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The zone of inertia: absorptive capacity and organizational change

Lynn Godkin
Lamar University, Beaumont, Texas, USA
Abstract
Purpose The purpose of this paper is to describe how interruptions in organizational learning effect institutional absorptive capacity and contribute to organizational inertia. Design/methodology/approach An exploratory model is presented as a heuristic to describe how interruptions in organizational learning affect absorptive capacity. Findings A number of pivotal factors may result in a zone of inertia hindering organizational learning and process. Originality/value This paper describes the concept of a zone of inertia and introduces a model placing the notion in context. Keywords Organizational change, Workplace learning, Learning processes Paper type Conceptual paper

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Introduction n, 1971). Even when Organizations are apathetic toward change and ght change (Scho knowledge is explicitly available to organizational members it remains embedded in social structures (Brown and Duguid, 1998) and difcult to move. (Stopford, 2003) Dysfunctional mental models and modes of behavior contained in organizational memory require unlearning if change is to occur. (Hedberg, 1981; Nystrom and Starbuck, 1984) Institutional capacity to learn is represented by how well technologies and methods are recognized and managed (Lyles and Baird, 1994). It is determined by how well employees identify, adopt, and adapt technology to use (Lakomski, 2005). So the question arises, how can management leverage the capacity to overcome inertia and promote institutional change? This paper addresses that issue. It is based on the belief that facilitators and managers can foster change through strengthening institutional absorptive capacity. Hedberg and Ericson (1997) have suggested that organizational learning can be stymied by both insight inertia and action inertia (Hedberg and Wolff, 2003). The paper presents this view and places it into context. A related model is introduced incorporating a concept labeled the zone of inertia to illustrate insights available in the literature. Organizational inertia and institutional absorptive capacity Absorptive capacity, the routines and process through which rms acquire and exploit knowledge (Zahra and George, 2002, p. 186), has four dimensions (Daghfous, 2004): (1) acquisition; (2) assimilation; (3) transformation; and (4) exploitation.

The Learning Organization Vol. 17 No. 3, 2010 pp. 196-207 q Emerald Group Publishing Limited 0969-6474 DOI 10.1108/09696471011034900

These include: . how well technologies and methods are recognized and managed (Dodgson, 1993; Lyles and Baird, 1994); . building organizational ability to access external knowledge; . developing organizational capability to incorporate external knowledge to enhance core competencies (Daghfous, 2004); . understanding new external knowledge (Cohen and Levinthal, 1990); . chel and Raub, 2003); applying knowledge gathered to commercial ends (Bu . exploitation of such knowledge (Cohen and Levinthal, 1990); and . the ability to learn and solve problems (Kim, 1997). Institutional absorptive capacity can be limited by insight inertia and action inertia (Hedberg and Wolff, 2003) In the following sections drivers of both are introduced along with sources of leverage that might ameliorate dysfunctional aspects of each. Insight inertia Insight inertia appears when management does not observe and interpret cues from the external environment in time to determine and adjust institutional behavior to meet environmental or market place demands (Hedberg and Wolff, 2003). Learning under ambiguity (March and Olsen, 1975), . . . organizational members are not able to make sense of the environment or to explain why certain changes happened at all (Kierser et al., 2003, p. 610). Rhetoric associated with the positive or negative framing of reports about environmental activity, for example, contributes to learning under ambiguity. (Kieser, 1997). Drivers of insight inertia Assumptions, tacitly held (Nonaka and Takeuchi, 1995), guide how managers approach understanding of their external environment. The tacit properties of this type of knowledge make it hard to dene and recognize, harder to create in practice, and even harder to detect in research. Yet, many scholars regard tacit knowledge as the foundation of much competitive advantage in turbulent markets (Stopford, 2003, p. 267). The concepts of mental models (Kim, 1993) and theories of action (Argyris and n, 1978) illuminate why insight inertia might take hold. Scho More to the point, individuals carry mental models and institutions entertain shared mental models (Kim, 1993, p. 42). Mental models are the frameworks from which interpretations of the environment are derived. Shared mental models include organizational routines that have proven successful in the past in terms of explanatory power. Alternatively, theories of action explain the managerial relationships to the world, how they think of the environment, and how they perceive the environment in terms of opportunity and threats (Lakomski, 2005). Theories of action are necessary to the creation and transfer of knowledge (Weick, 1976). Sources of insight leverage A number of sources offer leverage to the manager seeking to compensate for insight inertia. Four are evident in the literature, and these are:

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(1) (2) (3) (4)

communities of practice; professional groups; agents of learning; and consultants.

