What gives people the confidence to get things right? Getting things right does that. It sounds like a tautology, but mastering all elements of the system and self-mastery go hand-in-hand. What achieves mastery, though? According to one forthright prediction, 'The most successful corporation of the 1990s will be something called a learning organisation, a consummately adaptive enterprise'. That sentence comes from a magazine, Fortune, but it's based on the preachings of management gurus who are now demanding that organisations join them in education itself.
The concept is nothing new. It's the foundation of success in sport. The great champion is at once master and pupil, giving lessons to others and learning from both experience and coaches. That applies to individual sports like golf or tennis, where Stefan Edberg, for example, was coached to two Wimbledon titles by his British coach, Tony Pickard. It's equally important in a team sport like rugby, where the top players of the day - like the massed super-stars of Bath or Wigan - will take instruction and instructions from coaches whose own playing careers have been far less distinguished.
Most managers will pay tribute to a mentor or mentors who helped develop their skills and their self-belief. But it's a far cry from that to the learning organisation, in which managers are expected to coach as well as play. As usual, the trend was first signalled by Peter Drucker, who spotted that information had replaced physical assets as the backbone of business. In today's competition, what you know determines what you can provide and sell, and how: therefore, the competitor who knows most, and uses that knowledge most effectively, must win.
There are three stages in achieving victory. (1) Knowing what to do (2) Knowing how to do it (3) Doing it - without which, of course, the knowledge of 'What' and 'How' is useless. Each of the stages hinges on self-belief: belief that you can master the subject or the sport, belief that you can apply that mastery in real-life situations, belief that you will succeed in execution. More, all three stages are informed by the belief that you can continuously improve, forever raising your game or your management performance.
Today, that's not an option: information is constantly being outdated. So winners will update their knowledge continuously. Otherwise, the lead will be lost. This general truth is illustrated very specifically by the ups and downs of information technology, where knowledge differentials have led to rapid changes of leader in fields ranging all the way from spreadsheets to super-computers. This isn't just a question of technology. The power of learning affects every activity inside the company, and dominates its ability to succeed outside, in the marketplace, where the customers live.
'Today leading firms seek to understand and meet the "latent need" of the customer - what customers might truly value but have never experienced and would never think to ask for'. The words come from Peter Senge, the MIT professor who has become heavily identified with the concept of the learning organisation. However, he takes issue with the Fortune writer quoted above on one key word. Companies, says Senge, don't only need to be 'adaptive'. They must above all become 'generative'.
To illustrate the difference, he cites the comment of one Detroit executive on Mazda's fun sports car: 'You could never produce the Mazda Miata solely from market research. It required a leap of imagination to see what the customer might want'. That's an example of generative learning, in which the learner 'acquires new ways of looking at the world, whether in understanding customers or in understanding how to better manage a business'. Senge might have added that the learner must also acquire the self-belief needed to form and back an imaginative judgment.
By contrast, the adaptive learner essentially reacts to changing circumstances. Rather than strike out into new territory, the self-doubting adapter follows the crowd - often over the edge of the cliff. Many companies have flopped on that score, like carmakers which utterly failed to compete with Japanese rivals who produced new models faster, cheaper and to far higher standards of quality, both in production and use. Now, of course, everybody left in car manufacture has adapted or is adapting: it's do or die. But the stable door is being shut well after the horse has bolted.
Manfred Perlitz of the University of Mannheim points out that Western adapters - and not just in cars - are busy winning the last war. The competitive race will now go, not to the most efficient user of just-in-time, with the lowest rate of defects and the highest output per man-hour, but to the leaders in creativity. That's the same distinction that Senge makes - and so do the Japanese. They've even invented a perfectly awful word, 'creagement', to describe the creative management processes which are needed.
Why do managers and generals so often fight the old battles, rather than the new? It happens in sports as well. When the British Lions faced the All Blacks in Auckland in 1993, a week after humiliating the opposition, they made no changes in their approach - even though it was certain that the New Zealanders, having been so badly beaten, would play differently. The mixture-as-before, though, always looks safer. Change involves risk: but sometimes (as in the comprehensive defeat at Auckland) not changing is the riskier course.
