Learning as Strategy; From Hype to Balance?

Living Knowledge working paper

Arne Carlsen
Bjørn Haugstad

INTRODUCTION
Learning and knowledge management was the mantra of organizations in the 90s. The combined
abilities to identify, acquire, create, share and utilize knowledge were by practitioners and
academics alike praised as the ultimate sources of competitive advantage. There are countless
approaches to this in the literature – ranging from the high level rhetoric of “learning
organizations” to nitty gritty details of “technologies for knowledge management. Practitioners
and consultants have a tendency to uncritically applaud knowledge and learning as absolute
positives, inviting indulgent head shaking from skeptical academics, who in their turn are more
occupied with questions of why learning often fail, refraining to build practical schemes. Added
to this is a confusing terminological jungle with a number of competing conceptual frameworks
for the same phenomena.

The purpose of this paper is to do a brief, introductory exploration of the relationship between
organizational learning and strategy formation in firms. When is learning strategic, and in what
way? We will claim that equating learning with strategy is a mistake, and that the concept of
learning as an end in itself is problematic. All organizations learn all the time, and unlearning is
often as important as learning.

We start the discussion by a brief overview of some of the concepts underpinning the mantra of
organizational learning. We focus on what we choose to call learning muscles; a set of practices that
go by names like “dynamic capabilities”, “meta-competencies” and “modes of knowledge
conversion”. These learning muscles are in turn enabled by certain organizational qualities; the
traits of learning organizations. We then contrast these ideals by discussing the typical myopia of
organizational learning and comment on some of the tradeoffs faced by firms who want to excel
at learning.

We end the note by suggesting that for learning to be truly strategic, principles of balance need to
be highlighted. This is far from straight forward and entails much more than “adopting a business
perspective on learning”. Learning as strategy is an artful walk between a number of opposing
considerations.
LEARNING MUSCLES
Learning practices go under many names. The work of Nonaka and Takeuchi (1995) and their
concepts of organizational knowledge creation have been much praised. To their typology of
tacit, explicit, individual and collective knowledge, Nonaka and Takeuchi associate 4 modes of
knowledge conversion (knowledge creation):

- Socialization; from tacit to tacit knowledge

- Externalization; from tacit to explicit knowledge
- Internalization; from explicit to tacit knowledge
- Combination; from explicit to explicit knowledge
See figure 1 for an illustration. The key here is to link the processes of knowledge creation (learning
really) to the specific types of knowledge.

Tacit knowledge To Explicit knowledge Dialogue

Socialization Externalization Socialization Externalization

Tacit creating tacit conversion from tacit
knowledge knowledge through to explicit knowledge
shared experience Linking
Field Explicit
From Building Knowledge
Internalization Combination
conversion of explicit creation of new
Explicit knowledge to tacit knowledge from
knowledge knowledge explicit knowledge Internalization Combination

Learning by doing

Epistemological
dimension Externalization
Combination
Explicit
knowledge

Tacit Socialization
knowledge Internalization
Ontological
dimension
Individual Group Organization Inter-organization

Knowledge level

Figure 1 Knowledge creation (Nonaka and Takeuchi, 1995)

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In line with Nonaka and Takeuchi, but with much less direct links to the specifics of knowledge,
many authors have commented on the generic capabilities of firms to absorb and utilize
knowledge. Christensen (1994) distinguishes between two broad types of capabilities;
“reproductive” and “dynamic” capabilities. The former exploit given resources and capabilities,
and learning is “experience-based” and strongly path-dependent. The latter promote innovation
and the creation of new routines and capabilities, and learning is “experimental” and R&D-based.
A conceptual relative to this classification is given in table 1 below.

Generative capabilities The ability of the company to create knowledge, new ideas and
thereby, opportunities for growth.
Appreciative capabilities The ability of the company to detect emerging knowledge areas, make sense
of their strategic significance and extrapolate into future business areas
Absorptive capabilities The ability of the company to absorb new knowledge and exploit it through
complementary knowledge areas or assets.
Table 1 Organizational capabilities (Välikangas and Carlsen 1999)

While recognizing these first two approaches to knowledge creation and learning as valuable1, it
could be argued that they are both quite high level; What specific practices in firms are we referring
to? Table 2 below is an attempt to answer this2. Our focus on practices reflects a view that
learning in firms is situated and mediated by activities (Wenger 1998). These practices are the
“learning muscles” of a firm. Klein (1998) presents a similar argument.

