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Read the Case Study:  Crossan, M. M., Lane, H. W., & White, R. E. (1999). AN ORGANIZATIONAL LEARNING FRAMEWORK: FROM INTUITION TO INSTITUTION. Academy Of Management Review, 24(3), 522-537. doi:10.5465/AMR.1999.2202135

Answer this question: How does organizational learning affect the strategic decision making of an organization? 

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• Academy of Management fleview 1999, Vol. 24, No. 3. 522-537,

AN ORGANIZATIONAL LEARNING FRAMEWORK: FROM INTUITION TO

INSTITUTION

MARY M. CROSSAN HENRY W. LANE

RODERICK E. WHITE Richard Ivey School of Business

Although interest In organizational learning has grown dramatically in recent years, a general theory of organizational leaming has remained elusive. We identily re- newal of the overall enterprise as the underlying phenomenon of interest and organ- izational learning as a principal means to this end. With this perspective we develop a framework for the process of organizational learning, presenting organizational leaming as four processes—intuiting, interpreting, integrating, and institutionaliz- ing—linking the individual, group, and organizational levels.

Organizational learning has existed in our lexicon at least since Cangelosi and Dill (1965) discussed the topic over 30 years ago. Lately, its popularity has grown dramatically (Crossan & Guatto, 1996), yet little convergence or consen- sus on what is meant by the term, or its basic nature, has emerged {Huber, 1991; Kim, 1993).

In large part, convergence has not occurred because different researchers have applied the concept of organizational learning, or at least the terminology, to different domains. For exam- ple, Huber (1991) takes an information-process- ing perspective of organizational learning, whereas Nonaka and Takeuchi (1995) are con- cerned with product innovation, and March and Olsen (1975) are interested in exploring how the cognitive limitations of managers affect learn- ing. These works share some common threads, but the domains differ significantly. They con- cern different phenomena: information process- ing, product innovation, or bounded rationality. Although the phenomenological domains of var- ious researchers do sometimes overlap, the dif- ferences in domains do much to explain the lack of convergence among organizational learning frameworks.

In this article we identify strategic renewal a s the underlying phenomenon of interest. Re-

We gratefully acknowledge the Canadian Centre for Management Development, the Social Sciences and Human- ities Research Council, and the National Centre for Manage- ment Research and Development for their financial support of this project.

newal harmonizes continuity and change at the level of the enterprise (Hurst, 1995; Hurst, Rush, & White, 1989). Organizational learning can be conceived of a s a principal means of achieving the strategic renewal of an enterprise. As we argue in this article, strategic renewal places additional demands on a theory of organization- al learning. Renewal requires that organiza- tions explore and learn new ways while concur- rently exploiting what they h a v e a l r e a d y learned (March, 1991). In contrast, learning ap- plied to the domain of new product develop- ment, for example, tends to focus on the explo- ration side of the exploration-exploitation tension identified by March. Recognizing and managing the tension between exploration and exploitation are two of the critical challenges of renewal and, hence, become a central require- ment in a theory of organizational learning.

For renewal to be strategic it should encom- pass the entire enterprise—not simply the indi- vidual or group—and it should recognize that the organization operates in an open system, rather than having a solely internal focus {Dun- can & Weiss, 1979). Although theorists have rec- ognized the strategic importance of organization- al l e a r n i n g a s a m e a n s of providing a sustainable competitive a d v a n t a g e (DeGeus, 1988; Stata, 1989), few organizational learning frameworks have illustrated the tension be- tween exploration and exploitation that is at the heart of strategic renewal (see Table 1).

Here we develop an organizational learning framework to address the phenomenon of re-

522

1999 Crossan. Lane, and White 523

TABLE 1 Propositions Applied to Established Organizational Learning Frameworks

Source

March & Olsen (1975)

Daft 8E Weick {1984)

S e n g e {1990)

Huber (1991)

March {1991)

Wat kins & Marsick (1993)

Nonaka & Takeuchi (1995)

Strategic Renewal Tension

Nat considered

Not considered

Not considered

Not considered

Yes

Not considered

Not considered

Multilevel Framework

No group level

Not considered

No organizational level

Yes

No group level

Yes

Recognized, but not a substantial part of the model

One Level Afiects the Others

Not considered

Not considered

Not considered

Not considered

Not considered

Not considered

Some discussion of the link between individual and group

Process Linking Levels

Not considered

Processes described but not a levels perspective

Processes focus on individual and group— not a levels-related model

Processes within level but no model or processes to link levels

Not considered

Six action imperatives of the learning organization

Focuses on processes that link individual and group—weak on link between group and organization

Cognition/ Action Link

Yes

Learning is a change in behavior

Yes

Cognition affects behaviors

Yes

Consistent with Senge’s perspective

Knowledge focus

newal. A framework defines the territory and takes us a step closer to a theory. A good frame- work has several requirements. First, it should identify the phenomenon of interest: in this case strategic renewal. Second, the key premises or assumptions underlying the framework need to be stated (Bacharach, 1989). Third, the relation- ship among the elements of the framework needs to be described (Sutton & Staw, 1995; Weick, 1995a; Whetton, 1989). As Sutton and Staw state, “Theory is about connections among phenomena, a story about why acts, events, structure and thoughts occur” (1995: 378). Our framework makes high-level connections. Fur- ther theory development will expand and deepen these connections and will enable de- velopment of testable hypotheses.

Four key premises or assumptions form the underpinnings of this framework and support one central proposition:

Premise 1: Organizational leaming involves a tension between assimilating new

learning (exploration) and using what has been learned (exploita- tion).

Premise 2: Organizational learning is multi- level: individual, group, and organ- ization.

Premise 3: The three levels of organizational learning are linked by social and psychological processes: intuiting, interpreting, integrating, and insti- tutionalizing (4rs).

Premise 4: Cognition affects action (and vice versa).

Proposifion: The 4l’s are related in feed-forward and feedback processes across the levels.

