Learning How To Learn
Value Based Management in Learning Organizations

By

Prof. Harshada Kshire
Lecturer
Vivekanand Institute of Management Studies & Research
Mumbai
E-mail: harshadaxyz1@rediffmail.com
 

In times of drastic change, it is the learners who inherit the future. The learned usually find themselves equipped to live in a world that no longer exists. (Author unknown)

THE BIGINING

'Learning organizations' enable companies to remove hierarchical levels and to

introduce a flatter organizational structure, which can lead to reduced costs and increased productivity. This enables a kind of management in which the managerial form is not as direct as it is in more traditional structured companies. Value-based management is advanced as a possible answer to the question of which managerial form that is appropriate for these kind of companies.

In the article, value-based management is described as well as the underlying factors that are affected by such a managerial form. Required managerial elements in relation to value-based management are advanced. Examples from Wipro are used to illustrate both the use of value-based management in practice and the underlying factors.

WHAT IS LEARNING ORGANIZATION?

David Garvin in the August 1993 Harvard Business Review defines a leaning organization as "an organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights." The important component of this definition is the requirement that change occur in the way work gets done. Peter Senge in his book, The Fifth Discipline, described a learning organization 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."

This definition is very idyllic and abstract. Its focus is on philosophical grand scheme. It is very desirable but what we must do to get there is unanswered. Ross, Smith, Roberts and Kleiner advocate this definition. "Learning in an organization means the continuous testing of experience, and the transformation of that experience into knowledge- accessible to the whole organization, and relevant to its core purpose."

These authors suggest a checklist from this definition

1. What kinds of structures have you designed for this testing?
2. When people raise potentially negative information, do you shoot the messenger?
3. Does your organization show capabilities it didn't have before?
4. Do you feel as if what you know is qualitatively different - "value-added" from the data you took in?
5. Is the knowledge accessible to all of the organization's members?

ACTIVITIES OF A LEARNING ORGANIZATION

1. Systematic problem solving: thinking with systems theory; insisting on data rather than assumptions; using statistical tools
2. Experimentation with new approaches: ensure steady flow of new ideas; incentives for risk taking; demonstration projects
3. Learning from their own experiences and past history: recognition of the value of productive failure instead of unproductive success
4. Learning from the experiences and best practices of others: enthusiastic borrowing
5. Transferring knowledge quickly and efficiently throughout the organization: reports, tours, personnel rotation programs, training programs
(David Garvin, "Building a Learning Organization", Harvard Business Review, Aug. 1993, pp. 78-90.)

REASONS TO BUILD A LEARNING ORGANIZATION

1. Because we want superior performance
2. To improve quality
3. For customers
4. For competitive advantage
5. For an energized, committed workforce
6. To manage change
7. For the truth
8. Because the times demand it
9. Because we recognize our interdependence
10.  Because we want it
(The Fifth Discipline Fieldbook, p 9-12)

ATTRIBUTES OF A LEARNING ORGANIZATION

1. "The first is learning how to disperse power on an orderly, non chaotic basis. Right now the word "empowerment" is a very powerful buzzword. It's also very dangerous. Just granting power, with out some method of discipline and order that comes out of a command-and-control bureaucracy, produces chaos. Organizations have to learn to disperse power so self-discipline can largely replace imposed discipline. That immerses organizations in the area of culture; replacing the bureaucracy with aspirations, values, and visions.

2. The second attribute of winning companies will be systemic understanding.

3. The third attribute that twenty-first companies will need is conversation. This is the single greatest tool in your organization- more important than computers or sophisticated research.

4. Finally, under our old system of governance, one could lead by mandate. If you had the ability to climb the ladder, gain power, and then control that power, you could enforce these changes in attributes. But the forthcoming kind of company is going to require voluntary followership. Most of our leaders don't think in terms of getting voluntary followers; they think in terms of control."
(William O'Brien, The Fifth Discipline Fieldbook, pp. 13-14.)

Thus, there will be focused on the cognitive processes that enable organizational learning. On how information and the impressions from the surroundings become manifest in the organization, and how meaning is deducted from otherwise paradoxical experiences and information. The processes of learning that flows in the organization need continuously to contribute to the organization's development with learning of second order. Second order learning is the learning that arises, when an incident makes one re-examine and question one's basic values and objectives.

Second order learning is thus a necessity for continuous development. If only first order learning takes place without reflective loops back to examine basic understandings, then companies will continue to develop in a certain direction until they meet a radical crisis, which may cause the company to change direction dramatically or to die. The theory about learning organizations is a theory of continuous development without radical crisis. In order to ensure a company future survival, daily learning processes of first order must take place, as well as the critical reflection, that is given by a learning process of second order, must occur from time to time. For example, a centralized mechanistic organizational structure will be liable to build on previous behavior, while a more decentralized flexible organizational structure will claim new knowledge to a larger degree.

