The Business Book

(Joyce) #1


School concluded that poor
management practices were the
major reason for employee turnover.
The problem of high turnover in
lower-paid jobs is still an issue. In
the January 2012 edition of the
Harvard Business Review, Harvard
Business School professor Zeynep
Ton wrote about companies that
had found a way to invest in their
staff while keeping product costs
low: “Highly successful retail
chains ... not only invest heavily in
store employees but also have the
lowest prices in their industries,
solid financial performance, and
better customer service than
their competitors. They have
demonstrated that, even in the
lowest-price segment of retail, bad
jobs are not a cost-driven necessity
but a choice. And they have proven
that the key to breaking the trade-
off is a combination of investment
in the work force and operational
practices that benefit employees,
customers, and the company.”

Learning by listening
Peter Senge’s theory about
corporate learning went beyond
just minimizing labor turnover. He
intended it to be a model by which
companies could maximize their

success by actively fostering the
education of all employees in order
to innovate and adapt. In this
respect, Japan’s Honda Motor
Company is often cited in case
studies as a perfect example of a
“learning organization.”
In the 1980s, while professor
of business studies at Stanford
University, Richard Pascale analyzed
the management style of Japanese
companies, Honda in particular. He
concluded that “organizational
agility” was the reason for Honda’s
success. As evidence he cited the
entry of the Japanese company into
the US market in 1959.
Honda had been preparing to
launch its larger 250 cc and 350 cc
motorcycles in Los Angeles, but the
advance sales team soon realized
that the big Japanese bikes were
inadequate for road conditions and
the vast distances traveled in the
US. The team reluctantly sent the
models back to Japan for testing.
Meanwhile, the three Japanese
salespeople had been zipping
around Los Angeles on the 50 cc
Super Cub, a best seller at home
but considered inappropriate for
the power-hungry American biker.
Nevertheless, US interest in the
Super Cub grew and Sears


The Honda Super Cub became
enormously successful in the US,
thanks to managers who listened to
their sales staff and broke away from
the standard “macho biker” approach.

department store approached the
Honda team to ask if it could sell
the smaller bikes. The sales team
reported back to head office and
advised that instead of launching
the larger bikes, the Super Cub
should be the focus of Honda’s debut
in the US. Instead of dismissing the
underlings, the managers took
notice and agreed to go with the
advice of the sales team. The result
for Honda was phenomenal success
in the US market. In Peter Senge’s
model, Honda is an example of how
“every level of an organization
should feel included and valued.”

Questioning precedents
In essence, Senge’s “learning
organization” draws on earlier
ideas, including those of Harvard’s
Chris Argyris. In 1977 Argyris
published his theory of “double
loop learning,” showing that
companies and their employees
can assess and modify underlying
ways of thinking to improve their
capacity to learn and perform
effectively. The following year

There is no organizational
learning without individual
Chris Argyris,
Donald Schön
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