Organizational learning - Fiol & Lyles - Article

Although there exists widespread acceptance of the notion of organizational learning and its importance to strategic performance, no theory or model of organizational learning is widely accepted. The confusion started when Simon (1969) defined organizational learning as the growing insights and successful restructurings of organizational problems by individuals reflected in the structural elements and outcomes of the organization itself. Development of insights and other action often do not occur simultaneously, which makes the problem of distinguishing between them all the more important. As a result of this confusion, theorists have referred to learning as (a) new insights or knowledge; (b) new structures; (c) new systems; (d) mere actions or (e) some combination of the above. These phenomena are referred to as learning, adaptation, change or unlearning. The problem emerges around a clear definition of learning and the measurement of it. In this paper, organizational learning means the process of improving actions through better knowledge and understanding.

Areas of consensus in theory for organizational learning

Environmental alignment

The ultimate criterion of organizational performance is long-term survival and growth. To achieve this, organizations align with their environments to remain competitive and innovative. Alignment implies that the firm must have the potential to learn, unlearn or relearn based on its past behaviours. Organizations have freedom and choice in how they adjust to a changing environment, and this leads to the capacity of organizations to learn over time. Thus, organizational performance affects the organization’s ability to learn and to adapt in a changing environment.

Individual versus organizational learning

Though individual learning is important to organizations, organizational learning is not simply the sum of each member’s learning. Organizations develop and maintain learning systems that not only influence their immediate members, but are then transmitted to others by way of organization histories and norms. Learning enables organizations to build an organizational understanding and interpretation of their environment and to begin to assess viable strategies. It results in associations, cognitive systems and memories that are developed and shared by members of the organization.

Contextual factors

Four contextual factors affect the probability that learning will occur: corporate culture conducive to learning, strategy that allows flexibility, an organizational structure that allows both innovativeness and new insights, and the environment.

Culture. An organization’s culture manifests itself in the overriding ideologies and established patterns of behaviour. Culture can be used to predict the actions taken. Change and/or learning in organizations often involve a restructuring of the broad norms and belief systems.

Strategy. Strategy determines the goals and objectives and the breadth of actions available for carrying out the strategy. Strategy influences learning by providing a boundary to decision-making and a context for the perception and interpretation of the environment.

Structure. Depending on the degree of flexibility that is required, different decision-making structures are needed in the same organizational unit. Functional organizations may be efficient but are less likely to adapt, whereas less mechanistic structures often encourage learning and reflective action taking.

Environments. If either the internal or external environment is too complex and dynamic for the organization to handle, an overload may occur, and learning will not take place. The process of learning involves the creation and manipulation of the tension between constancy and change.

Concept of learning

Change, learning and adaptation have all been used to refer to the process by which organizations adjust to their environment. However, these terms are not used consistently. Hedberg (1981) suggests that it is misleading to equate learning with adaption. Learning can involve a great deal more than only simple adaptation. However, Meyer (1982) uses the term adaptation to refer to two forms of organizational adjustment that both involve some understanding of action/outcome causal links: deviation-reducing adaptation occurs when there is understanding within a given framework/set of organizational norms; deviation-amplifying adaptation involves the creation of new causal relationships built on a new base of assumptions. Both of these types of adaptation form part of what Hedberg (1981) calls levels of learning.

Two basic dimensions appear with some consistency in the literature. One has to do with the content of learning. Cognitive development: adjustment is a process affecting primarily an organization’s interpretation of events, the development of shared understanding and conceptual schemes among members of the organization. Behaviour development: organizational learning refers to the new responses or actions that are based on interpretations. The other important dimension that emerges refers to the extent of cognitive development, and it has to do with the level at which this development takes place. Lower-level learning: the process merely serves to adjust parameters in a fixed organizational structure. Higher-level learning: the development redefines the rules and changes the norms, values and worldviews.

Content of learning

The content produced by the process of organizational adjustment may be defined as the patterns of cognitive associations developed by the organization’s members. It can also be viewed as the behavioural outcomes that reflect the patterns and/or cognitive associations that have developed. The distinction is similar to Schein (1983) arguing for three levels of culture: cognitive, behavioural and artifactual. The links between changes in behaviour and level of cognitive development may be depicted as in figure 1 (p. 807). Small changes in behaviour do not tend to bring about major cognitive development, nor do major changes. Creating change may be creating the illusion of learning such that management appears to be in control.