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Community of practice . . . refers to groups of individuals in which professional knowledge is shared and created through the experience of working together (Berthoin Antal et al., 2003, p. 922). They share a common set of problems or a passion for a particular topic or issue which results in a deepening knowledge collectively held (Wenger et al., 2002, p. 4). Communities of practice cross boundaries and can be found within, between and among organizations. Communities effectively steward knowledge in part by creating technical jargon, specialized methods, and customized environments (Wenger et al., 2002, pp. 151-2). While knowledge moves relatively easily within a community, it moves between communities only with difculty (Lakomski, 2005, p. 90). Communities of practice must be fully aligned with the organization or they will fail to contribute all they can (Wenger et al., 2002). It will take effort, but valuable knowledge can be accessed through employees membership in communities of practice. As communities of practice, professional groups act as gatekeepers (Scarbrough and Swan, 2003) mediating and assimilating management knowledge. Sharing knowledge between groups and individuals from different professional backgrounds is more complex when it involves well-established communities (Hayes and Walsham, 2003). Agents of learning . . . accumulate, generate, and update both tacit and explicit knowledge . . . (Nonaka and Takeuchi, 1995, p. 152) potentially useful to the organization. Such individuals provide information and understanding necessary to remedy insight inertia. Friedman (2003) speculates that agents of learning are probably rare and possibly endangered in most environments. The research of and literature reviewed by Friedman (2003) reveal agents to be: . proactive, but reective; . having high aspirations while being realistic about limitations; . able to identify with their own organizations while remaining critical of those organizations; and . independent in outlook while cooperating with others. Learning agents assume real risk when taking on the role. For example, Frohman (1997) has found that agents of learning are not generally considered high potential personnel despite the fact that they actually do go far beyond their job requirements, but in individualistic ways. A study by Spreitzer and Quinn (1996) found career advancement among middle managers studied was positively correlated with conservative changes undertaken. Plateaued managers, on the other hand, were the ones most likely to make radical changes. To the extent that their jobs do not explicitly include a learning agent-like role, learning agents experience role ambiguity, role conict, or both. (Kahn et al., 1964) They can encounter frustration and unmet expectations which lead to cynicism and burnout (Friedman, 2003).

A nal remark might be made concerning the use of consultants when making sense of the external environment. Consultants can provide a great deal of insight under certain circumstances. However, hiring them to mitigate insight inertia carries its own risk (Berthoin Antal and Krebsbach-Gnath, 2003). For example, managers may feel the hired consultants have little worthwhile to provide. Alternatively, they may simply deny that problems under scrutiny even exist. Action inertia In contrast to insight inertia, action inertia appears after managerial observations of the environment are gathered. Action inertia arises when managerial response to environmental activity is too slow or the information gathered is inadequate enough to generate actions and results benecial to the organization. (Hedberg and Wolff, 2003) Here, as in the case of insight inertia, three interruptions in the learning cycle identied by March and Olsen (1975) and three recognized by Kim (1993) shed light on what is taking place. So far as March and Olsens (1975) contributions are concerned, role-constrained learning interrupts the learning cycle in cases of action inertia when individuals play a limited role related to the questions at hand and cannot reasonably act on the knowledge they have of the environment. Audience learning occurs when individuals change their behavior in response to knowledge acquired, but cannot persuade others to do likewise. Superstitious learning emerges when individuals draw incorrect conclusions about the impact of organizational actions on the environment and the results of organizational actions on the environment. Rhetoric associated with the positive or negative framing of reports about environmental activity contributes to superstitious learning (Kieser, 1997). Kim (1993) contributes three additional interruptions to the learning cycle broadly related to action inertia. The rst two involve the organizations memory and retentive capacity. Specically, situational learning interrupts the learning cycle when individuals solve problems through improvisation, but do commit successful applications to organizational memory. Fragmented learning appears when individuals learn, but that learning is not integrated into the organizational memory. It is typical in . . . very decentralized organizations that do not have the networking capability to keep the parts connected (p. 46). The third, opportunistic learning, interrupts the learning cycle and contributes to action inertia when policies, procedures, and rules cannot be adapted to a given circumstance. Drivers of action inertia Much of what managers know is left unsaid because that knowledge is tacitly held. (Sternberg, 1999) The use and transfer of individual tacit knowledge into communicable, explicit, organizational knowledge is often problematic . . . (Maier et al., 2001, p. 29). Managerial assumptions and premise controls held tacitly by management determine to a degree how well organizations ameliorate action inertia. Similar in inuence to theories of action and mental models discussed above, managerial assumptions and premise control suggest an explanation for why action inertia might materialize. Specically, management decisions typically dominate operations and the production of goods and services. Technology is making the working environment increasingly abstract. Working knowledge is contained in our heads and

