The Importance of Learning
The ability to learn quickly is critical to entrepreneurial success. The importance of a new company’s ability to learn from mistakes and turn mistakes into learning opportunities cannot be understated; while 15% of Canadian startups fail in the first year, only 51% of startups make it to the five-year mark (“The State of Entrepreneurship in Canada”, 2010). Although there are many factors that can contribute to the demise of a company, companies that learn from their failures and turn mistakes into learning opportunities are more likely to succeed than companies that can’t adapt as quickly. Accepting at face value that organizational learning is beneficial to startups, it cannot be assumed that learning is automatic. Even when learning exists at an individual level in entrepreneurial teams, it can’t be assumed that this ability will translate into organizational learning as the company matures.
Developing Formal Learning Structures
If organizational learning in startups cannot be taken for granted, does that mean it can be created and built? A substantial body of knowledge exists regarding the development of management theories that facilitate organizational learning for large organizations. Many prevalent management theories, from Total Quality Management (TQM) to the Deming Management theory through the Toyota Production System all emphasize and promote continuous improvement, the core of which is the ability to learn. There is no improvement without learning. There is no learning, and therefore no improvement, without the philosophical acceptance that failure is not an end state but a learning process.
The challenge is that most entrepreneurs do not study management theory, thereby making the lessons on organizational learning that have been developed by working with large organizations inaccessible to most entrepreneurs. Many of the points developed in theories were scoped for large organizations and do not directly apply to startups, further obscuring the points that do apply from entrepreneurs.
Therefore we should develop a learning theory for entrepreneurs that can be applied at the startup phase and embedded in the culture of the organization so it continues to scale as the company grows.
In this series we will discuss the importance of developing formalized learning structures and explore their application in startups.