Organizational Learning and Strategic Renewal [618339]

Organizational Learning and Strategic Renewal
Author(s): Mary M. Crossan and Iris Berdrow
Source: Strategic Management Journal, Vol. 24, No. 11 (Nov., 2003), pp. 1087-1105
Published by: Wiley
Stable URL: https://www.jstor.org/stable/20060603
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Strategie Management Journal
Strat. Mgmt. i., 24: 1087-1105 (2003)
Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/smj.342
ORGANIZATIONAL LEARNING AND STRATEGIC
RENEWAL
MARY M. CROSSAN1* and IRIS BERDROW2
1 Richard Ivey School of Business, The University of Western Ontario, London, Canada
2 Management Department Bentley College, Waltham, Massachusetts, U.S.A.
This paper attempts to fill an important gap in the integration of strategy and organizational
learning through empirical research that examines the process of strategic renewal using a com
prehensive framework of organizational learning. The 41 framework of organizational learning
is used to examine the phenomenon of strategic renewal at Canada Post Corporation (CPC).
The study illustrates the underlying processes that form the tension between exploration and
exploitation, demonstrating why strategic renewal is so challenging. Furthermore, it challenges
assumptions about organizational learning, suggesting that we need to demystify organizational
learning by removing the halo that surrounds it. Copyright ? 2003 John Wiley & Sons, Ltd.
ORGANIZATIONAL LEARNING AND
STRATEGIC RENEWAL
The field of strategic management has been fer
tile ground for researchers seeking perspectives
on the key considerations in managing the suc
cess of the enterprise. One of these, identified by
Mintzberg, Ahlstrand, and Lampel (1998), is orga
nizational learning. In this paper we ask: How does
organizational learning explain the phenomenon
of strategic renewal? We present an empirical
study of the process of strategic renewal that
addresses three shortcomings of current research
on organizational learning and strategic renewal.
The first shortcoming is a too-narrow conceptual
ization of organizational learning as it relates to
strategy. Second, organizational learning research
has ignored the main undercurrent of strategic
renewal?the tension between exploration and exploitation. The third is a lack of empirical
research applying organizational learning theory to
strategic renewal. In addressing these shortcom
ings we seek to contribute to strategy research by
delving more deeply into the black box of strategy
process.
We apply the organizational learning framework
developed by Crossan, Lane, and White (1999) to
examine strategic renewal at Canada Post Corpora
tion (CPC). CPC provides an excellent case study
because of the significant changes it has under
gone as well as its need to understand and respond
to a potential move from physical to electronic
delivery of mail. CPC s challenges are similar to
those faced by many firms undergoing strategic
renewal (e.g., Fugifilm, described by Kunii, Smith,
and Gross, 1999), particularly those firms adapt
ing to significant technological change (Evans and
Wurster, 1997; Useem, 1999).
We begin with a general overview of the orga
nizational learning literature as it applies to strate
gic renewal and follow with a more in-depth dis
cussion of the organizational learning framework
employed. After presenting the study methodology Key words: strategic renewal; organizational learning;
transformation; strategic process; innovation ^Correspondence to: Mary M. Crossan, Richard Ivey School of Business, University of Western Ontario, 1151 Richmond Street North, London, ON, Canada N6A 3K7
Copyright ? 2003 John Wiley & Sons, Ltd. Received 27 December 1999 Final revision received 27 March 2003
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1088 M. M. Crossan and I. Berdrow
we conclude with a discussion of the findings and
implications of the research.
ORGANIZATIONAL LEARNING AND
STRATEGY
Strategy research has been criticized for its overly
analytical orientation, top management bias, lack
of attention to action and learning, and neglect of
the elements that lead to the creation of strategies
(Mintzberg et al., 1998). Organizational learning
research, with its focus on process, has the poten
tial to offer insight into these identified shortcom
ings (Walsh and Huff, 1997). Indeed, as DeGeus
(1988) points out, organizational learning may be
the only sustainable competitive advantage. How
ever, despite the many literature reviews (Argyris
and Schon, 1978, 1996; Crossan et aU 1995;
Daft and Huber, 1987; Fiol and Lyles, 1985;
Huber, 1991; Levitt and March, 1988; Shrivastava,
1983), organizational learning research has largely
remained disconnected from strategy. Attempts to
forge a link between strategy and organizational
learning have been hindered by shortcomings that
fall into one or more of three broad categories.
The first shortcoming is a too-narrow conceptu
alization of organizational learning. Organizational
learning has often been described as an emer
gent, trial-and-error, even random process (Goold,
1996a, 1996b; Mintzberg, 1996a, 1996b; Pascale,
1996a, 1996b; Rumelt, 1996). Another perspec
tive on organizational learning, drawing heav
ily on the work of James March (Cohen and
Sproull, 1996), sees it as a more rational pro
cess within the domain of decision-making and
choice. For example, using a computer simula
tion to examine the impact of organizational learn
ing on entrepreneurship, Lant and Mezias articu
late three basic components of a learning model:
'First, organizations have a target level of perfor
mance or aspiration level to which they compare
their actual performance.. .Second, performance
above or below aspiration level affects the likeli
hood of observable organizational change.. .Third,
a learning model suggests that the acquisition and
processing of information about alternatives takes
place in a relatively costly process of search'
(Lant and Mezias, 1990: 149). However, the focus
on choice and decision-making does not capture
the richness of the organizational learning phe
nomenon found in interpretive systems (Daft and Weick, 1984), communities of practice (Seely
Brown and Duguid, 1991), dialogue (Isaacs, 1993),
and memory (Walsh and Ungson, 1991). This sug
gests the need for a more in-depth examination of
the organizational learning phenomenon.
Lant, Milliken, and Batra conclude that 'orga
nizational learning may be more complex than
the trial-and-error process often emphasized in the
organizational learning literature' (Lant, Milliken,
and Batra, 1992: 603). Delving more deeply into
the cognitive processes of organizational learning,
Barr, Stimpert and Huff found that the process of
strategic renewal at the railroads they studied 'was
more complex than the two-tiered models of orga
nization learning (single-loop and double-loop)
usually found in the management literature' (Barr,
Stimpert and Huff, 1992: 32). They concluded that
'renewal hinges not so much on noticing new con
ditions, but on being able to link environmental
change to corporate strategy and to modify that
linkage over time' (1992: 15). Their research sug
gests the need for a more in-depth model of the
organizational learning process to understand how
interpretation affects changes in strategy. To limit
the view of organizational learning to either an
emergent, happenstance, trial-and-error perspec
tive or a more rational choice and decision-making
perspective is to restrict what organizational learn
ing has to offer strategy.
The second shortcoming is the failure to address
the fundamental tension of strategic renewal?the
tension between exploration and exploitation. For
example, organizational learning theory has been
employed to understand resources and capabili
ties (Nanda, 1996), tacit knowledge (Nonaka and
Takeuchi, 1995; Spender 1996), and the role of
memory in organizations (Casey, 1997). These
undertakings, though important, do not address the
overarching tension created when firms develop
new competencies while concurrently exploiting
existing ones.