In most situations, there's only one risk: that of being wrong. It attends every decision in life, big or small. Managers or players with self-belief are confident in the knowledge of What and How and never hesitate over putting that knowledge to the practical test. He who hesitates is sometimes saved. But far more often the fear of being wrong, which is the opposite of self-belief, leads to delay and error. Fear in any form is a bad manager. In this most common of manifestations it is literally self-defeating.
The self-believer doesn't only maximise the present. Without self-belief, you cannot create the future. In shaping that future, the old targets expressed purely in financial terms have become even more inadequate. Perlitz tbus advises that the necessary high rate of innovation won't be achieved unless companies set specific goals for, say, the annual earnings and sales to be generated by new products. It follows that reward systems must recognise future needs, partly by becoming less systematic. What carefully calibrated yardstick can you put on creating the future of the company?
Alan Kay, a great pioneer of personal computing, put the issue (and the power of self-belief) in a nutshell: 'The best way to predict the future is to invent it'. The learning organisation seeks to generate the future it wants. That philosophy is the opposite of 'that's the way we've always done things round here', 'sticking to the knitting', 'Not Invented Here' and other out-worn defences of the status quo. Senge calls rather for 'creative tension', which means 'seeing clearly where we want to be...and telling the truth about where we are'.
That establishes the gap between 'vision' and 'reality', and is precisely the exercise to which corporate strategists and total quality companies have long been accustomed. The difference is that Senge challenges the realism of most ideas on reality. Managers, like everybody else, focus on isolated events, rather than patterns of behaviour. Even if they look at the latter (which is how you spot trends), they rarely look behind patterns to the 'systemic structure.' That's where you find the ultimate reality and the ultimate test of objectivity about your strengths and weaknesses.
The car industry again serves as an excellent (and chilling) illustration. The event that everybody spotted was the rise in Japanese car sales. Nobody had the self-confidence to face the truth - that the Japanese were manufacturing and even marketing cars more effectively on every score. Rather than make this self-damaging admission, all kinds of irrelevant explanations were offered, from cheating to unfair cultural attributes. Then attention turned to the patterns of behaviour, the common characteristics of the way the Japanese produced and marketed cars, and the great wave of imitation began.
But what really caused the defective Western methods? They flowed from rigid corporate systems in which design, marketing, production and finance were separate, warring camps. Correction required overturning the whole stable framework to which insecure executives had clung for years. Not surprisingly, the Western giants, from General Motors and Ford to Fiat and Mercedes-Benz, experienced even more difficulty in reengineering their cultures than in changing their engineering.
New methods, however, modify cultures. For its new Omega executive range, GM Europe, for the first time in its history, formed thirteen teams for each part of the car, each manned by all ten functions. By working together, people learn from each other. That's one way in which the learning organisation is becoming reality. More and more, managers (and other employees, for that matter) are forming self-directed, self-believing teams in which know-how and information are pooled. More and more, too, management development itself is founded on team-working, tackling real-life corporate problems - from strategy downwards.
Many such problems, on analysis, tend to be of the type that Senge calls 'shifting the burden'. An agonising symptom shows up - say, falling sales. You can treat the symptom in two ways: attacking the sales shortfall directly, or finding the underlying cause and treating that. Human nature being what it is, most managements take the route least likely to damage their self-esteem: they go for the symptom, the obvious event that comes to view. So they launch a marketing promotion drive to boost the sales. Even if that succeeds, the problem will recur, possibly in more virulent form.
In an actual Senge case, a management team looked beneath the symptom to find the underlying cause of just such sales difficulties. Curing the symptom by intensive promotion had indeed worsened the disease. The underlying defect was lagging introduction of new products - the company had never heard the Perlitz message or the Kay clarion-call: it wasn't inventing its future. As a side-effect, the reliance on marketing expenditure to save the day had inevitably promoted the saviours to high positions in the company. They knew masses about marketing, but nothing of new product development, which had languished accordingly in a vicious circle.
Three chief executives in succession had come from advertising. The remedy for the firm's decline turned out to lie as far from the consumer as possible - in the boardroom. Even if the side-effects don't worsen the problem directly (as in that case), they always worsen it indirectly by delaying the truly necessary action. All that's evidently correct: but what's it got to do with learning? Shouldn't common sense alone have spotted the new product lag, or the advantages of Japanese car-makers?
