Executive Interviews: Interview with Daniel Levinthal on Learning Organizations
July 2008 - By Dr. Nagendra V Chowdary

Daniel Levinthal
Reginald H Jones Professor of Corporate Strategy at the Wharton School,
University of Pennsylvania, Current Chair of the Management Department at Wharton.

• One is to become a (successful) learning organization. Other is to be benefited from being a learning organization. However, how do we assess whether an organization has become truly a learning organization or not? Are there any yardsticks to assess the attainment of being a learning organization?
  For simple first order learning processes of refining the firm's existing practices, there are the standard sort of benchmarks such as learning curves and other measures of rates of improvement. The challenge is more difficult to measure rates of learning with respect to higher order learning processes that involve more basic changes in the firm's way of doing business or productmix. With regard to product development activity, one standard metric is to track what fraction of existing sales are represented by products or services introduced in a recent time window, such as the last five years. A more subtle sort of measure relates to the fact that firms that are committed to learning are committed to identifying and surfacing failures. Is the organization tracking in a rich and full ways, its record of failures as well as successes?

• What is the role of leadership in creating a successful learning organization?
  Leadership is critical in setting the tone for the broader organization. Does the leader buy into the ethos of continuous improvement for him or herself, or simply expect that of others? Does the leader provide a context in which people feel safe in surfacing issues and problems that might guide useful changes in practices or is this potentially useful data going to be repressed out of fear that their jobs and evaluation will be threatened?

• Should the concept of a learning organization be looked at as a competitive necessity or amere organizational nicety?
  Business firms need to continually improve and adapt if they are to survive and be competitively viable over any sustained period of time. The days of sheltered markets and the easy life of the quiet monopolist are long gone. Indeed, given any competitive positionwill likely erode over time, it has been argued that the only truly sustainable competitive advantage a firm might have is the ability to adapt and to learn.

• It's more than 35 years since Chris Argyris propounded the idea of learning in organizations. What new evidence, if at all, do you find in support of learning organizations? What does the latest research has to say on learning organizations?
  Well, first, the idea in fact precedes Argyris and arguably first entered the management andorganizational literature with the work of James March and Herbert Simon in the 1950s. The issue of organizational learning is one of the more active lines of inquiry within the management literature. A major focus of current work is how organizations manage to balance the dual imperative of exploiting their current knowledge (leveraging and diffusing the existing set of superior practices) and exploring new, alternative bases of action. A vibrant system needs to do both. An organization that focuses excessively on the former will do well in the short run but in a longer horizon is likely to find itself at a competitive disadvantage. An organization that overinvests in exploration may not do sufficiently well in the near term to survive to see the fruits of these exploratory efforts. As March and I argue in a paper entitle, "The Myopia of Learning", exploitive activity tends to drive out exploratory efforts. The payoffs to more exploitive efforts are more certain, closer in time, and more proximate to the actors involved. How organizations can maintain an appropriate mix, what structures facilitate this, and what in fact comprises an appropriate mix are important topics of ongoing research efforts.

1. Learning Organizations Case Study
2. ICMR Case Collection
3. Case Study Volumes