The document discusses organizational learning theory and its main concepts. Organizational learning theory states that in order to remain competitive, organizations must learn to change their goals and actions in response to a changing environment. Learning occurs when an organization consciously decides to change actions based on changes in circumstances and links actions to outcomes. Initial individual learning only becomes organizational learning when it is shared, stored in organizational memory, transmitted, and used for organizational goals. The document also examines strengths and weaknesses of organizational learning theory.

1. Maria Romanova
Natalja Zhuravljova
17.11.2010
Organizational Learning Theory

2. Today’s program:
 Nature of theory
 Main articles’ overview
 Strengths and weaknesses
 Case

3. Organizational learning theory states that, in
order to be competitive in a changing
environment, organizations must learn to
change their goals and actions to reach
those goals.
In order for learning to occur, however, the firm must
make a conscious decision to change actions in
response to a change in circumstances, must
consciously link action to outcome, and must remember
the outcome.
The initial learning takes place at the individual level:
however, it does not become organizational learning until
the information is shared, stored in organizational
memory in such a way that it may be transmitted and
accessed, and used for organizational goals.

4. Organizational learning vs
Learning organization
 Organizational learning – set of theories; the
result is change in organization/ its
development
 Learning organization– set of standpoints,
practical tool; the result is tulemuseks is
improving the organization in order to gain
competition advantages

5. Organizational learning – achieving
common wisdom, culture and synergy
 Organizational learning differs from the
processes implemented by the company in
order to train the staff. The traditional view of
learning involves company’s strategies and
concentrates on theoretical knowledge creation
(exploration).
 The important aspect of organizational learning
is staff’s ability to put the learned material into
practical knowledge – implement gained
knowledge(exploitation).

6. Adaptive and proactive learning
 Adaptive learning: monitoring of environment and
changing with it, evolution
 Proactive learning: desire to learn and to
change/improve / develop organization, revolution

7. Adaptive and Generative Learning
• The fundamental contribution of this paper was the
development of an OL theoretical model that incorporates
adaptive and generative learning processes. This model is
based on two concepts from complexity theories: self-
organization and self-transcendence.
• Adaptive learning aims to improve or develop knowledge of the
explicate order through a process of self-organization. Self-
organization is a self-referential process characterized by logical
deductive reasoning, concentration, discussion and improvement.
Adaptive thinking underlines the importance of rationality.
• Generative learning involves any approach to the implicate order
through a process of self-transcendence, which might involve
avoiding previous knowledge. Self-transcendence is a process
characterized by intuition, attention, dialogue and inquiry.
Generative learning is developed individually or socially at the edge
of chaos, through intuition, attention, dialogue, inquiry and attention,
which relates to concepts like creativity, or imagination.
Maybe creativeness or intuition has always been essential for
1
R.Chiva, A.Grandio, J.Alegre

8. • Organizational systems presents three types of states: stability,
chaos and edge of chaos.
When the system is stable and chaotic, little learning may
take.Lerning will emerge at the edge of chaos .
• Organizing and learning are strongly linked: When learning we
organize reality in a different way, and when organizing, a
process of learning should have taken place
This paper’s approach differs from previous works such as
those by Weick and Westley (1996), who consider organizing
and learning as opposites, or Clegg et al. (2005) who consider
learning as an element of organizing.
• The increasing significance of generative learning for
organizations, mainly due to the importance of radical
innovations, could lead organizations to follow guidelines that
facilitate or foster intuition, attention, dialogue and inquiry, which
could require a new organizational form and management logic.
That is one of the problems that has grounded every civilization: a
certain repetition. Creativity should not be blocked.

9. An Organizational Learning Framework:
from Intuition to Institution
1. Organizational learning involves a tension between
assimilating new learning (exploration) and using what
has been learned (exploitation). Both are essential for
organization, but they compete for scarce resources
2. Organizational learning is multi-level: individual, group,
and organization. Innovate ideas occur to individuals
– not organizations. Ideas are shared, actions taken
and common meaning developed
3. The three levels of organizational learning are linked
by social and psychological processes: intuiting,
interpreting, integrating, and institutionalizing
4. Cognition affects action (and vice versa).
Understanding guides actions, but action also informs
understanding.
2
Crossan, M., Lane, H.W., White,
R.E.

