Clock and laptop

The digital economy of the 21st century has created a marketplace that is more intricate and dynamic than ever. At a time when the only constant is change and businesses have to reinvent themselves in ever shorter intervals organisations need to revisit continuously the strategies and skills on which they compete.

In the past, companies used to rely on experience and expertise – that is, the detailed understanding of their markets – in order to innovate and drive growth. Yet, with shorter and shorter innovation cycles, an accumulation of experiences alone can no longer offer adequate guidance.

A case in point is what business leaders say keeps them awake at night: disruptive market entrants, new technologies, competitor activities and so on. These are all symptoms of one underlying factor, change, and of the realisation that knowledge is no longer power when it comes to responding to the pace of change.

Organisations have to adopt a more flexible approach. Increasingly, successful businesses will compete based not on their know-how but on their ability to learn, or more precisely, the speed and adaptability of that learning.

Creating a learning culture is critical if businesses want to capitalise on change rather than simply try to manage or react to it. The difficulty is that many modern organisations are structured around optimised, standardised processes and conventional Intellectual Property to make them efficient, reduce cost and risk, and maximise profits. This set-up is almost diametrically opposed to the concept of an adaptive ‘learning culture.’

Our company, Mu Sigma, was conceived as a learning organisation from its inception and both our own experience and working with large multinationals across a variety of industries has helped us identify five key cultural characteristics and practices that businesses need to consider as they embark on the same route.

  1. A growth mindset. Most organisations focus their efforts on recruiting people with the right skill set and investing in the right tools to achieve their objectives. However, benefiting from the change brought upon your organisation first and foremost requires the right mindset – what Stanford University professor Carol Dweck calls the ‘growth mindset’. Contrary to a fixed mindset, the growth mindset enables you to adapt flexibly to change and evolve continuously through learning and practice.
  1. Interdisciplinary Perspective is the new IP. Once a firm prioritises learning over knowing, a logical next step is to stop clinging onto the concept of Intellectual Property. Applying the same old knowledge and methods will lead to the same results, and too often, stop well short of delivering something truly ground-breaking. The ‘new IP’ is one that is achieved by taking an interdisciplinary perspective, seeking cross-pollination from a range of disciplines and opening the organisation up both on the inside – to overcome corporate silos – and toward the outside. The ‘new IP’ believes that ideas from different origins want to complete each other.
  1. Constant prototyping. Automation and efficiency have been key drivers in business for a long time, but our world of change demands a new approach. Often business problems are not very clearly defined, and solutions are anything but static. A growth mindset requires a willingness not only to be flexible but also to experiment continuously. Failure must not only be acceptable but become a desired outcome without which learning cannot happen. So expect and accept volatility, and be ready to change and refine solutions incrementally, with constant prototyping.
  1. Problem focus rather than project focus. In modern organisations, innovation and problem-solving tend to be highly regimented, usually taking the shape of ‘projects’ to solve specific issues. Thinking of discrete projects with specific start and end dates can be counter-productive as this often narrows down the project team’s focus, making it hard to consider wider ramifications and interconnected problems. By contrast, a learning culture views experimentation and constant prototyping as an ongoing activity. These principles should pervade every function of the company and get built into its DNA. A continuous work stream will also make it easier to uncover latent needs, alternative ways of thinking and new opportunities
  1. Feedback loops. Designing for change requires effective and frequent feedback loops. Again, experimentation and failure - ‘test and learn’ - are at the heart of this process. The more often high quality feedback is sought and incorporated, the more rapidly evolution will occur, producing a steep upward trajectory of improvement. A process where mistakes or weaknesses go unidentified produces a slower upward trajectory. In fact, if there are too few or poor quality feedback loops, the organisation will see a decline in performance because serious problems won’t be spotted early enough to head them off.
It goes without saying that people are core to creating a learning culture in your organisation. However, creating teams of individuals from disparate backgrounds is nothing short of a challenge. It falls upon the team leaders to watch out for signs of team dysfunction, whether it’s lack of commitment, fear of conflict or trust issues. Having an ‘early warning system’ for dysfunctional behaviour means that you can head it off before it can impact on the team. This is especially critical as an organisation transitions from a knowledge-driven to a learning culture, which some employees may find harder to get accustomed to than others.

By Tom Pohlmann, head of values and strategy, Mu Sigma