the learning project organization

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© 1998 Wiley-Liss, Inc. DRUG DEVELOPMENT RESEARCH 43:134–142 (1998) Management Overview The Learning Project Organization Ivan Jensen 1 * and Ole Roger Sandstad 2 1 SANT + Bendix, Holte, Denmark 2 Coopers & Lybrand, Oslo, Norway ABSTRACT The pharmaceutical industry is becoming increasingly knowledge-intensive. The ability to process (acquire, analyze, store, retrieve, communicate) knowledge is, therefore, a critical success factor. In this article, we develop a utilitarian model of organizational memory and learning that incorporates the conceptually important distinction between information and knowledge and their compartmentalization among the various domains of organizational memory. The crucial importance of context-rich interaction between project members—socialization—is highlighted and the consequence of its absence in a virtual project organization discussed. In the strict sense, information technology cannot convey knowledge and its indiscriminate use may aggravate rather than alleviate the operational stresses on a virtual project orga- nization. Drug Dev. Res. 43:134–142, 1998. © 1998 Wiley-Liss, Inc. Key words: virtual project organization; organizational learning; organizational memory; information; knowledge *Correspondence to: Ivan Jensen, SANT + Bendix, Skovlytoften 9B, DK-2840 Holte, Denmark. E-mail: [email protected] THE LEARNING PROJECT ORGANIZATION Some time ago, a newly appointed pharmaceutical project manager asked us where and how learning orga- nizations store all the smart things they learn. This de- ceptively simple question led us to examine what we know about organizational learning and remembering. In this article, we propose a model of learning in project organi- zations, a synthesis of existing theory, and reflections on our own work experiences, which may be of use to oth- ers wrestling with the same question. In presenting our model, we hope to encourage dialogue about a subject that is both fascinatingly complex to us and of consider- able operational (i.e., economic) importance to the phar- maceutical industry. INTRODUCTION “In a time of drastic change, it is the learners who inherit the future. Those who have stopped find them- selves equipped to live in a world that no longer exists” [Willard, 1994]. The pharmaceutical world is indeed un- dergoing changes these days, drastic both in scope and rate. The amount of information that needs to be pro- cessed in pharmaceutical development is also increasing drastically; currently, the globally available biological information is reputed to double every 12 months. These visible discontinuities may mask a more insidious but equally important change in the dominant paradigm of the pharmaceutical industry—from “manufacturers of specialty chemicals” to “purveyors of specialty knowl- edge” (which often comes packaged in the form of tab- lets or vials). “For organizations in the 1990’s, learning makes the critical difference. Through learning, organizations adapt to change, avoid the repetition of past mistakes, and re- tain critical knowledge that would otherwise be lost” [Dixon, 1994, p. 7]. It is not just learning per se that is important. The rate at which individuals and organiza- tions learn may become the only guarantee of survival, and especially so in knowledge-intensive businesses [Stata, 1989]. The pharmaceutical industry is driven by a knowledge paradigm. But the knowledge density (the ratio Strategy, Management and Health Policy Venture Capital Enabling Technology Preclinical Research Preclinical Development Toxicology, Formulation Drug Delivery, Pharmacokinetics Clinical Development Phases I-III Regulatory, Quality, Manufacturing Postmarketing Phase IV

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Page 1: The learning project organization

134 JENSEN AND SANDSTAD

© 1998 Wiley-Liss, Inc.

DRUG DEVELOPMENT RESEARCH 43:134–142 (1998)

Management Overview

The Learning Project OrganizationIvan Jensen1* and Ole Roger Sandstad2

1SANT + Bendix, Holte, Denmark2Coopers & Lybrand, Oslo, Norway

ABSTRACT The pharmaceutical industry is becoming increasingly knowledge-intensive. The ability toprocess (acquire, analyze, store, retrieve, communicate) knowledge is, therefore, a critical success factor. Inthis article, we develop a utilitarian model of organizational memory and learning that incorporates theconceptually important distinction between information and knowledge and their compartmentalizationamong the various domains of organizational memory. The crucial importance of context-rich interactionbetween project members—socialization—is highlighted and the consequence of its absence in a virtualproject organization discussed. In the strict sense, information technology cannot convey knowledge andits indiscriminate use may aggravate rather than alleviate the operational stresses on a virtual project orga-nization. Drug Dev. Res. 43:134–142, 1998. © 1998 Wiley-Liss, Inc.

