When organizations’ stop learning, they start suffering

Management: When organizations’ stop learning, they start suffering

By:

Vijay Sardana

During my visit to many factories in India and aboard, many issues what were observed can easily be avoided by careful planning. Proper planning can easily save execution cost.

Proper planning can also save operating cost which can help in overall cost saving and improve profits.

While planning and execution one should be open to new ideas and suggestions so that any good idea and suggestion can be used without waste of resources and time. In many companies, people feel hesitant in giving good suggestions once the project and execution plan is accepted by the top management. The main reason is that people are not sure how senior management will react and take their inputs one the plan is finalized. I don't see any reason why new inputs cannot be considered after the finalization. If we don't consider new inputs, it means we assume that our teams have stopped learning once the project is finalized.

This happens when employees feel that their inputs will be criticized publicly without going into the merit of the inputs. This discourages the team members from coming with ideas for improvement and creativity to save cost or to improve profits.

To accept or to reject the input is a separate issue, but considering the input should a continuous process. 

This approach by senior managers’ kills the spirit of team members to constantly strive for excellence and to deliver better results. It is strange and sad that at the time of interviews and selection of candidatures, every organization tries to get the best of the human resource but when they join the team their inputs are not considered with the same zeal. Sometimes, it looks strange why a person with 30 -40 year experiences from some of the best performing organization was hired, but his knowledge and expertise was consulted in decision making process. I agree, every input or suggestion cannot be accommodated in the scheme of things, but their must be a process or criteria to shortlist the inputs. I still agree that there can be many decisions which are confidential in nature and everyone can’t be party to it, but still there is need to devise a system to accommodate the concerned people in decision making process.

In absence of a fair and open working environment, many people feel they are like a spare part of the machine and they are not a useful member of team. This demoralization of the teams is a serious set-back for any organization because with demoralized team no one can win in market place. This creates spiraling effect and organizations starts sliding from their peak. When there is no enthusiasm in the team members to deliver excellence, such organizations will stop learning and will start drifting away from ground reality and ultimately either will become obsolete or will existing at the mercy of market forces. Kindly look into the list of fortune 500 companies, how many are still existing in the list just after 10 years? Find out the reason why these companies have vanished from the fortune 500 list?

Look around you will find, once a very good organization, is no more in the same league as it was few years back.

Do a reality check

Ask your HR department to go for placements in leading business schools.  The ranking of your organization for placement sessions by young students will tell you what society thinks about your organizations. 

The major signal is when young generation from management collages are not aspiring to join your organization or during placement days you are not invited ahead of your completion for selection interviews during campus placement, this clearly indicates that society at large feels that this organization has no bright future. Take these signals seriously.

Very often top management will communicate that we don’t care about these things. This is nothing but ignoring the facts on ground. This is first signal that we are drifting from the reality.

The next signal which can be visible from the market place is reduced attraction towards shares of that company in stock markets. One can observe the share price movements of such companies with respect to their competitors. Long term investors will look at fundamentals, quality of top management and corporate governance issues while evaluating the company’s future and its potential to create wealth in future.

For wealth creation, knowledge is the first criteria. Companies without innovation and creativity will get below average valuation. Why Apple because leading company from virtually bankrupt company, and why leading companies like Kodak has to file for financial support. Why Microsoft started loosing their dominance in IT world in comparison to Apple. Why Google became more powerful than Yahoo. In my view all were having access to same set of hardware and internet connections. Why they started moving in different directions. What was the difference? Just think it over.

Intellectual power has started surpassing financial power:

Without creative thoughts potential to earn better profits in comparison to competition is not possible. You will notice that large number or old economy stocks were considered as the good stock but lately new economy stocks and many of them are from knowledge industry like IT, Pharmaceutical, biotech, etc. are doing better.

It is also interesting to note that when old economy stocks started focusing on innovation they started getting good response from investors and their valuation starts improving. Innovations and creativity not only improve their profitability but overall valuation in the eyes of the customers.

Valuation of cash rich petrochemical giants with no innovation or creating is going down. On the other hand even older but small automobiles company is now gaining better response from investors because they have started focusing on innovations and delivering better profits.

If you analyze the environment in which they are working are almost similar because they are operating in the same country, head office is in the same city, having same amount of asset base. The only difference was that leader of faster growing organization focused on organization learning through research and knowledge injection where as the slow moving organization was more interesting in talking about money and investments which they can make.

Option before Senior Management:

Japanese management concepts of Quality Circles and Management team etc. are very effective tools to channelize the whole organizations energy for the development of organization. This develops sense of partnership at all levels. People with practical experience come with better suggestion than people sitting at top because the understanding of ground reality can be different depending upon the exposure at various levels. These systems were adopted by all major leading companies in the world because the understood and accept these facts and role of participatory management.

It is always true that you need a very good leadership to drive an organization to higher growth path, but with demoralized team no leaders can more to higher growth path.

In my view the best way is all to allow your team to come with new ideas and creative thoughts. This will channelize their creative energy in right direction. Let the team leaders guide them how to prepare a meaningful proposal for consideration of the management team by undertaking proper analysis including the financial implications and requirement of other resource analysis. Let the teams prepare the own cost-benefit analysis and execution plan before presenting to top management.

Biggest challenge for the top management is to be humble enough to accept that teams can also give better ideas then the top management. During my working with many family owned European companies, I noticed that promoters leave the organizations in the hands of professional managers to run the show with a clear direction what they expect from the top executive management. They don’t look into day-to-day operations of the business. Their main job is to look at future growth of the organization and finalizes the operating principles and financial targets and investments with the help of top executive team.

This concept of participatory system of management is missing in many family own companies in India, that is why even with very good resource base and pool of talent they are not able to grow beyond the boundaries of India. In case they have to become multinational corporations, these organizations should accept the fact that no one in the world can have 100% knowledge of everything and no one can be present in every place.

Develop Human Centric Systems to deliver financial results:

Let the systems work and they should allow organizations to grow as professionally run bodies not tightly controlled regimented type of organizations. We should also accept the fact there will be slippages and mistakes, but instead of stopping the growth of organizations, we should develop a system to address slippages and mistakes. Don’t target any individual for the mistake because when decision was taken there were many people involved and based on the facts available to all.

Now things are now going the way it was planned, this only tells us that market and environment is offering challenges which no one anticipated. It means please go back to drawing board and re-look into the plan and inject new inputs which are now available and modify the plan and prepares the organizations for the new ground reality in place of going into blame game.

Making mistake is not a crime but accepting and rectifying a mistake in professional way indicates the maturity of the organizations.  

In the end one thing is clear, every member of the team had certain potential and certain capability was she or he was hired by the organization.

Organization leaders must thing over whether they able to utilize the potential of the person on not? If not, something is wrong somewhere in organization building process including Human Resource Management.

Unless organizations are able to absorb right set of knowledge base and skill sets, no amount of financial injection can revive the organizations.

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