According to Slater and Narver (1995) organizational learning is the organizational process of acquiring new information that results in new knowledge creation and ultimately leads to a change in the behaviour of people in the organization. Understanding knowledge generation processes and integrating of organization learning in company’s strategy can help managers in strategic design. In this case the benefits derived can be two-fold: on the one hand it is possible to enhance strategy development by leveraging on the existing and future knowledge, while on the other hand manager can develop such course of actions that would foster knowledge creation and innovation as well as stimulate interaction among units and knowledge dissemination.
Organizational knowledge could be both explicit and implicit, and the two types of knowledge are closely related. Tacit knowledge is the most delicate type of knowledge and it is derived from the experiences as well as imagination of individuals within the organizations. It can be created and developed both in groups and individually, through sharing within the organization and through the interaction with external stakeholders. Explicit knowledge is being transferred into tacit by the process of assimilation.
Managers usually perceive strategy-making as a double-spiral of knowledge creation. The first one embodies knowledge creation that is responsible for strategic action and “reflection-on-action”. New knowledge creation is essential for the organization as without it the company may stagnate by relying solely on existing knowledge and know-how that loses competitiveness in the market. Engagement in strategic action leads to socialization of knowledge, while externalization, internalization and combination could be observed during reflection-on-action process. Tacit knowledge creation occurs in two ways: through experiments and through joint projects. Some of the strategy formation processes also include sub-processes that provide feedback on the failures, thus generating learning. This knowledge is further assimilated through conceptualization, systematization and assimilation. The first sub-process refers to creating concepts and models from a range of experiences. Systematization step refers to combining various explicit concepts and models into a knowledge system. Strategic imagination plays equally important role in strategy creation. It is possible to distinguish 4 steps of organizational imagination process: emergence of idea, externalization, consensus, and commitment. The driving forces for idea externalization are rewards, recognition and learning that employees receive in case their idea is successfully adopted, therefore managers should incentivize employees to demonstrate more imagination and to promote idea externalization. Knowledge transmission is also an important factor that has to be facilitated by the strategy. Factors to stimulate knowledge transmission are the relationships (both formal and informal) as well as organizational identity that is manifested in values and shared understanding.
Although effective strategies can largely facilitate organizational learning, in some cases learning is impeded by company’s actions. Firstly, the vision or the identity of the company can play a dual role. It can both facilitate learning by selecting only the relevant information and hamper knowledge creation by limiting the scope of knowledge that the organization deems appropriate. Secondly, major failures prevent learning as companies erect barriers against new actions and tend to remain passive in strategy development. Major successes may also harm learning as it blinds managers to the dangers and weaknesses of the environment. Lastly, excessive accumulation of information may become a hindrance for growth, as it becomes harder for companies to manage it. (Bawden et al., 1999)
Organizational learning is rarely a linear process that exists separately from organizational development. Therefore, managers should pay careful attention to knowledge management and learning in developing company’s strategies, as there is a strong reciprocity between organizational learning and company’s growth and profitability.
References
Bawden, D., Holtham, C., & Courtney N. (1999). Perspectives on information overload. Aslib Proc New Inf Perspect, 51(8), 249–55.
Slater , S., & Narver , J. C. (1995). Market orientation and the learning organization. 59(3), 63-74.