Key words: virtual project organization; organizational learning; organizational memory; information; knowledge

*Correspondence to: Ivan Jensen, SANT + Bendix,Skovlytoften 9B, DK-2840 Holte, Denmark. E-mail: [email protected]

THE LEARNING PROJECT ORGANIZATION

Some time ago, a newly appointed pharmaceuticalproject manager asked us where and how learning orga-nizations store all the smart things they learn. This de-ceptively simple question led us to examine what we knowabout organizational learning and remembering. In thisarticle, we propose a model of learning in project organi-zations, a synthesis of existing theory, and reflections onour own work experiences, which may be of use to oth-ers wrestling with the same question. In presenting ourmodel, we hope to encourage dialogue about a subjectthat is both fascinatingly complex to us and of consider-able operational (i.e., economic) importance to the phar-maceutical industry.

INTRODUCTION

“In a time of drastic change, it is the learners whoinherit the future. Those who have stopped find them-selves equipped to live in a world that no longer exists”[Willard, 1994]. The pharmaceutical world is indeed un-dergoing changes these days, drastic both in scope andrate. The amount of information that needs to be pro-cessed in pharmaceutical development is also increasing

drastically; currently, the globally available biologicalinformation is reputed to double every 12 months. Thesevisible discontinuities may mask a more insidious butequally important change in the dominant paradigm ofthe pharmaceutical industry—from “manufacturers ofspecialty chemicals” to “purveyors of specialty knowl-edge” (which often comes packaged in the form of tab-lets or vials).

“For organizations in the 1990’s, learning makes thecritical difference. Through learning, organizations adaptto change, avoid the repetition of past mistakes, and re-tain critical knowledge that would otherwise be lost”[Dixon, 1994, p. 7]. It is not just learning per se that isimportant. The rate at which individuals and organiza-tions learn may become the only guarantee of survival,and especially so in knowledge-intensive businesses[Stata, 1989]. The pharmaceutical industry is driven by aknowledge paradigm. But the knowledge density (the ratio

Strategy, Management and Health Policy

Venture CapitalEnablingTechnology

PreclinicalResearch

Preclinical DevelopmentToxicology, FormulationDrug Delivery,Pharmacokinetics

Clinical DevelopmentPhases I-IIIRegulatory, Quality,Manufacturing

PostmarketingPhase IV

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LEARNING PROJECT ORGANIZATION 135

of information to mass, or the amount of datapoints, in-formation, or knowledge per patient, process, project,NCE, or batch) is continuously increasing, as witnessedby the increasing volume of the average NDA, batchrecord, market model, etc.

Since the rate of an organization’s learning must beequal to or greater than the rate of change in its environ-ment in order to guarantee survival [Revans, 1982], theability to acquire, process, store, and retrieve informationeffectively is a critical success factor in the pharmaceuti-cal industry. Many of its material business processes havealready been reengineered for greater efficiency and ef-fectiveness, often through or in conjunction with exten-sive use of information technology (IT). But truly integratedmanagement of the immaterial processes, the knowledgeflows, is still in its infancy. It may be more appropriate toradically redesign the CANDA (Computer Assisted NewDrug Application) and “Emerging Dossier” than to viewthis as an issue of automating existing processes. (Radicalredesign could entail integrating workflow tools, documentmanagement, clinical data management, project manage-ment, organizational learning, etc., into a “knowledge man-agement superstructure.”)

With increasing globalization, new ways of working,technology developments, and regulatory requirements,ever-growing amounts of data, information, and knowledgehave to be moved at greater speed across an increasingnumber of interfaces. To complicate matters, a project or-ganization is often the preferred way of structuring workrelated to change (such as development work).

A world-class pharmaceutical development projectis frequently divided into phases of relatively short dura-tion, which means that the project team is formed,changed, and disbanded rapidly. Many project memberswill not know one another initially and may spend onlyshort periods of time on the team. They are likely to berecruited from a large-base organization with many func-tional specialties and to be located at many sites aroundthe globe. They will operate across specialty, language,cultural, and sometimes company interfaces as well astime zones. Many activities will be undertaken in paral-lel, rather than sequentially. In its extreme form, a globalproject organization is “virtual” in that project team mem-bers rarely meet and are deprived of two of the impor-tant mechanisms for knowledge processing: co-location(i.e., frequent personal contacts), and the filing cabinetsof organizational archives [Savage, 1990]. Without exten-sive use of IT, knowledge would, therefore, predomi-nantly be transferred within and between virtual projectteams neatly packaged in the brains of the team mem-bers—and they do not meet often....

