Feb 08, The fifth discipline: the art and practice of the learning organization. In English - 1st ed. Download for print-disabled. Libraries near you: WorldCat. The Fifth Discipline: The Art and Practice of the Learning Organization ganization, and in the special spirit of an enterprise made up of learners.
Mental Model 'Mental models' are deeply ingrained assumptions, generalizations, or even pictures or images that influence how we understand the world and how we take action. HathiTrust Digital Library, Limited view search only. Internet Archive. Please choose whether or not you want other users to be able to see on your profile that this library is a favorite of yours.
Finding libraries that hold this item The most successful corporation of the s will be something called a learning organization. You may have already requested this item. Please select Ok if you would like to proceed with this request anyway. Senge is quite easy.
You may not go for some areas and spend the moment to just locate the book The Fifth Discipline Fieldbook: Strategies And. Leading management guru Peter M Senge defines the five business 'disciplines' which together help to build learning organizations. These companies will be the successful ones in the coming decade because of their ability to learn, to absorb new ideas, theories and practices at all employee levels and use them to competive adventage.
Better order another sixteen. You don't want to get a reputation for being out of stock of popular beers. Week 6: Sure enough, customers start coming in at the beginning of the week, looking for Lover's. Two are loyal enough to wait for your backlog. Only six cases arrive in the next shipment. You call your two "backlogged" customers. They stop in and buy their shares; and the rest of the beer sells out before the end of the week.
Again, two customers give you their names to call as soon as your next shipment arrives. You wonder how many more you could have sold had your shelves not been empty at the end of the week.
Seems there's been a run on the beer: none of the stores in the area have it. This beer is hot, and it's apparently getting more popular all the time. After two days of staring at the parched, empty shelf, it doesn't feel right to order any less than another sixteen cases.
You're tempted to order more, but you restrain yourself because you know the big orders you've been placing will start to arrive soon. But when. Week 7: The delivery truck brings only five cases this week, which means that you're facing another week of empty shelves.
As soon as you fill your back orders, Lover's Beer is sold out again, this time within two days. This week, amazingly, five customers give you their names. You order another sixteen and silently pray that your big orders will start arriving. You think of all the lost potato chip sales. The suspense is palpable: every time a customer buys a six-pack of that quiet beer, you notice it.
People seem to be talking about the beer. Eagerly, you wait for the trucker to roll in the sixteen cases you expect. But he brings only five. You'll get them in a couple of weeks. By the time you call your backlogged customers, you'll be sold out before you can sell a single new case.
You'll be without a bottle of Lover's on your shelf all week. What will this do to your reputation? You place an order for twenty-four more cases—twice as much as you had planned to order. What is that wholesaler doing to me, you wonder? Doesn't he know what a ravenous market we have down here? What's going through his mind, anyway? You spend your days at a steel desk in a small warehouse stacked high with beer of every conceivable brand: Miller, Bud, Coors, Rolling Rock, a passel of imported beers—and, of course, regional beers such as Lover's Beer.
The region you serve includes one large city, several smaller satellite cities, a web of suburbs, and some outlying rural areas. You're not the only beer wholesaler here, but you're very well established.
For several small brands, including Lover's Beer, you are the only distributor in this area. Mostly, you communicate with the brewery through the same method which retailers use to reach you. You scribble numbers onto a form which you hand your driver each week. Four weeks later, on average, the beer arrives to fill that order. Instead of ordering by the case, however, you order by the gross. Each gross is about enough to fill a small truck, so you think of them as truckloads.
Just as your typical retailer orders about four cases of Lover's Beer from you, week after week after week, so you order four truckloads from the brewery, week after week after week. That's enough to give you a typical accumulation of twelve truckloads' worth in inventory at any given time. By Week 8, you had become almost as frustrated and angry as your retailers. Lover's Beer had always been a reliably steady brand. But a few weeks ago—in Week 4, actually—those orders had abruptly started rising sharply.
The next week, orders from retailers had risen still further. By Week 8, most stores were ordering three or four times their regular amount of beer. At first, you had easily filled the extra orders from your inventory in the warehouse.
