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UNIT-7 Learning Organizations

Syllabus: Learning Organizations Knowledge Management in Indian Organizations Mystique of a Learning Organization Balanced Scorecard - Learning and Change Managing Innovations Continuous Learning - RICE Model - Knowledge Network Knowledge Management in Indian Organizations:
KM India is an endeavor undertaken to create a more robust Indian ecosystem that generates economic value through the effective harnessing of knowledge and intellectual capital, within knowledge-based organizations and industries. The intent is to create a better understanding of knowledge management practices, research and practical applications. Stakeholders in this ecosystem include KM practitioners, policy makers, as well as academicians and researchers. As better knowledge management practices get instituted within India, the quality and quantity of knowledge being generated and consumed will be enhanced, thereby allowing the accelerated production of economic value. . This initiative is intended to support Indias emergence as a knowledge superpower, in a connected global economy. The objective of Making India a Knowledge Superpower by 2020 and the emerging threat from countries like China, Vietnam, Taiwan there is an urgent need of knowledge empowerment and the challenges before us are to enhance the intellectual capital of country to become a global leader in knowledge led manufacturing and service industries. There is a need to be able to meet the indigenous needs for a knowledgeable and skilled manpower for various solutions without compromising on our ability to fulfill global needs. Towards realizing this object, CII has formed a Mission on Knowledge and Skills. The Core Purpose of the Mission is to Institute a sustainable framework that would assist industry across sectors in developing knowledge and skills abilities in our workforce to International Standards. In ever changing market place, where only certainty is uncertainty, corporate success come from consistently creating, disseminating and using new knowledge. Globalization, transformation of the enterprise, emergence of digital firm, and transformation of industrial economies are four powerful worldwide changes which have altered the business environment (Laudon, 2002). Today business view is shifting from a product-centric to a knowledge-centric view. Companies cannot afford to under invest in using, reusing and losing knowledge that they already have. In this rapidly changing business environment, intellectual capital has become a key asset of the enterprise. The ability of companies to exploit their intangible assets has become far more decisive than their ability to invest and manage their physical assets (Davenport & Prusak,1998). By managing its knowledge assets, an enterprise can improve its competitiveness and adaptability and increase its chances of success. Organisations are discovering that they need to do a better job of capturing, distributing, sharing, preserving, securing, and valuing this precious knowledge in order to stay ahead of their competition (Liebowitz & Beckman ,1998).Changing business environment has created need for the effective and efficient knowledge management. India can not lag behind in this knowledge revolution hence many Indian companies have started their knowledge management programs. This has initiated a basis for this study to be carried out to understand knowledge management in Indian organisation. This paper is part of larger study which I had undertaken to study KM in Indian organisations.

Mystique of a Learning Organization:


What is Organizational Learning? Argyris (1977) defines organizational learning as the process of "detection and correction of errors." In his view organizations learn through individuals acting as agents for them: "The individuals' learning activities, in turn, are facilitated or inhibited by an ecological system of factors that may be called an organizational learning system" (p. 117). Huber (1991) considers four constructs as integrally linked to organizational learning: knowledge acquisition, information distribution, information interpretation, and organizational memory. He clarifies that learning need not be conscious or intentional. Further, learning does not always increase the learner's effectiveness, or even potential effectiveness. Moreover, learning need not result in observable changes in behavior. Taking a behavioral perspective, Huber (1991) notes: An entity learns if, through its processing of information, the range of its potential behaviors is changed. Weick (1991) argues that the defining property of learning is the combination of same stimulus and different responses, however it is rare in organizations meaning either organizations don't learn or that organizations learn but in nontraditional ways. He further notes: "Perhaps organizations are not built to learn. Instead, they are patterns of means-ends relations deliberately designed to make the same routine response to different stimuli, a pattern which is antithetical to learning in the traditional sense" (p. 119). Or else, he argues, Organizational Learning perhaps involves a different kind of learning than has been described in the past: "the process within the organization by which knowledge about action-outcome relationships and the effect of the environment on these relationships is developed" (Duncan & Weiss 1979). In his view, "a more radical approach would take the position that individual learning occurs when people give a different response to the same stimulus, but Organizational Learning occurs when groups of people give the same response to different stimuli." What is a Learning Organization? Senge (1990) defines the Learning Organization as the organization "in which you cannot not learn because learning is so insinuated into the fabric of life." Also, he defines Learning Organization as "a group of people continually enhancing their capacity to create what they want to create." I would define Learning Organization as an "Organization with an ingrained philosophy for anticipating, reacting and responding to change, complexity and uncertainty." The concept of Learning Organization is increasingly relevant given the increasing complexity and uncertainty of the organizational environment. As Senge (1990) remarks: "The rate at which organizations learn may become the only sustainable source of competitive advantage." McGill et al. (1992) define the Learning Organization as "a company that can respond to new information by altering the very "programming" by which information is processed and evaluated." Organizational Learning vs. Learning Organization? Ang & Joseph (1996) contrast Organizational Learning and Learning Organization in terms of process versus structure. McGill et al. (1992) do not distinguish between Learning Organization and Organizational Learning. They define Organizational Learning as the ability of an organization to gain insight and understanding from experience through experimentation, observation, analysis, and a willingness to examine both successes and failures.