How can such “virtual project organizations,” as dis-tinct from their constituent individuals, learn and remem-ber anything? How can we meaningfully understand the

concepts of “organizational learning” and “organizationalmemory” and in practice create and maintain efficient andeffective organizations under those operating conditions?

This article presents our current model for organi-zational learning, taking as the starting point a view ofthe pharmaceutical company predominantly as an infor-mation processing system. We begin by describing theLego blocks of learning: data, information, and knowl-edge. Then we discuss what can be built with the blocks(i.e., organizational memory) and the processes by whichknowledge is acquired into and retrieved from memory.We conclude with the implications of our model for thelearning project organization and for the role of informa-tion technology.

ORGANIZATIONAL KNOWLEDGE AND LEARNING

Since learning something must, in some form, re-late to “knowing” it—whether the knowing was createdde novo or acquired [Nevis and DiBella, 1998]—we needto consider “organizational knowing” before proceeding.In the face of alternative epistemologies [von Krogh andRoos, 1995; Spender, 1996], we developed a utilitarianand hierarchical model of what is known within an orga-nization. The material that follows defines the necessaryand sufficient building blocks of the model, as well astheir attributes and relationships.

In our model, data is at the bottom of the hierar-chy, and we understand it as a representation of informa-tion. Information, the next layer, is composed ofaggregates of datapoints and makes up the formalizablepart of knowledge (what can be expressed in a formalsystem and communicated by, for instance, IT). The dif-ference between data and information is quantitative.Knowledge is made up of information about the state of asystem plus something that we name “inner context.”Inner context (corresponding to the “ground” of cogni-tive psychology) is system-bound—related to a givenperson, group, or organization—and cannot be explicitlydeclared. Thus, the difference between information andknowledge is qualitative (and it is tempting to see themas logically distinct). This hierarchy of knowing—in par-ticular the distinction between information and knowl-edge—has recently been shown to have operationalrelevance [Koch et al., 1997].

As an example, a clinical trial in diabetic patientswill lead to a number of datapoints (blood glucose mea-surements, dose and timing of insulin injections, timingand size of meals etc.). The information from this trial(aggregates of datapoints) is contained in the patient caserecord forms or computer-based database. The knowl-edge about this trial, however, only emerges with a con-text: what are the results from other similar trials,established clinical practice, etc. Thus, the “IntegratedSummary of Efficacy” expresses the knowledge obtained

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from the clinical trials by establishing a context definednot only by the trials themselves but also by other trialsand general clinical experience.

In a similar vein, Figure 1—a mind map of this pro-cess—was drawn up to illustrate the context of the article.

Knowledge can be said to exist as two differenttypes, explicit (cognitive or declarative) and tacit (proce-dural or behavioral), and to reside in two different do-mains, the individual and the collective or shared domain[Spender, 1996; Nonaka, 1994]. We have illustrated thismodel, and its four archetypical extremes, in Figure 2.

Explicit knowledge can be declared (although fromtime to time language may be woefully inadequate) and,hence, communicated. Explicit knowledge, in otherwords, is like information in that regard. In the individualdomain, experts possessing explicit knowledge can givelectures or write textbooks and thus communicate theirknowledge to other individuals or groups. A high degreeof codification and abstraction of the knowledge will fa-cilitate its communication or “diffusion” [Boisot, 1995].

In the shared domain, explicit knowledge is whatusually fills our libraries, departmental archives, and fileservers. It is readily available and transmittable, if onlyone knows where to look.

Tacit knowledge, on the other hand, cannot be ex-pressed in any formal system such as language. It is calledprocedural or behavioral because it relates to behavior,what we do and how we do it. On the individual level, anartist or expert can talk about work and explain methodsin great detail, but the person listening may never beable to reach the artist’s or expert’s level of proficiency(certainly not without practice). A prominent feature ofindividual, tacit knowledge is its effectiveness: most ofus can effortlessly ride a bicycle (a fairly complex task ofspatial orientation, motor coordination, and velocity andacceleration calculations) while reading a map and beingengaged in conversation at the same time.

Tacit knowledge in the shared domain correspondsto organizational culture [Schein, 1992, 1996]. Culturemay be described as a very efficient and effective organi-

Fig. 1. The figure is a mindmap that sets out to visualize both the con-tents and the context of the article. The mapping is allomorphic (as is thecase with most mental models) in that not all elements of the map are

presented in the article and not all elements of the article are presentedin the map.

