How to Become a Learning Organization to Boost Innovation and Profitability
Continuous learning is the key to achieving business goals, developing a competitive edge and reaching business success. Most innovative organizations are learning organizations, always focused on accelerating the path to truth.
In order to create a learning organization, you need stage-relevant teams that are looking for the truth, while communicating with customers. In order to find the truth, they need to have a learning mindset and a framework, which they apply to iterate your product offering based on the insights found.
What is a learning organization and why it matters
It was over 2000 years ago when the philosopher Socrates stated an eternal wisdom that companies should always keep in mind when determining growth strategy: “The more you know, the more you don’t know.”
While tech and Ancient Greek philosophy may seem like an unlikely pair, the truth of the quote remains incredibly relevant and valuable to companies looking to both humbly stave off obsolescence and attain higher highs. No matter how much knowledge you may have gained to this present moment, there will always be an infinite amount more to learn. Having the right mechanisms in place to continuously gain more knowledge of the wants and needs of your users and to improve the performance of your employees is vital.
A learning organization is one that can move fast and adapt to the constant changes in the marketplace in order to maintain or increase their competitive advantage.
Harvard Business Review describes a learning organization as “an organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights.”1
Peter Senge, the “inventor” of the learning organization, argued that “the only sustainable source of competitive edge is an organization’s ability to learn faster and better than its competitors.”2 However, in order to understand what learning really is, let’s first start with what Senge doesn’t mean with learning. For him, learning is not about simple consumption of information, reading books and attending lectures. Learning is about a shift of mind. Learning is:
- Changing yourself: to learn is to change your mind, recreate yourself.
- Acquiring new skills: to be able to do something you were not able to do before.
- Seeing differently: to perceive the world in a different way.
- Becoming more creative: most importantly, to extend your capacity to create.
“This, then, is the basic meaning of a learning organization — an organization that is continually expanding its capacity to create its future.” Peter Senge
When it comes to learning, there are two important things to remember:
- Learning is aimed at becoming more creative. Knowledge becomes power only when you put it into action.
- Learning never stops. The more you learn, the more aware you become of your ignorance.
Truth + Learning = Profitability
The purpose of our approach is to find the truth about where a product or service fits in the market, if it does at all, and what to do about it.
As the first step, you have to reverse-engineer the needs of the users to understand the truth in the market. Then, you have to learn from that truth to iterate on the product or service.
The goal is to create a functional learning organization to accelerate the path to that truth. And with those learnings, determine if and how profitability is possible at scale. With this approach, it will be possible to drive profitability not only for a single product or service, but for the whole portfolio of products and services, once your company becomes a learning organization.
Creating a Growth Mindset
Implementing a growth mindset starts with organizing your teams to optimize for learning. In order to do that, a learning framework has to be set up. Then, once there is a new idea, you run it through the framework. It works in the following way:
- Assign a Chief Learning Officer - a leader responsible for coordinating and organizing the team to optimize learning about your users and customers, and how that forms the solution that you bring to the market.
- Organize the team in such a way that the Chief Learning officer is at the front, in direct contact with the insights gained from the customers.
- Create a learning or feedback loop
Apply the learning loop to the building of the product(s)
- Turn learning from customers into key insights that translate into hypotheses that are then tested and iterated; view feedback as a gift.
- Once you have a hypothesis on how to iterate your product or what kind of product to bring to market or anything else, you need to test it with customers who have a learning mindset - you need to match learners with learners, which you can find by looking for innovators and early adopters. You don’t sell products to customers, you recruit partners who share your vision, understand your reality and are willing to give you the time and truth you need to learn.
- Your Product Owner / Manager needs to have direct access to the learnings from the customers and they need to turn to key insights that translate into hypotheses that are then iterated.
The business objective is to achieve profitability at scale, and everyone on the team needs to know the most important thing: finding the truth and being able to learn from it will lead to profitability.
Techniques to accelerate learning
The first principle of accelerated learning is that, in order to learn faster, direct experiences have to be created. These are real life experiences and interactions with the customers. Once they are created, the team also needs to know how to be open to the learning, while accelerating it, so they can build what people want and need. Making sure that the direct experiences are created and that the team is up to date are objectives of your Chief Learning Officer.
If you have a team with a fixed mindset that operates off a set of assumptions, you will not be able to transform and achieve change effectively. The way a learning organization approaches the market is different from a knowing organization. Truth can be painful and it’s possible that your team members are going to avoid or ignore it. The question is: “Are you asking questions to get the answers you want or to get to the truth?” The answer should be the latter.
There are also a number of specific techniques to accelerate learning.
The Faynman Technique states that information is learned when you are able to explain it yourself and use it in a number of different situations.4 The principle is that if you can’t explain it simply enough, you don’t understand it enough. This also helps you identify gaps in your understanding of a given concept.
