A learning organization is creating, acquiring and transferring knowledge through learning and learns from mistakes and modify behaviour to reflect new knowledge. An organization can learn from individuals through external and internal sources of learning.

Organizational learning involves internal source such as employees and external sources such as customers, consultants, industry and academic publications, suppliers, business partners, and competitors (Lussier, R.N., & Achua, C.F. 2012).

The P&G organization used the external sources of learning before A. G. Lafley was appointed CEO. Based on the case study, Durk Jager who was the previous CEO had questioned the ability of many P&G employees. Therefore, Jager has relied on the external sources of learning because he does not build trust with employees.

Once a leader does not believe the employee’s ability to achieve organizational objectives, he or she would not use the internal sources of learning.Lafley prefer both internal and external sources of learning when he became CEO. Internally, Lafley encourages regular interactions between the managers and non-managers in P;G organization.

The creation of knowledge by individuals internally is an internal learning process in an organization (Simon, 1991). Thus, employees could learn from each other to understand the needs and wants of customers by interacting with each other within an organization. Individuals always come up with plenty of new ideas concerning the improvement of products and services among employees if they share similar perspectives and interpretation frameworks (Brown and Duguid, 1991).Furthermore, the P;G Company expanded the mission statement that “the consumer is boss”. Thus, Lafley’s deep commitment to serving customers is considered an external source of learning. This is because Lafley always concentrates on the human dimension of understanding customers.

Since organizational learning is a process of communication with individuals leading to better decision making. Therefore, communicating with customers regularly would be a better approach to learn how to improve innovation of products based on customers’ needs and wants. Besides that, feedback that can obtain and collect from customers is the most common source of new ideas (Pascale, 1984; von Hippel, 1988). Customers’ responses can help an organization learn to improve customers’ satisfaction and create new products development.

In addition, business partners with specific expertise in some knowledge areas that can be integrated with the organization’s area of expertise will benefit the organizations. This will allow organizations to increase their competitiveness and leverage their skills and resources optimally (Hamel and Prahalad, 1994; Quinn and Hilmer, 1995; Teece,1992; Mowery et al, 1996).