Conflicting results in two studies on strategic renewal serve to elucidate the second shortcom
ing. The work of Huff, Huff, and Thomas (1992),
which uses a simulation methodology to exam ine the interaction between inertia and stress as it
relates to four proposed phases of renewal, stands
in contrast to that of Stopford and Baden-Fuller
(1994), who examine renewal in 10 firms in four
European industries. Whereas Huff et al. found a
'bifurcation between firms that stay within one
strategic framework for long periods of time and
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Organizational Learning and Strategic renewal 1089
firms that actively seek major changes in strategy'
(Huff et al, 1992: 71), Stopford and Baden-Fuller
found that 'all of the firms built or attempted to
build all the attributes of corporate entrepreneur
ship in long drawn out processes over many years,
not in a one-shot, single event' (Stopford and
Baden-Fuller, 1994: 528). Further, though some
firms strived for 'successful metamorphic change',
researchers found no evidence of it. Neither study
drew heavily on the organizational learning lit
erature to explain the phenomenon of strategic
renewal.
Using another simulation, Mezias and Glynn
(1993) employed the same learning model as Lant
and Mezias (1990) to explore the effectiveness
of three corporate renewal strategies: institution,
revolution, and evolution. They found that 'units
engaging in an institutional strategy did not tend to
experience more innovation, in spite of increased
resources devoted to search … Units engaging
in a revolutional strategy, purportedly designed to
increase radical innovative change, garnered only
transitory increases in the amount of innovation'
(Mezias and Glynn, 1993: 94). The findings of
Mezias and Glynn, more consistent with those of
Stopford and Baden-Fuller, show that the strategic
renewal process tends to be a long-drawn-out pro
cess. Yet, these studies yield no significant insight
into the process of strategic renewal and, more
specifically, no clues to why firms?even those
that intend to?do not radically innovate.
Organizational learning is seen as a means to
develop capabilities that are valued by customers,
are difficult to imitate, and hence contribute to
competitive advantage. However, organizational
learning often remains a 'black box' as researchers
presume that positive transformation can and will
happen. Yet despite the pervasive view that organi
zational learning leads to new sources of capability
in support of new strategies, there has been no
empirical examination of the effects of organiza
tional learning on strategic renewal. Understanding
the process of strategic renewal is critical if we
are to move beyond the claims that organizational
learning may be the only sustainable competitive
advantage (DeGeus, 1988).
Research on organizational learning is not
without its problems. For example, practitioner
focused, learning organization research has left
practitioners and many researchers with a very
normative view of organizational learning as an
innately positive phenomenon. Notable examples of this positive orientation are the work of Senge
(1990) and the work of Watkins and Marsick
(1993), whose six action imperatives typify this
positive and prescriptive view of organizational
learning. Argyris and Sch?n describe learning
organization research as 'prescriptive, practice
oriented, value-committed, sometimes messianic,
and largely uncritical' and they allege that research
'treats the phrase, learning organization as a
catchword for whatever is front-running Japanese'
(Argyris and Sch?n, 1996: xix). Allowing for the
possibility that organizational learning may not
be Utopian enables us to take a more critical
view of organizational learning and helps reveal
undiscovered aspects of the process.
Finally, even in cases where organizational
learning has been applied to strategic renewal,
researchers have stopped short of application
and testing. For example, Crossan et al (1999)
explicitly address the tension between exploration
and exploitation. However, their framework is only
loosely tied to the story of Apple Computer, and
they present no in-depth empirical examination.
We attempt to address these three shortcomings
by presenting an empirical study of the process
of strategic renewal using a comprehensive frame
work of organizational learning. A brief descrip tion of the framework follows.
THE 41 ORGANIZATIONAL LEARNING
FRAMEWORK
We employ the 41 framework developed by
Crossan et al. (1999). While the framework
addresses the first two shortcomings, in that
it is comprehensive and captures the tension
between exploration and exploitation, there has
been no empirical examination of it. The following
provides a brief overview of the 41 framework.
As shown in Table 1, four associated (micro)
processes?intuiting, interpreting, integrating, and
institutionalizing?serve to link three levels of
analysis and define learning within organizations.
Intuiting and interpreting occur at the individual
level; interpreting and integrating happen at the
group level; and integrating and institutionalizing
take place at the organizational level. The use of
verb forms conveys both the cognitive and behav
ioral perspectives of learning processes. For exam
ple, it is important to consider not only intuition
(cognition) but also how that intuition develops
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1090 M. M. Crossan and I. Berdrow
Table 1. Learning/renewal in organizations: four pro
cesses through three levels
Level Process Inputs/outcomes
Intuiting Experiences
Individual Images
Metaphors
Interpreting Language
Group Cognitive map
Conversation/dialogue
Integrating Shared understandings
Mutual adjustment
Organization Interactive systems
Institutionalizing Routines
Diagnostic systems
Rules and procedures
Crossan, Lane, and White (1999); reproduced by permission of Academy of Management Review.
(behavior). Crossan et al. (1999: 525) define the
learning processes as follows:
Intuiting is the preconscious recognition of the
pattern and/or possibilities inherent in a personal
stream of experience. This process can affect the
intuitive individual's behavior, but it only affects
others as they attempt to (inter)act with that indi
vidual.
Interpreting is the explaining of an insight, or idea to one's self and to others. This process goes
from the preverbal to the verbal and requires the
development of language.
Integrating is the process of developing shared
understanding amongst individuals and the taking
of coordinated action through mutual adjustment.
Dialogue and joint action are crucial to the devel
opment of shared understanding. This process will
initially be ad hoc and informal, but if the coor
dinated action taking is recurring and significant it will be institutionalized.
Institutionalizing is the process of ensuring that routinized actions occur. Tasks are defined, actions
specified and organizational mechanisms put in
place to ensure that certain actions occur. Insti
tutionalizing is the process of embedding learning
that has occurred by individuals and groups into the
institutions of the organization including systems,
structures, procedures, and strategy.
Processes at the organization level, especially
institutionalization, merit further discussion be
cause of their critical link to strategy. The organi
zational level is where we find stores of knowledge and learning in such nonhuman elements as struc
tures, systems, procedures, routines, and strategy.
As posited by the design, planning, and position
ing schools of strategy noted by Mintzberg et al
(1998), analysis at the organization level shows us
the importance of aligning these nonhuman ele
ments with the competitive environment.
According to some, the design, positioning, and
planning schools of strategy are excessively ana
lytical and neglectful of the origin of strategies
(Mintzberg et al, 1998). But their central mes
sage?the need for alignment between organiza
tions and environments?remains important. We
concur with Hamel and Prahalad (1993) that this
alignment is a dynamic process that inevitably
stretches resources and capabilities from time to
time. As the alignment shifts over time, a firm must
be capable of reinterpreting its environment and
incorporating its understanding into new products,
processes, strategy, and structure.
The 41 framework recognizes that the compet
itive position of a firm is dynamic not static,
with influences working through feedback loops
as depicted by the arrows shown in Figure 1.
