Organizational learning is an area of knowledge within organizational theory that studies models and theories about the way an organization learns and adapts (Vasenska, 2013:615).
In Organizational development (OD), learning is a characteristic of an adaptive organization, i.e., an organization that is able to sense changes in signals from its environment (both internal and external) and adapt accordingly. OD specialists endeavor to assist their clients to learn from experience and incorporate the learning as feedback into the planning process.
Note a profound ambiguity in how the term adaptive system is used. The earliest system theorists studied self-regulating organic and mechanical systems in which a system "adapts" to environmental changes, acting so as to maintain its organization in a steady (viable) state. System theory was taken up in the humanities by those who use the term "adaptation" to mean how an organization evolves so as to produce desired outcomes (or even different outcomes chosen by the participants). When adaptation is used in the second sense, while the organization may continue under the same name, the nature of the system - its structure and behavior - changes. Successive incremental changes can lead to a radically different system.
Argyris and Schön were the first to propose models that facilitate organizational learning; others have followed in the tradition of their work:
Argyris & Schön (1978) distinguished between single-loop and double-loop learning, related to Gregory Bateson's concepts of first and second order learning. In single-loop learning, individuals, groups, or organizations modify their actions according to the difference between expected and obtained outcomes. In double-loop learning, the entities (individuals, groups or organization) question the values, assumptions and policies that led to the actions in the first place; if they are able to view and modify those, then second-order or double-loop learning has taken place. Double loop learning is the learning about single-loop learning.
Kim (1993), integrates Argyris, March and Olsen and another model by Kofman into a single comprehensive model; further, he analyzes all the possible breakdowns in the information flows in the model, leading to failures in organizational learning; for instance, what happens if an individual action is rejected by the organization for political or other reasons and therefore no organizational action takes place?
Nonaka & Takeuchi (1995) developed a four stage spiral model of organizational learning. They started by differentiating Polanyi's concept of "tacit knowledge" from "explicit knowledge" and describe a process of alternating between the two. Tacit knowledge is personal, context specific, subjective knowledge, whereas explicit knowledge is codified, systematic, formal, and easy to communicate. The tacit knowledge of key personnel within the organization can be made explicit, codified in manuals, and incorporated into new products and processes. This process they called "externalization". The reverse process (from explicit to tacit) they call "internalization" because it involves employees internalizing an organization's formal rules, procedures, and other forms of explicit knowledge. They also use the term "socialization" to denote the sharing of tacit knowledge, and the term "combination" to denote the dissemination of codified knowledge. According to this model, knowledge creation and organizational learning take a path of socialization, externalization, combination, internalization, socialization, externalization, combination . . . etc. in an infinite spiral. Recently Nonaka returned to this theme in an attempt to move this model of knowledge conversion forwards (Nonaka & von Krogh 2009)
Bontis, Crossan & Hulland (2002) empirically tested a model of organizational learning that encompassed both stocks and flows of knowledge across three levels of analysis: individual, team and organization. Results showed a negative and statistically significant relationship between the misalignment of stocks and flows and organizational performance.
Flood (1999) discusses the concept of organizational learning from Peter Senge and the origins of the theory from Argyris and Schön. The author aims to "re-think" Senge's The Fifth Discipline (Senge 1990) through systems theory. The author develops the concepts by integrating them with key theorists such as Bertalanffy, Churchman, Beer, Checkland and Ackoff. Conceptualizing organizational learning in terms of structure, process, meaning, ideology and knowledge, the author provides insights into Senge within the context of the philosophy of science and the way in which systems theorists were influenced by twentieth-century advances from the classical assumptions of science.
Watson, Bruce D. argues that organizational learning has proven to be a somewhat elusive concept to grasp and therefore its practical implementation has also been difficult. There are various positions on what "learning" is understood to be and there is a lack of synthesis of theoretical and empirical investigations. He argues that the conception of "learning" in the organizational learning literature has received insufficient attention and that this has largely contributed to the lack of clarity in the concept of organizational learning. It is proposed that cognitive science, especially connectionism, provides a model of individual learning that is capable of incorporating implicit and explicit elements of learning and knowledge. Connectionist models of learning mimic the physiological neural processes of the brain and connectionism demonstrates the capacity to combine cognitivist and constructivist theories of learning. To accomplish the transition to an explanation of collective cognitive processes as occur in organizations, and while continuing to recognize the individual neural processes that must be involved, it is proposed that the theory of situated action is united with connectionism. On the basis of such, a reconceptualisation of organizational learning and a new framework to guide management practice is proposed.