And you had been prescient; noting that there was a trend, you had immediately raised the amount of Lover's Beer you ordered from the brewery. In Week 6, after seeing an article in Beer Distribution News about the rock video, you had raised your brewery order still further, to a dramatic twenty truckloads per week. That was five times as much But you had needed that much; the beer's popularity was doubling, tripling, and even quadrupling, to judge from the stores' demand.
By Week 6, you had shipped out all the beer you had in inventory and entered the hellishness of backlog. Each week you sent out what you could, and sent the stores paperwork equivalents of I. A few of the larger chain stores called you and got what preferential treatment you could offer, but the Lover's Beer in your inventory was gone. At least you knew it would be only a couple of weeks more before the extra beer you ordered would begin to arrive.
In Week 8, when you had called the brewery to ask if there was any way to speed up their deliveries and to let them know that you were upping your order to thirty truckloads , you were dismayed to find out that they had only just stepped up production two weeks before.
They were just learning of the increase in demand. How could they be so slow? Now it's Week 9. You're getting orders for twenty truckloads' worth of Lover's Beer per week, and you still don't have it. By the end of last week, you had backlogged orders of another twenty-nine truckloads. Your staff is so used to fielding calls that they've asked you to install an answering machine devoted to an explanation about Lover's Beer.
But you're confident that, this week, the twenty truck-loads you ordered a month ago will finally arrive. However, only six truckloads arrive. Apparently the brewery is still backlogged, and the larger production runs are only now starting to get shipped out.
You call some of your larger chains and assure them that the beer they ordered will be coming shortly. Week 10 is infuriating. The extra beer you were expecting—at least twenty truckloads' worth—doesn't show. The brewery simply couldn't ramp up production that fast. Or so you guess. They only send you eight truckloads. It's impossible to reach anybody on the phone down there—they're apparently all on the factory floor, manning the brewery apparatus.
The stores, meanwhile, are apparently selling the beer wildly. You're getting unprecedented orders—for twenty-six truckloads this week.
Or maybe they're ordering so much because they can't get any of the beer from you. Either way, you'have to keep up. What if you can't get any of the beer and they go to one of your competitors? You order forty truckloads from the brewery. In Week 11, you find yourself tempted to take extra-long lunches at the bar around the corner from your warehouse.
Only twelve truckloads of Lover's Beer arrive. You still can't reach anybody at the brewery. And you have over a hundred truckloads' worth of orders to fill: seventy-seven truckloads in backlog, and another twenty-eight truckloads' worth of orders from the stores which you receive this week.
Some of those backlog costs come due, and you're afraid to tell your accountant what you expect. Week 14 By Week 12, it's clear.
This new demand for Lover's Beer is a far more major change than you expected. You sigh with resignation when you think of how much money you could make if you only had enough in stock. How could the brewery have done this to you? Why did demand have to rise so quickly? How are you ever expected to keep up? All you know is that you're never going to get caught in this situation again.
You order sixty more truckloads. For the next four weeks, the demand continues to outstrip your supply. In fact, you can't reduce your backlog at all in Week You finally start receiving larger shipments from the brewery in Weeks 14 and At the same time, orders from your stores drop off a bit.
Maybe in the previous weeks, you figure, they overordered a bit. At this point, anything that helps work off your backlog is a welcome reprieve. And now, in Week 16, you finally get almost all the beer you asked for weeks ago: fifty- five truckloads.
It arrives early in the week, and you stroll back to that section of the warehouse to take a look at it, stacked on pallets. It's as much beer as you keep for any major brand. And it will be moving out soon. Throughout the week, you wait expectantly for the stores' orders to roll in. You even stop by the intake desk to see the individual forms. But on form after form, you see the same number written: zero. What's wrong with these people?
Four weeks ago, they were screaming at you for the beer, now, they don't even want any. Suddenly, you feel a chill. Just as your trucker leaves for the run that includes the brewery, you catch up with him.
