3 Ways Your Company Can Learn and Unlearn

Martin Reeves of the Boston Consulting Group writes that today’s business environments “are more diverse and dynamic than ever before. Even historically stable industries (energy and consumer banking, for example) face increased levels of change. Companies must therefore strike the right balance between exploration, the discovery of new products, strategies and models, and exploitation, capturing profits from existing ones. They must balance learning new ways of thinking and acting with forgetting old ones. They must tune their learning mechanisms to the business environment.”

Reeves describes “three distinct feedback loops” from which learning and unlearning takes place.

AAEAAQAAAAAAAAM9AAAAJDc5NDNlNjZkLWE3ZTAtNGQ0Ny1hMzkxLWY3NDVhYmU1ZDNjYg

“The first cycle is the one that focuses on the company’s immediate actions. The decision makers inside a company choose to execute a certain action, which will result in an observable outcome. The analysis of this outcome will be used to adjust the next round of action.”

“The second feedback loop focuses acts on the company itself – how it reacts to feedback. This self-directed loop views the company and its actions not as a given, but as an entity that is capable of adjusting and configuring itself and its approach to strategy. As I write in Your Strategy Needs A Strategy, successful companies proactively change their approach to strategy and execution in different business environments.”

“The third feedback process might be the most under-utilized one: a company shaping its environment. A company that uses this mechanism will view the company’s surroundings (industry structure, customer preferences, market segments, policy makers, etc.) not as a given, but as shapeable.”

The bottom line: “In essence a company must choose which of these learning loops to emphasize and also the appropriate balance between exploration and exploitation.”

Share This Post: