In my masters thesis I tried to develop a simple, generic, easily manageable approach to introducing Learning Organization environment in an organization

1. FRAMEWORK FOR LEARNING
ORGANIZATION, BASED ON A COMPANY
STUDY EXAMPLE
Department of Mechanical and Industrial Engineering
Chair of Production Engineering
Supervisor - Professor Tauno Otto (not a very helpful person)
Author - Archil Nasrashvili
2016

2. PROBLEM DESCRIPTION
• not enough tempo of improvement, reason - low rate of learning
Problem to be solved - performance improvement in manufacturing team via
improving learning environment and more specifically using “Learning
Organizational” methodology
Challenges to be addressed
1. To prove that LO principles are connected with performance improvement on team level
2. To develop a simple, generic, easily manageable approach to introducing LO environment
2
Need for improving performance of production and supply at E***** Estonia THW
department

3. OBJECTIVE I
To demonstrate that different teams within organizations, which deliberately or
unknowingly employ learning organization principles show better performance
Method:
1. Gather all the KPI’s per each team and measure their performance
2. Measure teams on “Learning Organizational” principles
3. Compare these two sets of data to each other to see if there is a correlation
3

4. OBJECTIVE II
Solve the issue of vagueness of the process of introducing “Learning
Organizational” principles via proposing a framework for practicing it as a
management system
Method:
1. Gather major implications of organizational learning theories
2. Define a process of implementing learning organizational principles using “Deming cycle”
4

5. THW consists of four teams
1. Order fulfilment - conducting operations for the purpose of order intake, sales, and customer care
2. Supply chain team - sourcing and purchasing, production planning, inventory management, and
forecasting
3. Production operations team
4. Warehouse team
5
“THW” DEPARTMENT OF E*****
The company study performed at E******’s test hardware (THW) department, it is possessing high
level of knowhow and is manufacturing oriented, specialized in producing test and measurement
hardware devices for internal usage only

6. “THW” DEPARTMENT’S KPI’S
Key performance indicators for all of the teams:
Unit / team KPI1 KPI2 KPI3 KPI4
The Department Customer Satisfaction On Cost
Order Fulfillment Trouble Report Inventory Days
Production Fault Report PRO Closing 5S
Validated Kaizen
Proposals
Supply Chain LT for Stations LT for Components Buffer Fulfillment
Logistics Service
Performance
Warehouse Outbound Quality Inbound Service
6

7. “THW” DEPARTMENT’S KPI’S
One measure per each team, same as an average
result of all KPI standings:
85.5%
87.2%
81.0%
82.6%
76.7%
AVERAGES
KPI Standings, averaged per team
Order Fulfillment Production Supply Chain The Department Warehouse
KPI results for Q1 & 2/3 of Q2:
KPI results for Q1 & 2/3 of Q2.
2016
Order
Fulfillment
Production
Supply
Chain
Warehouse
Trouble Report 78%
Inventory Days 93%
Fault Report 76%
PRO Closing 79%
5S 96%
Validated Kaizen Proposals 98%
LT - Station 54%
LT - Components 72%
Buffer Fulfillment 99%
Logistics Service Performance 98%
Outbound Quality 57%
Inbound Service Level 96% 7

8. LEARNING ORGANIZATION SURVEY
The survey benchmarks an organization against three main building blocks of Garvin’s LO:
1. Supportive learning environment
2. Concrete learning processes and practices
3. Leadership that reinforces learning
Supportive Learning Environment
Psychological safety
Appreciation of differences
Openness to new ideas
Time for reflection
Concrete Learning Processes and Practices
Experimentation
Information collection
Analysis
Education and training
Information transfer
Leadership That Reinforces Learning Leadership supportiveness
8

9. LEARNING ORGANISATION SURVEY RESULTS
Supportive Learning
Environment
Concrete Learning
Processes and Practices
Leadership that
Reinforces Learning
Department VS Base Data
The Department
Bottom quartile
Top quartile
I. Supportive Learning Environment
Psychological safety 69
Appreciation of differences 70
Openness to new ideas 71
Time for reflection 73
Learning environment composite 71
II. Concrete Learning Processes and Practices
Experimentation 49
Information collection 41
Analysis 60
Education and training 63
Information transfer 38
Learning processes composite 50
III. Leadership That Reinforces Learning
Composite for this block 73
9
Comparing to surveys base-data consisting of 225
top US companies

