The Learning Organization 14:6 Systems Thinking and Systems Dynamics 9781846636479, 9781846636462

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ISSN 0969-6474

Volume 14 Number 6 2007

The Learning Organization The international journal of knowledge and organizational learning management The relevance of systems thinking and systems dynamics Guest Editor: Peter Smith

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The Learning Organization

ISSN 0969-6474 Volume 14 Number 6 2007

The relevance of systems thinking and systems dynamics Guest Editor Peter Smith

Access this journal online _______________________________ 467 Editorial advisory board _________________________________ 468 Editorial ___________________________________________________ 469 Guest editorial ____________________________________________ 471 Systems thinking: a case for second-order-learning Jamshid Gharajedaghi____________________________________________

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Some new theoretical issues in systems thinking relevant for modelling corporate learning Gianfranco Minati ______________________________________________

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Learning to think systemically: what does it take? Carol Ann Zulauf _______________________________________________

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Light bulbs and change: systems thinking and organisational learning for new ventures Misha Hebel ___________________________________________________

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CONTENTS

CONTENTS continued

Insurance sector dynamics: towards transformation into learning organization Gopalakrishna Barkur, K.V.M. Varambally and Lewlyn L.R. Rodrigues ____

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Change in(ter)ventions to organizational learning: bravo to leaders as unifying agents Roland K. Yeo__________________________________________________

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EDITORIAL ADVISORY BOARD

Dr Ivan Blanco Emporio State University, Kansas, USA

Richard McCarthy Quinnipiac University, Connecticut, USA

Dr Nick Bontis School of Business, McMaster University, Canada Dr Manfred Bornemann Intangible Assets Management Consulting, Graz, Austria Professor Stephen Bushardt University of Southern Mississippi, College of Business Administration, Hattiesburg, USA

David Megginson Sheffield Business School, Sheffield Hallam University, Sheffield, UK Snejina Michailova University of Auckland, NZ ¨ rtenblad Anders O School of Business and Engineering, Halmstad University, Sweden

Professor Francisco Javier Carrillo Center for Knowledge Systems, Technologico de Monterrey, Mexico

Rajesh K. Pillania Institute for Integrated Learning in Management, New Delhi, India

Dr Steven Cavaleri Professor of Management, Central Connecticut State University, CT, USA

Dr Michael D. Quinn Principal, WorkPlace Cornerstone Group LLC, Colchester, CT, USA

Professor Colin Coulson-Thomas Professor of Direction and Leadership, University of Lincoln, UK

Dr Paul Tosey University of Surrey, Guildford, UK

Professor Stephen A.W. Drew School of Management, University of East Anglia, Norwich, UK Dr Joseph Firestone Executive Information Systems, Alexandria, VA, USA Laura Freebairn-Smith Research Associate, Yale School of Medicine and Senior OD Consultant, Yale University Libraries, Yale University, New Haven, CT, USA Dr Lynn Godkin Professor of Management, Program Coordinator for the Small Business Development Center, Lamar University, Beaumont, Texas, USA Dr Jim Grieves University of Hull, Scarborough Campus, North Yorkshire, UK Professor Samuel K.M. Ho Dean, Hang Seng School of Commerce, Hong Kong Neil M. Johnston Orbis Learning Corporation, Los Altos, California, USA

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Professor Derek Walker Faculty of Business, RMIT University, Melbourne, Australia Dr Kate Walsh Assistant Professor of Organizational Management, Cornell University, New York, NY, USA Dr Judith White School of Business, University of Redlands, Redlands, CA, USA Karl M. Wiig Chairman, Knowledge Research Institute Inc., Arlington, TX, USA Professor Barry Wisdom Missouri State University, Springfield, Missouri, USA Professor Lyle Yorks Columbia University, New York, NY, USA Dr Ortrun Zuber-Skerritt Adjunct Professor, Griffith University, Brisbane, Australia

Editorial Another year This issue brings to close my second year as Editor for The Learning Organization (TLO). During this year I have made an effort to include more general organizational knowledge management topics in the mix of articles as I feel that knowledge management is a necessary component of learning organizations. This is reflected in the change of the subtitle from An International Journal to its current form: The International Journal of Knowledge and Organizational Learning Management. This year over 43 original articles were submitted, which underwent a double-blind review process with a minimum of two external reviewers along with the Editor reading and commenting on each article submitted. Of these: 2 per cent were accepted outright, 24 per cent were conditionally accepted (indicating that changes were required to be made but without undergoing additional review other than by the Editor), 44 per cent were sent back for major revisions, and 29 per cent were rejected outright either due to quality or lack of fit with the scope of the journal. While last year, Volume 13, only had a single special issue on “Facilitating organizational learning and KM” by our SI editor Peter Smith, this year we have increased that number to three. The special issues have been on “Communities of practice – One size fits all” by Pemberton and Mavin, “On sharing knowledge – Socio-technical approaches” by Ramirez and Coakes, and “The relevance of system thinking and system dynamics” again by Peter Smith, which is the current issue. Next year hopefully we will have at least two special issues for the readership with one planned on “The new learning organization” by Ortenblad and another to be determined. Unfortunately, I have been informed by Peter Smith our SI Editor that he will be leaving the position at the end of this year and a new SI editor will need to be appointed. Let’s all extend to Peter our sincerest thanks for the terrific job he has done while acting as TLO’s SI editor. As always, the quality of the journal is due to both my fellow members of the Editorial team: Sharon Mavin, the European Area Editor, and Peter Smith; the input and reviews I receive from my Editorial Advisory Board; and the tremendous reviews voluntarily given by our outstanding team of reviewers. I wish I could name you all, but space does not permit. As I started last year and will continue this year, I would like to name a few individuals who have gone above and beyond the call of duty in performing reviews and select a Reviewer of the Year, who will receive a certificate and a small cash award. As before, the award is made based on service to TLO through reviewing which includes both the quality of the reviews received and the quantity of reviews performed. Those individuals who performed multiple reviews during this issue and had very high quality reviews are: Deborah Blackman, David Megginson, Dave Snowden, Maxim Vronov, Dianne Waddell, Kate Walsh, Judith White, and Josephine Lang Chin Ying. Judith White performed the greatest number of reviews during the year and has my personal appreciation for her hard work. Again each of these reviewers provided very high quality reviews that I and the authors felt

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significantly helped the authors to improve their articles. The choice for a single reviewer of the year was extremely difficult and in fact impossible this year and so I have decided to award a joint Reviewer of the Year Award this year. The TLO Reviewers of the Year for Volume 14 are: Dave Snowden and Kate Walsh. Thanks again to these two exceptional individuals and also to all of my reviewers who really make this job satisfying. Steven Walczak

Guest editorial The relevance of systems thinking and system dynamics In one of the first papers I had published in TLO (Smith and Saint-Onge, 1996, p. 5) it was asserted that “Predictability is still the basis on which most organizations are run.” That article, like a host of other publications by innumerable authors, looked forward with enthusiasm to the late 1990s and the end of the prevailing view of the world as a giant piece of clockwork. After all, much earlier, Ackoff had stated that we had begun to move from the “Machine Age” to the “Systems Age” (Ackoff, 1981, pp. 6-15), and Senge had very widely popularized the notion of “A shift of mind” and “Systems Thinking” as the cornerstones of The Learning Organization (Senge, 1990, pp. 12-13). Well, here we are in 2007, and I am still prepared to assert that “Predictability is the basis on which most organizations are run”, and furthermore, that much of today’s organizational distress can be traced to that mechanistic view. I have always been convinced that Senge had it right when he wrote that “metanoia – a shifting of mind” was a prerequisite for adoption of a systems approach by individuals and collectives (Senge, 1990, pp. 68-92). For example in the previously referenced paper by Smith and Saint-Onge (1996) we described a case that strongly supported Senge’s view, demonstrating the importance of changing mindsets prior to systems interventions, and the means to accomplish this end. Unfortunately, as a management consultant of many years, such cases have convinced me that human beings in general are not naturally systems thinkers. In other words, the wide adoption of, or even appropriate recognition of the power of system dynamics will always be an uphill battle. Recently the Systems Dynamics Mailing List (2007) carried a heated dialog concerning “The Death of System Dynamics?” with views pro and con. Such questioning is not new – I have a copy of an excellent article by David P. Norton written in 1991 entitled “Whatever Happened to the Systems Approach” (I have a copy of the article but not the source). It may well be therefore that I am preaching only to the converted with this Special Issue; however, I felt it timely to try to do my small part to underline once more the relevance I feel system dynamics holds for the overall success of all organizations, not just learning organizations, and indeed for the quality of the lives we live. The six authors contributing papers to this Special Issue clearly not only agree with me that systems thinking and system dynamics has relevance for organizations, but they have set out to prove it. The first paper is by Jamshid Gharajedaghi, a longtime colleague of Russel Ackoff, and since I had the pleasure of working with Jamshid in the past, someone for whose insight and experience I have the greatest regard. Jamshid’s paper “Systems Thinking, A case for second-order-learning” is quite clear in its proposition that the roots of today’s inability to deal appropriately with change are buried in the shortcomings of a still prevailing analytical culture. The second paper by Gianfranco Minati “Some new theoretical issues in Systems Thinking relevant for modelling corporate learning” first explores fundamental aspects introduced in the literature in order to establish a general rather than generic

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usage of the systems concept. Issues of definition and theoretical frameworks are then clarified before introducing new theoretical challenges for systems thinking. Gianfranco builds on these in proposing new theoretical frameworks relevant to learning, for example in learning organizations In our third paper “Learning to think systemically – what does it take?” Carol Zulauf most effectively tackles the critical question that was central to my editorializing above. Carol describes one of the first attempts to actually gather data on how people learn to think systemically. Her action research approach involved collecting and reading 120 journals kept by graduate students in a systems thinking course. Carol’s paper concludes that systems thinking can be taught, and that indeed benefits are realized. “Light bulbs and change – systems thinking and organisational learning for new ventures” by Misha Hebel is presented next. In this paper Misha explores the practical worth of different “tried and true” systems thinking tools that she feels may be dismissed by academic researchers as theoretically old fashioned. Misha demonstrates the contemporary power of such tools when emphasis is placed on both a simple application of the tools together with more complex processes of reflection learning. A means to convert tacit knowledge into an explicit form is described by Messrs. Gopalkrishna, Varambally, and Rodrigues in our fifth paper “Insurance sector dynamics: towards transformation into learning organization”. By enabling the knowledge management component of an organization to better act as a central repository of organizational knowledge, making available best practices, past experience, and problem solutions for timely common use, their research minimized a critical “service quality gap”. Last, but in no way least, in the paper “Change in(ter)ventions to organizational learning: Bravo to leaders as unifying agents” Roland Yeo examines the relationship between change interventions and organizational learning in a large-sized Singapore manufacturing firm that had implemented change interventions for two years. In this very practical paper Roland identifies the processes through which team learning develops; the factors that affect organizational learning; and the influences of such factors on organizational effectiveness. The year 2008 marks a milestone for TLO being its 15th publishing anniversary; systems thinking and system dynamics have been around for a lot longer than this journal, but it would be gratifying to see all three flourishing and seen as relevant for very many years into the future. As always your comments are very much appreciated. Peter Smith Consulting and Special Issues Editor References Ackoff, R.L. (1981), Creating the Corporate Future, John Wiley & Sons, Chichester. Senge, P.M. (1990), The Fifth Discipline, Doubleday, Garden City, NY. Smith, P.A.C. and Saint-Onge, H. (1996), “The evolutionary organization: avoiding a Titanic fate”, The Learning Organization, Vol. 3 No. 4, pp. 4-21. Systems Dynamics Mailing List (2007), Systems Dynamics Mailing List, January-February, available at: [email protected]

The current issue and full text archive of this journal is available at www.emeraldinsight.com/0969-6474.htm

Systems thinking: a case for second-order-learning

Systems thinking

Jamshid Gharajedaghi Interact, Bryn Mawr, Pennsylvania, USA

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Abstract Purpose – The purpose of this paper is to show that changes in social systems do not occur randomly. They are consistent with what has gone on before, with the history and identity of the system. As long as the organizing principles of a dominant culture remain unchallenged, behavior of all the social-units originating from this culture will remain unchanged. Design/methodology/approach – The concepts developed in this paper are the results of 30 years of real life experimentation with organizations and cultural transformations in different cultures. The paper demonstrates how an analytical culture, despite its well-known shortcomings, keeps reproducing the same set of non-solutions all over again. Findings – To change, systems need to go through an active process of unlearning. Unlearning is an iterative and collective process of the second-order learning. A participative and iterative design process with the aim of replacing the distorted shared images is the most effective learning tool to produce a second-order learning and a desired change in the behavioral pattern of a social system. Originality/value – The value is to appreciate the real source of resistance to change. Keywords Systems analysis, Organizations, Change management, Design, Learning Paper type Conceptual paper

Introduction During the last 50 years, our worldview has gone though a profound transformation in two critical dimensions. Not only there has been a fundamental shift in our understanding of the nature of the organization from a mindless mechanical system to a purposeful socio-cultural system. But also, there has been a discriminating shift in our way of knowing: from analytical thinking, the science of dealing with independent sets of variables, to systems thinking, the art, and science of handling interdependent set of variables. Unfortunately, despite all the rhetoric to the contrary, our newly found insights have had very little influence in our choices. A dominant analytical culture, with a scientific tag, has kept reproducing the same set of none-solutions all over again. Effective use of these discriminating conceptions requires not only a clear understanding of the notion of self-organization, but also unambiguous recognition of the shortcoming of the analytical thinking. Unfortunately, the task is not just an academic discourse but demands second order learning, enormous emotional struggles and huge cultural challenge. Engagement in this process, in addition to competence, requires courage. Socio-cultural-systems and self-organization The formidable second law of thermodynamics states that universe as a close system has a tendency toward elimination of all distinctions. Thus, the ultimate state is sameness and randomness, (a chaotic simplicity). Entropy (S), the measure of randomness and sameness will therefore always increase. However, open systems, are neg-entropic and move toward organized complexity.

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According to quantum theory universe is continuously expanding with increasing order and complexity. In this context even sub-atomic particles show open systems behavior and self-referencing tendencies. In addition Living systems theories maintain that open systems, are self-organizing. They exhibit a tendency to move toward a predefined order. The central insight of Santiago Theory (Maturana and Varela, 1980) is the identification of cognition, the process of knowing, with the process of life. For Capra (2002, p. 34) “The organizing activity of living systems, at all levels of life, is a mental activity. The interactions of a living system with its environment are cognitive interactions.” Stuart Kauffman sees Self-organization as the co-producer of the stunning biological complexity around us. “Molecules of all varieties join in a metabolic dance to make cells. Cells interact with cells to form organism; organism interact with organism to from ecosystems, societies. Where did this grand architecture come from? For more than a century, the only theory that science has offered to explain how this order arose is natural selection. But in crafting the living world, selection has always acted on systems that exhibit spontaneous order, Formation of this underlying order further honed by selection needs to be explained as well” (Kauffman, 1995, pp. 1-2). I have argued extensively elsewhere (Gharajedaghi, 2006, pp. 122) that to be self-organizing, and to move toward a predefined order, a system must possess means of knowing, an internal image of what it wants to be. DNA is the source of this image for biological systems whereas culture (shared image) is the source of desired future for socio-cultural systems. The shared image of the desired future provides default values for all decisions and stands at the center of the process of change. That is why experience with social transformation is fraught with frustration. The triumphant resurgence of old patterns of behavior despite the concerted efforts of change agents is an uninterrupted saga of despair. What seems to make this stubborn insurgency so overpowering is the fact that the set of organizing principles (cultural codes) that make the system to behave the way it does are implicit and in most cases are considered sacred. The set of implicit, sacred cultural codes or organizing principles responsible for regenerating the existing order is what I metaphorically refer to as “second-order-machine.” Second-order-machine is equivalent to the notion of attractor in Chaos Theory. To produce a change in behavioral pattern of a social system its second order machine need to be dismantled and the attractor in action be redesigned. Otherwise, the existing order will outlive the temporary effects of any interventions. I have also argued that purposeful, socio-cultural systems are self-evolving. They do not passively adapt to their environments but co-evolve with them. They are able to change the rules of interaction as they evolve over time. But, never the less, in open systems changes do not occur randomly. They are consistent with what has gone on before, with the history, and identity of the system. This phenomenon known as Self-reference is a major obstruction to the development of traditional systems. For example: the baggage of the past tragedies and unpleasant memories is a heavy burden for the traditional cultures to overcome. The existing distorted images obstruct self-evolving processes.

In a more familiar context, consider the education and/or healthcare system where peer evaluations and strong self-referential values have produced a dominant closed culture that keep reproducing the existing order despite numerous calls for reform. As long as organizing principles of a dominant culture remains un-challenged behavior of all the social-units originating from this culture will remain unchanged. To development, these systems need to go through an active process of unlearning and redesign. Unlearning is an iterative, and collective process of the second order learning that demands freedom to question the sacred underlying assumptions. But, many traditional societies lack the freedom to question their sacred cultural codes. Most are subject to enormous intimidation by traditional forces. Questioning a sacred practice is often treated as an insult and is punishable by death. Sometime intimidating forces, present such a monumental obstruction to development that paying any price to remove them might be justified. So much this is so that even tragic intervention of outside power, if it results in dissolving the entrenched intimidating forces, may prove to be a welcome tipping point for potent cultural evolution (Japan and Turkey provide sobering examples for this arguments). Cultural intimidation, and ensuing self-censorship has been the most destructive tools of dogmatic ideologies, left or right, throughout history. Emancipation, according to Habermas, takes place whenever people are able to overcome past restrictions that had resulted from ideological distortions. Analytical thinking and complexity Complexity is a relative term. It depends not only on the Number but also most importantly on the Nature of interactions among the variables involved. Open loop, independent variables with linear relationships are considered simpler than closed loop, interdependent variables with nonlinear relationships. Analytical thinking is preoccupied with independent variables. It stubbornly assumes that the whole is nothing but the sum of the parts. However, increasingly we are finding out that our independent variables are independent no more and that the neat and simple construct that served us so beautifully in the past is no longer effective. Unfortunately our cognitive ability has evolved around assumptions of independent variables, open loop thinking (unidirectional causality) with linear relationship. We do experience extreme difficulties in visualizing the behavior of interdependent variables or the outcome of nonlinear feedback loops. Barry Richmond, in a reference to the fact that we have been applying the same set of non-solutions to the crucial social problems such as drugs, poverty, crime, illiteracy and mal-distribution of wealth for most of the last fifty years without any positive results, concludes: “The way we think is outdated. As a result, the way we act creates problems, and then we are ill-equipped to address them because of the way we think.” (Richmond, 2001, p. 3). It seems we are trapped in a vicious circle; even our highly regarded mathematical tools are not doing the job. Stephen Wolfram has a similar observation: “The idea of describing behavior in terms of mathematical equations works well where the behavior is fairly simple. It almost inevitably fails whenever the behavior is more complex. Degree of difficulty

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encounter in mathematical representation of a phenomenon increases exponentially by the degree of its complexity. Indeed, there are many common phenomena about which theoretical science has had remarkably very little to say.” (Wolfram, 2002, p. 3). He then demonstrates how systems too complex for traditional mathematics could yet obey simple operational rules and how remarkably simple iterative algorithms capture the essential characteristics of nature’s mysterious ability to produce complex phenomena so effortlessly (see Figure 1). Furthermore, analytical thinking has very little to say about: life, love, happiness, success, and many other important emergent properties that do not yield to any one of the five senses. Emergent properties are Properties of the whole, product of the interaction of the parts, outcomes of dynamic processes produced online real-time. Systems methodology I have found the Interactive design, the centerpiece of Ackoff’s systems methodology to be a perfect platform to integrate and use the critical contributions that three other contemporary conceptions have to offer, In my experience, the depth and richness of Interactive Design, the beauty and magic of Iteration of Context, Structure, Function and Process when combined with the dynamic power of Operational Thinking, and understanding the implication of Self-organization create a competent and exciting systems methodology that goes a long way in dealing with emerging challenges of seemingly complex and chaotic socio-cultural systems (see Figure 2). Distinctive claim of systems thinking is ability to see the whole. But contrary to a widely held belief, the popular notion of a multi-disciplinary approach is not a systems approach. In fact, the ability to synthesize separate findings into a coherent whole seems far more critical than the ability to generate information from different perspectives. Analytical thinking assumes that understanding structure is sufficient to understand a system. For synthetic thinking function is the key for seeing the whole. The dynamic thinkers on the other hand, looks to the process, the how question, for the necessary answer to define the whole. It is my contention that structure, function, process represent three aspects of the same thing and with the containing environment form a complementary set. Together they define the whole or make the understanding of the whole possible. Structure defines components and their relationships; function defines the outcomes; and finally, process explicitly defines the sequence and dynamic interactions of activities that produce the outcome.

