Is it worth investing in the concept of a Learning Organization? Is it possible to build a company of the future that will gain an advantage over its competitors?

Recently, on my LinkedIn feed, I read several interesting, but too academic for my requirements, posts on the above topic.

That’s why I wanted to share my practical experiences in this area. There will be fewer theories and a lot of confessions about mistakes made and conclusions drawn from them 🙂

First, what is a Learning Organization, and why is it worth building? What benefits can we achieve thanks to such an organization? How do we find out whether our company already has it, whether something is still missing, and how to do it?

I worked at a company that was like many others. We spent a lot of money on modern equipment, automation and digitalization and improved the quality of our products. Unfortunately, we did not achieve a competitive advantage that would translate into increased sales or better financial results. We were pleased with the good financial results, but at the same time disappointed with the lack of a significant competitive advantage. Initially, it seemed that we had everything under control and were resistant to difficulties. However, there came a moment when we started to wonder whether we were wasting our potential. Perhaps our self-confidence has led to the loss of development opportunities?

Identification of areas for improvement

We then decided to evaluate our company thoroughly and identified several areas that needed improvement:

1. Lack of flexibility in decision-making: – Long-term decision-making processes – Concentration of decisions in the hands of the management board – Reactivity towards the market and competition instead of creating it – A large number of ad hoc activities reducing profitability – Business planning detached from market reality
2. Lack of employee involvement in the company’s success: – Employees did not identify with the company and its results – Limited ability to delegate decisions – Low teamwork skills and conflicts – Declarative, not real, employee involvement – Too small number of so-called A-Players in the management team
3. Failure to learn from mistakes: – Lack of in-depth analysis of the mistakes made – Lack of decisive and quick corrections – Lost profits and market share due to employee disengagement and inability to respond quickly to changes

Has something similar happened in your companies? Research has shown that only 30% of our employees were committed to the company’s success, while market leaders achieved a commitment level of 70%. This shocked us. We realized that we had to adapt the company not only technologically but also change our organizational culture and management method. We decided to end the classic management structure in which the “omniscient” management board takes full responsibility for running the company.

How we transform our company into a Learning Organization?

This approach aims to increase competitiveness and efficiency through the ability to adapt to changes and continuous improvement of both the organization and employees. But how do you get started, and how do you fill it with concepts in practice?

We aimed to create a more flexible organization where employees would be more involved in the company’s success. We decided to flatten management structures, shorten decision-making time and respond to risks and opportunities faster than the competition. Below are some of our carefully and constantly monitored goals and the results we achieved thanks to them:

– Improving the company’s financial results by increasing work efficiency and machine productivity, using a proactive approach to the market and reducing errors in production processes by delegating decisions to people closer to the problem.

– Increasing employee engagement, reducing staff turnover and attracting new talent.

– Improving customer satisfaction through better service and product quality.

– Introduction of a new management and thinking system in the organization based on giving greater powers to employees, which influenced their morale and commitment.

Where to start and how to check the status of building a Learning Organization?

The foundation of change and the key to success is increasing employee involvement. This is a necessary condition. Its implementation is building trust by creating an employee-friendly company, open to different views, fair and based on shared values. Building trust must start with owners, companies, the Management Board, key management staff and informal leaders in the organization. Without their belief in the actual application and promotion of the principles of the Learning Organization, there will be no success. Here, declarative support for the project from the leaders is not enough. We need their total commitment and setting a personal example. Such a project cannot be extended.

An essential step in building employee trust and commitment is opening the company to a fair and unrestricted exchange of views and arguments about what to do best. This is a constructive conflict, not telling your boss and colleagues what they want to hear but going beyond your comfort zone and fighting for your assessments and views. We run away from constructive conflict, which should ignite discussions and thus engage employees. Don’t be fooled by the fact that there are plenty of ideas in the company; they come from a small group of activists, and most are uninvolved.

I consider convincing employees and leaders to engage in constructive conflict as the most challenging element of the Learning Organization. Constructive conflict is also a great tool for triggering employee initiative new ideas, and verifying the risks in undertaken activities.

Feedback is vital for building trust, sharing knowledge, accelerating decisions and improving their accuracy. This is supposed to be a mechanism that optimizes the bloodstream of every organization, and for example, after each presentation or speech, participants send short notes to the host with information: what is ok and what should be improved. A note is prepared from each official or consultative meeting with the findings or lack of findings. Notes are prepared for each business and external meeting. Once a quarter, each employee is provided with feedback based on the 360-degree methodology, what they are doing well and what is worth continuing, what they are doing but should be improved, and what they are not doing but are worth doing. It is a simple but very effective tool for self-improvement.

Thanks to this continuous flow of information correcting our actions, we do not need employee evaluations or process reviews. We were most pleased with the behavior of employees who asked their colleagues for advice or asked, “How could I help you?” We have placed the organizational self-improvement gene in the bloodstream of the organization. That gene was feedback.