As stated in Premise 1, organizational learn- ing reveals a tension between exploration and exploitation (March, 1991). March focuses more on the balance rather than the tension, but he recognizes its fundamental role in strategic re- newal: “Maintaining an appropriate balance be- tween exploration and exploitation is a primary

524 Academy of Management Review July

factor in system survival and prosperity Both exploration and exploitation are essential for organizations, but they compete for scarce re- sources” (1991: 71).

This competition for resources creates a ten- sion. As we discuss in subsequent sections, this tension is seen in the feed-forward and feed- back processes of learning across the individ- ual, group, and organization levels. Feed for- ward relates to exploration. It is the transference of learning from individuals and groups through to the learning that becomes embedded—or in- stitutionalized—in the form of systems, struc- tures, strategies, and procedures (Hedberg, 1981; Shrivastava, 1983). Feedback relates to exploita- tion and to the way in which institutionalized leaming affects individuals and groups.

As noted in Premise 2, organizational learning is multilevel. A basic assumption is that insight and innovative ideas occur to individuals—not organizations (Nonaka & Takeuchi, 1995; Simon, 1991}. However, knowledge generated by the in- dividual does not come to bear on the organiza- tion independently. Ideas are shared, actions taken, and common meaning developed (Argyris & Schon, 1978, 1996; Daft & Weick, 1984; Huber, 1991; Stata, 1989). Complex organizations are more than ad hoc communities or collections of individuals. Relationships become structured, and some of the individual learning and shared understandings developed by groups become institutionalized a s organization artifacts (Hed- berg, 1981: Shrivastava, 1983). There is a reason- able degree of consensus that a theory of organ- i z a t i o n a l l e a r n i n g n e e d s to c o n s i d e r the individual, group, a n d organizational levels (Crossan, Lane, White, & Djurfeldt, 1995).

The 41 processes introduced in Premise 3 are described in detail in the next section. Through- out the feed-forward and feedback processes, the interactive relationship between cognition and action (Premise 4) is critical—one cannot be divorced from the other (Neisser, 1976). Under- standing guides action, but action also informs u n d e r s t a n d i n g {Seely-Brown & Duguid, 1991; Weick, 1979). Organizational learning links cog- nition and action. This differentiates it from the related fields of knowledge management and intellectual capital. In spite of arguments to the contrary (Nonaka & Takeuchi, 1995), the fields of knowledge management (Conner & Prahalad, 1996; Davenport & Prusak, 1997; Foss, 1996; Grant, 1996; Kogut & Zander, 1992) a n d intellec-

tual capital (Edvinsson & Malone, 1997; Stewart, 1997) remain largely focused on cognition. How- ever, these fields share common ground with organizational learning in recognizing the im- portance of knowledge to the success of the en- terprise. Quinn suggests that “looking beyond mere product lines to a strategy built around core intellectual or service competencies pro- vides both a rigorously maintainable strategic focus and long-term flexibility” (1992: 216). Re- search in knowledge management and intellec- tual capital informs organizational learning, but it does not capture the ongoing cycle of action taking a n d knowledge acquisition found in learning theories.

There have been several reviews of the organ- izational learning literature (Fiol & Lyles, 1985; Huber, 1991; Levitf & March, 1988), but scholars have not recognized the importance of under- standing organizational learning from the per- spective of strategic renewal. As noted in Table 1, few of the well-known organizational learning frameworks (Daft & Weick, 1984; Huber, 1991; March, 1991; March & Olsen, 1975; Nonaka & Takeuchi, 1995; Senge, 1990; Watkins & Marsick, 1993) recognize the tension of strategic renewal. Further, the frameworks vary in the degree they address the other key premises.

In the following section we expand these key premises by describing the 41 processes of or- ganizational learning that link the levels, using the well-known story of Apple Computer to illus- trate these processes. We then discuss the dy- namic nature of the 41 processes a s they relate to fhe feed-forward a n d feedback processes of learning. Finally, we present implications for research a n d management.

THE 41 FRAMEWORK OF ORGANIZATIONAL LEARNING

The 41 framework of organizational learning contains four related (sub)processes—intuiting, interpreting, integrating, a n d institutionaliz- ing—that occur over three levels: individual, group, and organization. The three learning lev- els define the structure through which organiza- tional learning takes place. The processes form the glue that binds the structure together; they are, therefore, a key facet of the framework. In- tuiting a n d interpreting occur at the individual level, interpreting and integrating occur at the group level, and integrating and institutionaliz-

1999 Crossan, Lane, and White 52S

TABLE 2 Learning/Renewal in Organizations: Four

Processes Through Three Levels

Level

Individual

Group

Process

Intuiting

Interpreting

Integrating

Inputs/Outcomes

Experiences Images

Metaphors

Language Cognitive map Conversation/dialogue

Shared understandings Mutual adjustment

Interactive systems

Routines Organization Institutionalizing Diagnostic systems

Rules and procedures

ing occur at the organizational level (see Table 2). There are a sequence and progression to these processes through the different levels, and while there is some “spillover” from level to level, not every process occurs at every level.

For example, intuition is a uniquely individ- ual process. It may happen within a group or organizational context, but the recognition of a pattern or possibility comes from within an in- dividual. Organizations do not intuit. This is a uniquely human attribute that organizations do not possess. Similarly, organizations do not in- terpret. Interpreting has to do with refining and developing intuitive insights. The development of language, principally through an interactive conversational process, is a basic interpretive process. The proverbial person on a deserted island could have an intuitive insight and begin to make sense of it through an internal conver- sational process (i.e., talking to one’s self), but the interpretive process is likely to be much richer and more robust if the conversations and interactions are with others. This process spans the individual and group levels, but it does not extend to the organizational level.

When actions take place in concert with other members of a workgroup, the interpreting pro- cess quite naturally blends into the integrating process. Integrating entails the development of shared understanding and the taking of coordi- nated action by members of a workgroup. Ac- tions that are deemed to be effective will be

repeated. Initially, the workgroup informally makes this judgment about what actions should be replicated. Eventually, fhe workgroup may establish formal rules and procedures, and rou- tines become embedded. The process of institu- tionalizing occurs.

The process of institutionalizing is an organi- zation-level phenomenon. Organizations, like other social institutions, are socially constructed (Berger & Luckmann, 1968). The routines and rules that make up an enduring organization exist independently of any one individual (al- though individuals and their actions are af- fected by these rules and routines).