Figure 1. The Koch curve

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Figure 2.

A set of interdependent variables forms a circular relationship. Each variable co-produces the others and in turn is co-produced by the others. Which one comes first is irrelevant because none can exist without the others. They have to happen all at the same time. To fail to see the significance of these interdependencies is to leave out the most important aspect of the challenge. Therefore, to handle them holistically requires understanding each variable in relation to the others in the set at the same time. This demands an iterative inquiry (see Figure 3). On the other hand, multi-loop nonlinear feedback systems that according to chaos theory exhibit chaotic behavior are integral part of our current reality. However, there is order in this Chaos. They seem to produce particular patterns of behavior. Discovering these patterns is the key for recognizing the “Second Order Machine” (the attractor in action) that is locking the system into its existing pattern. In this context,

Figure 3.

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Operational thinking is an ingenious way to overcome the difficulties encountered in constructing and simulating mental models for discovering these patterns of behavior. I believe that an interactive design process with the aim of replacing the distorted shared image is the most effective learning tool to produce a desired change in the behavioral pattern of a social system. This daring optimism is based on the following assumptions: . An exciting vision of the future is a powerful instrument of change. . The success of any action invariably depends on the degree to which it penetrates and modifies the “shared image”. . Penetrating the shared image is more a matter of beauty than logic. . Repeated failures to deal with the critical social challenges are not only due to our inability to solve the problem we face but also because of the failure to face the core problem. . The core problem is the mess, the second order machine responsible for regenerating the problematic patterns repeatedly. . The mess can only be dissolved. To dissolve a mess system has to be redesigned and the second-order-machine dismantled. . Designers are to produce the next generation of the system without any consideration for present constraints. . Design must produce a clear and explicit image of the desired future, removing the fear of unknown. Abstract, motherhood statements will not do it. . Participation of critical actors in redesigning the future is the uncompromising operating principles of interactive design. . Challenging the establish relationships among people is not an easy proposition. But, people are more likely to accept a change if they had a hand in shaping it. Furthermore note that: . Design is a holistic approach; it requires iteration of structure, function, and process. An iterative process of applying simple rules is at the core of nature’s mysterious ability to produce complex phenomena. . The best way to understand and learn a system is to redesign it. . To achieve an order of magnitude improvement in performance of any system is to redesign it. An agreement on a desired future is an indication that there is a light at the end of the tunnel and an alternative to the existing mess does indeed exist. Finally an agreement on an ideal design would irreversibly change the image of the future for all the participants. This is a second order learning and the first step toward recreating the future. Finally words of wisdom from Donnelly Meadows: Self-organizing, nonlinear, feedback systems are inherently unpredictable. They can’t be controlled, but they can be re-designed. Before disturbing a self-organizing system, watch how it behaves. Study its beat. Watch it work. Learn its history. Direct your thoughts to dynamic, not static analysis – not only to “what’s wrong?” but also to “how did we get there?” (Meadows, 2001, pp. 1-3).

References Capra, F. (2002), The Hidden Connection, Doubleday, New York, NY. Gharajedaghi, J. (2006), Systems Thinking: Managing Chaos and Complexity. A Platform for Designing Business Architecture, 2nd ed., Elsevier, New York, NY. Gleick, J. (1987), CHAOS: Making a New Science, Viking Penguin Inc., New York, NY. Kauffman, S. (1995), At Home in the Universe, Oxford University Press, New York, NY. Meadows, D. (2001), “Dancing with systems: what to do when systems resist change, an excerpt from Donna Meadow’s unfinished last book” (she died in Spring 2001), Whole Earth, Winter, available at: www.wholeearthmag.com/ArticleBin/447.html Maturana, H. and Varela, F. (1980), Autopoiesis and Cognition, D. Reidel, Dordrecht. Richmond, B. (2001), An Introduction to Systems Thinking, STELLA, High Performance Systems Inc., Watkinsville, GA. Wolfram, S. (2002), New Kind of Science, Wolfram Media Inc., Champaign, IL. Corresponding author Jamshid Gharajedaghi can be contacted at: [email protected]

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Some new theoretical issues in systems thinking relevant for modelling corporate learning

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Gianfranco Minati Italian Systems Society, Milan, Italy Abstract Purpose – The purpose of this paper is to describe fundamental concepts and theoretical challenges with regard to systems, and to build on these in proposing new theoretical frameworks relevant to learning, for example in so-called learning organizations. Design/methodology/approach – The paper focuses on some crucial fundamental aspects introduced in the literature in order to establish a general rather than generic usage of the systems concept. Issues of definition and theoretical frameworks are clarified before introducing new theoretical challenges for Systems Thinking, such as the perspective of a General Theory of Emergence (GTE), new modelling approaches and new concepts including Multiple Systems (MSs) and Collective Beings (CBs). Findings – New approaches for modelling management and corporate learning are described. The paper also explains the Dynamical Usage of Models (DYSAM) developed to deal with MSs and CBs for managing learning systems able to self-design evolutionary strategies. Originality/value – The paper expands understanding of the notion of system and underlines the relevance of systems thinking in modelling and facilitating corporate learning. Keywords Modelling, Learning, Systems theory, Learning organizations Paper type Conceptual paper

Introduction There are various disciplinary and cultural ways to approach and use the concept of system. By focusing upon some crucial fundamental aspects introduced in the literature, we want to establish a general rather than generic usage of the concept. This is possible by focusing upon theoretical aspects introduced within various disciplines and considering the different usages and purposes. After clarifying issues of definition and theoretical frameworks related, for instance, to organisation, self-organisation, emergence, constructivism and reductionism, we introduce new theoretical challenges for Systems Thinking, such as the perspective of a General Theory of Emergence (GTE), new modelling approaches and new concepts including Multiple Systems (MSs) and Collective Beings (CBs). Within this framework it is possible to identify new approaches for modelling management and corporate learning. We then focus upon the Dynamical Usage of Models (DYSAM) developed to deal with MSs and CBs for managing learning systems able to self-design evolutionary strategies. We consider the difference between growth and development as a system of interacting processes of growth. The Learning Organization Vol. 14 No. 6, 2007 pp. 480-488 q Emerald Group Publishing Limited 0969-6474 DOI 10.1108/09696470710825097

1. The framework. Definitions: systems, systemics and systems thinking. . . In this paper we use the term “Systemics” with reference to the usage of systemic concepts in various activities, including scientific research, management, education, economics, politics and culture in general (Minati and Pessa, 2006).

Systemics applies when phenomena are described as systems, for instance as devices or processes, such as electronic devices and their design and teams with their way of playing. Systemics does not apply when phenomena are not described as systems but, for instance, as objects such as electronic devices when considered for their price or function and teams for the number of players. The corpus of systemic concepts named Systemics may be briefly listed as follows: . Elements are said to interact when one element’s behaviour influences that of another. . Systems are established, through a necessary condition, when interacting elements give rise to entities with properties which the component elements do not possess (e.g., electronic components interact, when powered on, establishing devices and players interact establishing teams). . A sufficient condition for the establishment of systems is when elements interact in: organized (e.g., assembly lines); and/or self-organized, emergent ways (e.g. Swarms) – see Section 2.2. . Actions at the microscopic level (i.e. upon the elements) are ineffective for managing the macroscopic level (i.e. systems), because there are no linear relationships[1] between the microscopic and macroscopic level. One effective approach is to act upon both elements and interactions using a suitable non-linear model. . The same modelling of a system may be applied in different disciplinary fields, giving rise to interdisciplinarity. Systems are not observer-independent, but rather observer-dependent in the sense that it is the observer which models a phenomenon as a system. This contrasts with the objectivistic view assuming reality existing as it is. In Systemics, modelling is done by the observer through a language to represent it. This is called constructivism (see, for instance, Berger and Luckmann, 1966; Butts and Brown, 1989; Von Foerster, 1981, 2003; Von Glasersfeld, 1984). The concept of system should be considered as theoretically depending upon the observer because it is the observer partitioning and modelling the phenomena to be conceptually considered as a system (Guberman and Minati, 2007; Minati, 2006b). The opposite of Systemics is reductionism. It is based, in short, on assuming the macroscopic level as a linear extension of the microscopic level. Some currently used expressions and terms are: (1) Systemic principles. Referring to the constructivistic role of the observer, emergence, interaction, interdisciplinarity, microscopic versus macroscopic, organization and self-organization. (2) Systemic approach. A methodology based on Systemic principles. (3) Systemic. Based on Systemic principles. (4) Systemic properties. Properties of systems which the component parts do not have. Examples of systemic properties occur when considering that a system may be: anticipatory, learning and open-closed. Examples of non-systemic

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properties are weight, shape and physical dimensions. The distinction is not absolute, but depends upon the level of description adopted by the observer. Systemic problems. Problems related to considering a phenomenon as a system. Examples are lack of availability, manageability, reliability and reparability; incorrect functioning and behavior, inability to support systemic properties. Systemics. Corpus of Systemic principles. Systems theory. Theory of automata and self-regulating devices (e.g., Watt’s regulator). Systems thinking. Cultural views based on Systemic principles. Systemic view. Considering phenomena by using Systemic principles in general. General System Theory. The original, founding approach introduced by Von Bertalanffy (Von Bertalanffy, 1969).

2. Some theoretical systemic challenges We may find evidence of the vitality of Systemics by considering its evolutionary dynamics, its ability to redefine its problems and approaches and to formulate new theoretical frameworks able to introduce more generalisation. More recent areas include modelling by agents, Artificial Life, sub-symbolic computation such as Neural Networks, Cellular Automata and Genetic Algorithms and Quantum modelling. Recently introduced concepts such as those of Multiple Systems and Collective Beings, are also relevant to this paper. 2.1 Multiple systems and collective beings A Multiple System (MS) is considered as a set of systems established by the same elements interacting in different ways, i.e. having multiple simultaneous or dynamical roles (Minati and Brahms, 2002; Minati and Pessa, 2006). Thanks to multiple simultaneous or dynamical roles different systems having different properties emerge. Examples of MSs in systems engineering include networked interacting computer systems performing cooperative tasks, as well as the Internet, where different systems play different roles in continuously new, emerging usages. It must be stressed that multiple belonging is, in the case of MSs, passive for components. It means that they react, by applying given laws such as, for instance, those of physics. They do not process interactions, as do agents possessing a cognitive system (studied in Cognitive Sciences as, for instance, in Barsalou, 1992; Lindsay and Norman, 1972; Pessa, 2000; Stillings et al., 1995). Within this framework Collective Beings (CBs) have been introduced as particular MSs established by agents possessing the same cognitive system (Minati and Pessa, 2006). In CBs multiple belonging is active, i.e. decided by the component autonomous agents. Examples of CBs are Human Social Systems for cases where: . agents may dynamically give rise to different systems, such as temporary communities (e.g., audiences, queues, passengers on a bus), at different times and without considering multiple belonging; and . agents may simultaneously belong to different systems (e.g., behave as components of families, workplaces, traffic systems, mobile telephone networks or as consumers) by constantly considering their multiple belonging.

2.2 Emergence The most important challenge is related to implementing a General Theory of Emergence (GTE), the new General System Theory (GST) (Minati, 2006a). For the purposes of this paper, emergence (Holland, 1998; Minati and Pessa, 2002; 2006; Pessa, 1998; 2002; 2006) may, in short, be considered as: (1) The occurrence of new (i.e. requiring a level of description different from that used for elements) collective entities, such as swarms, flocks, traffic, industrial districts, markets, and collective effects, such as superconductivity, ferromagnetism, and the laser effect, established by the coherent (as detected by an observer) behaviour of interacting components. (2) With reference to the cognitive model used by the observer, emergence may be considered as a process being only observer-dependent, considering that: . collective properties emerge at a level of description different from that used by the observer for the components; and . collective properties are detected as new by the observer depending upon the cognitive model adopted, able to detect the establishment of coherence. The role of the observer in processes of emergence is related to Constructivism as mentioned above. There are various definitions of emergence in the literature (Baas and Emmeche, 1997; Bedau, 1997; Corning, 2002; Crutchfield, 1994; Ronald et al., 1999, Rueger, 2000). The General Theory of Emergence (GTE) is intended as a meta-theory, i.e. based on meta-modelling as for logical openness, (see Minati et al., 1998) and the Dynamic Usage of Models (DYSAM) discussed below. The purpose is to contribute towards a conceptual framework for a meta-theory of generalization having specific approaches, like GST, as particular cases (Minati, 2006c). The implementation of a GTE (we may have different, equivalent or non-equivalent theories) will clarify why current theories, having interdisciplinary applications, related to processes of establishing systems such as Synergetics, Theories of phase transition and Dissipative systems are not per se General Theories of Emergence. 3. New theoretical frameworks relevant for management and learning organisations Learning organisation (see, for instance, Argyris and Scho¨n, 1978, 1996; Dixon, 1994; Senge, 1990; Senge et al., 1994, 1999) in management sciences relates to post-industrial societies in which knowledge is the principal and most productive resource (see, for instance, Bell, 1973; Drucker, 1968, 1970, 1989). Definitions introduced relate to the ability to implement and use processes of learning to improve acquisition, development, management and application of knowledge as well as processes of emergence (Bouchard, 2006). By the way, we know that the name organisation is reductive because learning may refer to systems in general, arising both from processes of organisation and also emergence. Moreover learning may refer not only to natural or artificial learning systems, but also to Collective Learning related to the concept of Collective Intelligence or Swarm Intelligence intended as the property of non-intelligent, non-learning agents to adopt an intelligent, collective learning behaviour (see, for instance, Franks et al.,

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1991; Bonabeau et al., 1999; Millonas, 1992, 1994; Theraulaz et al., 1990; Theraulaz and Deneubourg, 1994). A new approach useful for dealing with learning systems such as MSs and CBs is the Dynamic Usage of Models (DYSAM) related to meta-modelling (Minati, 2001; Minati and Brahms, 2002; Minati and Pessa, 2006; Van Gigch, 1991). Within the conceptual framework of MSs and CBs it is impossible, in principle, to model a system using a single model. It is not only a matter of using dynamical systems or changing variables. MSs are different because the same elements dynamically interact in different ways. Dynamicity in this case does not refer to the role of time in the laws describing the behaviour. The laws themselves change over time because the system to be modelled, as a multiple-system, changes over time. This corresponds to using different models, which are not extensions or refinements of the models used for another of the multiple-systems of a MS or CB. The approach of multi-modelling has already been introduced in various ways, such as the well-known Bayesian Method, Ensemble Learning, Evolutionary Game Theory, Machine Learning and Pierce’s abduction. Methods based on multi-modelling are suitable because, in the presence of processes of emergence, the experimental study of a complex system may never be accomplished in an exact way. There are different incomplete, equivalent and non-equivalent, representations of the behaviour. DYSAM is based on strategies using independent and irreducible[2] models. There are several ways to implement the DYSAM approach through various simulations. An implementation of DYSAM based on Neural Networks has been previously described (Minati and Pessa, 2006). With reference to management, one specific, strategic aspect is the ability to multi-model problems and use them in a systemic way, that is, without looking for the best one but generating inter-relations between models and mutual dynamic representations. How can the multi-modelling approach, and specifically DYSAM, relate to addressing the complex issues of Knowledge Management (KM)? We think, in short, that the crucial point lies in adopting a constructivistic approach, just as various disciplines had to do in order to deal effectively with new complex problems. The role of the observer is not to generate relative points of views, but cognitive existence by modelling phenomena in effective ways. The strategy is to consider the question: How effective is it to think in this way? We think that this approach is more and more necessary as problems to be faced are more effectively modelled as emergent rather than merely organisational. It is a matter of going beyond classical integration, and dealing with modelling mutual representation of different levels, dynamic context-dependence, developing abilities to redefine by evaluating equivalence and non-equivalence, to detect and represent establishment of processes of emergence and manage processes of emergence not considering them as organisational ones. Within this framework it is not only a matter of using modelling and simulation, but dealing with ways of reasoning considering their power, compatibility, combinability and contextual effectiveness, like deduction, abduction, deduction and evaluating the logical power of generalising approaches, such as analogy, knowledge representation, languaging, models of learning and metaphors. KM is expected to develop appropriated knowledge to manage itself in the scenario of increasing complexity.

An example is Management of Information Systems (MIS) related to syntactic and semantic levels and inducing the emergence of new systems (e.g., marketing, user-profiling, security and offering of new information-based services) overcoming mere optimisation. This is particularly related, as introduced in the literature, to virtual corporations. For instance, as described in (Minati and Pessa, 2006) development is a process modelled as a system of interacting processes of growth. The strategy of only optimising is self-defeating as it unbalances the processes, while development is, above all, a balance between processes considered relevant to modelling the system. In this view processes may also relate to the environment and not be only internal. This approach, being systemic, applies to different disciplinary fields, such as economics, biology, culture, architecture, laws and sociology and may be suitable for modelling current global environmental problems. When dealing with global problems we face a lack of theorisation able to model them in a suitable manner. In a non-systemic view each of them are singularly and causally related in a non integrated way. But a set is not a system, i.e. in a set elements are not considered to interact collectively. Thanks to DYSAM it is possible not only to consider integration, but multi-model each aspect. With reference to economic, ecological and sociological aspects, the problem is not only to consider their interaction in an integrated model, but to consider aspects such as: how to make more economically advantageous an ecological behaviour rather than a non-ecological one; how to make an economic aspect play a particular sociological role; how to make ecological behaviours the norm; how to measure the imbalance between different aspects; how much does the imbalance cost? Conclusions We have introduced an overview on new systemic problems and approaches. With particular reference to learning organisations we have extended the meaning to systems arising both from processes of organisation and self-organisation (emergence). Within this framework we have focused on a specific approach based on the concepts of Multiple Systems and Collective Beings to be approached with a Dynamic Usage of Models. We have discussed the difference between growth and development with reference to corporations, but generalisable to the evolution of different kinds of systems. Notes 1. A linear function f(x) satisfies the following two properties: Additivity property – f(x þ yÞ ¼ f (x) þ f( y); Homogeneity property – f(axÞ ¼ af(x) for all a. 2. A model is reducible to another one when there are rules for transforming representation of one into another. An example is given by the theory of dissipative structures in which it is possible to transform models of open systems into models of closed systems and vice versa. A model may be considered irreducible to another one because of the current state of the knowledge or in principle, when it is possible to demonstrate the impossibility to transform different representation. Multiple modelling may relate to: Different levels of descriptions of the same system. In this case models may be reducible or irreducible one to the other. Multiple systems established by same elements by interacting in different ways, such as for CBs. In this case different systems call for different, irreducible models otherwise it was contradictory with the concept of CB itself.

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References Argyris, C. and Scho¨n, D. (1978), Organizational Learning, Addison-Wesley, Reading, MA. Argyris, C. and Scho¨n, D. (1996), Organizational Learning II: Theory, Method, and Practice, Addison-Wesley, Reading, MA. Baas, N.A. and Emmeche, C. (1997), “On emergence and explanation”, Intellectica, Vol. 25, pp. 67-83. Barsalou, L.N. (1992), Cognitive Science: An Overview for Cognitive Scientists, Erlbaum, Hillsdale, NJ. Bedau, M.A. (1997), “Weak emergence”, Philosophical Perspectives, Vol. 11, pp. 375-99. Bell, D. (1973), The Coming of Post-Industrial Society. A Venture in Social Forecasting, Basic Books, New York, NY. Berger, P.L. and Luckmann, T. (1966), The Social Construction of Reality, Penguin Books, New York, NY. Bonabeau, E., Dorigo, M. and Theraulaz, G. (1999), Swarm Intelligence: From Natural to Artificial Systems, Oxford University Press, Oxford. Bouchard, V. (2006), “Self-organisation, emergence and management: some empirical findings”, Systemist, Vol. 28 No. 2, pp. 26-35. Butts, R. and Brown, J. (Eds) (1989), Constructivism and Science, Kluwer, Dordrecht. Corning, P. (2002), “The re-emergence of ‘Emergence’: a venerable concept in search of a theory”, Complexity, Vol. 7 No. 6, pp. 18-30. Crutchfield, J.P. (1994), “The calculi of emergence: computation, dynamics and induction”, Physica D, Vol. 75, pp. 11-54. Dixon, N. (1994), The Organizational Learning Cycle. How We Can Learn Collectively, McGraw-Hill, London. Drucker, P.F. (1968), The Age of Discontinuity, Heinemann, London. Drucker, P.F. (1970), Technology, Management and Society, Harper & Row, New York, NY. Drucker, P.F. (1989), The New Realities, Harper & Row, New York, NY. Franks, N.R., Gomez, N., Goss, S. and Deneubourg, J.L. (1991), “The blind leading the blind: testing a model of self-organization (Hymenoptera: Formicidae)”, Journal of Insect Behaviour, Vol. 4, pp. 583-607. Guberman, S. and Minati, G. (2007), Dialogue about Systems, Polimetrica, Milano. Holland, J.H. (1998), Emergence from Chaos to Order, Perseus Books, Cambridge, MA. Lindsay, P.H. and Norman, D.A. (1972), Human Information Processing, Academic Press, New York, NY. Millonas, M.M. (1992), “A connectionist type model of self-organized foraging and emergent behaviour in ant swarms”, Journal of Theoretical Biology, Vol. 159, pp. 529-42. Millonas, M.M. (1994), “Swarms, phase transitions, and collective intelligence”, in Langton, C.G. (Ed.), Artificial Life III, Addison-Welsey, Reading, MA, pp. 417-45. Minati, G. (2001), Esseri Collettivi, Apogeo, Milano. Minati, G. (2006a), “Multiple systems, collective beings, and the dynamic usage of models”, Systemist, Vol. 28 No. 2, pp. 200-11. Minati, G. (2006b), “Emergence of collective beings, systemics, collective behaviours, dynamic usage of models”, Proceedings of 7th International Conference on Computing Anticipatory Systems (Casys’05), Lie`ge, Belgium, pp. 326-41.