A company, that has ambitions to become a 'learning organization', need what has been labeled as 'high caliber' employees. Characteristic for such employees is that they 1) are highly educated, 2) have the ability to acquire new knowledge fast and continuously adapt to new conditions, 3) possess the ability to work without supervision and control, being able to lay down own goals, observe the outcome of these goals, and correct errors that may occur, 4) have good interpersonal skills, and 4) possess the ability to solve problems by creative evaluation of different possibilities, and by contributing with own ideas to reach solutions to the emerging problems.

This will enable companies to remove hierarchical levels and to introduce a flatter organizational structure, which can lead to reduced costs and increased productivity. Therefore a challenge for the management is to create room for an organizational form in which learning and innovation are encouraged.

Just as impossible it is to force people to be spontaneous, just as impossible is it to enforce people to be creative, to act more independent or to take on more responsibility. Thus the management has not any direct possibility to force employees to act spontaneously, take initiatives, and to learn from their experiences.

The management needs to create room in the organization that urges the employees to develop the characteristics that is considered necessary for 'learning organizations' or for making organizational learning possible. It is crucial that the management cannot force renewal, but management can try to create an environment for radical renewal by influencing the processes in the organization that is a requisite for second order learning Continuous learning cannot as such be 'implemented'.

Value-based management

The emphasis on learning organizations also requires another managerial form than the traditional authoritative form with focus on supervision and regulation. The management needs to focus on communication of values and visions. This managerial focus is called value-based management.

Value-based management can fundamentally be seen as an indirect managerial style. It is concerned with making the employees carry out the correct work assignments on their own initiative without ordering them directly to do so. In knowledge based companies the circumstance also exists that the management does not know what the employees specifically are supposed to do, and the management is not expected to know. The management's role is to define, create, and communicate the conditions in which knowledge workers can work. Conditions about what is acceptable behavior, and which actions are appropriate in relation to the management's vision and company values.

By this information from the management the employees deduct their understanding of conditions and direction in the company. Value-based management is thus a managerial form that is concerned with making a group of people work together towards a mutual goal without explicit managerial pressure and use of power.

ABOUT WIPRO'S BUSINESS MODEL

The man behind Wipro's success was Azim Premji. One of the richest men in the world, Premji continued to amaze people by his simple & direct approach. In a country where lobbying and behind-the-scenes deal making was common, Premji had established a reputation for his ethical uprightness. If there was one thing distinctive about Wipro's business model, it was the emphasis on values. These values had served as an anchor, even as Wipro entered new businesses and reinvented itself from time to time. From a domestic vegetable oils manufacturer, Wipro had transformed itself into a technology company that competed globally with leading software services companies. The core values had also shaped an organizational culture that allowed entrepreneurial talent to blossom.

As Premji once remarked, "When I look at where we have came, what gives me tremendous satisfaction is not so much the success, but the fact that we achieved this success without compromising on the values we defined for ourselves. Values combined with a powerful vision can turbo-charge a company to scale new heights and make it succeed beyond one's wildest expectations."

In the past three years, Wipro had launched various initiatives to strengthen its software business and move up the value chain. One such initiative was building the enterprise applications business. Wipro realised that global giants who had installed expensive packages like Oracle and SAP wanted to get more out of their investments. American consultancy firms typically charged $125-130 per hour for this while Indian companies did it for $75-80 per hour. Several customers had started offering these jobs to Indian firms. Wipro had created a separate business unit for enterprise application services in 1999 and scaled it up to a 1700 man outfit by early 2004.

(Source: IIMB Management Review, March 2003.)

VALUE SYSTEM AT WIPRO

Human Values.

We respect the unique needs of customers and employees. We are sensitive to their differing needs in our interactions with them.

Integrity

We deliver what we commit. With honesty, fairness, reliability and uprightness in whatever we do.

Innovative Solutions

We consistently offer novel and superior solutions to satisfy the needs of the Customer.

Value for Money

Delivering higher Value to the Customer through continuous improvement in quality, cost and speed.

Human Values

This value is very important to us because:

a) For employees:

* Brings out the best in employees as it has been proven by research that 'Customer satisfaction is contingent on employee satisfaction'.
* Helps in attracting and retaining the best talent. Talent finds comfort in an environment of universal values; and attrition gets reduced.
* Employees prefer a company where they feel they are being respected for who they are.
* Ensures that all individuals are treated in a just and equitable manner.
* Opportunities of advancements are governed by individual merits.
* Helps in building warmth and restricts chances of negative interactions.
* Communicates that we care.

b) For customers:

