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At 11:55 04-02-2002, Lin Grist wrote:<br>
<br>
<blockquote type=cite cite>hi lisa there was some wonderful
work done by a group at Royal Dutch Shell<br>
in The mid 90's. They looked at companies that had been in business
for over<br>
100 years and what is was about those companies that allowed them to
survive<br>
and prosper over the long haul.<br>
<br>
I think you would find some very useful stuff in the article written by
Arie<br>
deHeus (may have wrong spelling can anyone help?) who was at the time the
VP<br>
of Strategic Planning for Royal Dutch Shell. They looked at
companies like<br>
Hudson's Bay which has been around for about 600 years in one form
or<br>
another.<br>
<br>
I will go through my archives and see if I can find the article - I
moved<br>
countries a couple of years ago, so it might be a while - otherwise is
there<br>
anyone else on the net who has this article?<br>
Lin Grist<br>
London UK</blockquote><br>
<br>
Hi Lin, Lisa and all:<br>
<br>
The correct spelling is Arie de Geus and the article you reffered
is<br>
"Planning as Learning", published in Harvard Business Review,
<br>
March-April, 1988, pg. 70-74.<br>
<br>
I provide below a summary of that article and other de Geus'
writings<br>
that may be of interest to some. It is a text (that I think that Lisa
already <br>
knows) that I wrote as part of my never ending "Search for
LO's"... <br>
<br>
By the way, de Geus' concept of "living company" is another
version of <br>
self-organization ;-)<br>
<br>
Regards<br>
<br>
Artur<br>
<br>
-----------<br>
<br>
<br>
Part II - Two Conceptions of LO's<br>
<br>
II.1. Arie de Geus and the "Learning Company"<br>
<br>
I became acquainted with the concept of "Learning Organization"
through <br>
the seminal article of Arie de Geus "Planning as Learning"
(PL), published <br>
in the March-April 1988 issue of of the Harvard Business Review, later
<br>
developed in his book "The Living Company" (LC), of 1997. De
Geus also <br>
published an article with the title "The Living Company" in the
Harvard <br>
Business Review (March-April 1997) - indeed a presentation of the book
<br>
(LC-HBR).<br>
<br>
It's true that the expression "learning organization" doesn't
appear in <br>
the 1988 HBR article. But the concepts of "institutional
learning", <br>
"accelerating institutional learning", "mental
models" and "shared mental <br>
models" were already there. So, when the LO concept appeared it's
relation <br>
with the article from de Geus was obvious for me.<br>
<br>
I think the majority of people, in this list and elsewhere, more often
<br>
relate the origin of the concept of LO to Senge and his "The Fifth
<br>
Discipline" (1990). I don't. And I think it is important to state
this, as <br>
I will try to show that the two conceptions, even if they have <br>
similarities, have different origins and objectives and really constitute
<br>
two different models of the "Learning Organization".<br>
<br>
It would be perhaps interesting to open the previous paragraph to <br>
discussion and see how many would like to question the paternity I am
<br>
stating. Fortunately (or unfortunately) the point has no discussion! It's
<br>
Senge, himself, in his Forward to "The Living Company" that
says: "It was <br>
through Arie de Geus, whom I met over 15 years ago, that I first became
<br>
seriously acquainted with the concept of organizational learning. That
<br>
meeting began the journey of a lifetime." (LC, pg. 1)<br>
<br>
Back to the 1988 HBR article -- there are probably many personal reasons
<br>
to justify why I immediately found it so important.<br>
<br>
First, it was not a text from a scholar, reflecting about companies from
<br>
the outside -- it was from an insider, a "corporate man", at
the time the head <br>
of planning for the Shell Group, where he previously had line
responsibilities. <br>
And this article was a follow-up to two articles published in HBR in
<br>
1985 by Pierre Wack (also previously head of planning at Shell) about
<br>
scenario planning as a tool to change mental models ("micro
worlds") <br>
of the management team. All this resonated with my experience of almost
<br>
20 years at IBM.<br>
<br>
Second, de Geus was not claming that a "learning company"
should be <br>
"created", nor was he a guru with a "prescription"
(like reengineering or <br>
downsizing); on the contrary, he wasn't proposing any "new
solution"; he <br>
was stating that every company is a learning company -- some of them
<br>
completely fulfill that potential, the majority suffer from
"learning <br>
disabilities". I could observe those disabilities both at IBM and
with its <br>
customers...<br>
<br>
Third, being myself a planning consultant (in my case for Information
<br>
Systems) I had already noticed that the institutional learning obtained
<br>
during the planning process is at least so important as the plan itself.