These feedback loops are what create the tension
of strategic renewal. Within a constantly changing
environment, organizations must manage the ten
sion between institutionalized learning and the
processes of intuiting, interpreting, and integrat
ing. The former enables exploitation?the effi
cient production within well-defined and routine
parts of the business; the latter enables explo
ration ?processes equally important but less tan
gible and concrete. Crossan et al refer to these
as the feed-forward and feedback processes of
learning.
As shown as a matrix in Figure 2, if the
vertical axis is considered as the input, source,
or cause, and the horizontal axis as the output,
product, or effect, one can examine how intuition
becomes institutionalized (cell 1,4) or, inversely,
how institutionalization impacts the development
of intuition (cell 4,1). The diagonal of the
matrix (cells 1,1; 2,2; 3,3; 4,4) describes the
pure processes (intuiting, interpreting, integrating,
institutionalizing) previously discussed. The cells
in the upper right area comprise the feed-forward
learning processes that move from individual
to group to organization, while the cells in
the lower left area represent feedback?the
impact of organization-level learning on individual
and group learning. For example, cell (4,3)
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Organizational Learning and Strategic renewal 1091
Individual Group Organizational
Individual
Group
Organizational
Figure 1. Organizational learning as a dynamic process (Crossan, Lane, and White, 1999; reproduced by permission
of Academy of Management Review)
OUTPUT
Figure 2. 41 matrix
represents the effect of institutionalized learning
on integration.
In summary, the 41 framework: (1) recognizes
the tension between assimilating new learning
(exploration) and using what has already been
learned (exploitation); (2) examines three levels of learning and the relationship amongst the lev
els; (3) identifies processes that link the levels;
(4) links these processes to strategic renewal; and
(5) recognizes that organizational learning involves
an interaction between cognition and action. While
many frameworks or models have attempted to
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1092 M. M. Crossan and I. Berdrow
explain organizational learning, none incorporates
all five areas. We turn now to the methodology
used to apply the 41 framework to organizational
learning at CPC.
RESEARCH METHODOLOGY
We selected CPC because it represented an inter
esting and instructive case study of strategic re
newal. At the time of the study, CPC had under
gone major strategic changes and was in the midst
of deciding if, and how, it would move from phys
ical to electronic delivery of mail. CPC needed not
only to exploit what it had learned about the physi
cal delivery of mail but also to explore whether and
how it should participate in the electronic delivery
channel. There existed a strong tension between
exploration and exploitation (March, 1991) found
in companies undergoing strategic renewal. It was
evident, therefore, that we would readily observe
the phenomenon of interest at CPC. Before we
examine CPC s strategic renewal process through
the lens of organizational learning, we look briefly
at the changes the firm experienced.
CPC was the single provider of a full postal
service for all of Canada. Before October 16,
1981, when Parliament passed an Act making CPC
a Crown Corporation, the public postal service
had been under the jurisdiction of various Cana
dian government departments. Each looked after its own functional area and did not coordinate its
efforts with other departments. Don Lander, the
CEO at the time of the study, described the chal
lenges CPC faced (Lander, 1991: 100).
In moving to manage this enterprise as a business,
the new corporation had to face a number of major
challenges. It did not have a balance sheet, a pro
cess for billing customers or even a bank account of
its own. There was no system to accurately record,
apply and manage employee time and attendance.
Nor were there adequate measures to match labour
input with volumes. Some of the key functions
required by a corporation, such as payroll, labour
relations and data processing services, had been
provided to the Post Office by other government
departments.
Although the operations had been mechanized in
large mail processing plants, there was a complete
lack of consistent operating standards, systems and
procedures required in a nationwide distribution
system to ensure delivery commitments were being
met. The capabilities had never been measured. The promises of delivery were largely based on guesswork, a factor that had contributed to the
loss of reputation for reliability. The asset base of
our postal system was deteriorating_Perhaps the
biggest challenge of all was to change the corporate
culture.
The move to become a Crown Corporation pro
vided an opportunity for substantial change to
Canada Post's pattern of organizational learning.
It meant removing from government departments
the responsibility for and control over the var
ious operational areas and providing the newly
formed CPC with the opportunity to develop its
own infrastructure and identity.
A 10-year metamorphosis followed incorpora
tion. Volume increased by 40 percent, and CPC
became a profitable business. Its reliability, mea
sured by on-time deliveries, improved from 85 to
98 percent and it gained a worldwide reputation
as a leader in postal technology (Lacey, 1991).
Reflecting on the transformation, CPC manage
ment described the change as a four-phase process.
During the self-definition phase the organization
had to identify its human, physical, and financial
assets, and establish its own administrative infra
structure. The second phase was one of becoming
self-sufficient. Activities during this period focused
on achieving operational efficiencies, bringing the
systems and technology up to date, and improving
performance. The third phase?becoming compet
itive?saw the development of new products and
a marketing system.
At the time of our study CPC was in its
fourth phase: preparing for the future. As did
all industries and sectors, CPC faced a changing
environment. Shrinking resources, new forms of
competition, and complex environmental changes
demanded the development of cooperative and
strategic relationships with employees, customers,
and suppliers. More importantly, the advent of the
'information highway' meant that more informa
tion would travel electronically instead of physi
cally. Given its structural, intellectual, and tech
nological investment in physical delivery of mail,
CPC's major challenge was to position itself to sur
vive these shifts without jeopardizing its existing
business.
Research design
We chose a case study methodology because the
question of interest pertained to the processes
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Organizational Learning and Strategic renewal 1093
of organizational learning and strategic renewal
embedded within the context of the organization.
As Yin (1984) suggests, the case study strategy
is appropriate for studies that ask how and why,
research questions that require no control over
behavioral events (that is, they are studied within
their context) and that concern people who are still accessible and able to recall those events rela
tively accurately. The single-case design represents
a 'revelatory case' (Yin, 1984). The case study
format, and specifically the single-case study for
mat, is suited to an in-depth analysis of complex
phenomena as well as the inclusion of multiple
data sources in terms of respondents per site, doc
uments, and researcher's impressions during inter
views and tours. It was important to obtain access
to all stakeholder groups. CPC was willing to
provide this access and to facilitate the contacts
through the executive offices. CPC's 10-year meta
morphosis involved not only changes to its strategy
but also reassessments of every operation, every
system, every unit, and every service within the
organization.
Data collection and analysis
Our research approach yielded qualitative data,
given the emphasis placed on process and mean
ing (Denzin and Lincoln, 1994). To ensure data
quality we triangulated the modes of evidence
gathering: archival analysis, participant observa
tion of meetings, retrospective interviews, and evi
dence sources (i.e., multiple respondents). Key
informants reviewed the case study report to ensure
construct validity. Interview protocols and a struc
tured database for recording information helped to
ensure reliability.
The data 'bins' (Miles and Huberman 1994)
used to collect details from archival reports and
interviews were aggregated and the findings gen
eralized in stages, as follows:
1. Data were collected into bins with source ref
erences attached.
2. Data were classified within each bin as to fac
tors, processes, behaviors, and outcomes.
3. Factors, processes, behaviors, and outcomes for
each bin were generalized.