You initial the form, and cross out the twenty-four truckloads you had ordered, replacing it with a zero of your own. Week The next week, sixty more truckloads of Lover's Beer arrive. The stores still ask for—zero. You still ask for—zero. One hundred and nine truckloads of the stuff sit in your warehouse.
You could bathe in the stuff every day, and it wouldn't make a dent. After all, that video is still running. In your brooding thoughts, you consign every retailer to the deepest corner of hell; the corner reserved for people who don't keep their promises.
And, in fact, the retailers once again order zero cases of Lover's Beer from you. You, in turn, order zero truckloads from the brewery. And yet, the brewery continues to deliver beer. Sixty more truckloads appear on your dock this week. Why does that brewery have it in for you? When will it ever end? Yours is a small brewery, known for its quality, not its marketing savvy.
That's why you were hired. Now, clearly, you have been doing something right. Because in only your second month Week Six of this game , new orders had begun to rise dramatically.
By the end of your third month on the job, you felt the satisfaction of getting orders for forty gross worth of beer per week, up dramatically from the four when you started. And you shipped out. Because breweries get backlogs too. It takes in your brewery, at least two weeks from the time you decide to brew a bottle of beer until the moment when that beer is ready for shipment. Admittedly, you kept a few weeks' worth of beer in your warehouse, but those stocks were exhausted by Week 7, only two weeks after the.
The next week, while you had back orders for nine gross and another twenty-four gross in new orders, you could send out only twenty-two gross.
By that time you were a hero within your company. The plant manager had given everyone incentives to work double- time, and was feverishly interviewing for new factory help. You had lucked out with that Iconoclasts' video mentioning the beer. You had learned about the video in Week 3—from letters written by teenagers to the brewery. But it had taken until Week 6 to see that video translate into higher orders. Even by Week 14, the factory had still not caught up with its backlogged orders.
You had regularly requested brew batches of seventy gross or more. You had wondered how large your bonus would be that year. Maybe you could ask for a percentage of the profits, at least once you caught up with back orders.
You had even idly pictured yourself on the cover of Marketing Week. Finally, you had caught up with the backlog in Week But the next week, your distributors had asked for only nineteen gross. And last week, Week 18, they had not Some of the order slips actually had orders crossed out on them. Now, it's Week You have a hundred gross of beer in inventory.
And the orders, once again, ask for virtually no new deliveries. Zero beer. Meanwhile the beer you've been brewing keeps rolling in. You place the phone call you've dreaded making to your boss. The same pattern continues for four more weeks: Weeks 20, 21, 22, and Gradually your hopes of a resurgence slide, and your excuses come to sound flimsier and flimsier.
Those distributors screwed us, you say. The retailers didn't buy enough beer. The press and that rock video hyped up the beer and got everybody sick of it.
At root, it's the fickle kids—they have no loyalty whatsoever. How could they buy hundreds of cases one month, and nothing at all the next? Nobody misses you when you borrow the company car at the beginning of Week Your first stop is the wholesaler's office. Not only is it the first time you have ever met face to face, but it is only the second time you have ever spoken.
There has never been anything to say until this crisis. You greet each other glumly, and then the wholesaler takes you out to the back warehouse. We still have truckloads here. Another example of the fickleness of the public. If the retailers had stayed on top of it and warned you, this would never have happened.
You are working over the phrasing of a marketing strategy report in your mind on the way home when, on a whim, you decide to stop at the store of a retailer you pass along the way. Fortuitously, the owner of the store is in. You introduce yourself and the retailer's face breaks into a sardonic grin. Leaving an assistant in charge of the shop, the two of you walk next door to a luncheonette for a cup of coffee. The retailer has brought along the shop's inventory tally notebooks, and spreads them open across the table.
At this rate, it's going to be another six weeks before we order any more. And then you pull out a pocket calculator. If every retailer in this area waits six weeks before ordering any more beer, and then only orders a few cases a week, it's going to be a year or more before they put a dent in those truckloads sitting at the wholesaler's. Then, in Week 2, we sold eight cases. And it never died out.
