The Business of Business is Learning

An Occasional Paper by Harrison Owen, H.H.Owen and Co.

Fall 1988

There was a time, when the prime business of business was to make a profit and a product. There is now a prior, prime business which is to become an effective learning community. Not that profit and product are no longer important but without continuing learning, they will no longer be possible. Hence the strange thought; the business of business is learning, and all else will follow.

Present and emergent events have radically altered the conditions under which business will be done. It is a new game with new rules which demand new approaches. The alternatives are not thinkable, unless going out of business is an option.

Not only are the conditions new, but the time available for adaptation is diminishing on the same exponential curve which describes the advance of technology. Under the circumstances, life long learning is no longer a pleasant fringe benefit to be enjoyed by the few. It is the critical difference between success and failure.

The Stage is Set

With the approach of 1992 and the creation of the new European Market, business as it used to be is in for one more radical adjustment In one instant, trade barriers will fall, and a new market place with 350 million folks will be inaugurated The nature and impact of this change is waiting to be made clear, but at this juncture, it is only apparent that virtually every trading relationship and business practice will be up for reconsideration. Not that everything will pass away, but for sure the context will be different And that means that both the issues and opportunities will come in different packages. On a very much larger scale, the situation is rather like that experienced by AT&T on the morning of January 1,1984. Prior to that date, AT&T was the phone company. Afterwards it was set on a course that might include almost anything but its old business. For businesses in Europe, the old balkanized relationships, out-moded as they may have been, were never the less known and for that reason, comfortable. They will be replaced. What comes next has never been known, and in a very real sense cannot be dealt with in advance. January the 1st, 1992 will create a whole new business reality.

Even as Europe moves towards that magical moment when everything In principle changes, the United States and Canada have embarked on a similar path with the critical date infinitely closer. Somewhere around the first of January 1989, the trade barriers between the two nations will in large part cease to exist. There are fears and concerns on both sides, but it appears that the die is cast, and that a new and enlarged market of North America will be in existence. Not quite as large as its European counterpart, the consequences will never the less be similar.

Further to the east, the Pacific Rim nations, headed by Japan Inc. and closely followed by Korea and Taiwan, continue in a dynamic path of growth and development There is no indication that they are intending to follow the path of common market creation, but it may well be that they have no particular need of doing that. To a remarkable extent, they already dominate the world economy, if not in total value traded, then at least in perception. Scarcely a day goes by in either North America or Europe when the Japanese and their colleagues are not held up as the best available bete noire upon which to blame virtually anything that does not seem to be going correctly in the local economic picture. From the point of view of the western world, the Asian nations bordering the Pacific appear as an almost monolithic concern.

Completing the tour around the globe requires acknowledging the emerging sounds of a new spirit coming from the Eastern Block Countries. Trading under the code names of “perestroika” and “glasnost,” it is evident that something quite different is coming into being. Some may see this as the final gasp of a dying system which has effectively strangled itself in a tangle of bureaucratic constraints, but “last gasp” or “fresh breath” it is clear that the winds of change are blowing.

Of course, there is one more piece in the emerging global stew; China. Neither “eastern block” nor pacific rim, China stands alone. The self imposed isolation of the past 30 years is coming to an end, and a major global question arises; what will happen when 1 billion Chinese turn on and join the global market? Despite their presently impoverished state (as such states are currently measured) it remains true that the resources, physical, intellectual and spiritual) of that people are truly staggering. It is almost impossible to imagine the potential impact of a full and intentional Chinese entry onto the global stage.

For the moment, it appears that each portion of the world is fixated upon its own changing environment In Europe, all the talk is of 1992, while on the North American continent, the conversation is of the immanent fall of the trade barriers separating the US and Canada. Presumably, the Russians and others in the Eastern block are fully consumed with the new local realities, and the Pacific rim countries are too busy doing business to talk about much else. China, as usual, is keeping its own counsel. This fixation with the local, while understandable, screens some very important clues to the future.

As the various parts of the world move towards their own new working relationships, we will undoubtedly experience a period of local consolidation as each becomes accustomed to the new order created. But the real impact of the new working relationships will be seen less in terms of their local impact than the total synergistic effect. We are, after all, all residents of the same planet. Thus, if the impact of 1992 appears awesome for the European participants, the effect will be no less awesome for all other elements of the global community as common Europe interacts with common North America, and both in turn with the Pacific rim and the Nations of the Eastern Block. Throw in the giant question mark of the Peoples’ Republic of China, and the stew becomes profoundly rich and unknowable.

New Rules

There is much in our common global history which suggests that the new interrelationships will be but a logical extrapolation from what we have always known. Instead of having 130 plus nation states all defending their boundaries and simultaneously engaged in attempts to breach the boundaries of others thereby to gain a trading advantage, we will now only have four or five entities all engaged in the same sort of thinking. The premise here is that while the size of the players may change, the nature of the game will remain very much the same. In a word, the old rules will still be in effect, but the field of play much enlarged.

