So far in this chapter we have defined business strategy, identified key elements in a strat- egy (product market emphasis, objectives and plans, synergies, etc.), highlighted critical facets of the strategic planning process (SWOT, mission formulation, competitive analy- sis), and flagged the imperatives for sequential disruptions of market and a market ori- entation. Now we must emphasize the ability to learn and transfer knowledge as vital skills for both the development and execution of business strategies. Indeed, they repre- sent the critical prerequisites for the judicious selection and development of other strate- gic resources and skill sets.
Eddie Robinson coached the Grambling University football team to over 400 wins.
If we analyze his world-record success, we find that he acquired superior resources—
scores of his players have shown their athleticism in successful careers in the NFL. He also demanded dedication in training, assignments, and practice. Stamina, strength, and good play execution resulted. Coach Robinson also carefully studied films of upcoming Grambling opponents. With his staff, he formulated a specific game plan, a strategy to neutralize the strengths of the opponent, exploit its weaknesses, and mask Grambling’s own vulnerabilities. But the opposing coaches were doing homework too. On any given game day, weather, injuries, and “the breaks” could foil a game plan. Time and again, Coach Robinson was able to diagnose breakdowns, spot new opportunities, and antici- pate opponent reactions. He and his team constantly made adjustments on the sideline or in the short halftime break. Clearly, the ability to learn (1) in the formulation and re- hearsal of the game plan and (2) in the heat of the struggle proved itself to be a com- petitive advantage for Grambling.
What Is Learning?
You have been in college for some time now. One measure of its value so far might be to ask you to define learning. Students in our classes often give the following an- swers: “information,” “facts and concepts you can use,” “knowledge,” “skill acquisi- tion,” “discovery,” “to memorize.” Although learning touches on all of these, we like the very concrete definition from McGee: “Learning is when we connect new infor- mation to what we already know. We’re learning when we can say, ‘Hey, that’s just like _______.’ ”16The ancient Egyptians made awesome and lasting architectural struc- tures knowing only that a triangle with sides measuring 3, 4, and 5 units produced a perpendicular. Later, in the 6th century B.C. the Greek mathematician Pythagoras gave his famous theorem. (The square of the hypotenuse is the sum of the squared adja- cent sides, “just like the Egyptian’s 5–4–3 triangle.”) And sooner or later in statistics class you learn the concept of Euclidian distance, perhaps saying, “Oh, that’s like the Pythagorean theorem!”
We can now define the learning organizationas one that consistently creates and re- fines its capabilities by connecting new information and skills to known and remembered requisites for future success. Recognize implicit humility in this definition; it does not presume allsuccess factors are known. It surely includes the endeavors by the organiza- tion to learn more about what are the requisites of future success.
Exhibit 6–12 Requisites for the Learning Organization
SOURCE: Adapted from Calhoun Wick and Lu Stanton Leon, “From Ideas to Action:
Creating a Learning Organization,”Human Resource Management 34, no. 2 (1995), pp.
299–311, with permission of the copyright © owner John Wiley & Sons, Inc.
Visionary
leadership × Target &
trajectory × Information
systems × Creating &
striving × Execution
Managing Organizational Learning
Management scholars have only just begun to investigate how one creates and maintains a learning enterprise. One useful way to represent the process is the multiplicative model shown in Exhibit 6–12. A key feature of this type of model is that if any variable is zero, the product of the remaining variables is zero, in which case we do not have a learning organization.
Visionary Leadership
Ronald Reagan was twice elected president in landslide proportions. Many pundits credit Reagan’s success to his ability to communicate a clear vision for his administration: cut and simplify taxes, grow the economy, and rebuild the U.S. military. Hernan Cortes con- quered the Aztec empire—some 200,000 warriors—with 508 soldiers, 16 horses, 10 bronze cannon, four falconets, and 13 muskets. Cortes attacked when retreat seemed proper, he praised the valor of his defeated opponents, and made peace with the Aztec’s enemies. His vision—in speech and action—to take the Gospel to the New World, find fame in this fantastic adventure, and claim wealth beyond compare motivated superb ef- fort and loyalty in his men.17
POSCO, Korea’s giant steel maker, is driven by the company motto of “3 Bests,”
meaning best quality, minimal pollution, and zero accidents. Boeing’s vision directing ef- fort on the new 777 was even simpler than POSCO’s: “Working together to produce the preferred new airplane family.”18Indeed, a vision should be simple and easily commu- nicated throughout the business.
