Organizational Learning and Learning Organizations: Trigger Events, Processes, and Structures Soon Ang (Presenter) Nanyang Business School Nanyang Technological University Nanyang Avenue 639798 Singapore ASANG@NTUVAX.NTU.AC.SG (65) 799-4717 (voice) (65) 792-2313 (fax) Damien Joseph Nanyang Business School Nanyang Technological University Nanyang Avenue 639798 Singapore ADJOSEPH@NTUVAX.NTU.AC.SG (65) 799-4813 (voice) (65) 792-2313 (fax) Submitted for the Academy of Management Meetings, Ohio, Cincinnati, August 1996 Organizational Development and Change Division Organizational Learning and Learning Organizations: Trigger Events, Processes & Structures, and Learning Outcomes Abstract 50 words Organizational Learning and Learning Organization span many disciplines. Over 1000 abstracts in management, economics, psychology, sociology, and other social sciences were content analyzed. Analysis revealed a nomological network of (a) triggering events that render OL necessary; (b) OL processes and LO designs; and (c) learning outcomes. Questions guiding future research and practice ensue. INTRODUCTION Organizational Learning (OL) and Learning Organizations (LO) are alluring concepts in the 1990s. Interest among organizational researchers and practitioners is evidenced in growing numbers of books and research papers in the area; conferences on OL (e.g., Carnegie Mellon University in 1989; INSEAD in 1990; Western Business School in 1992); special calls for papers (e.g., International Journal of Organizational Analysis in 1995); and the establishment of research centers (e.g., Peter Senge’s Center for Learning Organizations at MIT; Academy for Applied Research in Organizational Learning in George Washington University). Despite growing interests, the body of knowledge on organizational learning and learning organizations remain disparate. There have been attempts at integrating the literatures (Duncan and Weiss 1979; Fiol and Lyles 1985; Levitt and March 1988; Huber 1991; Dodgson 1993; and more recently Barnett 1995 cited in Cohen and Sproull 1996). In each of these prior attempts, researchers identified a single or few key OL concepts and examined them in depth. Duncan and Weiss (1979) focused on process of creating knowledge about action-outcome relationships; Fiol and Lyles (1985) distinguished the levels of learning within organizations; Levitt and March (1988) emphasized experiential learning in organizations; Huber (1991) offered an information processing view of organizational learning; while Dodgson (1993) elaborated on goals and facilitators of OL and extended Fiol and Lyles (1985)’s levels of learning. This study integrates the bodies of knowledge more broadly. First, unlike prior studies where the focus has been on organizational learning, this study incorporates research in both organizational learning and learning organizations. Second, rather than dovetailing to specific learning concepts, this study embraces the eclectic nature of prior literature with the aim of evolving the underlying nomological network on OL and LO. The network then serves to converge our understanding on OL and LO and aid in developing mid-range propositions and guiding subsequent empirical testing. In the context of a nomological network, triggering events can be conceived as antecedents to OL and LO (see Figure 1). We define triggering events as circumstances which act as catalysts to OL. As with human beings, organizations do not learn proactively (Watkins and Marsick 1993). Organizations learn only when the need arises or when some events trigger off the need to learn. Especially given the tremendous pressures to perform and produce results, organizations tend to overinvest in exploiting existing knowledge and underinvest in learning or in developing new knowledge (Levinthal and March 1994). 2 Figure 1: Nomological Network of Organizational Learning and Learning Organizations Nomological Network of OL and LO Antecedents • Trigger events Core Concepts Consequences • Processes of OL • Structure of LO • Learning outcomes OL and LO form core concepts in the nomological network. Research in OL and LO are distinguished by their relative emphases on learning processes and structures. The phrase “organizational learning” suggests emphasis on process: a sequence of activities in which an organization undertakes to learn. In contrast, “learning organization” emphasizes unique structural characteristics of an organization that has the ability to learn. In LO, the focus is less on actions that result in learning, but on attributes or structural dimensions that characterized the organization as learning. Learning outcomes are consequences in the nomological network. They represent major effects of OL and LO on goals of the organizations. With these concepts for a nomological network in place, we will describe the methodology for bibliographic and content analysis in the next section, followed by results of our analysis. We will then discuss the implications of the nomological network for future research and practice. METHODOLOGY Defining a Universe and Appropriate Databases We collected data at end of first quarter of 1995. The initial task was to identify a suitable universe of publications on OL and LO. The universe should consist of all manuscripts on organizational learning and learning organizations published in periodicals, collections and books. OL and LO span numerous disciplines in both academic and practitioner journals. Disciplines include business and management, economics, education, political science, psychology, sociology and other social sciences. Because of the wide span, we identified databases that cover these disciplines. The seven databases accessed via Dialog Online Information Services were ABI/INFORM, Management Contents for business and management; EconLit for economics; PsycInfo for education and psychology; Sociological Abstracts for sociology; Social SciSearch for social sciences; and Dissertation Abstracts. Table 1 presents the reach and range of databases that defined our universe of publications. 