Organizational learning is the process by which an organization improves itself over time through gaining experience and using that experience to create knowledge. The knowledge created is then transferred within the organization.

1. CHAPTER 2
ORGANIZATIONAL LEARNING
By
Dr Nazrul Islam, MBA, PhD

2. LEARNING OBJECTIVES
 After reading this chapter, you will be able to:
 Define organizational learning and describe learning organization
 Explain the five disciplines and principles of a learning organization
 Discuss the four key dimensions that are critical for creating and
sustaining a learning organization
 Explain what knowledge is and give example of explicit and tacit
knowledge
 Describe the meaning and types of intellectual capital
 Define knowledge management and discuss four knowledge
management practices
 Describe the multilevel systems model of organizational learning
 Explain how organizational learning and training are related.

3. THE LEARNING ORGANIZATION
1. In 1990, Peter Senge in his book “The Fifth Discipline: The
Art and Practice of the Learning Organization” set in motion
a whole new approach to organizations that focuses on
learning and in particular, the “learning organization .”
2. An organization that acquires, organizes, and shares
information and knowledge, uses new information and
knowledge to change the behavior in order to achieve its
objectives and improves its effectiveness.
3. Peter Senge stated that a learning organization is a
group of people working together collectively to
enhance their capacities to create results they really
care about. (Fulmer and Keys 1998).

4. THE LEARNING ORGANIZATION, CONTD.,
 Five Principles
1. Everybody is a learner
2. Employees learn by attending formal training programs
as well as through informal means such as listening
and observing others.
3. Learning is part of a change process and in fact enables
change
4. Continuous learning is a hallmark of learning organization
5. Learning is an investment in future of employees
and the organization rather than expense.

5. ORGANIZATIONAL LEARNING
1. The process of creating, sharing, diffusing, and applying
knowledge in organizations;
2. A smart organization knows how to create knowledge
and disseminate it throughout the organization.
In other words, it knows how to learn.
3. “Organizations learn only through individuals who learn.
Individual learning does not guarantee organization
learning. But without it, no organizational learning
occurs.” (- Senge p.139)
4. To survive and develop, organizations must learn to
manage by managing learning - the capacity to learn and
change, consciously, continually, and quickly.

6. ORGANIZATIONAL LEARNING, CONTD.,
 Dodgson (1993) explains OL as
• the way firms build,
• supplement,
• organize knowledge,
• routines around their activities,
• within their cultures,
• adapt and develop organizational efficiency by
improving the use of the broad skills of their
workforces.

7. ORGANIZATIONAL LEARNING, CONTD.,
 Kullunga (2001) defined OL as encouraging a learning
curve within an organization such that employees at all
levels, individually and collectively, continually increase
their capacity to improve their level of performance.
 From these definitions, OL can be summarized as the
set of actions to acquire, share and interpret knowledge
among the members whose main objective is to
increase company performance through improved
quality of decision-making in the organization.

8. ORGANIZATIONAL LEARNING, CONTD.,
 The most important point is,
the existence of a knowledge management
infrastructure within the organization whose mandate is
to identify, analyze, manage, maintain and disseminate
knowledge to appropriate individuals within the
organization and externally to others (Liebowitz et al.,
1999). This can be only be achieved through the proper
combination of relevant systems and skills that are
influential in the learning process of an organization.

9. LEVELS OF LEARNING
Jeffries et al. (2003) developed a perspective by defining
the levels of OL as three phases beginning at the
individual level by interpreting and reflection, maturing at
group level by integration and conceptualization and
finally reaching the organization level by institutionalizing
and experimentation.
1. Individual Learning
2. Group/Team Learning
3. Organizational Learning

10. LEVELS OF LEARNING, CONTD.,
1. Individual Learning is the foundation for the
existence of organization’s learning and it should be
enhanced to lead to more effective OL.
2. Group/Team Learning is an inseparable step of OL
since teams provide new approaches to the learning
process, cause fundamental organizational changes
by functioning as a bridge between the individuals and
the organization (Marquardt,1996).
3. Organizational Learning requires the crucial step of
the transformation of individual learning into OL.