4. Generalizations were interpreted independently
by researchers and compared.
5. Similarities and exceptions were identified. 6. Observations were generated through analysis of each of the 16 cells of the 41 matrix.
An example of this process is shown in Table 2.
The data were collected in two phases. The
first phase involved historical analysis of archival
data. The second involved collecting interview
data from senior executives, general managers,
labor leaders, and franchisee representatives. We collected archival data in order to under
stand the events in CPC's history, listen to mem
bers of the organization talk about those events,
and observe how CPC's interpretation of itself
developed over time. The archival data served as
an ongoing CPC narrative as well as a means
to augment and verify interviewees' retrospec
tive memories. The categories of documents used
and the year of their publication are shown in
Exhibit 1. Following the case-based research pro
cess set out by Miles and Huberman (1994),
we analyzed each document and summarized the
information on a document protocol (Exhibit 2)
that captured: source information; intended audi
ence; date of publication; whether the content
focused on strategic and/or operational issues; the
nature of specific references, if any, to relation
ships among issues; performance indicators; the
41s; and the definition of the business. Any key
issues not listed above were also captured. We
then compared summaries across all documents
and incorporated the information into the project's
data bins.
We collected interview data in order to find
out how issues evolved over time, to learn where
and how ideas were developed and integrated,
to understand how the strategic renewal process
affected and was affected by the learning which
took place, and to see how CPC's interpretation of
its future was unfolding. Using the interview pro
tocol shown in Exhibit 3, we obtained information
and summarized it according to both the protocol
and the 41 matrix. Data were incorporated into the
bins and compared to corresponding archival data
to develop interpretations. The respondents were
selected to represent senior management from all
functional areas as well as executive-level man
agement in all divisions. If an interviewee identi
fied another individual who could provide further
insight, that person was contacted; thus the ini
tial interview list grew as we gathered information.
We expected to conduct interviews among CPC's
lower management levels, but we discovered that
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1094 M. M. Crossan and I. Berdrow
Table 2. Stages of data interpretation
Bin
Data Generalization
Interpretation
Interpretation Manager #1: 'I don't know to what extent the balance of
business between physical and electronic service will
change in the future, I haven't seen the numbers for
ten years out.'
Manager #2: 'If change is
incremental, people with
futuristic perspectives will
see the change as critical, those with historical or
current perspectives will just
see it as an adjustment.' Manager #1 believes that
understanding is developed
at the top and decisions are filtered down.
Manager #2 believes that an
individual's cognitive map determines their
interpretation of ideas and
situations. Factors considered at
individual level of
interpretation:
Individual cognitive
sch?mas
Changes in those
sch?mas
Individual beliefs and
understandings
Exhibit 1. Archival document analysis
Type of document (and number) Publication dates
Speeches and presentations (71) authored by Chairman of the Board; Senior
VP, Administration; Senior VP, Operations; Senior VP, Commercial
Operations; Corporate Manager, Product Development; President, Messagz;
President, CPSML; Corporate Manager; Resource Quality Manager; Other
senior management and Standard Corporate Publications
Annual reports (15)
Corporate plans and capital budget reports (7)
Other: operating principles, corporate restructuring reports, sales brochures,
media folders, biographies, union agreements, internal reports (34)
Newspaper, journal and magazine articles (45)
1986-93
1977-94
1987-94
1978-93
1985-93
the learning process around issues of strategic
renewal had been quite constrained, involving only
the most senior positions in the organization. Using
archival data as well as interviews from multiple
sources helped to reduce retrospective bias. When
we noted discrepancies between data sources,
we pursued them with respondents. Though we
encountered cases of memory lapses, there were
very few cases of conflicting perspectives.
With information from both archival data and
interviews we assembled the story of strategic
renewal at CPC. To determine whether the 41
model helped to understand and explain the re
newal process we categorized the story details into
the bins of the 41 model. During an interview, if a
respondent touched upon an issue particularly rel
evant to the model, the interviewer would probe
further.
Two or three researchers attended the interviews;
one administered the inquiries and the other(s)
recorded the responses. If sensitivity was not an issue, a tape recorder was used as well. Within
24 hours of each interview a researcher wrote
extensive notes that accurately recorded the ques
tions asked, responses given, and contextual obser
vations made about the site and the respondent's
nonverbal communications. Researchers then pro
duced an initial summary that they discussed
and verified together. Random checks were con ducted on both the archival and interview data
to ensure that similar interpretations had been
drawn. To maintain consistency, one researcher
processed all data. Final summaries and inter
pretations were discussed jointly to validate the
findings.
FINDINGS
We summarized the data according to the 16
cells of the 41 matrix (Figure 2). Points of con
vergence and divergence were identified from
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Organizational Learning and Strategic renewal 1095
Exhibit 2. Document protocol
Document #: Documented By:
ISSUE INTER-RELATIONSHIP: COUPLING AND DECOUPLING
PERFORMANCE ASSESSMENT (LEARNING-PERFORMANCE)
FOUR PS-PROCESS
DEFINITON OF THE BUSINESS
KEY ISSUES IDENTIFIED
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1096 M. M. Crossan and I. Berdrow
Exhibit 3. Interview protocol
I. INTRODUCTION
Overview of the study
'We are writing a case on the changes Canada Post has undergone in the past decade
and the challenges it faces in the future. All interviews and documentation are
confidential; nothing is released without approval of Canada Post. We are interested
in your individual perspective on these issues. '
II. CONTEXT
What was your background before coming to Canada Post?
How long have you been with CP, and in what capacities?
III. HISTORICAL PERSPECTIVE (general)
Can you give us your perspective on the changes Canada Post has undergone in the
past decade?
IV. FOUR PS (IN CONTEXT OF OPERATIONS, RETAIL AND EMAIL)
Whose insight drives the changes?
How are decisions made and action taken?
What are some of the tensions in making these decisions?
How is conflict resolved?
How are the decisions tied into the resource allocation process?
How are the decisions tied into strategy?
How do the investments in systems, structures and assets, facilitate/impede change ?
V. FUTURE
What are the three major challenges for the future?
What factors will facilitate or impede your ability to deal with these challenges?
VI. WRAP-UP
Are there other areas that we have not covered that you feel are important?
which interpretations were drawn. The following
summarizes the key findings for the four learning
processes along the diagonal of the matrix: intu
iting, interpreting, integrating, and institutional
izing; as well as the two off-diagonal regions:
feed-forward (upper right), and feedback (lower
left). Presenting qualitative research is challenging.
We adopt Locke's (2001) approach of alternat
ing between 'telling' and 'showing' by weaving
together the theoretical elements and live excerpts
from the setting.
Intuiting
Since it is not possible to observe preconscious
processes, our research methodology focused on
the source of intuitive insights and the ways in
which these insights were developed and shared.
Our findings support our decision to distinguish
between entrepreneurial intuition?which derives
from the ability to see parallel or analogous
situations and make novel connections to imagine
future possibilities?and expert intuition?which
comes from the ability to recognize past patterns
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Organizational Learning and Strategic renewal 1097
(Behling and Eckel, 1991; Crossan et al, 1999).