3 Table 1: Reach and Range of Databases Database Period Covered ABI/INFORM 1971-1995 Dissertation Abstracts 1861-1995 EconLit 1969-1994 Management Contents 1974-1995 PsycInfo 1967-1995 Social SciSearch 1972-1995 Sociological Abstracts 1963-1995 Although OL and LO have generated a lot of interest in the last five years, the phrase “organizational learning” had existed in our lexicon for as far back as 30 years ago when Cangelosi and Dill discussed the concept (Cangelosi and Dill 1965). As the data collection was conducted in the first quarter of 1995, it was agreed that we would restrict our dataset from 1994 to as far back as possible limited only by the coverage of respective databases. Search Strategy We used phrases “organizational learning” and “learning organizations” to search the titles, abstracts, identifies, and descriptors of publications in each database. No attempt was made to identify synonyms for OL and LO as the field of inquiry is too immature for a stable set of synonyms. In the search strategy, each database was first searched using a Dialog search string, “(organizational) (1w) (learning)” followed by “(learning) (1w) (organization).” The use of (1w), meaning 1 word between the search words, allows us to cast the search wider to include publications containing phrases such as “organization that learns” to “learning in organizations.” The search yielded 1381 publications. Hits without accompanying abstracts were removed as abstracts were necessary for subsequent content analyses. Cursory and irrelevant publications were also removed. Cursory publications were defined as publications which mentioned “organizational learning” or “learning organization” in passing as one of several themes of the paper or as one of many independent or dependent variables in the studies. Irrelevant publications included interviews and reviews of books on OL or LO. Other publications were also considered irrelevant when phrases “organizational learning” or “learning organizations” exist but do not relate to concepts of OL or LO. For example, publications dealing with “organization of learning passages,” or abstracts in publications where the words “learning” and “organization” appear consecutively in the abstract, as in “ ... learning. Organization of ...” were removed. The final working sample of 425 publications1 was obtained after eliminating duplicates across all seven databases. 1 A list of the 425 publications is available from the first author. 4 Table 2: Towards to final sample Publications Total abstracts obtained 1361 Irrelevant publications Cursory publications Book reviews Duplicates Total discarded 346 259 14 317 936 425 Total working sample Growth and Span of publications Figure 2 shows the growth of publications in OL and LO. The 425 publications were also categorized into three search term groups. The first group was designated “OL”, meaning the term “organizational (1w) learning “ was used to obtain the publications. The next group was designated “LO” to mean that the term “learning (1w) organization” was used to capture these publications. Finally, the third group was labeled as “Both” to mean that the publication was found to contain both terms in the basic index and therefore was captured under two previous terms. Figure 2. Growth of Publications 120 Legend All 425 LO 111 OL 251 1970 100 1968 Both 63 60 40 20 Year 5 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 1974 1972 0 1966 No of Publications 80 From the graph, we note a sudden spurt in publications in the last five years, particularly in 1994, suggesting the growing interest in the area. The oldest known publication on OL was published in 1965 (Cangelosi and Dill 1965). The concept of LO only took off after 1990, probably spurred by the Senge’s best-selling book on the learning organization (Senge 1990). To examine the span of publications of OL and LO, the 425 publications were clustered into three broad categories (see figure 3). The “Business/Management” cluster contained 249 publications from ABI/INFORM, EconLit and Management Contents. The “Soc/Psy” cluster contained 90 publications from PsycInfo and Sociological Abstracts while the third cluster, “Others,” contained 170 publications from Dissertation Abstracts and Social SciSearch. The “Others” cluster represented areas as diverse as anthropology to political sciences, and other social sciences. Figure 3: Span of Publications Span of Publications Biz (ABI/Mgmt content/ Econlit) 195 Others (Dissertation/ Social Scisearch) 