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hidden from the explicit view of others. Control over intelligent systems and other sophisticated technology is maintained through orders, rules, regulations, policies and standard operating procedures. Premise controls are the banks containing this river and guiding it energy. Premise controls are often created when managerial psychosocial assumptions are incorporated into technological and organizational designs (Weick, 2001, p. 170). They can certainly contribute to action inertia. Either workers are allowed to make nontrivial decision regarding a course of action or they cannot. These premises may be unconsidered choices by managers, but that does not make them any less potent (Weick, 2001, p. 170). Managerial assumptions, as evidenced in premise control, carry an element of self-fullling prophecy within them. It becomes more plausible to link technology with determination by self-fullling prophecies when a sizable portion of the technology exists in the form of decision premises. Self-fullling prophesies are themselves decision premises, which become realized when they are treated as if they were true (Weick, 2001, p. 170). Sources of leverage over action inertia A number of resources are available to the manager seeking to address action inertia. Five available in the literature are illustrative, including: (1) tapping into appropriate knowledge markets; (2) enlisting the help of champions and intrapreneurs; (3) considering knowledge entrepreneurs and management; (4) accessing networks of learning; and (5) fostering a cosmopolitan culture. There is a knowledge market related to technology and technique both within and outside the organization. All knowledge markets have brokers (also known as gatekeepers and boundary spanners) with strong contacts with the organizational environment and abilities to communicate within their organizations (von Rosenstiel and Koch, 2003). In terms of network theory in general and social capital theory in particular, true knowledge brokers might be associated with rain makers because of their knowledge bases inside and outside the organization (Uzzi, 2003). This is the case because knowledge . . . is dynamically created in social interactions between individuals both within and across organizations (Nonaka et al., 2003, p. 493). Cross and Prusak (2003) concluded from a study that about 10 percent of managers across industries are boundary spanners and therefore potential knowledge brokers. Knowledge markets are imperfect as administrators quickly learn. Three factors result in knowledge market inefciency (Cross and Prusak, 2003). First, there can be incompleteness of information available. Administrators simply do not have maps to bring buyers and sellers together. They also do not know what the return on shared knowledge might be. Second, asymmetry of knowledge may be evident. In other words, some knowledge may be available in one department or one organizational level, but not in others. Finally, localness of knowledge suggests people will get information from their nearest neighbors. Satiscing (March and Simon, 1958), in other words, . . . people will buy whatever knowledge the person in the next ofce may have rather than deal with the effort and uncertainty of trying to discover who in the company may know more (Cross and Prusak, 2003, p. 457).

Champions and intrapreneurs also drive action. In particular situations, the knowledge holder (rather than the knowledge seeker) is the one motivated to accelerate the diffusion of knowledge to partners (Salk and Simonin, 2003, p. 255). Champions promote technology and methods of interest to them for their own sake. Frohman (1997) found that intrapreneurs are not necessarily seen as competent or the best performers in the organization. This may be the case because they are preoccupied by needs for achievement and personal autonomy. Management fashion setters (Scarbrough and Swan, 2003, p. 506) are always available promising techniques to solve organizational problems and insure sustained progress. The role played by knowledge entrepreneurs and their importance in promoting the spread of management fashion is of increasing importance (Scarbrough and Swan, 2003). Teaching races (Salk and Simonin, 2003, p. 255) sometimes result as fashion setters compete to promote particular management methods. Simple concepts are more readily diffused throughout organizations than the complex (Rogers, 1983). Management fashion is attractive because of its relative simplicity and ambiguity (Clark and Salaman, 1996) and vagueness (Cole, 1999). Ambiguity . . . increases the scope of an ideas diffusion (Scarbrough and Swan, 2003, p. 507). Vagueness encourages decision makers to assume broader application of a concept than may be justied (Cole, 1999). Precision in presentation and application of the methods offered are absent. The recipient assumes that the methods presented have wider application than they actually do. The danger is great . . . that new knowledge will be treated in an additive fashion, without regard for how it contradicts existing practices in the organization, or it might not be processed at all (Berthoin Antal and Krebsbach-Gnath, 2003, p. 473). Management fashion is for sale. Let the buyer beware. Concerning networks of learning, organizational knowledge is context-specic, relational and dynamic (Nonaka et al., 2003). It issues from social interactions between individuals and the corresponding network of relationships spanning the inside and outside of organizations (Sadler, 2003). It is difcult to erect the organizational architecture (Kay, 1993) and structure necessary to support those networks and relationships (Sadler, 2003). Networks . . . open access to various sources of information and offer a broader learning interface than hierarchies do, operational learning is viewed as being easier to promote in hierarchies than in networks, whereas networks are held to be more conducive to conceptual learning than hierarchies are (Lane, 2003, p. 703). Communities of practice and professional groups, described in the prior section, are found within, without, and in-between organizations. They both represent resources available to management related to networks of learning. Networks are not limited to these two forms, but are considered here to clarify what we have in mind. Be aware of the presence of networks of learning and use them as leverage points when addressing action inertia. Cosmopolitan culture and cosmopolitanism represent a mindset and orientation toward the outside world (Merton, 1957). Cosmopolitans orient themselves to reference groups outside the organization (Gouldner, 1957, 1958) and are attuned to novelty and unfamiliar behaviors (Ting-Toomey, 1999). The more outward looking and cosmopolitan administrative staff and employees are the more likely they are to search outside the organization for information. In sum, the cosmopolitanism of the receiver is an important attitude that can inuence the effectiveness of communication in global organizational learning. If a