* Competition has provided Customers with numerous options. They will choose products and services that satisfy their needs. The identification of unique needs and providing solutions for satisfying them will attract Customers.
* Helps Customers to build trust in the company.
* Helps in delivering 'Customer delight'.
* Helps to keep in touch with Customers and satisfy their changing needs on an ongoing basis.
* Gives a competitive edge.
* Helps in building warmth and lessens chances of negative interactions. . Ensures that all Customers whether big or small are given due attention and consideration.
* Customers like to deal with vendors who treat them with respect and show care and understanding about their specific requirements.
* Positive behaviours which indicate presence of "Human Values":
* Being accessible to team members.
* Listening to other people's point of view even if you do not agree with it.
* Not interrupting others until they have completed what they want to say.
* Allowing free expression of views during meetings.
* Encouraging people to put across their point.
* Providing an environment conducive to feedback, creativity, personal and professional growth.
* Respecting the other person's views and appreciating the underlying cultural, ethnic and emotional backgrounds.
* Responding to queries in a timely and accurate manner.
* Recognising good work and building ownership in the other person.
* Empathising with the person or the situation before arriving at a conclusion.
* Truly emphasising 'we' in whatever is done.
* Keeping an open mind. An open mind leads to innovations and inventions.
* Seeking underlying reasons for needs stated and probing them adequately before reacting.
* Being part of the team during a crisis.
* Extending support during personal emergencies.
* Taking interest in new members settling down.
* Exhibiting warmth.
* Communication of confirmation, on time.
* Proactive and timely celebration of birthdays and long-service awards.
* Protecting individual dignity in any situation.
* Being fair - no politics, no rationalisation.
* Constructive criticism - never sarcastic or cynical.
* Avoiding public criticism of, or confrontation with, subordinates.
* Empowering people with necessary skills (through training), authority, freedom and encouraging them to take initiative, give their best and be accountable.

Integrity

It is important because

* It is valued by all- whether a Customer or a fellow employee.
* It is enduring.
* It creates trust and dependability.
* It brings home sincerity.
* It brings in a sense of fair play.

Positive behaviours that indicate "Integrity":

* Honouring written, oral or even implicit commitments and fulfilling them.
* Ensuring all our actions can stand not only public scrutiny, but also self-scrutiny.
* Being consistent, transparent and proactive in all internal/external communication.
* Resolving internal conflicts to keep up commitments to Customers and employees.
* Being frank about the shortcomings or defects in products, people or processes.
* Deriving satisfaction by contributing to what is expected of oneself.
* Being ethical beyond doubt. Anything gray is black.
* Telling the truth; whether good or bad.
* Being truthful to yourself, which in part contributes to your honour.

Innovative Solutions

It is important because

* It is the only differentiator and competitive advantage
* It challenges and energises the thinking energy of the people and brings out the best in everybody.
* It helps to stimulate thinking and ensures "Applying Thought".
* It helps to focus on solutions, speedy executions and building a superior organisation.
* Only an evolving, happening organisation will be able to stand out and last. )

Positive Behaviours: that exhibit "Innovative Solutions":

* Build an environment that encourages creativity and ideas. Remain open to ideas and develop receptivity. Keeping in mind that there are always multiple approaches to any issue.
* Research the needs of the Customer. Look for new opportunities by focusing on Customer needs constantly.
* Encourage people to think, create value for the Customer and not just be critical of solutions given by others.
* Encourage everyone to express themselves and give due notice to anything that is done right.
* Recognize and reward new ideas.
* Focus on solutions.
* Focus on executions.
* Satisfy needs of the Customer using 'out of box' thinking.
* Make products more convenient to use.
* Offer distinct benefits to Customer.
* Question the 'status quo'. Question everything that you think is not right.
* Encourage 'trying and failing' rather than not trying at all. Innovation does not always mean 'Eureka'.
* Constantly think of alternatives and different ways of doing things.

Value For Money

This is important to us because

* Customers want higher Quality and Value at a lower price. This is an absolute global reality
* A value packed product or a service makes sure that the Customers feel that they have received Value for Money.
* It helps in creating Customer delight and makes them 'brand ambassadors'.
* It enables us to concentrate more on substance rather than style.
* This cultivates an air of 'quiet confidence' in our people and in their interactions, rather than one of brashness or showmanship.

Positive Behaviours that facilitate delivering "Value for Money":

* Predicting and understanding Customers' current and future needs and delivering on or before time.
* Winning Customers through quality and service rather than through heavy discounting.
* Regularly collecting feedback on the quality of our service. Using Customer complaints to generate ideas for improvement.
* Understanding the reason for losing a Customer and working to fill the gaps.
* Looking at savings for the Customer although it might not increase our profits.
* Seeing how we can improve Customer's profitability and competitive advantage.
* Simplicity also means Innovation. Simplifying without losing effectiveness reduces
* unproductive time, thus increasing Value for Money.
* Constantly evaluating and eliminating the non-strategic cost that does not impact employee or Customer satisfaction.
* Speed, productivity, efficiency, effectiveness, cost reduction to dictate all our activities and transactions.
* Reducing cycle time and cost of all processes continuously.
* Recognising and rewarding people who contribute to enhancing quality.
* Recycling and reusing all resources.
* Ruthlessly cutting down all unnecessary expenses.
* Treating company's resources as one's own.
* Building operating effectiveness.
* Planning travel and communication in the most cost effective manner.
* Evaluating alternatives for saving cost whenever and wherever possible, without compromising on requirement.
 

Prof. Harshada Kshire
Lecturer
Vivekanand Institute of Management Studies & Research
Mumbai
E-mail: harshadaxyz1@rediffmail.com
 

Source: E-mail October 1, 2005

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