The 41*8 Defined and Developed

We define the learning processes a s follows: /nfui(ing is the preconscious recognition of the pattern and/or possibilities inherent in a per- sonal stream of experience (Weick, 1995b: 25). This process can affect the intuitive individual’s actions, but it only affects others when they at- tempt to (inter)act with that individual. Interpret- ing is the explaining, through words and/or ac- tions, of an insight or idea to one’s self and to others. This process goes from the preverbal to the verbal, resulting in the development of lan- guage. Integrating is the process of developing shared understanding among individuals and of taking coordinated action through mutual ad- justment. Dialogue and joint action are crucial to the development of shared understanding. This process will initially be ad hoc and infor- mal, but if the coordinated action taking is re- curring and significant, it will be institutional- ized. Institutionalizing is the process of ensuring that routinized actions occur. Tasks are defined, actions specified, and organizational mecha- nisms put in place to ensure that certain actions occur. Institutionalizing is the process of embed- ding leaming that h a s occurred by individuals and groups into the organization, and it includes systems, structures, procedures, and strategy.

The four leaming processes operate over the three levels. Because the processes naturally flow from one into another, it is difficult to define pre- cisely where one ends and the next begins. Quite clearly, intuiting occurs at the individual level and institutionalizing at the organizational level; however, interpreting bridges the individual and group levels, while integrating links the group and organizational levels. Insights, the seeds of

526 Academy ol Management Review July

adaptiveness and exploration, begin wifh the in- dividual but, if “successful,” eventually become embedded in the formal organization.

We describe the framework in a sequential way, although there are necessarily many feed- back loops among the levels, given the recursive nature of the phenomenon (as we discuss in subsequent sections). In the following discus- sion we develop each of the 41 learning pro- cesses in greater conceptual detail.

Intuiting

Scholars often assume that learning, whether it be at the individual, group, or organization level, is a conscious, analytical process. How- ever, Underwood (1982) suggests that the links between experience, knowledge, and conscious- ness are more complex than generally assumed. The subconscious is critical to understanding how people come to discern and comprehend something new, for which there was no prior explanation. A theory of learning needs to be able to address how this occurs. Accordingly, the process of intuiting—a largely subconscious process—is an important part of the framework presented here.

At its most basic level, individual learning involves perceiving similarities and differences— patterns and possibilities. Although there are many definitions of intuition, most involve some sort of pattern recognition (Behling & Eckel, 1991). The expert and entrepreneurial views of intuition are most closely aligned with the framework presented here.

The expert view of intuiting is a process of (past) pattem recognition. A highly sophisticated and complex map enables the expert to perceive pat- terns that novices cannot (Neisser, 1976). Prietula and Simon (1989) suggest that becoming an expert takes 10 years and requires the acquisition of 50,000 chunks of knowledge. Neisser (1976) has used the example of chess masters to explain ex- pert intuition. One must play a lot of chess, reflect on past experiences, and leam about great plays; all this and much more are required fo become a grandmaster. But an interesting thing seems to happen on the way to expertise. What once re- quired conscious, deliberate, and explicit thought no longer does. What once would have taken much deliberation and planning becomes the ob- vious thing to do. What has been learnt becomes tacit knowledge (Polanyi, 1967).

The expert no longer has to think consciously about action. Having been in the same, or simi- lar, situations and recognizing the pattern, the expert knows, almost spontaneously, what to do. Indeed, if asked to explain their actions, experts may be unable fo do so. While the pattern (and associated actions) is familiar, the underlying justification has receded from conscious mem- ory. In a simple way expertise can be thought of a s unconscious recollection. This helps explain why expertise is so hard fo transfer from one person to anofher. It is highly subjective; deeply rooted in individual experiences; and very diffi- cult to surface, examine, and explain.

Whereas expert intuition provides insight into the important process of pattern recognition, en- trepreneurial intuition has more to do with inno- vation and change. No two situations are the same, and patterns, while similar, are never identical. The ability to make novel connections and to discern possibilities is also key to intuit- ing. “Entrepreneurs” are able to make these novel connections, perceive new or emergent relationships, and discern possibilities that have not been identified previously. Whereas expert intuition may be past pattern oriented, entrepreneurial intuition is future possibility oriented.

Expert intuition supports exploitation; entre- preneurial intuition supports exploration. Entre- preneurial intuiting generates new insights. Koestler (1976) suggests that in the natural sci- ences such insights, when they occur, happen after the individual has had a long period of immersion in the problem, followed by a brief period of disassociation from the specifics of the problem. Although this may be true for break- through insights, more mundane acts of innova- tion may have more humble beginnings (Ander- son, 1992). Imagery and metaphor also seem to be important in this process.

For entrepreneurs in a business situation, there is always fhe question of whether these individuals are intuitive or just lucky. However, this question is difficult to answer because novel, intuitive insights cannot be judged right or wrong ex ante. They are simply possibilities. It is rare to see a business entrepreneur able to convert intuitive insight into business reality on a consistent basis. Fred Smith perceived the po- tential of reliable, overnight, small package de- livery, and Federal Express emerged a s a very successful business (Maisfer & Wyckoff, 1974).

1999 Crossan, Lane, and White 527

He was unable to replicate this success with Zapmail—an electronic mail service. There are exceptions, however. Howard Head, the entre- preneurial genius behind the Head metal ski, was also the inventor of the Prince oversized tennis racket.

The connection between quality of intuition and commercial success is difficult fo make. In- tuition is the beginning of new learning. Even- tual commercial success is dependent upon ef- fective learning at all levels—not simply the original intuitive insights of the entrepreneur.

Intuiting, especially of the entrepreneurial type, appears to be a largely subconscious pro- cess. In fact, trying to force it to a conscious level too soon may prevent it from h a p p e n i n g (Watson, 1969). The outcome of individual intu- iting is an inexplicable sense of the possible, of what might be done. Entrepreneurial intuitions are preverbal, and expert intuitions may be non- verbal a s well. No language exists to describe the insight or to explain the intended action. Consequently, intuition may guide the actions of the individual, but this intuition is difficult to share with others (Nonaka & Takeuchi, 1995). Imagery, sometimes called “visions,” and meta- phors aid the individual in his or her interpreta- tion of the insight and in communicating it to others.

