Organizational Learning - A Key to Management Innovation: A Case Study on Toyota

The key to the success of business organizations is in bringing innovations in every aspect of the company. To stay ahead in the game, companies need to learn faster than its competitors. Organizational learning is a great way to improve the efficiency of the workforce and attain the objectives of the company. Through organizational learning, a company can bring in ample innovation. This is exactly what the managers of Toyota did to take the organization to the next level.

What is Organizational learning?

It is a learning process implemented by an organization that demands individual, organizational, inter-organizational, as well as group level interaction. These interactions are followed by an analysis which ultimately leads to the goals of the organization. This process includes the creation, retention and transmission of knowledge inside an organization.

The proper application of organizational learning helps to effectively deal with an organization’s external and internal change. The process requires systematic integration and collective interpretation of new knowledge.

Organizational Learning in Toyota

Toyota Motor Corporation is a Japanese automobile company (the world’s 3^rd largest automaker) has gained an edge over many of its competitors by successfully applying organizational learning. With the help of organizational learning, Toyota has developed a very effective organizational culture to ensure global business of the business.

Toyota is gaining constant improvement through learning. Organizations like Toyota use information which has been acquired via the individual workers’ activities, to create programs and policies for achieving better results. The culture of Toyota emphasizes learning as a means to find the solution to a problem.  With the help of organizational culture, the company constantly improves the output and facilitates the business processes.

According to Jeffrey Liker, the author of the book “Toyota Way,” one of the fourteen management principles which have contributed to the success of Toyota, is the company’s turning into a learning organization. The writer points out that there are 3 main elements of organizational learning that Toyota follows:

• Recognizing the principle causes and building counter-measures - Toyota uses a method named “five why’s” to detect the primary causes. With the help of this method, the company keeps on asking the question ‘why’ until the root cause is fully uncovered.
• Utilizing the concept of “Hansei: Responsibility, Self-Reflection, and Organizational Learning” - This concept requires individuals to reflect on his/her weaknesses or mistakes and develop new means of improvement. Toyota utilizes this concept as a practical improvement tool. Several Hansei events are also conducted by Toyota for the purpose of improving the business processes.
• Using Policy Deployment - Through this process, Toyota maintains a smooth flow of objectives beginning with the highest level of the organization to the workgroup level. The important goals of the organization are created at the top level, and the other levels build objectives to back up these goals. Toyota’s objectives are concrete and can always be measured.

Based on organizational learning, this automobile manufacturer has created several procedures and practices such as:

• Learning in context - In order to acquire true information, it is required to know both the context and the data. The process of Toyota is rooted in reality as the company makes decisions based on the understanding of the problems and what impact these can have when implemented for real.
• Establishing learning labs in their daily work environment - Utilizing their visual management knowledge, Toyota has built this practice of giving every working environment the shape of a learning lab. This enables the operator to see the performance of the employees.
• Utilizing the supply chain environment’s systemic nature as a means for learning - Toyota has acquired the knowledge to create a smooth flow between the steps of a chain and mastered the discipline for doing the same. They have developed “pull systems” which perform both the roles of a structure for improvement, as well as a stage for cross-functional problem solving.
• Sharing of Knowledge - Toyota’s understanding of systematic interactions has given rise to a complete focus on the sharing of knowledge from the top to lower level of management. The company holds joint problem-solving sessions through which the knowledge is usually shared. In these sessions, individuals of different backgrounds and locations challenge their perspectives and build new ones.
• Creating knowledge - The kaizen strategy of management implemented by Toyota aims at constant improvement. The company applies this strategy right from the operator’s level to the executive’s level. What drives the success of Toyota’s management is their commitment towards the method of measuring, theory formulation, experimenting, reformulating and generalizing.

Apart from these practices, Toyota executes the framework of organizational learning by homogenizing its approach to problem-solving and by teaching its employees the way of reusing this approach in different situations to get an ideal output. Their focus on learning to solve problems is what helps them to effectively get rid of any issue that the organization faces.

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