If organizations can sense and respond to emerging opportunities, there is a good chance they will endure. If they can sense and respond to each new opportunity with greater ingenuity and speed—that is, if they can get better at getting better—there is a good chance they will bloom. Bruce Henderson, one of the early writers on business strategy, noted that strategy and its implementation are related to the natural system of evolution and survival of the fittest. His argument—that organizations, like organisms, must adapt or die—is perhaps even more poignant today.

Today it seems that organizations need to be able to do more than just adapt; they must be able to do so quickly, in the face of ever changing conditions. And if organizations are to adapt quickly and intelligently, they must make learning a central part of their strategy for survival and growth. If leaders and the people within their organization are learning all the time, faster than competitors, and applying the right strategies at the right times, the organization has hope.

To create a climate in which all that is possible, leaders must ask themselves a serious question: “How can I dramatically increase my organization’s ability to learn?” Do you think the answer is technology? We don’t, and neither do many experts. Consider Doug Engelbart, the now 75-year-old former electrical engineer who is widely credited with catalyzing the computer revolution 35 years ago with his invention of the mouse, hypertext, and multiple windows on a computer screen. Did he develop these high-tech tools to replace human ingenuity? No, his goal was to augment the collective IQ of organizations.

Technology does have the ability to augment what active learners can learn. It can help them gather information and generate new insights. In a vibrant learning culture, in which people are responsible for their own learning and for helping one another learn, well-planned and well-delivered technology enhances everyone’s experience. But in companies where people horde knowledge and resist new ideas, where leaders say things about learning that sound good (or even offer to teach a class) and then relegate learning to the human resources or training department, technology only increases costs and drains resources. In both kinds of cultures, technology accelerates what is already there.

If leaders want to create adaptive organizations, capable of getting better at getting better, they must first look at two fundamental issues: how people learn in the workplace and how to create a learning culture in which technology plays an appropriate supporting role.

How People Learn at Work

Learning theory and the study of organizational behavior over the last 20 years have clarified many principles about how adults learn in organizational settings. First, adults have a pragmatic approach: they are more likely to learn what they need to learn to do their jobs better. Second, they approach learning with a personal style or set of preferences—not everyone learns in the same way. Third, they learn at their own pace, no matter how much you rush them. Fourth, their interest in learning new things varies widely. Fifth, they want to be in charge of their learning rather than yielding to an instructor. Sixth, their learning occurs mostly in context, on the job, from day to day. And seventh, the transfer of learning in organizations is largely a function of the quality and strength of personal relationships.

This social component of learning means that one of the challenges of a leader is to foster relationships among people in the organization, particularly as they convey what and how they’ve learned. If leaders try to automate learning by replacing real-time human interaction with technological solutions, they lose the creative tension inherent in face-to-face encounters with instructors and with peers. They also forgo the lasting relationships that are forged when people learn from one another.

The importance of social networks is highlighted by Rob Cross, Andrew Parker, Laurence Prusak, and Stephen P. Borgatti, who recently found that “despite easy access to a world class knowledge management system and other accessible information sources, 85% of the managers [they studied] indicated [they got] information that had an impact on the success of a project from their personal network.” They also learned that the strongest predictors of effective learning from a network of relationships include knowing another person’s expertise and thus when to turn to him or her; being able to gain timely access to that person; the willingness of the person sought out to engage in problem solving; and a degree of safety in the relationship.

People need information to do their work, and they can get it only by working with others whom they respect. From this perspective, learning for adults is less about taking in new information than it is about connecting with people who help put that information in context and suggest new ways of understanding it. This social aspect is central to the way people learn at work. In fact, it is the central feature of a learning culture.

Have you ever wondered why would-be entrepreneurs are willing to pay to live in Silicon Valley? Why don’t they sign up for courses on the Web on the art of the startup? The answer lies in the community: the group of entrepreneurs, both successful and not, who are willing to share their experiences. Adults learn and adjust their approaches not just by getting facts but by getting relevant information in situ with all the nonverbal cues that real people’s stories afford. From such information, we see patterns emerge and discover new ideas worth trying. Managers who attempt to substitute technology for community isolate their high-potential employees from the very (human) system that will accelerate their learning. Presumably, these managers believe that investing in technology is cheaper than funding training staffs and establishing facilities where employees can take classes. They may also believe that standardizing learning instead of delivering on-site training programs will help the organization achieve its goals faster.