Imants (2003) provides theory development for organizational learning in schools within the context of teachers' professional communities as learning communities, which is compared and contrasted to teaching communities of practice. Detailed with an analysis of the paradoxes for organizational learning in schools, two mechanisms for professional development and organizational learning, (1) steering information about teaching and learning and (2) encouraging interaction among teachers and workers, are defined as critical for effective organizational learning.
Common (2004) discusses the concept of organizational learning in a political environment to improve public policy-making. The author details the initial uncontroversial reception of organizational learning in the public sector and the development of the concept with the learning organization. Definitional problems in applying the concept to public policy are addressed, noting research in UK local government that concludes on the obstacles for organizational learning in the public sector: (1) overemphasis of the individual, (2) resistance to change and politics, (3) social learning is self-limiting, i.e. individualism, and (4) political "blame culture." The concepts of policy learning and policy transfer are then defined with detail on the conditions for realizing organizational learning in the public sector.
Bontis & Serenko (2009a), and Bontis & Serenko (2009b) proposed and validated a causal model explicating organizational learning processes to identify antecedents and consequences of effective human capital management practices in both for-profit and non-profit sectors. The results demonstrate that managerial leadership is a key antecedent of organizational learning, highlight the importance of employee sentiment, and emphasize the significance of knowledge management.
Van Niekerk & Von Solms (2004) Compares and discusses organizational learning models for information security learning within organizations. Double-loop learning, as presented by Argyris & Schön (1978) is compared to outcome-based education, and information security specific standards published by the National Institute of Science and Technology (NIST), to determine its suitability for the fostering of an information security culture.
Bushe  defines organizational learning as an inquiry into the patterns of organizing among two or more people that leads to new knowledge and a change in those patterns of organizing. Arguing that since everyone creates their own experience, in every interaction everyone is having a different experience, and so learning from collective experience is a lot more difficult than simply discussing what happened in the past to decide what people want to do in the future. Bushe argues that many of dysfunctional patterns of organizing are sustained by sense-making processes that lead people to make up stories about each other that are more negative than the reality. Through an "organizational learning conversation" people come to understand their own experience and the experience of others which often allow them to revise their patterns of organizing in positive ways.
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Some of this knowledge can be termed technical – knowing the meaning of technical words and phrases, being able to read and make sense of data and being able to act on the basis of generalizations. Scientific knowledge is ‘propositional’; it takes the form of causal generalizations – whenever A, then B. For example, whenever water reaches the temperature of 100 degrees, it boils; whenever it boils, it turns into steam; steam generates pressure when in an enclosed space; pressure drives engines.
A large part of the knowledge used by managers, however, does not assume this form. The complexities of a manager’s task are such that applying A may result in B, C, or Z. A recipe or an idea that solved very well a particular problem, may, in slightly different circumstances backfire and lead to ever more problems. More important than knowing a whole lot of theories, recipes and solutions for a manager is to know which theory, recipe or solution to apply in a specific situation. Sometimes a manager may combine two different recipes or adapt an existing recipe with some important modification to meet a situation at hand.
Managers often use knowledge in the way that a handyman will use his or her skills, the materials and tools that are at hand to meet the demands of a particular situation. Unlike an engineer who will plan carefully and scientifically his or her every action to deliver the desired outcome, such as a steam engine, a handyman is flexible and opportunistic, often using materials in unorthodox or unusual ways, and relies a lot on trial and error. This is what the French call ‘bricolage’, the resourceful and creative deployment of skills and materials to meet each challenge in an original way. Rule of thumb, far from being the enemy of management, is what managers throughout the world have relied upon to inform their action.
In contrast to the scientific knowledge that guides the engineer, the physician or the chemist, managers are often informed by a different type of know-how. This is sometimes referred to a ‘narrative knowledge’ or ‘experiential knowledge’, the kind of knowledge that comes from experience and resides in stories and narratives of how real people in the real world dealt with real life problems, successfully or unsuccessfully. Narrative knowledge is what we use in everyday life to deal with awkward situations, as parents, as consumers, as patients and so forth. We seek the stories of people in the same situation as ourselves and try to learn from them. As the Chinese proverb says "A wise man learns from experience; a wiser man learns from the experience of others".
