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Creating a learning culture almost always involves a massive effort, and this is especially true if it's necessary to re-create the culture of an existing organization. If you decide to embark on the path of developing a learning culture, pay close attention to these potential stumbling blocks:
A BLOATED BUREAUCRACY. Nothing can slow an organization down faster than bureaucracy. Welch hated bureaucracy from the start, urging all managers to "fight it, kick it." Disdaining bureaucracy was one of the key GE values for years, and many of GE's key tactics and programs were aimed at eliminating unnecessary layers of management, needless approvals, and anything else that slowed the company down. Welch worked for years to replace GE's pervasive bureaucracy with trust, excitement, and informality.
AN ENTRENCHED CULTURE, MIRED IN THE PAST. How do most large companies get things done? The answer is: Our way. Transforming an organization almost always includes transforming the culture, which means changing the old mind-set. This is one of the most difficult aspects of leading any large-scale change in an organization. Welch was able to accomplish this through Work-Out, the GE values, eliminating nonperformers (the bottom 10 percent), and constantly communicating the message.
GETTING THE SEQUENCE WRONG. It would make little sense to attempt any large-scale change in a company that is about to be restructured or significantly downsized. An organization needs to be relatively stable before a learning infrastructure can be established. Otherwise, employees and managers alike will have a difficult time focusing on the task at hand, because they will be (correctly) absorbed with fixing the problems that are plaguing the corporation.
TRYING TO DO TOO MUCH, TOO SOON. The road to a learning organization involves many steps that are likely to require years, not months, to implement. In today's turbulent, short-term-oriented business environment, many business leaders may not have the time to do what Welch did. In today's corporate world, missing a quarterly profit goal by even a modest amount can send the company's stock plummeting by 20, 30, or even 40 percent. (It's an expectations game, as much as anything else.) Given that unforgiving reality, an impatient CEO may decide to move too quickly, skip steps, or assume that creating a few training courses is tantamount to creating a learning culture. While there is nothing inherently wrong with training—in fact, it is a vital part of the learning infrastructure—it is only a small part of the larger change effort.
LETTING DOWN YOUR GUARD. Managers who lead learning organizations cannot afford to get complacent or let down their guard. Learning must remain a top priority, and the message must be delivered consistently. Managers must send the message that learning is the key to the future, and that message must be backed up by the company's promotion and compensation systems.
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Depending upon your perspective, the case that started this chapter is either the simplest of the cases in this book or the biggest curve ball of the bunch. Unlike the other six scenarios, this one is really not fictitious, as it almost exactly describes the situation that confronted Jack Welch when he took the reins at GE in 1981.
The company's growth goal prior to Welch was to grow at a faster rate than the economy, making it a slightly-better-than-GNP company. There were more than 25,000 managers, and strategic planners often told the leaders how their businesses should be run. Managers weren't talking to employees, which helps to explain why they knew little about the morale of the workers. Many businesses at GE were limping along, at best. As a result of these and other problems, GE had lost half of its stock market value (when adjusted for inflation) in the decade prior to Welch's appointment.
What would Jack Welch do? In this particular case, we know what he did. He sold off losing businesses, kept and acquired market-leading businesses, fired the strategic planners, and worked every day to reduce bureaucracy. (Welch once compared bureaucracy to Dracula, saying that even after you've conquered it, it rises from the dead.) He spent years establishing an organization that thrived on trust and candor, and valued ideas over rank. He used growth initiatives to make the company more competitive, simultaneously ensuring that all of GE's diverse businesses operated from the same playbook. He took the concept of leadership to a new level, and never stopped trying to improve things.
Welch raised the bar on multiple fronts. For example, in his view, double-digit growth was the only acceptable growth measurement. And he worked feverishly to knock down as many boundaries as he could, and to install in their place a learning infrastructure that would help the company gather and implement strong new ideas.
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