106 34 1 2 8 22 48 Soc/Psy (PsyInfo/ SocioAbs) Relatively few publications span across clusters suggesting the importance of casting the searching over a wide range of databases. Of the 425 publications, only 8 publications represent common hits in all three clusters; 12 between the “Business/Management” and “Soc/Psy” clusters; 34 between “Business/Management” and “Others” clusters, and 22 between “Others” and “Soc/Psy” clusters. The remaining 349 publications resided within independent clusters. Coding Process and Reliability Based on the idea of a nomological network for OL and LO, we developed a template comprising publication descriptors such as author(s), title, year, journal of publication, database; trigger events; OL processes; LO structures; and learning outcomes. Publications extracted from ABI/INFORM and Management Contents in the first quarter of 1995 were used by three coders (the two primary investigators and a graduate research assistant) to ensure sufficient internal consistency and reliability. A search at the end of the first 6 quarter of 1995 yielded 45 abstracts from Management Contents and 50 abstracts from ABI/INFORM. Initially, all three coders were involved in coded the 45 abstracts from the 1995 Management Contents abstracts. The coding resulted in 40% agreement among the coders. Subsequent intense debates helped resolve disagreements. Explicit coding rules were developed and consensus reached. After resolving differences and reaching consensus on the 45 abstracts from Management Contents, the 50 abstracts from the 1995 ABI publications were again coded by all three coders. This second round of coding resulted in 70% agreement, and subsequent differences resolved through consensus building and greater refinement of coding rules. With reasonable confidence about coding rules, the coders subsequently coded 425 publications independently. Each coder was responsible for coding abstracts from at least two databases. Abstracts were analyzed for trigger events, learning processes, LO structures, and learning outcomes. During the process of individual coding, ambiguous abstracts were highlighted for group discussion. Abstracts highlighted for closer scrutiny were read by all coders and consensus achieved through intense group discussion.. RESULTS Results are organized along the nomological network: (1) trigger events; (2) processes and structures of OL and LO; and (3) learning outcomes. Trigger Events Of the 425 publications, about 35% (150) mentioned trigger events for OL or for creating LO. Trigger events can be characterized as internal or external triggers (Table 2). Internal triggers are events arising from within an organization. Major internal triggers include (1) human resource issues of executive succession, expatriation, personnel turnover; (2) project implementation issues such as IT, TQM or innovations; and (3) creating new inter-organizational interdependencies and collaborations in the form of joint-ventures, franchise agreements, strategic alliances, etc. External triggers are environmental jolts that occur external of the organizations. They refer to changes in various dimensions in the environment that require organizations to change existing routines and rules. These external triggers include (1) rapid changes in business environment such as demographic changes, and changes in consumer tastes and market demands; (2) rapid changes in technological environment such as pace of change in IT; (3) redefinition of economic environment such as new trade zones, and switch from planned to market economies; and (4) changes in legislation resulting from changes in ecological environments or political regimes. 7 Table 2: Trigger Events Issues (with sample triggers) Internal Human Resource Issues • executive succession • expatriation • personnel turnover Implementation Issues • implementation of IT • implementation of innovations; TQM • implementation of R&D Inter-organizational relations • joint ventures, franchise agreements • diversification • strategic alliances External Business Environment Issues • unstable markets • rapidly changing customer demands Technological Environment Issues • rapid technological changes Economic Environment Issues • globalization • recessionary pressures • economic reforms Ecological & Political Environment Issues • new “green” legislation • crises (e.g. Bhopal disaster) • political changes Total Occurrences 16 % of Total 10.7 19 12.7 16 10.7 32 21.3 35 23.3 9 6.0 23 15.3 150 100 Internal Triggers Human Resource Issues Organizational learning requires humans as agents. Accordingly, changes in human resources within any organization pose major impetus for OL. In Virany, Tushman, and Romanelli (1992), the researchers examines how changes in the chief executive officer triggered off necessary organizational learning among members in the top management team. In a study on expatriation, Vink and Schapink (1994) argued that organizations must learn to work beyond Western ethnocentric theories of behavior. Effective intercultural managers are those who have acquired and shared their collective experiences on unfamiliar and different cultures. On the relationship between personnel turnover and organizational learning, Carley (1992) showed that hierarchies were less affected by high