Minati, G. (2006c), “Towards a second systemics”, Systemics of Emergence: Research and Applications, Proceedings of the 3d Italian Systems Conference, Springer, New York, NY, pp. 667-82. Minati, G. and Brahms, S. (2002), “The dynamic usage of models (DYSAM)”, Emergence in Complex Cognitive, Social and Biological Systems, Kluwer, New York, NY, pp. 41-52. Minati, G. and Pessa, E. (Eds) (2002), Emergence in Complex Cognitive, Social and Biological Systems, Kluwer Academic/Plenum Publishers, London. Minati, G. and Pessa, E. (2006), Collective Beings, Springer, New York, NY. Minati, G., Penna, M.P. and Pessa, E. (1998), “Thermodynamic and logical openness in general systems”, Systems Research and Behavioral Science, Vol. 15, pp. 31-145. Pessa, E. (1998), “Emergence, self-organization, and quantum theory”, Proceedings of the 1st Italian Conference on Systemics, Apogeo Scientifica, Milano, pp. 59-79. Pessa, E. (2000), “Cognitive modelling and dynamical systems theory”, La Nuova Critica, Vol. 35, pp. 53-93. Pessa, E. (2002), “What is emergence?”, in Minati, G. and Pessa, E. (Eds), Emergence in Complex Cognitive, Social and Biological Systems, Kluwer, New York, NY, pp. 379-82. Pessa, E. (2006), “Physical and biological emergence: are they different?”, Systemics of Emergence: Research and Development, Springer, New York, NY, pp. 355-74. Ronald, E.M.A., Sipper, M. and Capcarre`re, M.S. (1999), “Design, observation, surprise! A test of emergence”, Artificial Life, Vol. 5, pp. 225-39. Rueger, A. (2000), “Physical emergence, diachronic and synchronic”, Synthe`se, Vol. 124, pp. 297-322. Senge, P.M. (1990), The Fifth Discipline: The Art and Practice of the Learning Organization, Doubleday Currency, New York, NY. Senge, P.M., Ross, R., Smith, B., Roberts, C. and Kleiner, A. (1994), The Fifth Discipline Fieldbook: Strategies and Tools for Building a Learning Organization, Doubleday Currency, New York, NY. Senge, P., Kleiner, A., Roberts, C., Ross, R., Roth, G. and Smith, B. (1999), The Dance of Change: The Challenges of Sustaining Momentum in Learning Organizations, Doubleday/Currency, New York, NY. Stillings, N.A., Weisler, S.E., Chase, C.H., Feinstein, M.H., Garfield, J.L. and Rissland, E.L. (1995), Cognitive Science. An introduction, MIT Press, Cambridge, MA. Theraulaz, G. and Deneubourg, J.L. (1994), “Swarm intelligence in social insects and emergence of cultural swarm pattern”, Series D: Behavioural and Social Sciences, Vol. 78, Kluwer, Dordrecht, pp. 107-23. Theraulaz, G., Goss, S., Gervet, J. and Deneubourg, J.L. (1990), “Swarm intelligence in wasps colonies: an example of task assignment in multi-agents systems”, in Meystel, A., Herath, J. and Gray, S. (Eds), Proceedings of the 1990 IEEE International Symposium on Intelligent Control, IEEE Computer Society Press, Los Alamitos, CA, pp. 135-43. Van Gigch, J.P. (1991), System Design Modeling and Metamodeling, Plenum Press, New York, NY. Von Bertalanffy, L. (1969), General System Theory: Foundations, Development, Applications, George Braziller, New York, NY. Von Foerster, H. (1981), Observing Systems: Selected Papers of Heinz von Foerster, Intersystems Publications, Salinas, CA.

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Von Foerster, H. (2003), Understanding Understanding: Essays on Cybernetics and Cognition, Springer, New York, NY. Von Glasersfeld, E. (1984), “An introduction to radical constructivism”, in Watzlawick, P. (Ed.) The Invented Reality, Norton, New York, NY, pp. 17-40. Corresponding author Gianfranco Minati can be contacted at: [email protected]

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Learning to think systemically: what does it take?

Learning to think systemically

Carol Ann Zulauf Suffolk University, Boston, Massachusetts, USA

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Abstract Purpose – The purpose of this action research is to gain insight into how people learn to think systemically. An examination of the themes that emerged from this action research will be undertaken. Design/methodology/approach – An action research approach was adopted which involved the collection and reading of 120 journals that were kept by graduate students in their systems thinking course. Findings – A theory of practice identified and supported three significant areas in systems thinking: how the structure of the system influences the behavior of its members; the consequences of decisions on other parts of the system and a shift from blaming to seeing how one is contributing to the situation; and insights gleaned from actually learning to think systemically: meta-learning of systems thinking. Research limitations/implications – The positive implications that emerged from this action research indicate that, once students are introduced to systems thinking theory, tools and application, they are able to link their decision-making abilities to consequences; see the delays in a system; move away from blaming external “others” and look to see how they are contributing to an issue or problem. Limitations include other areas that could have been included: challenges, stories, and questions that emerged from the action research. Data from other groups would also be warranted. Practical implications – The paper shows that systems thinking can be taught. . .that the benefits are being realized on different levels! Originality/value – This action research presents one of the first attempts to actually gather data on how people learn to think systemically and to begin to categorize the themes and patterns that emerged from the data. Keywords Learning, Decision making, Self assessment Paper type Research paper

So we have a new systems axiom. . .What is most systemic is most local. The deepest systems we enact are woven into the fabric of everyday life, down to the most minute detail (Senge et al., 2004, p. 234).

Introduction This quote by Peter Senge from his latest book has intrigued me since I first read it. The reason for that is that when people hear the word “system” they think something big. . .something that they think they cannot manage or understand. When it is said that “what is most systemic is most local” indicates that there is a way for leaders to understand and, hence, gain some control over their systems. Leaders can begin to look at their “system”, their department or functional area as a starting point for applying the tools and principles of systems thinking. The other part of that quote is just as powerful. It indicates the beginnings of the “how” with our respective systems. One of the most significant ways in which to look at our systems is by observation. This may sound basic or easy, a lot of times, where everyone is so busy and harried, we do not

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take the time to just observe. Observe the interactions. . .what is being done. . .not done. . .said, or not said. That is the beginning place to what is going on in our organizations, our system. There is a balance between the details and the dynamics in our complex systems.

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Focus of the research for this article This author started to collect journal entries from the graduate students in a Systems Thinking course beginning in the year 1995-2007. I was fascinated by the question, “What is it like to learn systems thinking, to start to think systemically?” The instructions to the Grad students (who are all working professionals . . . managers/ directors/VPs/Consultants and International[1] students) were to record their key learnings from this Systems Thinking course around this question: . What did you find to be key challenges, questions, insights in your learning to think systemically? . Capture these challenges, questions, insights into your journal as separate entries. . Synthesize your key thoughts into a story format from your journal. Data analysis The author re-read 120 journals[2] to look for patterns in learning to think systemically. Three main categories that emerged from the data focused on the following areas: (1) How the structure of the system influences the behavior of its members. (2) The consequences of making decisions on other parts of the system and a shift from blaming to seeing how one is contributing to the situation. (3) The insights gleaned from actually learning to think systemically: Meta-Learning of Systems Thinking. In each category that emerged will be the actual excerpts from the journals, taken as is so that the tone and context will be preserved as it was written by each graduate student. A final synthesis will be undertaken by the author. Systems thinking principle of “structure of the system influencing behavior” Several examples emerged which indicate one of the most powerful of the system thinking principles: that the structure of the system will influence the behavior of its members. This team was engaged with the People Express Microworlds simulation in teams of three in the classroom one evening. There is an indication from one of the student’s participation that the initial objective of the simulation which was to understand the dynamics of making decisions changed to being influenced by making the most money. As the participant shared: My team changed from it being an “understanding the effects of systems thing” to a “who can make more money” thing.

Another observation from a participant regarding structure-behavior: Feelings of competition, the need to win, and have the most money left were, subconsciously, in the forefront of my mind.

As you examine a situation from a wide lens that captures the essence of its being in a complete way, you begin to gain a clearer understanding of how variables are interconnected and contribute to the function, or dysfunction, of a system. The principle stating that structure influences behavior becomes a constant reminder when viewing a situation or system, regardless of the people involved.

The vast majority of observations and reflections came under the category of the impact or consequences of decisions, which will lead to larger questions/conclusions. Consequences of decisions and shifting away from blame To make my transition from linear thinking to systems thinking a bit easier, I have been taking the time each day to stop and think about how what I say or do will affect other things or people around me. Another important concept that I gained was realizing that there are many sides that affect the outcome of a given decision, action, or conversation. I never really thought how, I, myself, affected an outcome. In my life, I think it is very important that I begin to figure out where I may have negatively affected a decision and placed the blame on someone else. What has been my pattern of behavior and how can I change it to deliver a more effective outcome? What is the truth? These are very important questions that we all need to ask ourselves both as individuals and as managers. . .Isn’t that what systems thinking is all about? I realized that systems thinking helps the individual to explore all possible results. . .I saw that my mind explored different routes and paths to lead to the end result of what motivated me. . . .I can no longer think that the immediate result after an action is related to the action. Where systems are connected but time/space and cause/effect may be distant, the cause may not be evident. I like this. The microworld simulation was very effective in illustrating the fact that everything is interconnected and that time plays a huge factor in the severity of consequences. People are the most important element in a system. If we forget how to interact with one another, then systems will surely fail. Also, the concept of instant gratification is not going to get us very far in the world of systems thinking. The whole idea is to be able to step back and take the time to look at the big picture – the interrelatedness of things. . .if you are able to step back, you will be able to see things more clearly. You will be able to make more informed decisions about changes or adjustments that may need to take place. However, you may not realize the effects of these changes immediately; it could take months, or even years. On the microworld simulation, one thing that was clear from this exercise was the dynamic nature of business decisions. Every decision made continued a trend that would alter its impact over time. All of the decisions set a series of events into motion so both long-term and short-term impacts must be considered as well as the ability and the willingness to change. Every process goes through changes; therefore, one can actively manage that change or react to changes that are inherent. Since processes are active, no action will result in stasis, you must always consider the chain of events that have been set in motion. I think the paramount lesson in this exercise was that the ability to manage change is essential to any success, especially long term. Systems thinking is the process of how we think of things. The big picture versus the little picture. This is how everything relates to each other. I never realized that I knew this. I had

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tried to use my current job as an example of a way to understand systems thinking. We had often at my job changed things and not really given much thought to the big picture. Everyone seemed to be more concerned with their own department and the things that related only to them. This, of course, is not the best way to think of things. We have to be able to see the big picture. You have to address what is going on in the overall organization and not just the part that affects you. “How have I changed my thinking?” Well, I have to say that I see things differently than I did before. Systems thinking has helped me to see the big picture without missing the details in all the smaller pictures. I am now able to realize that everything is related. When you take one part out, you must realize that everything is affected. The more I have utilized and completed exercises with systems thinking, the more the walls of competitiveness are broken down and I have begun to open myself up to individuals and groups when discussing issues. It is almost an immediate sense of loss of power over the other person or the group because I no longer can predict where the dialogue will take us. It’s funny, I’ve always felt as though I was very open and able to see the “big” picture very easily. Now I realize that I really wasn’t seeing it as I thought I had. To begin, I never really thought about how I contributed to the things that were going on around me. I must admit that subconsciously I’ve been one of those people who very easily finds the person whose fault it is, and it’s never me. Now I realize what an important thing it is to look at how you relate to the “whole” that is going on around you. This week at my internship, I heard a great example that made me think about how important systems thinking really is. This is what happened: The team had created a great on-line resource for employees without having thought about how it was going to affect the other functions of the organization. The team proudly announced at a staff meeting that the resource was up and running and that individuals should take the time to look at it. This was received with much more anger than excitement. The technology group had not been made aware of the program or of the implementation. Immediately, they were flooded with a number of unexpected telephone calls for which they were not only unprepared but also unaware. This was very upsetting to them, and they made it known. It reminded me that we always need to step back and take a look at things and how they fit into the whole, in ways that I hadn’t thought of. Developing strategies, setting goals, and identifying an action plan from a systems perspective forces you to take a hard look at how your actions (or department) contribute within the system, both positively and negatively. The systems approach removes the burden that accompanies blaming within organizations, which ultimately limits or degrades the ability of the organization’s members to learn as an entity. I think adopting a systems perspective can also help to redefine work roles and the way in which projects are carried out to improve personal and organizational goals. The Microworld exercise, however, allowed me to actually experience what it is like to have to make decisions that can have a cascading effect on all levels of an organization. I saw that each decision needs to factor in the unintended consequences to the other parts of the system. It wasn’t until I got a chance to see the process from the top level that I realized that I was still hanging on to that “us against them” mentality of the employee. This view was causing me to examine systems from a perspective that, while potentially accurate, may have been biased towards ensuring employee satisfaction while failing to consider the larger impact to the organization as a whole.

One thing that I have realized is the need to factor in the other person’s view of the situation into the equation. This is a subtle distinction, but one that I think is crucial to really gaining a complete picture of the dynamics at work in a system.

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If you ignore the whole picture of the organization, you then become unable to see the results of your actions. Though it might have been tempting to look for external sources to point the blame, my journal lead me back to my responsibility in it all. When I came to class, I wanted to learn ways to “fix” some of the broken systems at work. I had the mindset of “how can I get ‘them’ to do things right?” or “how can I get ‘them’ to see how they are broken?” Things are different now and I am able to help facilitate discussions that collaborate for solutions. I have gained tremendous insight from taking the perspective that “there is no outside.” The cause of my problems and me are all part of the same system. That’s a big AHA and it’s allowed me to become much more collaborative and open to finding solutions. A personal “side effect” of learning to draw causal loops was a reduction in the amount of blaming and micromanaging. My perspective at work has changed dramatically as a result of this personal side effect. I am much more conscious of when I display behaviors that demonstrate the disabilities of “I am my position,” or the “enemy is out there” and am more apt to ask for others’ perspectives on the problem. I have noticed that when you are trying to discuss an issue with someone who is stuck on the pieces, it can be difficult to draw them towards seeing the big picture after acknowledging the pieces. As if they almost were validated by the acknowledgement of their issues and now have no need to push their comfort zones. Yet, it is exactly that, pushing the comfort zones that enables a system to challenge their assumptions and explore new ways of viewing and solving problems. The foundational beliefs that people hold are more likely to be activated when those people are presented with a stressful, unknown situation or problem. In order to make systems thinking a natural response in times of tribulations, it must be transformed into the foundation on which a person’s response is built. Part of integrating systems thinking into my life has been to share what I’ve learned with my close friends and to actively apply the principles. To me, this means realizing my role and influence in situations, identifying the leverage area, and seeking workable opportunities for improvement. It also means an almost abrupt end to pointing the finger and looking to lay blame for problems in my life elsewhere. I recently applied such thinking when I was very stressed about my boss and realized that my reactions to her behaviors had been influencing the loop and without any changes on my part, nothing in the system would change. This was a profound and empowering moment. I also believe that it takes a high level of self-awareness to see one’s role in a system and without this, some aspects of applying systems thinking are limited. In the past, I also haven’t thought much about how decisions we make today will affect what we do tomorrow on a regular basis. I feel that my job requires me to be able to put out immediate fires and think later. I was talking to a human resources professional who had recently been hired as an HR manager in a manufacturing environment. He said that his prior HR Generalist was focused on hiring hourly employees who shared the team goals of the company. He said, “Why do I

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care if an hourly worker has a team focus? I don’t. I see if they can perform the job and handle the physical aspects of the job. If they can, they are hired.” I was thinking that he was missing the “big picture.” If you create career paths for these individuals, they, hopefully, will be promoted. If they are promoted to higher level positions and never shared the fundamental team vision of the company, this is counterproductive and not very beneficial for the company. Even if the hourly workers are not promoted, it can have a detrimental effect if they do not share the same team goals and the company values. Another important learning for me was to look at situations and solutions with a long-term perspective. I can easily say that some of my decision-making can be short-sighted. For example, we are currently trying to fix a problem in my organization that has to do with excessive absenteeism. My immediate response, when first approached about the problem, was that we’ll handle this with warnings and termination. I am now continuously asking myself, “how can we change the culture so that this problem doesn’t keep popping up every few years (as it has in the past)?” I am also constantly thinking about how employee’s actions impact other parts of the organization. I find myself reminding employees that the impact of one mistake is so great because it touches many other parts of the organization. Systems thinking has showed me that it’s okay to slow down, step back, ask lots of questions, hear the entire story and see the interrelationships. We used to criticize the Recruiting Department for not meeting the established deadlines and we thought their excuses were not good enough. Since being in this class, though, I have had a meeting with the Recruiting side to hear their side of the story in hopes that I can better understand the reason why they have so many problems. Once I took the time to listen, I realized that it is not technically their fault. The managers are not sending the recruiters the information needed until after the deadline or they are sending inaccurate information. This leaves the recruiters’ hands tied and they are trying the best they can. If I had not taken this class, the Recruiting and compensation teams would still be going up against each other and placing blame. Now we can work together to find the best solution to our problems. The point here is that with a different perspective, it’s not the things/people that change, it’s the observer, who happens to be me in this case.

Insights from learning to think systemically: meta-learning of systems thinking I have learned that Systems Thinking stretches beyond the bounds of organizational learning. If understood, it can impact on every situation in your life. You begin to see things as they really are. Kind of a reality check. You will understand that perhaps your key leverage points necessary to change your own way of thinking could be your own emotional development. When do we refine our skills to be able to identify subtle signals that systems are breaking down? The book [The Fifth Discipline ] is very rich in metaphors. Recently I have been thinking that metaphors, deep parallels could, in themselves, become an educational method because at the root of them is, again, the process of clarification. Having a solid basis of systems thinking, I began constructing Causal Loop Diagrams (CLD’s). Somehow, among the variables – increases, decreases, S’s, O’s, and arrows – I found the concept very easy to grasp. In fact, it almost felt natural for me to be combining things in that way. I wonder if it has anything to do with my extensive science background. Physics, for example, has many formulas and a lot of word problems (stories) that need to be broken

down and solved. Chemistry also has a lot of formulas or chemical equations which use arrows to indicate the flow of reaction. I think that we would be a much more productive society if we all thought this way. There is so much talk about being a Global Community. I believe that in order for people to think globally, they need to think systemically. . .I think that systems thinking will play a major role in society’s transformation from local to global thinking. It is fascinating how systems thinking leads your mind along a path of questioning and making connections. Along the path, there is something for everybody. The global thinker can picture the entire loop at once, the intuitive can articulate a language of complexity, and the artist can illustrate the story he is telling. Finally, the archetypes lend the pragmatist the levers needed in order to proceed in addressing the problem. I think my undergraduate training in sociology helped prepare me for this shift in thinking, since I spent so much of my undergraduate career looking at how an entire structure contributes to social phenomena. Sociology also challenged my “mental models” (long before I used that name for them!) and taught me to look at all of my behaviors and ideas in light of my own culture, and how it might be different if I were part of a different culture. All of this helped me tremendously in understanding the theoretical basis for systems thinking. The more I thought about it, the more I realized that for the first time in my life, I was learning a subject that I needed to learn as part of a team. I could learn it no other way. With an introduction to systems thinking, my awareness seems to have changed slightly. I’m not trying to make it sound like I’ve reached some epiphany or transcendental state, but I really think that I am becoming more aware of the interrelated dimensions in a number of different places. In comparing the linear thinking approach with which we are accustomed to a systems thinking approach, I thought about the different effect each of these approaches can have on our powers of observation. I equated it with the difference between navigating around a city by car and by foot. When you are driving, your progress is linear in nature, since you are looking for the street you need to drive down. One street leads to another, which leads to another. While they are connected, you lose sight of your path since your focus in on the current road. When you walk around a city, you have more of a systems perspective since you have more time to observe how sections of the city are connected. You have the time and the freedom to change your path at any point. Your frame of reference is different from someone driving through the city, which enables you to gain a broader understanding of how to get between places. Like walking, adopting a systems perspective requires patience and an ability to focus awareness on the variables that play an influential role at that moment. It also requires pacing and a willingness not to rush to the destination (identifying the system archetype and leverage points) but to proceed slowly to experience the process. I have found that throughout my life, problems continue to multiply as long as I look for their solutions outside of my self. I encounter this both in my work life and in my personal life. Whenever I have blamed something or someone else, I have eventually come to feel helpless and out of control around that issue. I believe that Systems Thinking addresses this very deeply ingrained mental model by continually asking the following questions: How do I contribute to the problem? Where am I not open to hear the other side? Where can I be more patient? What can I learn from this? What assumptions am I making and which assumptions am I not willing to let go of? How can I be most instrumental in the solution? The idea of turning a problem on its many sides and looking at it from many perspectives truly speaks to me. My greatest insights have come at the end of such turning and looking. My greatest

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lessons have come only when I was open to hear all sides of an issue. I see systems thinking as a strong proponent of that type of dialogue and problem solving. . .this class has reawakened the questioner in me. As the conversations and presentations progressed, it became clearer and clearer to me that this (systems thinking) can be a powerful tool. I watched people be real hesitant about what they are doing, yet, they were all learning, too. Different skill sets were becoming more and more evident. Julie can make a causal loop sing with her graphics. As I looked at her work, it looked like a flower. A flower. . .hmmmm. . .isn’t that an apt description of this concept? There is a circle, a base if you will. Off the base come little loops that all need to feed off the base to be valid. If your flower is true to its form, then it will be supported by theory. Of course, sometimes we get a rather complex flower (multiple bases) but I think the theory holds up. Anyway, it made my work easier.