Scholars have recognized metaphors a s a crit- ical link in the evolution from individual intui- tive insighf to shared interpretation. Individuals use metaphors to help explain their intuition to themselves and fo share it with others. As Tsou- kas explains, “Metaphors involve the transfer of information from a relatively familiar domain . . . to a new and relatively unknown domain” (1991: 568)—that is, from fhe known fo the un- known, from that for which we share literal lan- guage to that emerging insight for which lan- guage does not yet exist. As such, metaphors mark the beginning of the interpreting process. Srivastava and Barrett provide the example of a child trying to describe for the first time to his mother that his foot is asleep. The child has no literal language to relay this strange sensation:

In frustration, he says to his mother: “It feels like there are stars hitting my foot.” Having no avail- able literal terms, the child associates a new unfamiliar experience with one he understands. He has a sparkling, glittering, tingling sensation that seems to impact his foot from somewhere outside his body. At the age of four he is unable to

say, “Mother, there is a certain numbness in my foot which is a result of an inadequate supply of blood which I have inadvertently seemed to cir- cumvent” (1991: 568).

In this example the child perceives something he has no words to describe, although the words do exist, and no doubt his mother would explain that the word “numbness” can be used to de- scribe the sensation.

True innovators have a problem akin to the child. They have a sensation—an insight into a possibility—but they have no literal language to describe it. Unfortunately, they do not have a “parent” to provide that language; indeed, none exists if the insight is truly novel. Individuals employ metaphors to bound and describe the insight. As Tsoukas elaborates.

In lay discourse, metaphors constitute an eco- nomical way of relaying primarily experiential information in a vivid manner, and they can be used as variety reduction mechanism in situa- tions where experience cannot be segmented and imparted through literal language (1991: 567).

Indeed, for entrepreneurial insights, metaphors may be the only language available for one to communicate with another.

Early in the evolution of the personal com- puter, Steve Jobs of Apple employed the “appli- ance” metaphor. This metaphor evokes a whole set of subsidiary images: easy to use, small, affordable. Subsequently, more literal language was used to name more precisely many of the attributes associated with the original metaphor (e.g., graphical user interface). This example also points to the reciprocity between thinking and acting that is inherent in fhe development of language.

Naming also directs actions towards fhe object (or image) you have named because it promotes activity consistent with the related attribution {i.e., the name or the metaphor) it carries. To change the name of an object connotes changing your relationship to it because when we name something, we direct anticipations, expectations, and evaluations toward it (Srivastava & Barrett, 1988: 34-35).

Using this reasoning, if lobs had used a different metaphor to describe his initial insight, perhaps the personal computer as “business assistant,” it would have led to very different actions, and Apple would have become a very different com- pany. Early in a company’s development, when it is far from equilibrium, small differences in

528 Academy of Management Review July

the metaphors employed and the ways in which conversations unfold and language develops may ultimately result in great differences in where the company ends up.

Interpreting

Whereas intuiting focuses on the subcon- scious process of developing insights, interpret- ing begins picking up on the conscious elements of the individual learning process. Through the process of interpreting, individuals develop cog- nitive maps about the various domains in which they operate (Huff, 1990). Language plays a piv- otal role in the development of these maps, since it enables individuals to name and begin to explain what were once simply feelings, hunches, or sensations. Further, once things are named, individuals can make more explicit con- nections among them.

Interpreting takes place in relation to a do- main or an environment. The nature or texture of the domain within which individuals and organ- izations operate, and from which they extract data, is crucial to understanding the interpretive process. The precision of the language that evolves will reflect the texture of the domain, given the tasks being attempted. The well- known example of fhe Inuit having over a dozen different words for (various types of) snow illus- trates the rich interaction between the fask do- main and the sophistication of language. More- over, a person with very rich a n d complex cognitive maps of a domain, like the chess mas- fer, will be able to see things and act in ways that others cannot.

The cognitive map is affected by the domain or environment, but it also guides what is inter- preted from that domain. As Weick (1979) sug- gests, people are more likely to “see something when they believe it” rather than “believe it when they see it.” As a result, individuals will interpret the same stimulus differently, based on their established cognitive maps. The same stimulus can evoke a different or equivocal meaning for differenf people (Hambrick & Ma- son, 1984; Walsh, 1988). This difference is not a result of uncertainty about the stimulus. Uncer- tainty is related to the quality of information. But for any group of people, even high-qualify infor- mation may be equivocal: it may hold multiple, and often conflicting, meanings (Daft & Huber, 1987). Although equivocality is an issue in the

development of both individual understanding a n d s h a r e d u n d e r s t a n d i n g within a group, equivocal situations are often resolved through a group interpretive process (Weick & Van Or- den, 1990).

Just a s language plays a pivotal role in en- abling individuals to develop fheir cognitive maps, it is also pivotal in enabling individuals to develop a sense of shared understanding. Interpreting is a social activity that creates and refines common language, clarifies images, and creates shared meaning and understanding. Equivocality is reduced through interpreting by “shared observations and discussion until a common grammar and course of action can be agreed upon” (Daft & Weick, 1984: 291). Groups will have an interpretive capacity related to the makeup of the group and to the group dynamics (Hurst et a l , 1989). As the interpretive process moves beyond the individual and becomes em- bedded within the workgroup, it becomes inte- grafive. Individual interpretive processes come together around a shared u n d e r s t a n d i n g of what is possible, and individuals interact and attempt to enact that possibility.

Integrating

Whereas the focus of interpreting is change in the individual’s understanding and actions, the focus of integrating is coherent, collective ac- tion. For coherence to evolve, shared under- standing by members of the group is required. It is through the continuing conversation among members of the community and through shared practice (Seely-Brown & Duguid, 1991) that shared understanding or collective mind (Weick & Roberts, 1993) develops and mutual adjust- ment and negotiated action (Simons, 1991) take place.