turnover rates than teams, particularly when the task is nondecomposable. Implementation Issues The introduction of a new technology, innovation, or R&D often triggers need for organizational learning (see George 1983; Bessant and Buckingham 1993; Carlsson and Kean 1976). Implementing a new innovation often alters existing work routines, reward structures, or communication patterns to the extent that organizations must ensure sufficient slack resources to 8 support learning activities to incorporate the innovations successfully and to obtain full benefits of the innovation. Inter-organizational Relations Organizational learning is an emerging paradigm for the study of strategy making when firms diversify into new practices, products or services and collaborate with other firms in creating new interorganizational relationships or IOR (Alaharkonen and Rutenberg 1990) (Kazanjian and Drazin 1987). The need for close collaboration and cooperation with others in IOR such as strategic alliances imposes an unprecedented emphasis on organizational learning as parties to the relationship need to institutionalize and amalgamate distinct organizational practices, new job definitions, new ways of managing and even redefining the nature of the firm (Lewis 1991). External Triggers Business Environment Issues Business turbulence comprises one of the most significant environmental jolts faced by firms. Rapidly changing dynamics of industries and competitive forces require firms to learn faster than competitors to order to achieve sustainable competitive advantage. To survive, organizations must learn to shift from managing and producing in the world of stable markets to one with short product lifecycles, continual innovation, and rapid changes in customer demands. Organizations must build a capacity to learn: to conduct quick studies and tackle novel problems (Maccoby 1993; Hosley, Lau, Levy, and Tan, 1994). Technological Environment Issues The greatest jolt from the environment is the unprecedented pace of change in technologies. Because of the high rate of technological change, formal education in schools will never be able to totally prepare workers for their lifetime’s technological work demands. It is thus paramount that firms create a learning environment within their organizations to promote onthe-job learning and growth. Continual learning and investing in the full spectrum of employee talents with teamwork are cornerstones for coping with relentless pace of change in technology (Benett and O’Brien 1994; Atkinson 1994). Economic Environment Issues Economic environment issues take on many forms. With globalization of markets, organizations must learn to break the limited mindsets of national markets to compete on a worldwide basis (Ghoshal and Butler 1992). Firms in economic recessionary regimes must learn new survival skills to re-vitalize the organization, steering the organization from danger to opportunity (Hollingworth 1992). Organizations in East European economies and other communist regimes face great challenges when reforms coverted centrally planned markets to free, open markets (Swiderski and Seiderski 1986). Firms had to erase old organizational memories and routines of a socialist economy and generate new rules, standard operating procedures to compete in a new open market economy. Ecological & Political Environment Issues 9 Occasionally, organizations learned from natural disasters (e.g., Bhopal disaster). Disasters make explicit organizational policies on safety measures (Bowman and Kunreuther 1988). As nations become more concerned with the ecological environment, and as new laws and statutes are enacted to protect the natural environment, organizations need to develop new rules, behaviors and business practices to abide by the “green” laws (Mylonadis 1994). Organizations also need to learn to cope with new regulation following changes in political leadership and regimes (Godkin and Montano 1991). Processes of Organizational Learning Due to its eclectic origin, the OL & LO literature offers divergent knowledge about the processes of organizational learning. Literature on the processes can best be distinguished by their emphases on three different focal points to the learning process: the assumptions underlying organizational actions; the concrete experiences on which learning is based, or information processing cycle of knowledge acquisition, interpretation and codification. Table 3 provides a breakdown of the three processes together with the number of occurrences in the literature. Learning processes that emphasize assumption-surfacing and experiential learning represent the bulk of the discussion on processes. Table 3: Major Processes of Organizational Learning Occurrences Assumption-surfacing learning • single- versus double-loop learning • triple-loop learning • deutero learning • unfreeze-change-refreeze Experiential learning • Kolb’s experiential learning model • Learning from histories • others Information processing model • Huber’s model • Amponsem’s 5 stage model • others Total 46 Percentage of Total 38.3 48 40.0 26 21.7 120 100 Assumption surfacing learning In assumption surfacing processes such as double-loop (Argyris 1980), triple-loop (Isaacs 1993), and deutero learning (Schon 1975), the focus is on