<br>
In the case of Shell, de Geus shows how the use of "scenario
planning" at <br>
the corporate level can change the older mental models of managers and
<br>
create a new set of shared mental models about different possibilities.
<br>
Hence, planning can be a tool for institutional learning and, as planning
<br>
is done regularly, a tool for continuous learning. In my case, it was
<br>
mainly the learning achieved by all managers and departments of a company
<br>
that Information is a corporate asset that must be managed at an <br>
organization wide level and not only at a departmental or individual
<br>
level. Indeed the creation of a new shared mental model in relation with
<br>
"Information Management" was usually considered by customers at
least so <br>
important as the Plan itself.<br>
<br>
But, fourth, and most important: in the 1988 HBR article, de Geus <br>
(briefly) described the Shell Study about longevity in companies (later
<br>
developed in LC). The Shell study discovered that some 1/3 of all created
<br>
companies die in about 10 years -- companies have a big infant mortality
<br>
rate! But even the life span of other companies is only about 20-30
years.<br>
"Yet some companies obviously do learn and can adapt. In fact our
survey <br>
identified several that were still vigorous at 200, 300, and even 700
<br>
years of age. What made the difference? Why are some companies better
able <br>
to adapt?" (de Geus, PL). A list of some of these companies is
provided in <br>
LC and include America's DuPont, the Hudson Company and Kodak, Japan's
<br>
Mitsui, Suminoto (created in 1590) and Daimasu, and some European <br>
companies (the Swedish company Stora is more than 700 years old), not to
<br>
mention the UK members of the "Tercentenarians Club", which
only accept as <br>
members companies over 300 years old... The study identified 40 companies
<br>
"older and greater than Shell" (born in 1890) and studied 27 in
detail <br>
(LC, pg.10-12).<br>
<br>
The LO model of the Geus has the following important
characteristics:<br>
1 It's not an "a priori" or "prescriptive" model --
there are no rules or <br>
disciplines that organizations obey to became LO's. On the contrary, it
is <br>
an "a posteriori" concept, related with the capacity of real
companies to <br>
adapt and survive.<br>
2 If many companies die in their first years and even most big companies
<br>
die in 20-30 years, and if, on the contrary there are companies that
<br>
survive for centuries (in a sort of "survival of species")
then, to <br>
explain that fact, de Geus admits that those companies that adapt and
<br>
survive are able to learn, and to learn quickly enough to survive.<br>
3 Having identified those companies, the Shell Study tries to understand
<br>
what are the common characteristics of those longer living companies that
<br>
has enabled them to learn, adapt and survive (I will come back to this
<br>
point).<br>
4 In PL and in LC-HBR, de Geus never uses the expression LO but only
<br>
"institutional learning". According to the Index of LC, the
expression LO <br>
is used 4 times. Indeed, in two of these 4 instances the expression used
<br>
is "learning company" (pg. 28, 29). In the other 2 (pg. 19 and
77) LO is <br>
used, but referring to a general concept that others use. In a certain
<br>
sense, de Geus doesn't seem very confortable using the expression LO and
<br>
speaks only about Companies. He relates company longevity with company
<br>
learning, hence the expression "Learning Companies". This is
due to the <br>
fact that, like species, companies survive in an environment of <br>
competition. So he postulates that companies can learn and, hence, are
<br>
"living beings", as "only living beings can learn"
(LC, pg. 95).<br>
If on the contrary we consider, for instance, organizations of Public
<br>
Administration, or even some NGO's that are publicly subsided, they don't
<br>
fully compete and can be maintained alive by political decision. So the
<br>
fact that some government organizations are 200 years old, doesn't <br>
necessarily mean that they are able to learn. They can be unable to
<br>
survive but being maintained "alive" (more or less
"alive"...) by <br>
"artificial" ways. This is my interpretation it is not clearly
stated by <br>
de Geus.<br>
<br>
Back to the characteristics of "Learning Companies", de Geus
equates <br>
"companies that survive for a long time" with "companies
that learn and <br>
adapt", hence "learning companies".<br>
<br>
Based again in the Shell Study, he describes (in LC) the characteristics
<br>