Estee Solomon Gray, formerly of Xerox, and John Seely Brown, director of the Palo Alto Research Center and chief scientist for Xerox, note that “the real genius of organizations is the informal, impromptu, often inspired ways that real people solve real problems in ways that formal processes can’t anticipate. When you’re competing on knowledge, the name of the game is improvisation, not standardization.” Asking people to learn in isolation or without the timeliness of context, which is born of relationships, hinders the organization’s ability to adapt.

Computers, the Internet, e-mail, cell phones, e-learning, and the myriad technologies that will be sold as “the next killer application” can enhance our learning, but in a culture that does not allow people to learn in context, technology adds nothing. Technology doesn’t replace a learning culture; it is one and only one tool to use in the community of learning. The use of technology does not stimulate more learning, but it does reflect how active a learning culture might be. In this way, distance learning technology is a mirror of an organization’s culture with regard to learning, not a stimulus for reshaping it.

A Culture Worth Reflecting

An organization’s culture is a complex thing. It includes the shared history, expectations, written and unwritten rules, values, relationships, and customs that affect everyone’s behavior in an organization. Ed Schein at MIT defines culture as the sum of solutions to yesterday’s problems. Think about it: A tribe, a family, or an organization encounters a problem (earthquake, divorce, missed interest payments, for example). And the lessons that the people learn from those problems (accurately or otherwise) and how they solve them (obey the gods, stay away from the opposite sex, manage your expenses to the penny) become the cultural underpinnings of the next generation. Hence, an organization’s culture is the sum of the distinctive behaviors, intentions, and values that people develop over time to make sense of the world.

Schein points out that an organization’s culture appears at three levels. (See the exhibit below.) At level one, there are the culture’s physical artifacts: the buildings, the furniture, the manuals, the décor, the cars, the stone hand tools. Physical artifacts can be very powerful. One company, for example, that was considering making a change from a top-down hierarchical organization toward a flatter, more egalitarian culture, had to deal with a strong artifact of its old culture: a headquarters building in the shape of a pyramid, with the CEO’s office at the peak.

At level two are the intangible policies, rituals, procedures, and networks of relationships. Company parties, celebrations, bonus calculation methods, communication patterns, and methods for booking airline flights are all examples of these very real components of culture. And at level three are the values, assumptions, beliefs, and expectations that underlie levels one and two. “The boss knows best,” “The only thing that counts is the bottom line,” “It’s okay to change a decision after you leave a meeting,” “Meetings are only formalities for agreeing with management,” and a host of other premises constitute the foundation of an organization’s culture.

One of the challenges of defining an organizational culture is to infer this third level, the underlying values and operating principles, which Chris Argyris calls the organization’s “theories in use.” If leaders within an organization publicly espouse one thing and model another, their actions speak louder than their words. Such leaders create confusion and sap the organization’s energy. Leaders who close the gap between their talk and their behavior tend to create more powerful cultures because employees don’t have to spend their time negotiating the distance between what is said and what is done.

Jack Welch often stated his belief that one should face reality as it is, not as it was or as you wish it were. This value became evident in his management culture: he demanded the facts and pushed employees to know them as well. Welch’s espoused theory in this instance matched his theory in use. Jim Collins reinforced the importance of such truthfulness in Good to Great when he outlined the principle of “confronting the brutal facts.” Yet many managers champion theories of truthfulness but don’t model them for employees. In such a culture, leaders may want to make changes but don’t have the influence they think they do.

In fact, leaders don’t directly influence organizational outcomes. Rather, they make decisions that shape the culture of the people working in the organization, who in turn influence outcomes. An organization’s culture stands between the leader’s intentions and the results the organization achieves. (See the exhibit opposite.) Sometimes this principle is manifested in dramatic ways. For example, in 1990 the government of Mexico City decided it needed to do something to reduce air pollution. With good intentions, city leaders passed a law they thought would solve the problem: cars with even-numbered license plates could be driven only on Mondays, Wednesdays, and Fridays, and cars with odd-numbered plates could be driven on Tuesdays, Thursdays, and Saturdays. The idea behind the law was that people would carpool and thus air pollution would be cut in half. What happened instead was that many people went out and bought a second car. And since the average income in Mexico City was low, most people bought old clunkers with bad rings. As a result, air pollution increased substantially. The culture of the people, whose desire for independence was stronger than their need to save disposable income, stood between the city’s leaders and the outcome they desired. In the end, they got the exact opposite of what they had hoped for.