1 Other particularly interesting examples include the works of Dierickx (1989) discussing the strategic value of
organizational learning processes, and the work of Lei et. al. (1996) who have a good conceptualization of the
links between core competencies and organizational learning.
2 This framework was built for a specific purpose - to investigate how research projects might stimulate learning in
firms, and is not meant as a complete classification of learning practices as such. Our argument for trying to specify
practices beyond general mechanisms still stands though.

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Categories Practices Explanation
External Acquisition of “raw” Practices of recruitment of new employees and
networking and nowledge purchasing of new machines, software and equipment.
knowledge External training and Practices of training employees in courses run by
acquisition research persons external to the firm. Collaboration with R&D
and educational institutions.
Value chain collaboration Practices of collaboration with customers, partners,
suppliers and R&D/educational institutions
Internal Active experimentation and Practices of experiential learning geared at continuos
knowledge reflection improvement of existing processes. Process analysis
creation and and quality circles are examples.
reuse Managing development Practices of initiating, defining, managing and
projects implementing the results from one-of-a-kind
development projects
Knowledge representation Practices of representation of knowledge in a wide
and storage sense, both through material and immaterial objects.
Internal training and Practices of exchanging and sharing knowledge within
dissemination the firm, through mentors, informal talks, on the job
training, internal courses or by technical tools.
Linking knowledge and Practices of recognizing, understanding and imagining
Knowledge strategy the strategic value of knowledge and the knowledge
strategizing demands of new strategies
Valuing knowledge Practices of measuring the value of knowledge assets
and of pricing knowledge services
Table 2 Learning muscles as practices for learning and knowledge creation (Carlsen 1999)

LEARNING ORGANIZATIONS
How are learning muscles embedded in organizations, and what are the enabling conditions for
continuous learning and knowledge creation in firms? Table 3 below summarizes three major
contributions on characteristics of a learning organization. Arie De Geus and Peter Senge are
both often credited with being the origin of the concept of the “learning organization”. The
Japanese professors Nonaka and Takeuchi, referred to a number of times previously, are
probably the most widely recognized and cited of recent contributors to the field. As can be seen
from the table – there are a number of common themes. All three emphasize the importance of
sensitivity to changes in the environment, shared visions, stepwise learning through
experimentation and organizational decentralization and autonomy.

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Peter Senge (1990);
The 5 disciplines
Personal Mastery;
Visioning, exploiting creative and
emotional tensions, confronting
unempowering beliefs
Team learning;
Collective intelligence and alignment,
balancing dialogue and discussion,
overcoming defensive routines
Shared visions;
Building and committing to shared
visions, fostering commonality and
partnership
Mental models;
Planning as learning, love of truth and
openness, balancing inquiry and
advocacy, challenging underlying
beliefs
Systems thinking;
Nonaka and Takeuchi (1995);
Enabling conditions
Fluctuation and creative chaos;
Open attitude towards the
environment, periodic breakdown of
routines and frameworks, purposeful
ambiguity and reflection in action
Redundancy;
Intentional overlapping of
information, functions and project
stages; regular sharing of frameworks,
job rotation
Intention;
Collective commitment to
organizational intention and visions,
both value-laden
Requisite variety;
Internal diversity in backgrounds and
approaches, multi-skilling, equal
access to information
Autonomy;
Arie De Geus (1997)3;
Basic characteristics
Sensitivity and Adaptiveness;
Perception of signals of change,
memorizing multiple futures,
commitment to change, playing and
simulations
Evolution;
Conservatism in financing,
redundancy to exploit new
opportunities, distribution of power
Cohesion and identity;
A company’s innate ability to build a
community and a persona for itself.
Managing for longevity, building trust
and common values
Ecology and Tolerance;
Tolerance for new ideas, diversity
and experiments
Balancing tolerance and cohesion
Managing through step-wise growth,
autonomy and experiential learning