We are not out to replay our discussion of organizational mission in this section. The emphasis is on leadership. Organizational leaders determine whether the vision is con- crete or wimpy. Cortes scuttled his ships after landing to end any doubt about commit- ment. CEs former CEO, Jack Welch, had to follow through with rewards and divesti- tures when he called for all GE products to be first or second in their markets.
High-profile CEOs are the subject of many articles and lore. But visionary leadership for the learning organization must extend throughout the organization: the executive committee, the senior partners, the regional heads, and department and branch man- agers. Especially in the nebulous assignment “to improve capabilities to attain success”
every supervisor is a role model in character—prudent, just, constant, and sober—as well as a potential champion of innovation, skill development, risk taking, and success sharing. From the Field 6–2 profiles the moral culture at Cintas.
Target and Trajectory
It takes resources and plans to create a learning enterprise. When a firm’s leadership has determined to build a learning culture, a program and administrative structure must be designed. A timetable should be developed to specify when each enabling phase or crit- ical event ought to take place. It took Xerox six years to move from its first “Leadership through Quality” initiatives to winning the Malcolm Baldrige National Quality Award.
Even a firm with a rich tradition of managing intellectual and moral capital must attend to the maintenance of these strategic assets. What programs, tracking measures, and new hiring criteria should be applied or reviewed?
Information and Value Systems
We have already discussed situation analysis, SWOT, competitive analysis, customer sat- isfaction studies, and more. The learning organization developssystemsto gauge internal matters: efficiency, employee morale, and cross-functional knowledge. Value systems en-
6–2
FROM THE FIELD
Goodness in Good Strategy
In 1985 General Dynamics, the second-largest U.S. defense contractor, was charged with im- proper expense billings to the government.
Shortly thereafter, Secretary of the Navy, John Lehman, ordered the company “to establish and enforce a rigorous code of ethics for all General Dynamics officers and employees, with manda- tory sanctions for violations.”19To carry out the order General Dynamics created a company ethics office, the first of its kind in business.
More recently, at many companies compli- ance with laws and rules is not enough.
They’ve sought a higher moral standard. The aim is an organizational culture built on core values and steadfast adherence to legal and ethical principles in everyday action. As much as a SWOT and competitive analysis, the moral principles of the firm are embodied in the strategic planning process. “This approach starts at the highest level of an organization, with the leaders in top management who buy into the core values, have aligned their per- sonal values with company values, and serve as guardians of the process. When leaders are committed, and their behavior is consistent, employees become committed.”20
Cintas, the leader in corporate identity uni- forms, serving Delta Airlines, Wal-Mart, Hertz, and Avis, and with floor mats, first aid, and
other services to the business market, recorded sales of nearly $2 billion in 2000. Touted by Forbesas one of America’s best-managed com- panies, Cintas is the 1998 award winner for Strategy Excellence from Bain & Company, one of the world’s leading consulting firms.
Cintas Chairman, Richard Farmer, points to the company culture as the foundation for its planning excellence and its sustained superior performance. Cintas has a clear vision. Yes, it includes market-based goals: “To be well known as the obvious leader in the business,”
and “To have a uniform rental presence in every city in the United States and Canada.”
Yes, it seeks synergies: “To leverage our infra- structure to become a more valuable resource for our customers by providing additional products and services.”
But the Cintas culture is knit by the visions of virtue also: “To be recognized as a company which insists upon absolute honesty and in- tegrity in everything we do,” and “To have a highly talented, diverse and motivated team of partners who are compatible with our culture and enjoy what they do.”21
Everyone at Cintas is a partner. To see the Cintas Way that this vision is expected to be lived each day, visit: http://www.cintas- corp.com/hr/greatplace.asp.
couraging honesty and information sharing and quashing the need to cover up errors with the need to fix problems are part of the equation.
Other systems must focus on the external environment. Competitive intelligence can be gained by talking to distributors, monitoring advertising and trade shows, reading cor- porate annual reports, tracking dialogue on the Internet, and more. Recognize good ideas from customers, competitors, foreign markets, and elsewhere. David Luther, senior, vice president of quality at Corning Inc., says, “It’s absolutely crazy to reinvent something that somebody else has done.”
