Can Organizations Learn? LO21389

Fred Nickols (nickols@worldnet.att.net)
Sun, 25 Apr 1999 14:37:07 -0400

Replying to LO21376 --

Doug Merchant responded to my earlier request for his definition of
learning and some examples of what he means by learning at various levels.

Regarding the definition of learning, he writes...
>If we view learning as changing future behavior
>based on the response from previous behavior there
>are several mechanisms where organizational level
>learning can occur even absent the learning of
>individuals in the organization.

Doug, your use of "based on the response from previous behavior" leaves me
a little confused but I'll set that aside for now. It seems to me you're
saying that learning is reflected in changed behavior and that these
changes in behavior occur as a result of our experience. Thus, we act
differently in the future because we learned something in the past.

It seems to me that we also learn in ways that confirm existing behavior
patterns. Thus, we act roughly the same way in similar situations in the
future because we have learned that doing so is effective, that is, it
produces the outcomes we desire.

As you can no doubt deduce, I'm using "learn" in the sense of reflecting
on, analyzing, and becoming aware of relationships between ourselves and
our world, including other people and, especially, the relationships
between our actions and our goals. What I learn might or might not be
reflected in changed behavior.

In response to my request for examples, Doug presented three:
1. Market Mechanisms
2. Clan Mechanisms
3. Hierarchy Mechanisms.

>I. Market Mechanisms (Population and Selection Mechanisms, "Darwinian
>Learning")
>
>The most obvious organizational level knowledge storage and learning
>mechanism are the populations of individuals in the organization and the
>intake, selection and retention mechanisms by which those populations
>change.

Regarding the comment above, I'll certainly agree that the individuals who
make up the organization represent "storage" and "learning mechanisms."
I'll also acknowledge that intake, selection and retention mechanisms are
consciously, deliberately used to maintain and/or change those
populations.

>The internal market mechanisms that enable organizational learning are not
>limited to the populations of individuals who make up the organization.
>In some firms, business units compete with each other for corporate
>resources (e.g., capital, talent, executive attention). Successful
>business units grow and acquire outside firms while less successful
>business units may shrink, be disbanded or divested. What the
>organization has learned about business success is stored in the business
>unit boundaries.

Your last sentence immediately above is troubling. First you refer to
some additional mechanisms whereby shifts in the organization's
populations are effected and then assert that the organization has learned
something about business success. I certainly see how some people, maybe
even many people, might learn something through their experiences of the
kinds of events to which you refer but I fail to see how the organization
has learned anything. That the people who people the organization are new
and different people with new and different skill sets is pretty obvious
but it sounds a lot like you're saying that, at this level, organizational
learning and individual learning are indistinguishable.

>And, the business unit population and characteristics
>shape how the parent organization "perceives" and reacts to the external
>environment.

The comment above is also troubling. Presumably, the "parent
organization" consists of some subset of the organization's population.
Is is their perceptions to which you refer? Or, are you saying that the
"parent organization" is some kind of collective intelligence, composed of
the unit populations, and sentient on its own? I suspect you are using
"perceive" in a figurative way owing to your use of quotation marks but I
can't be certain.

>II. Clan Mechanisms (Neural Network Mechanisms and Skinnerian Learning)
>
>Another organizational level learning mechanism is the fabric of
>information sharing relationships among individuals in the organization
>and the mechanism by which these relationships increase or diminish
>information flow.

Okay; information sharing among individuals is to me an understandable
form of "organizational learning" but I don't see how that ties to the
neural network example that followed (see below). I read and re-read the
neural network example and I concluded that it doesn't give me enough
information to understand what you're talking about. Essentially, the
description is so parsimonious that I can't picture what occurred. Can
you point me to a source where I can read about it in more detail?

>An extreme example -- I once read where a "neural network" was created
>from a gym full of students Each student had a fixed instruction set, a
>battery, a meter and switch which were wired together to create the
>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, in fact, 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 most likely change the organization's behavior.

