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MGT504 - Organization Theory and Design - Lecture Handout 25

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One of the primary characteristics of learning organization is a strong organizational culture. In addition, the culture of a learning organization encourages change and adaptation. A danger for much successful organization is that the culture becomes set and the company fails to adapt as the environment changes. When organizations are successful, the values, ideas, and practices that helped attain success become institutionalized, as the environment changes; these values may become detrimental to future performance. Many organizations become victims of their own success, clinging to outmoded and even destructive values and behaviors. Durk Jager, the new CEO of Procter & Gamble, is struggling to change a rigid culture that insists on “the P&G way of doing things,” P&G typically is a great American company, but it has stopped growing. Whereas many competitors take only months to move new products from idea to the market, P&G typically takes five years. Jager wants to create a culture that encourages speed, innovation and initiative. In one training video, he admonishes employees to trash their Current Best Approaches Manuals – long a mainstay at P&G – and think for themselves.

Thus the impact of a strong organizational culture may not always be positive. Some organizations have cultures that encourage a healthy adaptation to the external environment while other has cultures that encourage rigidity and stability. Learning organization has strong, adaptive cultures that incorporate the following values.

  1. The whole is more important than the part and boundaries between parts are minimized. In learning organization, people are aware of the whole system, how everything fits together, and the relationships among various organizational parts. Everyone considers how their actions affect other parts and the total organization. This emphasis on the whole reduces boundaries both within the organization and with other companies. Although subcultures may form, everyone’s primary attitudes and behaviors reflect the organization’s dominant culture. The free flow of people, ideas, and information allows coordinated action and continuous learning. At the Mayo Clinic, founded more than a century ago in Rochester, Minnesota, team work permeates the clinic’s organizational culture. Doctors are expected to consult with doctors in other departments, with the patient, and with any aspect of a patient’s problem. Collaboration and sharing of ideas and information is incorporated into everything Mayo does, from diagnosis and surgery to policy making, strategy planning, and leadership.
  2. Equality is a primary value. The culture of a learning organization creates a sense of community and caring for one another. The organization is a place for creating a web of relationships that allow people to take risks and develop to their full potential. Activities such as assigned parking spaces and executive dining rooms that create status differences are discarded. At fastenal Co. in Winona, Minnesota, CEO Bob Kierlin has no reserved parking space and often sorts the mail himself. Kierlin treats all his employees the same, whether you’re a janitor or a vicepresident. The sense of equality and fairness is a core element of Fastenal’s culture. The emphasis on treating every one with care and respect creates a climate of safety and trust that allows experimentations, frequent mistakes and learning.
  3. The culture encourages risk taking, changing, and improvement. A basic value of learning organization is to question the status quo. Constant questioning of assumptions opens the gates to creativity and improvement. The culture rewards and celebrates the creators of new ideas, product, and work processes. To symbolize the importance of taking risks, a learning organization culture may also reward those who fail in order to learn and grow.

The culture of learning organization encourages openness, boundary less ness, equality, continuous improvement, and risk – taking. Even though the internal culture is strong, the cultural values encourage a healthy adaptation to a changing external environment. Adaptive corporate cultures have different values and behavior pattern than unadaptive cultures. In adaptive cultures, managers are concerned with customers and employees as well as the internal processes and procedures that bring about useful change. Behavior is flexible and managers initiate change when needed, even if it involves risk. In unadaptive cultures, managers are more concerned about themselves or their own special projects, and their values discourage risk – taking and change. Thus, strong healthy culture, such as those in learning companies, help organizations adapt to the external environment, whereas strong unhealthy cultures can encourage an organization to march resolutely in the wrong direction. As discussed in Book Mark 9.0. A strong adaptive culture is a key determining factor in the success of companies such as Wal – Mart, Johnson & Johnson, and Hewlett-Packard. Netscape Communications, recently acquired by America online, reflects the values of a strong, adaptive organizational culture.

Adaptive Versus Non-Adaptive Corporate Cultures

  Adaptive Corporate Culture Unadaptive Corporate Culture
Core Values Managers care deeply about customers,
stockholders, and employees. they also
strongly value people and processes that can
create useful change(for example, leadership
initiatives up and down the management
Managers care mainly about themselves,
their immediate work group, or some
product (or technology) associated with
that work group. They value the orderly
and risk – reducing management process
much more highly than leadership
Common Behavior Managers pay close attention To all their
constituencies. Especially customers, and
Initiate change when needed To serve their
legitimate Interest, even if it entails Taking
some risks
Managers tend to be somewhat Isolated,
political, and bureaucratic, as a result, they
do change their strategies quickly to adjust
to or take advantage of changes in their
business environments

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