Edward Hess: Can You Build a High-Performance Learning Organization?

“If we want adaptable learning organizations, we need to humanize our management models, and that requires many companies to fundamentally change attitudes and behaviors toward employees…. [W]e need to form new capital markets to support the building of endur­ing, value creating, people-centric, learning companies.”—Edward Hess

Appropriately enough, we conclude our week-long feature on Edward Hess’s Learn or Die: Using Science to Build a Leading-Edge Learning Organization with an excerpt from the books epilogue. In this passage, Hess describes the challenges of creating a High-Performance Learning Organization (HPLO):

Several people in the past year have asked me whether these research find­ings are scalable in a big company. My answer is: It depends. A private company built by an entrepreneur who aims to create an enduring business (like Gore and Bridgewater) has a good chance if the company executes its model well. Gore has scaled its model to over 10,000 employees globally, because maintaining the “Gore Way” has been a passionate pursuit of the successor leadership teams. Leadership succession coming from inside is critical. McKinsey & Company is another good example of a private busi­ness that has scaled and not lost its founder’s essence. Is it easier to do this in a private company? Yes, it is. The key is successful leadership succession from within. That is the challenge Bridgewater is tackling now.

Regarding public companies, UPS has scaled its high employee engagement and operational excellence model to over 400,000 employees, because Jim Casey’s philosophy is still alive in UPS. If successor leaders grew up in the culture and have lived the values for years, scaling is pos­sible. Other good examples of public companies that have achieved this are Costco, Corning, Inc., Sysco, and Southwest Airlines. Keeping the founder’s culture alive is the key, and that is difficult if an organization doesn’t build an internal leadership succession pipeline that keeps that culture alive. That is a challenge facing many good learning companies today, for example Starbucks, Amazon, and Google.

I submit that scale, efficiency, and learning are not mutually exclusive. Examples are the U.S. Army, Navy, and Marine Corps, UPS, and Toyota. Are those organizations perfect? No. In today’s world, no organization will be perfect, because it’s made up of human beings who make mistakes. One can question the examples of the U.S. Army, Navy, and Marine Corps. Aren’t they “command and control”? I contend that if you look deeply inside those organizations, you will find strong command, but you will also find high soldier engagement and learning driven by small unit structures. You will find strong, meaningful values of duty, honor, courage, and service that meet individual soldiers’ needs for autonomy, relatedness, affiliation, effectiveness, and personal growth. As important, you will find those orga­nizations actively engaged in learning and improvement initiatives based on the science of learning.

How about existing public companies that don’t have founders involved that want to create a learning organization? That’s harder. The nature of U.S. capital markets, with their nonscientific, one-dimensional focus on short-term shareholder value creation, makes building great public learn­ing companies hard. In my previous book Smart Growth I espoused the view that the dominance of short-termism in our public capital markets inhibits growth and innovation. The average public company stock hold­ing period is below twelve months. We no longer have stock ownership; we have stock renting. Likewise, short termism is evidenced by the fact that the average tenure of Fortune 500 public company CEOs is less than 5 years—4.6 years, to be exact. The probability of transforming an existing public company into a great learning organization in 4.6 years is very small, absent a major crisis situation like the one Lou Gerstner inherited at IBM in 1993. Even if a CEO can’t transform an existing company into a great learning company in 4.6 years, however, she can begin the journey to create a great learning company and see benefits during her tenure. Likewise, an existing public company can put in place critical thinking, discovery, and experimentation processes and After Action Reviews—but the effective­ness of those processes depends on the adoption and systematization of the key learning enablers discussed above.

If you’re a leader, manager, or a teammate and you want to change your organization, the best advice I can give you is to change yourself first. Then, start to work on your sphere of influence, those whom you can influ­ence, or those to whom you look for guidance or leadership. Get to know each person individually and emotionally. Understand their hopes, dreams, fears, and concerns. Then help them learn more so they can be more. Put in place a code of learning conduct for yourself and your team that treats people with respect and dignity and gives them permission to speak freely without fear of punishment. Create a respectful, mutually supportive and accountable, positive team culture.

Role model how to think and communicate better. Admit your igno­rance and your mistakes. Be authentic. Act with caring humility. Engage people so they feel like they have some control over their destinies. Be honest, have high standards, and hold everyone, including you, to those standards. Follow a Gore tenet—be the kind of person people want as a leader. Manage your thinking, your emotions, and how you communicate. Be aware and mindful. Strive to be fully engaged in every communication and focus on having a positive impact.

If we sit back together and think critically about the findings set forth in this book, I submit that they challenge the continued viability of the dominant management model and organizational model resulting from the Industrial Revolution—big command and control structures with Theory X leaders. If we want adaptable learning organizations, we need to humanize our management models, and that requires many companies to fundamentally change attitudes and behaviors toward employees. That ultimately means we would have to humanize the capital markets too. Or we need to form new capital markets to support the building of endur­ing, value creating, people-centric, learning companies. I find it interesting that many of the businesses that are engaged in the journey of creating an adaptable learning organization are privately owned or are public compa­nies with engaged founders who have significant ownership positions or voting rights.

In addition, management and the capital markets have to accept the fact that the learning process is not efficient. Collaboration takes time. Creating and sustaining high emotional engagement takes hard work and time. Organizations like Bridgewater, Intuit, IDEO, and Gore demonstrate that the time investment and the hard work at learning can create consis­tent value.

One of the points that this book makes is that the commonly espoused managerial choice between high employee accountability and high employee emotional engagement is a false dichotomy. Consistent high per­formance requires both high employee accountability and high employee emotional engagement. Likewise, a forced choice between operational excellence and innovation is a false dichotomy, too. Both operational excellence and innovation are dependent upon learning. Both require the HPLO formula with the key difference being the tolerance for failure.

I like to tell my students that business is not “rocket science.” Busi­ness principles are pretty simple—the difficulty is in the execution, because execution involves people. The same can be said about the principles of creating a high-performance learning organization. The science of learn­ing and learning processes are in many ways the easy part. The hard part is the disciplined daily execution of the principles. I asserted in chapter 1 that learning better and faster was a strategic imperative. Learning can be positively transformative, individually and organizationally, and I believe that institutionalizing and maintaining that positive transformative process can be a sustainable competitive advantage.

A learning journey is a people journey. It is both a continuous “search for the truth” and an emotional journey. One of your roles as a leader or manager or teammate is to “invite, include, and inspire” others to join you in the learning journey.

Good journeys, my friends!