What is Adaptive Learning vs. Generative Learning? The current view of organizations is based on adaptive learning, which is about coping. Senge (1990) notes that increasing adaptiveness is only the first stage; companies need to focus on Generative Learning or "double-loop learning" (Argyris 1977). Generative learning emphasizes continuous experimentation and feedback in an ongoing examination of the very way organizations go about defining and solving problems. In Senge's (1990) view, Generative Learning is about creating - it requires "systemic thinking," "shared vision," "personal mastery," "team learning," and "creative tension" [between the vision and the current reality]. [Do Japanese companies accomplish the same thing with "strategic" and "interpretive" equivocality"?] Generative learning, unlike adaptive learning, requires new ways of looking at the world. In contrast, Adaptive Learning or single-loop learning focuses on solving problems in the present without examining the appropriateness of current learning behaviors. Adaptive organizations focus on incremental improvements, often based upon the past track record of success. Essentially, they don't question the fundamental assumptions underlying the existing ways of doing work. The essential difference is between being adaptive and having adaptability. To maintain adaptability, organizations need to operate themselves as "experimenting" or "self-designing" organizations, i.e., should maintain themselves in a state of frequent, nearly-continuous change in structures, processes, domains, goals, etc., even in the face of apparently optimal adaption (Nystrom et al. 1976; Hedberg et al. 1976; Starbuck 1983). Hedberg et al. (1977) argue that operating in this mode is efficacious, perhaps even required, for survival in fast changing and unpredictable environments. They reason that probable and desirable consequences of an ongoing state of experimentation are that organizations learn about a variety of design features and remain flexible. What's the Managers' Role in the Learning Organization? Senge (1990) argues that the leader's role in the Learning Organization is that of a designer, teacher, and steward who can build shared vision and challenge prevailing mental models. He/she is responsible for building organizations where people are continually expanding their capabilities to shape their future -- that is, leaders are responsible for learning. What's the Relationship between Strategy and Organizational Learning? Or, as Mintzberg (1987) says: the key is not getting the right strategy but fostering strategic thinking. Or as Shell has leveraged the concept of Learning Organization in its credo "planning as learning" (de Geus 1988). Faced with dramatic changes and unpredictability in the world oil markets, Shell's planners realized a shift of their basic task: "We no longer saw our task as producing a documented view of the future business environment five or ten years ahead. Our real target was the microcosm (the 'mental model') of our decision makers." They reconceptualized their basic task as fostering learning rather than devising plans and engaged the managers in ferreting out the implications of possible scenarios. This conditioned the managers to be mentally prepared for the uncertainties in the task environment. Thus, they institutionalized the learning process at Shell.