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zational repository of behavioral scripts. Were individu-als to compute and consciously think about every actionand interaction in a system of more than a few people,the organization would end up completely paralyzed.Thus, tacit knowledge, both individual and shared, cor-responds to empirical “assembler programs” of behav-ior. Like such programs, they are largely unintelligibleto an outsider—and largely unarticulable by an insider.

Interestingly, different cultures are reputed to havevery different context-orientations [Boisot, 1995; IngoRegier, personal communication]. Japanese culture isconsidered highly context-dependent; at the other endis the USA. It is tempting to see this as one factor con-tributing to the relative success of Japanese industriesrequiring intensive teamwork.

We are now ready to define organizational learning,which we do by a slight extension of Huber’s definition[1991]: An organization learns if, through an increase inthe content of the shared domain of the organizationalmemory, its range of potential behaviors is changed. Inkeeping with the framework of Inkpen and Crossan [1995],our definition recognizes learning in organizations as 1)occurring at three levels (individual, group, and organiza-tion); 2) involving both cognitive and behavioral change;and 3) being concerned with both process and content.

The distinction between organizational learning andlearning by individuals in organizations is important.Organizational learning can be said to have taken placeonly when the knowing exists independently of theindividual(s) who acquired it. If your company still“knows” after the document management file server ter-minally malfunctions, the production archives burn, the

“blockbuster genius” retires from the company, or 10%of the employees have been laid off, then the knowledgeis obviously in the shared domain of organizationalmemory. Individual learning, thus, is a necessary but in-sufficient condition for organizational learning [Argyrisand Schon, 1978]. Depending on the circumstances un-der which learning takes place, as well as its object, dif-ferent types of learning have been proposed using mentalmodels as the bridge between individual and organiza-tional learning [Kim, 1993].

ORGANIZATIONAL MEMORY: BRAINS, BEHAVIOR,PAPER, & SILICON

Memory is defined as “the faculty of retaining andrecalling things past” (American Heritage Dictionary),but its exact nature and attributes in organizations re-main unclear [Walsh and Ungson, 1991]. Historically, thestudy of memory within the context of organizational psy-chology has, not surprisingly, had the individual as itsobject, although it has been postulated that memory canbe ascribed to supra-individual collectives (groups andorganizations) as well.

We explicitly assume that “organizations function-ally resemble information-processing systems that processinformation from the environment. As information pro-cessing systems, organizations exhibit memory that is simi-lar in function to the memory of individuals” [Walsh andUngson, 1991, p. 60]. We also believe that organizationalmemory is not just a passive repository for data, informa-tion, and knowledge, but an active interpretative system[Daft and Weick, 1984; cf. our definition of knowledge].Managers and employees form beliefs and theories basedon what they perceive and their interpretation(s), whichin turn influence the decisions they make and the way theorganization performs. In the following, we try to pin downthe essence of organizational memory and reflect on theprocesses by which information can be acquired, stored,and retrieved from it.

What is known in an organization, the content oforganizational memory, can be stored in conceptuallydifferent repositories. Walsh and Ungson [1991] suggestfive “storage bins” of organizational memory: individu-als, culture, transformations, structure, and ecology. In-terestingly, external archives, whether paper-based or inelectronic format, are seen primarily as a tool for indi-viduals, in that “individuals and organizations keeprecords and files as a memory aid.” Thus, the five binscorrespond largely to what we earlier defined as tacitknowledge in the shared domain. Each “bin” as well asexternal archives are discussed below.

Individuals

Employees have their own recollection of whathappens in their organization and retain information

Fig. 2. Organizational memory. Any element of an organization’s knowl-edge will be either tacit (procedural, behavioral) or explicit (cognitive,declarative) and located predominantly or exclusively in the individual orshared memory domains. The arrows indicate and name the processesthrough which knowledge can be moved from one domain to another.The names in the four quadrants are metaphors for organizational knowl-edge archetypes.

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based on their direct experiences and perceptions. How-ever effective this process is for the individual, it is riskyand ineffective for the virtual project organization to relyon individuals as the key or main carriers of organiza-tional memory. It is risky, considering today’s personnelturnover rates (both intra- and intercompany) in theknowledge-intensive pharmaceutical industry. It is inef-fective, not so much because of the price of transporta-tion but because of the high cost of time spent away fromthe primary work process (e.g., in offsite project meet-ings). A return airfare from Europe to the US to attend aone-day meeting amounts to a few thousand dollars; theopportunity cost of the two extra days spent on travelingmay well be orders of magnitude greater.

