Maria Romanova

Natalja Zhuravljova

17.11.2010

Organizational Learning Theory

Today’s program:

Nature of theory

Main articles’ overview

Strengths and weaknesses

Case

Organizational learning theory states that, inorder to be competitive in a changingenvironment, organizations must learn tochange their goals and actions to reachthose goals.

In order for learning to occur, however, the firm mustmake a conscious decision to change actions inresponse to a change in circumstances, mustconsciously link action to outcome, and must rememberthe outcome.

The initial learning takes place at the individual level:however, it does not become organizational learning untilthe information is shared, stored in organizationalmemory in such a way that it may be transmitted andaccessed, and used for organizational goals.

Organizational learning vs

Learning organization

Organizational learning – set of theories; the

result is change in organization/ its

development

Learning organization– set of standpoints,

practical tool; the result is tulemuseks is

improving the organization in order to gain

competition advantages

Organizational learning – achieving

common wisdom, culture and synergy

Organizational learning differs from the

processes implemented by the company in

order to train the staff. The traditional view of

learning involves company’s strategies and

concentrates on theoretical knowledge creation

(exploration).

The important aspect of organizational learning

is staff’s ability to put the learned material into

practical knowledge – implement gained

knowledge(exploitation).

Adaptive and proactive learning

Adaptive learning: monitoring of environment and

changing with it, evolution

Proactive learning: desire to learn and to

change/improve / develop organization, revolution

Adaptive and Generative Learning

• The fundamental contribution of this paper was thedevelopment of an OL theoretical model that incorporatesadaptive and generative learning processes. This model isbased on two concepts from complexity theories: self-organization and self-transcendence.

• Adaptive learning aims to improve or develop knowledge of theexplicate order through a process of self-organization. Self-organization is a self-referential process characterized by logicaldeductive reasoning, concentration, discussion and improvement.

Adaptive thinking underlines the importance of rationality.

• Generative learning involves any approach to the implicate orderthrough a process of self-transcendence, which might involveavoiding previous knowledge. Self-transcendence is a processcharacterized by intuition, attention, dialogue and inquiry.

Generative learning is developed individually or socially at the edgeof chaos, through intuition, attention, dialogue, inquiry and attention,which relates to concepts like creativity, or imagination.

Maybe creativeness or intuition has always been essential for human beings,

1R.Chiva, A.Grandio, J.Alegre

• Organizational systems presents three types of states: stability, chaos and edge of chaos.

When the system is stable and chaotic, little learning may take.Lerning will emerge at the edge of chaos .

• Organizing and learning are strongly linked: When learning we organize reality in a different way, and when organizing, a process of learning should have taken place

This paper’s approach differs from previous works such asthose by Weick and Westley (1996), who consider organizingand learning as opposites, or Clegg et al. (2005) who considerlearning as an element of organizing.

• The increasing significance of generative learning fororganizations, mainly due to the importance of radicalinnovations, could lead organizations to follow guidelines thatfacilitate or foster intuition, attention, dialogue and inquiry, whichcould require a new organizational form and management logic.

That is one of the problems that has grounded every civilization: a certain repetition. Creativity should not be blocked.

An Organizational Learning Framework:

from Intuition to Institution

1. Organizational learning involves a tension between

assimilating new learning (exploration) and using what

has been learned (exploitation). Both are essential for

organization, but they compete for scarce resources

2. Organizational learning is multi-level: individual, group,

and organization. Innovate ideas occur to individuals

– not organizations. Ideas are shared, actions taken

and common meaning developed

3. The three levels of organizational learning are linked

by social and psychological processes: intuiting,

interpreting, integrating, and institutionalizing

4. Cognition affects action (and vice versa).

Understanding guides actions, but action also informs

understanding.

2

Crossan, M., Lane, H.W., White,

R.E.

The fifth Discipline (Senge, 1990)

In Senge's view, generative learning requires five disciplines: personalmastery, mental models, shared vision, team learning andsystemic thinking.