Every person interviewed attributed entrepreneur
ial-style intuitive insights to one key individual.
This individual was the first to envision mail oper
ations that used electronic switching systems to
enable inter-machine communication?an impor
tant strategic step on the path from physical to
electronic delivery of mail. Contrary to expecta
tions, respondents did not identify the CEO as the
primary source of this type of intuitive insight. He
was, however, credited as the primary source of
expert intuition. Respondents consistently labeled
the entrepreneurial individual as 'visionary' and
the expert as 'operationally focused' with a 'hands
on' approach, as the following widely cited story
illustrates.
When the newly appointed CEO arrived at CPC,
he requested the operational results from the pre
vious day, only to find that results were compiled
quarterly. Because of his experience and expertise
in the auto industry, in which operations track
ing was standard practice, the CEO sensed that
it would be possible to similarly monitor postal
operations. Through his leadership CPC invested
millions of dollars in information systems to link
and oversee its operations. A National Control
Center (NCC) and several District Control Cen
ters (DCCs) were soon operating 24 hours a day.
With neither a precedent nor a means to justify the
investment, the CEO maintained a strong belief,
based on his experience, that these systems were
both important and possible.
In other instances, the originator of the intuitive
insight was not so clearly apparent. For example,
respondents could not determine who first thought
of franchising CPC's postal outlets, an idea that
significantly changed the organization's operations
and scope.
Interpreting
To examine how individuals interpret insights or
ideas?how they explained insights to both them
selves and others?we looked at the way respon
dents talked about CPC's operations and strategic
direction, noting whether their accounts diverged or matched. When asked about the source of
new interpretations to guide the renewal process,
respondents consistently gave credit to top man
agement. Senior management stated that work
ers did not want to manage the company and so
were not given the opportunity to plan or make decisions. For example, one director stated that,
since the operations were so complex, senior man
agers simply wanted to be told what to do. Mid
dle management echoed this opinion, expressing
the belief that understanding developed at the top
and decisions filtered down. One regional man
ager commented that he did not know the extent
of future changes to the balance between physical
and electronic service, as he had not yet seen senior
management's projections. His interpretation of
how the business would change was based on
senior management's directives, not his own opin
ions, knowledge, and experience. The manage
ment executive committee communicated strategy,
vision, and operational implications through a pre
sentation on operational principles given to senior
managers. The presentation spelled out acceptable
behavior as well as changes in systems, standards,
measurement, and monitoring.
Organizations can change interpretations by
changing individuals. The CEO, as we noted,
arrived with many new perspectives and man
agement concepts from the auto industry. Indeed
whole groups of people?and new interpreta
tions?were imported, for example, into the mar
keting and engineering departments. When senior
management contemplated a system of retail fran
chise outlets and lacked internal expertise, they
brought in a new general manager of opera
tions?one with retail experience. His mandate
was to change CPC's focus from the manage
ment of labor and physical assets to the man
agement of relationships. New people bring new
perspectives and many of CPC's new perspectives
came from nongovernment organizations. These
changes helped the organization break from tradi
tion, in terms of self-image and modes of oper
ation. From a 41 perspective, such diversity in
interpretations presented a significant challenge to
integration. Executives and senior managers were
often changed to achieve a shared understanding,
particularly since not everyone was fully com
mitted to the new operating principles. The CEO
believed in centralized control and strong leader
ship, while the corporate manager of labor rela
tions preferred consensus building through educa
tion. One senior executive compared the organiza
tion to cells continually splitting and joining.
In order to initiate new thinking among exist
ing employees, programs that fostered new inter
pretations were put in place. For example, one
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1098 M. M. Crossan and I. Berdrow
CPC division launched Feet-in-the-Street, an expe
riential learning program designed to let inside
postal workers experience dealing with clients by
working in the sales area for a day. The inside
workers gained awareness of competitive pres
sures, client needs, and the importance of their own
work. An example of experimental learning was
PARADIGM, CPC's innovative prototype of the
postal service of the future, through which indi
viduals had the opportunity to try out possibilities,
unencumbered by existing systems and procedures.
External stakeholders were encouraged to
develop new interpretations about CPC through the
Speak-Up program. One respondent highlighted
the importance of these new external interpreta
tions: 'Slowly but surely, Canada Post Corpora
tion's message is getting out to its customers.
It is particularly gratifying when some of CPC's
toughest critics, including the past chairman of the
Canada Direct Marketing Association, an associ
ation of some of the postal service's largest cus
tomers, publicly acknowledges the progress made
by the corporation in delivering reliable, accessi
ble and affordable service.' This new interpretation
had to be presented consistently and repetitively to external stakeholders.
Overall, the changing interpretation brought
about by management turnover provided CPC with
a quick infusion of new insights and ways of think
ing about the business. A top-down orientation
to learning provided an efficient way to change
behaviors throughout the organization, as did pro
cesses of experiential and experimental learning.
However, the interviews revealed that although
many individuals had changed their behavior to
comply with edicts from the top, many had not
changed their thinking, suggesting that CPC's state
of learning was more fragile than it appeared.
Integrating
Much of the organizational learning literature
assumes that the integration of views should be an
open and participative process (Senge, 1990). At
CPC, however, integration was often tightly man
aged, resulting in integration of behavior despite
disjunctive beliefs. For example, one executive
would not allow union conflicts to impact manage
ment initiatives and decisions. Refusal to integrate
or even consider the union's perspective caused
ongoing grief and dysfunction among manage
ment, the union, and employees. Hence, unionized employees had very little voice in the renewal
process. It was apparent that the extent of one's
power and authority determined one's influence
over the integration process. Other influences, such
as the threat of bankruptcy and closure, would mit
igate rebellious behavior. This message was clear
in one respondent's particularly poignant remarks:
'All of us, whether we are staff or line peo
ple, in operations or in a support service, need
to know more about our basic business of mov
ing mail. That's what Canada Post is all about,
and if anyone finds that this is too dull a sub
ject to take an interest in, then maybe he or
she should look for opportunities in another line
of business.' In many cases, disbelief was sus
pended until such time as the outcomes would
prove the legitimacy of the change. The director
of research and development believed that some
of the conflict originated with differences between
functional groups as well as between individual
views, supporting the argument that individual
interpretations come from personality as well as
experience.
As expected, the focus of integration varied
with the organization level and functions involved.
Within the executive level, integration focused
on differing visions of the future, definitions of
accountability, and decisions around resource allo
cation. Between the corporate executives and the
employees, integration centered on gaining accep
tance to executive decisions. Integration of man
agement and workers was a top-down process
aided by participative activities and communica
tion programs. Two such initiatives were the devel
opment of a vision statement and a set of operating
principles. Between the corporation and the unions,
integration followed a negotiating process some
times necessitating arbitration. Overall, the exec
utives integrated their perspectives and developed
a common vision for the organization's strategy
and operations. Employees were encouraged to
accept this common vision and to change their
views to conform. Executives negotiated differ
ences between their vision and that of the union
to achieve an acceptable common ground.