The example below seems to me to encompass some well-known groupings such
as "cliques," "old boys network," "the in crowd," and so on. Clearly
these kinds of subgroupings exist, and many more besides, but I don't see
their connection to organizational learning. I can see how portions of an
organization's population might be unaware of subgroupings among other
members of the population but it's a stretch for me to envision members of
a network who don't know they're members of a network. More to the point,
how do these subgroupings learn anything without their individual members
learning it? How is their learning different from anything the
organization might be said to have learned?

>I have not doubt that such networks exist and influence large
>organizations. And, I have not doubt that in many cases no one in the
>organization (or even in the network) are aware of the network's existence
>or influence. I remember one case where organizational level behavior was
>eventually tracked back to a network of smokers that emerged when the
>smokers were forced to periodically go 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 mechanism for organizational level
>learning and the storage of what has been learned. This includes the
>policy, practices, language, shared culture, etc. etc. Just two example
>follow.
>
>In the early 1980's, sales managers in AT&T's long distance business faced
>ever increasing competition for their business customers. The managers
>and sales folks were paid under an incentive compensation plan that
>reflected the importance of protecting the incumbent base of revenue from
>competitors while promoting applications to stimulate usage growth.
>Unfortunately, the billing and tracking systems that supported sales
>operations were left over from the monopoly days. Immediately after
>divestiture of the local business, a customer who selected a competing
>long distance supplier for all their business would no longer appear in
>AT&T's sales management system. (A system built when AT&T was a
>monopoly.) The field sales folks realized that when faced with the
>prospects of losing a significant fraction of a customer's business, their
>compensation prospects would be better served if they ignored the
>situation, focused their efforts elsewhere, and lost all of the customer's
>business. Having taken their business elsewhere, the customer dropped from
>the system and "no longer existed" when future sales quota were assigned.
>The sales folks then could work to win back the "non-existent customer"
>and the resulting revenue would be rewarded as new business growth.

Doug: I see how the sales force learned a thing or two but I don't see any
organizational learning in there.

>Another example of how "symbols and rules" shape organizational level
>learning comes from US history. In "Democracy In America", Alexis de
>Tocqueville discussed the importance of inheritance laws in shaping a
>society. He compared the Primogeniture and Equal Share approaches to
>inheritance and argued that Equal Share made the US society much more
>democratic and dynamic by continually breaking down the accumulation of
>individual wealth with each successive generation. In this case, these
>organizational level governance rules shaped societies capacity to adapt.
>While I suspect there are analogues in a business organizations they will
>be difficult to find and understand if the primary LO Community focus is
>on the learning of the individuals in the organization.

I don't think organizational analogs are difficult to find. How about
policies that require officers to step down at age 65? Or, how about
policies that married people may not report directly to one another? Or,
just for the heck of it, how about a change in policy that increases from
$15 to $25 the size of an expense requiring a receipt? There are all
manner of policies, rules and regulations that shape an organization's
population and thus the capabilities it can be said to posses. How about
the requirement for an MBA for certain positions?

>These non-individual level these forms of organizational learning may be
>better labeled under the term "Organizational Governance". Unfortunately,
>that term seems to have been captured by those who want to increase firm's
>responsiveness to their shareowners.

I wouldn't call it governance; I'd call it capability management by way of
population skill set management. If the officers of a company set about
reshaping the employee population so as to give the organization skill
sets and capabilities it does not possess, and if they are successful, I
wouldn't be inclined to say that the organization has learned anything --
I'd be inclined to say that the officers brought in a bunch of new folks
with new skills.

In any event, Doug, thanks for taking the time to respond and I think I
understand most of your examples, but I'm darned if I can see any
organizational learning in there -- except as a figure of speech. --

Regards,

-- 

Fred Nickols Distance Consulting "Assistance at A Distance" http://home.att.net/~nickols/distance.htm nickols@worldnet.att.net (609) 490-0095

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