LEARNING TO CHANGE
BUSINESS
prepared by Professor Bob Garratt
Chairman, Board Performance Ltd, London
Chairman, ODPL, Singapore
Visiting Professor, Cass Business School, City
University, London
Some Definitions: 1
• CHANGE from the Anglo French
chaunge - the movement from one state
or condition to another
by itself it has no moral dimension
• GOVERNANCE from the Greek
kubernetes - the steersman
Some definitions: 2
• Learning
from the Old English leornung - the
self-development of an individual’s attitudes,
knowledge and skills
• Leadership
from the Old English löd - showing
the way forward and ensuring followership through a
form of consultation
• Management
from the Old Italian “managgiare”
- the breaking of wild horses, C16th; and French
menager - the domestic economy of a household,
C18th
Corporate Governance
is a Directoral Dilemma
concerns the appropriate board structures,
processes and values
which drives the enterprise forward to achieve its
Purpose whilst keeping it under prudent control
The Traditional Organisation
"Us"
Symbols
Pyramidal
Hierarchical
Many layers
Strictly segmented
Top-down only
Customer unfriendly
"Them"
Citizens/Customers
The Learning Organisation
External
World
The Business Brain
Internal
World
Policy
Strategy
Operations
Acceptance that good and bad learning occurs
continuously at all levels of the organisation
Focus on systems for capturing learning fast
Valuing of people and learning
Discussability = forgiveness provided one learns
The Learning Organisation
Monitoring
external
environment
Giving
direction
Policy
Disruptions
from the
environment
THE
BUSINESS BRAIN
Strategy
Performance
Operations
Control
System
Deviations
from plans
The Learning Organisation
Giving
direction
Policy
Organisational
Effectiveness
Monitoring
external
environment
Disruptions
from the
environment
THE
BUSINESS BRAIN
Strategy
Performance
Operations
Organisational
Efficiency
Control
System
Deviations
from plans
The Wrong-learning Downward
Spiral
“Downsize”
“Rightsize”
Dumbsize
and
Capsize
The Learning Organisation
For any organism to survive, its rate of
learning has to be equal to, or greater than,
the rate of change in its environment
L
C
Source: Reg Revans
Primary Tasks for the Board
• Formulating Policy/ Foresight
• Strategic Thinking
• Supervising Management
• Exercising Accountability to owners and other
stakeholders
The Learning Board - Basic Framework
EXTERNAL
ACCOUNTABILITY
BOARD
CONFORMANCE
INTERNAL
POLICY FORMULATION
BUSINESS
BRAIN
BOARD
PERFORMANCE
SUPERVISING MANAGEMENT
STRATEGIC THINKING
SHORT TERM
LONG TERM
C R Garratt 1992
Policy Review Cycle
POLICY FORMULATION
ACCOUNTABILITY
EXTERNAL
Stating Purpose
Creating Vision and Values
Developing Corporate Climate and
Culture
Monitoring the External Environment
To the Company
To Owners
To Regulators and Legislators
To Stakeholders
Ensuring Directorial Audits
Governance
Review
Cycle
Strategy
Review
Cycle
BUSINESS
BRAIN
Overseeing Management Performance
Monitoring Budgetary Control
Reviewing Key Business Results
INTERNAL
Assessing Organisational Capability
Positioning in the changing markets
Setting Corporate Direction
Reviewing and Deciding Key
Resources
Deciding Implementation Processes
STRATEGIC THINKING
SUPERVISING MANAGEMENT
SHORT TERM
Operations Review Cycle
LONG TERM
Creating Strategic Changes
The Board Ensures That
•
•
•
•
•
•
The organisational purpose is clear
The organisational vision is understood and accepted
The organisational values are understood and accepted
Their words are in line with the values and behaviours
Their business, funding, and people strategies are clear
Project management systems are in place to give
continuous quantitative and qualitative feedback on
progress
• The emotional climate allows for learning and critical
review
Organisational Capability Survey
Internal Focus
Task
Focus
External Focus

Clarity of Personal Responsibility

Work Quality

Organisational Clarity

Competitor Orientation

Financial Rewards
Leadership
Learning Climate
Process
Focus

Personal Rewards

Organisational Adaptiveness

Personal Performance

Customer Orientation

Group Performance
The Learning Organisation
Four characteristics:
It encourages people at all levels of the
organisation to learn regularly and rigorously
from their work
It has systems for capturing the learning
and to move it to where it is needed
It values its learning
It is able to continuously transform itself
The “Good Learning” Organisation:
the idealised process of critical review and learning
A Mistake or Deviation is made
Accept Ownership quickly
and assess Possible Risks
Are they potentially serious?
NO
Take Corrective Action and
Inform those affected
YES
Share your discovery to improve
work processes and learning
Tell someone
responsible
immediately
YES
Investigate
critically why the
mistakes happened
Co-operate actively
to ensure error
is corrected
Is there a flaw in the
system or process?
NO
Codify problem and Resolution
so that others may learn quickly
Problem Solved
The ‘bad-learning’ organisation
A mistake is made
Will it show?
NO
YES
YES
Can you hide it?
NO
Can you blame:
- others
- special circumstances
- a customer
YES
NO
Will an admission of guilt
damage your
employment prospects?
Hide it and hope no-one finds out
Problem
Avoided
Conceal it
before anyone
finds out
NO
Be first to
your boss with
your version
of events
YES
Sit tight and hope the
problem goes away
Asking Discerning Questions
Directors are charged to think critically
and independently; and to ask
discerning questions of proposals to
them using their “intelligent naivety” of
the daily operations
Breaking The Existing Mindsets
so that:
• Departments are seen now not as
pyramids but continuous “double loops
of learning”
• fast decision making leads to fast
feedback and project-based learning
• authority is devolved
• successful individual decisions is
rewarded
Unblocking Resistance to Change
The Stability
Group
Change
announced
Acceptance
Denial
Understanding
Fear
Grieving
Resistance
Piloting/Demonstrating
Developing Strategic Thinking
Three Key Questions to Identify the Coalition of
Powers to Implement Change

Who Knows?
(Information not Speculation)

Who Cares?
(Emotional Energy)

Who Can?
(Formal Power for Change)
Developing Strategic Thinking
Strategic Thinking
is the ultimate test of the leader
rather than of the expert
It is the move from being clever to being wise