One grad student summed up her experience of learning systems thinking by creating a Causal Loop Diagram which she titled, “The Loop of Learning.” Below is her depiction of the learning process and its impact: The “Loop of Learning” states that: As understanding of the causal loop diagrams increases, application of the concept to everyday life increases. And as application increases, understanding of the leverage points of system archetypes increases. As understanding of the concepts of archetypes increases, the application to everyday life increases. As insight is gained on everyday leverage points, the laws of the Fifth Discipline become clearer. As understanding of the laws increases, understanding of the disciplines and disabilities increase. As understanding of the 2D’s increases, insight into my personal role in various systems increases (see Figure 1). This way of being – in a constant state of inquiry – is amazingly calm. I realized that learning is not just an aggregation of information, but our capacity to create.

Implications from action research The one surprise and possible dismay I felt when I first started reading the journal entries and seeing the themes emerge – especially the theme of consequences of decisions – was seeing how so many people did not connect a decision with its possible outcome or consequences, that the concept of time delays was not considered. What contributes to this lack of connection? This trend that was evident from this action

Figure 1. The loop of learning

research supports research undertaken by Booth Sweeney and Sterman (2000, p. 249, 280-281) who reported the initial results from their systems thinking inventory indicated that “subjects from an elite business school with essentially no prior experience to system dynamics concepts have a poor level of understanding stock and flow relationships and time delays”. They also found that “performance did not vary systematically with prior education, age, national origin, or other demographic variables”. They further assert that, “there is abundant evidence that sophisticated policymakers suffer from the same errors in understanding stocks and flows that we observe in our experiments”. The examples from this action research illustrate, yet again, the power of how a structure of any situation will influence the behavior of its members. In this case, the shift occurred from a pure learning of systems thinking via a simulation to the competitive nature of how the team members could make the most money. This, of course, reinforces the need to examine how the norms, cultural expectations, policies and procedures in our organizations may play out in our respective organizations. Of course, this principle of “structure influencing behavior” links to the other finding from this action research, that those in decision making positions are able to see the consequences of those decisions! The positive implications that emerged from this action research does indicate that once participants are introduced to systems thinking theory, tools and application, they are able to link their decision-making abilities to consequences; see the delays in a system; move away from blaming external “others” and look to see how they are contributing to an issue or problem. Aiding in that process centers around the meta-learning of systems thinking, discussed below. The other major theme that emerged centered around the meta-learning of systems thinking; i.e. what overarching methodologies may assist one in learning to think systemically. Some specific methodologies and reflections that emerged revolved around these thoughts and reflections: . Self-awareness may be the beginning point to thinking systemically; that our being aware of how our actions, behaviors, decisions affect others is necessary to seeing the “bigger picture”. . Powers of observation are critical in seeing the nuances in a system and identifying the subtle signals of systems. . Being able to learn systems thinking as a team, v. individual learning per se. . Encouraging the power of questioning and inquiry help tremendously in expanding one’s mind in order to inquire more deeply into the dynamics of the system. . Incorporating many perspectives is also essential in expanding one’s view of the problem or situation in any given system. . That certain disciplines – for example, sociology, physics, and chemistry – may be more conducive to learning to think systemically because fundamentally they share the same characteristics of systems thinking; for example, seeing how the culture influences behavior; breaking down word problems, working with many variables, seeing the interconnections and interactions of variables.

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That keeping a journal and being able to reflect aid in learning systems thinking because it gives us the “space” in which to see how our thoughts are changing.

Peter Senge (2006, pp. 117, 118) posits that “two particular systems thinking skills are vital: seeing the patterns of interdependency and seeing into the future. ‘Seeing into the future’ is not a prediction in the statistical sense; it is simply seeing how a system is functioning and where it is headed”. These two systems thinking skills are critical – not only for individuals, teams and organizations but for our whole global community if we are to continue to make the fundamental shifts that need to occur for a healthy, nurturing, and sustainable life on all these levels. Notes 1. International students came from Argentina, Brazil, Canada, China, Greece, Israel, Italy, Japan, Nigeria, Russia, United Arab Emirates, United Kingdom. 2. The actual names of the students and any organizational names have not been used in this study. References Booth Sweeney, L. and Sterman, J. (2000), “Bathtub dynamics: initial results of a systems thinking inventory”, System Dynamics Review, Vol. 16 No. 4, pp. 249-86. Senge, P. (2006), “Systems citizenship: the leadership mandate for this millennium”, Reflections, Vol. 7 No. 2, pp. 113-20. Senge, P., Schammer, O.C., Jaworski, J. and Flowers, B.S. (2004), Presence, Society of Organizational Learning, Cambridge, MA. Further reading Senge, P. (1990), The Fifth Discipline, Doubleday, New York, NY. Corresponding author Carol Ann Zulauf can be contacted at: [email protected]

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Light bulbs and change: systems thinking and organisational learning for new ventures Misha Hebel

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Faculty of Management, Sir John Cass Business School, City University, London, UK Abstract Purpose – The purpose of the paper is to revisit the practical worth of different systems thinking tools applied to three different business clients, which may be dismissed by academic researchers as theoretically old fashioned. Design/methodology/approach – The methodologies used are systems-based (SSM, VSM and causal loop diagrams), culminating in reflective practitioner in action. Findings – By maintaining a simple application of tools but a more complex act of reflection, learning can occur for client and consultant. This may be the basis of a more formal research programme. Originality/value – The material presented here is just a sample of business clients chosen to present the broadest selection of systems tools within the constraints of this paper. Reflection rather than pre-structured research is the emphasis. .

Keywords Business formation, Entrepreneurship, Learning, Systems theory Paper type Case study

Introduction The author has been a student and teacher of systems thinking for a number of decades. A few years back she felt she could no longer research or lecture on long established methodologies and models – such as Soft Systems Methodology (SSM) and the Viable Systems Model (VSM) – without revisiting their practical worth in organisations. So the author became an independent business consultant specialising in micro businesses. If a consultant cannot communicate or apply systems ideas in this context they do not earn money. What resulted was a significant learning experience for the author as well as for the small organisations involved. This paper summarises the authors application of some well established systems tools and concepts to bring about light bulb moments and significant changes in the operation of some new ventures in the UK. Background After researching in the area of systems thinking (Hebel, 1998, Davis and Hebel, 2005) and working in Organisational Development (Hebel and Muggleton, 1999; Hebel and Mathiesen, 2001; Hebel and Wirszycz, 2004) the author presented her reflection on the application of systems thinking to small businesses to the BIOPOM conference in 2006 (Hebel, 2006) and BIPoM/BCS socio-technical series (Hebel, 2007). This resulted in reflection on the worth of systems thinking as an organisational learning tool and concluded in this paper.

The Learning Organization Vol. 14 No. 6, 2007 pp. 499-509 q Emerald Group Publishing Limited 0969-6474 DOI 10.1108/09696470710825114

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The paper briefly introduces the author’s interest in new ventures and the theory underlying systems thinking and organisational learning. By association with three client case studies the results section records the application of some mature systems tools, to three new ventures or micro businesses experiencing classic problems. The tools referred to are from the systems thinking discipline and include causal loop diagrams (System Dynamics), Soft Systems Methodology (SSM) mode 1 and Viable Systems Model. The purpose of the paper is to revisit the practical worth of such tools which may be dismissed by the academic research as old fashioned theoretically. New ventures The author has worked with clients at many different stages of organisational growth; from the keen inventor with a good idea but little knowledge of the practicalities to the mature entrepreneur, looking for more personal satisfaction. These small organisations lend themselves to development by systems thinking for a number of reasons listed below: . in the early stages of a venture there is scope to develop and change quickly; . often a need to test scenarios; . need to structure analysis in some way; . way of capturing enthusiasm and energy; . could be single modelling technique or whole methodology; and . clarifying ideas so that it can become a focussed business plan, presentation or elevator pitch, review document, action plan. Systems thinking Systems Thinking applied to Organisations Development originated in the 1950 s as a reaction to Operational research with the development of cybernetics and contingency theory in the UK (Flood, 1991). A system is defined as “a set of components interconnected for a purpose” (Open University) and it is this definition that underlies all systems approaches. Conceptualising this system allows notional boundaries to be drawn and system purpose to be explicitly identified. In many ways this is the beginning of every consultant client conversation. Clarifying what it is the client actually wants to achieve and more importantly how much effort (or learning) they are willing to put in. Contingency theory and the changing business world of the 1960 s led to the development of SSM by Checkland (Checkland and Scholes, 1990; Checkland, 2004). This methodology attempted to address the lack of “soft” human input into systems and organisational problem solving. The mode 1 version provides a series of activities that encourage those involved to deconstruct situations and conceptualise alternative possibilities. Mode 2 offered a chance to take in political and cultural aspects. There are many critics of SSM (Jackson, 2004) including Checkland himself but the different stages of SSM mode 1 (separately or combined) have been continuously useful as part of the consultants toolkit. From rich pictures to summarise and generate humour to conceptual models, presenting an ideal procedure. Following the principles of cybernetic control, feedback and balance VSM was developed by Beer (1979, 1981, 1985). This model presents an ideal structure for organisation design. It is asserted that certain systems need to exist and be connected by flows of information and goods. In the large scale organisations on which this was

based the system in focus needs to be nested within recursions of identically structured systems for it to operate effectively. Recursion is rarely possible in new ventures and micro businesses It is these two major systems approaches that form the basis of this paper. It is at times supplemented by causal loop diagrams and System Dynamics ideology of quantifiable variables connected and affecting other variables in a system. There have been many developments and discussions about SSM and VSM but for the purpose of practice the focus is on SSM mode 1 and VSM as a basic model. Core to all systems approaches is the view that organisational problems and opportunities need to be viewed holistically (Jackson, 2004). That processes, connections and feedback are crucial to analysing and designing effective organisations Daellenbach and McNickle(2005). Systems thinking in all its forms offer the academic and practioner a chance to model situations conceptually or quantitatively before making changes reality. Although the area continued to be researched and explored[1] as a discipline it has diminished in popularity and status in the UK over the last 20 years. Instead it might be argued to have been broadened into information systems, knowledge management and most recently by entrepreneurship theory. This academic area looks at businesses on such a small scale that all aspects and connections can easily be viewed and acted upon. The advantages of systems thinking as applied to new ventures and micro businesses are listed below: . holistic approach connecting all aspects of the business; . managing individual and small business complexity; . seeking understanding and not being solution led; . creative techniques – mapping, idea generation, creativity; . models that show connection and feedback, e.g. Viable Systems Model (VSM), Formal Systems Model (FSM); and . methodologies that encourage convergence and divergence, e.g. Soft Systems Methodology (SSM) and Total Systems Intervention (TSI) Disadvantages of applying systems theory to new venture situations: . the models and methodologies traditionally do not lead to definite action – because everything is open ended; . requires ability to conceptualise rather than be functional; . theories have been designed based on the behaviour of large organisations; and . they are based on a problem centred philosophy rather than that of a post-modern philosophy opportunity development and temporary improvements (Jackson, 2004). Attempts to address the latter theoretical dilemmas have resulted in “toolkits” (Brocklesby and Cummings, 1996) or “cookbooks” (Taket and White, 2000) to encourage variation and innovation. It is this approach most often adopted by the consultant, who needs labels and legitimisation to sell their wares. However the client is most often interested in the outcome and most importantly guidance on direction, they are not too concerned about the analytical process. The learning for the consultant can come very early but for the client it often does not happen until the later stages of

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the process. It is these different stages of learning that prompted further investigation into Organisational Learning. Organisational learning Systems thinking and organisational learning are natural companions. Both are based on the importance of feedback and perspective. Senge (Senge, 1992; Senge et al., 1994) stressed the importance of challenging mental models in order for organisational learning to occur. He also linked systems thinking explicitly to this as his Fifth Discipline. Argyris (Argyris and Scho¨n, 1978; Argyris, 1985; Smith, 2001) stressed not only the importance of double loop learning (Figure 1) but also organisational learning, theory in action and theory in use. As Shelby (2007) points out, organizational learning is the end of the war between thinking and doing. The trouble with double loop learning is that it can be painful and distressing as long held beliefs may be found to be dysfunctional or outmoded. It requires personal responsibility to be taken for actions. Old habits and ways of thinking, whose reasoning is lost in the mists of time (Hebel, 1998; Davis and Hebel, 2005) must be challenged. Case studies This section briefly describes three client case studies. They have been chosen because they cover a good range of the consultant’s toolkit and variation in small business development; conception, end of first year review and ten years on. The ventures documented in this paper have been anonymised so as not to inadvertently jeopardise their development and also because it is the patterns rather than the specifics that seem important in the wider sense of organisational learning Many budding entrepreneurs and new ventures seek help from business advisors with only an idea or vague plan. In they go to organisations such as Business Link[2] or Science Enterprise Centres[3] as well as independent consultants such as the author[4]. They often need help coping with the complexity of demands placed upon them on starting a business. This is not complexity in the large organisation sense but the potentially overwhelming personal/intellectual complexity of detail. Examples of the issues faced are shown in Table I. Getting advice is important, as depending on the source and country it is claimed that between 60-90 per cent of businesses fail in the first two years (Start-ups, 2005; Abrams, 2004). After that point failure is lower but can still be high (smallbusiness.co.uk, 2007) and even when predicted to slow (Enterprise Quest, 2006) still results in nearly 20,000 closing business with the associated lost revenue and jobs. The reasons for failure are

Figure 1. Argyris model of double loop learning (Smith, 2001)

Personal Loss of direction Rumours Bad press Decreasing sales Cash flow problems New competitors Withdrawal of finance Focus on technology rather than benefits Inability to keep up with change

Communication Inarticulate sales (elevator pitch) Low morale Miscommunication An attitude of not invented here Gossip Ineffective marketing campaign Obsession with semantic detail Lack of networking Unhappy customers Diminishing of market

Corporate governance Overemphasis on politics Board level conflict/churn Poor corporate governance Lack of motivation and reward programs Return of faulty product

Leadership Disgruntled shareholders Inarticulate leadership Loss of knowledge Loss of confidence High churn

varied but failing to manage cash flow, underestimating the importance of relationships and failing to work out a long term strategy are high on the list. Story 1 – New venture (medical practice) The first client described in this paper was a GP planning to start an independent practice combining both traditional and alternative medicine. In order for the consultant to understand the client’s requirements and to help the client to sort out the complexity of personal wishes along with the practicalities of setting up a business it was decided to start with a rich picture. Table I indicates the variety of issues the GP needed to consider before writing a business plan. Whilst sketching the RP it became evident that more focus would be needed and so it was decided to conduct a full SSM mode 1. Outcomes of SSM. The full analysis is too long for this paper so the outcomes are summarised below: (1) Identification of previously unconsidered issues: . need for market research; . financial management; and . a range of different business models. (2) Identification of key systems – leading to a conceptual model “road map”. A setting of personal priorities: . balancing demands on finance – help with long term financial management; . knowing the market; . advertising; . practice business model – GP only, GP and alternative, Alternative only, other; and . practice location – home based surgery, shared premises, independently located surgery, other.

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Table I. Start-up complexity

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Story 2 – End of first year strategy (university spin-out) This organisation was in its second year. It had been formed by a group of people from different Universities and the NHS. Most of the participants were used to big organisation support, had academic connections and favoured a collaborative style of working. The idea was to use the company to promote a scientific information exchange between the UK and other countries. The twelve people involved decided to form a UK Limited Company to spread the financial risk and to provide a formal structure to their governance. This they felt would ensure commitment as well as investment. All twelve people were designated Directors. Board meetings were held bi monthly and around half the Directors attended regularly and were the drivers of the process. After one year they ran a successful event that had been their focus thus far. A year later the dreams still existed but the board attendees were diminishing and they were struggling to act on their decisions. A strategic direction seemed to exist but nothing drove this forward and plans were constantly being postponed. Initially SSM was applied to the situation this highlighted some cultural issues about running the business but mostly it indicated a problem with the structure of the organisation. It was for this reason that VSM was applied. Although based on large organisation design and traditionally used in this context the principles are sound on a smaller scale. Levels of recursion were not appropriate but Ashby’s Law (Heylighen, 1992) still applied. People, opportunities and networks existed to help amplify or attenuate variety. Figure 2 shows a simple application of the model to the University spin-out. Applying the model confirmed the prevalence of the collaborative working style by identifying the majority of people were located in Operations. The universal Director status had resulted in no one actually taking a strong Director role. Consequently systems 3-5 in the Metasystem were not functioning very well and there were no significant information flows between the meta system and the operations. Interestingly the regulation was strong but the governance, connections and flows were not (see Figure 3). The learning here was for one of the key driving forces, who had been talking about policy and had a strategic vision but was reluctant to take control, just like everyone else. The prospect of moving into a more directive role, reducing the number of directors, eliminating non-participative members and obtaining staff to complete admin was a challenging one and against the ethos of the original company. Theory in action was not working however and so double loop learning occurred. Story 3 – Mature venture The MD of this successful marketing company was feeling restless after 15 years. He felt that there was more he could do, more interesting work to conduct and maybe more money to be made. He had a few business ideas and opportunities and money to

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Figure 2. Rich picture of doctors dilemma

reinvest. On the surface the way forward seemed clear. In this case it was decided to draw a causal loop diagram (Figure 2). The learning in this case focuses on the expectations and habits of the MD. He had not realised how entrenched his beliefs were. He also had not realised how complex the feedback loop was that had him stuck in a repeated work pattern. This systems tool also offered him a range of possible intervention points – practical ones to break the cycle or alternative ways of dealing with his beliefs and attitudes (see Figure 4). The learning for clients has been summarised within the stories but for the consultant they can be grouped as follows: (1) Single-loop learning: . manage risks, do not avoid them; . simplify and stick to basics; and . provide a clear outcome. (2) Double-loop learning: . new ventures operate at a speed commensurate with web 2.0; . systems thinking complements the new business focus of sustainability; . most people are solution driven and reverse engineer; . theory is rarely part of new ventures – emotions are; and . pictures, graphs, shorthand summaries are welcomed in a busy world.

