mere
adoption of a customer service solution is not
evidence that a company has learned about
customer service, any more than Band-Aids are
cures for cuts.
The fault of today’s problem-solving orien-
tation is also apparent in areas other than cus-
tomer service. Most of the currently popular
quality programs are too often piecemeal ef-
forts-quick fixes--that are not directed at fun-
damental problems. Moreover, they are pri-
marily directed at the shop-floor level. David A.
Garvin, a former member of the Board of Over-
seers of the Malcolm Baldrige National Quality
Award, has observed, “Many.. .companies are
still using packaged programs or off-the-shelf
solutions: employee suggestion programs, cus-
tomer surveys, or statistical process control
packages that they have purchased from out-
side vendors. They remain customers of qua&
ty management, not creators, and have yet to
put a personal stamp on their programs. De-
ployment is incomplete outside of manufactur-
ing or operations, and lower level activities are
not fully aligned with strategic goals.”
“Packaged,” ” off-the shelf,” “incomplete,”
“not fully aligned.” These criticisms also apply
to other currently popular solutions to busi-
ness problems-such as just-in-time invento-
ry, fast cycle time, or empowered teams. The
problem is not with the programs per se, since
many have resulted in success stories; instead,
the problem lies with companies thinking that
these practices are solutions, and believing
they have learned to solve their business prob-
lems. The awareness-analysis-action orienta-
tion of thinking/problem-solving companies is
in itself limiting. As Matthew Kiernan has ob-
served, “Such a linear approach virtually pre-
cludes the ability to step back and ask more
fundamental, difficult, and useful questions.”
According to the philosophy of the think-
ing’problem-solving organization, if experience
says it’s broke, fix it and fix it fast, but don’t fo-
cus on why it breaks. Management practices are
programmed into discrete and identifiable so-
lutions to fit the varieties of business problems.
For example, thousands of organizations are
engaged in some kind of total quality manage-
ment (TQM) program. These programs typical-
ly require supervisors to spend five days learn-
ing about statistical quality control. Their bosses
then get a two-day overview, and senior man-
agement receives a one-hour briefing.
Further, there is a premium on a manag-
er’s ability to sell company programs to em-
ployees and customers. Employees are expect-
ed to enthusiastically embrace and enact each
new program, which is announced with great
fanfare and hailed by managers as a sure-cure.
Employee commitment and involvement-
but only regarding the solution at hand-is
encouraged. Many programs are begun simul-
taneously, sometimes at cross-purposes and
typically without any systemic integration.
Employees and customers alike often grow
weary of “the solution of the month.”
THE LEARNING ORGANIZATION:
ENHANCING EXPERIENCE
In today’s turbulent times, every organization
is afforded a rich competitive experience, but
few organizations profit from it; those that do
are learning organizations. Learning organi-
zations process both the experience and the way
the organization experiences it. Drawing on the
work of Peter Senge and Chris Argyris, as
well as our own research, we can identify sev-
eral organizational and behavioral character-
istics of learning organizations. Many are evi-
dent at Home Depot.
Once inside the doors of a Home Depot
store, you know you are dealing with a very
different kind of company. A few feet from the
entrance is a makeshift classroom, with bleach-
er seating, a chalkboard/bulletin-board, and a
work table. As often as four times a day, Home
Depot staff or supplier representatives conduct
clinics for customers, teaching them how to in-
stall a pedestal sink, rewire an electric outlet,
build a fence, or do any number of home im-
provement projects. Throughout these lOO,OOO-
plus square feet warehouse/stores are “Depot
Dan” displays, which demonstrate the steps of
various “how-to” projects and are positioned
near the necessary materials and tools. Orange-
aproned salespeople are hired not only for their
product knowledge, but, as President Arthur
M. Blank notes, for their ability “to raise the cus-
tomer’s enthusiasm about a project.” As one
customer said, “The salespeople at Home De-
pot are coaches and cheerleaders allin one. You
feel like you have a partner on your project.”
But the focus on learning at Home Depot
is not geared just toward the customer. Before
Home Depot opens a new store, employees re-
ceive nearly four weeks of training. The retail-
er also holds quarterly Sunday-morning meet-
ings for its 23,000 employees, using satellite TV
hook-ups in each store. Known as “Breakfast
with Bernie and Arthur” (the company’s
founders), these meetings inform employees
