A new organizational language is emerging. It is needed to describe how to manage the shift from the world of stable mass markets and mass production, with electromechanical tools, to a customer-responsive world of continual innovation with information-communication technology. This shift is transforming industrial bureaucracies with their functional hierarchies into decentralized business units that make use of heterarchical, cross-functional teams.
I call the new paradigm "technoservice" to emphasize that employees become responsible not only for producing something, but more than that, for using technology to satisfy customers--internal as well as external.
One of the key expressions used in describing this change is "learning organization." Like empowerment, corporate culture and other topical concepts, organizational learning strikes many managers as fuzzy, perhaps even needless, jargon. Nevertheless, they will not be able to redirect information-age organizations without having a common language that goes beyond the traditional concepts of productivity, profit, span of control, and even quality.
For this reason, it is well worth the effort to define the new concepts more precisely. Once understood, they raise challenging issues, for these terms turn out to be peaks of conceptual icebergs.
Consider the learning organization. In the old paradigm, where markets and technology were relatively stable, innovation was carefully planned and implemented. Learning referred to training for front-line sales and production workers. The learning curve described the time necessary to achieve maximum productivity by those working at a particular process. Once the employee learned the drill, little further improvement in performance was expected.
Only a few elite companies kept a small staff of intellectuals who were given the task of scanning the environment for changes that might require corporate response. IBM had such a group of futurists in the 1970s, but frustrated by their lack of clout in the corporation, they moved over to the Hudson Institute. Volvo's planners headed by Bo Ekman were a rare exception. They brought ideas from Japan and the U.S. to the company and helped Volvo to react rapidly to the oil crisis of the 1970s by making a deal with Norway. More commonly, corporations resisted outside ideas as NIH (not-invented-here) and therefore suspect or not relevant to the company. Most executives implemented what they had learned at school, with fine-tuning from occasional consultants.
WHAT THE BEST FIRMS DO
Customer-focused innovation requires continual learning. While this has been espoused by R&D organizations in the past, it usually meant that members of the technical staff learned that which they considered relevant to their particular area of expertise. Furthermore, knowledge was hoarded by experts and there was little learning across functions and disciplines. Now, there are learning requirements at all levels for both individuals and teams.
The best companies are scanning at all levels. As Robert Galvin of Motorola once put it, these companies are not too proud to steal good practices from anyone. Bell Labs has even made a business of teaching process benchmarking, which is a more polite term for stealing good ideas. To meet customer expectations in terms of quality, cost and timeliness, customer surveys inform product innovation. And it is the customer who determines the variables to be measured.
In the past, good companies relied on employee surveys to measure motivation and morale, but little was done to improve the results. In the new paradigm, the best companies do not wait for yearly or bi-yearly surveys that may be old news by the time they are analyzed. They connect with intrinsic employee motivation by eliciting and quickly acting on ideas for improvement from the front-line. These ideas may refer not only to products and processes but to the quality of working life as well. …