The evolution of language extends the pro- cess of interpreting to interactions among indi- viduals: the realm of workgroups, organizations, communities, and even societies. Language de- veloped through conversation and dialogue al- lows the evolution of shared meaning for the group. As Daft and Weick explain:

The distinctive feature… is sharing. A piece of data, a perception, a cognitive map is shared among managers…. Passing a startling obser- vation among members, or discussing a puzzling development enables managers to converge on an approximate interpretation (1984: 285).

1999 Crossan, Lane, and White 529

Language not only helps us learn—it pre- serves, for better and for worse, what has been learned. For an organization to learn and renew, its language must evolve. Conversation can be used not only to convey established meaning but also to evolve new meaning.

Not all conversational styles are equally ef- fective, however, for developing shared mean- ing. Isaacs suggests that “dialogue is a disci- pline of collective thinking and inquiry, a process for transforming the quality of conver- sation and, in particular the thinking that lies beneath it” (1993: 25). Through dialogue the group can evolve new and deeper shared under- standings. This shared meaning can cause those who have participated to more or less spontaneously make mutual adjustments to their actions. As Isaacs goes on to explain.

Dialogue proposes t h a t . . . some of the most pow- erful forms of coordination may come through participation in unfolding meaning, which might even be perceived differently by different people. A flock of birds suddenly taking flight from a tree reveals fhe potential coordination of dialogue: this movement all at once, a wholeness and lis- tening together that permits individual differen- tiation but is still highly interconnected {1993: 25).

The dialogue process attempts to convey both the message and a deep interconnected mean- ing. A consensual approach that attempts to get agreement on the message without delving into the underlying meaning(s) risks a groupthink outcome (Janis, 1982).

As with the process of interpreting, the context surrounding the integrating process is critical. Seely-Brown and Duguid’s (1991) notion of “com- munities of practice” captures the importance of the infegrative context. These authors and their colleagues have been involved in ethnographic research on workplace practices and suggest that understanding and impacting leaming and innovation require one to study and understand the situation in which practice occurs. Neither occurs ex situ:

Practice is essential to understanding work. Ab- stractions detached from practice distort or ob- scure intricacies of that practice. Without a clear understanding of those intricacies and fhe role they play, the practice itself cannot be well un- derstood, engendered (through training) or en- hanced (through innovation) (1391: 40).

Observations from these ethnographic studies reveal that actual practice is not what is speci-

fied in manuals or necessarily what is taught in classrooms. Rather, it is captured and promul- gated by stories told by community members. Storytelling is a significant part of the learning process. Stories reflect the complexity of actual practice rather than the abstractions taught in classrooms. As stories evolve, richer under- standing of the phenomenon is developed, and new integrated approaches to solving problems are created. Stories themselves become fhe re- pository of wisdom—part of the collective mind/ memory (Weick & Roberts, 1993).

Institutionalizing

The process of institutionalizing sets organi- zational learning apart from individual or ad hoc group learning. The underlying assumption is that organizations are more than simply a collection of individuals; organizational learn- ing is different from the simple sum of the learn- ing of its members. Although individuals may come and go, what they have learned as indi- viduals or in groups does not necessarily leave with them. Some leaming is embedded in the systems, structures, strategy, routines, pre- scribed practices of the organization, and in- vestments in information systems and infra- structure.

For new organizations there are few estab- lished routines or structures: there is no organ- izational memory. Often by the nature of their small size, their open communication, and their formation based on common interest and dreams, individual and group learning domi- nate in young organizations. As organizations mature, however, individuals begin to fall into patterns of interaction and communication, and the organizations attempt to capture the pat- terns of interaction by formalizing them.

This institutionalization is a means for organ- izations to leverage fhe learning of the individ- ual members. Structures, systems, and proce- dures provide a context for interactions. Over time, spontaneous individual and group learn- ing become less prevalent, as the prior learning becomes embedded in the organization and be- gins to guide the actions and learning of organ- izational members.

Organizations naturally outgrow fheir ability to exclusively use spontaneous interactions to interpret, integrate, and take coherent action. Relationships become formalized. Coherent ac-

530 Academy of Management fleview July

tion is achieved with the help of plans and other formal systems. If the plan produces favorable outcomes, then the actions deemed to be consis- tent with the plan become routines. There is a need to ensure that the routines continue to be carried out and that the organization produces and performs. This is the role for what Simons calls “diagnostic systems” (1991,1994). An organ- ization uses these systems to regulate the day- to-day routines of the business—to exploit the current understanding of the business. Simons also identifies another type of formal system he calls “interactive.” Organizations use interac- tive systems to consider how the future can or may be different from the past.

As one moves from the individual level of in- tuiting/interpreting through group integrating to organizational institutionalizing, the process of learning is less fluid and incremental a n d be- comes more staccato and disjointed. Generally, that which becomes institutionalized in organi- zations h a s received, at some point, a certain degree of consensus or shared understanding among the influential members of the organiza- tion. Before a formal organizational system or structure is established or changed, the modifi- cation generally undergoes some process of consideration. Once something is institutional- ized, if usually endures for a period of time.

Changes in systems, structures, and routines occur relatively infrequently in organizations; a s a result, although the underlying processes of intuiting, interpreting, and integrating are more fluid and continual, significant changes in the i n s t i t u t i o n a l i z e d organization typically a r e punctuated. For this reason much organization- al change is interpreted a s being radical or transformational, rather than incremental, in nature. However, even though fhe institutional changes may a p p e a r disjointed, the underlying learning processes of intuiting and interpreting at the individual and group levels that result in these changes may be more continuous.

Institutionalized learning cannot capture all the ongoing learning at the individual a n d group levels. It takes time to transfer learning from individuals to groups and from groups to the organization. As the environment changes, the learning that has been institutionalized may no longer fit the context; there may be a g a p between what the organization needs to do a n d what it h a s learned to do. As the g a p widens, the organization places more reliance on individual

learning a n d initiative. For example, Seely- Brown (1993) reports on studies that examined the informal routines of e x p e r i e n c e d order clerks in comparison with the formal institution- alized system. Although the product of their day’s work gave the appearance that the clerks had followed the formal routine, they had, in fact, improvised in ways that proved more effi- cient and effective.