about the past quarter’s performance and the
company’s growth plans and allow employees
to phone the companys top executives to ask
questions. The company’s in-house TV station
also produces programs designed to instill the
Home Depot “service spirit” in new stores and
their employees.
While customers learn a lot from Home
Depot, they also do their share of teaching. For
example, contractors asked for special checkout
areas near the lumber racks; Home Depot
obliged and found that the measure speeded
“front-of-the-store” checkout. In some stores,
73
Home Depot is experimenting with a bridal
registry, because customers buying starter
homeowner kits for newlyweds suggested the
idea. Customers also taught Home Depot that
selling paint and wallpaper wasn’t enough-
they needed decorating help too. Chairman
Bernard Marcus commented on the impor-
tance of continuous customer testing: “One of
the biggest lessons we learned was that we had
to listen to our customers, whether they had re-
quests on specific kinds of merchandise, need-
ed help or counsel, or just wanted to complain.
Now it’s like a religion in our company.” The
religion is practiced through continuous test-
ing/experimenting with merchandising ideas.
With this teachinglearning orientation,
Home Depot has become the dominant force
in the $115 billion home improvement indus-
try. Founded in Atlanta in 1979 by Bernard
Marcus and Arthur M. Blank (both of whom
had been fired by once-rival Handy Dan),
Home Depot today has more than 200 stores,
sales over $6 billion, and profits of over $300
million. The chain’s aggressive expansion
plans call for 525 stores nationwide by the
year 2000. Walter Johnson, senior editor of
Do-lt-Youuse2f Retailing, the publication of the
National Retail Hardware Association, pre-
dicts, “Statistically, if Home Depot continues
to rack up its current growth rate, and the
market keeps up its 4.6 percent annual rate,
Home Depot could virtually own the home
improvement business by the year 2000.”
The key to Home Depot’s phenomenal
success is its commitment to learning from ev-
ery aspect of the organization’s experience. In
fact, any company today with a sustainable
strategic advantage-an ability to ensure a
competitive edge over the long run via pro-
tection, perpetuation, and/or replacement-
has achieved that position through dedicat-
ing its people, policies, and practices to
learning from experience. The San Diego Zoo,
Home Depot, Sony, 3M, Wal-Mart, Heinz,
Southwest Airlines, Levi Strauss, Motorola,
and Honda all have shown that their advan-
tage is their capacity to learn.
The philosophy at Home Depot, as at all
learning organizations, is to maximize the
learning that can be achieved from every com-
74
pany interaction with employees, cus-
tomers/clients, vendors, suppliers, and even
competitors. The company makes a conscious
effort to learn from every experience, not just
about the experience-be it a sale, a delivery,
or a management meeting-but about the
way the company collects, processes, and uses
information.
The primary responsibility of management
and the focus of management practices in a
learning organization is to create and foster a
climate that promotes learning. Management’s
task is not to control or be a corporate cheer-
leader or crisis handler; it is to encourage ex-
perimentation, create a climate for open com-
munication, promote constructive dialogue,
and facilitate the processing of experience.
When management accomplishes this, em-
ployees share a commitment to learning. In a
learning organization, employees are responsi-
ble for gathering, examining, and using the in-
formation that drives the learning process.
They must be boundary spanners, working
across functional departments and divisional
lines to mine the experience of customers, sup-
pliers, and even competitors. They must con-
scientiously expose failures and constructively
promote dissent when their experience war-
rants disagreeing with the company line.
As the San Diego Zoo and Home Depot
demonstrate, learning organizations bring a
teaching/learning orientation to their rela-
tionship with the customer. This orientation
is reflected in their open, ongoing dialogue
with their customers. The learning organiza-
tion believes in informing the customer and
being informed by the customer-not via the
occasional focus group, customer survey, or
blitzkrieg campaign, but through a continu-
ous conversation that enhances the experi-
ence of both parties.
Nowhere are the differences between the
learning organization and its knowing, under-
standing, and thinking antecedents more evi-
dent than in their approaches to change. Be-
cause of its commitment to continuous
improvement through experimentation, the
learning organization always has a great many
changes underway. Since there are so many
changes, no one change is viewed as a
 EXHIBIT 1
ORGANIZATIONALAPPROACHES
TO EXPERIENCE

