The key ideas

The Fifth Discipline: The Art and Practice of the Learning Organization

Peter Senge, 1990

Why do reasonable people in good companies keep creating the very problems they suffer from? Peter Senge shows that the cause lies more often in how the system is built than in the people. You'll learn to see loops, delays and hidden levers, and you'll find out how a group of people can learn together instead of simply working side by side.

Who it is for

For leaders and for anyone who works in a team and is tired of problems that keep coming back. And for anyone who wants to understand why smart people make strange decisions together.

Today's problems come from yesterday's "solutions."

The store that drowned in beer

Imagine the manager of a small store. Usually he sells four cases of one brand of beer a week. Suddenly sales double, the delivery is late, the shelves go empty. He orders more, then more again. A few weeks later the stockroom is crammed with cases nobody buys. The manager is sure the supplier is to blame. The supplier is sure the brewery is to blame. And the brewery thinks the market has gone mad.

This story is told by Peter Senge. His academic home is the Sloan School of Management at the Massachusetts Institute of Technology. Senge studied under Jay Forrester, the founder of system dynamics, the study of how the parts of a complex system affect one another over time. In 1990 Senge published a book that made the learning organization one of the central ideas in management.

His point is simple and uncomfortable. From childhood we're taught to break a problem into pieces, and we get used to seeing the world as a set of separate fragments. Then we try to put the whole back together and can't. That's why smart people in good companies keep creating the very problems they suffer from, and don't see how it happens.

Senge proposes five disciplines that help a group of people learn together. Four of them concern people: personal mastery, mental models, shared vision and team learning. The fifth, systems thinking, binds them into a single whole. Ahead you'll see why the store drowned in beer, and you'll learn to spot such traps in your own work and life.

The same game, thousands of different people

The store story comes from a teaching game invented in Forrester's group in the early 1960s. It's called the Beer Game: four players act as the store, the wholesaler, the distributor and the brewery. Each sees only their own orders and their own inventory. They're not allowed to talk to each other. The only signal passing down the chain is the neighbour's order.

Customer demand in the game changes just once: from four cases a week to eight, and then stays there. But the beer arrives with a delay, and the players begin to panic. The store orders extra, the wholesaler sees the jump and orders even more, the brewery starts a huge batch. Then all that beer arrives at once, and the chain drowns in cases.

What's most striking, for Senge, isn't the failure itself. The game has been played thousands of times with all kinds of people, and the result is almost always the same. So it isn't about the players' character or their stupidity. The structure of a system produces the behaviour of the people caught up in it.

Hence the main mistake. When things go badly, we look for someone to blame. But the people put in their place behave almost the same way. Senge shows that the players could have done far better if they had remembered the beer already ordered but still on its way, and hadn't panicked over the delay. For that, you need to see not your own square but the whole chain.

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About the author

Peter Senge is an American management scholar, a lecturer at the MIT Sloan School of Management and a student of Jay Forrester. He founded the Society for Organizational Learning (SoL).

All books by this author: Peter Senge

Terms from the book

  • Feedback
  • Balancing loop
  • Reinforcing loop
  • Forrester
  • Shell
  • Trim tab
  • Mental models
  • Sloan School of Management: The business school of the Massachusetts Institute of Technology (MIT). Senge has taught there for many years.
  • System dynamics: The study of how the parts of a complex system affect one another over time through feedback loops and delays. Founded by Jay Forrester in the 1950s.
  • Learning organization: A concept from Senge's book: an organization where people continually expand their capacity to create the results they want and learn how to learn together.
  • Systems thinking: The ability to see the whole: connections, loops and patterns instead of separate events. For Senge, the fifth discipline that ties the others together.
  • Beer Game: A supply chain simulation from MIT: a store, a wholesaler, a distributor and a brewery. It shows how the structure of a system produces crises.
  • Distributor: An intermediary between a producer and wholesale buyers who buys goods in bulk and moves them further down the chain.
  • Argyris: Chris Argyris (1923–2013), an American organizational researcher at Harvard who studied how people and companies protect themselves from unwelcome knowledge.
  • Skilled incompetence: Argyris's phrase: experienced people become skilled at avoiding learning so as not to look incompetent.
  • Systems archetypes: Recurring combinations of feedback loops that Senge describes as typical storylines, such as "limits to growth" and "shifting the burden".
  • People Express: An American budget airline founded in 1981. It grew very fast and in 1986 was taken over by another airline.
  • Symptomatic: Aimed at relieving the visible sign of a problem rather than removing its cause.
  • Fuller: Richard Buckminster Fuller (1895–1983), an American inventor, architect and thinker, creator of the geodesic dome.
  • Creative tension: A concept from the book: the energy created by the gap between vision and reality, which pulls reality towards the goal.
  • Emotional tension: A concept from the book: the anxiety and disappointment caused by the gap between goal and reality, which push a person to lower the goal.
  • Fritz: Robert Fritz, an American composer and consultant whose ideas on the creative process and structural tension Senge draws on.
  • Big Three: The three largest American carmakers: General Motors, Ford and Chrysler.
  • Wack: Pierre Wack (1922–1997), a French economist who led the planning group at Shell and was one of the creators of scenario planning.
  • Embargo: A ban on trade with a particular country. In 1973 Arab oil-exporting countries stopped oil supplies to a number of Western countries.
  • Hologram: A three-dimensional image recorded with laser light. Any fragment of it holds information about the whole image.
  • Bohm: David Bohm (1917–1992), an American-British theoretical physicist who also worked on philosophy and the nature of dialogue.
  • Assumptions: Beliefs a person holds to be true without checking them and on which they build their conclusions.

All terms

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