Learning Organizations

Malva Daniel Reid, Jyldyz Bekbalaeva, Denise Bedford, Alexeis Garcia-Perez, Dwane Jones

• Publisher: Emerald Publishing Limited
• Year: 2021
• ISBN:
  9781839824326
• Topic: Business
• Subtopic: Gestione dell'informazione
• Index: Business

The 21st century economy is fuelled by knowledge. Today, knowledge is more than an idea - it is an economic commodity. An organization's knowledge capital is a competitive and comparative advantage. Every organization must now invest in the knowledge assets of all its employees. Learning is the engine that creates and renews knowledge capital.

Learning Organizations delves into why learning is an essential business operation; how modern learning is different from industrial-era training; how to discover learning sources and opportunities; how to design a learning environment and learning strategies that optimize the potential of every employee.

This is essential reading for business managers, human resource professionals, and academic researchers studying knowledge economies, knowledge, and intellectual capital.

Section 1

Learning in the Knowledge Economy

Chapter 1

Knowledge Capital and the Knowledge Economy

Chapter Summary

This chapter describes the role of knowledge as the primary factor of production in a knowledge economy. Knowledge is the critical capital asset in the knowledge economy. Because the economic properties and behaviors of knowledge are different from financial and physical capital, the authors explain the need to rethink how we see economic transactions and how we think about capital investment and development. Learning is the primary investment activity in knowledge capital. Each type of knowledge capital is different, though, and requires a distinct learning strategy.

Why We Care About This Topic

Knowledge is the primary form of capital in the new economy. We care about knowledge as capital because the economic properties and behaviors of knowledge – as a commodity – are different from other forms of capital. Learning is the investment that leverages and grows knowledge capital. An organization’s learning strategy and culture must suit all forms, behaviors, and properties of knowledge capital. Additionally, the investment in learning must be reasonable and suitable to the organization’s business vision and goals. In this chapter, the authors explain the need to tailor learning to each type of knowledge capital.

Learning and the Knowledge Economy

The knowledge economy presents challenges and opportunities. The primary challenge is transitioning from learning processes, cultures, and designs of an industrial economy to those required to survive in a knowledge economy. Every economy is defined by what it produces and what it consumes. Economies are production engines, and they are the factors of production that distinguish one economy from another. In the agricultural economy, the primary production factors were land, seed, and human physical labor. In the industrial economy, the primary element of production was industrial machinery and facilities that converted raw resources into finished products. In the knowledge economy, the primary factors of production are all forms of knowledge capital. Knowledge capital is the engine of the twenty-first century economy. This new economic engine runs on a new kind of fuel – learning. In this new economy, everyone knows what they can do with that knowledge is now a critical competitive factor for an organization. Innovation drives competition, rather than efficiency and effectiveness of production. Learning must be pervasive, inclusive, continuous, dynamic, and creative to fuel knowledge organizations. Where learning as fuel is rationed or restricted across an organization, that organization will perform at a lower capacity. Organizations where learning as fuel is absent from everyday operations will fail to compete in the knowledge economy.

The knowledge economy creates a wealth of learning opportunities. We need a new approach to learning for the knowledge economy. The new approach means seeing learning differently – as something everyone does, every day, in every context – to achieve the organization’s business goals. This new approach has significant implications for what managers do every day – for how and what they manage. Managers must now be catalysts of learning – just as managers were responsible for the performance of agricultural work or industrial operations – so today, are they responsible for creating a rich learning environment in which their workforce can thrive.

We are in a transition stage – shifting managers’ role from an industrial economy to a knowledge economy. There is little guidance on what this new management role means – and what competencies support it. This book provides managers with a framework and an action plan for helping their organizations transition to this new economic reality.

Nature of a Future Knowledge-based Economy

Over the past 70 years, the US economy has shifted from an advanced industrial economy to a knowledge-based economy. A knowledge economy is one in which knowledge capital is a primary production factor, equivalent to raw materials, labor, and financial capital, as the primary means of production. In the industrial economy, physical capital (land, equipment, buildings) and financial capital were the primary factors of production and wealth sources. In the knowledge economy, knowledge or intellectual capital is the primary factor of production and the main source of wealth generation (Carlaw, Oxley, Walker, Thorns, & Nuth, 2006). Houghton and Sheehan (2000) suggest that a knowledge economy is one in which knowledge is a crucial resource … one in which the generation and the exploitation of knowledge have come to play the predominant part in the creation of wealth. Powell and Snellman (2004) define the knowledge economy as “production and services based on knowledge-intensive activities that contribute to an accelerated pace of technical and scientific advance”. Knowledge is what fuels our twenty-first century economic systems.