The integration process was most difficult in
those areas requiring a trade-off, particularly in
resource allocation. The challenge of moving from
corporate-owned to retail-franchised postal outlets
lay in developing an integrated and shared under
standing of how to proceed. Failure to integrate
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Organizational Learning and Strategic renewal 1099
or agree on whether and how to make the transi
tion could have resulted in the status quo. Instead,
CPC chose a route that minimized conflict: it let
the customer decide. By situating franchised retail
outlets away from existing corporate outlets and
having the franchisee undertake the investment,
CPC avoided tough resource allocation decisions.
When it became evident that the customer, the ulti
mate arbiter, preferred the retail outlets, integration
followed. At no point was a contentious, either/or
choice necessary.
CPC followed a similar route with the develop
ment of electronic and hybrid products. It set up
the business unit 'Messagz' as a separate function
so it would not threaten the existing physical mail
function. It appeared that integration was achieved
through decoupling potentially conflicting issues.
The decision, if contentious, could be separated
from the changes, allowing for experimental learn
ing that would yield new data and help drive
change within the interpretation and integration
processes. As one executive pointed out, 'disbe
lievers were chipped away at until they changed
their mind or left the organization.'
Overall, CPC had a high level of integra
tion around operational issues, but a high degree
of diversity around strategic issues, particularly
among stakeholder groups. Although the process
had been very efficient, CPC did face some sig
nificant challenges in aligning key stakeholder
groups who may have been alienated in the
process.
Institutionalizing
CPC had to evolve very quickly from an unre
liable, strike-ridden, inefficient, deficit-generating
entity into a profitable, competitive, nation
wide delivery service of choice. Its institu
tions?strategy, structure, and systems?needed a
massive overhaul in a very short period of time.
Throughout the self-definition and self-sufficiency
stages, most changes to the systems and struc
ture focused on gaining efficiencies while effec
tively delivering mail across the nation. CPC
implemented the National Mail Condition Report
ing System to monitor plant inventories and vol
umes, and it installed new optical character read ers to increase the amount of machinable mail.
Transportation systems were changed from rail
to highway, reducing in-transit time. Produc
tivity agreements with letter carriers expanded the service and community mailboxes, increas
ing carrier efficiency. New products and ser
vices such as electronic mail transmission and
Admail were introduced. As CPC gained momen
tum in the becoming-competitive phase, it imple
mented new technologies that facilitated network
control?pattern recognition, routing, and mate
rials handling?to provide seamless service. It
improved sortation times with multiple-line opti
cal character readers and letter-sorting machines.
Air-routing control systems, surface transportation
reporting systems, and trace mail options for Pri
ority Courier products were implemented as well.
All of these changes were the result of new ideas
about productivity and competitiveness.
When it became a Crown corporation in 1981
CPC had an ideal opportunity to review its institu
tionalized learning and decide what did and did
not fit the newly formed organization. Unfortu
nately, because CPC lacked the time or, perhaps,
because it did not recognize their importance,
entirely new systems were neither considered nor
implemented. Though it implemented many new
initiatives, CPC also retained systems, policies,
and procedures from the old organization, in spite
of the fact that it wanted a new future. This had
far-reaching implications. For example, it was only
after several years that the policy requiring super
visors to call absentee workers was abolished; it
was thought to undermine CPC's efforts to develop
a more trusting relationship between management
and labor.
The strategic renewal processes led to changes
not only in systems and structures but also in
strategies. The old systems of CPC involved all
aspects of its value chain functions. The new distri
bution systems shortened CPC's role in the value
chain by outsourcing retail and aggregating cus
tomer delivery. Hence, CPC evolved from being
a distribution expert to being a network manage
ment expert, from implementing control systems to
developing a process infrastructure. The new cus
tomer orientation drove the need to change core
competencies and systems. It remained to be seen
if the electronic delivery paradigm would have the same influence.
CPC's strategy entailed a shift from, as some
put it, a nationalistic 'deliverer of mail services'
to a viable business entity providing a customer
focused, fiscally responsible service. It managed to
avoid some difficult resource allocation decisions
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1100 M. M. Crossan and I. Berdrow
by outsourcing certain operations and thus shifting
accountability to its partners.
To maintain the momentum of change, CPC
gave shape to its view of what a future postal
system might look like in a facility called PARA
DIGM. The R&D department developed PARA
DIGM to provide a laboratory and testing ground
for new ideas in technology, particularly in the
areas of sorting and distribution. This experimen
tal mock-up helped stretch the imaginations of
employees and management, customers, and sup
pliers. Possibility became reality when PARA
DIGM-tested ideas were implemented into existing
systems.
Tracking the diagonal
We have discussed each of the 41 quadrants as
distinct entities. However, it is important to recog
nize that in order to be successfully implemented
a new idea must traverse through each of these
quadrants. In the next section we will discuss the
dynamic feed-forward and feedback flows of learn
ing in a general sense, but first we offer the follow
ing example to illustrate the connectivity between
diagonal quadrants. We track one idea?the senior
executive responsible for envisioning and enacting
an efficient and effective postal system?through each of the 41s.
This individual came into the organization with
a strong operations focus developed during his
work in the automotive industry. His experience
indicated that an efficient and effective operation
needed standards, systems, and procedures; his
intuition suggested this was possible at CPC. As he
gained experience at CPC, his intuition began to
take form. As language around his interpretation
developed he was able to articulate the need to
monitor and perfect mail processing and distribu
tion 24-hours a day, nation-wide. He achieved inte
gration through a directive approach in which he
developed shared understanding mainly in a com
pliance mode. Everyone was held accountable. If a
problem existed, an explanation was expected from
each person whose department had contributed to
the problem. The introduction of systems support
ing a national control center to capture and moni
tor daily results represented the institutionalization
of his ideas. Improvements in cost, absenteeism,
safety, and overtime were achieved. In the next sections we address the feed-forward and feedback
processes more generally.
Feed-forward
For intuitions and interpretations to be shared and
integrated they need to be articulated in a form
and a language that others can access and under
stand. Visionaries, for example, gain support and
momentum for their ideas through the efforts of
a champion. A visionary will sometimes pair up
with a champion to articulate a vision and per
suade others to accept it. Not finding such a partner
could prove detrimental. One CPC manager, a self
described 'techie,' was not able to sell his ideas to
others and, as a result, watched as problems he could solve went unresolved. To understand some
thing yet be incapable of clearly expressing it or
convincing others of its legitimacy is to prevent
ideas from becoming realities.
One way to clearly and vividly express ideas is
to connect the unfamiliar with the familiar through
the use of analogies. The manager mentioned in
our discussion of intuiting?the one with keen
and intuitive insights about the future of elec
tronic delivery of information?relied heavily on
analogies to explain difficult concepts. For exam
ple, he compared airplanes with steamships to
help individuals understand the shift from phys
ical to electronic delivery of mail. Using graphs
depicting the substitution pattern for air travel as it became a more efficient and effective means
of ocean passage, he illustrated that neither the
magnitude nor timing of the electronic threat was
certain.