10. The fifth Discipline (Senge, 1990)
In Senge's view, generative learning requires five disciplines: personal
mastery, mental models, shared vision, team learning and
systemic thinking.
 Personal mastery, is the term Senge uses to refer to institutionalized
conditions for personal learning within an organization. It is related to
issues of staff empowerment and the development of staff potentials.
 People in an organization have different internal pictures of the world
or mental models, the second discipline, which should be made
explicit so that they can be discussed openly and modified
 Shared vision concerns the need for a certain degree of consensus
within an organization, and at the same time the need for inspiration
and motivation.
 Teams, not individuals, are the fundamental learning unit in modern
organizations; unless the team can learn, the organization cannot
learn. This requires improved interpersonal communication between
team members, a reduction in defensive behavior, and openness to
creative thinking.
 The Fifth Discipline that integrates the other 4. Systemic thinking, is
crucial to examine the interrelationships between parts of an
analysis: Åsa Lööf
Society for Organizational Learning
(Senge)
3

11. The 11 Laws of the Fifth Discipline
 Today's problems come from yesterday's "solutions."
 The harder you push, the harder the system pushes back.
 Behavior will grow better before it grows worse.
 The easy way out usually leads back in.
 The cure can be worse than the disease.
 Faster is slower.
 Cause and effect are not closely related in time and
space.
 Small changes can produce big results...but the areas of
highest leverage are often the least obvious.
 You can have your cake and eat it too - but not all at
once.
 Dividing an elephant in half does not produce two small
elephants.
 There is no blame.

12. The Language of Systems Thinking:
"Links" and "Loops”
 From any element in a situation you can trace arrows ("links") that
represent influence on another element. These, in turn, reveal cycles
that repeat themselves, time after time, making situations better or
worse
 Links never exist in isolation. They always comprise a circle of
causality, a feedback "loop," in which every element is both "cause"
and "effect“ - influenced by some, and influencing others, so that every
one of its effects, sooner or later, comes back to roost.
 There are basically two building blocks of all systems representations:
reinforcing and balancing loops
Reinforcing loops generate exponential growth and collapse, in which the
growth or collapse continues at an ever-increasing rate. For example,
organizations often assume that they will face steady, incremental growth in
demand. The limits will appear.
Balancing processes generate the forces of resistance, which eventually
limit growth. But they are also the mechanisms, found in nature and all
M.Goodman, J.Kemeny,
C.Roberts
4

13. Näide organisatsiooni juhtimisest (balancing loop):
 The N Hospital in Connecticut opened a very attractive outpatient
clinic in the late 1980s. The administrators knew that it was meeting
a real need, and they assumed it would always be filled with
patients. That would make it a constant revenue generator.
However, a few months after it opened, the number of patient visits
(and thus revenues) leveled off, below the hospital's forecasts. The
hospital started a community marketing campaign, and patient visits
rose for a time, but soon dropped off again.
 Finally, the administrators took a close look at their patient volume
statistics. They spent time in the waiting room and surveyed staff at
the front desk and patients. It turned out that when traffic was low,
people were served quickly. Word got around, doctors and
paramedics referred people, and the clinic became crowded. But
people have an innate distaste for sitting in busy waiting rooms.
Since they had a choice, they went elsewhere.
The general lesson for all businesses is: if you don't adjust your

14. The Myopia of Learning
 Examined processes of experiential learning as instruments of
organizational intelligence.
 Organizations should be designed taking learning limits to learn into
account.
 Confusion of experience Problems of memory, conflict, turnover, and
decentralization make it difficult to extract lessons from experience and
to retain them.
-Studies of reductions in the cost of production associated with the number of
units produced do not, in general, provide direct confirmation of the processes by
which those improvements have occurred, nor do they demonstrate that
experiential learning processes inexorably lead to optimal practices.
-The interpretations of history are political, reflecting efforts to assign and evade
responsibility and to establish favorable historical stories
 Exploration/exploitation balance
-Successful trap – exploitation drives exploration. The returns to exploitation are
ordinarily more
certain, closer in time, and closer in space than are the returns to exploration. As
develop greater and greater competence at a particular activity, they engage in
activity more, thus further increasing competence and the opportunity cost of
This competency trap is a standard, potentially self-destructive product of
-Failure trap – exploration drives exploitation. Failure leads to search and change
Levinthal, Daniel A. and James G.
March
5