Personal mastery, is the term Senge uses to refer to institutionalizedconditions for personal learning within an organization. It is related toissues of staff empowerment and the development of staff potentials.

People in an organization have different internal pictures of the worldor mental models, the second discipline, which should be madeexplicit so that they can be discussed openly and modified

Shared vision concerns the need for a certain degree of consensuswithin an organization, and at the same time the need for inspirationand motivation.

Teams, not individuals, are the fundamental learning unit in modernorganizations; unless the team can learn, the organization cannotlearn. This requires improved interpersonal communication betweenteam members, a reduction in defensive behavior, and openness tocreative thinking.

The Fifth Discipline that integrates the other 4. Systemic thinking, iscrucial to examine the interrelationships between parts of anorganization rather than the parts in themselves.

analysis: Åsa Lööf

Society for Organizational Learning

(Senge)

3

The 11 Laws of the Fifth Discipline

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

The harder you push, the harder the system pushes back.

Behavior will grow better before it grows worse.

The easy way out usually leads back in.

The cure can be worse than the disease.

Faster is slower.

Cause and effect are not closely related in time and space.

Small changes can produce big results...but the areas of highest leverage are often the least obvious.

You can have your cake and eat it too - but not all at once.

Dividing an elephant in half does not produce two small elephants.

There is no blame.

The Language of Systems Thinking:

"Links" and "Loops”

From any element in a situation you can trace arrows ("links") that

represent influence on another element. These, in turn, reveal cycles

that repeat themselves, time after time, making situations better or

worse

Links never exist in isolation. They always comprise a circle of

causality, a feedback "loop," in which every element is both "cause"

and "effect“ - influenced by some, and influencing others, so that every

one of its effects, sooner or later, comes back to roost.

There are basically two building blocks of all systems representations:

reinforcing and balancing loops

Reinforcing loops generate exponential growth and collapse, in which the

growth or collapse continues at an ever-increasing rate. For example,

organizations often assume that they will face steady, incremental growth in

demand. The limits will appear.

Balancing processes generate the forces of resistance, which eventually

limit growth. But they are also the mechanisms, found in nature and all

systems, that fix problems, maintain stability, and achieve equilibrium.

Balancing loops are often found in situations which seem to be self-correcting

M.Goodman, J.Kemeny,

C.Roberts

4

Näide organisatsiooni juhtimisest (balancing loop):

The N Hospital in Connecticut opened a very attractive outpatient

clinic in the late 1980s. The administrators knew that it was meeting

a real need, and they assumed it would always be filled with

patients. That would make it a constant revenue generator.

However, a few months after it opened, the number of patient visits

(and thus revenues) leveled off, below the hospital's forecasts. The

hospital started a community marketing campaign, and patient visits

rose for a time, but soon dropped off again.

Finally, the administrators took a close look at their patient volume

statistics. They spent time in the waiting room and surveyed staff at

the front desk and patients. It turned out that when traffic was low,

people were served quickly. Word got around, doctors and

paramedics referred people, and the clinic became crowded. But

people have an innate distaste for sitting in busy waiting rooms.

Since they had a choice, they went elsewhere.

The general lesson for all businesses is: if you don't adjust yourservice satisfaction to the level expected by your customers, the

The Myopia of Learning

Examined processes of experiential learning as instruments oforganizational intelligence.

Organizations should be designed taking learning limits to learn into account.

Confusion of experience Problems of memory, conflict, turnover, and decentralization make it difficult to extract lessons from experience and to retain them.

-Studies of reductions in the cost of production associated with the number of units produced do not, in general, provide direct confirmation of the processes by which those improvements have occurred, nor do they demonstrate that experiential learning processes inexorably lead to optimal practices.

-The interpretations of history are political, reflecting efforts to assign and evade responsibility and to establish favorable historical stories

Exploration/exploitation balance

-Successful trap – exploitation drives exploration. The returns to exploitation are ordinarily more

certain, closer in time, and closer in space than are the returns to exploration. As develop greater and greater competence at a particular activity, they engage in activity more, thus further increasing competence and the opportunity cost of This competency trap is a standard, potentially self-destructive product of

-Failure trap – exploration drives exploitation. Failure leads to search and change leads to failure which leads to more search, and so on. New ideas and

Levinthal, Daniel A. and James G.