10. LEARNING ORGANISATION SURVEY RESULTS
Teams’ standings on three building blocks of learning organization
10

11. LEARNING ORGANISATION SURVEY RESULTS
Team’s standings on
three building blocks
of Learning
Organization survey
Weak and strong
sides of the teams
as revealed by the
survey
Unit
Supportive
Learning
Environment
Concrete Learning
Processes and
Practices
Leadership that
Reinforces Learning
The Department 71 50 73
Order Fulfillment 73 37 89
Production 70 62 72
Supply Chain 69 48 66
Warehouse 71 54 64
Weak and
strong sides of
the teams
Supportive Learning Environment Concrete Learning Processes & Practices Leadership
Psychological
safety
Appreciation
of
differences
Openness
to
new
ideas
Time
for
reflection
Experimentation
Information
collection
Analysis
Education
and
training
Information
transfer
Leadership
that
reinforces
learning
The department
Order fulfillment
Production
Supply chain
Warehouse
11

12. ANALYSIS RESULTS
One measure, same as an
average result of all survey
standings per each team, against
survey’s base data’s top results
One measure per each team,
same as an average result of
all KPI standings
81.0%
83.0%
74.5%
79.0%
77.0%
AVERAGES
Learning Organization Survey Standings
Order Fulfillment Production Supply Chain The Department Warehouse
85.5%
87.2%
81.0%
82.6%
76.7%
AVERAGES
KPI Standings, averaged per team
Order Fulfillment Production Supply Chain The Department Warehouse
12

13. ANALYSIS RESULTS
Correlation Coefficient: An uphill (positive) linear relationship of 0.796
87.2%
85.5%
82.6%
81.0%
76.7%
83.0%
81.0%
79.0%
74.5%
77.0%
68.0%
70.0%
72.0%
74.0%
76.0%
78.0%
80.0%
82.0%
84.0%
86.0%
88.0%
90.0%
Production Order Fulfillment The Department Supply Chain Warehouse
LO Survey results vs KPI Results
KPI Results LO Survey Results 13

14. DEVELOPED FRAMEWORK FOR LO IMPLEMENTATION
Aim was gathering major implications of organizational learning theories and find corresponding procedural practices to address them
Learning Modes [1] Same As Can be managed using
Learning about things Knowledge
Systematic problem solving [Garvin]
Experimentation with new approaches [Garvin]
Systems thinking [Senge]
Transferring knowledge [Garvin]
Learning how to do things
Skills, competences,
abilities
Systems thinking [Senge]
Team learning [Senge]
Systematic problem solving [Garvin]
Transferring knowledge [Garvin]
Learn from own experience & past history [Garvin]
Learn from experiences & others best practices
[Garvin]
Learning to become ourselves and
achieve our true potential
Personal development
Personal Mastery [Senge]
Mental Models [Senge]
Shared Vision [Senge]
Learning to achieve things together Collaborative enquiry
Mental Models [Senge]
Systems Thinking [Senge]
Shared Vision [Senge]
Team learning [Senge] 14

15. DEVELOPED FRAMEWORK FOR LO IMPLEMENTATION
Learning Levels [2] Same As Can be managed using
Adaptive learning
Detect and correct errors in
operating procedures
Systems thinking [Senge]
Team learning [Senge]
All five of Garvin's LO procedural practices
Generative learning I
Questioning the procedures,
behaviours, assumptions
Systems thinking [Senge]
Team learning [Senge]
Mental models [Senge]
All five of Garvin's LO procedural practices
Generative learning II
Corrective change in the
system of sets of alternatives
Systems thinking [Senge]
Mental models [Senge]
All five of Garvin's LO procedural practices
[3] From / To Tacit Explicit
Tacit
Socialization Externalization
Mental Models Systems thinking
Personal Mastery Learn from own experience & past history [Garvin]
Explicit
Internalization Combination
Team learning Shared Vision
Systematic problem solving Experimentation with new approaches [Garvin]
Learn from experiences & others best practices [Garvin]
15

16. DEVELOPED FRAMEWORK FOR LO IMPLEMENTATION
16

17. CONCLUSIONS
The thesis tried to address both challenges stated in the “problem description” section
It was proved that LO principles are connected with organizational performance on team levels in
the studied company, with correlation coefficient of 0.796, the teams scoring high on learning
organization principles also score better in terms of performing on key performance indicators
A framework for managing learning organization principles was successfully introduced, giving
answer to “where to start” and “how to proceed”, based on several organizational learning theories
and using PDCA cycle approach
17

