performance measures and targets linked to the firm's answer for CarMax. Is this a viable answer for ot values, vision, and goals. Second, performance infor- businesses? mation is communicated quickly, clearly, and usefully. Third, performance information is shared with the right Discussion Questions people, and they are empowered to act on the informa- tion. Fourth, people are encouraged to suggest changes 1. How is continuous improvement linked to organ to improve performance, and the company works to zational change? overcome barriers to implementing performance im- 2. What external forces for change are likely to in- provements. Fifth, the company monitors the process to fluence CarMax's commitment to continuous ensure its learning loops are fostering increased learning improvement ? and increased performance. 10 3. What internal forces for change are likely to in- These features can be seen in CarMax's use of learn- fluence CarMax's commitment to continuous ing loops, which "can be implemented anywhere in the improvement ? organization to accelerate the pace of change" 11 At Car- Max, CEO Austin Ligon holds regular sessions with 4. Explain CarMax's use of (a) talent management employees to share the latest performance information. continuous learning and (b) learning loops from During a collaborative analysis of the shared informa- the perspectives of incremental change, strategic tion, Ligon asks questions such as: "What is it that we change, and transformational change. may be doing that could be considered unnecessary, or 5. What are the primary organizational devel- stupid? "12 Ligon participates in these brainstorming ses- opment interventions that are embedded in sions, ensuring "every idea is recorded and receives a CarMax's fostering of learning for continuous response."13 improvement? Learning for Performance Improvement What is the key to improving performance? In consider- SOURCE: This case was written by Michael K. McCuddy, The Louis S Mary L. Morgal Chair of Christian Business Ethics and Professor of ing the question, learning seems to be the unequivocal agement, College of Business Administration, Valparaiso University. Chapter 18 Case References 1. Anonymous, "About CarMax," CarMax Web site, http://www.carmax. 9. Ibid . com/enus/company-info/about-us.html (accessed July 5, 2011). 2. Ibid. 10. E. Douglas," Five Factors of Successful Learning Loops," 3. Ibid. Marketers Web site, http://www.ideamarketers.com/?Five_Factor 4. C. Thormahlen and G. Van Horn, "Moving Metal: Managing Risks Successful_Learning&articleid=1535019 (accessed July 5, 2011). in the New Automotive Marketplace," The RMA Journal 193(3) 11. Anonymous, "Examples of Learning Loops," Secrets to Business November 2010): 13-20 (8 pages). site, http://www.secrets2business.com/examples-of-learning- 5. Anonymous, "Our Culture and Values," CarMax Web site, http://www. accessed July 5, 2011); E. Douglas," Five Factors of Successful 6. Ibid. carmax.com/enus/company-info/culture.html (accessed July 5, 2011). ing Loops," Idea Marketers Web site, http://www.ideamark 7. M. Weinstein, "Look Ahead: Long-Range Learning Plans," Training com/? Five_Factors_of_Successful_Learning&articleid=15 (accessed July 5, 2011). (November/December 2010): 38-41. 12. Ibid. 8. Ibid. 13. Ibid.CarMax, the Used Car Superstore: Learning for Performance Improvement CarMax, the nation's largest retailer of used cars, is improvement, the CarMax Web site states, "We will headquartered in Richmond, Virginia, where its first never stop improving our systems, our processes, and store was opened. CarMax has "grown from that one our policies." In short, CarMax is committed to organi- store in Richmond to more than 100 stores across the zational change that continually improves how the com- country." CarMax promotes itself this way on its cor- pany operates. porate Web site: "We've sold more than 2 million cars. CarMax's commitment to continuous improvement We've appraised more than 5 million. And the news is relies heavily upon learning. The Talent Management buzzing with stories about CarMax, the experience we process is one way by which CarMax capitalizes on con- offer our customers, and the work environment we pro- tinuous learning. The use of learning loops is a second vide for our Associates."2 way by which CarMax fosters continuous improvement. The operations of CarMax are guided by its five- point business concept: Talent Management for Continuous Learning CarMax has strategic goals for Talent Management 1. "We offer tens of thousands of used cars across the to ensure its workforce has the necessary skills to sup- country [;] port company performance. According to Sean Ramage, 2. "Every car we sell has a low, no-haggle price[;] CarMax's Director of Talent Management, "Our com- 3. "Our vehicles are superior in quality. Only the best pany has put a strong emphasis on the importance of cars meet our high standards[;] core competencies that drive behavior, which, in turn, drives performance. Based on our short- and long- 4. "We'll buy your car whether you buy from us or term goals, we partner with company leadership to put not[; and] together programs that support the competency needs/ 5. "You'll get friendly customer service."3 gaps that drive the desired performance goals."7 Writing in The RMA Journal, Casey Thormahlen Ramage points out that CarMax regularly surveys its and George Van Horn, suggest new car dealers that sell associates and managers to ascertain what is needed to used cars can learn a great deal from CarMax. They say achieve their individual work objectives and to improve that "Injew-car dealers looking to expand their used-car performance. CarMax combines this survey informa- operations should take a page out of CarMax's play- tion with assessment data from other sources, including book. CarMax . . . has consistently outpaced its more performance reviews and management assessment pro- traditional rivals by offering a more pleasant buying grams. Ramage indicates this comprehensive assessment experience. Sales commissions are set on a per-vehicle approach links employee competencies with business basis (rather than by percent of sale), prices are fixed, objectives and promotes a genuine continuous learning and buyers are given a transparent, itemized price break- process. down. A robust parts and services department creates As part of the continuous learning process, CarMax further economies of scale for dealers choosing this path, monitors trends in Talent Management and human re- allowing for modest repairs that enhance the resale value sources as well as overall societal trends. And CarMax of incoming trade-ins."4 monitors emerging technologies to provide the right CarMax asserts its operations are firmly based on tools to help associates develop the competencies they a foundation of ten values that seek to treat custom- need to have to excel at their roles." ers, CarMax associates, and investors with trustworthi- Learning Loops ness and ethical practices while merging the best retail Another way in which CarMax incorporates learning practices with the needs and demands of the automo- into its continuous improvement commitment is through tive industry.' One of the ten values guiding CarMax learning loops. Successful learning loops incorporate is continuous improvement. With regard to continuous five basic features. First, the company develops effective 702 PART 4 ORGANIZATIONAL PROCESSES AND STRUCTURE