Because project teams are formed, changed, anddisbanded rapidly, there is also a considerable risk ofproject members disappearing with important knowl-edge before it has been processed or entered into theshared domain of organizational memory. From the per-spective of a learning project organization, it is impor-tant that individual explicit knowledge be transferred tothe shared, explicit part of organizational memory in asystematic manner (using IT in the form of memoranda,reports, summaries, etc.).

Culture

Tacit shared knowledge corresponds to organiza-tional culture, in keeping with a definition of culture asa learned way of perceiving, thinking, and feeling aboutproblems that are transmitted to members in the orga-nization [Schein, 1992]. Language, shared frameworks,mental models, symbols, rituals, and myths are all carri-ers of information. The addition of inner context to orga-nizational information, as argued earlier, corresponds to“assembler programming” of organizational behavior andrepresents an increase in efficiency and effectiveness.

Adding context or coding takes place wheneverpeople interact, but the effect diminishes as a functionof the distance between them. (Note also that contextis added irrespective of the utility of what is beingcoded.) The consequences for the virtual project orga-nization are not surprising: because of insufficient in-teraction, a shared project culture may be weak or notdeveloped at all. Hence, project team members maybehave as individuals, with individual agendas, ratherthan as team members, with aligned, shared goals. Theabsence of a shared culture is problematic. Conflictingcultures are just as dysfunctional and impair learning[Schein, 1996].

Transformations

An important repository for tacit shared knowledgeconsists of the routines, the work logic (i.e., what trans-formations of raw materials to outputs occur), that gov-

ern “the way we do things in this company.” A great dealof knowledge about work is stored in the form of stan-dard procedures and routines. Managers and decision-makers also routinely acquire and mentally store this typeof knowledge [Huber, 1991].

Because much of the information embedded intransformations (again, of inputs or raw materials intooutputs) is tacit, the explicit articulation of standard op-erating procedures can be very difficult. Nevertheless,transformations contain valuable information that, if re-trievable, could guide the forming of new transforma-tion processes. An important challenge for the virtualproject team, therefore, is to capture these transforma-tions so that they become indexed and stored and canbe used as a basis for future projects and their plansand decisions.

Structure

Individual roles, structure, also provide a reposi-tory in which organizational information can be stored.Thus, roles represent one aspect of tacit, shared knowl-edge. It has been suggested that “the combination ofroles in interaction memorizes an interaction sequenceand thus constitutes a social memory of super-indi-vidual information” [Walsh and Ungson, 1991, p. 66].Roles are very context-rich and represent an effectiveway of coding behavior (think of archetypical rolessuch as “mother,” “teacher,” “joker,” and “manager”).Inappropriate roles, therefore, can be powerful inhibi-tors of organizational learning.

Ecology

In Walsh and Ungson’s [1991] framework, the ac-tual physical construction of the workplace (the last“bin” of memory) encodes tacit knowledge and revealsa good deal about the organization. Physical layout, aswe know from experience, can promote or inhibit in-formation sharing and learning. What are the implica-tions for projects? Should all projects, and especially avirtual project, have a shared project office (“war room”)as a home base? If so, what could or should the physi-cal attributes and characteristics—in other words, theecology—be in order to promote the interaction andlearning of project team members?

External Archives

We want to conclude our discussion of organiza-tional memory by emphasizing that, although we use theterm “external archives,” the boundaries are blurringbetween what is internal and what is external to a projectorganization.

External archives are increasingly importantsources of information. They can be accessed with easeand are found in ever-increasing numbers, as witnessed

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by the explosion of Internet-based services. Competitiveintelligence is abundant and commercially available.The Freedom of Information Act ensures access to in-formation stored in regulatory authorities and othergovernment bodies. Scientific information can be ac-cessed in vast quantities, both commercially and in vari-ous nonprofit contexts (e.g., HUGO, the Human Genomeproject). Some companies employ “knowledge manag-ers” in deliberate attempts not only to access externalarchives but also to ensure that the data and informa-tion are contextualized (that is, become knowledge) asfar as possible.

THE DYNAMIC NATURE OFORGANIZATIONAL MEMORY

How Content Is Acquired

We have described five “bins” of organizationalmemory that contain predominantly tacit shared knowl-edge. By defining organizational memory as an activeinterpretative system [Daft and Weick, 1984], we nownote that the content of organizational memory has passeda series of “gatekeepers,” personal and cultural filters,that add or remove meaning through a coding processoperating at the individual, group, or organizational level[Weick, 1995]. Filtering of information and knowledgeon their way to the storage bins, however, may block,obscure, oversimplify, or misrepresent learning eventsand the context in which they took place.