In fact, common sense alone wouldn't have been enough: informed common sense is the catalyst for effective change. What shocked Xerox into a massive effort to change all its ways was learning that Japanese copiers (like Japanese cars) were winning, not by skulduggery, but by superior methods of production and management. A further crucial point, though, is that the findings were made by a team of line managers. Outsiders would not have been believed, and line managers wouldn't have believed staff experts.
The ultimate test of athletes or managers, however, is how they react on hearing the bad news about their performance - being dropped from an international side, say, or getting a message like the one which Xerox's team brought back from Japan. The individual with weak self-esteem has it weakened further by the bad news. For stronger people, the setback serves as a spur to renewed and better focused effort. The person who has self-belief bounces back again and again, always in the conviction that the next time will be the best time.
This ability to take and learn from criticism is the acid test of self-belief. This was brought home to us by the remarkable case of a defence contractor which had one advntage over most businesses: a single customer, the military. The advantage lies in the fact that, with only one buyer, you can obtain perfect knowledge of customer satisfaction (or dissatisfaction). Other companies rely on conducting expensive surveys which, unless very carefully constructed, yield imperfect and even misleading information.
This particular contractor had a brave managing director who invited the chief purchasing official to give a full and frank assessment of the company's performance. The official did an excellent job. He consulted his people (who worked intimately with the contractor day-to-day) and reported their findings, many of them close to damning, without pulling a single punch. The chairman (who had been managing director previously) reddened with every blow, and could barely control his anger.
He accused the customer of misrepresenting the facts: but his most passionate attack was based on the damage which the customer had done to the morale of managers who had been doing their utmost to deliver performance and quality. As we found in conversation afterwards, his managers were indeed angry - not with the customer, but with their chairman. The customer, they said, had given them benchmarks, targets at which they could aim. They knew precisely where, in his eyes, they were going wrong and what outcomes they had to achieve to go right.
Furthermore, they firmly believed in their ability to perform. And they were not deceived in this belief. A few months after this incident, the company won a desperately needed order from its single customer. Likewise, the managers at Xerox reacted to the bad news from Japan by accomplishing vital changes which reversed its calamitous loss of market share. That involved resorting to coaching and learning on a massive scale.
At Rank Xerox, every one of 28,000 employees has been trained in the principles and practice of total quality. Work on 'continuous improvement', or 'business process reengineering', or any other approach to radical reform of specific activities is a double education. First, the participants have to learn the tools and techniques required to tackle the process and its improvement. Second, they learn from the experience of undertaking the project as a team and driving it to a successful conclusion.
Both processes build self-belief, and ultimately depend on it. Total quality rests on the conviction that everybody, from the summit of management to the shopfloor, can be involved in learning and improvement by acting with confidence on their own initiative. Like the application of an athlete to his or her sport, the work never ends. The defence contractor and Xerox exemplified Robert Bruce's famous maxim, learnt from the persistent spider: If At First You Don't Succeed, Try, Try Again. But that isn't enough.
Analyse the collapse of companies - like those which once formed the British Leyland Motor Corporation, now reduced to the German-owned rump named Rover - and you will more than likely find a sorry tale of winning positions weakly surrendered by failing to build on success. Steffi Graf's opponent at Wimbledon in 1993, suffering a fatal last-set loss of self-belief, exemplified the same failure. The champion not only comes from behind, but, like Pete Sampras a year later, tightens his or her game inexorably when on top. That's been one of the winning Japanese traits in world markets - If At First You Do Succeed, Try, Try Again.
That's the opposite of arrogance. The arrogant company imitates the British Leyland bosses, and basks in a false sense of security. Self-believers are always deeply conscious of the strengths which generate superiority and of the weaknesses which threaten it - and work hard to reinforce the former and eradicate the latter. That means learning. In the learning organisation, everybody learns, which means that everyone is taught - and that's an idea which many senior managers find personally uncomfortable.
Entering anything that looks like a classroom damages their fragile self-esteem. But if they don't learn, the discomfort will eventually prove much greater, for themselves and the organisation. The organisation per se can't learn: it's amorphous and inhuman. But the humans who animate the organisation, if they only believe in themselves and everybody else, can create an environment which is both adaptive and generative. Without that environment, and without that self-belief, managers who seek successful change are wasting their time - and their greatest, human assets.
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