Having been integrated and accepted, ideas must
then be institutionalized in order to impact the
future of the organization. Two gateways lie in
their path: the decision-makers and the resource
allocation process. Maneuvering through these
involves successful persuasion. The process of
institutionalization is much simpler if the indi
vidual bringing the idea forward has power and
influence. As previously noted, one executive who
dictated changes and expected the institutional
ized idea to be successfully realized was in a
position to have his expectations met. Champi
ons who lack power over resource allocation must
persuade decision-makers of their idea's viabil
ity. For example, the visionary of the electroni
cally connected postal system went to great lengths
to sell his idea across organizational levels, from
local workers to corporate executives. When ideas
needed limited approval and quick success to gain
overall support, the path of least resistance and
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Organizational Learning and Strategic renewed 1101
minimal exposure was sought. For example, he
recognized that rural post offices would resist
franchising. So he started with urban locations
and, when management and employees accepted
it, he expanded the franchising concept into rural
locations.
Feedback
The 41 framework suggests that once learning has
been institutionalized it impacts the other learn
ing processes. PARADIGM, the futuristic postal
system prototype, aided the interpreting and inte
grating processes by providing a concrete means
to communicate CPC's needs and aspirations to
employees, customers, and suppliers. Prior to this
proactive move, CPC simply received the same
kind of equipment, products, or services demanded
by the U.S. postal system. PARADIGM enabled
CPC to communicate its vision to suppliers and to
work proactively with its customers in developing
that vision.
The institutionalization of the National Control
Center (NCC) facilitated the integrating process.
The NCC and District Control Centers (DCCs)
were key vehicles of change in interpretations.
They became hubs for the daily accumulation and
dissemination of information about operations, and
the information they tracked served to concen
trate individual attention, energy, and, therefore,
interpretation. In an 8:30 meeting each morning,
results and business volumes from the previous
day were examined, and managers highlighted any
areas that had a negative impact on either cost or
service. They discussed reasons for missed deliv
eries (flight delays, bad weather affecting ground
transportation, equipment failure, or human error)
and remedial actions. Integration occurred by hold
ing everyone accountable for both the problem and
the solution.
Another institutionalized program that helped
to develop and communicate understanding was
Speak-Up, a program designed to encourage man
agers to communicate, to both internal and external
audiences, the ongoing changes at CPC. It also pro
vided an opportunity for managers to become more
aware of their own organization as they prepared
for speaking engagements and anticipated audience
questions. In addition, the CPC Speakers Bureau,
which coordinated the program, helped to develop
a common language by ensuring consistency in
messages. However, individuals had difficulty interpreting
some of what had been institutionalized, includ
ing CPC's strategy. The union, having tracked and
categorized resource allocations over a number of
years, described CPC strategy as 'two steps for
ward, one step sideways and one step backwards.'
The Employee Suggestion Reward Program
rewarded intuiting and interpreting processes and
led to ongoing and significant cost savings. On the
other hand, the NCC and DCCs, by focusing on
existing operational strategies, hindered creativity.
The controls were focused on measuring deviation
from stated goals (single-loop learning) rather than
deviation from environmental demands, (double
loop learning), thus precluding the development of
entrepreneurial visions based on customer need.
If CPC wanted thoughts on new issues or ser
vices it would make them NCC reporting items.
Things that were not on the list were not noticed,
tracked, or improved. The NCC served to focus
attention on meeting performance standards. Fail
ures were not recognized as learning opportunities and were avoided.
By making the structural change from regional
to operational divisions and thus giving promi
nence to the Operations and Marketing and Sales
areas, CPC acknowledged the need for a stronger
market focus. It was expected that such a change
would bring about a better interpretation of market
needs and help to integrate them with operations. But CPC circumvented its own institutional
structure by developing a subsidiary with an inde
pendent structure. Canada Post Systems Manage
ment Limited (CPSML) was set up to market CPC
innovations. Its separate structure, systems, and
procedures enabled CPSML to develop and imbed
its own learning. In contrast, Messagz, established
as a separate division to focus on the electronic
business, remained a part of the institutionalized
structure of CPC and faced some critical chal
lenges as a result. In particular, its livelihood
depended upon competing for resources against
the well-established physical delivery side of the
business.
Before incorporation, operations resembled inde
pendent, balkanized fiefdoms. A lack of commu
nication systems inhibited the integration of activ
ities and operations. After incorporation, opera tions became centralized and functional areas were
suddenly forced into interdependence. When the
CEO arrived, one of his first priorities was bet
ter integration. He achieved this by emphasizing
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1102 M. M. Crossan and I. Berdrow
joint accountability. The DCC and NCC meetings determined which areas were to be involved in the
integration and conflict resolution processes.
DISCUSSION
Beyond providing a rich description of organi
zational learning for strategic renewal, this study
presents several important findings. With respect to
organizational learning research, the study demon
strates that organizational learning processes are
not inherently positive or negative. For example,
we noted that the hierarchical and top-down inte
grating process at CPC entailed a high turnover
of senior managers. Organizational learning the
ory has tended to focus on retaining knowledge
and, hence, minimizing employee turnover (Grant
and Gnyawali, 1996). Indeed, Snyder and Cum
mings (1998), in pointing out key learning disabil
ities, suggest that employee turnover may cause
'amnesia.' As a result, any nonparticipative pro
cess that churns managers is not likely to meet
a researcher's definition of organizational learn
ing. However, we suggest that the infusion of
managers from outside CPC and the consequent
change in cognition and behaviors at the individ
ual, group, and organization levels are evidence
of organizational learning. We suggest that before
judging the effectiveness of learning processes,
researchers need to describe how learning occurs.
To do this we must demystify organizational learn
ing?remove its halo?and consider whether an
organization's context determines its pattern of
learning. Although no conclusions can be drawn
about the nature of the relationship between orga
nizational learning and performance, the case study
presents a strong argument that the organizational
learning process at CPC, flawed though it may
seem when viewed from a more Utopian perspec
tive, was in fact the best process given the con
text. Future organizational learning research may
be more mindful of the potential for different pat
terns of organizational learning.
We argue that organizational learning research
ought to forge a stronger link to strategy and
explicitly identify the challenge associated with
managing the tension between exploration and
exploitation. Failure to do so may be one of the
reasons that some research has adopted an overly
positive stance. To simply examine learning at the task or product level is to overlook the con
flicts apparent when we take an organization-level
perspective. Activities associated with exploita
tion, in general, are well articulated and consid
ered logical, having emerged through the processes
of exploration?intuiting, interpreting, integrating,
and institutionalizing. In contrast, activities asso
ciated with exploration gain meaning and become
understood as they move through the 41 process.
As a result, they often lack a well-established
logic and therefore are difficult to support and
defend. The tension is generally resolved with a
bias towards exploitation, as logic tends to prevail.
While researchers have noted that organizations
suffer from inertia (see, for example, Barr et al,
1992), the underlying processes that contribute to
inertia are not well understood. An organizational
learning perspective helps to map earlier findings
onto a process of strategic renewal.