surfacing tacit assumptions, propositions, premises, and theories-in-use that underlie everyday actions. The assumptionsurfacing models emphasize collection observation of patterns in real world phenomena and requires that individuals within the organization develop the competence for continuing shared inquiry into theories of organizational action. Assumptions are questioned by intense dialog and interaction among team members. Experiential learning 10 In experiential learning, the focus is on learning from prior actions. Historical concrete experience, either direct or vicarious, forms the basis for observation, interpretation and reflection. From the observations, new implications for actions can be deduced. These implications then serve as guides in acting to create new experiences (Kolb 1976 cited in Carlsson and Kean 1976; March, Sproull, and Tamuz 1991) Information processing models In information processing models of OL, the focus is on acquisition, distribution and interpretation of knowledge. The most important step in the information processing model is knowledge acquisition (Huber 1991). To facilitate learning organizational knowledge must be accessible to all relevant organizational members With new knowledge acquired, organizational members unlearn old practices and discard old ways of processing experience (McGill, Slocum, and Lei 1992). Organizational learning then becomes the processes of codification and communication through which individual knowledge becomes organizational knowledge (Amponsem 1991). Structures of Learning Organizations Team Based Organizations Prior research argued that the fundamental organizational redesign necessary for creating learning organizations is the reconfiguration of a hierarchical-based organization to a team-based organization (see Figure 4a). Team-based organizations rely dominantly on professionals who possess high analytical skills and self-management competences in systematic problem solving, team learning, scenario planning, mental modeling, vision creation and sharing (Senge 1990; Garvin 1993; Wills 1992). Team-based learning organizations possess two crucial characteristics: self-direction, and cross-functional (see Table 4). Team-based organizations possess very flat structures thereby avoiding entrenched bureaucracy and rigid lines of authority. Flat structures also aid team members in developing creative dialog (Schein 1993; Marsick and Watkins 1994) and in formulating and implementing strategy at the work team levels (Lundberg 1991). Multi-functional teams facilitate horizontal work flows, team-oriented action learning, and creating shared knowledge and experiences that transcend traditional functional boundaries (Goldhar and Lei 1994). 11 Figure 4a Structural Redesign Teams - self directed - cross functional hierarchy Facilitators Culture • experimenting • reflective Leadership • visionary • mentors; coaches Learning infrastructure • technological aids (Practice fields, GSS, ESS, EPSS, HRIS) • learning labs Teams • self directed • cross functional Figure 4b Figures 4a & b Structure of Learning Organizations Prior research also alluded that team-based organizations require three facilitating factors: (1) a leadership that is widely-shared, visionary and mentoring; (2) an organization culture that encourages experimentation and reflection; and (3) the presence of a learning infrastructure in the form of learning resources and technological aids (Figure 4b). 12 Table 4 Structures of Learning Organization Occurrences Teams 68 • self-directed • cross-functional • competent professionals Leadership • • % of Total 23.0 50 16.9 visionary mentor/coaches Culture 74 25.0 experimenting • reflective Infrastructure • technology aids • learning labs 104 35.1 Total 296 100 • Leadership OL is facilitated by top executives who act as teachers, designers, mentors and stewards rather than as directors of actions and managers making top-down executive decisions. OL can only be sustained when leadership is widely distributed and widely shared, and when leadership emphasizes on continually building a shared vision of the organization, surfacing and challenging individual mental models, and engaging in systems thinking and future scenario planning (Burdett 1993; Senge 1990b). Culture Organizations nurture learning by focusing members’ attention not only on the external environment but inwardly on their own behaviors. Members are encouraged to reflect critically on their own behaviors and identify ways they often inadvertently contribute to organizations’ problems, and change how they act (Argyris 1991). Learning capability is also improved by encouraging active experimentation: the ability of members to voice out new ideas, and carry out action research, and embark upon innovative programs and work activities without fear of being penalized for failure (Richards 1994). Learning Infrastructure The literature emphasizes heavily on investing in creating learning infrastructures: technological tools, practice fields, and learning laboratories to promote active research, dialog, experimentation and learning within organizations (Cohen and Austin 1994). Technological aids such as employee performance support systems (EPSS) or human resource information systems (HRIS) can track history of skills and competences of members within the organizations so that ad hoc teams can be formed with members possessing appropriate mix of relevant skills. A competence-based HRIS also aids organizations in tracking members who may require re-tooling or training before their skills erode. 