By David C. Forman, Sage Learning Systems
Most training and educational professionals have focused their efforts on learning in individuals, not organizations. This is understandable because so much needs to be accomplished to improve the efficacy of schools and corporate training programs. Besides, the notion of organizational learning has been ambiguous, difficult to comprehend and unfamiliar. This orientation toward individual learning seemed appropriate, complete and right at the time; but now it may no longer be sufficient.
Many of the basic building blocks of today's learning solutions were developed more than fifty years ago when the world was barely entering the information age. ENIAC, the precursor to modern computers, was in the laboratory while Benjamin Bloom was developing taxonomies of knowing; and distinctions between teaching and learning objectives were debated. Major corporations were domestic, not global, in reach; and their competitive advantage was based on the size and scope of their fixed assets. The term human capital was probably considered an oxymoron for the day. The PC was several decades away. The Beatles had not been born.
The economy, world situation and avenues for value creation have changed dramatically. The competitive strength of companies and even countries is now tied not to physical resources but to the knowledge and skills of people. And these people do not work in isolation within companies; they work in teams, informal groups and in multiple roles. Human talent works better in teams (de Geus, 2004). In this changed environment, there needs to be a way to discuss cumulative learning among individuals in teams, communities and organizations. There needs to be more emphasis on organizational and not just individual learning.
The term "Organizational Learning" entered most people's consciousness in 1990 with the publication of Peter Senge's The Fifth Discipline. Senge actually used the term "The Learning Organization," and the concept resonated with strategic thinkers and corporate leaders immediately. It made sense that there were different factors at work to make an "organization smart" and if these could be harnessed, the company could be stronger, more vital, and better able to adapt to change.
Senge defined the learning organization as the collective ability of a group to expand continuously its capacity to create the future. Most observers view organizational learning and the learning organization as virtually synonymous terms, with the former focusing more on process and the latter on structure. Huber (1991) extended the definition of organizational learning by identifying four necessary constructs: knowledge acquisition, information distribution, information interpretation, and organizational memory.
Organizational learning remained a relatively abstract concept for several years. The idea was compelling but few knew what to do about it. Then, several things started to happen. First, influential CEOs became very interested in optimizing the human capital and talent in their organizations. Led by champions such as Jack Welch, rhetoric turned into programs and core values that strengthened intangible human assets and led to stronger competitive market positions. These champions knew inherently that the keys to a dynamic, responsive, contemporary organization were not just workers or employees; but people who could think, work together, challenge each other, and innovate.
Workers today must be equipped not simply with technical know-how but also with
the ability to create, analyze, and transform information and to interact
effectively with others.
Chairman, Federal Reserve Board
Next, economists (and even accountants) began to provide more clarity and specifics on the definition, costs and the components of organizational value. Organizational value is comprised of financial assets, physical assets and intangible assets. It is now clear that in the 21stcentury economy, 80% of a company's market value is not determined by cash, buildings or equipment, but by intangible factors such as intellectual and human capital. Furthermore there is the "market to book" value of Fortune 500 companies which in 2001 reached a value of 6.0. This figure means that for every $6 of market value, only $1 represents financial and physical assets (Weatherly, 2003). These figures corroborate what top CEOs already understood. Wealth stems from great people.
Useful distinctions were made among different types of intangible capital (Weatherly, 2003). The term human capital is sometimes used as a synonym for intangible capital, but it is not as Table 1 demonstrates. Different authors may use other terms such as relational, customer and intellectual capital, but Weatherly's categories are logical, consistent and complete. It is also interesting to note that human capital is an asset that employees decide to share or not share with the organization (Davenport, 1999). Workers are not human capital; but human capital owners who decide when, how and where they will contribute it. This is a very important distinction that is often ignored by managers and executives.
Table 1: Types of Intangible Capital
Type of Intangible Capital
The collective knowledge, experience and attributes of employees that they choose to
invest in their workplace.
The codified knowledge that
resides within an organization
Methodologies and policies
The relationships within the organization to facilitate the
transfer of knowledge
The company's external relationships.
The last reason for increased visibility of organizational learning is the rise of enterprise-level knowledge management (KM) systems. Early implementations were often little more than a big repository of indexed documents that people could access. As the technology improved, these systems included connections to experts for those who needed their guidance; and collections of work products, proposals and research papers that could be accessed by employees facing similar situations. These systems have great potential for reducing mistakes, leveraging existing work and networks, and greatly contributing to organizational learning. Human and cultural factors, however, have often impeded the progress of knowledge management within organizations. For example, in some contexts, knowledge sharing is not rewarded or at least subtly discouraged. Despite these difficulties, the need for effective knowledge management--a key facilitator of organizational learning--continues to be a priority in global organizations.