We believe this premise to be a fond hope; understandable but basically flawed. That the premise exists is truly understandable, for when all else changes, it would be comforting to know that the basic rules. remain inviolate. Bigger for sure, but still comprehensible.

There are many confounding factors which render the hope for unchanged rules both fond and futile. We mention only two; the multinational (global) corporations and the Electronic revolution.

Global Business

The multinational corporations have already removed the nation state from its previous role as the only player in the global economic environment. This is not to suggest that the several nation states have no significant. roles to play, but no longer do the States context the corporations, but rather the reverse. Put rather more clearly, it used to be the case that a particular business was German, French or American, which did business in the global community as a “representative” of that country. In many ways, this situation was merely a holdover from colonial days, when, for example, the English Crown was represented in the New World, not only by the resident High Commissioner (colonial governor), but also the Hudson Bay Trading company, which held its charter from the crown In that case, it was the country which provided the context (identity) for the corporation

Things have now changed. For a large multinational, operating simultaneously in many countries of the world, it may still be true that it is an “American company”, but at a deeper level it is a global institution with its own identity, quite independent of the nation of origin, or the nations in which it happens to be doing business. The center of identity lies no longer with the country but with the company, which now provides the context of operations.

Obviously, there is a spectrum of effect, with some companies still maintaining strong national ties. Rolls Royce, for example, is unmistakably British. Other corporations, however, are no longer even multinational, they are in effect global. Electrolux is thought by many Americans to be an American Company, although in fact it has its roots in Sweden. Major oil companies, typically, are far along the road to global identity. Shell Oil, was from the beginning a British/Dutch effort, although its many national manifestations appear quite indigenous. From the point of view of the American consumer, Shell is just one more gas station. From Shell’s point. of view, it is a global network having a broad range of national embodiments.

The difference may only be perception, but perception is often reality. And In the case of the emerging global economic community, how we think about things may end up being determinative. There are many, of course, who see the rise and power of the multinational corporation as a threat. And of course, it may be threatening to the nation state, but there is some reason to believe that the nation state itself Is problematical for the emerging global community. Without debating the merits of either of these positions, we take it as a fact that the global corporation is a reality now, and suggest that the passage from national, to multinational, to global can only continue.

From the point of view of a Global Business, the difference in doing business in 140 nation states or in 5 large economic arenas, is, to a certain extent, only a question of size and complexity. The basic sense of identity and essential rules of the game remain the same. What this means to the developing economic centers (Europe, North America, Pacific Rim etc) is that they are already, like it or not, contexted by the global corporations, and not the other way around. While there is no guarantee that the. nationalistic chauvinism exhibited by the several nation states may not simply be enlarged to encompass the new economic groupings, the point remains that global economic structures already exist. In effect, the rules have already changed. Still to be determined is the nature and scope of the new rules.

The Electronic Revolution

The electronic revolution adds another dimension to the emerging global environment Since the advent of workable computers at the close of World War II, we have all had the sneaking suspicion that things would never be the same again. The doomsayers predicted a world monitored by big brother, and the optimists foresaw instant communication and harmony. Neither turned out to be right, but the world certainly is different. For a long time that difference was quietly masked in the backroom DP Centers, where little men in white coats guarded the sanctuary. Now it seems the computers have escaped their keepers, and we all know by experience what we have long suspected –The world isn’t what it used to be.

Should any doubt have remained, the events of October 19th 1987 stand as a watershed. On one level, the 24 hours surrounding that date enclosed a global financial disaster of previously unimaginable proportions. The US market lost 25% of its assessed value, and other markets registered declines of twice that amount. The US loss of one half a trillion dollars is an almost unthinkable amount, representing just about half of the total US federal budget. Putting it directly, we lost, in one afternoon, as much as the whole US Federal Government spends in 6 months. Hardly peanuts.

Yet the curious thing is that, for all the noise and smoke, very little seems to have happened. Except for Stockbrokers and investors playing way out on the margins, most everything else came through in good shape. Should we then call October 19th a nonevent? In financial terms possibly, but as a global learning experience, it was a megabuster.

In 24 hours, anybody who had access to any part of the public media witnessed the electronic revolution first hand As our small planet turned before the sun, one market place after another signed on to the great computer conference in the sky, did its business and retired from the field of battle, but the electronic market place never stopped. New York, London, Tokyo each made their appearance and disappearance, but the real market rolled on.

For those invested in the certainty of time and place, the events of the day were shattering, for suddenly it became apparent that the comings and goings on Wall Street, for example, were but part of the show which had meaning only as a piece of the larger electronic fabric. Indeed if one were to boldly ask “where and when was the market”” the inescapable answer is that the market was whenever and wherever anybody wanted it You certainly didn’t have to be in London, Tokyo, or New York Given a phone line and a Personal Computer, access was provided. So where, reallv. is the market? Obviously, in the Great Electronic Connection in the sky.