Knowing Understanding Thinking Learning

Dedication to the Dedication to A view of business Examining, enhanc-

one best way: strong cultural val- asa seriesof ing, and improving
PHILOSOPHY l Predictable
ues which guide problems. every businessex-
strategy and action. perience,including
l Controlled If it’s broke, fix it
Beliefin the “ruling how we experience.
l Efficient fast.
myth.”

Encourageexperi-
Maintain control ments, facilitate ex-
Clarify, communi- Identify and isolate amination, promote
MANAGEMENT through rules and cate,reinforce the problems, collect
regulations, “by the constructive dis-
PRACTICES company culture. data, implement sent, model leam-
book.” solutions.
ing, acknowledge
failures.

Use corporate Enthusiastically Gather and usein-

Follow the rules, embraceand enact formation; con-
EMPLOYEES don’t askwhy. values as guides to
behavior. programmed structively dissent.
solutions.

Are part of a teach-

Must believe the Believecompany Are considered a ing/learning rela-
CUSTOMERS company knows values insure a pos- problem to be tionship, with open,
best. itive experience. solved. continuous
dialogue.

Implemented Part of the continu-

Incremental, must through problem- ous processof expe-
CHANGE be a fine tuning of Only within the
“ruling myth.” solving programs, rience-examine-
“the best way.” which are seenas hypothesize-experi-
panaceas. ment-experience.

panacea. Some are bound to fail. The organi-
zation’s entire approach to change is one of ac-
ceptance and normalcy. Change is an input
that leads to learning. By viewing each change
as a hypothesis to be proven and by examining
the results of each experiment, the learning or-
ganization ensures that change enhances its
experience, and thus promotes learning.
A COMPARISON OF APPROACHES
Exhibit 1 shows the key characteristics of each
of the four types of organizations discussed
above, drawn from dialogues with practicing
managers. The continued use of experience as
a way to improve is essential for any organiza-
tion to survive.
Processing experience is not natural,
however, for knowing organizations, which
have institutionalized the continuity of re-
porting relationships and relations with their
customers, suppliers, and others. For these
firms, even mundane changes can become
prohibitively costly. As we have indicated,
managers in knowing organizations develop
practices over time that protect the organiza-
tion from pressure from outside influences,
whatever their merit. Closed off from its own
experience, the knowing organization has no
forum or faculties for the kind of processing
that learning requires.