Organizational learning is now in sharper focus. The first step in a renewed emphasis on organizational learning is to move beyond the general concept and develop a practical framework that can facilitate communication. This article presents a practical framework for the discussion of organizational learning, and it has its roots both in instructional design (ID) and organizational development (OD) practices.
The framework for organizational learning identifies factors that are necessary for an organization to continue to develop and grow its intangible capital. When these factors operate together and synergistically, a learning culture is created that perpetuates itself and nurtures continued growth throughout the enterprise. Organizational learning, then, becomes both additive and cumulative so that the whole is greater than the sum of its parts.
At a macro level, this potential is best illustrated by the GE Corporation whose market value is billions of dollars greater than the sum of its various component businesses. This synergistic value is not achieved by accident, but rather by a concerted strategy to share knowledge in a boundaryless organization. Within an organization, the same standard applies: organizational learning should result in accumulated intangible capital that exceeds the sum of what individuals possess and contribute.
There are two levels to the framework. The first is the contribution level and this refers to what individuals, teams and groups do to develop new knowledge, processes, approaches and products. When successful, it is the outcome of work and jobs and the foundation of organizational learning; if it does not exist, the organization begins to become stale. The second is the multiplier level that expands and magnifies contributions throughout the organization to more people, faster and more effectively. It is this level that can lead to a sustaining and vibrant learning culture.
Each level is depicted in the following visual and then briefly described. The levels and their corresponding organizational capabilities are certainly not exhaustive and they can occur in varying sequences, but the framework is valuable because it provides a common language to discuss organizational learning. With a common language established, it is then possible to create programs and processes to develop these organizational capabilities, monitor their success, and make adjustments accordingly.
The Contribution Level represents the collective performance improvement of the organization. This is the essence of a learning organization: if improvement occurs, the organization learns and grows; if it doesn't, the organization stagnates, loses ground and repeats the same mistakes again and again. The main organizational capabilities of the contribution level are:
· Learn-- The collective knowledge, skills and know-how of people in the organization must continue to be nurtured and grown. To some, this might translate into more extensive training programs, but this is rarely the answer. Leading companies such as Qualcomm and Cisco understand that communication platforms play a vital role in refreshing knowledge and keeping people current and competent. Cross (2003) has recognized that informal as opposed to formal learning is four times more meaningful in providing know-how. Organizational learning opportunities must extend beyond formal training programs and include different informal and nontraditional ways in which people learn and grow.
· Collaborate-- People do not work in isolation. Project teams, matrixed- organizations and multiple job roles are common practices in today's organizations. To be successful in this environment, people need to work together, share information and exchange perspectives. If not, individual knowledge and know-how remains locked up and not accessible to the team and the larger organization. The organization starts to whither as collaboration breaks down and knowledge remains in the purview of individuals. Individuals, it must be remembered, have a choice of whether to invest their human capital in the organization.
· Leverage -- It is not enough to simply share past information and practices; improvements must be made to solve new problems. The ability of teams to synthesize, challenge and enhance past approaches is what establishes the basis for innovation. This is where collective information is interpreted, tested and transformed. Organizational growth, learning and value are now being formed. This capability has its roots in "double-loop" or generative learning (Argysis, 1977 and Senge, 1990).
· Innovate -- Organizational innovation occurs if: 1) the collective body of knowledge and know-how grows, 2) people work together 3) collective knowledge is enhanced and extended and 4) these lessons are applied to move the organization forward. If application does not occur, the organization remains essentially unchanged. Innovation can take a number of forms. It can result in breakthrough ideas, patents, products and methods or it can lead to more gradual improvements in quality, timeliness and cost effectiveness.
The Multiplier Level extends the impact and influence of the learning organization. If the contribution level supplies the substance of the organizational performance improvement, the multiplier level helps to provide its soul to a broader audience.. Without this level, organizational learning would be apparent for a period of time; but would not become ingrained and part of a perpetuating learning culture. The main organizational capabilities of the multiplier level are:
· Mentor - The mentor-mentee relationship can be a rich source of insights, guidance and practical wisdom. It is also a vehicle for both the mentor and mentee to pass on, enrich and extend improved organizational learning practices. Since these discussions usually occur outside the direct reporting and work environment, these lessons get passed along to other spheres of influence within the enterprise. As networks and social capital expand, mentoring becomes a way to enrich relationships and extend influence.
· Network-- Some people argue that social capital (know-who) is a more significant organizational asset than human capital (know-how), given how quickly knowledge and conditions change. The ability to expand social networks and relationships, both internally and externally, is vital to improving the visibility and credibility of organizational learning. It is also a key ingredient in gaining broader consensus and laying the foundation for a perpetuating learning culture.
· Inspire - Passion has its place. All learning, whether individual or organizational, encompasses change, and this is difficult to accomplish under any circumstance. Champions help to provide the motivation for change and also serve as role models to guide others. Inspiration is not only the key to implementing change but helping to establish a culture that values learning, growth and continuous improvement.
