The preceding material in this appendix provides a history of management by discussing several different approaches to management. Each approach developed over a number of years and focused on the particular needs of the organizations at the time.

In more recent times, managers seem to be searching for new approaches to management.47 Fueling this search is a range of issues modern managers face that their historical counterparts did not. These issues include a concern about the competitive decline of Western firms, the accelerating pace of technological change, the sophistication of customers, and the increasing emphasis on globalization.

A new approach to management that is evolving to handle this new range of issues can be called the learning organization approach. A learning organization is an organization that does well in creating, acquiring, and transferring knowledge and in modifying its behavior to reflect new knowledge.48 Learning organizations emphasize systematic problem solving, experimenting with new ideas, learning from experience and past history, learning from the experiences of others, and transferring knowledge rapidly throughout the organization. Managers attempting to build a learning organization must create an environment conducive to learning and encourage the exchange of information among all organization members.49 Honda, Corning, and General Electric are successful learning organizations.

The learning organization represents a specific, new management paradigm, or fundamental way of viewing and contemplating management. Peter Senge started serious discussions of learning organizations with his book The Fifth Discipline: The Art & Practice of the Learning Organization. 50 Senge, his colleagues at MIT, and many others have made significant progress in developing the learning organization concept. According to Senge, building a learning organization entails building five features within an organization:

1. Systems thinking—Every organization member understands his or her own job and how the jobs fit together to provide final products to the customer.

2. Shared vision—All organization members have a common view of the purpose of the organization and a sincere commitment to accomplish the purpose.

3. Challenging of mental models—Organization members routinely challenge the way business is done and the thought processes people use to solve organizational problems.

4. Team learning—Organization members work together, develop solutions to new problems together, and apply the solutions together. Working as teams rather than as individuals will help organizations gather collective force to achieve organizational goals.

5. Personal mastery—All organization members are committed to gaining a deep and rich understanding of their work. Such an understanding will help organizations successfully overcome important challenges that confront them.

Overall, managers attempting to build learning organizations face many different challenges. One such challenge involves ensuring that an organization changes as necessary. Changes in the external environment, like an increasingly global marketplace, rapid technological advances, and growing pressure to do more with less, all require managers to implement needed changes as they build their learning organizations.52