A shocking day, all in all for the financial markets of the world. Not only did they take a beating financially, even worse, they discovered their own irrelevance. But for the rest of us, the news and the learning can be useful. Unless the planet suffers a huge and permanent electrical short circuit, otherwise known as nuclear disaster, we may presume that the electronic revolution will continue, broaden and intensify. This means that all of us, not just the select few, will be party to a different reality, the electronic connection, in which time and space no longer mean what they used to. One might ask, Is this real? To which the only reasonable answer appears to be – Well it was certainly real enough to vanish a half a trillion dollars (to say nothing of additional Yen, Marks and Francs) on a single day.

The Bottom Line: the Business of Business Is Learning

The implications for our emerging SuperMarkets, and all those who choose to do business therein, are profound. Should any one think that the new economic entities were simply expanded versions of the old nation states, playing by the same rules on a larger turf, that hope must quickly be put away. For just as these new markets are contexted and spanned by preexisting global businesses, so also are they enmeshed and indissolubly linked by the electronic revolution. The global electronic village is the reality, but what we do in the village market place remains to be seen.

Commenting on the volatile and competitive business conditions is scarcely news. But the moment is truly unique both in terms of impact and complexity. Things have always been changing, And more recently, the rate of change has been faster rather than slower. But we now confront several hard dates upon which the shape and function of the market place will predictably change in totally unpredictable ways. Even if one were to fathom exactly what might transpire in Europe, the synergism of effect between Europe and the rest of the world renders that knowledge suspect, if not useless. We know it is going to be different, but how different is the question.

Businesses born in calmer days developed a variety of strategies and methods to deal with change and insure their success, all of which were some variant of the age old management dictum concerning “Making the Plan, managing to the plan, and meeting the plan.” The presumption was that if all three of these bases were covered, success was probably insured, and at the very least, blame was escaped. At the moment, it is clear that plans made today are usually bypassed before the sun has set. And of course, managing to irrelevant plans becomes an exercise in futility, while meeting those same plans is a prescription for failure, to say nothing of despair.

Under the old rubrics, planing was something that could be accomplished on a yearly basis, and doing it more often was precluded by the amount of time it took. But, given the old pace of the world, a yearly plan, albeit imperfect, seemed adequate. By the same token, education and training, otherwise known as learning, could also be handled on a “once done”, or “occasionally done” basis. Lifetime learning meant something rather different than it does in some circles at the moment. It was presumed that a quantum of knowledge was good for the duration. One simply had to up-grade it now and then.

Those calmer days have now definitively gone. Planning must become a continuous process, and learning is no longer good for a lifetime. And at the institutional level, planning and learning are synonymous, with the operative word being learning, To the extent that planing involves an acknowledgment of the past, a recognition of the present, and a projection to the future, it is no more nor less than the organizational learning environment, the place, if you will, where learning can take place. But planning done only as a rational, linear process will not fill the bill.

In the “old days”, there was validity to the thought that planing could operate by the simple formula that Past + Present = Future. One simply took past performance plus present realities (incremented by some reasonable percentage), to arrive at future goals. However, when the world is changing as radically and dis-continuously as it seems to be doing at the moment, a linear extrapolation from the past, through the present, into the future, is more than likely to bring the business to the point of failure. Past production of buggy whips, incremented by present surplus production capacity, used to define next year’s production and sales goals, will not change the fact that the world no longer needs buggy whips. The issue is no longer just “more and better,” it is more often a question of “different”, indeed radically different. Capitalizing on that difference is the basis of continued profitability’ to say nothing of simple survival.

Recognizing and/or creating a “difference that makes a difference” (to quote Gregory Bateson, (“Steps Towards and Ecology of Mind”) is not only the road to success, it is also the essence of learning. Contrary to the conventional wisdom, in which learning is little more than the drab ingestion of facts, Bateson proposes that real learning takes place when the differences in life are perceived. Stimulated by the discontinuities, the mind jumps (is forced) to breakthrough understandings. From these breakthroughs can come new products and modalities of business.

Whatever else we may confront at the moment, it is certain that we face a world rich in difference and discontinuity. Unsettling for sure, but satisfying food for the mind (corporation) that will learn.

No longer can this learning environment be convened on an annual basis; it must constantly be in session. With the advent of the SuperMarkets, not to mention everything else that is going on in the world, planning-as-learning and learning-as-planing must become a constant and continuing phenomenon. By the same token, these activities, which once assumed a position at the periphery of organizational life, now move center stage. Profits and products, essential as they may be, are only possible, on an ongoing basis, when the competitive position of the business is constantly aligned with the emerging world, when differences and discontinuities are seized upon as the leading edge of new opportunity. In a word, the business of business is learning.