The contribution and multiplier levels work together to foster organizational learning. If the organizational capabilities in the contribution level exist and work together seamlessly, then the collective level of organizational learning rises. If the capabilities in the multiplier level are present, integrated and effective, then organizational learning's influence is extended and a learning culture begins to take hold.
The Organizational Context
Some organizations can grow organizational learning capabilities; others cannot overcome the considerable barriers, in spite of best intentions. The best collaboration, mentoring and networking programs, for example, will go nowhere unless the company actively and enthusiastically supports these initiatives. This commitment often comes from senior management, but because of global success stories such as Shell, Philips and GE, more and more CEOs are "signing on" to the value of maximizing the use, development and deployment of their talent.
There are three organizational factors that directly impact organizational learning. One makes organizational learning easier, one makes it possible and the other makes it expected. These three factors are:
· Systems -- Technology can both facilitate and amplify organizational learning. The amount of information, people and structural capital within organizations is immense and without some way to systematize these resources, they are difficult to access, let along share and leverage. Technology has usually been used for communication platforms (Intranets), training delivery (e-learning), collaboration (web meetings and business platforms) and knowledge management. Problems arise, however, when organizations expect technology alone to drive organizational learning. It can't and it hasn't, despite the power of these systems and what vendors suggest. Poorly constructed technical systems can also impede organizational learning.
· Culture --If organizational learning is inconsistent with the culture and values of the organization, it will whither. Examples of an inconsistent culture might be one that supports strict hierarchical relationships, cycles through a great many people, or values cost reduction above value creation. Just as the soft Ss in the McKinsey 7S framework (shared values, skills, staff and style) are more influential than hard factors such as structure and systems in the effectiveness of implementing strategy, culture is what makes organizational learning possible. If a company's culture initially supports the basic precepts of organizational learning; and then the organization develops learning capabilities and begins to demonstrate their value, learning can then become embedded and instilled as part of the ongoing company culture.
· Performance Management - The organization needs to craft job responsibilities, programs and objectives to ensure that organizational learning is expected, part of everyday activities, and rewarded. If this type of motivation and reinforcement is not present, then momentum wanes and companies fall out of alignment and revert to past practices. When employees are aligned and focused on organizational learning, then it can begin to achieve its unfulfilled potential.
If the talent of an organization is its most precious (and expensive) asset, there must be ways to discuss the continued development and expansion of these intangible assets. If we believe the rhetoric of the knowledge economy, we must at least be able to converse about a company's most prized possessions and its wealth. The models and frameworks from the training and education disciplines are not helpful because they focus on individual not organizational learning. Similarly, the evaluation and return on investment literature offers little guidance because it looks at particular programs and not learning that is additive and cumulative over time. In addition, these evaluation models are rather exclusively focused on cost reduction as opposed to value and knowledge creation.
The frameworks from strategists and organizational developers have proved to be not much more useful. They are either too abstract or too segmented. Many treatments, for example, focus on a piece of the puzzle such as knowledge management or collaboration, but not the power of an organization that grows, develops and continues to create more intangible capital..
The framework for organizational learning has been presented as a vehicle to begin the important discussion about practical ways in which the knowledge and wealth of an organization can grow. The framework's levels and organizational capabilities are taken from the nexus between instructional design and organizational development where learning becomes both meaningful to the individual and to the organization. Some training and HR professionals may not want to enter this new organizational learning arena because it is ill-defined, complex and high-stakes. It is safer to retreat to our specialties. But organizational learning has great promise precisely because it is so important, yet poorly understood. If we come out of our silos, we have a lot to contribute.
The rate at which organizations learn may become the only sustainable competitive advantage
Peter Senge, 1990
Argyis, C. "Double-loop learning in organizations." Harvard Business Review, 55(5), 115-125
Cross, J. "Informal learning: the other 80%." The Internet Time Group, 2003
Davenport, T. Human Capital: What It Is and Why People Invest It.? San Francisco, CA: Jossey-Bass, 1999
De Geus, A. "The nature of organizations." Hr.com online learning, 2004
Fitz-enz, J. ROI of Human Capital. New York, NY: AMACOM, 2000
Greenspan, A. In: The Human Capital Challenge. Alexandria, VA: ASTD, 2003
Huber, G. "Organizational learning: the contributing process and literatures." Organizational Science, 2.88:115
Senge, P. The Fifth Discipline: The Art and Practice of the Learning Organization. New York, NY: Doubleday/Currency, 1990
Weatherly, L. "Human capital: the elusive asset." SHRM Research Quarterly. 1, 2003
Weatherly, L. "The value of people." SHRM Research Quarterly. 3, 2003
Posted by Jay Cross at February 13, 2004 11:04 AM | TrackBack
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