18. Thank you!

19. THW DEPARTMENT’S LO SURVEY RESULTS
1. Supportive Learning Environment Order Fulfillment Production Supply Chain Warehouse
Psychological safety 71 69 69 68
Appreciation of differences 74 68 68 70
Openness to new ideas 67 73 68 77
Time for reflection 80 72 73 69
Learning environment composite 73 70 69 71
2. Concrete Learning Processes and Practices
Experimentation 38 67 43 49
Information collection 27 48 45 44
Analysis 50 62 57 70
Education and training 41 83 55 72
Information transfer 29 51 38 33
Learning processes composite 37 62 48 54
3. Leadership That Reinforces Learning 89 72 66 64
Composite for this block 89 72 66 64

20. BASE DATA OF LO SURVEY
Top quartile Third quartile Median Second quartile
Bottom
quartile
Supportive Learning Environment
Psychological safety 87 - 100 77 - 86 76 67 - 75 31 - 66
Appreciation of differences 87 - 100 65 - 79 64 57 - 63 14 - 56
Openness to new ideas 96 - 100 91 - 95 90 81 - 89 38 - 80
Time for reflection 65 - 100 51 - 64 50 36 - 49 14 - 35
Learning environment composite 80 - 90 72 - 79 71 62 - 70 31 - 61
Concrete Learning Processes and Practices
Experimentation 83 - 100 72 - 82 71 54 - 70 18 - 53
Information collection 90 - 100 81 - 89 80 71 - 79 23 - 70
Analysis 87 - 100 72 - 86 71 57 - 70 19 - 56
Education and training 90 - 100 81 - 89 80 69 - 79 26 - 68
Information transfer 85 - 100 72 - 84 71 61 - 70 34 - 60
Learning processes composite 83 - 97 75 - 82 74 63 - 73 31 - 62
Leadership That Reinforces Learning
Composite for this block 83 - 100 77 - 82 76 67 - 75 33 - 66
Building Blocks and Their
Subcomponents
Scaled Scores
Base Data of 225 Organizations surveyed

21. UNDERSTANDING CONSISTENCY OF THE RESPONSES
Leadership
Psychological
safety
Appreciation
of
differences
Openness
to
new
ideas
Time
for
reflection
Experimentation
Information
collection
Analysis
Education
and
training
Information
transfer
Leadership
That
Reinforces
Learning
Order Fulfillment 1.12 1.97 1.58 1.87 1.37 0.10 1.38 0.83 1.05 0.91
Production 1.65 1.78 1.15 1.55 1.50 1.54 1.34 1.07 1.37 1.21
Supply Chain 1.28 0.89 1.65 1.93 2.37 1.97 1.54 1.18 1.73 1.27
Warehouse 1.18 1.01 1.39 1.07 1.93 2.65 2.15 1.66 0.77 2.21
Supportive Learning Environment Concrete Learning Processes & Practices
Standard Deviation of
the responses
Performed STDev analysis to see how consistent the responses were

22. INFORMATION COLLECTION QUESTIONS FROM THE LO
SURVEY
Experimentation Information Collection
This
unit
experiments
frequently
with
new
ways
of
working
This
unit
experiments
frequently
with
new
product
or
service
offerings
This
unit
has
a
formal
process
for
conducting
and
evaluating
experiments
or
new
ideas
This
unit
frequently
employs
prototypes
or
simulations
when
trying
out
new
ideas
This
unit
systematically
collects
information
on
competitors
This
unit
systematically
collects
information
on
customers
This
unit
systematically
collects
information
on
economic
and
social
trends
This
unit
systematically
collects
information
on
technological
trends
This
unit
frequently
compares
its
performance
with
that
of
competitors
This
unit
frequently
compares
its
performance
with
that
of
best-in-
class
organizations
Order fulfillment 3 2 3 2 1 6 1 1 1 1
Order fulfillment 7 1 3 3 1 7 1 1 1 1
Order fulfillment 3 3 1 1 1 6 1 1 1 1
Mean 4.33 2.00 2.33 2.00 1.00 6.33 1.00 1.00 1.00 1.00
Standard Deviation 2.31 1.00 1.15 1.00 0.00 0.58 0.00 0.00 0.00 0.00
Average Standard
Deviation
1.37 0.10

