learning management

European companies have been playing catch-up with American rivals on many fronts - most notably, of course, in the micro-electronic wars. Here only mobile phone firms are market-leading, effective challengers to US domination. The Eurogiants have, true, been doing their best in the mega-merger arena: but few have the financial muscle that the Americans are bringing to bear in super-deal after super-deal. There is a more insidious and serious threat from the West, though - the usurpation of intellectual leadership.

The supremacy of Silicon Valley is not founded on wealth: nor, until recently, did it depend on margers. Unsurpassed organic growth was predominantly created by applied brainpower. Some of this mental muscle was of the specialised variety that produced the breakthroughs in microprocessors, software, Internet hardware, etc. But the Valley's winners have also excelled in the arts and crafts of 'knowledge management' and managing the 'learning company' - the phrase most often associated with MIT's Peter M. Senge, author of The Fifth Discipline.

FIVE DISCIPLINES
Senge has identified five 'learning disciplines' as the basis of 'learning organisation work'. They have been crucial to the headlong rise of the micro-electronic millionaires (and billionaires). The quintet are:

• Personal Mastery. People are expected to develop their personal capacity (their 'skills-set') to meet their own objectives, and thus those of the company, which in turn is organised to encourage that personal effort.
• Mental Models. Companies actively seek to establish the right 'mind-set' to guide actions and decisions - for example, the 'can-do' mentality which believes that all tasks can be achieved.
• Shared Vision. All members of the organisation are committed to its aims and its ways of realising an over-arching vision like Bill Gates's original 'A PC on every desk and in every home,using Microsoft software'.
• Team Learning. Very bright people are hired, but teamed together, because group thinking is greater than the sum of its individual parts.
• Systems Thinking. These companies understand that actions and decisions cannot be isolated, but have ramifications throughout the organisation - so all sections are brought into the act.

Get Senge's quintet rolling through a company, and its intellectual firepower must be greatly augmented. But you can only do that if enough intellectual capacity exists in the first place - and that is a matter, not only of recruitment, but training. If Business Week is right, that's where US companies are launching a major, behind-the-scenes drive for supremacy: 'Corporate America has concluded that investing in people is the way to stay ahead'. So executive education is 'suddenly every CEO's favourite strategic weapon'.

Is this any more than executive retention? Giving managers education is a valuable perk, which may persuade them to stay longer: on the other hand, it makes them more attractive to poachers. So the retention benefit is tenuous. But the magazine is plainly correct when it writes: 'Executives are also looking for help managing the speed of change... that trend has been exacerbated by the nagging fear of becoming obsolete in a world transformed by technology'. And that transformation, of course, should dominate strategic thinking in companies of all shapes and sizes.

TRANSFORMATION
Even small, owner-managed businesses can be transformed by new technology. Talking to hundreds of owner-managers in the last few months, I found little awareness of the digital threats and opportunities. But I was impressed by one proprietor's tale. He had called in an expert to update the software of a company which distributes pharmaceuticals to independent pharmacies. The expert finished the job, but said he had thrown in something extra, for free: a Website.

The company at first didn't know what to do with this new toy. But it turned out that many of its customers were wired up, so it started selling its wares over the Web, taking orders and handling the paperwork electronically. The new approach had been so successful that the company was now wondering whether its costly salesforce could be dropped completely - or whether some personal contact was still necessary. Either way, the transformation of the business would be sustained.

Note that the change had not stemmed from the knowledge and insight of the management. The educated brainpower of an outsider had supplied the missing ingredient - by chance. But in these fast-moving times, you cannot rely on chance or outsiders. You have to develop the internal capacity required to meet the challenge of change. You start with yourself, naturally. How do you rate on Personal Mastery, Mental Models, Shared Vision, Team Learning and Systems Thinking? Start with the first:

• What is my current skills-set?
• Does it fully match the requirements of (a) my present job, (b) the job I want next?
• Am I doing enough to update my existing skills?
• What must I do to enhance and augment those skills in the light of 2(a) and 2(b) above?

Unless you get yourself well-educated on all these Personal Mastery counts, and the other four, you are in no position to lead and inspire others. This lesson is one that was rammed home hard by my investigation of 20 companies which all claimed to be pursuing Total Quality Management. The only real successes were those firms, like Honeywell UK and what is now Thomson Microelectronics, which had begun their TQM exercise at the top, in the boardroom, and carried it right the way through - spending time and money, not just for a few months, but for year after year, and involving everybody, from top to bottom.

