Wednesday, July 16, 2008

Organizational Learning-Exploitative and Exploratory

Why do intelligent organizations do dumb things?

According to Stewart Clegg, of the University of Technology in Sydney, Australia, the answer may be that organizations are guilty of too much cleverness and not enough intelligence. In a recently published essay,

Clegg cautions organizations against falling prey to the lure of short-term gain through clever strategies, rather than choosing a more intelligent path leading to long-term sustainability.

Clegg suggests that competitive advantage is gained through two distinct kinds of organizational learning-exploitative and exploratory. How these are handled within organizations, and which form of learning is given precedence, is largely a matter of the organizational power structure.

Exploitative learning, which has its foundations in classical management, suggests that the detailed prescription of tasks is the best basis for production efficiency. This approach to learning is best accomplished through explicitness of rules and routines. Exploitative learning is most effective when a rule-enabling setting is achieved, where continuous improvement develops through the structuring of desire, understanding, and trust. Ideally, workers share with management a desire for continuous improvement.

Exploratory learning, on the other hand, allows for complex searches, innovation, variation, risk-taking and more relaxed controls, providing flexibility, investments in learning, and the creation of new capabilities. Distant time horizons and uncertain benefits are valued.

Clegg argues that a critical managerial dilemma is how to manage the relationship between exploratory and exploitative learning. An emphasis on exploitative learning and the necessary explicitness of rules may restrict experimentation and crush innovation. Steadfast attention to task accomplishment can be punitive and stifling. At worst, it can threaten the survival of the organization, as increasingly outmoded processes are slavishly and uncritically adhered to.

On the other hand, an overemphasis on exploratory learning is also not optimal

Clegg, S. 1999. Globalizing the intelligent organization: Learning organizations, smart workers, (not so) clever countries and the sociological imagination. Management Learning, 30 (3): 259-280.

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