75
 Few people would question the assump-
tion that an organization’s culture impacts its
employees, customers, and other key stake-
holders. In the 198Os, many understanding
organizations developed strong cultures that
thwart learning. For them, culture is a
metaphor for understanding their employees’
behaviors. Rituals, stories, jargon, and physi-
cal settings are all instruments that can hinder
their ability to detect and develop the mecha-
nisms that learning requires. Opening up an
organization’s culture and boundaries is
hard; in addition, many an understanding or-
ganization’s ruling myth ensures that the
company “spin” is applied to any information
that crosses organizational boundaries. For
them, the purpose of processing experience is
to promote the culture.
The central argument advanced by man-
agers using the thinking approach is that their
adoption of the latest business practices is ev-
idence of their ability to learn. Employees are
encouraged to find out what the problems are
and to help figure out the solutions; top man-
agers are there to offer options and alterna-
tives to those seeking advice. The organization
confronts numerous problems and solutions
as it seeks to respond effectively to seemingly
ceaseless change. So consumed is the prob-
lem-solving organization by its constant prob-
lem-solving that it fails to appreciate the need
to examine experience, to ask, Why, with so
many solutions, do we still have problems?”
A learning organization is qualitatively
different from knowing, understanding, and
thinking organizations. Its managers and
members behave differently. We believe that
several core behaviors are evident in learning
organizations: openness, systemic thinking,
creativity, personal efficacy, and empathy.
These behaviors occur not simply because the
organization believes learning is desirable,
and not because it has adopted a learning mis-
sion/vision. Rather, these behaviors are part of
the conscientious and consistent implementa-
tion and integration of management practices
that promote learning; they are the result of
the organization’s culture, strategy, structure,
information technology, reward systems,
staffing, and leadership. To adopt these prac-
76
tices, however, managers must set aside much
of what they have heretofore believed to be
true about creating effective organizations.
UNLEARNING THE ORGANIZATION
If we, as owners, managers, employees, and
observers, are to build learning organizations,
we must first concern ourselves with unlearn-
ing the organization. It is not an easy task. We are
comfortable in these conventional organiza-
tion environments-we have trained in them,
we have succeeded in them, and we feel pro-
tected by them. But many types of organiza-
tions, and the behaviors they promote, have
outlived their usefulness. Organizations are
designed to control employees’ behaviors, yet
individuals are intrinsically curious and want
to experiment. For an organization to unlearn,
it needs to free managers and their organiza-
tions from seven roadblocks that hinder learn-
ing, and embrace new practices.
Learning Culture. A learning organization
has a culture and value set that promotes
learning. A learning culture is characterized by
its clear and consistent (1) openness to experi-
ence; (2) encouragement of responsible risk-
taking; and (3) willingness to acknowledge
failures and learn from them. A learning cul-
ture is not so much captured in a “Sloga-
neered” mission statement crafted by a con-
sulting firm; instead, it is evident in the
everyday practices of a company-its rites and
rituals, the heroes it reveres, the legends it
retells. In a company with a learning culture,
everyone-management, employees, cus-
tomers, and suppliers-sees opportunities to
learn and grow. Groups engage in active dia-
logue and conversation, not discussions.
These conversations are reflective, as opposed
to argumentative, and they are guided by
leaders who facilitate the building of strong re-
lationships among key stakeholder groups. It
is clear to us that to instill a learning culture,
managers must set aside their penchant for
discussion, embracing conversations and dia-
logues instead. To create conditions that foster
conversation and dialogue, they must realize
that face-to-face meetings are more functional
than E-Mail or the distribution of computer
printouts. A dialogue provides a forum for
people to talk and think about problems to-
gether. E-Mail and fax are “lean” communica-
tions media that help a manager “tell” others
what to do, but do not encourage experimen-
tation and learning. Dialogue requires a “rich”
media (face-to-face meetings), so that people
can build shared visions and reflect on their
own ways of looking at the world.
Continuous Experimentation. Strategy in
a learning organization is predicated upon a
recognition and acceptance that learning is the
only source of sustainable strategic advantage.
As such, management is committed to contin-
uous experimentation as a means of institu-
tionalizing learning. The low-cost strategy of
Wal-Mart and the differentiator business strat-
