The Business Book

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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 LEARNING ORGANIZATION

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

learning.

Chris Argyris,

Donald Schön