Although we detected no conscious awareness
that CPC was 'managing' the tension, it clearly did so: one individual was able to move intu
itive insights through interpretation, integration, and institutionalization without much assistance
from others. Through his capability, credibility,
and senior position, he was able to develop a sense
of shared understanding that he swiftly worked
to institutionalize. As a result, exploration thrived
in spite of CPC's strong exploitation focus. The
establishment of the PARADIGM facility was an
excellent example of the success of the exploration
process. While this process of organizational learn
ing shared aspects of the sense-making and sense
giving processes described by Gioia and Chit
tipeddi (1991), who examined strategic change in
a large, public university, it differed in the concen
trated role played by one individual in the strategic
renewal process at CPC. It may be that the highly
technical nature associated with a very ambiguous,
complex, and uncertain environment, coupled with
significant resource allocation decisions, required
a particular expertise to both make sense and give
sense to the situation. However, the strong paral
lels between Gioia and Chittipeddi's sense-making
and the interpreting process, as well as the parallel
between sense-giving and the processes of inte
grating, institutionalizing, and feedback in general,
signal the importance of examining these interpre
tive and social processes to fully understand the
complexity of strategic renewal. Even when ideas are well formulated in the
exploration phase, they must not only compete
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Organizational Learning and Strategic renewal 1103
with the well-established logic of exploitation; they
must also compete with the investment, in both
mindsets and assets, associated with exploitation.
Consequently, there are often significant obstacles
to overcome when exploration challenges exploita tion. We saw this in CPC with the move to
franchise postal outlets. Two factors?investment
in the existing infrastructure and strongly held
beliefs that corporate outlets represented the best
method?could have overridden the exploration of
new distribution methods. However, CPC allowed
both to operate simultaneously and used the cus
tomer as the final judge. This is consistent with
Fiol's findings that 'to promote learning as a com
munity, managers must actively encourage the
development of different and conflicting views of
what is thought to be true, while striving for a
shared framing of the issues that is broad enough
to encompass those differences' (Fiol, 1994: 418).
Although the importance of resource allocation
in strategy has been identified by others (Bower,
1970; Burgelman, 1983), organizational learning
provides a different perspective on the problem
of managing the exploration/exploitation tension.
When the first two challenges (logic and invest
ment in mindsets and assets) are combined with a
resource allocation system that favors established
logic, track records, and return on investment,
exploitation is likely to drive out exploration. CPC
was able to buffer itself to some extent by decou
pling some decisions (as it did with franchising)
and by setting up a different institutional structure
(as it did with PARADIGM and CPSML). CPSML,
as we noted, was essentially a separate business
unit managing its own resource allocation system.
The 41 framework proved a robust tool in help
ing to understand the process of organizational
learning and strategic renewal at CPC. The breadth
of the 41 framework provides a structure to incor
porate more fine-grained processes that have not
been integrated into a common model of learn
ing. There have been several examples of these
types of linkages identified in this section, and
the opportunity exists to incorporate many more.
One of the strengths of the 41 framework is that
it enables researchers to categorize learning and
thus minimize the positive bias that tends to creep
into organizational learning research. One draw back of this more neutral orientation is that it does
not directly take into account issues such as power
and leadership as they relate to learning. In this
study our observations of constrained power and hierarchical leadership emerged from the descrip
tion of the 41 process. Regardless of the pattern of
organizational learning?whether it sports a halo
or horns?the 41 framework obliges the researcher
to label the pattern only after having described it.
Future research would benefit from a contrast
and comparison of patterns of learning across
organizations. A comparative case study approach
would be helpful. However, we see no need to
limit research to case studies. For example, survey
methodology could be employed to measure the
41s and the feed-forward and feedback processes
to observe interorganizational differences associ
ated with strategic renewal.
There are important implications for manage
ment arising from this research. Foremost is a cau
tionary note about accepting organizational learn
ing as inherently or exclusively positive. All orga
nizations learn, for better or worse, and the chal
lenge is to understand the pattern of organizational
learning and manage it within its unique context.
The 41 framework helps to unearth the underlying
learning processes. Further, this research reveals
the complex and deep nature of organizational
learning processes. Management needs to be cog
nizant that strategic renewal encompasses a mul
tilevel process that spans from individual intuitive
insights through to major resource allocation deci
sions that institutionalize learning.
In summary, this research has applied a frame
work of organizational learning to the process of
strategic renewal at CPC. The intent is not to gen
eralize the pattern of learning found at CPC to
other organizations, but to provide a generalizable
framework that can be used to understand orga
nizational learning processes in all organizations.
The comprehensive nature of the 41 framework
connects facets of organizational learning (such as
the levels of learning and their relationship to strat
egy) that have often remained disconnected. And
we have argued that our comprehensive view of
how tensions are managed (that is, between the
feed-forward and feedback of learning and across
the three levels of experience) poses a central chal
lenge for organizational learning. Leavy warns that
'there is the danger that the high level of interest
in the notion of learning in the strategy field will
lead to an uncritical perspective that all learning is
virtuous' (Leavy, 1998: 464). This study demon
strates that learning may not be entirely virtuous.
If researchers and managers continue to focus on
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1104 M. M. Crossan and I. Berdrow
only the perceived positive aspects of organiza
tional learning they will fail to comprehend its
full complexity. We conclude that it is necessary
to first describe organizational learning and then
assess whether the organizational learning process
is appropriate for the organization, given its con
text. Future research may be able to identify dif
ferent patterns of organizational learning and the
contexts in which they are most effective.
POSTSCRIPT
In the 2001 Annual Report the Chairman of CPC
states that:
Over the next several years, the Corporation will
face a rapid pace of technological innovation. The
increased availability and growing acceptance of
alternative media is shaping customer demand for
greater speed, flexibility and information and will
continue to affect Canada Post's product mix. In
order to maintain the universal service obligation, a service that is offered at one of the lowest rates
in the industrialized world, it is essential to replace
the anticipated loss of income from declining mail volumes with revenue from other sources.
The e-economy depends on an efficient and afford
able distribution network, integrated supply chain
management services and the security of informa
tion. The Corporation is moving on every front to become more flexible and innovative. With its
Business Transformation program, Canada Post
is re-engineering its key business processes to
improve effectiveness, efficiency and customer
responsiveness. In addition, innovative electronic
services are being developed to address the needs
of the new economy and to integrate electronic
commerce and physical delivery.
I have great confidence in Canada Post's ability to
adapt to the significant challenges that lie ahead. With its proven track record of success, the Cor
poration has charted a course that will ensure it
remains a key contributor to Canada's continued
prosperity.
CPC's vision statement of 2003 sates that:
'Canada Post will be a world leader in providing
innovative physical and electronic delivery solu
tions, creating value for our customers, employees
and all Canadians.' These very public statements
signal that CPC sees itself as being quite adaptive
to change in a world where physical mail volumes will continue to decline and where demand for
innovate electronic products will increase. Though we do not have the benefit of the in-depth insight
gained through the methods of the reported study, we observe that these statements reveal a clear
sense that electronic delivery solutions play an
important role in CPC's strategy.
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