One very important filtering mechanism that oper-ates constantly is embedded in channels of communica-tion and, thus, affects both acquisition and retrieval. It isintuitively clear that these channels must somehow becapable of retaining the content of the message intact ifcommunication is to be effective. This was expressed asthe “law of requisite variety” [Ashby, 1956], in which “va-riety” is defined as the number of possible states of asystem and is related to the complexity of the messagesrequired to describe the system. The law of requisitevariety simply states that, in order to be free of distor-tion, the variety—or “bandwidth”—of the channels ofcommunication must be at least equal to the variety ofthe message that is to be communicated.

The quality and management of information andknowledge acquisition determine the quality of the con-tent of organizational memory and that, in turn, largelydetermines future action. In addition, if this memory ispoorly organized the way in which information andknowledge are retrieved—and the quality of what is re-trieved—will be affected. Because more and more tasksare carried out with the assistance of computers, thisopens the possibility of using them for meta-informa-tion purposes, i.e., to track information flows, sources,recipients, and use of information. This is an important

concept. Particularly in entrenched line organizations,contributions to organizational memory seem almostaccidental and rarely managed or driven by intention. Em-ployees often lack the skills and motivation to input knowl-edge into organizational memory, let alone to moveknowledge from the explicit into the tacit, shared domain.

How Content Is Retrieved

The capability of the organization to access memoryand retrieve information and knowledge is to a large ex-tent dependent on how well the content has been ac-quired, coded, stored, indexed, and maintained. Although“retrieval from organizational memory” may suggest files,archives, databases (the explicit, shared content), retrievalactually takes place every time an interaction occurs(meetings, decisions, etc.).

Retrieval of information and knowledge from orga-nizational memory also varies along a continuum, fromautomatic to controlled [Walsh and Ungson, 1991]. Auto-matic retrieval happens in an effortless, intuitive mannerwhen decisions are made or problems are solved basedon previous practices or established routines shared bymembers of the organization. What makes retrieval “au-tomatic” is the tacit nature of the routines and proce-dures. There are mental models stored in the various binsof organizational memory, influencing the way peoplethink, feel, decide, and act. (Again, tacit, shared knowl-edge corresponds to “assembler programmed” behavior,and this is what makes it so effective.)

Controlled retrieval takes place when members ofthe organization consciously access information aboutpast decisions and problems solved and use it to increasethe quality and effectiveness of current work processes.The ease with which this can occur varies across the dif-ferent storage facilities. The capability of individuals toretrieve data and information from the shared domain ispartly constrained by their familiarity with the locationsand content of the data and information. Access to theexplicit part of organizational memory may also be con-strained by

• security concerns (need to protect unique intel-lectual property),

• power considerations (e.g., “need-to-know” / I de-cide vs. “want-to-know” / you decide),

• the presence or absence of adequate structuringof the information (document management and workflowtools), and

• organizational tradition (“push” vs. “pull”).Finally, the amount and quality of information in

the explicit, shared domain of organizational memory isalso to a large extent dictated by managerial practices(the reward and recognition system of the organization).Needless to say, information technology is concerned withthe explicit, shared organizational memory.

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THE LEARNING PROJECT ORGANIZATION(ON THE WAY FROM THEORY TO PRACTICE)

We have defined learning to take place if, throughan increase in the content of the shared domain of theorganizational memory, the organization’s range of po-tential behaviors is changed.

As discussed earlier, members of a virtual projectorganization are likely to be geographically separated andto come from different national cultures and technicaldisciplines and even different companies. Working to-gether on temporary project assignments, they do notspend much time together (because of the time and costinvolved in attending project meetings). Often, they donot have the time, opportunity, or inclination to developan effective project culture. These teams remain predomi-nantly a loose constellation of individuals, each with hisor her own agenda and goals. It is notoriously difficult toarrange meetings and, when they do occur, the agenda isoften crammed and the time available pitifully short con-sidering the importance of the issues. In our model (Fig.2), such a virtual project team would be a “Guild,” a col-lective of specialists with a preponderance of tacit, indi-vidual knowledge.

From the project manager’s perspective, this isproblematic. There will be very little common context,so that the project goal may become fragmented into anumber of distinct, technical goals and individual agen-das. Because the project team will not have developed ashared “assembler program” for its culture and behavior,it cannot function effectively as a team. A large numberof interfaces (interaction and information flows) betweenthe specialists must be “micro-managed” by the projectmanager. In such situations, there is plenty of room forskilled incompetence [Jensen et al., 1995].