Holism and interconnectedness, Autonomous individuals and groups,

balancing processes, reinforcing self-organizing teams, holographic &
feedback, understanding causalities autopoietic systems.
and underlying patterns

Table 3 Characteristics of the learning organization – comparison of 3 approaches

There are also important differences as each contribution has its own strength. De Geus has a
particularly interesting discussion of the role of organizational identity and “persona” as a basis
for long-term survival and growth. His background as head of corporate planning in Shell has
also lead to unique insights into how firms can prepare for change through “memorizing multiple
futures”. Senge’s concept of “systems thinking” is a well-known cornerstone of his work.
However, we find his discussion on how one identifies and overcomes underlying beliefs and
barriers to learning, whether on a individual or organizational level, as particularly strong. In this
Senge draws heavily on the work of Chris Argyris and Donald Schön (1978). Nonaka and
Takeuchi provide fascinating stories of how the general conditions enable knowledge creation in
daily activities. Their observation about the importance of redundancy is original, and their
discussion of the role of tacit knowledge in creativity and bottom up innovation is unequaled4.

3The labeling of the four categories is our interpretation. De Geus do not use the exact same formulations or
explanations of characteristics in his book as in his Harvard Business Review article.
4Readers should be aware that these enabling conditions for knowledge creation are only a modest part of the work
of Nonaka and Takeuchi. They offer a range of other insights into management and organizational structure that we
have not brought up.

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THE MYOPIA OF KNOWLEDGE AND LEARNING
We all understand more or less intuitively that learning can be a painful process fraught with
logical difficulties and emotional tensions. Generalizations from experiences and understanding
causalities of the past can be hard, leading many firms to draw wrong conclusions both about
what happened and what one can learn from it5. Organizations also, for a variety of reasons, tend
to overlook failures as a source for learning.

We are despite such difficulties taught from early childhood that learning is in itself inherently
good, something one should strive for at all times. And as mentioned, there is a widespread
assumption in the business world that organizational learning is an absolute positive, and that
learning equals competitiveness. Is this really true? Always?

Not so. Although the ability to learn is fundamental to building competitive advantage and
thriving in a rapidly changing environment, it also has its downside. Not all learning is good for a
firm the same way not all knowledge is “true” or relevant. First, the concept of learning as an end
in itself overlooks the possibility that an organization might be learning the wrong thing, e.g. a set
of practices that has no or negative value. Learning from a successful past frequently lures
organizations into “competence traps” where they are stuck when the environment changes –
improving themselves to obsolescence. Second, a lack of success might trigger experimentation
in such frequencies that no commercial exploitation of what is learned is possible. One of the
keys to desirable learning is thus to be able to strike a balance of learning foci and learning sources.

Välikangas (1994) distinguishes between three principally different learning sources:

1. Learning from the past (experiencing)6, e.g. learning from organizational experience in a process
of trial and error. Reflection and feedback are necessary ingredients.
2. Learning from the future (imagining), e.g. learning by a process of simulation, building scenarios
and “dreaming”. Search and experimentation is the essence of such learning, and imagination
can enhance the value of singular experiences or unique signals of change from the
environment7.
3. Learning from the present (imitating), e.g. processes of imitating successful behavior of
competitors, learning from demanding customers or from suppliers (which is indirectly often
learning from competitors).
Flood and Romm (1996) discusses three different learning foci in their book “Diversity
Management”:

5 Much of this section draws on a famous paper by Levinthal and March (1993) where the “myopia of organizational
learning” is discussed.
6See also Heijden (1998) conceptualizing strategic learning as a mix of approaches fitting neatly into the stages
of Kolb’s (1991) experiential learning model.
7An interesting recent contribution here can be found in (Scharmer 1999) who talks of the merging discipline of
presencing as the organizational capability of “sensing and actualizing emerging futures”.