Given that the environment is constantly changing, the challenge for organizations is to m a n a g e the tension between the embedded in- stitutionalized learning from the past, which en- ables it to exploit learning, and fhe new learn- ing t h a t must be a l l o w e d to feed forward through the processes of intuiting, interpreting, and integrating. Although the 4rs have been presented in a linear fashion for e a s e of expla- nation, appreciating the iterative nature of the processes is critical, a s we will discuss in a subsequent section.

In the following section we present the Apple story in a linear fashion to illustrate the 41 pro- cesses. The focus of the story is on the explora- tion side of strategic renewal. We then broaden the discussion to examine the dynamic nature of organizational learning.

Understanding the Learning Processes: The Apple Story

The relationship between each of the levels and processes perhaps can best be illustrated by way of a story—that of Apple Computer.^ By all accounts, Steve lobs, through an intuitive process, had the insights upon which Apple was founded, lobs perceived patterns and evolved certain images’^ about possibilities, which de- veloped into a metaphor (e.g.. the personal com- puter a s an appliance—one in every home) that guided Apple during its early years. These im- ages were based, at least in part, upon his unique experiences and cognitive orientation. He provided much of the insight and energy that were the genesis of Apple.

‘ This description is not represented as an accurate case history. Rather, it is a story we use to help illustrate the conceptual model; we do not employ it as empirical support for the model.

^ The italicized words represent the key words used to describe the inputs and outcomes of the processes as shown in Table 2.

1999 Crossan, Lane, and Whife 531

But these initial images were necessarily vague when it came to specific actions. At the intuitive stage actions are improvised, rooted more in feeling than thinking (Hurst et aL, 1989). The language used to explain improvised action is necessarily underdeveloped, vague, and im- precise. On the basis of lobs’ own experiences and his perceptions of the events, along with Wozniak’s technical expertise, these men impro- vised actions as they went along.

Language plays a pivotal role as insights be- come more sophisticated and concrete through the interpretive process. In part, it was through the group process of dialogue and conversation that Jobs’ own understanding and individual cognitive complexity were enhanced. Talking and acting with others, developing words to de- scribe what had been vague insights, and en- acting these insights enabled a deeper meaning to evolve (Bruner, 1990).

Many researchers talk about this evolution of meaning in terms of cognitive complexity and cognitive maps (Huff, 1990). Although one must be careful with this metaphor, it is helpful to think of Jobs initially navigating his chosen ter- ritory more or less mapless, guided only by some vague vision of what lay over the next hill. As he, with others, experimented and explored the territory, a mental picture or map slowly emerged, with finer and finer levels of detail. (This metaphor is only helpful to a point. Jobs was not just exploring the territory—through his actions he was helping to create or enact the territory.)

As insightful as Jobs was, he could not accom- plish his vision alone. He needed to involve oth- ers. The conversation and dialogue, which served to develop his understanding, also helped to integrate the cognitive maps of the group—to develop a shared understanding. Lan- guage, which plays a critical role in the devel- opment of individual maps, is essential as a means of integrating ideas and negotiating ac- tions with others. Through conversation, work- groups identify areas of difference and agree- ment, gain language precision, and develop a shared understanding of their task domain. They quite naturally, as a part of this process, use their common language and fhe conversa- tional process to negotiate mutual adjustments to their actions. These adjustments are an inte- gral part of the learning process. The assump- tion is that a certain coherence of actions should

emerge from a shared understanding of the business situation—that is, the emergent strat- egy (Mintzberg, 1994).

But what is the context within which shared understandings and mutual adjustments occur? Early in an organization’s life, as was the case with Apple, these processes are largely informal and spontaneous. As organizations grow larger and more people are involved, informal interac- tions do not suffice. What had happened more or less spontaneously must now be arranged; what had been an informal conversation over coffee about the future of the company becomes a for- mal planning process with in(erac(ive systems (Simons, 1991, 1994).

The organization naturally outgrows its abil- ity to exclusively use spontaneous interactions to interpret, integrate, and take concerted ac- tion. Relationships become formalized and rou- fines develop. There is a need to ensure that the routines continue fo be carried out and that the organization produces and performs. This is the role of diagnostic systems (Simons, 1991, 1994).

In the Apple situation John Sculley was brought in, at least in part, to provide needed systems, structures, and other formal mecha- nisms. Individual and communal learning be- came institutionalized in the hope that the learning could be more systematically ex- ploited. Institutionalization contributes to more efficient operations, enabling the organization to better deliver on the founder’s original vision. With Apple, however, it also may have hindered the organization’s ability to renew itself by intu- iting, interpreting, and integrating emerging patterns and new possibilities. Unable to realize his new vision within Apple, Steve Jobs left to start a new enterprise, appropriately called NeXT.

Essentially, the process of institutionalizing embeds learned behaviors that have worked in the past into the routines of the organization. Diagnostic systems develop ruies and proce- dures to facilitate the repetition of routines. But the process of institutionalizing also feeds back by creating a context through which subsequent events and experiences are interpreted. This context may facilitate and/or impede the organ- ization’s ability to (re)inferpret and respond to its environment. The Apple example, while use- ful, is a simplification. In entrepreneurial startup situations like Apple, there is originally little or no past learning embedded in fhe formal

532 Academy of Management Review July

organization. Indeed, there is no formal organi- zation. Established organizations do have past learning embedded within them. As such, learn- ing and renewal in these situations must deal with this difference in context and its associated challenges.

Organizational Learning As a Dynamic Process

Organizational learning is a dynamic process. Not only does learning occur over time and across levels, but it also creates a tension be- tween assimilating new learning (feed forward) and exploiting or using what has already been learned (feedback). Through feed-forward pro- cesses, new ideas and actions flow from the individual to fhe group to the organization lev- els. Af the same time, what has already been learned feeds back from the organization to group and individual levels, affecting how peo- ple act and think. The concurrent nature of the feed-forward and feedback processes creates a tension, which can be understood by arraying the levels against one another, as shown in Fig- ure 1. Doing so illustrates that, in addition to the

processes that feed forward learning from the individual and groups to the organization, learning that has been institutionalized feeds back and impacts individual and group learn- ing. The importance of these interactions can be highlighted by two relationships that are espe- cially problematic: i n t e r p r e t i n g – i n t e g r a t i n g (feed forward) and institutionalizing-intuiting (feedback).