11. A MULTILEVEL SYSTEMS APPROACH TO
ORGANIZATIONAL LEARNING
 An environment for learning and the
acquisition and exchange of knowledge and
information.
 The opportunity for groups to interact,
communicate, and share information.
 Individuals must have formal and informal
opportunities for learning. Learning and the
transfer of knowledge and information must be
rewarded
Organizational
Level Learning
Group
Level
Learning
Individual
Level
Learning
A Multilevel Systems Approach to Organizational Learning

12. SO, OL NECESSITATES FOUR MAIN EVENTS DEFINED
BY CROSSAN ET AL.’S (1990),
The preconscious recognition of the possibilities
inherent in a personal experience.
İntepreting, the explanation of an idea to oneself and to
others.
İntegrating, the developing of a shared understanding
and coordinated action among individuals.
İnstitutionalizing, the process of ensuring that actions
are made routine.
1
2
3
4

13. TYPES OF LEARNING
 Single-loop learning involves an organization to
respond to changes in its environment by detecting
errors and correcting them, but maintaning its
existing organizational norms.
 Double–loop learning, on the other hand, involves
the revision of organizational culture, assumptions,
guidelines, objectives, strategies and structure of an
organization. It is a process of creative renewal and
rediscovery of an organization to remain
competitive (Senge 1990).

15. ACCORDING TO PETER SENGE, FIVE LEARNING SKILLS
ARE:

16. THE FIFTH DISCIPLINE
Senge in his book The Fifth Discipline proposed five disciplines which are the
guiding principles to become a learning organization:
 Systems thinking: Organizations are a system of interrelationships. To
become more successful we need to analyze these relationships and find the problems in
them. This will allow an organization to eliminate the obstacles to learning. Integrates others
and has to do with viewing the organization as a whole.
 Personal mastery: People with personal mastery are open to others &
are in a learning mode. Organizations only learn if the
individuals in them learn. Employees need to grow and work on their own goals.
 Mental models: The images and assumptions that people have about
themselves and the world. This is the company culture and the diverse theories and
mindsets that serve as a framework for the functioning of the organization. Learning
organizations look for how these affect organizational development.
 Shared vision: A learning organization's employees all share a common vision.
Personal goals must be in sync with the goals and vision of the organization.
 Team learning: Learning takes place in teams through dialogue, discussion,
team learning and “thinking together.” For a team to learn, they must be in sync and reach
agreement.

17. THE FIFTH DISCIPLINE
SENGE IN HIS BOOK THE FIFTH DISCIPLINE PROPOSED FIVE
DISCIPLINES WHICH ARE THE GUIDING PRINCIPLES TO BECOME A
LEARNING ORGANIZATION:
1.Personal Mastery:
This discipline of aspiration involves formulating a coherent
picture of the results people most desire to gain as individuals
(the personal vision), alongside a realistic assessment of the
current state of their lives today (the current reality).
Learning to cultivate the tension between vision and reality,
represented in this icon by the rubber band, can expand
people's capacity to make better choices, and to achieve
more of the results that they have chosen.

18. 2. Mental Models This discipline of reflection and inquiry skills
is focused around developing awareness of
the attitudes and perceptions that influence
thought and interaction. By continually
reflecting upon, talking about, and
reconsidering these internal pictures of the
world, people can gain more capability in
governing their actions and decisions.
The icon here portrays one of the more
powerful principles of this discipline, the
ladder of inference depicting how people
leap instantly to counterproductive
conclusions and assumptions.

