Learning networks as a means for work organization development

Learning Networks as a Means for Work Organization Development Recent Finnish Experiences Tuomo Alasoini Finnish Workplace Development Programme Ministry of Labour tuomo.alasoini@mol.fi Paper prepared for the Nordic R&D Conference on University and Society Cooperation, Ronneby, 14-16 May 2003 1 Introduction Finland is now considered one of the most competitive industrial nations in international comparison. Finland’s performance in innovation also enjoys a high reputation. According to the EU Innovation Scoreboard 2002, Sweden and Finland are the two innovation leaders among the EU Member States (www.trendchart.cordis.lu/Scoreboard2002/index.html). By a closer look, however, Finland’s good performance is mainly based on achievements in the area of technological development and innovation. This is one of the main conclusions of the Science and Technology Policy Council of Finland (2003) in its newest triennial review. The review examines the main challenges facing research and innovation funding and it contains a list of policy recommendations for the future. It states, “Technological development and technological innovations are generally considered the strongest area of Finnish innovation. /…/ Well-deserved attention has begun to be paid to the relative weakness of social innovation in the entity of innovation. Its development alongside technology is a major challenge for society and for the economy. As yet Finland has no clear development strategy for social innovation. The challenge concerns both the organizations responsible for social development, the development of working life, and the safeguarding of individual development and opportunities by means of research-based innovations.” From the point of view of work organization development policy the unbalanced development of technological and social innovation can be seen as follows: (1) The relatively favourable overall growth of productivity in Finnish economy in recent years conceals the fact that there are remarkable sectoral differences in productivity development. The rapid productivity growth in sectors which produce information and communications technologies (ICT), such as the electrical and electronics industry, is contrasted with slackened growth in most other industries. Finnish companies’ overall record in turning the new technological opportunities permitted by advanced ICT into gains in productivity has been relatively poor. This indicates that many companies have not managed to implement sufficient improvements in their work and human resource management (HRM) practices to achieve synergistic effects of combined use of ICT and new forms of work organization. (2) There is no clear evidence indicating of a positive association between the extent of the use of ICT and the improvement of the quality of working life (QWL) at company or workplace level in Finland. The new technological opportunities have been so far insufficiently utilized as a means to deliberately improve work processes, work organization and work designs from the QWL point of view. Finland is not alone among the industrial nations with these problems. Though industry- and plant-level survey data from various sources indicate that superior productivity gains usually are a combined effect of new technologies and supplementary management and work organization innovations (e.g. Antila and Ylöstalo 1999; Breshanan et al. 2002; Gjerding 1999; Kumar 2000; Lewis et al. 2002), work organization development as such has so far played only a minor role in public-policy decision-making, especially when compared to the development of new product and production technologies. For instance, Brödner and Latniak (2002) found out that only seven of the 15 EU Member States had ongoing public-supported work organization development programmes in 2002. 2 This paper outlines a fresh approach to work organization development which utilizes learning networks as a means for disseminating and generating knowledge of new practices, and examines opportunities for this approach in Finland by looking at university-industry cooperation. University-industry cooperation in Finland is analysed with the help of experiences of the Finnish Workplace Development Programme (1996-2003). The last part of the paper examines learning networks as a model for interaction and cooperation at four different levels. Towards a New Approach in Work Organization Development Bases for Innovation-Promoting Work Organization Development Typical goals of the ‘first-generation’ of work organization development programmes dating from the 1960s to the 1980s included improvements in job contents, working conditions, work environments, employees’ opportunities for participation and labour-management relations (Den Hertog and Schröder 1989). The two main weaknesses with these ‘first- generation’ programmes were that the objects of development were often perceived as abstract and unattached to strategic business goals by management and that the programmes lacked effective means to communicate and disseminate project outcomes to other companies. Their poor record in these two respects can be contrasted with the simultaneous success of the Japanese quality movement in improving performance of Japanese companies (Cole 1993). Maintaining and strengthening the social legitimacy of work organization development policy in today’s globalizing and increasingly networked economy calls for an approach, which explicitly focuses on the promotion of productivity-boosting organizational innovations. Work organization development designed specifically to promote innovations differ by its strategic goal-setting from its predecessors, which were designed specifically to promote QWL and employee participation, but it can be linked to their value basis in two ways: (1) Innovations provide a way to boost productivity and thus to improve the competitiveness of companies and economic growth in general. Countries, regions and companies which are unable to compete in the field of innovations are in danger of losing their strategic room for manoeuvre in global competition. They will then be forced increasingly to seek their competitive advantages in lowering the costs of traditional production factors such as labour. On the corporate level, this has the long-term effect of undermining the job security of the employees, making atypical employment more widespread and reducing companies’ interest in developing the competence and skills of their employees. For society as a whole, the threat lies in a weaker financial base for social expenditure and a growing economic and social gulf between different population groups. The consequences could easily be a self-perpetuating vicious circle which would be hard to break. Maintaining good QWL calls for a sound growth of productivity which is based on organizational innovations. (2) Promotion of innovation activity within companies makes them more interested in improving employees’ opportunities to contribute to development work. In this respect, the Japanese quality movement provides both a good and a bad example. It is good in the sense that it became in effect a mass movement for quality improvement in Japanese companies. It is, however, a bad example in the sense that it did not, in fact, break down the hierarchical decision-making structures within companies and lead to industrial democracy, giving rise instead to a development organization (e.g. quality circles) which existed parallel to the 3 production organization (Lillrank 1995). By contrast, in the Nordic countries, where the responsibility for planning and development activities has recently been delegated to employees and teams within the production organization, work organization development aimed at boosting innovation has much better chances of further speeding up this line of development. The Role of External Expert Knowledge in Work Organization Development Attempts to develop work organization can take many forms. Figure 1 presents these different means in a two-dimensional diagram. The x-axis illustrates the intensity of the role of external expertise in the change process, while the y-axis illustrates the relationship between expertise and practical knowledge (i.e. knowledge that management and employees possess) in achieving change. Typical traditional methods of work organization development include the ready-made expert solutions at one end of the x-axis (legislation, agreements between the labour market organizations, norms, standards and blueprinted consultancy ‘change packages’) and the dissemination of information at the other end (research reports, method guidebooks, databases, etc.). What these two methods have in common is that the outside expertise and in-house practical knowledge never meet during the actual process of change. Figure 1. Different roles of external expertise in work organization development. Dissemination of information Training programmes Advisory services Ready-made expert solutions Company- specific expert solutions Expertise directly guides process of change Expertise indirectly guides process of change Expertise and practical knowledge in interaction Expertise and practical knowledge unconnected Participatory development The potential for influencing change processes using these methods alone has dwindled in recent years. Meanwhile, the importance of the methods in the upper right-hand corner of figure 1 has correspondingly grown. There are two reasons for this. Firstly, the pace of change in the companies’ operating environment has accelerated and the issue of work organization is increasingly becoming a reflexive topic, which is subject to continuous discussion and redefinition. If external expertise is really to have any impact under these circumstances, it must have a strong enough role in the actual process of change itself. This is the justification for its position on the right-hand side of the figure. At the same time, companies’ 4 development challenges have become more complex as a result of globalized competition, networked economy and the rapid advances in ICT. Their main focus of attention is no more on renewal of individual business processes, but, increasingly, on continuous development of the entire product and business concept (Virkkunen 2002). This has also reduced the potential for solitary actors to find solutions to emerging problems, let alone to define the problems themselves properly. In order to make proper definitions or to find successful solutions, it is increasingly important that there is interaction between different types of knowledge. This, in turn, justifies the position at the top of the figure. The methods placed at the top right of the figure are company-specific expert solutions and participatory development. These two methods also describe the typical role of expertise in work organization development programmes. The division between these two methods broadly corresponds with the division into a design-oriented and a process-oriented approach (Naschold 1993). Design orientation applies here to cases where external expertise is mainly used to explore the possible future states and features of the organization on the basis of theories or models of ‘next-generation’ organizations or other good-practice design criteria and diagnosis of the current state of affairs in the organization, whereas in process-oriented approach external expertise is used to assist the organization to find proper ways to implement participatory processes of change on the basis of theories or models of change and intervention. In innovation-promoting work organization development, this division should be bridged. Seeing work organization as a reflexive topic lays increased stress on process- oriented approaches. Increased reflexivity does not mean, however, that the company’s room for manoeuvre is no more bound by its current state of affairs and its own historical and other contextual factors, i.e. also expertise in design issues is still highly important. The methods placed at the top right of the figure also create better opportunities than the other methods for mutual, interactive learning for both experts and practioners. Involvement of experts in actual processes of change and their interaction with practioners promotes their opportunities for reflective observation and abstract conceptualization of the change processes, resulting into new models, methods and tools for development work. From the point of view of companies, dialogue with experts helps them, in addition to solve practical problems, improve their capacity to solve future problems. From Best Practices to Learning Networks In traditional approaches of work organization development programmes, the aim is first to identify ‘best practices’ through experimentation within a group of companies, and then to transplant these to other companies. The problems of these