Learning Cultures Make a Difference

The challenge for business leaders, then, is to concentrate less on trying to achieve specific business results and more on creating a self-sustaining culture that produces more energy than it consumes. The beautiful byproduct of an organization whose entire culture focuses on learning is that it inspires ordinary people to flourish in an increasingly turbulent world.

Learning cultures also offer a source of sustainable competitive advantage. The well-known Wharton School marketing professor George Day defines competitive advantage as having three components: superior value added from the customer’s point of view, an offering that is difficult for competitors to imitate, and enhanced flexibility. We’ve talked about organizations that get better at getting better. What does that mean these organizations are doing? It probably means that they are constantly discovering new ways to satisfy customers’ needs, new ways to develop products and services, and new ways to deliver those products and services. By definition, these enterprises will meet each of Day’s criteria and will enjoy a strong competitive advantage. The learning capability is in itself a competitive advantage: it brings superior value, it’s hard to imitate, and it has built-in flexibility. In fact, Arie De Geus argues that learning is the only source of sustainable competitive advantage.

The internal operating strength and flexibility that a learning culture creates also yield external financial strength. After 20 years, the annual survey by Fortune and the Hay Group still finds that the world’s elite organizations share one thing: corporate cultures that value people and how they learn. These companies don’t just claim people are their best asset; they behave that way. They offer intensive leadership- development programs that address individuals’ needs and the organization’s strategic goals. They emphasize the importance of people and recognize that this value must be balanced with financial results. And their leaders have such attributes as self-confidence and self-control, achievement orientation, empathy, and teamwork, yet they still manage expenses and pay attention to the bottom line.

Recruitment firm Robert Half International found similar results in a 1999 study. “For a growing number of workers, corporate culture is the key determinant in their choice to stay with an organization long term....While compensation will always be a strong motivator, today’s professionals are placing greater emphasis on issues ranging from management style and degree of autonomy to intellectual challenge and relaxed dress code policies.”

The Fortune/Hay Group findings go even further, noting that as a society, we admire companies that successfully transform themselves, in good times and bad. “This ability to predict changes in the marketplace, adapt to them, and capitalize on them more quickly than the competition is what keeps a company on the list during difficult times.” People who are learning allow and even stimulate transformations. And the leaders of admirable companies recognize that connection.

Human Capital Capability’s founders, Laurie Bassi and Karen McGraw, are so convinced that a learning culture leads to organizational success, and ultimately to financial performance, that they have established a firm whose sole purpose is to measure organizations’ human capital infrastructure and performance, and recommend improvements. Laurie Bassi has also created a money management firm, Knowledge Asset Management, which invests solely in companies that make significant investments in employees. Its investment strategy is unique because it bases portfolio recommendations in large part on this one factor—investment in learning. Bassi founded Knowledge Asset Management after examining data from 1997 to 2001 and finding strong evidence that companies that allocate more resources to helping their employees learn tend to outperform in the stock market the following year. So far, the strategy has paid off: the firm’s portfolio has outperformed the S&P 500 through its first six months of operation. (To learn more, see Bassi and McGraw’s article on page 21.)

The decision to invest in learning is defined by a set of values, expectations, and behaviors related to actively managing organizational learning. The learning-oriented corporate culture sets the context of everything the organization does. All leaders can create such a culture, and all leaders should—but how?

Get Clear

Are you clear how much you value learning? If you aren’t motivated by learning, you won’t be able to inspire others to learn. As a leader, you set an example for everyone in the organization. We invite you to do a little self-assessment: What have you learned in the past year? What new concepts and principles are you using today that you weren’t using last year? How many nonfiction books have you read (not skimmed) in the past year? How often do you ask yourself, “What will I learn today?” If you open yourself up to learning, you will motivate others to do the same. And Creating a Learning Culture if this occurs, the value for learning will begin to spread throughout the organization like memes. We advise you to check your own values, add active learning if it’s not already there, and, even if you’re not certain how, begin.