The key ingredient of the Learning Organization is in how organizations process their managerial experiences. Learning Organizations/Managers learn from their experiences rather than being bound by their past experiences. In Generative Learning Organizations, the ability of an organization/manager is not measured by what it knows (that is the product of learning), bur rather by how it learns -- the process of learning. Management practices encourage, recognize, and reward: openness, systemic thinking, creativity, a sense of efficacy, and empathy. What is the Role of Information Systems in the Learning Organization? Although, Huber (1991) explicitly specifies the role of IS in the Learning Organization as primarily serving Organizational Memory, in my view, IS can serve the other three processes (Knowledge Acquisition, Information Distribution, and Information Interpretation) as well. One instance of use of IS in Knowledge Acquisition is that of Market Research and Competitive Intelligence Systems. At the level of planning, scenario planning tools can be used for generating the possible futures. Similarly, use of Groupware tools, Intranets, E-mail, and Bulletin Boards can facilitate the processes of Information Distribution and Information Interpretation. The archives of these communications can provide the elements of the Organizational Memory. Organizational Memory needs to be continuously updated and refreshed. The IT basis of OM suggested by Huber (1991) lies at the basis of organizational rigidity when it becomes "hi-tech hide bound" (Kakola 1995) and is unable to continuously adapt its "theory of the business" (Drucker). Does IT Impose Any Constraints on Organizational Learning? Huber (1991) notes that "it might be reasonable to conclude that more learning has occurred when more and more varied interpretations have been developed, because such development changes the range of the organization's potential behaviors..." (p. 102). However, most extant information systems focus on the convergence of interpretation and are not geared for multiple interpretations (Argyris 1977). Mason & Mitroff (1973), in their seminal article, had noted that the Lockean and Leibnitzian characteristic of the dominant MIS model as its limiting characteristics. These designs are based on the convergence of interpretations. In contrast, Kantian and Hegelian inquiry systems (Churchman 1971) are needed for facilitating multiple interpretations. These systems also underlie the notion of "unlearning" (Hedberg 1981) which implies discarding of "obsolete and misleading knowledge." While Kantian inquirer offers complementary interpretations, the Hegelian inquirer offers a "deadly enemy" contradictory interpretation. The dialectic of convergent and divergent inquiry facilitates the surfacing of hidden assumptions.

Balanced Scorecard: The balanced scorecard is a strategic planning and management systemthat is used
extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. It was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic nonfinancial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance. While the phrase balanced scorecard was coined in the early 1990s, the roots of the this type of approach are deep, and include the pioneering work of General Electric on performance measurement reporting in the 1950s and the work of French process engineers (who created the Tableau de Bord literally, a "dashboard" of performance measures) in the early part of the 20th century. The balanced scorecard has evolved from its early use as a simple performance measurement framework to a full strategic planning and management system. The new balanced scorecard transforms an organizations

strategic plan from an attractive but passive document into the "marching orders" for the organization on a daily basis. It provides a framework that not only provides performance measurements, but helps planners identify what should be done and measured. It enables executives to truly execute their strategies. This new approach to strategic management was first detailed in a series of articles and books by Drs. Kaplan and Norton. Recognizing some of the weaknesses and vagueness of previous management approaches, the balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective. The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise. Kaplan and Norton describe the innovation of the balanced scorecard as follows: "The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."

Adapted from Robert S. Kaplan and David P. Norton, Using the Balanced Scorecard as a Strategic Management System, Harvard Business Review (January-February 1996): 76. Perspectives The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives: The Learning & Growth Perspective This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In a knowledge-worker organization, people -- the only repository of knowledge -are the main resource. In the current climate of rapid technological change, it is becoming necessary for knowledge workers to be in a continuous learning mode. Metrics can be put into place to guide managers in focusing training funds where they can help the most. In any case, learning and growth constitute the essential foundation for success of any knowledge-worker organization.