approaches have been dealt with by a number of writers (e.g. Fricke 1994; Gustavsen et al. 2001; Lillrank 1995; Wareham and Gerrits 1999). For instance, the causal mechanisms through which the adoption of different practices lead to improvements in company performance are complex and context-bound, and the acquisition of these practices is not a case of a mechanical transfer of information; it is always a creative learning process in the company in question. One possible solution to the problem of accumulation of knowledge would be to abandon the idea of ready-made best practices and that of disseminating these practices afterwards. According to the new approach to work organization development, enough companies should be included in programmes and projects from the very start and companies should be networked together and also with expert organizations. A large enough number of companies 5 and expert organizations might be termed critical mass. Setting up solid channels for the exchange of experiences and actual development cooperation within this critical mass can facilitate the creation of learning networks. The term ‘learning network’ refers here to a cooperation forum between companies and expert organizations based on equal participation and confidential exchange of information and experiences which is intended to help companies define their development needs and find solutions to their problems. The expert organizations involved in such networks are typically research and educational institutions, consultancy companies and development agencies. These networks may take many forms and may also include other participants, such as customers, labour market organizations, intermediate-level organizations, etc. They may be open or closed. They may have a reasonably permanent structure or a constantly changing one. They may have both permanent members and loosely connected contributors. In many countries, learning networks have been actively promoted in recent years through various development programmes and projects (e.g. Alasoini 2001; Bessant and Tsekouras 2001; Gustavsen et al. 2001; Tell 2001) with the aim (1) to improve the potential for individual companies to carry out projects successfully (if critical mass has been achieved within projects and programmes, it improves the chances of successful development and lasting results); (2) to improve individual companies’ chances of receiving inspiration, ideas and encouragement to develop (the more critical mass projects and programmes have, the better the chances of companies using comparisons to understand their own situation better and thus to support their own development); and (3) to boost the search for new, innovative solutions (the more interaction there is between different points of view within projects and programmes, the better the chances will be of finding fresh outlooks). Also in work organization development according to this approach it is possible to talk of good or best practices. The notion in this case, however, does not refer to ready-made, transferable solutions; it refers to practices as generative ideas, which serve as sources of inspiration for companies. Universities as Partners of Companies Different types of network can be effective in different situations. In cases of learning involving the search for solutions to problems which are already fairly well defined, it is useful if the network participants and their knowledge base are similar to each other. With the help of adaptive learning of this kind it is possible for the participants to find solutions without needing to question norms and basic assumptions guiding their activity. In cases where the focus is on defining the actual problems, differences in knowledge between the participants can be a resource in itself. This calls the participants for the kind of generative learning which does enforce them to critically assess their own norms and basic assumptions. Since both types of learning are often needed, the best situation could be ‘just the right difference’ between the network participants (Nahapiet and Ghoshal 1998; Schienstock and Hämäläinen 2001; Tell 2001). This helps enrich the knowledge base of the network but still leaves the participants able to understand each other’s fundamental issues, targets, language and value judgements. Figure 2 takes a closer look at this issue, from the point of view of adaptive and generative learning separately. The underlying assumption here is that the opportunities for learning by the different network participants are a function of the difference in their knowledge base. 6 This has an effect on their learning opportunities through two components: the ease of information exchange and the novelty of information exchanged. The ease of information exchange decreases with the increase of difference in the knowledge base of the network participants. The novelty of information exchanged, instead, increases with the growth of difference in the knowledge base of the participants. The two inverse U-shaped curves in figure 2 depict the joint effect of these two components. In adaptive learning the optimum point of difference is probably to the left from the optimum point in generative learning. Figure 2. Opportunities for learning and the difference in the knowledge base of the network participants. Adaptive learning Generative learning Difference in knowledge base Opportunities for learning Innovations often call for posing entirely new questions or redefining old ones, i.e. generative learning. This means that innovation-promoting work organization development should focus on creating and supporting learning networks with actors with relatively wide differences in their knowledge base. Innovation-promoting work organization development, therefore, is an area in which researchers are supposed to have an advantage over consultants as development partners of companies, owing to their basically critical scientific approach towards the ‘reality’. It is an open question, however, whether scientific communities are ready and willing to expand their role in an area in which they are forced in a constant search for a satisfying balance between their own scientific norms and standards and the expectations of different groups of practioners. Companies and universities constitute two different communities of practice with two different logics of operation. Even in the Nordic countries with their high reputation for well-functioning ‘national in