Get Started

If you as a leader start by examining your own learning habits and begin trying new things, you will find a way. It may be messy and unclear, but if you lead yourself, others will follow. Learning is often not a neatly defined and well-controlled process. There won’t be a moment when the stars align and you’ll know it’s time to start. In today’s rapidly changing world, real-world practice never presents itself as a collection of precise problems but as messy, indeterminate situations. It’s everyone’s job to develop better ways to deal with the unstructured, the undefined, and the unknown. Ralph Waldo Emerson once noted that there are always two parties: the movement and the establishment. Which one are you a part of? Unless you’re an active learner, you’re part of the establishment and are likely stifling learning in ways you don’t understand.

Donald Schön posed the challenge this way:

In the varied topography of professional practice, there is a high, hard ground overlooking a swamp. On the high ground, manageable problems lend themselves to solution through the application of research-based theory and technique. In the swampy lowland, messy, confusing problems defy technical solutions. The irony of this situation is that the problems of the high ground tend to be relatively unimportant to individuals or society at large, however great their technical interest may be, while in the swamp lie the problems of greatest human concern. The practitioner must choose. Shall he remain on the high ground where he can solve relatively unimportant problems according to prevailing standards of rigor, or shall he descend to the swamp of important problems and non-rigorous inquiry?

Get Informed

Okay, you say, what do I do? One way to begin the process of creating a learning culture and to enroll others in the effort is to conduct a learning culture audit. Although there may be no one best way to do this, a simple diagnostic can help you assess your organization and your management team’s orientation to learning. It describes the characteristics of cultures that encourage learning and of those that block learning.

While the list on the next page is not exhaustive and may not be in the form that will work best for your organization, it may help you assess how you’re doing as a leader of a learning culture. We invite you to consider each question carefully and think about your behavior and that of your colleagues. You might also want employees to complete such a survey to get a sense of how they feel you and the entire organization are doing.

By taking organizations through this audit, leaders begin to demonstrate that they are willing to ask tough questions and are interested in hearing answers that are honest rather than reassuring.

Get Caught Up

While you can argue that benchmarking only prepares you for someone else’s yesterday, the following examples will show you what other leaders have done to stimulate learning in their organizations and may help you generate some ideas of your own. These vignettes may or may not be relevant to your situation, but they will let you see where other companies are and whether or not you’re playing catch-up.

• The energy company AES doesn’t have formal training programs: there is no AES University and there are no HR people who go out and make people learn. But the company does have a culture in which people at all levels are encouraged to assume new responsibilities. For example, the company had approximately $9 million of debt reserves at its Thames, Connecticut, plant. The maintenance workers—people without college degrees—stepped up and said, “We want to learn how to manage the reserves.” They were given the okay, so they went out and learned everything they needed to by talking to financial experts and taking courses. As a result, they ended up managing the reserves better than the people in the organization’s treasury department, who had done it for so long that they were bored. The maintenance team’s manager said it all: “Once people know they have responsibility and have to make decisions, they’ll go out and learn what they need to know—if you give them the freedom to do it.” For these people, the learning happened in context, in a network of relationships, in a culture that valued learning, and in an organization that had a real business need.

• At British Rover (in the days before it was purchased by BMW), a new CEO came in and saw that the factory workers needed to upgrade their skills. People asked him how he would accomplish this, and he said, “First, we’re going to give everybody a 100-pound allowance for learning.” When a worker came to him and said, “I’d like to take a course at a cooking school,” the CEO agreed. He told one of his executives, who had questioned the decision, “I don’t want to do anything to discourage this gentleman from learning. Once he gets into the habit of opening his mind and exploring new things, who knows what he might discover and want to learn about things related to his job?”

