12 -1 Organizational Theory The Nature of Organizational Learning Organizational learning — the process of improving organization member’s capacity to understand and manage the organization and its environment so that managers can make decisions that continuously raise organizational effectiveness.

12 -2 Organizational Theory There are two principal types of organizational learning strategies: Exploration — members search for and experiment with new kinds or forms of organizational activities and procedures. Exploitation — members learn ways to refine and improve existing organizational activities.

12 -3 Organizational Theory Learning organization — an organization that purposefully designs and constructs its structure, culture, and strategy to enhance and maximize the potential for organizational learning to take place Managers need to encourage learning at four levels: individual, group, organizational, and interorganizational

12 -4 Organizational Theory Individual-level learning — managers need to facilitate the learning of new skills, norms, and values so that individuals can increase their own personal skills and abilities. Group-level learning — managers need to encourage learning by promoting the use of various kinds of groups so that individuals can share their skills and abilities.

12 -5 Organizational Theory Organization-level learning — managers can promote organizational learning through the way they create an organization's structure and culture. Adaptive cultures value innovation and reward experimenting and risk taking. Inert cultures are cautious and conservative and discourage risk taking.

12 -6 Organizational Theory Interorganizational-level learning — organizations can improve their effectiveness by copying and imitating each other’s distinctive competencies. Systems thinking argues that in order to create a learning organization, managers must recognize the effects of one level of learning on another.

12 -7 Organizational Theory There are factors that can affect the ability of an organization to become a learning organization. One of the most important is related to the decision-making manager’s cognitive structure — the system of interrelated beliefs, preferences, values, and expectations used to define problems and events.

12 -8 Organizational Theory Research has identified several factors that lead managers to develop a cognitive structure that causes them to misperceive and misinterpret information. These factors are called cognitive biases because they systematically bias cognitive structures and affect organizational learning and decision making.

12 -9 Organizational Theory Cognitive dissonance — the state of discomfort or anxiety that a person feels when there is an inconsistency between his or her beliefs and actions Illusion of control — causes mangers to overestimate the extent to which the outcomes of an action are under their personal control

Organizational Theory Frequency — deceives people into assuming that extreme instances of a phenomenon are more prevalent that they really are Representativeness — leads managers to form judgments based on small and unrepresentative samples

Organizational Theory Projection — allows managers to justify and reinforce their own preferences and values by attributing them to others Ego-defensiveness — leads managers to interpret events in such a way that their actions appear in the most favorable light

Organizational Theory Escalation of commitment — leads managers to remain committed to a losing course of action and refuse to admit that they have made a mistake These factors inhibit organizational learning, but there are also several ways in which an organization can overcome their effect.

Organizational Theory Strategies to promote organizational learning: Listening to dissenters Converting events into learning opportunities Experimenting

Organizational Theory Strategies to promote organizational learning: Increase the breadth and diversity of the top management team Use devil’s advocacy and dialectical inquiry to evaluate proposed solutions Develop a collateral structure

Managing Learning Organizations How to Streamline Organizational Decision Making –Downsize –Reduce management layers –Establish miniunits How to Cultivate Employees’ Personal Mastery –Provide continuous learning opportunities. –Foster inquiry and dialogue. –Establish mechanisms to ensure that the organization is continuously aware of and can interact with its environment.

Creating a Learning Organization Aspects of the ideal learning organization Typical behaviors of this aspect Results of these behaviors Blocks to achieving these results Measures of progress EXAMPLE: Employees feel the work they do has meaning They display energy and enthusiasm when they work The team is more motivated and new ideas are generated There is a lack of clarity on how tasks help fulfill mission Employees talk about how they are fulfilling an important mission Workbook Activity