Understanding Organizations as Learning Systems

With the decline of some well-established firms, the diminishing competitive power of many companies in a burgeoning world market, and the need for organizational renewal and transformation, interest in organizational learning has grown. Senior managers in many organizations are convinced of the importance of improving learning in their organizations. This growth in awareness has raised many unanswered questions: What is a learning organization? What determines the characteristics of a good learning organization (or are all learning organizations good by definition)? How can organizations improve their learning? In the literature in this area, authors have used different definitions or models of organizational learning or have not defined their terms.1 Executives have frequently greeted us with comments like these:

  • “How would I know a learning organization if I stumbled over it?”
  • “You academics have some great ideas, but what do I do with a mature, large organization on Monday morning?”
  • “I’m not sure what a good learning organization is, but you should not study us because we are a bad learning organization.”

Our research is dedicated to helping organizations become better learning systems. We define organizational learning as the capacity or processes within an organization to maintain or improve performance based on experience. Learning is a systems-level phenomenon because it stays within the organization, even if individuals change. One of our assumptions is that organizations learn as they produce. Learning is as much a task as the production and delivery of goods and services. We do not imply that organizations should sacrifice the speed and quality of production in order to learn, but, rather, that production systems be viewed as learning systems. While companies do not usually regard learning as a function of production, our research on successful firms indicates that three learning-related factors are important for their success:

  1. Well-developed core competencies that serve as launch points for new products and services. (Canon has made significant investments over time in developing knowledge in eight core competencies applied in the creation of more than thirty products.)
  2. An attitude that supports continuous improvement in the business’s value-added chain. (Wal-Mart conducts ongoing experiments in its stores.)
  3. The ability to fundamentally renew or revitalize. (Motorola has a long history of renewing itself through its products by periodically exiting old lines and entering new ones.)

These factors identify some of the qualities of an effective learning organization that diligently pursues a constantly enhanced knowledge base.

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References

1. C. Argyris, “Double Loop Learning in Organizations,” Harvard Business Review, September–October 1977, pp. 115–124;

K. Weick, The Social Psychology of Organizing (Reading, Massachusetts: Addison-Wesley, 1979);

B. Leavitt and J.G. March, “Organizational Learning,” Annual Review of Sociology 14 (1988): 319–340;

P.M. Senge, The Fifth Discipline (New York: Doubleday, 1990); and

E.H. Schein, “How Can Organizations Learn Faster? The Challenge of Entering the Green Room,” Sloan Management Review, Winter 1993, pp. 85–92.

2. C.K. Prahalad and G. Hamel, “The Core Competence of the Corporation,” Harvard Business Review, May–June 1990, pp. 79–91.

3. J. Child and A. Kieser, “Development of Organizations over Time,” in N.C. Nystrom and W.H. Starbuck, eds., Handbook of Organizational Design (Oxford: Oxford University Press, 1981), pp. 28–64; and

E.H. Schein, Organizational Culture and Leadership (San Francisco: Jossey-Bass, 1992).

4. J. Van Maanen and E.H. Schein, “Toward a Theory of Organizational Socialization,” Research in Organizational Behavior 1 (1979): 1–37.

5. C. Argyris and D.A. Schön, Organizational Learning: A Theory of Action Perspective (Reading, Massachusetts: Addison-Wesley, 1978).

6. Senge (1990).

7. Huber identifies four constructs linked to organizational learning that he labels knowledge aquisition, information distribution, information interpretation, and organizational memory. Implicit in this formulation is that learning progresses through a series of stages. Our framework makes this sequence explicit and connects it to organizational action. Huber does not make this connection since to him learning alters the range of potential, rather than actual, behaviors. See:

G. Huber, “Organizational Learning: The Contributing Processes and Literature, Organization Science 2 (1991): 88–115.

8. At Motorola, we observed and interviewed fifty senior managers, visited the paging products operations, and had access to about twenty-five internal documents. At Mutual Investment Corporation (a pseudonym for a large financial services company based in the United States), we observed and interviewed corporation employees in the investment funds group and the marketing groups. At Electricité de France, we observed and interviewed employees in the nuclear power operations. At Fiat, we observed and interviewed employees in the Direzione Technica (engineering division) in Torino, Italy.

9. A. Strauss, Qualitative Analysis for Social Scientists (Cambridge: Cambridge University Press, 1987).

10. For a discussion of “communities of practice” see:

J.S. Brown and P. Puguid, “Organizational Learning and Communities of Practice,” Organization Science 2 (1991): 40–57.

11. Argyris and Schön (1978).

12. W.H. Schmidt and J.P. Finnegan, The Race Without a Finish Line: America’s Quest for Total Quality (San Francisco: Jossey-Bass, 1992).

13. For the idea of the factory as a learning laboratory, see:

D. Leonard-Barton, “The Factory as a Learning Laboratory,” Sloan Management Review, Fall 1992, pp. 39–52.

14. This skill has been referred to as “legitimate peripheral participation.” See:

J. Lave and E. Wenger, Situated Learning: Legitimate Peripheral Participation (Palo Alto, California: Institute for Research on Learning, IRL Report 90–0013, 1990).

15. C. Argyris, Strategy, Change, and Defensive Routines (Boston: Putman, 1985).

16. See “Companies That Train Best,” Fortune, 8 February 1993, pp. 44–48; and

“Motorola: Training for the Millenium,” Business Week, 28 March 1994, pp. 158–163.

17. T. Peters, Liberation Management (New York: Knopf, 1992).

18. Jay W. Forrester is considered to be the founder of the field of systems thinking.

19. S. Srivastra and D.L. Cooperrider and Associates, Appreciative Management and Leadership (San Francisco: Jossey-Bass, 1990).

20. E. Nevis, Organizational Consulting: A Gestalt Approach (Cleveland: Gestalt Institute of Cleveland Press, 1987).

21. W.R. Torbert, Managing the Corporate Dream (New York: Dow Jones-Irwin, 1987).

Acknowledgments

The research in this paper was supported by a grant from the International Consortium for Executive Development Research, Lexington, Massachusetts, and by the MIT Organizational Learning Center. The authors would like to thank Joseph Reelin, Edgar Schein, Peter Senge, and Sandra Waddock for their helpful comments on an earlier version of this paper.