13 Decision aids such as executive support systems (ESS) and group support systems (GSS) enable organizational members to simulate models of reality, re-frame existing mental models, and facilitate shared mental-modeling. These IT decision aids also possess storage capabilities that enable organizations to design, develop and retain institutional memory that will resilient of personnel turnover. Learning Outcomes Overall, there is relatively sparse empirical literature on learning outcomes. Organizational theorists have tended to regard OL and LO positively. Significant number of publications highlight, theorize and predict that OL and LO will nudge organizations towards greater competitiveness and sustained survival. Very few studies probe potential negative consequences of OL and LO (see Table 5). Table 5 : Learning Outcomes Competitiveness • agility • greater anticipatory power • productivity and quality enhancements Organizational Survival (2) • alliance longevity • organization rule change • grow in intelligence Negative Outcomes • decline in initial assets • obstructing innovation adoption • trade-off between hierarchy and teams Occurrences 56 % of Total 44.8 62 49.6 7 5.6 125 100 Total Competitiveness Organizations with learning ability have been argued to become more competitive because they are more agile. Agile enterprises thrive by responding quickly to changing markets and flourish by their turning unpredictable changes into opportunities for improved performances (Ward 1994). Learning organizations are also deemed to possess greater anticipatory power in developing new products and making quality enhancements (Antal, Dierkes, and Hahner (1994). They are able to predict trends and concerns of the economy in which they operate and recognize the need to discard old competencies and develop new ways of doing things. Organizational Survival Organizational theorists have also argued that OL is critical in sustaining the longevity of strategic alliances. LO survive longer because that they dynamically monitor interfirm diversity and continually change internal organizational rules, routines, and procedures (Parkhe 1991; Schulz 1991). LO also survive longer by proactively using analytical and creating learning 14 techniques to increase capacities for differentiation, integration, and reflective thought (Etheredge and Short 1983). Negative Outcomes Relatively few studies examine negative outcomes of OL and LO. In one simulation study, Schulz (1992) showed how inefficient experiences in organizational learning incur substantial search costs and setbacks and consequently deplete initial assets of a firm. In another simulation study, Carley (1992) demonstrated the tradeoff between team-based and hierarchical based organizations. Although team-based organizations learn faster and better, hierarchical-based organizations possess greater institutional memory and are therefore more resilient of personnel turnover. Other researchers cautioned that OL can obstruct rapid diffusion of innovation adoption. Where organizational firms do not possess the requisite technical know-how, firms need to spend inordinate amounts of time and effort building a knowledge base before innovation can be implemented and operated effectively (Attewell 1992). CONCLUSION Organizations increasingly face pressures to rejuvenate, change and learn to assure themselves of short term high performance, and long-term survival. Concepts of organizational learning and learning organizations offer useful strategies and actions in promoting organizational adaptation. This paper synthesizes past research in both OL and LO and proposes a nomological network framework for guiding future research in the area. Trigger events, processes of OL, structural characteristics of LO, and learning outcomes offer core theoretical and practical hooks for fruitful avenues in future research and practice. Sample of research questions are: (1) Can some trigger events be “induced” by organizations to enable organizations to learn strategically? (2) Is there an association between type of trigger events and processes of OL? (3) Is there an association between type of trigger events and structural redesign of LO? (4) Are there unfavorable or unintended learning outcomes? (5) Are there strategic contingencies or cross-situational similarities of differences in how LO are created? Research questions above are not exhaustive. For example, prior research has adopted primarily a Western ethnocentric view of organizational learning. The generalizability of OL and LO concepts to an Eastern or other societies remain under-researched. To illustrate, prescriptions from existing literature on teams with distributed leadership and decentralized decision making power collide with national cultures characterized high power distances where top-down decision making is revered (Hofstede 1991). Exploration of these and other research questions will be the next step in integrating and advancing our knowledge on OL and LO. 15