1. 2/19/00 Prepared by James R. Burns 1 Microworlds: The Technology of the Learning Organization Senge, Chapter 17 THE FIFTH DISCIPLINE

2. 2/19/00Prepared by James R. Burns2 How can we rediscover the child learner within us? ä Human beings learn best through firsthand experience. ä Learning by doing only works so long as the feedback from our actions is rapid and unambiguous ä But learning from experience is neither rapid and unambiguous because the consequences of our actions are separated from us in time and space

3. 2/19/00Prepared by James R. Burns3 How then can we learn? Microworlds (MW) ä MWs enable managers and management teams to begin “learning by doing” ä MWs are nothing more or less than interactive simulations ä MWs compress time and space so that it becomes possible to experiment and to learn when the consequences are in the distant future and in distant parts of the organization

4. 2/19/00Prepared by James R. Burns4 Transitional objects: the way children learn ä Children have a rate of learning that is truly astounding ä They rehearse with transitional objects: dolls, blocks, play-houses, etc.. ä Managers too have their transitional objects: MWs ä When teams go white-water rafting, participate in a role playing exercise, participate in a dialogue practice session, they are engaging in a microworld.

5. 2/19/00Prepared by James R. Burns5 Transitional objects: Are they the best? ä A white-water rafting trip doesn’t produce powerful insights into strategic business issues ä Role-playing exercises do not show us whether our personnel policies are aligned with our manufacturing and marketing policies

6. 2/19/00Prepared by James R. Burns6 What about computer simulations? ä PC is ubiquitous and getting more powerful every month ä These simulations will prove to be a critical technology for implementing the disciplines of the learning organization

7. 2/19/00Prepared by James R. Burns7 How Does Organizational Learning Occur? ä According to Shell’s Arie de Geus, by ä Changing the rules of the game (through openness and localness) ä Through play ä Microworlds are places for relevant play

8. 2/19/00Prepared by James R. Burns8 MWs allow for…. ä issues and dynamics of complex business situations to be explored through trying out new strategies and policies and seeing what might happen ä Costs of failed experiments disappear ä Organizational sanctions against experimentation are nonexistent

9. 2/19/00Prepared by James R. Burns9 MWs are being used today by managers…. ä for managing growth ä for product development ä for improving quality in both service and manufacturing business ä and they build upon the system archetypes

10. 2/19/00Prepared by James R. Burns10 MW1: Future Learning: Discovering Internal Contradictions in a Strategy ä Lying behind all strategies are assumptions, which remain implicit and untested ä These assumptions have internal contradictions ä Such internal contradictions cause the strategy to also have internal contradictions ä Such internal contradictions make the strategy difficult to implement

11. 2/19/00Prepared by James R. Burns11 The Business Plan of Index Computer Company ä GOAL: reach 2 billion in sales in four years ä Reqd. James Sawyer, vice pres. of sales, to double his sales force ä Other top managers were unsympathetic saying “you will work it out” ä While uncomfortable, Mr. Sawyer did not want to become a “nay sayer.”

12. 2/19/00Prepared by James R. Burns12 Executives split into 3-person microworld teams to play out the consequences of the sales plan ä They constructed an explicit model of the assumptions behind the plan ä 20% annual sales growth ä Hire 20% more salespeople and you make 20% more sales ä Sawyer says “wait a minute...not all salespeople are equal…there is much they have to learn…before they can sell a single system

13. 2/19/00Prepared by James R. Burns13 Sawyer continues... ä we got most our of our sales people originally by hiring away from competitors ä today 20% is so many people that we cannot posibly get experienced people from our competitors ä assumptions were changed to show inexperienced sales people to be only 1/3 to 1/4 as productive as experienced salespeople

14. 2/19/00Prepared by James R. Burns14 Consequences ä could not reach goal of $2 billion in sales in four years ä could only get to $1.5 billion ä Attempts to get to $2 billion resulted in having to double the sales force in the fourth year alone ä This would wreak havoc on the sales organization and the personnel budget

15. 2/19/00Prepared by James R. Burns15 Sawyer’s assessment ä There would be a lot of pressure on our veterans ä And, our veterans would have to train the new salespeople ä This wold result in more veterans leaving ä This would create a vicious cycle ä Many of our veterans came to us to escape this kind of situation somewhere else

16. 2/19/00Prepared by James R. Burns16 Then Susan Willis, Director of Human Resources had her say ä sales people resist any call to invest their time in training and developing new salespeople

17. 2/19/00Prepared by James R. Burns17 Further, Susan Willis said: ä Sawyer said this was because of hiring the most aggressive salespeople who get their kicks and their commissions from closing a sale in the field ä There are no incentives or commissions for helping newcomers ä The proposed strategic plan would simply reinforce this problem

18. 2/19/00Prepared by James R. Burns18 Conclusions of the MW session at Index ä Train new sales people more quickly ä Establish new rewards for sales managers to develop their staffs ä Get more support to help senior sales people mentor and train new sales people ä Create a MW for training new sales people

19. 2/19/00Prepared by James R. Burns19 MW2: Seeing Hidden Strategic Opportunities: How our Beliefs Influence our Customer’s Preferences ä Here again MWs are helpful in surfacing different assumptions and discovering how they can be related in a larger understanding ä Bill Seaver and John Henry are president and VP for Meadowlands shelving company ä They have reached an impasse in the way they saw their customers and their market

20. 2/19/00Prepared by James R. Burns20 Seaver believes... ä That the key to success in the market place lay in having good products priced competitively

21. 2/19/00Prepared by James R. Burns21 Henry agrees but... ä Also felt service quality could play a big part in whether or not customers chose Meadowlands ä Believed the company should invest in upgrading its service through training Meadowlands dealers in performing a wide raange of services from better account management to office design and troubleshooting customers problems

22. 2/19/00Prepared by James R. Burns22 Seaver’s response was... ä These are good ideas but he didn’t support spending significantly more on dealer support because he was convinced that it would not have significant impact on Meadowlands’ sales.

23. 2/19/00Prepared by James R. Burns23 Sales people said... ä “Our competitors are discounting like mad and we can only hold our own if we match or better them ä When Henry himself talked with customers, frequently they said they would rather have 5% off on their sales order than better service after the sale ä Still he held onto his belief that there must be a way to gain competitive advantage through better service

24. 2/19/00Prepared by James R. Burns24 What the MW showed... ä Continual discounts in the face of poor service quality became a vicious circle ä Efforts to maintain customers with better service quality lacked credibility because that had experienced poor service for so long

25. 2/19/00Prepared by James R. Burns25 Further, the MW showed… ä Investing in service quality took a long time to exhibit its effects because ä customers have to experience improved service before thy take it seriously ä the repurchasing delay in the shelving industry to two-to-four years

26. 2/19/00Prepared by James R. Burns26 Both Seaver and Henry were right…. ä Seaver was right in the short run ä Henry, in the long ä Both learned a lot about the way the company interacted with its customers and within itself.

27. 2/19/00Prepared by James R. Burns27 MW3: Discovering Untapped Leverage: The Drift to Low Quality in Service Businesses

28. 2/19/00Prepared by James R. Burns28 Managing for Quality in Service Businesses

29. 2/19/00Prepared by James R. Burns29 Microworlds and Organizational Learning

30. 2/19/00Prepared by James R. Burns30 Copyright C 2000 by James R. Burns ä All rights reserved world-wide. CLEAR Project Steering Committee members have a right to use these slides in their presentations. However, they do not have the right to remove this copyright or to remove the “prepared by….” footnote that appears at the bottom of each slide. Prepared by James R. Burns