Creating and Striving
Vision, plans, and information are certain to be bland and feeble if not energized by cre- ative effort. To create means to bring something into existence, to make something orig- inal. What does it take to be creative? Well, researchers in a variety of fields have told us that creative people tend to be or have:22
Curious Persistent Imaginative Visual thinker
Sense of humor Motivated and energetic Energetic Unique Independent Eclectic taste Hard-working Confident
Observant Avid reader Ambitious Able to see the big
picture
Thomas Edison claimed that creativity was 1 percent inspiration and 99 percent perspiration. That essence is reflected in the preceding traits and in our experience with effective managers. Creative professionals work hard. Their efforts are efficient in the sense that they don’t try to force fit a tired solution to a new challenge and they often recognize the payoffs that can come from finding new ways to frame prob- lems. They recognize that a crisis in sales force performance may be a training prob- lem, a motivation problem, or even a selection problem. By examining the data from different perspectives, the creative manager tends to see the limits of existing routines and the need for new solutions at any level of operations or position in the value- added chain.
Execution
Nike’s slogan “Just Do It” captures the flavor of postindustrial culture. Like Grainger, learning organization has the same urgency to act, but it tackles a bigger agenda. Un- like the couch potato charged by Nike to get out there and play tennis with or with- out grace, Grainger needed to enter the new digital marketspace, and executein a su- perior fashion. Thus, the learning organization must “Do the Right Thing” and “Do It Right.”Ariba is a world leader in e-marketplace development for business. Its slogan,
“making the net work for B2B,” is lived in its competitive superiority in using its tech- nology to host the critical mass of buyers and sellers; it serves both players. Buyers re- alize benefits from price exploration and procurement efficiencies. Sellers stand to ac- quire new customers and strengthen existing relationships with market-based performance measures.23
Learning organizations know the competitive advantage to be gained from execution.
Lear Seating can deliver a car seat system ready for installation within two hours of the time it was ordered. Kuper Maintenance emphasizes fix-it-right the first time, knowing the nuisance and frustration that come from lingering problems at its customer’s physi- cal plants.
Quality execution takes practice. So learning organizations make or find practice fields.
They simulate market situations in training sessions. They use customer quotations and other feedback to tune systems. They hone routines in low-risk environments, perhaps in isolated test environments or in cooperation with a key supplier or customer with a shared stake in the excellence of operations. For example, Microsoft may pilot test a new operating system or software application at organizations that are apt to find and stretch the limits of functionality. Not only are kinks ironed out, but “new wrinkles” may be added to enhance system performance.
6–2
BUSINESS 2 BUSINESS
Listen Up!
Learning organizations listen to their customers. An airline customer told the aeronautical engineer at Boeing that he wanted a jet with a fuselage that could change size. Regarding the request as a technical impossibility, the Boeing engineer delved a little farther: “Why do you want such a plane?”
The customer explained, “We don’t know 10 years from now what size plane we will need. If we had the flexibility to shrink or expand the size of the plane, it would help us meet future travel demands, even those we
cannot anticipate.”
Largely as a result of this exchange. Boeing reframed its notion of a plane’s interior. It created a plane with quick-change seats and movable galleys—the flexible interior. The 777 can be outfitted for packing in vacation travelers or accommodating the need for room among business passengers traveling
overnight.24
What business are you familiar with that really listens to its customers? Why do you say that? Who does the listening? How does listener input get translated into action?
Summary This chapter has pointed to the significant probability that you will give forecasting input to your company’s strategic planning process. Although many planning models can be summarized in crisp flowcharts and path diagrams, appreciate the iterative and multiple- tasking character of planning in action.
You may also be asked to provide a SWOT analysis. Consider the various internal and external forces within your bailiwick and try to convey them to top management. Con- ceptual maps, value-added chains, and customer profiles will be helpful in this regard.
These are just a small sample of singular situation analysis tools. Recognize that most students will plug into the planning process of their employer. For formulating a strat- egy for your own company or organization, we strongly recommend you use a variety of approaches. Of course, do not forget to spend time talking with and listening to mem- bers of your stakeholder groups—customers, suppliers, employees, owners—firsthand.
We spent several pages on the analysis of competition. The heat of competitive pres- sures comes not only from intense rivalry among firms in the same industry chasing the same group of customers, but also from negotiations with powerful customers and sup- pliers. We must also regard the full range of existing and potential alternatives to our products as competitors. For example, potential customers of our information technol- ogy consultancy can consider other consulting firms, outsource their operations, or de- velop an internal strategic support staff.