of those companies:<br>
(a) "Sensitive to his environment" (open, learning) <br>
(b) "Cohesive, with a strong sense of identity" (have a
"persona") <br>
(c) "Tolerant" (also used "decentralized") <br>
(d) "Conservative in Finance" (pg. 12-14).<br>
<br>
The rest of the book is a development of these characteristics and <br>
an analysis of "companies as living beings".I will not devellop
those <br>
characteristics here, but I reccomend the reading. I will only refer
<br>
to some other points from LC that I find interesting: <br>
- A company is not an "economic machine". Its aim is not <br>
to maximize profits. A company is a "living being", composed
<br>
of people ("human beings" and not "human resources");
it aim <br>
is "to survive" (LC, pg.25-27; see also the chapter
"Managing <br>
for Profit or Longevity: Is there a Choice"? pg. 123-157);<br>
- For a company to survive it has to have the capacity to shift <br>
and change, to adapt and learn, to continuously produce <br>
new shared mental models of the environment and of the <br>
company itself. "The essence of a company is learning" <br>
(to compare with Harrison Owen's "The Business of Business is <br>
Learning", also of 1988);<br>
- "the essence of learning is the ability to manage change by
changing <br>
yourself both for people growth (Piaget's "accommodation"
concept, <br>
expressly referred by de Geus) and for companies";<br>
- "(as) decision making is learning, then all companies learn all
the time. <br>
There is no need to "build" a learning organization. You
already have a <br>
learning organization".<br>
- but, except in the case of longer living companies, frequently, <br>
companies have learning disabilities and in relationship to company
<br>
learning, one can say that: <br>
- "It is slow... <br>
- It closes down options... <br>
- It depends on learning by experience, instead of by simulation...
<br>
- It breeds fear..." (LC, pg. 77-80)<br>
Some of these points are developed in a different way in LC-HBR, namely:
<br>
- "Why do so many companies die young? Mounting evidence suggests
<br>
that corporations fail because their policies and practices are based
<br>
too heavily on the thinking and the language of economics. <br>
<br>
Put another way, companies die because their managers focus <br>
exclusively on producing goods and services and forget that the <br>
organization is a community of human beings that is in business <br>
- any business - to stay alive. Managers concern themselves <br>
with land, labor, and capital, and overlook the fact that labor means
<br>
real people" (pg. 52); <br>
- "The manager of a living company understands that keeping the
<br>
company alive means handing it over to a successor in at least <br>
the same health that it was in when he or she took charge. <br>
To do that, a manager must let people grow within a community <br>
that is held together by clearly stated values. The manager, therefore,
<br>
must place commitment to people before assets, respect for innovation
<br>
before devotion to policy, the messiness of learning before orderly
<br>
procedures, and the perpetuation of the community before all other <br>
concerns" (pg. 54); <br>
- "such companies are willing to scuttle assets in order to survive.
<br>
<br>
To them, assets and profits are like oxygen: necessary for life but
<br>
not the purpose of life" (pg. 55); <br>
- "And once a company has adapted to a new environment, it is no
<br>
longer the organization it used to be; it has evolved. That is the
essence of learning" (pg. 56).<br>
A last comment to stress that for people who have difficulty in seeing
<br>
companies as "living beings" (and not as "machines")
the Foreword of Peter <br>
Senge to LC makes a compiling case for that hypothesis. I have used it
<br>
with customers and I can guarantee its success...<br>
__________________________ <br>
References<br>
Arie de Geus, "Planning as Learning" (PL), in Harvard Business
Review, <br>
March-April, 1988, pg. 70-74<br>
Arie de Geus, "The Living Company Growth, Learning and Longevity in
<br>
Business" (LC), 1997, Nicholas Brealey (254 pgs)<br>
Arie de Geus, "The Living Company" (LC-HBR) , in Harvard
Business Review, <br>
March-April 1997, pg.51-59<br>
Harrison Owen, "The Business of Business is Learning", <br>
1988, an informal paper, url:
<a href="http://www.openspaceworld.com/business.htm" eudora="autourl"><font color="#0000FF"><u>www.openspaceworld.com/business.htm<br>
</a></u></font>Peter Senge, Foreword to A. de Geus' "The Living
Company" <br>
-- <br>
<br>
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