Kaplan and Norton emphasize that 'learning' is more than 'training'; it also includes things like mentors and tutors within the organization, as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed. It also includes technological tools; what the Baldrige criteria call "high performance work systems." The Business Process Perspective This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission). These metrics have to be carefully designed by those who know these processes most intimately; with our unique missions these are not something that can be developed by outside consultants. The Customer Perspective Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business. These are leading indicators: if customers are not satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good. In developing metrics for satisfaction, customers should be analyzed in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups. The Financial Perspective Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it. In fact, often there is more than enough handling and processing of financial data. With the implementation of a corporate database, it is hoped that more of the processing can be centralized and automated. But the point is that the current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives. There is perhaps a need to include additional financial-related data, such as risk assessment and cost-benefit data, in this category. Learning and change: Knowledge that is acquired, stored, and dispensed without having any affect on the organization should, perhaps, be called trivia. For knowledge to actually be meaningful it needs to induce change. This is not to imply that all change is derived from knowledge (any person who has ever been associated with an organization knows better than that), but it is to say that knowledge, when acted upon can induce change that can have consequential impact on an organization. Perhaps, then, the real legacy of any knowledge management program or policy is the significance of the changes these initiatives bring about. It was Charles Darwin who said, "It's not the strongest species that survive, nor the most intelligent, but the most responsive to change". Understanding this phrase forces organizations in any industry to look closely at the way change can impact their business. Any large-scale change, however, requires the organization to confront the issue of culture. This can be a daunting task. Culture is that invisible and often complex system of beliefs and practices that determines how people act in organizations is fraught with difficulty. Timothy Galpin (1996) gave 10 cultural components to consider when implementing change: Rules and Policies :Eliminate rules and policies that hinder the change and create new ones that reinforce the desired way of operating. Develop and document new SOPs. Goals and Measurement Develop goals and measurements that reinforce the desired changes.

Customs and Norms Replace old ways of doing things that reinforce the old ways with new customs and norms. E.g. replace written reports with face-to-face meetings. Training Again replace training that reinforces the old way of doing things with new training. Develop experiential training that provides real time, hands on experiences with new processes and procedures. Ceremonies and Events Put in place ceremonies and events that reinforce the new ways. Recognise individual and team contributions to making the changes work. Management Behaviors : Publicly recognise and reward managers who change by linking promotion and pay to the desired behaviors. Do not promote or pay increases to managers who do not come on board. Rewards and Recognition Make rewards specific to the change goals that have been set. Ensure that the performance management system recognises and rewards the desired ways of operating and does not simply reinforce the old ways. For example, a performance management system that measures only individual behaviour will undermine any attempts to inculcate a culture of teamwork. Communications : Deliver communications in new ways to show commitment to change. Use multiple channels to deliver consistent messages at all stages during the transition, before, during and after. Physical environment : Make sure the physical environment reflects the change. If knowledge and information sharing is your gaol, get people out of offices and into open, shared areas. If you want them to talk to their customers, create virtual offices so that your people are encouraged to work outside the office with customers. Organizational structure Make sure that structure reinforces the operational changes. Combine overlapping divisions; re-organize around customers as opposed to functions. Garvin (1993) defines a learning organization as an organization skilled at creating, acquiring, and transforming knowledge, and at modifying its behavior to reflect new knowledge and insights (p. 80). If change is not the result of creating, gaining, and sharing knowledge then learning is fairly meaningless. Innovation is merely creative imagination unless it results in a transformation of reality. Yukl (2002) states, "Organizational learning involves acquiring new knowledge, either by discovering it or by imitating the best practices of others" (p. 295). Yukl (2002) goes on to add that organizational learning describes organizations that utilize acquired knowledge to become more effective. This effectiveness can be realized through the change process resulting from acquired knowledge. What is important for an organization is the ability to implement the acquired knowledge into progressive change rather than acquire knowledge and never use it. Yukl again states, "New knowledge is of little value unless it is used. Some organizations are very successful at discovering knowledge, but fail to apply it effectively" (p. 295). One of the ways that effective application can be realized is through competition. As organizations are competitively driven to reach new heights (goals), they are forced to explore, discover, and change based on the value of the knowledge acquired.