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Figure 3. VSM applied to 2 year old business

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Figure 4. Causal loop diagram of mature business MD dilemma

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Conclusion The three stories above are much simplified in their highlights and application of systems thinking. This is in part due to the constraints of this paper but also because a certain amount of simplification is necessary for the clients, who often do not have the time or inclination to see the fine detail. What is important to client and consultant are outcomes that are practical and enable learning so that a fraught situation can be moved away from. Notes 1. In journals such as Systems Research and Behavioural Science and Systems Practice and Action Research. 2. Available at: www.businesslink.gov.uk/ 3. Available at: www.enterprise.ac.uk/ 4. Available at: www.dogwhistle.co.uk/ References Abrams, R. (2004), “Focus on success, not failure”, USA Today, available at: www.usatoday.com/ money/smallbusiness/columnist/abrams/2004-05-06-success_x.htm (accessed 27 April 2007). Argyris, C. (1985), Strategy, Change and Defensive Routines, Pitman, London. Argyris, C. and Scho¨n, D. (1978), Organizational Learning: A Theory of Action Perspective, Addison-Wesley, Reading, MA. Beer, S. (1979), The Heart of the Enterprise, Wiley, Chichester. Beer, S. (1981), Brain of the Firm, 2nd ed., Wiley, Chichester. Beer, S. (1985), Diagnosing the System for Organisations, Wiley, Chichester. Brocklesby, J. and Cummings, S. (1996), “Foucault plays Habermas: an alternative philosophical underpinning for critical systems thinking”, Journal of the Operational Research Society, Vol. 47, pp. 741-54. Checkland, P. (2004), Soft Thinking, Systems Practice, Wiley, Chichester. Checkland, P.B. and Scholes, J. (1990), Soft Systems Methodology in Action, Wiley, Chichester. Daellenbach, H.G. and McNickle, D.C. (2005), Management Science, Decision Making through Systems Thinking, Palgrave Macmillan, Basingstoke. Davis, C.J. and Hebel, M. (2005), “Injecting value in organisations: myths, norms, facts and values”, Systems Research and Behavioural Science, Vol. 22 No. 6, pp. 525-36. Enterprise Quest (2006), “Business failure rate set to slow”, available at: www.enterprisequest. com/news/2006/04/business_failure_rate_set_to_s.html (accessed 27 April 2007). Flood, R.L. (1991), Creative Problem Solving: Total Systems Intervention, Wiley, Chichester. Hebel, M. (1998), “Values systems – a way to greater understanding”, Systems Practice and Action Research, Vol. 11 No. 4, pp. 381-402. Hebel, M. (2006), “How systems thinking has helped new ventures”, paper presented in BIOPoM, 3 October. Hebel, M. (2007), “Light bulbs and change – systems thinking for new ventures”, paper presented in BIOPoM/BCS Socio-Technical series, 7 February. Hebel, M. and Mathiesen, B. (2001), “A human value system based methodology for an organisational development consultancy”, Systemist, Vol. 23 No. 2, pp. 75-85.

Hebel, M. and Muggleton, A.T. (1999), “Applying soft systems methodology to the Commissioning Specialists Association – or SSM on CSA”, in Castell, A.M., Gregory, A.J., Hindle, G.A., James, M.E. and Ragsdell, G. (Eds), Synergy Matters: Working with Systems in the 21st Century, UK Systems Society Conference (UKSS) Proceedings, Plenum, New York, NY, pp. 181-6. Hebel, M. and Wirszycz, R. (2004), “The entrepreneurial legacy for e-learning”, European Journal of e-Learning, Vol. 2 No. 1, 2004, available at: www.ejel.org/volume-2/vol2-issue1/ issue1-art22-abstract.htm Heylighen, F. (1992), “Principles of systems and cybernetics: an evolutionary perspective”, in Trappl, R. (Ed.), Cybernetics and Systems ’92, World Scientific, Singapore, pp. 3-10. Jackson, M. (2004), Systems Thinking, Creative Holism for Managers, Wiley, Chichester. Senge, P.M. (1992), The Fifth Discipline, Century Business, London. Senge, P.M., Kleiner, A., Roberts, C. and Ross, R.B. (1994), The Fifth Discipline Fieldbook, Nicholas Brearley, London. Shelby, J.J. (2007), A Primer on Systems Thinking and Organizational Learning, available at: www.systemsprimer.com/index.html (accessed 16 April 2007). smallbusiness.co.uk (2007), “Failure rates for new UK business”, available at: www. smallbusiness.co.uk/5.2/start-a-business/news/254967/failure-rates-for-uk-business.thtml (accessed 27 April 2007). Smith, M.K. (2001), “Chris Argyris: theories of action, double-loop learning and organizational learning“, The Encyclopedia of Informal Education, available at: www.infed.org/thinkers/ argyris.htm (accessed 16 April 2007). Start-ups (2005), “Business failure rate soars in 2005”, available at: www.startups.co.uk/ Business_failure_rate_soars_in_2005.YVRA91BoEYn0nA.html (accessed 27 April 2007). Taket, A.R. and White, L.A. (2000), Partnership and Participation: Decision-Making in the Multi-agency Setting, Wiley, Chichester. About the author Misha Hebel is with the Faculty of Management at the Cass Business School, City University, London specialising in systems thinking, entrepreneurship and leadership. She also runs Dogwhistle, an Organisational Development (OD) company specialising in new venture development and micro business effectiveness and is an Associate Lecturer (AL) in Business and Technology with the Open University. Her PhD in value systems in organisations was awarded by City University Business School in 1998. She also gained a post-graduate teaching qualification in 2001 and currently sits on editorial boards for a number of international journals and conferences. She can be contacted at: [email protected]

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Gopalakrishna Barkur Engineering Management Faculty, Department of Mechanical & Manufacturing Engineering, Manipal Institute of Technology, Karnataka, India

K.V.M. Varambally Manipal Institute of Management, Karnataka, India, and

Lewlyn L.R. Rodrigues Department of Mechanical Engineering, Manipal Institute of Technology, Academic City No. 7, Dubai, United Arab Emirates Abstract Purpose – The purpose of this research is to study the influence of five critical factors on service quality in the insurance sector. Having studied the influence of these critical factors, an attempt has been made to obtain a generic solution to enhance the quality of service by proposing a holistic framework of learning organization. As globalization and IT revolution have made the insurance sector highly knowledge-intensive, customer expectations and perceptions have also grown exponentially. Hence, this research is timely and goal-focused. Design/methodology/approach – The research is based on system dynamics methodology, which involves sequential phases including: problem identification, conceptualization, model formulation, simulation and validation, and policy analysis and implementation. Meta-analysis of existing literature and rationalization are also a part of the framework development. Findings – The results have indicated that the key parameters, e.g. past experience, personal needs, external communication, word of mouth, and active clients have significant influence on service quality of the insurance sector. Practical implications – The outcome of this study can be directly implemented in the insurance sector to enhance the quality of service, as it provides a means to convert the tacit knowledge in the organization into an explicit form. The knowledge managementsystem, as a component of the learning organization, acts as a central repository of organizational knowledge and enables the service providers to minimize the “service quality gap” as best practices, past experience, and solutions to problems of common occurrence will be available for common use. Originality/value – This research is unique in the sense that it uses a system dynamics approach to service quality enhancement in the insurance sector. The research has immense value to the insurance sector, as its growth is a function of service quality. Keywords Insurance, Organizational change, Learning organizations Paper type Research paper

The Learning Organization Vol. 14 No. 6, 2007 pp. 510-523 q Emerald Group Publishing Limited 0969-6474 DOI 10.1108/09696470710825123

Introduction Service sectors have now become increasingly vibrant owing to the liberalization policies of nations coupled with the process of globalization and IT revolution. This revolution has also induced a shift of paradigm on customer requirements and expectations in addition to them being “quality conscious”. Insurance sector is one of

the sectors, which has witnessed this change and has tuned itself to the local/global demands particularly after the inception of General Agreement on Trade in Services (GATS). In fact, the more developed and efficient a country’s insurance market, the greater will be its contribution to economic prosperity (Skipper, 2001). Spending wisely to improve service comes from continuous learning of the “expectations” and “perceptions” of customers and all the stake holders. Leading business organizations over the world have learnt the art of growing strategically by continually expanding their capabilities to create their future. Senge (1994) has narrated such organization as “learning organization”. The rate at which organizations learn eventually becomes the only sustainable source of competitive advantage, especially in a knowledge intensive business. Business organizations have, therefore, begun to create their own learning systems with a view at: accelerating the rate of learning; and facilitating learning to meet organizational missions and goals. Large business organization typically has an apex body at the corporate level which systematically leads education and training throughout the organization. Such corporate learning systems need to have their own strategies to grow and sustain competition. The Learning Organization holds the key to out-innovate competition in coming times. Continuous learning, unlearning, and re-learning therefore become vital to these organizations. System Dynamics is a powerful tool that can be an inherent part of Learning Organization. This is because it gives a systematic approach to conceptualize the problem, build a dynamic model and run simulations to identify the critical parameters which need closer control to enhance the efficiency and effectiveness of the organization. In this paper System Dynamics approach has been used to study the system parameters in order to transform the Insurance Sector into a Learning Organization with specific reference to the learning outcomes on customer expectation and customer perception. Literature review The research literature on service quality proposes numerous models by different researchers across the world. However, the SERVQUAL instrument (Parasuraman et al., 1988), a 22-item scale that measures service quality along five factors, namely reliability, responsiveness, assurance, empathy and tangibles, forms the foundation on which all other works have been built: . tangibles (physical facilities, equipment, and appearance of personnel); . reliability (ability to perform the promised service dependably and accurately); . responsiveness (willingness to help customers and provide prompt service); . assurance (knowledge and courtesy of employees and their ability to inspire trust and confidence); and . empathy (caring, individualized attention the firm provides to its customers). Service quality is associated with an attitude representing a long-term, overall evaluation, whereas satisfaction represents a more short-term, transaction-specific judgment (Cronin and Taylor, 1994). Several studies (Oliver, 1993; Taylor and Baker, 1994) indicate that customers must have experienced a particular service in order to

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achieve satisfaction; however, the perceived service quality need not necessarily be the result of any one service encounter. The customer’s perceived quality depends upon five factors (Sureshchandar et al., 2001): (1) Core service. (2) Human elements of service delivery. (3) Non-human element of service delivery. (4) Tangibles of services. (5) Social responsibility. The core service refers to the essence of a service. In a service sector the service features offered are as important as how they are delivered. Schneider and Bowen (1995) emphasize that in a service business a lot of emphasis is usually placed on the procedures, processes, and contexts for service to the extent the organization tends to overlook that there is also something called the “core service”. Further, they summarize that the core service itself has perceivable, tangible, and multidimensional quality features that could distinguish services, and could predominate over other issues such as delivery and the like. The nature and quality of this core service largely influences the quality perceptions of the customers. Human element of service delivery refers to all aspects (reliability, responsiveness, assurance empathy, moments of truth, critical incident and recovery) that will fall under the domain of the human element in the service delivery. The non-human element in the service delivery is in contrast to the human element. Service delivery processes should be perfectly standardized, streamlined, and simplified so that customers can receive the service without any hassles. The tangible of the service facility refers to the equipment, machinery, employee appearance, etc., or the man-made physical environment, popularly known as the “servicescapes”. The social responsibility is the obligation of organization management to make decision and take actions that will enhance the welfare and interests of society as well as the organization. When an organization shows enough evidence on its Social responsibility it is natural to attract more customers. In this paper, all the above referred factors have been the key variables of interest in the study of Insurance sector dynamics owing to their influence on Service Quality “expectation” and “perception”. Insurance sector dynamics Traditionally, the insurance industry has been utilizing the complaint ratio as a measure of service quality (Stafford and Wells, 1996). This ratio is the number of complaints received divided by a measure of insurance business in force. Complaint ratio is an overall indicator of service quality. It fails to capture critical information such as feelings and perceptions of those individuals who did not complain. This lack of specific knowledge about service shortfalls can result in companies overlooking critical problem areas. Yoo and Ginzberg (2003) through their extensive study on Global Learning Organizations opine that contrary to the frequently suggested uniform approach, there is a need to understand the strategic roles of the local units in

designing the knowledge management support tools and practices. This concept is very much applicable to the Insurance sectors because the local expectations and perceptions of the customers on the benefits of insurance policies play a vital role in the success of different schemes in insurance policies. In the insurance industry, the principal means by which one insurer can distinguish him/her from another is based on: service before and after the sale of the policy (Stafford and Wells, 1996). It is generally difficult to differentiate market offerings because insurance providers offer government mandated products. Despite the service emphasis and positive actions taken by the insurance industry, there is little existing research that evaluates individual perceptions of the service rendered by insurance providers. So, in this context, the insurance sector dynamics deals basically with the study of the influence of the five key factors on the service quality gap, which is essentially the difference between their service quality expectation and service quality perception. The study on Insurance Sector Dynamics has a key role to play on system performance. This is because we have already entered the era of Knowledge Management where data, information and knowledge are not only considered to be the strategic assets, but also the tools for survival in the ever growing competitive market conditions. Many organizations have incorporated the concept of Learning Organization and Insurance Sector is now ripe to embark into the same. A periodic study of the system parameters, which influence the service quality as per the perceptions of the customers would be an immense source of information to identify the shortcomings and improve upon the same. At the same time the benchmarking and the best practices adopted can be stored for future use thus transforming the Insurance Sector into a Learning Organization. Research methodology The research methodology goes in accordance to the principles of System Dynamics methodology proposed by Forrester (1994). This includes: Problem identification, System Conceptualisation, Model formulation, Simulation and validation, and Policy analysis and improvement (Sushil, 1993). The problem identification stage involves the identification of variables (Checkland and Holwell, 1998) considering the key variables which have influence on the service quality. One major impediment in Service quality related research is the issue of quantifying the parameters that influence the system. In this research we define such intangibles as “units” which refer to the equivalent values used to study the trend. It is important to note that in System Dynamics research, it is mainly the trend that is studied rather than the accuracy of the numbers, and hence, the choice of “units” as the quantifiable numbers stands justified. Using the principles of cybernetics, variables relating to the problem situation have been filtered out and related to find out the causal relationships and feedbacks in the system. The causal loop of Insurance Sector Dynamics (Figure 1) has been developed considering the variables and their causal relations (Coyle, 1977). The Insurance Sector fundamentally being a service sector, it should make learning an inbuilt component in rendering quality service. Every customer will come with a new set of expectations, and also, perceptional differences. Hence, the “service quality gap” will be nothing but the difference between the “expectations” and “perceptions” (Figure 1).

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Figure 1. Insurance sector dynamics – causal loop diagram

The causal loop provides the foundation for the model formulation in the form of Stock and flow diagram (Mass, 1986). The governing equations are given in the appendix. The modelling and simulations have been performed using Vensimw PLE software (Ventana Systems Inc., 2006). A separate analysis is carried out for Active clients’ model. Here, a new variable is introduced to the Stock and flow diagram (Figure 2), which would influence the Service quality gap. The Active clients’ model is shown in Figure 3. Results and analysis The primary objective of this paper is to study the critical factors which have influence on the quality of service provided in an Insurance Sector. Following are the critical parameters whose influence on system performance has been studied in order to make policy implementations. Past experience Past experience is the customer’s previous exposure to service that is relevant to the same company or some other insurance company. Past experience is one of the forces that shape predictions and desires. The Past Experience of a customer on issues such as recommendation on right policy, bargain on premium, experiences in dealing with insurance officials, claim experiences, time period to recover claim settlement etc. play a very important role in forming perceptions. When an employee who has maintained the record of such past experience of customers leaves the organization, he carries away all the explicit, implicit and tacit knowledge with him. Also, the past experience

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Figure 2. Insurance sector dynamics – stock and flow diagram

Figure 3. Active clients’ model – stock and flow diagram

of the customer on the other hand, will be a key parameter that will make him to repurchase insurance policies or not. The simulation results indicate that the “Service quality gap” is influenced very little by the increase in the “Customer expectation of performance” to start with, however, the variation becomes significant over an extended period of time. In this simulation the variables (Figure 4): ceper1 to ceper5, refer to the “customer expectation”, which is based on past experience, increased from 1,000 units to 3,000 units in steps of 500. It can be observed that the lower the customer expectation, the higher will be the service quality gap. It is interesting to note that service quality gap will be minimum at the starting stage (even a negative trend is observed at the start i.e. expectation is higher than the perceived quality), and over a period of time the perceptions improve gradually. Personal needs The customers’ personal needs can be of physical, social, psychological, and functional like: fulfill obligations, learn my business and work with me, protect me from catastrophe, provide prompt service etc. While conducting the simulation runs, a given

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Figure 4. Past experience versus service quality gap

unit of past experience, the personal needs, which in turn is influenced by the personal need factor was varied from 0.2 to 0.6 in steps of 0.1 (Figure 5). With the past experience coupled with increasing personal needs of the customer, the service quality expectation dominance may be observed to start with, but eventually, their service quality perception improves over a period of time. It is important to note that the higher the personal needs, the longer will be the service quality recovery period. External communication External communication is mainly through the customer contact external to the organization and is influenced primarily by the contact rate of the customers. In this simulation the contact rate was varied from 0.1 to 0.2 in steps of 0.025 and its influence on service quality gap was studied (Figure 6). It can be observed that by and large

Figure 5. Service quality gap versus personal needs

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Figure 6. Service quality gap versus external communication

there will be no change in the service quality gap but eventually after an extended period of time (. 30 months) the sector fails to meet the customer expectation. Word of mouth In this case, the influence of word of mouth on the service quality is studied. The contact index will decide the number of contacts made by the customers, and hence, it was varied from 0.2 to 0.8 to study the influence (Figure. 7). It can be observed that with the increase in the word of mouth mode of communication, there is a steady decrease in

Figure 7. Service quality gap versus word of mouth

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Figure 8. Service quality gap versus active clients (curve 1-4)

Figure 9. Service quality gap versus active clients (curve 1-9)

the service quality gap, because the service quality expectation increases continuously. However, after reaching particular duration of time (. 40 months), the system recovers, and thereafter, service quality perceptions will takeover. Active clients’ model It is to be noted that the Active clients do have significant influence on the service quality gap (Figures 8 and 9). Also the influence may be non-linear. In this context, the average case load handled by the insurance sector workers will be a critical parameter, and hence, it is varied from 500 to 2000 in steps of 500 (curve 1-4) (Figure 8) and steps of

50 from 2,100 (curve 5-9) (Figure 9). It is evident that there is a dip in service quality with the increase in the case load. Initial oscillations in the service quality after the 36th month, vanishes with the increase in the number of active clients. The dip in service quality, which is observed in the initial stages, vanishes with the increase in the active clients. It is interesting to note that the increase in the number of active clients not only decreases the dip in service quality but also brings down the service quality gap.

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519 Implications and recommendations This study makes the point clear that the critical factors in an Insurance Sector, e.g. Past experience, Personal needs, External communication, Word of mouth, and Active clients do have significant influence on the Service Quality. Further, the simulation results indicate that the following measures would improve the service quality: . enhancing customer expectation; . creating awareness to increase the customer needs; . promoting internal communication instead of external communication; . delighting the customers to promote word of mouth; and . involving the active clients to a greater extent. A closer look at the above implications calls for the transformation of the Insurance Sector into a Learning organization through the introduction of a Knowledge Management System because all the above implications in one way or the other are dependent on the speed and agility of the service provider to assimilate, validate, store, distribute and apply the knowledge pertaining to: customers, product, services, and the progress made by science and technology. Learning Organization should essentially consist of people who are continually increasing their capacity to produce the results they really want to produce. The groupware can only provide the support but it is people who make the technology work. The Learning Organization Framework of Insurance Sector, emerged as an outcome of the implications of simulation results, is shown in Figure 10. Fundamentally, it emphasizes the development of a Diagnostic Metrics, which could be in the form of a measurement instrument i.e. a questionnaire. Using this metrics the Customer Expectation as defined by: Word of mouth, Personal needs, Past experience and External communication and the Customer perceptions as defined by: Tangibles of service, Core service, Human element of service, Non human element of service, and Social responsibility have to be evaluated on a regular time interval. This will enter into a system database, and thus, forms a basis for measuring the Service Quality Gap (P-E). Based on this study, a Gap Analysis may be performed and all those who are responsible for providing quality service have to be involved in this exercise. Essentially, the regional heads and experts constitute the core teams and take lead in this analysis. As an outcome, all the shortcomings may be listed and measures to fill the gap between customer expectation and the service provided may be proposed. It is important to note that all the problems encountered in dealing with the customers and the methods adopted to deal with them in an effective manner will have to be properly documented and stored in an explicit form. This is exactly where the Knowledge Management System (KMS) comes into use. The Nonaka and Takeuchi model (Nonaka and Takeuchi, 1995), which deals with Externalization, Internalization,

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Figure 10. Learning organization framework of insurance sector

Socialization, and Combination can be a very useful tool in the knowledge conversion process. The KMS thus developed would transform the Insurance Sector into a Learning Organization, where the knowledge gained during the developmental process will be stored systematically and validated from time to time. This portal of knowledge base can thus act as a learning tool for those newly joined and also provide a means for the senior staff to share their knowledge with the juniors so that the highest quality of service may be provided to the customers at a minimum time lag. Conclusion Flexibility, sensibility and adaptability are the fundamental requirements of modern day service sectors. In today’s customer driven market, these requirements are of paramount importance more than ever before. The fundamental philosophy of Learning Organization is to make these features in-built in the system of governance itself. In this paper an attempt has been made to transform the Insurance Sector into a Learning Organization. To start with, the key parameters which influence the Service quality, e.g. Past experience, Personal needs, External communication, and Word of mouth have been analyzed using System Dynamics. The results have indicated that these parameters do have significant influence on the Service quality of the Insurance sector. Drawing on the inferences of the simulation results, a framework has been proposed to identify the key components of the Learning Organization in Insurance Sector. The framework gives a systematic flow of information and knowledge

pertaining to the service quality and suggests means to store it in the knowledge base of the organization in the form of a well defined Knowledge Management System (KMS). Even though this paper culminates in the recommendation of a framework for implementing the concept of Learning Organization in Insurance sector, it calls for future extension of this research into the specific details of knowledge conversion (tacit to explicit) so as to facilitate the storage of knowledge in the KMS. There is also enough scope to add new variables (e.g. cultural factors, demographic influences, political stability, feel-good factors etc.), which influence service quality, into the insurance sector dynamics and carry out simulation. In this era of globalization, Insurance Sectors are open for global competition, and hence, when there is a threat of foreign companies entering into local market, there also lies an equal opportunity for the local companies to take their product outside the national boundaries, and in this context, transformation into a Learning Organization would be a strategic decision.