Position A in fig. 1 is typical of many bureaucratic firms in which success programs have been firmly engrained: no new learning takes place, and no attempts are made to change. This position may be appropriate in a stable and predictable environment in which there is little incentive or need for either change or learning. On the other hand, position B represents firms that keep taking actions, changing strategies and restructuring, but with very little learning taking place. The actions are not based on learning or knowledge of what will work. Position B produces shocks for the organization with little resulting sense of direction. Position C produces few changes, but these represent meaningful learning tools. This position may be most appropriate in a turbulent environment in which renewal and innovation are crucial for survival but too much change would cause the organization to lose its sense of direction. Position D, with high propensity to change and to learn, may be appropriate in a moderately turbulent environment.

Levels of learning

Lower-level learning occurs within a given organizational structure, a given set of rules. It leads to the development of some rudimentary associations of behaviour and outcomes, but these usually are of short duration and only impact part of what the organization does. It is a result of repetition and routine and involves association building. Lower-level learning tends to take place in organizational contexts that are well understood and in which management thinks it can control situations. Lower-level learning should not be confused with lower levels within the organization. The focus of learning is on the immediate effect on a particular activity or facet of the organization. Higher-level learning aims to adjusting overall rules and norms rather than specific activities or behaviours. The associations that result from higher-level learning have long-term effects and impacts on the organization as a whole. This type of learning occurs through the use of heuristics, skill development and insights and is therefore a more cognitive process. The context for higher-level learning is typically ambiguous and ill defined, making purely repetitive behaviour rather meaningless. The desired outcome of this type of learning is the development of frames of references, or interpretive schemes, new cognitive frameworks within which to make decisions. In fact, “unlearning” may be one of the most important consequences. Higher-level learning results become dysfunctional if it creates the development of superstitions, associations, or norms that support dysfunctional behaviours.

Discussion

There still exists confusion regarding what is learning and how to distinguish it from unreflective change (see table 1, p. 809). Of this list of 15 works on learning and adaptation, 12 use the label “learning”. Of these 12, 7 look at both behavioural and cognitive development; 3 look only at cognitive and 2 only at behavioural phenomena. The only patterns that can detected in this brief literature review are (a) the prevalence of the term “learning” over “adaptation”, and (b) the tendency to look at both behavioural and cognitive development regardless of the label.

Theories of higher-level learning are rare. It is unclear whether this is because it is a rare occurrence or because theorists have not developed ways of describing and measuring it.

Table 2 (p. 810) summarizes the discussion of the levels of organizational learning and identifies a number of activities that may be categorized according to whether they represent lower- or higher-level learning processes. Lower-level learning: focused learning that may be mere repetition of past behaviours – usually short term, surface, temporary, but with associations being formed. Captures only a certain element – adjustments in part of what the organization does. Single-loop and routine-level. Higher-level learning: the development of complex rules and associations regarding new actions. Development of an understanding of causation. Learning that affects the entire organization; double-loop learning. Central norms, frames of reference, and assumptions changed.

Making organizational changes or adjustments does not and should not automatically assume the existence of learning. In order to determine learning, one must rely on the statements or actions of individuals or groups representing the organization, and one must separate behavioural and cognitive development from each other and from mere action-taking or change. These difficulties must be overcome if there is to be further development of a theory of organizational learning. Certainly a first step is the recognition of their existence. The second step is reaching agreement about the meanings of the words used. To aid in resolving this dilemma, the following definitions are suggested:

Learning: the development of insights, knowledge and associations between past actions, the effectiveness of those actions and future actions. Adaptation: the ability to make incremental adjustments as a result of environmental changes, goal structure changes or other changes.

Conclusions

There is considerable inconsistency in what is being observed and how it is being measured in the organizational learning literature. Once one accepts that organizational learning and change may be two different processes, the dilemma becomes a measurement problem. Behavioural adaptation can be measured by changes in management systems, decisions and the allocation of resources. Organizational learning that represents changing associations, frames of reference and programs begs a methodology that demands a more in-depth look at the functioning of the organization. The area of research focusing on higher-level learning is particularly relevant to strategic management because it is this level of learning that will impact a firm’s long-term survival. Some research questions that might be proposed can be found on p. 811. The measurement and analysis of the learning process is an essential element of the researcher’s function. Researchers can help to guide organizations and executives by developing better methods for distinguishing between types and levels of organizational learning.