Basis: feedback

The company must have a system for collecting information and sharing good business practices. A Knowledge Base should be developed, gathering, for example, described processes and procedures, manuals, information about customers, competitors, market events, errors, implemented and rejected ideas, and good business practices owned and observed on the market.

What the Knowledge Base gave us: employee departure did not mean loss of knowledge; it improved the adaptation process of new employees and their onboarding, minimized the risk of making the same mistakes, and helped transfer knowledge and good practices within the organization.

The right to make mistakes and work with mistakes. We agreed that everyone has the right to make a mistake, and the company has no penalties. Every error case has been analyzed, conclusions are drawn, and, as a result, operational procedures have been improved. Important or recurring error cases were discussed by company management.

Occupational health and safety cases were discussed by the Management Board regardless of their importance. We did not accept reports containing common empty words like this. “As a result of a combination of various events and circumstances.” The error analysis concerned every department and management level, including the company’s Management Board.

Employees’ professional development was carried out systematically and continuously and was both individual and team-based. At all management levels, the leader and each employee established an annual, individual development plan covering the areas of:

supplementing, increasing or obtaining new specialist competencies,
building managerial competencies, teamwork,
using individual talents for the good of the organization.

The 20/80 rule

80% of the employee’s development was individual work with the active participation of the leader as a mentor and coach. The leader devoted 20% of his working time to the development of employees and teams. This is a change in the leadership role for which it was necessary to prepare and provide methodological support from the HR department or external experts. The individual development program included, for example, joint analysis with the leader of articles read/watched/listened to, books, and materials available on YouTube and LinkedIn. The most interesting items were also analyzed as a team.

Additionally, during team meetings, business cases regarding working with errors in the company, as well as inspiring external business stories, were analyzed. It was a learning experience. There has never been a dilemma that an employee, after completing his or her tasks, deals with his or her training matters during working hours. We trusted each other. The leader-employee-team development formula constructed in this way has proven to be effective.

Delegation of authority and decentralization of management

It is worth introducing the delegation of powers and decentralization of management once we have achieved sufficient maturity of the city organization driven by increased employee involvement, efficient error analysis and feedback system and an established culture of constructive conflict. The purpose of delegating authority is to achieve organizational agility in faster and more accurate decision-making. This is already a real competitive advantage. At the Management Board level, we leave only decisions critical to the company’s functioning: strategy, annual budget, key investments and financing. We transfer the remaining decisions to those who are closer to the problem. The risk of disturbances in the company is negligible because we have already reached a certain level of company maturity.

In such a culture, the employee is already accustomed to consulting with a leader/mentor, informs and receives feedback about business matters and himself, uses the Knowledge Base, and the organization is open to a sincere exchange of views and ideas. The consequence of delegating authority is the decentralization of management. We are flattening organizational structures – we are reducing the number of management levels because decisions are the responsibility of employees.

We are fundamentally changing the role of leaders from supervision and control over employees to the role of a mentor and coach who, together with the employee, improves their substantive and managerial competencies.

Each company individually must determine whether it has already achieved a sufficient level of Learning Organization and maturity, allowing for decentralization of management. This task involves analyzing the degree of implementation of the mechanisms described above. Whether this is a sufficient degree of implementation is an individual assessment and depends on our appetite for risk and challenge.

When an organization reaches a stage where it is ready to make crucial decisions, the Board no longer operates in isolation. It has the support of a large group of committed employees ready to share responsibility for the company’s success. Although formally, it is the Management Board that makes the decision, in fact, it is the result of team consensus.

The answer to the question of whether it is worth creating the so-called “Learning Organization” and thus gaining a competitive advantage is clear: yes, it is profitable, and the effects are significant.

However, it is crucial to define specific goals and indicators, monitor them continuously and regularly discuss progress or lack thereof. Without this mechanism, enthusiasm may quickly fade, and questions will arise about the sense of the actions taken.

What results have we achieved?

In just 12 months – six months of preparation and another six months of project implementation – we achieved significant results. There was a 35-50% reduction in errors detected in all processes. We no longer encounter “orphaned” problems for which it is difficult to find a source. Teams’ focus on minimizing errors, rather than correcting them later, resulted in a 12% increase in work efficiency and a 15% increase in machine productivity.

This success was due to the teams’ commitment to generating innovative ideas, identifying best practices, and constant concern for the quality of the product and processes – both production and support. The atmosphere in the workplace has become friendly; both the stations and production halls were clean, and the air was fresh. Canteens offered tasty meals, and wages became fair and decent. Flexible working hours and attention to employee health and safety reduced staff turnover by 50% in difficult competitive market conditions.

Achieving more is always possible and is a goal for the future. We have undergone an organizational transformation: from a hierarchical model, based on directives from above, to an agile and mobile structure in which employees actively participate in shaping the company’s success.