15. Three types of myopia were discovered:
Temporal myopia Learning tends to sacrifice the long run to the short
run.
- As learning develops distinctive competencies and niches, it
simultaneously
compromises capabilities outside those competencies and niches.
When conditions
change, the learned skills become impediments.
-Possible option for individuals or sources of capital is to move in and
out of organizations as entrepreneurs, leaving others to experience
their decline, but this may be scant comfort to those who suffer the fate
of the specific organization.
Spatial myopia. Learning tends to favor effects that occur near to the
learner
There is difficulty in subordinating the interests of individuals and
subunits in
an organization to the interests of the organization.
Failure myopia. Organizational learning oversamples successes and
undersamples failures

16. Organizational memory
 Organizational memory consists of mental and structural artifacts that
have consequential effects on performance.
 The paper discusses the processes of information acquisition,
retention, and retrieval from memory in the context of these structural
bins and then elaborate on how organizational memory can be used,
misused, and abused in organizations.
3 assumptions:
 Organizations functionally resemble information-processing systems
that process information from the environment. As information processing
systems, organizations exhibit memory that is similar in function to the
memory of individuals.
 Organizations being information systems act as interpretative systems.
 Organization is a network of intersubjectively shared meanings that
are sustained through the development and use of a common language
and everyday social interactions.
Walsh, J.P. & G.R. Ungson
6

18. Defining the organizational memory
 Acquisition
 Retention
 Individuals
 Culture
 Transformations
 Ecology
 Structures
 External archives

19. Aaggregation of individuals' shared beliefs, an organization's culture
also reflects information about the who, what, when, where, and how
of a decision stimulus and response.
Examples of failure due to organizational memory
Starbuck and Hedberg (1977) reviewed the problems the Facit
Company faced in coping with the changing technology in the
mechanical calculator industry. The company's near bankruptcy and
subsequent takeover was attributed to Facit's top managers' inability
to recognize the development of electronic calculators as a serious
competitive threat. These managers' memory for their great
successes in the mechanical market blinded them to the changes.
Wilensky (1967) reviewed the Ford Motor Company's experience
with the Edsel failure. He attributed this failure, in part, to Ford's
insensitivity to the increasing sales of foreign import.

20. Organizational memory plays 3 important roles:
Informational role. The information content that is housed
in memory's retention facilities can contribute to efficient
and effective decision making.
Control function. It can reduce the transaction costs that
are often associated with the implementation of a new
decision.
Political role. Control of information creates a source of
dependence with which individuals or groups in power
are able to influence the actions of others.

21. The use of organizational memory:
Proposition 1: Decisions that are critically considered in terms of an
organization's history as they bear on the present are likely to he more
effective than those made in a historical vacuum.
Proposition 2: Decision choices framed within the context of an
organization's history are less likely to meet with resistance than those not
so framed.
Proposition 3: Proposition 3: Change efforts that fail to consider the inertial
force of automatic retrieval processes are more likely to fail than those that
do.
The misuse of organizational memory:
Proposition 4: The automatic retrieval of past decision information that fails
to meet the requirements of more novel situations is likely to promote
deleterious decision making.
Proposition 5: 5: In inertial situations that call for routine solutions, the
critical consideration of purposefully retrieved past decision information
consumes a manager's time and energy and, thus, creates wasteful
opportunity costs.
Proposition 6: The controlled retrieval of decision information that is not
examined in the context of novel situations is likely to promote deleterious

22. Advantages and disadvantages of
theory
Advantages:
 Maintaining levels of
innovation and remaining
competitive
 Being better placed to
respond to external
pressures
 Having the knowledge to
better link resources to
customer needs
 Improving quality of
outputs at all levels
 Improving corporate
image by becoming more
people oriented
 Increasing the pace of
change within the
organization
Disadvantages:
• Exploration/exploitation
balance
• Competency trap
• Temporal, spatial, failure
myopia
• Organizational memory

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