References Checkland, P. and Holwell, S. (1998), “Action research: its nature and validity”, Systemic Practice and Action Research, Vol. 11 No. 1, pp. 9-21. Coyle, R.G. (1977), Management System Dynamics, John Wiley & Sons, London. Cronin, J.J. and Taylor, S.A. (1994), “SERVPERF versus SERVQUAL: reconciling performance-based and perceptions-minus-expectations measurement of service quality”, Journal of Marketing, Vol. 58, pp. 132-9. Forrester, J.W. (1994), “System dynamics, systems thinking and soft OR”, System Dynamics Review, Vol. 10 No. 2, pp. 245-56. Mass, N.J. (1986), “Methods of conceptualization”, System Dynamics Review, Vol. 2 No. 1, pp. 76-80. Nonaka, I. and Takeuchi, H. (1995), The Knowledge Creating Company: How Japanese Companies Create Dynamic Innovation, Oxford University Press, New York, NY. Oliver, R.L. (1993), “Cognitive, affective, and attribute bases of the satisfaction response”, Journal of Consumer Research, Vol. 20 No. 3, pp. 418-30. Parasuraman, A., Zeithaml, V. and Berry, L. (1988), “SERVQUAL: a multiple item scale for measuring consumer perceptions of quality”, Journal of Retailing, Vol. 64 No. 1, pp. 12-40. Schneider, B. and Bowen, D.E. (1995), Winning the Service Game, Harward Business School Press, Boston, MA. Senge, P.M. (1994), The Fifth Discipline, The Art and Practice of the Learning Organisation, Century Business, London. Skipper, H.D. Jr (2001), Insurance in the General Agreement on Trade in Services, American Enterprise Institute for Public Policy Research, Washington, DC. Stafford, M.R. and Wells, B.P. (1996), “The effect of demographic variables on perceived claims service quality”, Journal of Insurance Issues, Vol. 14 No. 2, pp. 163-82. Sureshchandar, G.S., Rajendran, C. and Kamalanabhan, T.J. (2001), “Customer perception of service quality – a critique”, Total Quality Management, Vol. 12 No. 1, pp. 111-24. Sushil (1993), System Dynamics: A Practical Approach for Managerial Problems, Wiley Eastern Publication, New Delhi.

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Taylor, S.A. and Baker, T.L. (1994), “An assessment of the relationship between service quality and customer satisfaction in the formation of consumers’ purchase intentions”, Journal of Retailing, Vol. 2, pp. 163-78. Ventana Systems Inc. (2006), available at: www.vensim.com (accessed 12 January 2007). Yoo, Y. and Ginzberg, M. (2003), “One size doesn’t fit all: knowledge management systems and knowledge sharing practices in global learning organizations”, Sprouts: working papers on information environments, Systems and Organizations, Vol. 3 No. 2, pp. 83-106.

Appendix Equations: Insurance sector dynamics 1. core service ¼ underpinning knowledge, 100; 2. underpinning knowledge ¼ core service*rate of service knowledge gain; 3. rate of service knowledge gain ¼ 0:1; 4. human element of service ¼ manpower*productivity; 5. manpower ¼ 100; 6. productivity ¼ 0:6; 7. nonhuman element ¼ efficiency of personnel*ICT tools; 8. ICT tools ¼ 10; 9. efficiency of personnel ¼ 0:6; 10. tangibles of service ¼ knowledge; 11. knowledge ¼ rate of knowledge gain*tangibles of service; 12. rate of knowledge gain ¼ 0:1; 13. social responsibility ¼ satisfaction index*societal needs; 14. societal needs ¼ 10; 15. satisfaction index ¼ 0:6; 16. service quality perception ¼ core service þ human element of service þ nonhuman element þ social responsibility þ tangibles of service; 17. external communication ¼ customer contacts, 100; 18. customer contacts ¼ contact rate*External communication; 19. contact index ¼ 1; 20. word of mouth ¼ contact index*number of insurance holders; 21. number of insurance holders ¼ 100; 22. contact index ¼ 1; 23. past experience ¼ influence factor*customer perception of expectation; 24. influence factor ¼ 0:6; 25. customer perception of expectation ¼ 3; 000; 26. personal needs ¼ customer perception of expectation*personal need factor; 27. personal need factor ¼ 0:6; 28. external communication ¼ customer contacts, 100; 29. customer * rate*external communication; 30. contact rate ¼ 0.1;

31. service quality expectation ¼ past experience þ personal needs þ external communication þ word of mouth; and 32. service quality gap ¼ service quality perception – service quality expectation.

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Active customers

33.

clients contracting ¼ marketing effort/marketing effort required – clients becoming active;

34.

marketing effort required ¼ 1; 500;

35.

marketing effortt ¼ total hours - billable work;

36.

billable work ¼ active clients*average caseload;

37.

average caseload ¼ 2; 200;

38.

clients becoming active ¼ Clients contracting/contracting time;

39.

contracting time ¼ 1:5;

40.

active clients ¼ clients becoming active - clients departing, total hours/(1 þ (average tenure/marketing effort required)*average caseload)*average tenure/marketing effort required;

41.

clients departing ¼ active clients/average tenure;

42.

average tenure ¼ 5:

Corresponding author Gopalakrishna Barkur can be contacted at: [email protected]

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Change in(ter)ventions to organizational learning: bravo to leaders as unifying agents

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Roland K. Yeo College of Industrial Management, King Fahd University of Petroleum & Minerals, Dhahran, Saudi Arabia Abstract Purpose – The purpose of this research is to examine the relationship between change interventions and organizational learning. It seeks to identify the process through which team learning is developed, the factors that affect organizational learning and its influences on organizational effectiveness. Design/methodology/approach – Two groups of samples from a Singapore large manufacturing firm that had implemented change interventions for two years were selected. Qualitative data from 45 employees using the laddering, non-directive interviewing technique, and 20 leaders using focus group discussions were gathered. Findings – Changes to organizational systems and structure have led to a state of not-knowing which contributes to defensive dynamics. Learning begins with the unlearning of old habits by encouraging new thinking patterns through rigorous feedback loops. Expectations of leaders should also be redistributed to facilitate and integrate the various aspects of learning. Research limitations/implications – Change interventions have led organizational learning to develop in reciprocal directions where the initial top-down approach is subsequently supported and driven by a bottom-up approach. The strategy is to engage employees in collaborative decision making embedded in constant dialogue and reflection. Practical implications – Organizational learning strategies, developed from the lessons learned, are based on organizational infrastructures with an emphasis on efficiency, effectiveness and transformation. One of the critical considerations is the institutionalization of learning as being integral to daily work practices. Originality/value – The study extends the theoretical basis of the “fifth discipline” by incorporating the nominalist perspective such that organizations, as organisms, have the capacity to recreate themselves for the expansion of the shared vision. Keywords Organizational change, Discipline, Leadership, Learning organizations, Singapore Paper type Research paper

Introduction If you want to know the taste of a pear, you must change the pear by eating it yourself. . . If you want to know the theory and methods of revolution, you must take part in revolution. All genuine knowledge originates in direct experience. (Mao Zedong [1893-1976], founder of the People’s Republic of China in Sidel and Sidel, 1975; pp. 606).

The notion of “organizational learning” is overemphasized in much of the management literature. Because of the complexity involved in the type of learning that operates at The Learning Organization Vol. 14 No. 6, 2007 pp. 524-552 q Emerald Group Publishing Limited 0969-6474 DOI 10.1108/09696470710825132

This paper has greatly benefited from the constructive comments of the Guest Editor, Dr Peter Smith, and anonymous reviewers. The author also acknowledges the support given by King Fahd University of Petroleum and Minerals in the preparation of this paper.

the collective level, organizational learning has been perceived as a form of spirituality. For instance, Garratt (1990) associates the connecting tissue between single and double-loop learning as the business “brain”, while Hawkins (1991) refers to the platform for triple-loop learning as the business “soul”. For others like Stewart (2001), learning needs to be embedded in the images of an organization residing in the minds of employees as well as in the epistemological artifacts residing in organizational environments. As such, the recurring themes of “mind” and “soul”, and the interplay between the two have led us to posit that generation of new knowledge, attitudes and skills can be acquired and applied in existing or new organizational contexts (Blackman et al., 2004). In this regard, the above excerpt from a speech made by Mao Zedong in 1937 brings to light a fundamental theory of learning, that all genuine knowledge originates in direct experience. In order to facilitate organizational learning, we argue that leadership is a critical operating agent that creates opportunity and experience for all employees. Essentially, leaders need to first have a vision of how learning should be institutionalized through the intervention of systems, structure and strategy (Burnes et al., 2003). A successful intervention plan should be supported by a shared vision to promote collectivity. In this context, employees are constantly challenged to participate in activities that lead to the construction of knowledge for the ultimate competitive advantage of the organization (Sheehan, 2004). As such, organizational learning can be defined as a process in which individuals actively make use of knowledge to guide their behaviors in ways that promote the ongoing adaptation of the organization. According to Edmondson and Moingeon (1998), organizational learning is a process that engages in individual cognition and supports organizational adaptiveness. In this paper, our aim is to analyze the relationship between various change interventions and organizational learning. For the purpose of delimiting the scope of this paper, we have decided to use a framework developed by a large semi-private manufacturing firm in Singapore, herein identified as firm “X” from which this study was carried out (see Appendix).

A change intervention framework We now explain the framework that was developed to help firm “X” shape their change interventions. Its conceptual premise is largely based on Senge’s (1992) definition of organizational learning as the constant expansion of individuals’ capacity to create outcomes they genuinely want. In the process, new and expansive thinking patterns emerge, allowing collective mindsets to be completely set free. We will draw on Senge’s (1992) “fifth discipline” to justify the conceptual logic of Figure 1 which was used as a prior theory that guided our research. Our fundamental belief is that learning is the generation of new insights that can potentially change behavior (Huber, 1991). As such, it is essential that specific organizational attributes be carefully considered to allow the appropriate types of activities to develop and influence organizational learning (Cook and Yanow, 1993). These activities will invariably lead to modification in terms of organizational systems, structure and strategy (Appelbaum and Gallagher, 2000). Hence, we raise an important question which serves as the Research Problem: RP. What is the relationship between change interventions and organizational learning, and what sort of outcomes can be expected?

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Firm “X” first began by identifying three immediate change areas that could be implemented to promote organizational learning. These include creating a shared vision, flexible systems and team dynamics, all closely aligned to Senge’s (1992) “fifth discipline”. The senior management also believed that other frameworks involving the perspectives of theory in action (Argyris, 1993), organizational renewal (Braham, 1996), action learning (Garratt, 1987), growth and renewal (Pedler et al., 1997), organizational culture (Schein, 1985) and team building (Watkins and Marsick, 1993) are too complex for the large size of firm “X” to consider implementing. However, these perspectives will be used to support the conceptual discussion of Figure 1. The “fifth discipline” posits that informal and social networks help in the transition between error detection and error reduction, the former associated with first-order learning while the latter, defensive routines and second-order learning. Argyris and Scho¨n (1996) refer to error detection as model I theory-in-use while error reduction, model II, both relating to individual beliefs and assumptions but with different intensity. In this context, the interplay between mental models and team learning begins to influence the degree of learning. For instance, mental models provide individuals with the ability to expose their own thinking effectively, making it open to the influences of others. On the other hand, team learning encourages work groups to think insightfully by solving complex issues. Central to these processes is the role of dialogue which is the foundation of social relationships. It is essential to the sharing of underlying assumptions and beliefs between individuals, leading to a frequent state of reflection and inquiry necessary for deep learning. Through a series of change interventions, firm “X” was confident that the transitions created would take these individual beliefs and assumptions to a level where adaptive learning could be transformed into generative learning (Senge, 1992). The former refers to learning within predetermined rules, often associated with single-loop learning while the latter, learning through the constant challenging of routines and regulations, often associated with double-loop learning. In this context, generative learning often results from the dynamics of defensiveness through the interaction of multiple feedback loops to overcome the state of not-knowing (Simpson et al., 2000). As such, this assumption has led us to develop our first Research Question: RQ1. How will change interventions lead to organizational learning? Shared vision is much related to personal mastery and systems thinking in the “fifth discipline” (Senge, 1992). Taken together, they could be regarded as resources necessary for productive learning in firm “X”. For instance, institutionalizing shared vision is important to organizational learning as individuals could share a common

Figure 1. Firm “X’s” change intervention framework

image and objective of the future they wish to create. In this respect, shared vision can be regarded as an organizational resource with the primary purpose of building a sense of commitment and unified direction. Through personal mastery, individuals will possess a readiness to continually renew personal learning for the achievement of organizational goals. On the other hand, systems thinking is the understanding of how changes in the learning process can affect the complex interrelationships of the system as a whole. However, it does not adequately account for the possible resistance to learning caused by changes to organizational systems and structures, which may in turn lead to learning disruptions and disturbances (Sun and Scott, 2003). Learning groups, according to Simpson et al. (2000), can be regarded as complex systems themselves; hence, the overall workings of the “fifth discipline” do not successfully explain the possible barriers that might inhibit the transfer of learning between these systems. Further, insufficient attention is paid to how knowledge might be managed, how organizational structures might support knowledge sharing and their implication as a resource to organizational learning (Yeo, 2005). As such, we need to consider other theoretical perspectives to explain Figure 1 further. This has led us to develop our second research question: RQ2. What are the factors that influence organizational learning during a change intervention? According to Weick (1991), organizational learning is a process that is engaged in a system of purposive activities. These activities, as reinforced by Senge (1992), should best be motivated by a shared vision, flexible organizational systems and optimal human dynamics. As systems are a network of relations, the transfer of knowledge and skills from individuals to teams requires constant interaction between learners and the subsystems. A certain degree of systems flexibility would be required to facilitate learning at the collective level, enforcing regular knowledge co-construction based on a shared purpose (Marquardt, 1996; Vickers, 1983). For firm “X”, the shared objective is to engage individuals in the process of thinking, reflecting and acting rather than acting on instructions alone (Argyris, 1982). As O’Connor (2004) posits, leaders should operate as unifying enablers in facilitating these changes, as follows: . it is vital to support learning even if there are no answers to expertise; . leaders need to motivate employees to be proactive and learn from one another; . the workplace should be exploited as an intrinsic learning space; . leaders should clarify the perceived responsibilities of “the expert” when employees solve problems together and be ready to manage clashes in individual competencies; and . leaders have to be mindful that employees’ participation in any learning activity can be influenced by the mentality that “what we know” does not work. Ultimately, learning cannot be said to have taken effect unless there is some form of change in the way individuals confront daily problems and defensive routines. They must demonstrate that knowledge gained has been utilized and transformed into competitive knowledge, enhancing organizational performance, survival and future creation (Braham, 1996; Denton, 1998). The notion of learning is a continuous and progressive pursuit, bringing renewed connections between vision and reality.

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However, organizational renewal is frequently hindered by the disparity between the two. In order to narrow the gap, individuals need to be less reactive-responsive (adaptive learning) to circumstances but more creative (generative learning). In the same regard, leaders need to help them learn at a faster pace with a greater capacity by creating systems, structures and strategies that facilitate collaborative learning. Only then will vision and reality intersect, leading to organizational growth. This is when employees are being transformed into effective contributors rather than efficient workers with a view of external competition (Hawkins, 1991). It is with this assumption that we develop our final research question: RQ3. How does organizational learning lead to organizational renewal and growth? Research methodology As an exploratory study, we adopted a qualitative orientation by collecting rich data to illuminate the research problem and questions. We conducted the research in two stages and collected the data at the end of the two-year organizational learning intervention of firm “X”. In the first stage, we made use of an opportunity sample (Wilkins, 2002) of 45 employees and conducted laddering, non-directive interviewing with the subjects. Each interview lasted between 40 and 60 minutes (see Table I). In the second stage, we conducted four focus group discussions, each lasting about two hours. We invited 20 leaders, the key initiators of the change intervention, to participate in the discussions based on convenience sampling (Jarratt, 1996). Each group consisted of five members and we moderated their discussions based on key issues related to their intervention plans (see Table II). Laddering is a type of depth-interviewing which involves hidden-issue questioning and symbolic analysis. This technique was designed to establish a dialogue with the general employees (n ¼ 45) by first asking for a description of the situation and

Job titles

Core functions

Sales manager

Supervisory, external relations, administrative External relations, administrative Supervisory and administrative Administrative Supervisory, internal relations, administrative Internal relations, administrative Supervisory, technical, administrative Technical, administrative Technical Administrative Supervisory, internal and external relations, administrative Internal and external relations, administrative Technical, administrative

Sales executive Accounts and finance manager Accounts and finance executive Human resource manager

Table I. Profile of the interview respondents (Stage 1)

Human resource officer Engineering team leader Engineer Technical assistant Administrative officer Marketing communication manager Marketing communication executive IT and systems programmer Total

No. of subjects 2 3 2 3 1 4 5 9 3 5 1 2 5 45

Job titles Chief executive officer

Executive director Chief technology officer Accounts and finance director and Deputy director Human resource director and Deputy director Sales director and Deputy director Marketing communication director and Deputy director IT and systems development director and Deputy director Chief engineer Senior manager, engineering

Total

Contribution to the change intervention initiative Had a vision of transforming the organization into a learning organization; mooted the change initiative Supported the initiative; helped identify key areas of focus; crafted new vision and mission statements Helped identify key areas of focus; led a committee to look into systems changes. Helped forecast budget and allocate financial resources to support the initiative Led a committee to look into the training and development needs of employees and propose plans to enhance team dynamics Worked with CEO and Executive to identify performance indicators of the initiative Helped provide a strategic communication plan for all levels of employees Helped look into IT infrastructure to support and facilitate knowledge sharing Helped identify key areas of competences for the engineering and technical employees Helped to re-examine the workflow of the engineering processes to allow organizational learning to take place incrementally

No. of subjects

1

Change in(ter)ventions

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1 1 2

2 2 2 2 3

4 20

probing for more insights that might enlighten the study (Jarratt, 1996; Lester and Parnell, 2002). The process of laddering involves the direct use of probes; for instance, a recurring question asked was “What do you think your superiors should have done more (or less)?” The objective was to determine linkages between the subjects’ perception of attributes, consequences and values of change and organizational learning. This was largely achieved by maintaining control of each interview and directing the respondent deeper into the experience. According to Reynolds and Gutman (1988), this non-directive questioning technique is able to adequately evaluate the respondents’ motivation, underlying perceptions and behavior. In the first stage, each experience was explored exhaustively until basic values were unearthed or barriers brought up by the respondent were unable to be challenged (see Table III). In contrast, focus group discussion involves a more dynamic exchange of views between subjects as piggybacking of ideas allows for rich data to emerge. This

Table II. Profile of the focus group participants (Stage 2)

Table III. Development of the interview and focus group questions L4. Do you think there was a strong sense of shared vision during the change interventions? Why/not? L5. Were there systems changes, e.g. social structure, barriers, work processes, that challenged your employees’ routine positively and/or negatively? Please elaborate L6. Was there better teamwork, e.g. shared responsibilities, group learning and discussion, after the change intervention? Please explain L7. What do you think you should have done more (or less)? E4. Do you think there was a strong sense of shared vision during the change interventions? Why/not? E5. Were there systems changes, e.g. social structure, barriers, work processes, that challenged your routine positively and/or negatively? Please elaborate E6. Was there better teamwork, e.g. shared responsibilities, group learning and discussion, after the change intervention? Please explain E7. What do you think your superiors should have done more (or less)?