Narrative knowledge usually takes the form of organization stories (see organization story and organizational storytelling). These stories enable participants to make sense of the difficulties and challenges they face; by listening to stories, members of organizations learn from each other's experiences, adapt the recipes used by others to address their own difficulties and problems. Narrative knowledge is not only the preserve of managers. Most professionals (including doctors, accountants, lawyers, business consultants and academics) rely on narrative knowledge, in addition to their specialist technical knowledge, when dealing with concrete situations as part of their work. More generally, narrative knowledge represents an endlessly mutating reservoir of ideas, recipes and stories that are traded mostly by word or mouth on the internet. They are often apocryphal and may be inaccurate or untrue - yet, they have the power to influence people's sense making and actions.
Learning by individuals in an organizational context is the traditional domain of human resources, including activities such as: training, increasing skills, work experience, and formal education. Given that the success of any organization is founded on the knowledge of the people who work for it, these activities will and, indeed, must continue. However, individual learning is only a prerequisite to organizational learning.
Others take it farther with continuous learning. The world is orders of magnitude more dynamic than that of our parents, or even when we were young. Waves of change are crashing on us virtually one on top of another. Change has become the norm rather than the exception. Continuous learning throughout one’s career has become essential to remain relevant in the workplace. Again, necessary but not sufficient to describe organizational learning.
What does it mean to say that an organization learns? Simply summing individual learning is inadequate to model organizational learning. The following definition outlines the essential difference between the two: A learning organization actively creates, captures, transfers, and mobilizes knowledge to enable it to adapt to a changing environment. Thus, the key aspect of organizational learning is the interaction that takes place among individuals.
A learning organization does not rely on passive or ad hoc process in the hope that organizational learning will take place through serendipity or as a by-product of normal work. A learning organization actively promotes, facilitates, and rewards collective learning.
Creating (or acquiring) knowledge can be an individual or group activity. However, this is normally a small-scale, isolated activity steeped in the jargon and methods of knowledge workers. As first stated by Lucilius in the 1st century BC, “Knowledge is not knowledge until someone else knows that one knows.”
Capturing individual learning is the first step to making it useful to an organization. There are many methods for capturing knowledge and experience, such as publications, activity reports, lessons learned, interviews, and presentations. Capturing includes organizing knowledge in ways that people can find it; multiple structures facilitate searches regardless of the user’s perspective (e.g., who, what, when, where, why,and how). Capturing also includes storage in repositories, databases, or libraries to ensure that the knowledge will be available when and as needed.
Transferring knowledge requires that it be accessible to as needed. In a digital world, this involves browser-activated search engines to find what one is looking for. A way to retrieve content is also needed, which requires a communication and network infrastructure. Tacit knowledge may be shared through communities of practice or consulting experts. Knowledge needs to be presented in a way that users can understand it, and it must suit the needs of the user to be accepted and internalized.
Mobilizing knowledge involves integrating and using relevant knowledge from many, often diverse, sources to solve a problem or address an issue. Integration requires interoperability standards among various repositories. Using knowledge may be through simple reuse of existing solutions that have worked previously. It may also come through adapting old solutions to new problems. Conversely, a learning organization learns from mistakes or recognizes when old solutions no longer apply. Use may also be through synthesis; that is creating a broader meaning or a deeper level of understanding. Clearly, the more rapidly knowledge can be mobilized and used, the more competitive an organization.
An organization must learn so that it can adapt to a changing environment. Historically, the life-cycle of organizations typically spanned stable environments between major socioeconomic changes. Blacksmiths who didn’t become mechanics simply fell by the wayside. More recently, many Fortune 500 companies of two decades ago no longer exist. Given the ever-accelerating rate of global-scale change, the more critical learning and adaptation become to organization relevance, success, and ultimate survival.
Organizational learning is a social process, involving interactions among many individuals leading to well-informed decision making. Thus, a culture that learns and adapts as part of everyday working practices is essential. Reuse must equal or exceed reinvent as a desirable behavior. Adapting an idea must be rewarded along with its initial creation. Sharing to empower the organization must supersede controlling to empower an individual.
Clearly, shifting from individual to organizational learning involves a non-linear transformation. Once someone learns something, it is available for their immediate use. In contrast, organizations need to create, capture, transfer, and mobilize knowledge before it can be used. Although technology supports the latter, these are primarily social processes within a cultural environment, and cultural change, however necessary, is a particularly challenging undertaking.
Diffusion of innovations theory explores how and why people adopt new ideas, practices and products. It may be seen as a subset of the anthropological concept of diffusion and can help to explain how ideas are spread by individuals, social networks and organizations.