Machlup first observed this shift in the 1950s. Since the 1950s, economists have attributed the shift to the rise in the importance of services, information, an increasingly educated and trained workforce, technology, increasingly virtual work environments, and increases in artificial intelligence and automation. The common element to all of these perspectives is the increased value of knowledge.

The shifting economy changes the external business environment in which organizations function and the internal business environment that enables them to survive. Knowledge capital is increasingly important as the pace of change outside of the firm increases, which puts pressure on changes to unfold faster and more completely within the organization or organizational unit (Floyd & Wooldridge, 1996; Grant & Baden-Fuller, 1995; Oxtoby, McGuiness, & Morgan, 2002). The external environment includes other organizations, as well as the cities and neighborhoods in which they function. Organizations need to understand the extent of the changes and impacts, particularly as they affect the workforce. It is vital for all of us in the workforce to see these changes as opportunities and better understand how we can leverage our individual and collective knowledge capital to succeed in this new economy.

The shifting economy also has affected the nature of work. Labor economists, sociologists, and human resource researchers have chronicled the shift in work – from physical labor to knowledge work, from labor that supports a predefined business process to one that leverages capabilities. Knowledge work has been characterized as work that requires educational credentials and leverages “thinking.” This characterization is further reinforced by the increased automation of processed based work, off-shoring of jobs, and the increased number of jobs that required advanced qualifications. Every day we read of neighborhoods and cities that have been devastated by the loss of employment and the impact this loss has on everyday lives.

There is a more fundamental disruption to work than these visible and apparent impacts. The disruption is to our essential thinking about work and the relationship of people to work (LaFayette, Curtis, Bedford, & Iyer, 2019). For centuries, we have seen people as “operational resources” – they were the laborers who worked in the field to plant and harvest crops. The land and the agricultural machinery and tools were capital, not the laborers. For centuries, we have seen people defined by the jobs and billets they filled and their classification. People were and still are in some sectors, viewed as expenses and expendable resources. When a person becomes too expensive compared to the process, we retire them, fire them, or simply make them redundant. In neither the agricultural nor the industrial economy did we see people as having value for their knowledge. While education and skills were valued in the industrial economy, we saw them as formal external credentials rather than individuals’ attributes.

Knowledge has always been part of our economic systems, but recent events and advances have made it more visible and accessible. Increased knowledge capacity in populations has increased our awareness of its value and its power to change economic relationships. A knowledge economy reduces barriers to entry, is not constrained by the traditional rules of consumption and property, and is by definition prone to economies of scale and scope. We are now seeing a growing awareness that every type of work, every role, every worker – is a source of knowledge in the knowledge economy.

The transformation has substantial implications for an organization’s knowledge capacity. Organizations need to leverage the knowledge capital of their entire workforce. Learning is the source of knowledge capacity of organizations.

In the new economy, knowledge is an asset that produces wealth, multiplies the output of physical assets, gains a competitive advantage, and enhances the value of other types of capital. Recently, economists have begun to classify knowledge capital as a real capital cost because (1) investment in people is equivalent to investment in machines and plants and (2) expenses incurred in education and training are equal to depreciation costs of physical assets.

Historically, the knowledge capital we needed for an agricultural economy was related to managing the land and producing the crops or agricultural resources it produced – a few individuals had more extensive knowledge. Still, people were valued for the physical labor they provided to generate those crops. Gradually, humans are being replaced by machines in agricultural work because machines are less fragile and durable. In this earlier economy, managers and landowners were the “thinkers” – they directed and controlled the use of human labor.

Historically, the knowledge capital we needed for an industrial economy was related to how to support the industrial process – the shift in this economy was the need for more brainpower to define and manage the process. The overseer or agricultural team supervisor’s role in the agrarian economy expanded to include more coordination in increasingly complex organizations in the industrial economy. Management expanded to include budgeting, directing, controlling production resources, for example, human physical labor.

In the twenty-first- century knowledge economy, the model shifts significantly. The workforce and its knowledge are now as if not more important than the process or the raw materials. The role of managers shifts from command and control of a workforce to that of a catalyst creating opportunities for the growth of knowledge capital at all levels and in all contests. In this new economy, what we mean by knowledge capital expands significantly. We note that managers are now learning catalysts, learning designers, and engineers. Learning is no longer a stand-alone role of Chief Learning Officers or Human Resource Managers or Training Officer. These individuals still play an essential role. But they are not on the job and in the position with the workforce every day. The shift in production factors means that operational managers now have new roles for ensuring that learning is part of the way we work every day.

What is this knowledge capital that managers need to cultivate in their workforce? What is the definition and characterization of knowledge capital – how is it different from earlier economies?

Economic Properties and Behaviors of Knowledge Capital

In a knowledge economy, the core commodity – the primary factor of production – is knowledge. The definition of knowledge itself p...