From the organization’s perspective, this is alsoproblematic. New knowledge generated by project ac-tivities tends to remain locked inside the heads of teamsmembers. Such knowledge, essentially, remains in theindividual rather than organizational domain, resultingin retrieval (and, thus, utilization) difficulties. One needsto know that the knowledge exists, and inside whichheads, in order to access it. Knowledge must then betransferred by moving the individuals “hosting” it.

The crucial challenge for the project manager andthe organization is to ensure what can be defined asstepwise moves: from the individual to the shared do-main, and between tacit and explicit knowledge types(Fig. 2). This allows the organization to maximize thebenefits from previous project investments (transfer oflearning), and the project manager will be maximally ef-fective (utilization of learning). To where and how fastthe knowledge should move is determined by the natureof the organization and the competitive pressures that

are brought to bear on it. The “ideal” position in our modelmay well vary over time.

As Figure 2 suggests, the stepwise shift or relativemove of knowledge is accomplished by three principalactivities (roughly in order of priority): socialization,combination, and internalization–externalization. Orga-nizations do have different preferences, however. Insome, the dominant paradigm may be “soft,” humanresource-oriented. In these organizations, the primaryknowledge-moving activity may be socialization. Otherorganizations will have a more technocratic perspec-tive and prefer a combination knowledge-moving ac-tivity, using information and communication technology.As always, getting the balance right, understanding andstriking the right relationship between needs and rem-edies, is what matters. Each knowledge-moving systemis discussed below.

Socialization

The first challenge for the virtual project team is tomove tacit knowledge from the individual to the shareddomain by developing a strong team culture. The meansby which this is accomplished is socialization, which oc-curs when people are together.

Many project teams are taken through a start-up ormobilization phase in which team members meet in or-der to get to know one another. Rather than having clearlydefined behavioral goals, however, the duration of thisteam building often appears dictated by financial con-straints and its content mainly by the technical challengesof the project. Considering the cost of inadequate projectprogress—reputed to be a reduction in life cycle earn-ings of around US$ 1 million for each day of delay in amajor development project—it becomes difficult to un-derstand why so many projects are allowed to proceedwithout developing a viable team culture.

Assuming that each day spent on socialization inthe project start-up phase can reduce overall project du-ration by at least one day, socialization becomes a veryintelligent investment, even if the entire project team issent to an exotic, five-star resort. Developing a strongproject team culture moves the project team from “Guild”to “Soccer Team” (Fig. 2). Specialists would still be spe-cialists, but now they can work effectively as a team, indynamic interaction [Katzenbach and Smith, 1993] (cf.the “assembler programming” of culture).

How can socialization as a knowledge-moving ac-tivity be maintained in a group of people who, throughforce of circumstance, will be together only infrequently?In addition to face-to-face interaction, team membersmaintain socialization by communication. Because thevariety, e.g., complexity, of problems about which theyneed to communicate will be very high, members of thevirtual project team must choose communication chan-

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nels having the requisite variety (matching the variety ofthe message). If the knowledge content of the message ishigh or context-rich, video conferencing is a viable alter-native to face-to-face interaction. Telephone conferencingshould be used only as a last resort. One consequence ofusing lean communication media (channels with low va-riety, of which e-mail is a prime example) is that only theformalizable part of knowledge—i.e., information—istransmitted [Daft and Lengel, 1986].

We believe that the exponential increase in the useof e-mail is a reflection not only of its usefulness but alsoof its inability to communicate knowledge. To the ques-tions of T.S. Eliot—“Where is the wisdom that we havelost in knowledge? Where is the knowledge we have lostin information?”—we add “And where is the informationwe have drowned in data?”

A critical prerequisite for the development of sharedcontext and a strong team culture is trust, all the moredifficult to achieve the more virtual the organization[Handy, 1995]. The alternative to trust in a virtual projectorganization is control, which requires information. Wecannot overemphasize that the lack of knowledge andcontext, meaning, is not compensated for by adding in-formation. On the contrary: more information may ag-gravate the original problem by increasing the need toprocess it in order to establish context. This vicious circle,also called information overload, is established and main-tained by indiscriminate, accelerating use of IT.

The danger signal for the project manager is theabsence or fragmentation of a formerly clear, sharedproject goal. When CMC, marketing, and medical mem-bers of the project team sound as if they work on differ-ent projects, that is exactly what they do. Through contextdrift, they have started to pull in different directions. Adeliberate, context-oriented effort is necessary to bringthem together again.