19. 3. Shared Vision
4. Team Learning
This collective discipline establishes a focus on mutual
purpose. People learn to nourish a sense of
commitment in a group or organization by developing
shared images of the future they seek to create
(symbolized by the eye), and the principles and guiding
practices by which they hope to get there.
This is a discipline of group interaction. Through
techniques like dialogue and skillful discussion, teams
transform their collective thinking, learning to mobilize
their energies and ability greater than the sum of
individual members' talents. The icon symbolizes the
natural alignment of a learning-oriented team as the flight
of a flock of birds.
THE FIFTH DISCIPLINE

20. 5. Systems Thinking
Senge, P. M., Charlotte Roberts, Rick Ross, George Roth, Bryan Smith, and Art Kleiner (1999). The Dance of Change:
The challenges of sustaining momentum in learning organizations. New York, Currency/Doubleday. Page 32
In this discipline, people learn to better
understand interdependency and change,
and thereby to deal more effectively with the
forces that shape the consequences of our
actions. Systems thinking is based upon a
growing body of theory about the behavior of
feedback and complexity-the innate
tendencies of a system that lead to growth or
stability over time. Tools and techniques such
as systems archetypes and various types of
learning labs and simulations help people
see how to change systems more effectively,
and how to act more in tune with the larger
processes of the natural and economic world.
The circle in this icon represents the
fundamental building block of all systems: the
circular feedback loop underlying all growing
and limiting processes in nature
THE FIFTH DISCIPLINE

21. TO DEFINE THE KNOWLEDGE
Wisdom
Knowledge
Information
Data

22. DEFINITIONS
 DATA represents
Facts,
Observations,
Values of Results,
Quantitave,
Has not been processed,
It is obtained from Observations (input).

23. DEFINITIONS
 INFORMATION relates to,
structured data
meaningful data
describe a particular situation or condition
It gives us definitions.
(what,who,when,where)

24. DEFINITIONS
 KNOWLEDGE consists of
know-how,
truths,
perpectives,
concepts,
judgements,
methodologies,
It is about action and decision-making capability.

26. KNOWLEDGE AND ITS TYPES
 Knowledge
 The sum of what is known; a body of truths, information, and
principles
 Explicit knowledge
 Those things that can be bought or traded, such as patents or copy rights and
other forms of intellectual property
 The formula of Coca-Cola and the Brand name Coke
 Can be written into procedures or coded into databases and is
transferred fairly accurately
 Less than 20% of corporate knowledge is explicit
 Tacit /Implicit Knowledge
 80% of corporate knowledge is tacit or implicit
 Refers to the valuable wisdom learned from experience and insight,
and has been defined as intuition, know-how, little tricks, and judgment
 Almost impossible to transfer
 The decision-making behavior of dealers in financial markets.
 Transfer requires personal contact

27. TYPES OF KNOWLEDGE
 Tacit Knowledge (informal or soft) - knowing how
• obtained from experience
• stored in people’s head
• difficult to document
• difficult to communicate or share with other people
 Explicit Knowledge (formal or hard) - knowing that
• explained and recorded
• easily documented and transferred
• physically stored in either paper or electronic format

28. KNOWLEDGE MANAGEMENT PRACTICES IN AN
ORGANIZATION

29. KNOWLEDGE MANAGEMENT PRACTICES IN AN
ORGANIZATION, CONTD.,
 The creation, collection, storage, distribution, and
application of compiled “know what” and “know
how.”
 Organizations manage knowledge through four
processes:
 Acquisition
 Interpretation
 Dissemination
 Retention

30. ORGANIZATIONAL LEARNING PROCESSES
 Knowledge Acquisition
 Information Distribution
 Information Interpretation
 Organizational Memory

31. KNOWLEDGE ACQUISITION
External
 monitoring the environment
Internal
 information systems
 manage and retrieve information
 research
 development
 education
 training
 patent watching

32. KNOWLEDGE ACQUISITION, CONTD.,
 Environment Scanning
 Formal Training and Development
 Informal Learning:
 85% learning through informal training: ASTD

33. 33
Environmental
Scanning
External
Natural Task
Porter’s 5
Forces
Societal
STEEP/
PESTEL
OT
Internal
SW

34. INFORMATION INTERPRETATION
 Huber (1991) states that individuals and
groups have prior belief structures that
shape their interpretation of information and
thus the formation of meaning.
 So, to share the information firstly, it should
be interpreted.