23. Plan
KPI’s (Key performance indicators) Partially
Assign KPI responsibilities to the teams, and some
of the corresponding processes need to be
aligned too
LO survey (Learning organization) Yes Performed
Action plan Yes Created
Do (Introduce and adjust procedural practices)
Action / process Practiced? Clarification
Systematic problem-solving Not practiced Use Xerox problem solving method
Experimentation with new
approaches
Practiced
Prices variation tool was created as an
experiment which was successful, consequently
the "On Cost" KPI has been improving
dramatically
Learning from own experience Practiced
Monthly reviews of past performances and
lessons learned
Learning from experience of others Not practiced Benchmarking THW Estonia against THW China
Knowledge transfer facilitation
Partially
practiced
Practiced via trainings through intranet and work-
shadowing. Evaluation of these activities need to
be in place
DO (Introduce trainings in Senge's five disciplines)
Action / process Practiced? Clarification
Personal mastery Not practiced
Individual exercises (possible in small groups of
three)
Mental models Not practiced
Individual exercises (possible in small groups of
three)
Systems thinking Not practiced Group exercises
Shared vision Not practiced Group exercises
Team learning Not practiced Group exercises
Check
Action / process Practiced? Clarification
Monitor KPI's Practiced Quarterly
Measure LO status using LO
survey
Not practiced Initial survey is performed
Monitor increase of knowledge Not practiced Stages of technological knowledge tool
Update KPI vs. LO survey
correlation graph
Not practiced For the purposes of seeing the impact
Act
Action / process Practiced? Clarification
Adjust based on new results Not practiced Results - LO survey; KPI results; STK results
PROPOSED FRAMEWORK FOR LO IMPLEMENTATION
AT E******’S THW DEPARTMENT
Action / process Practiced? Clarification
CoP’s (Communities of practice) Yes Called "process leads" in E*****

24. XEROX’S SYSTEMATIC PROBLEM SOLVING METHOD
Step Questions to be answered Expansion / Divergence Contraction / Convergence
What's needed to go to the next
step
1. Identify and select problem What do we want to change? Lots of problems for consideration
One problem statement,
one "desired state" agreed
upon
Identification of the gap
"Desired state" described in
observable terms
2. Analyze problem
What's preventing us from
reaching the "desired state"?
Lots of potential causes identified
Key cause(s) identified and
verified
Key cause(s) documented and
ranked
3. Generate potential
solutions
How could we make the
change?
Lots of ideas on how to solve the
problem
Potential solutions clarified Solution list
4. Select and plan the solution What's the best way to do it?
Lots of criteria for evaluating potential
solutions
Lots of ideas on how to implement
and evaluate the selected solution
Criteria to use for evaluation
solution agreed upon
Implementation and
evaluation plans agreed
upon
Plan for making and monitoring the
change
Measurement criteria to evaluate
solution effectiveness
5. Implement the solution Are we following the plan?
Implementation of agreed
on contingency plans (if
necessary)
Solution in place
6. Evaluate the solution How well did it work?
Effectiveness of solution
agreed upon
Verification that the problem is
solved or
Agreement to address continuing
problems

25. STK - STAGES OF TECHNOLOGICAL KNOWLEDGE
Stage Name Description Comment
Knowledge Status -
1 / 0
0 Unknown
Complete ignorance: the existence of X is not
known
Effects of X perceived as pure
noise
1
1 Recognized
The existence of X is known, but magnitude is
only known qualitatively. Even ordinal measure
may not exist
X is an exogenous disturbance 1
2 Measurable
X can be measured on a cardinal scale, through
a repeatable measurement process
1
3 Adjustable
The mean level of X can be altered at will but
the actual level has high variation
X is endogenous to the process 1
4 Capable
Control of the variance: enough is known to
reduce the variance of X to a fraction of its
uncontrolled level
X can be used as a control or
outcome variable for the process
0.5
5
Perfectly
Understood
Complete knowledge: X can be held at a target
level under all conditions
Stage 5 knowledge is unreachable;
it can only be achieved partially
0
75%

26. Year End Estimate
Current Status
LEAD Time - STATION
THW Supply 2016-04 Commitment
Warning
LT w/o external impact would been 17
weeks.
Reason:
Z:TechnologyTestHardwareSupply01
Portfolio and Order Management04
MiscellaneousBSC Station details.xls
Consequence: Delays in delivering
› Close contact with critical suppliers. Follow-
up meetings initiated.
› Forecast to key suppliers sent
› Many new structures in SAP
› THW Supply included to TDM process
› Design issues
› Prioritization
› Problems with quality
› Orders on hold
› Materials with long LT
› Order intake w/o forecast
› Weekly meetings with Design to follow
changes
› Improve forecasting process
› Project towards Avex for quality
improvement
30
50
70
90
110
130
150
170
190
210
230
J A S O N D J V M A M J J A S O N D
Days
from
order
to
delivery
CPM
PSM
Stretch
Commitment
Robust
3 months
Achievements Issues & Risks Actions
Comments to performance
Target Owner/Driver: D****** J****** / R****** R****** Target Specification:
Facts: THW Supply delivered 7 stations with
average LT of 162 days/23weeks.