Moving from interpreting to integrating (feed forward) requires a shift from individual learn- ing to learning among individuals or groups. It entails faking personally constructed cognitive maps and integrating them in a way that devel- ops a shared understanding among the group members. There are many challenges in chang- ing an existing shared reality. The first is that individuals need to be able to communicate, through words and actions, their own cognitive map. Since many aspects of cognitive maps are tacit, communicating them requires a process of surfacing and articulating ideas and concepts. This process makes tacit knowledge explicit (Polanyi, 19B7).

Assuming individuals can surface and articu- late their maps, a second challenge arises from

HGURE I Organizational Learning As a Dynamic Process

Individual

Group

Organizational

Individual Group Organizational

1999 Crossan, Lane, and White 533

the collective interpretation of the maps. Making something explicit does not necessarily mean the understanding is shared. Imprecision of lan- guage is complicated by cognitive maps that act as unique filters on the communication: we tend to “see/hear what we believe” rather than “be- lieve what we see.” The real test of shared un- derstanding is coherent action. Yet, for novel ideas, shared understanding may not evolve un- less shared action or experimentation is at- tempted. The learning perspective suggests that leading with action, rather than bluntly focusing on cognition, may provide a different migration path fo shared understanding. As in experien- tial learning (Crossan et al., 1995), action pro- vides the opportunity to share a common expe- rience, which may aid in the development of shared understanding.

The second problematic interaction is be- tween institutionalizing and intuiting (feed- back). Institutionalization can easily drive out intuition. Intuiting within established organiza- tions with a high degree of institutionalized learning requires what Schumpeter (1959) refers to as “creative destruction”^—destroying, or at least setting aside, the institutional order to en- act variations thaf allow intuitive insights and actions to surface and be pursued. This is ex- tremely difficult because the language and logic that form the collective mindset of the or- ganization and the resulting investment in as- sets present a formidable fortress of physical and cognitive barriers to change. Further, mem- bers of the organization must step back from proven, objective successes and allow un- proven, subjectively based experimentation.

One example of the tension and the potential for resolution is in the resource allocation pro- cess (institutionalized learning). Many resource allocation processes inhibit fhe development of new insights, given their emphasis on track record and proven success (Bower, 1970; Burgelman, 1983). However, some firms, such as 3M, have recognized this problem and have in- stitutionalized a different resource allocation process that provides funding for new projects, and also holds the business accountable for having a significant portion of the revenue de- rived from new products (Hurst, 1995). The sys- tem tries to ensure that exploitation (feedback) does not drive out exploration (feed forward).

The tension between assimilating new leam- ing (feed forward) and using what has already

been learned (feedback) arises because the in- stitutionalized learning (what has already been learned) impedes the assimilation of new learn- ing. Fully assimilating new learning requires the feed forward of leaming from the individual and group to become institutionalized within the organization. Utilizing what has been learned is a feedback loop of institutionalized learning from the organization to groups and individuals. For example, rules and routines that once captured the logic and learning of how to facilitate learning at the individual level may no longer apply in a changed circumstance, yet the systems still focus an individual’s energy and attention in ways that impede the assimila- tion and feed forward of new learning (Mintz- berg, 1994). Or an organization structure that has a strong impact on who talks to whom in the organization may impede conversation that could develop valuable new shared understand- ings. Therefore, any theory of organizational learning needs to recognize the levels, pro- cesses, and dynamic nature of the learning pro- cess itself that create a tension between the feed forward and feedback of learning.

Conceiving of learning as a dynamic flow raises the possibility that these flows can be constrained. Consider for a moment the paral- lels between production flow and learning flow. Production flow must ensure that the level of work-in-process inventories does not exceed the capacity of any parf of the system to absorb and process them. Concepts like throughput, capac- ity utilization, cycle time, and bottlenecks have aided our understanding of what it takes to bal- ance a production line to ensure smooth flow. A dynamic theory of organizational learning rec- ognizes that there may be bottlenecks in fhe ability of the organization to absorb (Cohen & Levinthal, 1990) the feed forward of learning from the individual to the group and organiza- tion. Investment in individual learning and pressures for new product innovation may be- come stockpiled if the organization has limited capacity to absorb the learning. However, in the production process, work-in-process inventory does not “care” whether it is stockpiled, whereas in the learning process individuals (and their ideas) do. As a result, individuals may become frustrated and disenchanted, and may even leave the organization.

A dynamic theory of organizational leaming provides a means of understanding the funda-

534 Academy of Managemenf fievfew July

mental tensions of strategic renewal: the ten- sion between exploration (feed forward) and ex- ploitation (feedback). Although one may b e t e m p t e d to e q u a t e o r g a n i z a t i o n a l l e a r n i n g solely with the innovative feed-forward process, in doing so one fails to recognize that the feed- back process provides the means to exploit what h a s been learned (Crossan & Sorrenti, 1987). However, because learning that h a s become in- stitutionalized at the organization level is often difficult to change, it runs the risk of becoming irrelevant and may even obstruct feed-forward learning flows. This h a s led fo the call to liber- ate organizations and destroy bureaucracy (Pin- chot & Pinchot, 1993), yet bureaucracy (or insti- tutionalization) is not necessarily n e g a t i v e . Institutionalizing learning is necessary to reap the ongoing benefits of what h a s already been learned.

With the 41 framework we identify the flow of learning between levels a n d the tension be- tween feed-forward (exploration) and feed-back (exploitation) processes a s fundamental chal- lenges of strategic renewal. There are many fac- tors that could facilitate and inhibit this process, some of which are part of the institutionalized learning itself (e.g., reward systems, information systems, resource allocation systems, strategic planning systems, and structure). However, in the 41 model we recognize that ideas occur to individuals a n d that individuals ultimately share those ideas through a n integrating pro- cess. It is the individuals, and the social pro- cesses and group dynamics through which they interact, that may facilitate or inhibit organiza- tional leaming. One promising area for further research is to examine the role of leadership and management of the 41 learning process.