35. KNOWLEDGE INTERPRETATION, CONTD.,
 Mental Models
 Deeply ingrained assumptions, generalizations, or
images that influence how we understand the world and
how we take action.
 Communities of practices
 Networks of people who work together and regularly
share information and knowledge.

36. INFORMATION DISSEMINATION
Informal
 Tacit know-how
 Letters
 Memos
 Conversations
 Stories by employees
Formal
 Seminar
 Reports
 Information systems

37. KNOWLEDGE DISSEMINATION, CONTD.,
 Companies must design systems or ways of sharing
knowledge
 ICTs allow for increased codification of knowledge
 Benchmarking best practices
 Intranet
 A critical component for managing knowledge.

38. ORGANIZATIONAL MEMORY/RETENTION
 Hard information
 Data
 Intranet/internet systems
 Warehousing
 Soft information
 Experiences
 Tacit know-how
 List of contacts

39. KNOWLEDGE RETENTION, CONTD.,
 To capitalize on the sources of knowledge,
organizations must build tools to compile, store,
and retrieve this knowledge quickly. These are
called knowledge repositories.
 Ways of knowledge repositories:
 Highly structured database
 Informal lists of lessons learned, white papers,
presentations etc
 Online mentors
 Oral histories

40. INTELLECTUAL CAPITAL
 An organization’s knowledge, experience, relationships, process
discoveries, innovations, market presence, and community influence.
 More than knowledge
 More like intelligence: ability to create knowledge and includes the
ability to
 learn
 reason
 imagine
 find new insights
 generate alternatives and to
 make wise decision.
 Source of innovation and wealth production– it is knowledge of
value. Has to be formalized, cauterized, and leveraged to produce a
more highly valued assets.

41. FOUR TYPES OF INTELLECTUAL CAPITAL
1. Human Capital
 The knowledge, skills and abilities of employees
 The ability to learn, to reason, to analyze
 Interpersonal skills, such as the ability to communicate with others, and work in
teams to generate better work methods
2. Renewal Capital
 Intellectual property, which consists of patents, licenses,
copyrights, and marketable innovations including products,
services and technologies.
3. Structural Capital
 Formal systems and relationships that allow employees to
communicate, solve problems, and market decisions
4. Relationship Capital
 An organization’s relationships with suppliers, customers, and
competitors that influence how they do business.
 Customer Capital
 The value of an organization’s relationships with its customers

43. ORGANIZATIONAL LEARNING AND TRAINING
Research shows that learning organizations invest more in
training and development in the following ways:
1. LOs spend more on training per employee
2. LOs provide more hours of training per employees
3. In LOs, percentage of employees who received training was higher
4. LOs are more likely to use various training practices and programs
such as mandatory annual training and mentoring programs
5. LOs deliver a significantly higher percentage of learning time via
learning technologies.
Training &
Development
Individual Learning
Organizational
Learning

44. Barriers to KM and OL
Implementations
Özorhon, Dikmen, Birgönül, 2005
A business development manager of Company E
indicated that;
...experience gained through a
project cannot be transferred
to another engineer via paper;
new employees cannot always
show the same performance
by reviewing the previous
experiences of their pioneers...

45.  Difficulties in measuring the value added
 Focus on projects instead of organizations
 Traditions and conservative company culture
 Cultural differences due geographical diversity
 Instable workforce (high employee turnover)
Barriers to KM and OL
Implementations
Chinowsky, 2007

46.  Inappropriate IT Infrastructure
 Insufficient time
 Insufficient funding
 Lack of executive support
 Lack of standard work processes
Barriers to KM and OL
Implementations
Chinowsky, 2007

47.  A web-based system to capture data & reuse in future
Tacit Knowledge
Knowledge Platform for Contractors
Kıvrak, Arslan, Dikmen, Birgönül, 2008
face to face
interactions
coaching and
mentoring
brainstorming communities of
practice
Explicit Knowledge
documents reports standards specifications