RQ2. What are the factors that Organizational learning involves developing people who learn to see influence organizational learning during a change intervention? as systems thinkers see, who develop their personal mastery, and who learn how to surface and restructure mental models collaboratively (Senge, 1992) Organizational learning involves action learning processes which release the energy and learning of people in the hour-to-hour, day-to-day operational cycles of business (Garratt, 1990)

(continued)

L1. Over the past two years, do you think your employees learned something from the change interventions? Why/not? L2. What are some of the changes that caused your employees to acquire new knowledge and do things differently? Tell me a story or share an experience L3. What do you think you should have done more (or less)?

Focus group questions Stage 2

E1. Over the past two years, do you think you learned something from the change interventions? Why/not? E2. What are some of the changes that caused you to acquire new knowledge and do things differently? Tell me a story or share an experience E3. What do you think your superiors should have done more (or less)?

Interview questions Stage 1

Organizational learning is the ability RQ1. How will change interventions to adapt and utilize knowledge as a lead to organizational learning? source of competitive advantage. Learning must result in a change in the organization’s behavior and action patterns (Denton, 1998) In organizational learning, knowledge has to be generated and crafted in ways where the mind and brain can use and make it actionable (Argyris, 1993)

Research questions (RQs)

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Themes from the literature

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Research questions (RQs)

Focus group questions Stage 2 L8. What do you think were some of the good (or bad) results that had come out of these changes? L9. In what ways have these results benefited you, your employees and the company? L10. Do you think the change efforts were worthwhile? Why/not? L11. What do you think you should have done more (or less)? L12. What other issues are important to you, which I should have asked?

Interview questions Stage 1 E8. What do you think were some of the good (or bad) results that had come out of these changes? E9. In what ways have these results benefited you and the company? E10. Why do you think the company wanted to implement these changes? E11. What do you think your superiors should have done more (or less)? E12. What other issues are important to you, which I should have asked?

Notes: Words in italics in the last column indicate the differences in the way the questions were asked between the two stages; E preceding the question number denotes “Employees” and L, “Leaders”

RQ3: How does organizational Organizational learning involves learning lead to organizational collective efforts to learn continuously so that, as a whole, the renewal and growth? organization transforms itself where the capacity for growth and renewal is constantly enhanced (Watkins and Marsick, 1993) The outcome of learning is a renewed connection between employees and their work, which will spur the organization to create a future for itself (Braham, 1996)

Themes from the literature

Change in(ter)ventions

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Table III.

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technique worked well for leaders (n ¼ 20) of firm “X” as it was through open communication that key issues were deeply discussed. In the second stage, rigorous note-taking and transcription of verbal text were carried out with constant clarification with the subjects to ensure that opinions, comments and feedback were carefully observed. Unlike the laddering technique, we used probes to elicit opinions and underlying thoughts on issues relating to change and organizational learning (Denzin and Lincoln, 2000). The focus group process stimulated individual subjects, promoting a dynamic exchange of values and opinions. This technique provided valuable qualitative data and broad insights that might be difficult to obtain in other less efficient ways (Krueger, 1994; Stewart and Shamdasani, 1990). For both stages, data gathered was coded immediately and regularly within the research timeframe. In the process of coding, interpretive notes (memos) were attached to the data, reinforced by highlights of key words and phrases on the transcripts (Strauss, 1987). Content analysis was undertaken immediately once the data was completely gathered for each stage through the help of a software program, N.Vivo. During the analysis, the categories of classification were clearly and operationally defined according to the theoretical framework that had been developed as a prior theory (Figure 1). Secondly, objectivity was exercised to classify the various items into the appropriate categories. The unit of analysis for these items was determined by either a key word or key phrase uttered repeatedly by the subjects. Thirdly, quantification of data was observed through the number of mentions based on each unit of analysis (Holsti, 1969; Jarratt, 1996). N.Vivo helped greatly in straightening out the complex qualitative data, allowing key themes and repeat patterns to emerge. Findings We have tabulated the findings based on representative quotes corresponding to each set of interview questions, categorized by the research questions. We also highlight the key themes and patterns that have emerged from the qualitative data through the help of the N.Vivo software (see Tables IV, V and VI). Discussion RQ1. How will change interventions lead to organizational learning? We propose that learning groups in any change intervention process can be regarded as complex systems. We adopt the perspective of Simpson et al. (2000) that for working groups to operate effectively, it is essential to consider the interrelating patterns involved in the change process, including positive and negative feedback loops. In this research, we have identified that change processes can either amplify learning or anxiety when learners are engaged in the state of not-knowing within the operation of defensive dynamics. As exemplified in an employee’s account of her experience: . . .we generally don’t handle (respond to) change[s] well. . .because we tend to be (get) comfortable in our comfort zone. . .when the company announced [the] plans regarding the changes. . .we were very worried because we don’t know whether we can take the stress.. whether our work (job functions) will be affected. . .I am afraid to lose my job. . .but my supervisors told us to take one thing at a time and don’t be afraid to ask questions and make mistakes. . .I remember I have to learn to work with people because there are group projects

1. Over the past two years, do you think you (your E1. “I learn[ed] to focus on what I’m good [at] employees) learned something from the change rather than what I’m not good [at] . . . ” E2. “Honestly. . .I didn’t have [the] time to learn interventions? Why/not? anything extra (new skills). . .except [from] my mistakes. . .and (or) other people’s mistakes . . . ” L1. “. . .they (employees) probably learned not to take things for granted . . . ” L2. “. . .As I see. . .our people (employees) didn’t really bother to gain new knowledge. . .they were just trying to stay afloat. . . with [all] these changes . . . ” 2. What are some of the changes that caused you E3. “We had to do this joint project on improving (your employees) to acquire new knowledge and quality control of our (products’) packaging. . .all do things differently? Tell me a story or share an of us are (came) from different departments. . . [the] first thing I learn[ted] was how to work with experience strangers and something about quality control. . .[I] spent a lot time reading [up] and trying to understand how people think. . .and sometimes their ‘strange’ habit[s] . . . ” L3. “. . .one of the visible changes I saw in my department was. . .(employees) getting used to our new electronic applications. . .example[s] like scheduling, virtual discussions, reporting of (product) defects, HR matters like leave, MC, employee record. . .we were very paper-based (driven). . .now you see most of my staff learning from one another. . .on how to improve computer skills. . .good time to change their old way[s] of doing things. . .ha ha . . . ”

Interview (focus group) questions

Representative quotes RQ1. How will change interventions lead to organizational learning?

(continued)

Unlearning old habits is the beginning of a new thinking and learning process

“dialogue”: E (n ¼ 30), L (n ¼ 14); “group/team structure”: E (n ¼ 28), L (n ¼ 11); “work process”: E (n ¼ 17), L (n ¼ 9); “personal reflection”: E (n ¼ 12), L (n ¼ 7)

Learning from mistakes is the most practical lesson

“yes”: E (n ¼ 21), (n ¼ 10); “somewhat”: E (n ¼ 14), L (n ¼ 5); “unsure”: E (n ¼ 6), L (n ¼ 3); “no”: E (n ¼ 4), L (n ¼ 2)

Key themes and patterns

Change in(ter)ventions

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Table IV. Analysis of qualitative data based on RQ1

Table IV. Key themes and patterns

534

Notes: E refers to “employees” while L, “leaders”; n refers to number of recurring mentions as determined by N.Vivo in the data analysis

3. What do you think your superiors (you) should E4. “. . .my bosses were very serious with these Individual competence should be evaluated on the basis of efficiency and effectiveness have done more (or less)? changes. . .wanted every one of us to take it (change) seriously. . . they always encourage[d] us to look at the big picture. . . not to focus on immediate thing[s] but long-term (benefits). . . they all lead by example. . .which is good” L4. “. . .what I could have done less was. . . er... probably trying to meet deadlines all the time. . . I think we must accept that changes don’t change overnight. . . it is a process and I wish I was more patient and less demanding to (on) my staff . . . ”

Interview (focus group) questions

Representative quotes RQ1. How will change interventions lead to organizational learning?

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4. Do you think there was a strong sense of E5. “. . . the vision message was prominent . . . pasted all over the place in our office[s . . . even the vision statement shared vision during the change was everywhere in our intranet . . . but whether the vision interventions? Why/not? was shared by everyone . . . I’m not too sure . . . all I know is, people do follow instructions to get things done . . . ” L5. “. . .pretty much a shared vision . . . in our dialogue sessions . . . I could feel they (employees) all cared about their progress . . . performance[s] during the change process . . . there was some sense of unity I could feel when dealing with them . . . I’m sure they also moaned and groaned behind our back . . . because there were new things to do and old things to stop doing . . . changing of habits is not easy, right?” E6. “. . . I think they (leaders) gave us more power 5. Were there systems changes, e.g. social (authority) to make decisions . . . last time there was (were) a structure, barriers, work processes, that lot of procedure[s], especially paper work . . . now you just challenged your (your employees’) routine need to send an e-mail and, if you receive a reply, you can positively and/or negatively? Please straightaway do it . . . more efficient in my opinion . . .” elaborate L6. “. . . One of the challenge[s] is, staff must play different roles when we team[ed] them up to handle projects . . . to promote teamwork and team learning . . . Communication, I think, was a barrier because the lingo between them may be different . . . for example, a production staff and an admin staff can’t understand common terms related to manufacturing systems . . .”

Interview (focus group) questions

Representative quotes RQ2. What are the factors that influence organizational learning during a change intervention?

(continued)

Changes to routines diversify deeply-rooted systems, and redistribute power structures and social relations

“yes”: E (n ¼ 33), L (n ¼ 10); “somewhat”: E (n ¼ 7), L (n ¼ 6); “unsure”: E (n ¼ 4), L (n ¼ 3); “no”: E (n ¼ 1), L (n ¼ 1)

Shared vision leads to the collective construction of meanings and values, including performance

“yes”: E (n ¼ 22), L (n ¼ 8) “somewhat”: E (n ¼ 10), L (n ¼ 5); “unsure”: E (n ¼ 6), L (n ¼ 3); “no”: E (n ¼ 7), L (n ¼ 4)

Key themes and patterns

Change in(ter)ventions

535

Table V. Analysis of qualitative data based on RQ2

Table V.

7. What do you think your superiors (you) should have done more (or less)?

6. Was there better teamwork, e.g. shared responsibilities, group learning and discussion, after the change intervention? Please explain

E7. “. . . lots of cross-channel (departmental) projects and lots of discussion . . . team spirit (was) not good all the time . . . sometimes, we just have to get it done quickly . . . otherwise [we] can’t finish the work . . . maybe if we have more time, we can build better relationship[s] . . .” L7. “. . . I believe so (i.e. better teamwork) . . . we gave them (employees) clear objectives as a team and the [team] leader had to be responsible to make sure the project [was] carried on (carried out) well . . . I don’t see a problem with teamwork. . .with these changes, we just gave them more opportunities to work together, that’s all . . . and it’s actually quite interesting to find out how different [people from other] departments think (about the project) . . .” E8. “I hope (wish) my supervisors will give us some reward to encourage us . . . even time-off is good . . . what I like about them (leaders) is, they try to streamline our job to give us time to [be] involve[d] [in] projects or committee work . . .” L8. “I think what I could have done less is, talk less and listen more . . . sometimes we are so used to giving instructions and forget to invite suggestions or comments . . . some of our staff have very good ideas too . . . What I could do more . . . should [have] be[en] more supportive of their ideas. . .”

Leaders can promote organizational learning by removing organizational impediments and supporting new practices

Clear, specific objectives can drive teamwork, invigorate team spirit and minimize defensive dynamics

“yes”: E (n ¼ 18), L (n ¼ 9); “somewhat”: E (n ¼ 13), L (n ¼ 4); “unsure”: E (n ¼ 7), L (n ¼ 4); “no”: E (n ¼ 7), L (n ¼ 3)

Key themes and patterns

536

Interview (focus group) questions

Representative quotes RQ2. What are the factors that influence organizational learning during a change intervention?

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8. What do you think were some of the good (or E9. “. . .the culture is now not quite the same bad) results that had come out of these changes? anymore. . .it’s more like a family although the workload is killing. . .[I] guess we are always part of the family, except [that] now we grow in the family. . .the company wants us to do things together and live up to the vision . . . ” L9. “. . .having a strong troop (of army) behind you makes you competitive. . .we always go into [a] war (external competition) together. . .we need to develop a culture of shared responsibility, accountability and performance. . .only then can we call ourselves a learning organization . . . ” 9. In what ways have these results benefited you E10. “. . .after these two years, I think I can (your employees) and the company? multitask more. . .for example, I can handle a few things at one time because I have learned to prioritize. . .to have a positive attitude and to consult my superior[s] or colleagues if I have [any] problems. . .I also think I can handle stress slightly better now. . .ha ha . . . ” L10. “. . .for me (i.e. middle manager), I have benefited from being tolerant if things around me are not in order. . .I used to be very compartmentalized. . .everything must be done well, one at a time. . .the changes have taught me to be realistic with expectations, [be] firm when necessary and [be] flexible when things are [too] tensed . . . ”

Interview (focus group) questions

Representative quotes RQ3. How does organizational learning lead to organizational renewal and growth?

(continued)

A shift in the collective mindset results in an acknowledgement of self-deficiencies and of the need to explore, experience and grow with others

“mindset”: E (n ¼ 13), L (n ¼ 12); “courage to try”: E (n ¼ 8), L (n ¼ 10); “efficiency”: E (n ¼ 7), L (n ¼ 6); “boldness to change”: E (n ¼ 4), L (n ¼ 6)

Changes modify organizational culture, enabling the organization to be nimble and responsive to external circumstances

“organizational culture”: E (n ¼ 16), L (n ¼ 9); “competitive advantage”: E (n ¼ 11), L (n ¼ 10); “collective will”: E (n ¼ 10), L (n ¼ 7)

Key themes and patterns

Change in(ter)ventions

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Table VI. Analysis of qualitative data based on RQ3

Table VI.

11. What do you think your superiors (you) should have done more (or less)?

E11. “. . .the company is changing [its] image. . .to be more global I think. . .they were doing well, but they want[ed] to do much better in times like these (volatile, keen competition). . .I feel [that] this plan (change intervention) was to tackle the soul of the company. . .[it’s] no use if the body is growing without a soul. . .we are the soul and we’re growing too . . . ” L11. “Definitely worthwhile. . .after spending so much time and effort. . .we wanted to take the company to the next level where we invest in the right people to get the right results. . .look at the changes we had to go through. . .[it was] certainly no easy time. . .but when we fall, we pick ourselves up and then move on. . .this is the only way to improve [and] learn new things . . . ” E12. “If the top management could give us an update of what’s going on from time to time, we would get more connected, maybe more involved. . .we were too focused on the nitty-gritty [of daily work] but would like to have a clearer, bigger picture too . . . ” L12. “I suppose we (i.e. leaders) could have a stronger common mindset. . .some of us, me included, were afraid to rock the boat. . . do as told. . . which is not a wrong thing. . . but we could be more transformational in our thinking. . .so that when we lead the changes, [the] outcomes will be more phenomenal. . .but it’s not too late [yet]. . .we [are] still moving into the next phase of the [change] implementation . . . ”

(continued)

The ultimate purpose for any change is to focus on the transformation of the organization to meet external competition

A long-term competitive advantage is to promote a shared vision and institutionalize learning as an inescapable way of life

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10. Why do you think the company wanted to implement these changes? Do you think the change efforts were worthwhile? Why/not?

Interview (focus group) questions

Representative quotes RQ3. How does organizational learning lead to organizational renewal and growth?

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Key themes and patterns

12. What other issues are important to you, which E13. “. . .was wondering why didn’t you ask, how Changes often encourage the development of I should have asked? many people [had] resigned during the two years? different views from individuals, i.e. from an Well, I know for a fact. . .some left due to great individual to a helicopter to a satellite view stress from all these change[s]. . . others are too old (less employable) to move (job hop). . .some others believe[d] they should just endure . . . ” L13. “. . .an important issue is, why go through all this fanfare? Wasn’t the company doing OK all along? Why make things difficult? Well, we went into all this (change intervention) as a way of self-checking. . .we asked ourselves, is the company really doing well? Are we wasting resources? Is our company’s infrastructure sufficient? Do we have the capability to go on for the next 25-30 years and still be a market leader? At some point. . .a building needs to be repainted, not so much for the sake of being attractive; it’s to protect the texture[s] of the fac¸ade so that the building can withstand weather turbulence and not be destroyed easily . . . ”

Interview (focus group) questions

Representative quotes RQ3. How does organizational learning lead to organizational renewal and growth?

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Table VI.

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and I have to learn to speak out (up). . .sometimes, I am scared that my ideas(s) are stupid but my colleagues and superiors are quite encouraging. . .they always give me suggestions to improve myself. . .a while later, I realize that I begin to learn something new. . .

Changes in firm “X” led many of the employees to learn to communicate their sentiments because of the anticipated uncertainties brought about by the shifting defensive contexts. According to Senge (1992), dialogue is a metacommunication skill involving members to think together through a series of interrelated activities. In a learning system, constant interaction is created through communicative activities where new meanings and social structures emerge. Pepper (1995) regards communication as a process of organizing; hence, the communicative behaviors of employees during a change intervention often determine the degree and capacity to which learning has occurred. This is evident in a recurring theme that has emerged from the focus group discussions: [The] changes put in place must allow dynamic communication to promote spontaneity and constant inquiry. . .learning networks need to be developed [in order] to build up a strong learning culture. . .so that as a whole, we (the organization) can learn fast enough to catch up with people (competitors). . .

At the core of the learning system in firm “X” is the one experience that has influenced the patterns of dynamics among the employees during change. It is the uncertainty that creates the state of not-knowing, which according to Simpson et al. (2000) is the stimulus that leads learners into the filtering process of engaging in sense-making no matter how transient or vague. This can be represented by a dominant comment from an employee: . . .the more we don’t know, the more we are scared to do things, to act. . .mistakes seem to multiply. . .but because we don’t know the situation [well]; we try to learn on the job. . . the supervisor[s] are encouraging. . .they show us they also make mistakes. . .at least we don’t feel [we are] alone. . .

With the above example, we develop our first proposition with regard to change and learning: P1.

To learn is to engage in not knowing. The underlying stimulus to learn is uncertainty, propelled by a series of sense-making activities frequently accompanied by emotional complexity, including fear.

As illustrated in Table VII, the change processes led employees to each challenge their own assumptions by protecting and exploring their personal perspectives and insights into actions that seemed unfamiliar to them. When leaders were confronted with increasing defensive dynamics, they had to try and build greater learning networks by enforcing a shared vision and managing the learning process strategically. In this context, process control is essential to the rate and degree of learning that could be realistically expected. In order to integrate learning into daily work, leaders had to manage causal relationships by focusing on how operational learning could be achieved through the correction and adjustment of errors based on specified objectives (Coopey, 1996). When the level of changes became more complex, leaders began creating self-development opportunities for individuals to share and reflect on their experiences through feedback, inquiry and team support (Pedler et al., 1997). The aim

Principles of complexity

Implications for organizational learning

Actions within complex systems often produce unexpected or counter-intuitive results

Both leaders and employees were challenged by a state of not-knowing. As they grappled with the sense of uncertainty, they found ways to maintain equilibrium by using tried-and-tested methods in problem solving and avoiding any that was unfamiliar to them. Through a series of trials and errors, they began to experiment with new methods of doing things by first challenging existing routines and expectations. Drawing on their prior knowledge, they became more sensitive to and confident in error detection, and subsequently more responsive to error reduction Initially when changes were implemented, many operated by means of their individual mental pictures of how things could go right or go wrong. Defensive dynamics which were developed through changes in power structure gave leaders time to step back and analyze the situations more carefully. Even when the collaborative dynamics were sought to be integrated through a shared vision, many still saw changes as being realized in a much farther future than anticipated. As such, learning that occurred in group settings became a negative experience for most employees. They felt uncomfortable as their personal spaces were minimized to embrace a more public one (through team learning). Leaders’ resistance to intervene at the start allowed insights into group dynamics to develop spontaneously. This provided a more concrete and experiential type of learning for all The transformation of the change interventions into meaningful learning activities was rather significant and long-lasting. There was a fundamental clarity in the expectations of the various tasks as determined by individual as well as collaborative goals. In spite of notknowing in many instances as changes developed, employees were able to explore, experiment and modify their actions both in their planning and in their execution. Ultimately, the overall change effort was rated as a successful organizational learning endeavor by firm “X”

In complex systems, the links between cause and effect may be distant in time and space

Complex systems are highly sensitive to some changes but remarkably insensitive to others

Source: Based on data collected with reference from Simpson et al. (2000)

was to extend learning from single to double-loop where existing norms and practices (systems) were challenged to bring about desired outcomes (Garratt, 1990). Through a series of collaborative involvements, transfer of learning from the individual to team level began to develop where double-loop feedback mechanisms became operative in the complexity of change, as affirmed by an employee: The [organizational learning] intervention [process] has given us the opportunity to build our team spirit by trying [out] new things with people we don’t [usually] work with. . . especially

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Table VII. Learning groups as complex systems in change interventions

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across project groups made [up] of inter-departmental people. . .most important[ly] we can challenge different viewpoints [from the group] to see another side of the coin. . . this experience is quite an eye-opening one for me. . . and my colleagues too. . .

