Organizational Life and Learning LO27139

From: Doug Merchant (
Date: 08/11/01

Replying to LO27130 --

Sorry for the long post. I have consolidated comments I submitted several
years ago in response to the focus on individual learning most recently
expounded in the "Communities of Practice" thread.

[Host's Note: Doug, thanks for taking the time to assemble this
compilation. ..Rick]

>From Artur F. Dilva (LO27130)
> In a previous mail we saw that, according to the Shell Study of "company
>longevity", most companies have a short life span (20-30 years for most
>companies), but some others have a life span of 200 years or more.
>...[snip!]...He [de Geus] claims that the longer living companies that
>are able to adapt and survive must have strong learning capabilities and
>can be considered "learning companies" (he also claims that they shall be
>considered "living beings", "as only living beings can learn").

In "The Human Use of Human Beings: Cybernetics and Society", 1950, Norbert
Wiener wrote: "If we wish to use the word life to cover all phenomena
which locally swim upstream against the current of increasing entropy, we
are at liberty to do so."

How could we define "life" for the commercial organization? Long lived
organizations must be able to generate a level of supra normal profits.
The ability of an organization to generate supra normal profits is called
Market Power. The commercial environment (competitors, customers,
employees, capital, technology, etc) continually work to erode an
organization's market power.

If we define Commercial Entropy as related to the absence of supra normal
profits, the commercial environment continually works to increase an
organization's Commercial Entropy. That is, the commercial environment
works to chip away at the organization's capacity to generate the supra
normal profits required to locally reduce Commercial Entropy and support
organizational "life".

A long lived company has the ability to continually renew its sources of
Market Power in the various markets in which it must compete (customer,
financial, labor). This renewal capacity enables the organization to
change its future behavior based on the environmental response that is fed
back to the organization as a result of previous behavior. Commercial
Life is a manifestation of those organizations which can process
commercial information, renew market power and locally swim upstream
against the steady stream of increasing commercial entropy.

Organizational learning can be viewed as the process and mechanisms which
can sustain organizational life. That is, organizational learning is the
process where the environmental response to organizational behavior is fed
back to the organization and somehow changes the organization's future
behavior. Note: not all organizational learning is "life affirming".
That is, in the short run organizations may learn behaviors which are
counter to their long term survival.

Many participants on our learning network seem to limit their interest in
organizational learning to the learning of the individuals in the
organization. This position seems to provide a very tenuous thread to
support the type of corporate longevity that de Geus studied. I think it
useful to consider the extreme alternative where organizational learning
can occur absent the learning of any individuals in the organization.

If we view organizational learning as the process of changing future
organizational behavior based on the response from previous behavior there
are three types of mechanisms for organizational learning, These
organizational level learning mechanisms include Market Mechanisms, Clan
Mechanisms and Hierarchy Mechanisms.

I. Market Mechanisms (Population and Selection Mechanisms, "Darwinian

One organizational learning mechanism is the populations of individuals in
the organization and the intake, selection and retention mechanisms by
which those populations change.

I once hosted a client sports event that attracted many of the top level
executives from one of my National Accounts. I am 6' 5" and I was
startled to find that many of my senior guests towered over me. It seems
that in the 1940's, '50's and '60's, the company had an active AAU
Basketball program that influenced the selection criteria for management
hires. I don't pretend to know how the results of this long term intake
bias influenced the organization's behavior, but I find it hard to believe
it had no influence (and I know that height isn't individually learned).

Imagine an organization with a performance management system that only
acknowledged and rewarded measurable, individual accomplishments that
happened within the last 12 months. Would it surprise us to discover the
organization's employee population eventually had a dearth of team players
willing to take a long term focus?

The internal market mechanisms that enable organizational learning are not
limited to the populations of individual employees. In some firms
business units engage in internal competition for corporate resources
(e.g., capital, talent, executive attention). Successful business units
grow and acquire outside firms, less successful business units may shrink,
be disbanded or divested. What the larger organization has learned about
business success is stored in the business unit boundaries. And, the
business unit population and characteristics shape how the parent
organization "perceives" and reacts to the external environment. For
example, it may be difficult for the larger organization to "perceive"
market opportunities which lie in the "white spaces" between the charters
of existing business units.

II. Clan Mechanisms (Neural Network Mechanisms and Skinnerian Learning)

Another organizational level learning mechanism results from the fabric of
information sharing relationships among individuals in the organization
and the mechanism by which these relationships increase or diminish
information flow.

An extreme example -- I once read where a "neural network" was created on
the floor of a high school gym full of students. Each student had a fixed
instruction set, a battery, a meter and switch which were wired together
to create the neural network. This "network organization" was then
"taught" to recognize input presented to the "receptor" level of students.
What I find interesting about this example:

1) the organization could learn without the students learning anything
(their instructions and conditional behavior didn't change),

2) no student knew what the organization knew,

3) no one could know what the organization knew without observing the
organization's response to stimulus and

4) the process of testing what the organization knew would marginally
change the organization's behavior.

I have not doubt that such networks exist and influence the behavior of
large organizations. And, I have not doubt that in many cases no one in
the organization are aware of the network's existence or influence. I
remember one case where organizational level behavior was eventually
tracked back to an informal network of smokers that emerged when a new
anti-smoking policy forced them each to journey to a smoking room or
outside courtyard.

III. Hierarchy Mechanisms (Symbols and Rules, "the Organization as a
Stored Program Machine")

I suspect this is the most obvious type of organizational level learning
mechanism. This includes the policy, practices, language, shared culture,
etc. etc.

Jay Forrester and folks have spent a lot of effort understanding how the
deep structure of the organization's policies and practices etc. shape
organizational behavior (the back office at Hanover Insurance and Sterman
and folk's work with Analogue Devices come to mind).

As another example of how shared language (symbols and rules) shape
organizational behavior comes from the book "The Dark and Broad Seas", by
Jeffry V. Brock. The book is about Mr. Brock's long service with the
Royal Canadian Navy. In the early 1950's there was the proposal for the
Royal Canadian Navy to adopt the US Navy's communications equipment,
repair manuals and text books, and signal books with all the codes and
abbreviated message forms. Brock fought this effort on the grounds that

"...would not only be adopting a new language but also new battle tactics
and a whole new philosophy of the conduct of war at sea."

As an example, he noted the current Royal Canadian Navy fleet signal book
included the specific coded message, "ENEMY IN SIGHT. AM ENGAGING". At
that time, the only corresponding message in the US Navy fleet signal book
organizations shared language would have changed the organization's

Another example "symbols and rules" come from US history. In "Democracy
In America", Alexis de Tocqueville discussed the importance of inheritance
laws in shaping the US society. He compared the Primogeniture and Equal
Share approaches to inheritance and argued that Equal Share approach in
the US continually broke down the accumulation of individual wealth with
each successive generation. He argued this made the US society much more
democratic and dynamic and increased the capacity to adapt.

Senge's book offered great promise for eventually combining the work of
Deming and Forrester. Unfortunately, it seems the Learning Organization
efforts continue to be distracted by a focus on the learning of the
individuals in the organization.

Doug Merchant


"Doug Merchant" <>

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