27. DIFFERENT APPROACHES TO LEARNING
ORGANISATION
Name of the method, tool, and author Function
1
Measuring achievement of learning organizations. Learning Organization Rapid
Diagnostic Tool. Paul Chinowsky
Diagnosing on Learning organization
2 The Fifth Discipline, Art and Practice of the Learning Organization. Peter Senge Conceptual exercises for learning organization
3
The Fifth Discipline Field book: Strategies and Tools for Building a Learning
Organization. Peter Senge
Trainings for conceptual exercises
4 The Learning Company: A Strategy for Sustainable Development. Mike Pedler Main principles for creating LO environment
5
Learning in Action: A Guide to Putting the Learning Organization to Work. David
A. Garvin
Procedural practices for LO environment
6 Diagnosing and measuring learning organizations. Moilanen Learning Organization Diamond Tool
7 Dimensions of the learning organization questionnaire. Watkins and Marsick Diagnosing on LO environment
8
Strategy and the learning organization: a maturity model for the formation of
strategy. John Kenny
Changes in strategy of a company is suggested
9
Building the Learning Organization: A Systems Approach to Quantum
Improvement and Global Success. Kasvi
General principles and procedural practices
10 Is Yours a Learning Organization. Garvin Diagnosing on LO environment

28. Systems Thinking
How to understand
complex situations?
THE FIVE DISCIPLINES BY PETER SENGE
Personal Mastery
Clarify personal vision
Where do you want to be?
Mental Models
How to distinguish real data from
personal experiences?
Shared vision
To create commonality
of purpose
Team Learning
› How to function as
a whole, a team?

29. WHY LEARNING ORGANIZATION?
Longitudinal study of LO enabled vs. traditional organizations [4]:
• Overall organizational performance and organizational innovativeness is highly affected by LO [5]
• Learning organizational principles as major source of competitive advantage [6]
• While this concept has been introduced several decades ago, it has not been embraced by
companies as expected due to different reasons:
1. the vagueness of the process of introducing and maintaining the learning organization principles [7]
2. the scope being wide, time consuming, and return on investment is far in time [8]
Market Share ROA ROE Gross Margin
Learning companies (n = 16) 18.36 5.16 11.59 37.1
Competitors (n = 27) 17.28 4.82 11.26 33.19

30. SOURCES CITED IN THIS PRESENTATION
[1] - Mike Pedler, J. B. T. B., 1991. The Learning Company: A Strategy for Sustainable Development. 2, illustrated, reissue ed. Indiana:
McGraw-Hill
[2] - Bateson, G., 1987. Steps to an Ecology of Mind. Collected Essays in Anthropology, Psychiatry, Evolution, and Epistemology.
Northvale, New Jersey, London: Chandler publications for health sciences
[3] - Ikujirō Nonaka, H. T., 1995. The Knowledge-creating Company: How Japanese Companies Create the Dynamics of Innovation.
illustrated ed. Oxford: Oxford University Press.
[4] Ryan, S. C. G. P. J., 2008. The organizational performance of learning companies. The Learning Organization, Vol. 15(3), pp. 225 –
239
[5] Norashikin Husseina, S. O. F. N. N. A. I., 2015. Learning Organization Culture, Organizational Performance and Organizational
Innovativeness in a Public Institution of Higher Education in Malaysia: A Preliminary Study. Shah Alam, Malaysia, Elsevier, p. 512 – 519.
[6] Kabadayı Kuşcua, M. Y. ,. F. G. G., 2015. Learning Organization and its Cultural Manifestations: Evidence from a Global White Goods
Manufacturer. Istanbul, Elsevier Ltd..
[7] Garvin, D. A., 2000. Learning in Action: A Guide to Putting the Learning Organization to Work. s.l. Harvard Business School Press,.
[8] Etienne Wenger, R. M. a. W. M. S., 2002. Cultivating Communities of Practice: A Guide to Managing Knowledge - Seven Principles for
Cultivating Communities of Practice. s.l.:Harvard Business School Press

31. WEAKNESS
We know how the KPI’s are created and how the benchmark scores are designated to them –
• it’s either from the business needs
• from the existent results
• or the combination of both
Either way there is a high possibility that for those teams who are already performing better than
the rest the KPI’s benchmark scores are automatically high even without realizing it, and vice
versa for the low performing teams.
Future research needs to figure out a method to somehow apply objective KPI benchmark
scoring to the teams, taking into account the peculiarities of the internal and external
environment.