egy of JC Penney simply set the parameters for
learning to occur. A strategy is an outcome of
the learning process.
Learning companies unlearn “grand pro-
grams” in favor of smaller efforts and system-
atic abandonment. They relentlessly pursue
new solutions to problems that their own
product or service has just solved. Whenever
Sony introduces a new product, for example,
it simultaneously sets a “sunset” date on
which it will deliberately abandon that prod-
uct. This immediately triggers work on devel-
oping replacement offerings. The object is to
create three new products for every one that
is phased out: (1) an incrementally improved
old product; (2) a new spinoff product from
the original (e.g., the Sony Walkman from the
portable tape recorder); and (3) an entirely
new innovation. With so many experiments
underway, some are bound to fail. In a learn-
ing organization, failure is expected, even de-
sirable. The measure of strategic planning is
necessarily flexibility and the conscious con-
sideration of contingencies.
Network Intimacy. The structural charac-
teristics of learning organizations are perme-
ability, flexibility, and network intimacy. All
boundaries in a learning organization are high-
ly permeable, which maximizes the flow of in-
formation and opens the organization to its ex-
periences. Learning organizations create the
means for recognizing and embracing ideas
that originate outside the company. The lines
between management and employees, be-
tween departments, between employees and
customers, between the company and its ven-
dors, and even between the company and its
competitors are b1u.rred. The organization’s
structure is based on the need to learn; the
driving organizing principle is to put the nec-
essary resources in the hands of the people
who need them. As tasks, needs, and people
change, the structure changes so that cus-
tomers and employees alike face minimal in-
conveniences. Network intimacy, closeness,
and openness between management, employ-
ees, customers, competitors, and the commu-
nity make it possible for the learning organiza-
tion to constantly monitor changing needs and
people. The idea of structure as a fixed, formal
definition of how people and tasks are related
must be unlearned; structure must be thought
of as a process.
Information Systems.It is perhaps axiomat-
ic that a learning organization is effective to the
degree that the information it learns from is ac-
curate. More to the point, information in a
learning organization must be accurate, timely,
available to those who need it, and presented
in a format that facilitates its use. In most learn-
ing organizations, the tests of information and
information systems are simply (1) How does
this information add value to the decision pro-
cess? and (2) How can it get to the people who
need it? Home Depot, for example, excels in
giving the customer the precise information he
or she wants. Learning organizations must
combine detailed product knowledge with op-
erational flexibility so they can respond to al-
most any need. Thus, they must be open to ex-
ternal data regarding the industry, markets,
competition, and customers, and must channel
that information to the appropriate employees
without a managerial “spin.” Further, internal
information processes must be neither so clut-
tered nor so cumbersome that information is
generated for information’s sake. To create this
kind of information system, managers need to
unlearn most of their current operating beliefs
about who needs to know what-and when
and why.
Reward Systems. Reward systems in the
77
learning organization recognize and reinforce
learning. This means that pay and promotion
practices are tied to risk-taking, flexibility, contin-
uous improvement, and other behaviors that
learning organizations require. More than this, it
means that punishments for failure and dissent
are eliminated. In most organizations today, not
only are risk-taking and dissent not encouraged,
but they are severely punished and generally re-
garded by employees and managers alike as “ca-
reer enders.” By contrast, learning organizations
encourage dissent. Management believes that in-
tellectual diversity enhances and improves expe-
rience. Unlearning the traditional response of
denigrating dissent, and learning to encourage di-
versity for maximum learning, is one of the key
challenges facing managers in learning organiza-
tions.
Human ResourcePractices.Does a learning
organization, with its learning culture, experi-
mental approach to strategy, open information
systems, flexible structure, and encouragement
of diversity require a different kind of employ-
ee? Yes. A learning organization must select
people not for what they know, but for
whether they are able to learn. We believe the
ability to learn is in great supply in the work-
force. The problem is that organizations, by
their failure to unlearn, frustrate and squelch
employees’ learning abilities. John Reed, CEO
of Citicorp, has said, “We know how to hire
smart people and put them in the organization.
But that doesn’t produce a smart organization.