We still sell eight cases of beer—week after week after week. But you didn't send us the beer we wanted. So we had to keep ordering, just to make sure we had enough to keep up with our customers. Anyway, I wish you'd do a coupon promotion or something, so I could make back some of my costs. I'd like to unload some of those ninety-three cases. Then, on your trip back, you plan the wording of your resignation notice.
Obviously, you'll be blamed for any layoffs or plant closings that come out of this crisis—just as the wholesaler blamed the retailer, and the retailer blamed the wholesaler, and both of them wanted to blame you. At least it's early enough in the process that you can quit with some dignity. If only you could come up with some explanation to show that it wasn't your fault—to show that you were the victim, instead of the culprit.
Structure Influences Behavior Different people in the same structure tend to produce qualitatively similar results.
When there are problems, or performance fails to live up to what is intended, it is easy to find someone or something to blame. But, more often than we realize, systems cause their own crises, not external forces or individuals' mistakes.
Structure in Human Systems is Subtle We tend to think of "structure" as external constraints on the individual. But, structure in complex living systems, such as the "structure" of the multiple "systems" in a human body for example, the cardiovascular and neuromuscular means the basic interrelationships that control behavior.
In human systems, structure Leverage Often Comes from New Ways of Thinking In human systems, people often have potential leverage that they do not exercise because they focus only on their own decisions and ignore how their decisions affect others.
In the beer game, players have it in their power to eliminate the extreme instabilities that invariably occur, but they fail to do so because they do not understand how they are creating the instability in the first place. People in the business world love heroes. We lavish praise and promotion on those who achieve visible results. But if something goes wrong, we feel intuitively that somebody must have screwed up.
In the beer game, there are no such culprits. There is no one to blame. Each of the three players in our story had the best possible intentions: to serve his customers well, to keep the product moving smoothly through the system, and to avoid penalties. Each participant made well-motivated, clearly defensible judgments based on reasonable guesses about what might happen.
There were no villains, but there was a crisis nonetheless—built into the structure of the system. In the last twenty years, the beer game has been played thousands of times in classes and management training seminars. It has been played on five continents, among people of all ages, nationalities, cultural origins, and vastly varied business backgrounds.
Yet every time the game is played the same crises ensue. First, there is growing demand that can't be met. Orders build throughout the system. Inventories are depleted. Backlogs grow. Then the beer arrives en masse while incoming orders suddenly decline. By the end of the experiment, almost all players are sitting with large inventories they cannot unload— for example, it is not unusual to find brewery inventory levels in the hundreds overhanging orders from wholesalers for eight, ten, or twelve cases per week.
The causes of the behavior must lie in the structure of the game itself. Moreover "beer game"-type structures create similar crises in real-life production- distribution systems. For instance, in , personal computer memory chips were cheap and readily available; sales went down by 18 percent and American producers suffered 25 to 60 percent losses.
The result was a to percent increase in prices for the same chips. After a huge order buildup and increases in delivery delays throughout the industry, demand collapsed and you could have virtually any product you wanted off any supplier's shelf overnight.
Within a few years, Siemens, Signetics, Northern Telecom, Honeywell, and Schlumberger all entered the business by buying weakened semiconductor manufacturers. The companies already are idling plants and laying off workers at rates not seen for years.
Similar boom and bust cycles continue to recur in diverse service businesses. For example, real estate is notoriously cyclic, often fueled by speculators who drive up Unfortunately, the people in the real estate industry are too busy trying to address the problems they have left over from the last one.
A real retailer can order from three or four wholesalers at once, wait for the first group of deliveries to arrive, and cancel the other orders. Real producers often run up against production capacity limits not present in the game, thereby exacerbating panic throughout the distribution system.
In turn, producers invest in additional capacity because they believe that current demand levels will continue into the future, then find themselves strapped with excess capacity once demand collapses. The systems perspective tells us that we must look beyond individual mistakes or bad luck to understand important problems. We must look beyond personalities and events. We must look into the underlying structures which shape individual actions and create the conditions where types of events become likely.
As Donella Meadows expresses it: A truly profound and different insight is the way you begin to see that the system causes its own behavior.
