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Last week’s column set some readers’ teeth on edge (“Why Johnny Corporation can’t learn,” Keep the Joint Running, 11/19/2007). The issue was its negative tone.

The column explained why corporations rarely learn from their mistakes and even more rarely learn from their successes. “Don’t bring us problems — bring us solutions,” was the gist of the complaints.

Fair enough, so long as we all agree that unless you understand the underlying dynamics of a problem you’re unlikely to find a solution.

Solutions to these two problems are especially tough to implement because doing so calls for challenging some very popular business beliefs and practices. In particular, companies that truly want to be “learning organizations” will have to thoroughly and deeply re-think their approach to accountability, to metrics, and to compensation.

The first, and possibly most important step you can take is to give up one of the most cherished notions in American pop business culture — the need to hold people accountable. KJR has covered this subject before (see “The dark side of accountability,” 11/3/2003).

Among the many disadvantages of a hold-people-accountable business culture is that it pretty much guarantees that anyone associated with a mistake will do everything possible to hide it — to sweep it under the rug, bury it in a quarry, or put sawdust in the crankcase and call it a mint-condition classic.

Or, if there’s no way to hide the mistake, they’ll find some poor schnook to serve as a scapegoat. Root cause analysis? The root cause is that this schnook here caused the problem.

Think anyone will admit to a mistake under these circumstances? Of course not.

So Lesson One in creating a learning organization is to create a culture of responsibility. That means consistently praising everyone who identifies mistakes and takes the lead in fixing them, without ever paying the least bit of attention to who made the mistake in the first place.

The next place to look is metrics. Last week’s column pointed out that when your metrics define failure as success and vice versa, they guarantee you’ll repeat and extend your mistakes because you always get what you measure.

The best metrics assess your progress toward real, meaningful goals. They aren’t proxies or indexes, and they don’t assess intermediate results.

To illustrate, imagine three police departments. The first measures success by the ratio of arrests it makes to crimes committed. The crime rate goes up, not down, because the city’s peace officers are insufficiently concerned about determining who actually committed each crime, and even less concerned about making sure the evidence they present isn’t thrown out because of irregularities.

The second police department, headed by wiser leaders, measures the ratio of convictions to crimes. Much better. For the most part, its officers take care to arrest only those who seem to be guilty.

Much better, but still not as good as the third police department, which measures its success in terms of overall public safety.

Which is why Lesson Two in creating a learning organization is to choose your goals wisely and measure them carefully. Doing so points you in the right direction and makes sure you know success and failure when you see them.

Lesson Three is simply stated but difficult to put into practice: Align compensation. It’s particularly important if you want to learn from success.

This isn’t a matter of rewards and motivation, because compensation, properly understood, isn’t about rewards and motivation. It’s about the most tangible form of communication a company has — what it pays for. To understand this point, compare these two phrases: “Here’s what we want you to do,” and “Here’s what we’re paying you to do.”

The latter packs a much stronger punch, don’t you think?

Aligning compensation means defining acceptable performance as delivering results and strong performance as delivering repeatable results. Exceptional performance? That means repeating the results of others, not having them repeat yours.

Whether the subject is reusable software modules, successful business practices, or borrowing another employee’s PowerPoint deck, if you want a company that learns from its successes you had better provide the highest compensation to those employees who find those successes and learn from them.

Even this is dangerous, by the way. Because if you aren’t careful you’ll stifle innovation along the way.

It has to be that way. Learning from success means you don’t reinvent the wheel.

Innovation means you do.

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Learn from your mistakes.

It’s barely adequate advice. You can fail in a thousand ways. Learn from one and, like bottles of beer on a wall, you still have 999 left.

Compare that to what you can discover from success. Learning how to avoid one route to failure leaves you many ways to fail again. Learn how to succeed and you succeed.

Learning from mistakes matters. Learning from successes is vital.

So here are two questions to ponder: Why are most organizations more than willing to repeat their mistakes and so unwilling to learn from their successes?

These are two entirely different questions.

One reason organizations refuse to learn from their mistakes is well-known and obvious: To learn from a mistake, the organization’s decision-makers first have to acknowledge it. That’s a problem in our winning-is-the-only-thing, hold-people-accountable, lean-and-mean (really, famished and feeble) business culture.

We might encourage risk-taking, but that doesn’t mean we’re willing to accept a little failure now and then. That we have to redefine “risk” to mean “sure-things-only” is a small price to pay.

As is making the same mistake over and over.

Another reason organizations refuse to learn from their mistakes is more subtle: Very often, those who make the mistakes are also those who define the metrics that measure success. This might not seem to be a problem but it is because of the three fallacies of business measurement: Measure the right things wrong and you’ll get the wrong results; measure the wrong things right or wrong and you’ll get the wrong results, and anything you don’t measure you don’t get.

Example: A CIO who presided over an enterprise with four business units. He established measures of success for the four service desks that supported them. Unsurprisingly, he established productivity as a key metric, defined as the number of incidents resolved per technician.

One of the service desk managers seriously underperformed the others — productivity was truly awful. Here’s what he did wrong: He established a very effective program of end-user education. Because it was so effective, end-users in his business unit reported many fewer incidents.

The CIO held him accountable for his failure and praised the other service desk managers. His metrics defined failure as success, ensuring the perpetuation of a mistake — failing to educate the end-user community.

This really happened. It probably has really happened in company after company. It wouldn’t surprise me a bit to learn that someone has enshrined “maximizing technician productivity in service desk environments” as a best practice.

This example also illustrates one reason businesses sometimes fail to learn from their successes: Metrics that define failure as success also define success as failure (if they don’t just ignore it completely).

For more than a decade, the business punditocracy has blathered incessantly about success being the creation of shareholder value. There’s a problem with shareholder value as a measure: It’s hard to know whether today’s rise in the price of a share of stock is a blip that’s due to actions that will harm a company’s long-term competitiveness, or is the result of a real improvement in the health of the enterprise.

Even worse, it isn’t clear that it matters. I created shareholder value today. Next year, or the year after that is Someone Else’s Problem.

Just an opinion: The proper definition of business success is that it is sustainable. Never mind that sustainability is hard to measure. Never mind that it’s hard to recognize. It’s the only goal that matters.

If knowing what success looks like is hard, connecting actions to results is even harder. The actions that lead to sustainable success rarely produce immediate, dramatic results. Important change takes time and patience. By the time the impact of successful effort is visible, many business leaders will have given up on the effort.

Then there is the most common reason businesses refuse to learn from success: The Not Invented Here Syndrome (NIHS).

Very few enterprises reward managers for sharing their formulas for success with their peers. They don’t reward managers for emulating the practices of other managers either. Nor does emulating a peer do much to feed the average ego.

Being the first to spot a useful idea from outside the company looks and feels a lot like creativity. But if I borrow an idea from you, you get more credit and I get none. Where’s the value and satisfaction in that?

Why do businesses so rarely learn? The barriers are immense.

The miracle is that, occasionally, they do.

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