We have to put more of our energy into build-
ing and creating smart organizations by capi-
talizing on our smart people.”
Leaders’ Mandate. The role of leadership
in unlearning and learning cannot be over-
stated. Jack Welch, respected CEO of General
Electric, presents a learning perspective on the
question of retirement. Welch says he contin-
ually asks himself, “Are you regenerating? Are
you dealing with new things? When you find
yourself in a new environment, do you come
78
up with a fundamentally different approach?
That’s the test. When you flunk, you leave.” In
many ways, Welch has captured the test of
leadership in a learning organization: regen-
erating, dealing with new things, coming up
with fundamentally different approaches.
Despite the general ease with which leaders
and managers today call themselves members
of “learning organizations,” the actual build-
ing and maintaining of a learning organiza-
tion is a Herculean task. The demands of this
task run counter to most of what is currently
believed about managing organizations.
Learning organizations must be willing to un-
cover their assumptions about themselves
and their environment. Thus, organizational
learning is about more than simply acquiring
new knowledge and insights; it requires man-
agers to unlearn old practices that have out-
lived their usefulness and discard ways of
processing experiences that have worked in
the past. Unlearning makes way for new ex-
periences and new ways of experiencing. It is
the necessary precursor to learning.
A FINAL WORD
We’ve drawn most of our examples of learn-
ing organizations from major corporations.
These examples are particularly illustrative
because they deal with products and practices
familiar to many of us. However, there is
nothing about the learning organization, its
characteristics, or its managers that makes it
exclusively a big-company phenomenon. The
behaviors required for unlearning and learn-
ing can be exhibited by all of us, whatever our
involvement in organization life. Each of us
has the opportunity to create, in our own lives
and spheres of influence, learning behaviors
and learning organizations. There are many
agendas to choose from; the action begins
with our own unlearning.
 SELECTED BIBLIOGRAPHY
The materials about the San Diego Zoo
were taken from Rahul Jacob, “Absence of
Management,” American Way, February 15,
1993, pp. 38-40. For other articles on learning or-
ganizations, see Thomas Kochan and Michael
Useem, Transforming Organizations (New York:
Oxford University Press, 1992); Chris Argyris,
“Education for Leading-Learning,” Organiza-
tional Dynamics, Winter 1993, pp. 5-17; Michael
McGill, John Slocum, and David Lei, “Manage-
ment Practices in Learning Organizations,” Or-
ganizational Dynamics, Summer 1992, pp. 5-17;
Peter M. Senge, The Fifth Discipline: Five Practices
ofthe Learning Organization (New York: Double-
day, 1990); Curtis Ventriss and Jeff Luke, “Or-
ganizational Learning and Public Policy: To-
wards a Substantive Perspective,” American
Review of Public Administration, December 1988,
pp. 337-357; Mathew Kiernan, “The New
Strategic Architecture: Learning to Compete in
the Twenty-First Century,” Academy ofManage-
ment Executive, February 1993, pp. 7-21; and Bob
Hedberg, “How Organizations Learn to Un-
learn,” in Handbook of Organization Design, Paul
Nystrom and William Starbuck, eds. (New
York: Oxford University Press, 1981, Vol. 1, pp.
3-27). The entire issue of Organization Science,
1991, Vol. 2, was dedicated to theoretical expo-
sitions of learning organizations.
For readings on knowing organizations,
Don Hellriegel and John W. Slocum, Jr.‘s book
Management, 6th edition (Reading, MA: Addi-
son-Wesley, 1992, pp. 38-64) provides a good
summary. Also see Paul Adler, “Time and Mo-
tion Regained,” Harvard Business Review, Jan-
uary-February 1993, pp. 97-108.
For penetrating insights into how corpo-
rate cultures impact the behaviors of
managers in their firms, see John Kotter and
James Heskett, Corporate Culture and Perfor-
mance (New York: The Free Press, 1992); Har-
rison Trite and Janice Beyer, The Cultures of
Work Organizations (Englewood Cliffs, NJ:
Prentice-Hall, Inc., 1993); Carol J. Loomis, “Di-
nosaurs?‘: Fortune, May 3,1993, pp. 36-42; and
Susan Cartwright and Cary Cooper, “The
Role of Cultural Compatibility in Successful
Organizational Marriage,” Academy of Man-
agement Executive, May 1993, pp. 57-70.
Quality is Personal: A Foundation for Total
Management by Harry Roberts and Bernard
Sergesketter (New York: The Free Press, 1993)
provides excellent insights into many prac-
tices of thinking organizations.
The material on how Home Depot deliv-
ers service has been experienced personally by
the authors. Patricia Sellers, “Companies that
Serve You Best,” Fortune, May 31,1993, pp. 74-
88 details how Home Depot and other organi-
zations have learned to serve their customers.
of you wish to make photocopies or
obtain reprints of this or other
articles in ORGANEA~TONA DYMMICS,
please refer to the special reprint
service instructions on page 80.
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