Two thirds of the way through War and Peace, Leo Tolstoy breaks off from his narrative about the history of Napoleon and czarist Russia to contemplate why historians, in general, are unable to explain very much: The first fifteen years of the nineteenth century present the spectacle of an extraordinary movement of millions of men. Men leave their habitual pursuits; rush from one side of Europe to the other; plunder, slaughter one another, triumph and despair; and the whole current of life is transformed and presents a quickened activity, first moving at a growing speed, and then slowly slackening again.
What was the cause of that activity, or from what laws did it arise? The historians, in reply to that inquiry, lay before us the sayings and doings of some dozens of men in one of the buildings in the city of Paris, summing up those doings and sayings by one word —revolution.
Then they give us a detailed biography of Napoleon, and of certain persons favorably or hostilely disposed to him; talk of the influence of some of these persons upon others; and then say that this it is to which the activity is due; and these are its laws. But, the human intellect not only refuses to believe in that explanation, but flatly declares that the method of explanation is not a correct one. The sum of men's individual wills produced both the revolution and Napoleon; and only the sum of those wills endured them and then destroyed them.
Tolstoy argues that only in trying to understand underlying "laws of history," his own synonym for what we now call systemic structures, lies any hope for deeper understanding: For the investigation of the laws of history, we must completely change the subject of observations, must let kings and ministers and generals alone, and study the homogeneous, infinitesimal elements by which the masses are led.
No one can say how far it has been given to man to advance in that direction in understanding the laws of history. But it is obvious that only in that direction lies any possibility of discovering historical laws; and that the human intellect has hitherto not devoted to that method of research one millionth part of the energy that historians have put into the description of the doings of various kings, ministers, and generals.
Rather, "systemic structure" is concerned with the key interrelationships that influence behavior over time. These are not interrelationships between people, but among key variables, such as population, natural resources, and food production in a developing country; or engineers' product ideas and technical and managerial know- how in a high-tech company. In the beer game, the structure that caused wild swings in orders and inventories involved the multiple-stage supply chain and the delays intervening between different stages, the limited information available at each stage in the system, and the goals, costs, perceptions, and fears that influenced individuals' orders for beer.
But it is very important to understand that when we use the term "systemic structure" we do not just mean structure outside the individual.
The nature of structure in human systems is subtle because we are part of the structure. This means that we often have the power to alter structures within which we are operating.
However, more often than not, we do not perceive that power. In fact, we usually don't see the structures at play much at all. Rather, we just find ourselves feeling compelled to act in certain ways. In , psychologist Philip Zimbardo performed an experiment in which college students were placed in the roles of prisoners and guards in a mock prison set up in the basement of the psychology building at Stanford. What started as mild resistance by the "prisoners" and assertiveness by the "guards," steadily escalated into increasing rebelliousness and abusiveness, until the "guards" began to physically abuse the "prisoners" and the experimenters felt the situation was dangerously out of control.
The experiment was ended prematurely, after six days, when students began to suffer from depression, uncontrollable crying, and psychosomatic illnesses. It occurred in a private meeting with a high-ranking member of the Soviet embassy, a few months after the Soviets had sent troops into Afghanistan. The official talked, eloquently and with great sincerity, about how the U.
The U. Beginning in the late s, as threats from guerrilla factions increased, the ruling government asked for increasing Soviet assistance. Modest assistance led to greater needs for broader help. It came to a point, the official explained, where "We really had no choice but to intervene militarily. It also brought to mind similar stories of American officials, ten or fifteen years earlier, trying to explain how the United States became entangled in Vietnam.
How can such controlling structures be recognized? How would such knowledge help us to be more successful in a complex system? The beer game provides a laboratory for exploring how structure influences behavior. Each player—retailer, wholesaler, and brewery —made only one decision per week: how much beer to order.
The retailer is the first to boost orders significantly, with orders peaking around Week At that point, the expected beer fails to arrive on time— because of backlogs at the wholesale and brewery levels.
But the retailer, not thinking of those backlogs, dramatically increased orders to get beer at any cost. That sudden jump in orders is then amplified through the whole system—first by the wholesaler, and then by the brewery.