The above quote brings to our attention the relationship between structure and process in change settings, leading to our second proposition:

542

P2.

Learning can be enhanced by explicitly acknowledging, appreciating and evaluating the potentially divisive structure of diverse teams, which has either created or developed out of a process of defensiveness of personal perspectives and resistance to unfamiliar ones.

RQ2. What are the factors that influence organizational learning during a change intervention? We further argue that change processes can help stabilize the equilibrium of learning groups by amplifying and balancing feedback loops. As complex systems, these learning groups are not necessarily characterized by predictable patterns of behavior; instead, they involve a certain complexity in terms of relations, relationships and interrelationships embedded in the processes of change (Stacey, 1996). For instance, influences of a change intervention on organizational learning in this context involve such factors as group members, subgroups, ideas, emotions, systems, activities, expectations, conceptual frameworks and experiential backgrounds (Simpson et al., 2000). Accordingly, we have developed an organizational learning framework (Figure 2) which integrates the various factors related to change processes. Data reveals that the initial stage of the change intervention was largely driven by a top-down approach where tasks were executed under the specific directives of leaders with a strong focus on purpose and strategy. However, as learning groups became more complex, individuals began to play an implicit role in directing the manner and degree to which learning was to take place. In this context, leaders participated in the reciprocity by assuming the role of unifying agents to manage defensive dynamics as well as to facilitate team learning. As such, negotiation of systems modification in addition to

Figure 2. An integrated framework of organizational learning for firm “X”

social and power structures was evident in the process of change. The double arrows illustrated in Figure 2 indicate the importance of interdependence between decision makers (leaders) and actors (employees) in the entire process, as exemplified in the following quote of an employee: During these two years [of intervention], changes in certain systems, structure and process posed some problems (difficulties) in the beginning for us. . . as we went along, we realized that we were more empowered to make decisions. . . our supervisors became [our] partners in solving [these] problems. . .we also had the chance to make joint decisions on rules, policies and others. . . Now we can see that workflow has improved. . .because complex structures (e.g. hierarchies) are reduced. . . and people are closer to each other.

This integrated framework is an extension of Senge’s (1992) “fifth discipline” as we incorporate the seven dimensions of organizational learning from the work of Watkins and Marsick (1993). These include the development of learning opportunities, dialogue and inquiry, collaboration and team learning, a collective vision, flexible systems to facilitate learning and strategic leadership, and the connection of organization to its environment. This theoretical foundation is also supported by a concept of Argyris and Scho¨n (1996) who posit that true learning is implicitly related to dialogue and inquiry where deeply-held assumptions and beliefs are surfaced through the process of reflection. As such, we propose that dialogue and reflection serve as learning unifiers embedded within the change process. According to Senge (1992), dialogue is a means of improving communication between individuals and groups; hence, individuals are expected to be proficient in simultaneously articulating issues they face and listening actively to others before evaluating an input. On the other hand, reflection is regarded by Watkins and Marsick (1993) as dealing with feedback and self-disclosure on the levels of individual, team and organizational learning. Reinforcing Senge’s (1992) notion of dialogue, this feedback loop is the means by which actors use to produce knowledge for themselves. The interrelation (yet distinction) between the two learning unifiers has led us to develop our third proposition: P3.

Organizational learning in change processes requires a high level of sense-making achieved through the interaction of people and the surroundings. At the dyadic level, an individual makes sense of someone else’s sense. Without reflection, it is not possible to understand feedback and contribute to dialogue in meaningful and productive ways.

Data further identify three factors, namely “structure”, “systems” and “strategy” that have a direct influence on organizational learning. Firstly, the structure of an organization which affects the flow of information, work and authority needs to be fundamentally modified in order to facilitate organizational learning (Appelbaum and Gallagher, 2000). Organizational learning can be said to have taken place when the organization restructures itself in response to changes in the internal and external environments. Secondly, the nominalist (systems) perspective posits that organizations are self-regulating organisms where problems are seen as opportunities for growth and development. In this context, organizational learning occurs through cycles of action, including error detection, reduction and correction. In short, organizational learning is a self-regulating process of knowledge acquisition to overcome the condition of not-knowing and to achieve organizational stability. Thirdly, the strategy for organizational learning involves an appreciation of enlightened values and a greater

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understanding of competitive knowledge achieved through social networks and direct experience with the external environment. Together with leaders as unifying agents, a deeper meaning based on the collective construction of reality can be realized for the long-term effectiveness of the organization. In a leader’s words: We zoomed in on systems development by tweaking the company’s structure, in terms of doing things differently. . .because we want to give our staff a change of routine. . .a refreshing way of handling daily tasks...in a not-so-routine way. One of the [key] changes is to cut down on unnecessary work, better use of technology and more cross-team projects to broaden their way of thinking. . .our strategy is to run (learn) faster than others (competitors) so as to remain as the market leader in our field of work. . .

With the above example, we develop our fourth proposition: P4.

Organizational learning can be generated by focusing directly on the dynamics of structure, systems and strategy, which can be potentially transformational for the long-term benefits of the organization. As well, learners’ engagement with the reality of social situations is challenged at a fundamental level. When predictable behaviors, thought patterns and emotions do not make sense in new contexts (state of not-knowing), true learning will develop, often through a process of unlearning and relearning.

RQ3. How does organizational learning lead to organizational growth and renewal? Organizational learning is [of] no use. . . if the organization doesn’t transform [itself] and change with time. . .

The above is a dominant view that has emerged from the focus group discussions where organizational transformation was defined by leaders as having the focus, capability and will to survive in complex and turbulent environments. According to Smith (1993), “focus” refers the understanding of learning opportunities to gain competitive knowledge while “capability” implies the skills and resources necessary for employees to learn swiftly. Ultimately, “will” is the collective emotion, including feelings and motivation that propels organizational learning. Organizational renewal and growth can be characterized by the development of employees’ cognitive and behavioral attributes for the achievement of shared vision. The following is a quote of a leader that attests to such characteristics: In this period [two years of change interventions], I have observed something about our employees. . .they seem to show us [management] a ‘can do’ attitude. . .I believe [that] they really want to do it. . .and they will do it quite well. . .I think this what we call organizational learning. . . where people work towards a common objective (shared vision). . .

Consequently, these cognitive and behavioral changes of employees will result in a shift from adaptive responses to generative actions. As such, leaders need to create opportunities for employees to adapt and reshape knowledge in order to enable new learning patterns to develop. Leaders we spoke to were concerned with the outcome of organizational renewal, which they referred to as the narrowing of the gap between reality and vision. One way of narrowing the gap is to examine the core capabilities of the organization. For instance, after two years of change interventions, firm “X” was able to experience a proliferation of

generative conversation and creative orientation of work processes. The former was achieved by creating opportunities for constant dialogue and inquiry, while the latter, by simplifying complex systems and structures. These opportunities, according to Maani and Benton (1999), are two key capabilities of organizational learning leading to organizational renewal and growth. As apparent in Table VIII, the relationship between complex systems (characterized by learning groups) and organizational renewal can be enhanced through the collective mindsets of individuals who learn to be adaptable to changes and be nimble to recreate themselves. Lei et al. (1999) regard organizational competence as being measured by the organization’s capacity to recreate itself and its responsiveness to external competitions. In this context, we draw on Watkins and Marsick’s (1993, p. 267) notion of organizational renewal as our fifth proposition: P5.

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A vision of renewal “moves the organization beyond its limitations and results in an alternative future that a company might not now even imagine”.

Reinforcing our earlier theoretical foundation of Figure 1, we argue that organizational renewal and growth are the outcomes of the cyclical process of knowledge creation, dissemination and implementation. For instance, incorporating learning into organizational routines enables employees to challenge their mental models and be empowered to integrate quality and quantity into their work processes. Watkins and Marsick (1993) regard this process as leading to greater commitment and a renewed purpose for the organization. In order to promote trust and commitment, leaders need to be instrumental in providing a blame-free culture for learning. The state of not-blaming challenges defensive dynamics and enables employees to consider risks as a means of unlearning, learning and relearning new capabilities (Denton, 1998). Defensive dynamics surface when the consciousness and unconsciousness to avoid the struggle of confronting not-knowing intersect (Simpson et al., 2000). As such, not-blaming contributes to healthy

Principles of complexity

Implications for organizational renewal

Actions within complex systems often produce unexpected or counter-intuitive results

Despite the state of uncertainty and not-knowing brought about by the change interventions, it is believed that learning processes can be managed appropriately to achieve desired and practical outcomes Through a carefully-developed change intervention plan with the flexibility to accommodate unexpected changes, it is possible to achieve specific learning outcomes by means of predictable and quantifiable measures Throughout the entire process of change, there was not much of a problem in identifying actions for improvement and areas requiring specific change. However, the major difficulties encountered were certain constraints related to, for instance, resource and productivity limitations

In complex systems, the links between cause and effect may be distant in time and space Complex systems are highly sensitive to some changes but remarkably insensitive to others

Source: Based on data collected with reference from Simpson et al. (2000)

Table VIII. Learning groups as complex systems and organizational renewal

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dynamics that are critical to the building of an optimal organizational learning climate which operates at three levels. First is the ability to value people as the key asset; second, a perception of learning as a cyclical process; and third, the ability to reframe information at the strategic level (purpose) (Garratt, 1990), as encapsulated in the remarks of a leader: [An] optimal learning climate is very important. . .it will promote some sort of [a] dynamic exchange of “real” (authentic) information between employees. . . Soon, they (employees) will learn to accept [the] changes in our [company’s] policies, strategies and operations. . .and go on in life as per normal. . .and be happy as they go along, knowing [that] they have helped the company to grow in small but significant ways. . .

In turn, healthy working relationships will be developed through an appreciation of self-awareness, co-operation, acceptance and respect (Braham, 1996). Knowledge co-construction will ultimately lead to a new-found confidence, a sharpened mental model and an enhanced personal mastery, reinforced in an employee’s comments: . . .We have [now] realized the importance of teambuilding. . .and sharing [of] information and learning together. . .All this makes us realize that individual effort is not sufficient to battle elusive (abstract) challenges that permeate the workplace everyday. . .all this has trained us to be responsive [to issues] every minute of the day. . .

In summary, the above example has led us to develop our sixth proposition: P6.

The interplay of people, process and purpose often evokes experiences that contributes either to difficult or productive dynamics, leading to the rate and capacity at which an organization learns.

Practical implications for leaders There must be an environment of trust to encourage us [employees] to learn freely (i.e. inquiry). . .so that our views and perceptions will be treated with respect. . .this will motivate us to learn more. . .

The above is a quote of an employee and an example of the need to create an environment that incorporates both personal and public spaces for individuals to articulate their learned experiences. Lessons learnt from firm “X” have led us to highlight specific strategies to help leaders facilitate organizational learning processes with the desired outcomes. Table IX is constructed on the conceptual premise of the “fifth discipline” as we relate systems thinking to the level of interconnectedness pertaining to learning activities and the influences of organizational structure on behavioral modification. Second, we also consider personal mastery as dealing with the state of generativeness which aims at creating and connecting with individual as well as collective paradigms. Third, we associate mental models with the level of openness and inquiry required in the learning process. Fourth, our emphasis on team learning is related to the collective intelligence of individuals by integrating dialogue and discussion to challenge defensive dynamics. Finally, we regard shared vision as the ultimate source of commitment via a commonality of purpose through strategic partnership and compliance. As seen, the emphasis required for each level of learning is different, requiring specific facilitation and support. Taken together, these emphases will increase the organization’s capacity to learn and transform itself in the long run. For instance, the role of dialogue is seen as a critical role which permeates all three learning levels. As

Purpose Focused on “transformation”

Develop learning capabilities for all levels of employees Encourage systems thinking by frequently communicating the organization’s strategic plans and development Create opportunities for participatory policy-making Empower employees with decision-making capacity

Provide a flexible working structure Streamline complicated work processes Encourage collaborative learning by enhancing team dynamics Consider a flexible and performance-based reward system

Provide a learning culture and climate Create self-development opportunities for all employees Promote inquiry and dialogue Encourage open communication

Strategies for leaders (E3, E7, E12, L3, L7 and L12)

Source: Developed from the qualitative data of both stages. The numbers in parentheses in the header denote the interview and focus group questions

Organization Strategy Encouraging “satellite” view Promoting shared vision and institutionalizing learning as an inescapable way of life

Structure Process Improving the way people work and the way Focused on they interact with one another “effectiveness”

Teams Encouraging “helicopter” view

People Focused on “efficiency”

Systems Removing impediments and supporting new practices

Individuals Encouraging “independent” view

Organizational capabilities (E8-10, L8-10)

Organizational infrastructures (E4-6, L4-6)

Learning levels (E1-2, L1-2)

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Table IX. Strategies for the implementation of organizational learning

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learning becomes less individual, the focus on decision-making, empowerment and participation increasingly contributes to double-loop learning through the creation of feedback loops. Most importantly, learning impediments must be alleviated to make way for learning to develop spontaneously and responsively. In this context, the transfer between conceptual and operational learning is important in motivating individuals to learn for the accomplishment of specific tasks, often as a team, rather than for the sake of an intellectual experience (Romme and Dillen, 1997). The need for team learning is supported by an employee’s views: People should learn to cooperate. . . expectations should be realistic. . .process[es] should not be too complicated. . .There should also be support and people should recognize our efforts [in learning at all cost] . . . .I feel [that] the most important thing is, people must not feel left out. . .It’s important to work as a team. . .

Limitations and future lines of study This study reveals that process leadership is crucial to the facilitation of learning even when there are no immediate answers to complex issues during change. As described, leaders are critical enablers of complex paradigms and processes involved in the different aspects of learning. In so doing, they need to be constantly involved in the design of purpose, vision and values by which employees operate. As well, leaders need to help their employees achieve accurate, insightful and empowering views of reality by assuming appropriate stewardship (Schein, 1985). In this context, they should participate in more than just facilitating the change interventions; they need to invent constructs and paradigms that support continuous learning, evident in the following quote of a leader: What we did over the past two years or so. . .was to “invent” some changes to cause the whole company to be alert to internal and external circumstance[s]. . .[to] not be trapped in their (employees’) comfort zone[s]. . .to see problem[s] as opportunit[ies] for growth and development. . .to learn new things every day. . .to see things in different perspectives. . .

Despite the rich qualitative data obtained for this study, the research is limited by the lack of a wider sample to achieve a more cross-sectional representation of the context. For instance, quantitative methods could be utilized to study a wider perception of firm “X’s” change intervention plans from a much larger sample. Also, the current study is limited by the lack of longitudinal data which should have been collected periodically over the two-year period. Reflective accounts recorded after a period of two years may not be as reliable as fresh insights provided during the actual change process. We further recognize the possibility of biased views especially so when the data was collected after the success of the change interventions. Still, the research has yielded some useful perspectives to help firm “X” in the next phase of implementation. Following from the integrated framework (Figure 2), we propose an operational definition of organizational learning which serves as a future line of study: Organizational learning is the facilitation of shared vision through the creation of interacting systems initiated by leaders who will walk the talk.

Nonetheless, there is much to be learnt about organizational learning as it is a highly interactive process (Braham, 1996) and an inescapable way of life (Senge, 1992). It is evident that learning as a concept and practice is not independent of any single

organizational theory; learning concepts emerge across disciplines in organizational literature. It is through the integration of relevant concepts that a much considered perspective of organizational learning can be better accounted for. In spite of this, organizational learning theories continue to offer great challenges to researchers and practitioners. It is hoped that future work on organizational learning will focus on the linkages embedded in complex organizational processes. On the empirical front, a number of studies in organizational learning have utilized both the quantitative and qualitative methodologies (for example Edmondson and Moingeon, 1998; Goh and Richards, 1997; Steiner, 1998). However, few have employed ethnographic, phenomenological or longitudinal techniques in the study of the cognitive and behavioral aspects in relation to organizational learning. Hence, we conclude with some possible directions for further research by first proposing a question: (RQ) What impedes the transfer of learning from individuals to teams and ultimately to the organization at large? Next, we suggest that the following conceptual relationships are worthy of further investigation: R1.

The interaction dynamics between individuals, teams and the organization.

R2.

The linkage between dialogue and reflection.

R3.

The significance of systems thinking in organizational learning.

R4.

The impact of organizational learning on organizational performance.

Finally, we propose the following hypotheses to motivate further empirical work with a quantitative dimension: H1. The dynamics between individuals, teams and the organization have a direct influence on the degree of learning. H2. Dialogue and reflection improve the degree of interaction and rate of learning. H3. The role of leaders influences the way systems of learning are developed. References Appelbaum, S.H. and Gallagher, J. (2000), “The competitive advantage of organizational learning”, Journal of Workplace Learning, Vol. 12 No. 2, pp. 40-56. Argyris, C. (1982), Reason, Learning and Action, Jossey-Bass, San Francisco, CA. Argyris, C. (1993), Knowledge for Action: A Guide to Overcoming Barriers to Organizational Change, Jossey-Bass, San Francisco, CA. Argyris, C. and Scho¨n, D.A. (1996), Organizational Learning II: Theory, Method, and Practice, Addison-Wesley, Reading, MA. Blackman, D., Connelly, J. and Henderson, S. (2004), “Does double loop learning create reliable knowledge?”, The Learning Organization, Vol. 11 No. 1, pp. 11-27. Braham, B.J. (1996), Creating a Learning Organization, Kogan Page, London. Burnes, B., Cooper, C. and West, P. (2003), “Organizational learning: the new management paradigm?”, Management Decision, Vol. 41 No. 5, pp. 452-64. Cook, S.D. and Yanow, D. (1993), “Culture and organizational learning”, Journal of Management Inquiry, Vol. 2 No. 1, pp. 373-90.

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conceptual framework based on Peter Senge’s (1992) “fifth discipline”, as part of their organizational learning initiative which was rolled out at several stages over a two-year period. The rationale for having an organizational learning initiative was to prepare employees of firm “X” to meet the changing demands of the external environment. This initiative consisted of three parts, namely: (1) the crafting and regular communication of a shared vision; (2) the (re)design of systems changes by streamlining job functions and reporting hierarchy; and (3) the harnessing of team dynamics through dialogue and collaborative projects. Three committees were formed to spearhead the initiative. The Chief Technology Officer was responsible for systems development, while the Marketing Communication Director was tasked to come up with a strategic plan for the dissemination of the organization’s vision. In terms of enhancing team dynamics, the Human Resource Director was to look into the training and development needs of employees. The first three months of the initiative was spent on the preparation of various plans which were reviewed by the Chief Executive Officer and Executive Director. Our role was to provide professional advice on their operational concepts and guide the key personnel in the subsequent change intervention activities.

The first three months was spent on communicating the vision, building essential (or disintegrating) systems and identifying training needs for all levels of employees. The following six months saw the junior and middle management team receive training on job facilitation and personal coaching. Regular dialogue within departments was held and employees were asked to identify their personal goals which should be aligned to a shared objective. Supervisors were then asked to guide supervisees in translating these goals to departmental and organizational goals. Work processes were also gradually streamlined by reducing unnecessary paper work and giving employees the flexibility to learn and reflect. Individuals were encouraged to keep a learning log and be accountable for their competence development. A strong sense of ownership was essential to the initiative as all levels of supervisors were required to coach, inspire, and promote debate and discussion on work issues. Regular sharing was greatly encouraged with the aim of increasing knowledge base. A review was conducted at the end of the first year by the senior management to consolidate initial results and fine-tune strategies. In the second year, there was greater integration in terms of work processes and learning activities. This was achieved by having the three elements of the conceptual framework (Figure 1) – shared vision, flexible systems and team dynamics - operate in a systematic yet spontaneous manner to integrate the complexity of the various interconnected activities. An important contribution of this initiative was to see an increase in the competence levels of employees in being able to handle various routine challenges. In terms of corporate performance, Firm “X” would like to see an increase in productivity, better customer service and greater diversity in response to market changes.

Corresponding author Roland K. Yeo can be contacted at: [email protected]

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