Combination

The second challenge for the virtual project teamis to move knowledge from the explicit, individual do-main (the “University” quadrant) to the explicit, shareddomain (the “Library” quadrant). Considering the natureof virtual project work, the task is to make information“location-independent,” which requires 1) the willing-ness to make individual information part of the shareddomain, 2) the technology to do so, and 3) a suitable or-ganization of the information.

We realize that the desire to share information (“in-tellectual property”) in an R&D environment, outsidethe group of immediate collaborators, has always beenlukewarm (because of the academic success criteria ofthe next paper, the next patent, etc.). A consistent systemneeds to be put in place that rewards and recognizes thesharing of information. By consistent we mean that ev-

eryone should walk the talk; the system should encom-pass the entire organization, including management.

Information sharing is enabled by use of informa-tion technology; although, in light of the paradigm shiftreferred to earlier, we should refer to it as knowledgetechnology. Again, the key concept is location-indepen-dence. Can virtual team members work equally well inTokyo, Taihape, and Trondheim? Do people actually havethe hardware and software (portable computers, faxes,e-mails); do they actually work; and do members actu-ally know how to utilize both? Sometimes the metaphoricdistance between the nice and tidy flowcharts of theboardroom and the operational realities of the organiza-tion must be measured in light-years. The acid test, ofcourse, is to ask not senior managers but the users if theirneeds are met.

Finally, information in the shared domain must beorganized (structured) in such a way that retrieval fromit, as well as addition to it, is effortless. The entire dataand information life-cycle must be taken into consider-ation, as well as the attributes of and relations betweenthem. The tools are available (intra/extranets, distributeddatabases, point-of-origin data entry, GroupWare,workflow, document management, data management,etc.). The formidable task is to develop a comprehen-sive, definitive model of the knowledge and informationflows of the organization that can be used as the basis forknowledge management and knowledge technology de-cisions. As many have observed, IT is not a “passive” tech-nology but profoundly affects the way the organizationgoes about its business [Huber, 1990], particularly as theprice of IT dramatically decreases [Malone, 1997].

Externalization, Internalization

The final challenge for the virtual project team isto move knowledge 1) from individual tacit to individualexplicit (externalization), and 2) from shared explicit toshared tacit (internalization). Pragmatically, a balanceneeds to be struck between the effective but costly en-coding of behavior into culture, structure, and transfor-mations (internalization) and the less costly but lesseffective accessing of context-devoid information(externalization).

The interfaces between tacit and explicit knowledgetypes and between individual and shared domains arebridged by systems thinking and mental models [Senge,1990; Kim, 1993; Nevis and DiBella, 1998]. A mental modelis a way of codifying and abstracting tacit knowledge. Whenexplicit in the individual domain (i.e., externalized from“Guild” to “University”), knowledge is then capable ofbeing shared (“Library”). When explicit in the shared do-main, knowledge is then capable of being internalized asassembler programming. Put another way, at this point the“Library” now resides in the “Soccer Team.”

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One example of a mental model that can bridge theseinterfaces is a process map of all regulatory activities, fromidea generation to final NDA/MAA approval. Another ex-ample is a comprehensive market model for an NCE. Suchmodels can be used for analytical purposes and as tem-plates or learning platforms for new activities. Because theknowledge contained in the mental model is initially tacit,expressing it (making it explicit) is notoriously difficult.We contend that this is one reason why there are so fewoperationally useful mental models about.

Internalization, on the other hand, is probably moreclosely related to the traditional concept of learning, inthe sense that acquired skills and expertise become, forall intents and purposes, automatic. If there is a need tomove knowledge from explicit shared to tacit shared inorder to change behavior, the focus needs to be on con-text-adding processes. Depending on the scope of change,co-location of project group members may be requiredfor a shorter or longer period of time [Handy, 1995].

CONCLUSIONIn this article, we have developed a utilitarian model

of memory and learning in knowledge-intensive projectorganizations. In order to operate with maximal effec-tiveness, these organizations and their managers mustunderstand the conceptually important distinction be-tween information and knowledge, and how they are com-partmentalized in organizational memory. Socializationbetween project members—sharing of tacit knowledgevia context-rich interaction—is crucial for the success ofa virtual project organization but becomes problematicprecisely because of the project’s “virtuality.” Informa-tion technology, which, strictly speaking, has informationas its object, cannot convey knowledge, and indiscrimi-nate use of IT may aggravate rather than alleviate theoperational stresses on a fast-moving virtual project team.

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