• At The Men’s Wearhouse, attending Suits University is part of the job for all salespeople. The training lasts for four days and has three components. First, participants learn about fabrics, fit, fashion, style, and the tactical stuff of men’s clothing. Second, they learn about sales techniques. Third—and most important— they learn about professional self-confidence. By investing in such training, the company demonstrates that it does not see its salespeople as downtrodden retail workers who open the store, run the cash register, and close the store. The company views these employees as professionals who are worthy and capable, and it understands that training can do far more than transmit information to staff.

• At WD-40 Company, a small group of women in customer service decided to set up a library in the lunchroom. They stocked the library with books on leadership, learning, brand management, and just about anything else that might help employees contribute more to the organization. Now instead of reading the newspaper during lunch and eating alone, people pick up a book and then talk about what they’ve read. You see managers sitting side by side with people who work in the mailroom, and you hear them talking about how to improve the company’s brand. Once a month, the company also hosts lunchtime speakers. One session was on giving and receiving feedback, one was on investing, and another was on negotiations. While these topics may help people in their jobs, they may also help them buy their next car or save for their children’s college tuition. When people talk after work with their family or friends, they are now apt to say, “You know what I learned today?” and that’s a beautiful conversation. (To learn more, see an article by WD-40’s CEO on page 12.)

Get Ahead

Let’s say that you have assessed your own energy for learning and the learning climate in your organization, and you have committed to getting started—however messy that may be—and have begun to do some of the things that truly successful companies are doing. At some point, you will want to spark a more profound cultural transformation in order to achieve the competitive advantage that learning offers. The danger is that you will turn to technology, such as distance learning modules and Web-based technical courses, and assume you’ve done your job. On the contrary, if that’s all you do, you’ll be paying lip service to the idea of a learning culture rather than taking the lead in creating one.

If you have already established a learning culture, the appropriate technology might help accelerate that learning. But what does appropriate mean in this context? Technology can enhance a learning culture only if it helps answer such challenging questions as “How can we share information in a more interactive way in our organization?” “How can we make sure that customers’ data are up to date and available?” “How can we best learn from one another’s successes and mistakes?” “How can we extend our reach?” The idea of developing the right technology to serve an organization’s specific needs was a hallmark of the companies Jim Collins studied and wrote about in Good to Great. Great companies do not buy the latest technology because it looks cool and seems to make sense on a standalone basis. They ask the right questions and then determine if technology can help answer any of them.

Get Consistent

As long as learning is viewed by employees as the latest fad you’re introducing, your culture will not become a learning one. To cement the elements of learning into your organization’s culture, you’ll need to ensure that new ways of asking questions, running meetings, conducting performance reviews (asking “what did you learn last year?” for instance) become your organization’s new routine. Leaders who consistently and energetically reinforce the value of learning serve as the reactor core of an organization in which people learn. With that core energy source—your commitment to learning and to creating a learning culture—your organization will come to know that this is “just the way we do things around here.” That is when learning will have become a part of your culture.

Leaders who seek to offload the responsibility for creating a learning culture onto technology are missing the point: learning cultures thrive on large, free, safe networks of experts. The role of technology is to assist in developing and maintaining those networks. Companies who understand this will make wise investments in technology that accelerates the learning of their organizations. Companies who misunderstand this will continue to pour millions of dollars into standardized technologies that may or may not help their people learn, share, grow, and produce.

Every organization has the potential to develop a learning culture. It takes enlightened leadership and the application of the right technology to bring that potential to fruition. Consider the acorn. There is no giant oak inside an acorn, just the potential to become one. The realization of a large, growing, powerful oak tree from a tiny acorn requires a confluence of the proper genetic coding, a sustaining environment, nourishment, and time.

As the shapers of organizational culture, business leaders, educators, and technologists must examine the changing environment, put new tools into context, adapt to new environments, and be productive under a new reality. Adam Smith didn’t invent the division of labor and foist it on Europe. He described a fundamental social shift that he observed and then projected the implications of responding to that shift in different ways. Our task is to understand our situation, project the implications, and respond with new tools so that we continue to have a progressive impact on shaping society through our ability to learn.

Rank your organization on each characteristic on a scale of 1 to 5, 5 being always yes and 1 being always no. At the bottom, tally your numbers to determine if your organization has more of a pro-learning or an anti-learning culture. Circle the items in each category that will require special attention from you in the coming days, weeks, and years.

Learning Culture Self-Audit