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receiver at headquarters (or headquarters as a whole) is not interested in the external environment and not willing to engage with it, it is likely that she will ignore incoming communication as irrelevant to her local concerns, whether those are headquarters politics or knowledge produced at headquarters (Taylor and Osland, 2003, p. 223). Absorptive capacity and the zone of inertia Figure 1 illustrates the literature related to organizational inertia and absorptive capacity presented earlier. In the model derived, data emanates from the organizational environment positioned on the far left side which is interpreted by the organization. A heavy line passes from the organizational environment to institutional absorptive capacity and then to organizational initiative. This represents the ow of information and resultant learning without the distortion of interruptions. A feedback loop continues from organizational initiative to external environment indicating the reciprocal inuence of each on institutional operation. That heavy line linking organizational environment to absorptive capacity passes under and bypasses the zone of inertia. The term zone of inertia has been attached to this portion of the model to indicate the various factors inuencing organizational inertia. The key to the zone of inertia is the fact that there are interruptions in learning which effect institutional absorptive capacity and, ultimately, organizational initiatives. These interruptions result in insight inertia and action inertia as detailed earlier. Essentially, the model suggests that cues imitating from the organizational environment pass into a zone of inertia (shown within a line of dots and dashes). Interruptions in learning from environmental cues occurs in seven ways suggested by March and Olsen (1975) and Kim (1993), namely: (1) learning under ambiguity; (2) role constrained learning; (3) audience learning; (4) superstitious learning; (5) situational learning; (6) fragmented learning; and (7) opportunistic learning. These inuences variously cause organizational inertia as portrayed within the zone of inertia. Insight inertia results from learning under ambiguity and action inertia from the others. Theories of action and mental models held by organizational members drive insight inertia. Managerial assumptions and premise controls drive action inertia. The assumption of the paper, then, is that managers have the means available to leverage drivers of insight inertia and drivers of action inertia and, therefore, minimize inuences emanating from the zone of inertia. This is rooted in the belief that they also contribute to institutional absorptive capacity as shown in the model. Insight leverage, shown on the left, might be encouraged through the use of communities of practice, professional groups, and agents of learning as discussed above. Tapping knowledge markets, engaging champions and intrapreneurs and related methods outlined previously might also be considered when seeking action leverage. Both insight

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Figure 1. Absorptive capacity and the zone of inertia

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leverage and action leverage effect institutional absorptive capacity as well. All of these factors inuence and are inuenced by the absorptive capacity of the n, 1978), through which organization. Double-loop learning (Argyris and Scho underlying assumptions about behaviors are questioned, supports and nurtures organizational absorptive capacity and the process in general. It is highlighted with dotted lines. Ultimately, all affect the nature of organizational initiatives as they appear. Of course a feedback loop, designated by a heavy line, connects those initiatives with the organizational environment because of the results of those initiatives nd a home there. Conclusion This paper has proposed an exploratory model accounting for how inertia might emerge in organizations. Various means through which managers overcome such inertia have been suggested. The model suggests a number of basic propositions for future consideration: P1. P2. P3. P4. Interruptions in learning contribute to insight inertia within the organization. Interruptions in learning contribute to action inertia within the organization. Theories of action and mental models held by managers contribute to institutional insight inertia. Managerial assumptions and premise control mechanisms contribute to institutional action inertia.

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