IMPLICATIONS FOR RESEARCH AND MANAGEMENT

The central contribution of this work is the 4rs and the related feed-forward and feed-back pro- cesses. Further, the interplay between the levels and the processes reveals the tensions associ- ated with strategic renewal. It is our hope that this framework will stir a reaction in the organ- izational leaming community and help scholars research the links among the levels and the tensions inherent in organizational learning.

The same questions that we as researchers seek to answer form the basis of inquiry for

managers. Is there a satisfactory level of intui- tive, innovative insights in the organization? Do individuals have the motivation, understanding, capability, and opportunity to interpret their en- vironment? How do individual and group expe- riences help to develop shared understanding? How well do individual insights become shared, integrated, and institutionalized in the organi- zation? What impediments are there to integrat- ing individual perspectives? How much of the organization’s intellectual capital resides in in- dividual heads? Is there enough institutional- ized learning? How does institutionalized learn- ing facilitate or impede intuiting, interpreting, and integrating? What is the nature of the inter- play between the feed-forward and feedback processes?

The responses to these questions need to take into account the dynamic nature of organization- al learning as it relates to strategic renewal. Compartmentalization of the issues will lead to a simplification that disguises the many essen- tial challenges of the phenomenon. For exam- ple, in the case of the first question, a simple focus on intuiting may yield a better under- standing of the individual processes of innova- tion. However, such a focus will miss the tension and, hence, challenge of feeding forward infui- tive insights with the hope of interpreting, inte- grating, and institutionalizing them, while con- currently working within a setting where institutionalized learning continues to posi- tively impact upon the performance of the enter- prise.

The question of whether individuals have fhe motivation, understanding, capability, and op- portunity to interpret their environment sug- gests the need to examine more than just indi- viduals. It requires an examination of fhe link between interpreting and institutionalizing. In- dividuals may be motivated and capable, but if they turn their attention toward interpreting things that have little impact, the organization will reap few benefits from that learning. Fur- thermore, even if individuals are interpreting things of relevance, their learning needs to be integrated and institutionalized to realize its fu- ture value. This theory suggests it is not simply a matter of transferring data, information, or knowledge—it is a matter of organizational learning.

The role of experience in the development of shared understanding reinforces the learning

1999 Crossan, Lane, and White 535

premise that cognition (knowledge, understand- ing, and beliefs) and action (behaviors) are tightly intertwined, and changes in knowledge do not necessarily lead to changes in action. In contrast to knowledge management and intel- lectual capital, which focus management and research attention on cognition, this view of or- ganizational learning acknowledges the rich in- terrelationship between cognition and action.

The foregoing examples emphasize the need to pursue questions of organizational learning with a dynamic perspective. We encourage re- searchers and managers to extend their think- ing to consider how differenf parts of the organ- izational learning system impact one another. This framework should serve as a map to help researchers and managers expand their hori- zons.

While this framework should encourage and assist the pursuit of a more holistic understand- ing of organizational learning, there are two particular areas of research that will help ad- vance theory. The first is understanding the mechanisms that enhance or restrict the stocks and flows of learning. Here we have suggested that learning processes can be compared to pro- duction processes. This point should generate substantial dialogue, because it begins to ques- tion some of the traditional leverage points for organizational learning. For example, continued investment in individual and even group learn- ing may be counterproductive if fhe organiza- tion does not have the capacity to absorb or utilize it. If this is the case, future research in organizational learning needs to move from fhe reasonably well-developed undersfanding of in- dividual- and group-level learning to under- standing the flows of learning (feed forward and feedback) between fhe levels.

Yet, all intuitive insights should not, and can- not, be immediately interpreted, integrated, and institutionalized. What enables the organization to “separate the wheat from the chaff”—the good from the bad—as ideas and practices de- velop and are refined over time? We have sug- gested that the strategic context helps to frame things that are more or less relevant, but the decision rules, criteria, and processes are not so clear. For example, if 3M had framed the discov- ery of a glue that does not stick in a narrow strategic context, we would not have reaped the benefits of Post-It® Notes.

A second area that will advance theory is an understanding of how to reconcile the tension between exploitation and exploration—be- tween continuity and change. The 41 model di- rects our attention to the interplay of these pro- cesses, but it does not specifically address how organizations deal with this tension. Although a few management scholars have considered this problem (Hurst, 1995; Miller, 1990; Pascale, 1990), answers have proven elusive. This important question merits further consideration and inves- tigation.

This dynamic framework of organizational learning will place significant demands on both researchers and managers. It requires capabil- ity for cross-level examination with a critical eye for the tensions inherent in the feed-forward and feedback processes. It requires the capabil- ity to link human resource management, strate- gic management, and the management of infor- mation technology and systems as a means to facilitate the flow of learning. Although such research poses challenges, the potential bene- fits are significant. Strategic renewal is one of the central challenges of every organization. This dynamic process of organizational leaming could yield important insights into strategic re- newal.

In summary, in this article we have pushed in the direction of advancing a theory of organiza- tional learning by describing an organizational learning framework that incorporates the dy- namic multilevel nature of the phenomenon and captures the rich interplay between process and level. This framework should provide clarity, promote dialogue, foster convergence (Pfeffer, 1993), and encourage new directions in research that begin to examine organizational learning flows that enable strategic renewal.

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Mary M, Crossan is an associate professor in general management at the Richard Ivey School ol Business, She received her MBA and Ph.D. in business policy from the University of Western Ontario. Her research focuses on organizational learning and improvisation for strategic renewal.

Henry W. Lane holds the Fred and Darla Brodsky Chair in International Business at Northeastern University in Boston. Until recently, he was at the Richard Ivey School of Business. He received his DBA in organizational behavior from the Harvard Business School. His research interests are intemationa] business and organizational leaming and strategic renewal,

Roderick E. White is an associate professor in general management at the Richard Ivey School of Business, He received his DBA and MBA from Harvard University and his honors bachelor of arts (business) from the University of Western Ontario. His research interests focus on the renewal of mature organizations and the evolution of sociai structure.

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