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1. “How-learning” is concerned about doing things the right way. TQM and BPR are typical
examples.
2. “What-learning” is concerned about doing the right things, to question what the organization
should deliver, to which customers, i.e. future business opportunities.
3. “Might/right-learning”8 is concerned about the relationship between power, ethics and rewards;
what is right, who are rewarded when things are going well and whose knowledge are
developed.
The purpose of listing these learning foci and sources is to point to the fact that two firms might
benefit from totally different learning strategies depending on the business situation they are in.
And there are a variety of ways in which learning efforts can be unproductive. The value of
organizational learning must thus be linked to some kind of business goal, be it profits, customer
satisfaction, contentment of employees or long time survival.

Another main descriptor of organizational learning is at what level it takes place. We are not
thinking about the difference in learning and learning to learn (so-called deutero-learning), but of
the level of self-scrutiny and emotional intensity that learning takes place. The distinction
between single and double loop learning from Argyris and Schön is well known and widely
accepted9. We doubt however that the implications of this theory have reached many firms, or
researchers for that matter. We tend to think of learning in a normative manner, striving for more
rational behavior through analysis and collective action. But the behavioral patterns associated
with organizational double loop learning, or the attempts of avoiding it, has as much to do with
emotions as with rational analysis. Especially painful is the unlearning of the old habits,
organizational incompetencies, rigidities and defensive routines that have been accumulated over
time. And what is termed “learning activities” by members of an organization may actually be a
smokescreen and a barrier set up to avoid harder issues. Argyris and Schön (1996, p 281) call this
the “learning paradox”:

1. Problems are identified in discussable domains (e.g. organizational structures and information
systems) and the domains that are not discussable are bypassed, and the bypass is covered up.
2. Solutions are generated to deal with discussable features of the problems. Important features in the
undiscussable domain are excluded.

8 This type of organization learning might seem “exotic” or even unnecessary if one do not question the authority of
owners and top management in a company and their power relations to other stakeholders. But it is increasingly
naive not to do so, as knowledge resources gain importance and influence. And this is not an entirely new
phenomenon. The social identity and persona of a company, identified by Arie De Geus as perhaps the most critical
factor behind long term survival (se next section), hinges on these questions.
9 Single loop learning means changing actions to improve performance within a set of organizational strategies,
norms and underlying assumptions, whereas double loop learning implies subjecting also the underlying norms and
assumptions to change. By these definitions a “learning organization” supports both single and double loop learning
on a continuous basis. Argyris and Schön (1996) point out that such an ideal learning system has never been
identified – their concepts represent a move towards the ideal.

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3. During the early stages of intervention, the solutions do appear to correct some organizational errors. Most of
the solutions are single loop in nature, and as the results are less than expected the
importance of the undiscussable issues become increasingly apparent.
4. The participants begin to experience a double bind: If they face up to the issues they have treated as
undiscussable, they will also have to make public how they have bypassed them and covered
them up.
5. The participants may deal with their personal causal responsibility by denying it or by assigning it to the
domain of externalities (factors outside the control of the firm).
Consequently, the learning processes at one level might create barriers to more fundamental
learning. Our own experiences from development processes in small firms (Carlsen and Skaret
1997) partly confirm this: Many of the really important opportunities or problems facing firms
have deep roots in culture, assumptions and organizational practice that tend to be either
indescribable or undiscussable. The processes necessary to unbundle such knots often involve a
lot of time, failing and emotional turmoil. On the other hand, sometimes fundamental learning
seem to take place as a consequence of small, practical actions that trigger learning in ways not
foreseen a priori, a phenomenon also noted by Argyris and Schön. The relationship between
different learning processes and their outcome is thus poorly understood and hard to predict.

Figure 2 below sums up the dimensions and levels of organizational learning discussed in this
section. All three learning foci (what-learning, how-learning and might/right-learning) can be
combined with all the three learning sources (the past, the future and others) and be manifest
both as single- and double-loop learning.