Wholesaler orders peak at about 40, and brewery production peaks at about The result is a characteristic pattern of buildup and decline in orders at each position, amplified in intensity as you move "up-stream," from retailers to breweries. In other words, the further from the ultimate consumer, the higher the orders, and the more dramatic the collapse. In fact, virtually all brewery players go through major crises, ending with near-zero production rates only weeks after having produced 40, 60, or more gross per week.
The retailer's inventory begins to drop below zero at around Week 5. The retailer's backlog continues to increase for several weeks and the retailer doesn't get back to a positive inventory until around Weeks 12 to Similarly, the wholesaler is in backlog from around Week 7 through around Weeks 15 to 18, and the brewery from Week 9 through Weeks 18 to Once inventories begin to accumulate, they reach large values about 40 for the retailer, 80 to for the wholesaler, and 60 to 80 for the brewery by Week 30 —much larger than intended.
So each position goes through an inventory-backlog cycle: first there is insufficient inventory, then there is too much inventory. These characterisic patterns of overshoot and collapse in ordering and inventory- backlog cycles occur despite stable consumer demand.
The actual consumer orders experienced only one change. In Week 2, consumer orders doubled—going from four cases of beer per week to eight. They remained at eight cases per week for the rest of the game. In other words, after a one-time increase, consumer demand, for the rest of the simulation, was perfectly flat!
Of course, none of the players other than the retailer knew consumer demand, and even the retailers saw demand only week by week, with no clue about what would come next. After the beer game, we ask the people who played wholesalers and brewers to draw what they think the consumer orders were. Most draw a curve which rises and falls, just as their orders rose and fell. Such assumptions of an "external cause" are characteristic of nonsystemic thinking.
Players' guesses regarding consumer demand shed light on our deeply felt need to find someone or something to blame when there are problems. Initially, after the game is over, many believe that the culprits are the players in the other positions.
This belief is shattered by seeing that the same problems arise in all plays of the game, regardless of who is manning the different positions. Many then direct their search for a scapegoat toward the consumer.
But when their guesses are compared with the flat customer orders, this theory too is shot down. This has a devastating impact on some players. I'll never forget the president of a large trucking firm sitting back, wide-eyed, staring at the beer game charts.
At the next break, he ran to the telephones. One of our divisions had tremendously unstable fluctuations in fleet usage. It seemed pretty obvious that the division president didn't have what it took to get the job done. We automatically blamed the man, just as each of us in the experiment automatically blamed the brewery. It just hit me that the problems were probably structural, not personal. I just dashed out to call our corporate headquarters and cancel his termination process.
In fact, given the "physical system" of inventories, shipping delays, and limited information, there is substantial room for improving most team's scores. Following the "no strategy" strategy, each player would simply place new orders equal to orders he received. This is about the simplest ordering policy possible. If you receive new incoming orders for four cases of beer, you place orders for four. If you receive incoming orders for eight, you place orders for eight.
Given the pattern of consumer demand in this game, that means ordering four cases or truckloads every week—until you receive your first order of eight. Thereafter you order eight. When this strategy is followed unswervingly by all three players, all three positions settle into a form of stability by Week The retailer and wholesaler never quite catch up with their backlogs.
Backlogs develop, as in the basic game, due to the delays in getting orders filled. Backlogs persist because the players make no effort to correct them— because the "no strategy" strategy precludes placing the orders in excess of orders received needed to correct backlogs.
Is the "no strategy" strategy successful? Probably, most players would say no. After all, the strategy generates persistent backlogs. This means that everyone throughout the system is kept waiting longer than necessary for his orders to be filled. In real life, such a situation would, undoubtedly, invite competitors to enter a market and provide better delivery service.
Moreover, total cost generated by all positions in the "no strategy" strategy is lower than what is achieved by 75 percent of the teams that play the game! In trying to correct the imbalances that result from "doing nothing," most players make matters worse, in many cases dramatically worse. On the other hand, about 25 percent of the players score better than the "no strategy" strategy, and about 10 percent score very much better.
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