The five disciplines to create a learning organization
Peter Senge did a wonderful job5 identifying the five disciplines, five areas, which you must learn in order to create an organization which learns faster and better than your competition:
- Although the goal is to create a learning organization, the process always starts and ends with the personal learning abilities of your teams. If the people inside your organization are unable to learn, the whole organization cannot learn. Personal mastery is the discipline of continually clarifying and deepening your personal vision, of focusing your energy, of developing patience and of seeing reality objectively.
- It may seem counterintuitive, but a group of people can actually be less creative than an individual. The key to team learning is open communication without any assumptions and other elements that can undermine learning. When the group is creative, they can produce outstanding results, with team members growing faster together than they would on their own.
- Mental models affect how we see the world, our creative abilities and the ability to communicate openly with others. These models can both prevent you from seeing the solution or help you find it. The key is to learn to see other people’s mental models, and your own, while analyzing and changing them when necessary.
- A shared vision is one of the most powerful forces that can bring people together. However, it's often the case that this vision across team members and different teams is not aligned. The key is to connect the vision to ideas, frustrations and mental models of others in the organization, so that teams can harness their collective power rather than be stunted by individual divergence.
- Systems thinking brings all the previous disciplines together, as it means that all things are connected. If you do something in a system, you observe what happens, adjust your theory and repeat. Systems thinking is taking a look at the bigger picture, while getting rid of destructive behaviour, to see how the system behaves as a whole.
The five technologies to create a learning organization
There are also five technologies that can power the five disciplines described above. Utilizing these technologies can ensure that your company aligns itself as a learning organization.
- The greatest driver of positive change will come from focusing on the user. Digitalization has allowed many new players to enter the market, and user experience is king, in order to keep and grow your market share. Companies that do not follow this human-centered philosophy need to adjust or be left behind. The focus on the human experience, which includes end-to-end company-customer touchpoints, also helps to establish a company-wide shared vision that cements your company as a learning organization. We have an insightful article about how to utilize first-party data to be able to serve the needs and wants of your consumers better. (link the article here)
- Companies have started to realize that just designing a new shiny interface is not an option anymore. For a service to work, high quality design has to be applied to everything across the board: the interface, the processes, the technology and the strategy. Better results can be achieved when designers are co-creating alongside business people and technologists from the beginning.
- Recently, more and more companies are discovering that using the mindsets and skill sets of designers in projects greatly increased the problem solving capacity, while improving team communication and learning. Meanwhile, constant visuals also help to develop the common vision.
- The goal of being agile is to learn in shorter time frames, in projects. Agile Learning has introduced a new mental model of project management and collaboration that focuses on this more effective method of gaining and retaining knowledge. In some sense, the rise of Agile is the rise of a learning organization.
- The Lean Startup method is aimed at learning as quickly as possible by identifying the right questions, testing assumptions and learning by building. The goal of both the Lean Startup method and a learning organization is to build products and solutions of value in a capitally efficient process that leads to product-market fit and scalability.
How to change the learning culture of your company
The way to transform your company's learning culture and optimize profitability is by accomplishing small wins that increase your KPIs steadily over time. By achieving the KPIs step-by-step, you will also be able to showcase to stakeholders that learning indeed leads to increased truth, which then leads to higher profitability.
When you start your transformation to a learning organization, you need to operate outside of the internal echo chamber. Instead of focusing on your product and your business, you have to be focused on the customer and the market. You also cannot be blocked by the traditional way of thinking and conducting operations.
It is essential to have a safe space where new thinking and positive collaboration can occur. This safe space will then offer a place to experiment, learn from mistakes, and iterate quickly. Embracing the pursuit of knowledge while challenging and potentially expelling your entrenched methodologies is the cornerstone to a business that will thrive in any era
How U+ can help
The U+ Method can efficiently and effectively lead the development, implementation, and improvement of innovations in any sector. To date, we have used this method to bring 80+ products to market, creating over $1 billion in value for Fortune 1000 companies. Check out our success stories here.
We believe in teaching by doing. This means giving your team an immersive, hands on experience as part of the learning process. We reverse-engineer the needs of the users to understand the truth on the market. We learn from that truth to iterate the product. We do this together from the beginning until the end so that your organization can transform from within. Step-by-step we transform your culture through learning. Digitally.
Get 20 minutes with Jan to learn more about how U+ can help transform your company into a learning organization and achieve your digital innovation goals.
Harvard Business Review, Building a Learning Organization
Dennis Hambeukers, The Age Of The Learning Organization Is About To Begin
Peter Smith, The learning organization ten years on: a case study
Farnam Street Media, The Feynman Learning Technique
Dennis Hambeukers, The Age Of The Learning Organization Is About To Begin