What-
learning

Sources:
The past
The future
Others

Might/right- How-
learning learning

Figure 2 Dimensions and levels of organizational learning

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THE ART OF BALANCING
Our purpose in emphasizing the myopia of learning and knowledge in organizations is not to
suggest that most learning efforts are bound to fail or be unproductive. But not any kind of
organizational learning, or any kind of learning organization for that matter. All organizations
learn all the time. The question is for what purpose, how and for whom? The value of organizational
learning must thus be linked to some kind of business goal, be it profits, customer satisfaction,
contentment of employees or long time survival.

There is a fundamental difference in managing knowledge and organizational learning for the
purpose of exploiting current processes/products and services and exploring new ones. At first
glance this might seem like a trivial observation, or even wrong: Could not the sum of many
incremental process innovations in a business area over time amount to a radical innovation and
lead a firm into completely new business areas? True – and we have observed many such growth
patterns in small Norwegian firms (Carlsen and Skaret 1999). But the main point is that learning
and knowledge management entails important and fundamental tradeoffs in structure, culture,
personnel and strategy. Building schemes and incentives that facilitate efficiency often means
institutionalizing corporate rigidities that inhibit the pursuit of new markets and products (March
1991).

Likewise, the structures and cultures that promote reuse of knowledge and efficiency and those
that promote new knowledge creation and innovation are not the same. Strong ties are needed in
order to facilitate knowledge reuse, with direct, frequent and reciprocal contact. But such
organizational strongholds or tight networks are not necessarily good for innovation, where the
ability to expand the boundaries and create space for new knowledge is essential (Välikangas
1997). The basic rule is; Weak ties listen and expands the boundaries, strong ties transfer
knowledge. In between are the innovation centers – the Red Hot Zones of knowledge creation.

There are similar tradeoffs in strategic decisions, not just related to where a company should
spend its development resources, but in the day to day choice of projects and customers. Each
customer or project has a long-term learning potential, small or large, as well as a short term
profit potential. Given that much learning takes place in customer interaction, the choices of
projects are crucial to innovation. This is especially true for small firms who work as
subcontractors on a project to project basis.

Learning as strategizing seems to be an art of balancing between opposing and often

contradictory considerations. Between exploring the new or exploiting what is. Between
accumulating knowledge or forgetting. Between learning from the past or from the future. And
most of all balancing between values and identities of different communities within the firm.
Table 4 below sums up some of the dimension and balancing points that firms should consider,
if learning should be strategic.

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Dimensions of learning Balancing points
Sources The past, the present and the future.
Levels Single and double loop, learning how to learn
Foci What-learning, how-learning, for-whom learning
Overall purpose Learning as exploitation of existing knowledge and
markets versus exploration of the new.
Search trajectory Learning as complimentary versus spearhead
search. Adaptive walks and long jumps.
Time frame Learning focused at the short, medium and long
term
Table 4 Learning dimensions and balancing points

Or should they? In a brilliant paper on robust adaptive strategies Beinhocker (1999) argues that
firms need to diversify their strategies along three dimensions; length of time frame, risk and
relatedness to current business, through a mix of “adaptive walks and long jumps in an
evolutionary fitness landscape”. Consequently we can argue that this diversity need to be
reflected in a wide variety of learning efforts. But Beinhocker builds his argument around
Microsoft as a case. We hold that most major contribution on learning organizations implicitly or
explicitly use large diversified multinationals as their empirical basis. This is an important
limitation with regards to the relevance of such theories in Norwegian firms. When De Geus
(1997) describes the “persona” of a company, he is referring to huge conglomerates with life-
spans over a 100 years. He raises interesting questions that might be relevant also for small firms,
e.g. we can perhaps talk about a small firm persona derived from a societal role in a local
community. But chances are we would emphasize other aspects than these. Large multinationals
firms compete in the sport of biathlon where fully developed and neatly balanced learning
muscles are needed. We propose that the learning muscles of smaller firms more equate to the
specialized physique of a triple jumper, a long distance runner or a discus thrower. We should
build knowledge of many, not just one, ideals of learning firms, reflecting the diversity of firms
and markets. The view of strategy as an art of balanced learning could then be an inroad into
understanding learning mechanisms (muscles) in firms relative to the specific conditions in their
business environment.

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