March

5

Three types of myopia were discovered:

Temporal myopia Learning tends to sacrifice the long run to the short run.

- As learning develops distinctive competencies and niches, it simultaneously

compromises capabilities outside those competencies and niches. When conditions

change, the learned skills become impediments.

-Possible option for individuals or sources of capital is to move in and out of organizations as entrepreneurs, leaving others to experience their decline, but this may be scant comfort to those who suffer the fate of the specific organization.

Spatial myopia. Learning tends to favor effects that occur near to the learner

There is difficulty in subordinating the interests of individuals and subunits in

an organization to the interests of the organization.

Failure myopia. Organizational learning oversamples successes and undersamples failures

-Organizations promote successful people. On average, successful people

Organizational memory

Organizational memory consists of mental and structural artifacts that

have consequential effects on performance.

The paper discusses the processes of information acquisition,

retention, and retrieval from memory in the context of these structural

bins and then elaborate on how organizational memory can be used,

misused, and abused in organizations.

3 assumptions:

Organizations functionally resemble information-processing systems

that process information from the environment. As information processing

systems, organizations exhibit memory that is similar in function to the

memory of individuals.

Organizations being information systems act as interpretative systems.

Organization is a network of intersubjectively shared meanings that

are sustained through the development and use of a common language

and everyday social interactions.

Walsh, J.P. & G.R. Ungson

6

Defining the organizational memory

Acquisition

Retention

Individuals

Culture

Transformations

Ecology

Structures

External archives

Aaggregation of individuals' shared beliefs, an organization's culture

also reflects information about the who, what, when, where, and how

of a decision stimulus and response.

Examples of failure due to organizational memory

Starbuck and Hedberg (1977) reviewed the problems the Facit

Company faced in coping with the changing technology in the

mechanical calculator industry. The company's near bankruptcy and

subsequent takeover was attributed to Facit's top managers' inability

to recognize the development of electronic calculators as a serious

competitive threat. These managers' memory for their great

successes in the mechanical market blinded them to the changes.

Wilensky (1967) reviewed the Ford Motor Company's experience

with the Edsel failure. He attributed this failure, in part, to Ford's

insensitivity to the increasing sales of foreign import.

Organizational memory plays 3 important roles:

Informational role. The information content that is housed

in memory's retention facilities can contribute to efficient

and effective decision making.

Control function. It can reduce the transaction costs that

are often associated with the implementation of a new

decision.

Political role. Control of information creates a source of

dependence with which individuals or groups in power

are able to influence the actions of others.

The use of organizational memory:

Proposition 1: Decisions that are critically considered in terms of an

organization's history as they bear on the present are likely to he more

effective than those made in a historical vacuum.

Proposition 2: Decision choices framed within the context of an

organization's history are less likely to meet with resistance than those not

so framed.

Proposition 3: Proposition 3: Change efforts that fail to consider the inertial

force of automatic retrieval processes are more likely to fail than those that

do.

The misuse of organizational memory:

Proposition 4: The automatic retrieval of past decision information that fails

to meet the requirements of more novel situations is likely to promote

deleterious decision making.

Proposition 5: 5: In inertial situations that call for routine solutions, the

critical consideration of purposefully retrieved past decision information

consumes a manager's time and energy and, thus, creates wasteful

opportunity costs.

Proposition 6: The controlled retrieval of decision information that is not

examined in the context of novel situations is likely to promote deleterious

decision making.

Advantages and disadvantages of

theory

Advantages: Maintaining levels of

innovation and remaining competitive

Being better placed to respond to external pressures

Having the knowledge to better link resources to customer needs

Improving quality of outputs at all levels

Improving corporate image by becoming more people oriented

Increasing the pace of change within the organization

Disadvantages:

• Exploration/exploitation

balance

• Competency trap

• Temporal, spatial, failure

myopia

• Organizational memory

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