Americans are certainly following the spend part of this formula. Business Week says the 'average US company' spent $10 million on internal and external executive development in 1998. But BW does not define the average company, or say how much money went on updatinging top management itself. On the first point, to afford $10 million of educational overhead, the company has to be large. My guess is that top managers of such companies spend neither time nor money on their own education. Most of them visit executive classrooms only to bless the teaching - if that.

B-SCHOOL ON-LINE
But the classroom could be on the way out, or at least down. Even the Harvard Business School's professors 'realise that they must go on-line to compete'. The business schools no longer have a monopoly on their game. They must fight for custom against 'consultants, Web-based learning companies, and freelance professors'. On-line gives powerful new options for do-it-yourself education, whether or not you use outsiders as well.

Whatever the approach, one need is clear: keep as much tailormade content as possible. Ford Motor, the star of the US automotive show, has a new, D-I-Y Leadership Development Centre which has as its goal, according to its director, 'To train and inculcate and radicalise a core of leaders within'. If you haven't got $10 million, or anything like it, internal development is your best starting point. It is cheaper and, even more to the point, it can be directly related (like the strong educational element in TQM) to the work of the individual, the unit and the company.

There's little point in education that doesn't relate in this potent manner. Every company, to greater or lesser extent, is in the same position as Ford, needing to reshape itself to respond to powerful forces of change. What makes the current hard drive truly remarkable is that the financial fruits of an earlier revamp are still pouring in. Ford earns twice the profit of GM or Toyota, thanks to a bold move to centralise its operations around the globe. The main objective (which has been met) was to cut costs by vast amounts. But as managers are learning, cutting costs is never enough. Strategic success is more important.

CUSTOMER POWER
As a strategist, Jacques Nasser, the new CEO at Ford, sees the balance of power shifting towards the consumer - and thus back to local managements. Unless they get more say in matters of brands and marketing, they cannot play their full part in turning Ford into a fully-fledged 'customer-centric' business. Many Ford executives, however, are too deeply imbued with the old ethos to make the shift. That's why Nasser felt obliged to recruit top people from outside - from Mercedes-Benz, Chrysler, RJR Nabisco and VW. Note, too, that this far-reaching shake-up has been launched against a background of prosperity, not (as normal) to overcome economic disasters.

But why the inability to teach old dogs new tricks? Most companies face the same problem. Go into the old telecoms monopolies, like Deutsche Telecom, AT&T and BT, and you will find hundreds of telephone managers who still have the habits and ideas of monopolists. That makes them wholly unsuitable for an age of competition which will be wholly dominated by the Internet. However dynamic and far-sighted the men at the top, that greatly hampers their efforts to compete against newcomers who are not encumbered by the lumber of the past. The situation would be far easier if goals like those of Ford's new Leadership Development Centre had been pursued long ago. Try this simple but taxing exercise:

1. Take two sheets of A4 paper and write briefly across the top of one sheet (B1) where you want to be personally in five years' time.2. Across the other sheet, write with equal brevity (B2) where you want your organisation to be then.
3. Across the bottom of the two sheets (A1 and A2), write down a description of your present situation, and that of the organisation, listing strengths and weaknesses with total honesty.
4. Fill in the space between top and bottom of the sheets with the main steps that have to be taken for the journey from A to B.
5. Pay particular attention to the people issues: (a) Are present personnel (including yourself) fully capable of undertaking the journey? (b) If not, what must you do by way of recruitment and development?

WORLD-CLASS PROGRAMME
BT's reaction to the people issues includes a 'world-class' Masters Programme that runs part-time over 30 months and demands an average commitment of ten hours a week, with the intention of 'producing generalist managers with a broad understanding of the industry and BT and able to operate at the strategic level'. What giants like Ford and BT need is required all the way down the corporate scale. You want people who can complete the exercise above and carry through the conclusions to success.

Starting on that journey is obviously the most important step. If you don't start a journey, you can't possibly arrive. But few managers at any level share Nasser's urge to drive from A to B as an exercise of corporate and personal ambition. That general inertia gives a huge advantage to those who take the first step. You are competing against people who have actually chosen to be left at the starting line. That applies to virtually all the owner-managers I've been addressing of late. It is a very poor choice in today's markets.

To succeed in these markets you need education in information systems and e-commerce, leadership, innovation and global business, preferably customised to suit your purposes and using for case studies the actual needs of your organisation - with a view to practical implementation of the study findings. Plenty of good outside help is available in all these key areas. But the most important contribution has to come from ambitious insiders. Make sure you are among them.