Organizational learning,integrity and value through process-oriented innovations

Abstract

In an era marked by changing business models and evolving networks, a leadership challenge entails the successful management of processes towards learning, value generation, and organizational renewal. This article applies facet theory as the means of integrating two diverse, contemporary management orientations: process-oriented innovations and organizational learning. Both approaches advocate comparable principles, organically societal structures, and mindsets that challenge existing ways of thinking and acting in business and governance. Reframing through facet theory contributes nuanced insights into the multidimensionality and dynamic complexity of interactions between organizational learning and process-oriented innovations. The essence of intersections between the two approaches helps define the facets of a mapping sentence expressing the study’s research design. Facet definitions and specifications lead to configurational hypotheses regarding profiles differentially contributing to improved practices. By testing the ensuing model, future research can provide valuable prescriptions for practice and offer new insights into how business enterprises and organizations learn through ongoing process-oriented innovations.

Keywords

Facet theory organizational learning process-oriented innovations configurational approach mapping sentence

Esther Solomon, is an associate professor of Management Systems at the Gabelli School of Business of Fordham University, in New York. Her research areas include corporate governance, social cognition in leadership, stakeholder dynamics in organizational change, and process-oriented innovations. She has expertise in applications of the Facet theory methodology integrating quantitative and qualitative orientations, and is the past President of the Facet Theory Association.

1 Introduction

Process methodologies and the associated set of managerial practices and programs can be viewed as most important managerial innovations in recent decades [20]. Their origins are in the philosophy and methods of quality and process management formulated by Deming [25, 26], and described by Zeleny [116]. These integrative, multidisciplinary approaches include contributions by scholars such as Shewahart [88], Juran [55, 56], Ishikawa [53], and subsequently further evolved into a variety of process models, along with reengineering, and integration with information systems. Processes refer to “a structured set of activities designed to produce a specified output for a particular customer or market” [22], and as “collections of tasks and activities that together — and only together — transforming inputs into outputs” [40]. A process orientation helps capture value creation by viewing systems in action rather than just as static structures, to provide a dynamic picture of firms and management behavior.

In this article, process-oriented innovations are defined as including the practices of lean, quality and process management, six sigma, reengineering, applications of the Baldridge award and Balanced Scorecard frameworks, ISO 9000, and competitive benchmarking. Process-oriented innovations have evolved and are expressed through a number of frameworks [14 , 113] applied in diverse organizational settings. In the new era, they emerge as even more important to help integrate products, processes, and services [23, 78]. Reconfigurations of relations with customers, new product uses, and new governance mechanisms radically change processes and their dynamic interactions, which are necessary for supporting these innovations. This article follows von Bertalanffy’s definition of a system, as “an entity which maintains its existence through the mutual interaction of its parts”. [10] This view of systems is consistent with Aristotelean notions, and reflects the foundations of process-oriented innovations.

There are several concerns regarding the optimal application of process-oriented innovations, although they represent major advances. Efforts to implement these management practices have in many cases yielded breakthroughs and have revolutionized management thinking. However, long-term sustainable outcomes have often been difficult to demonstrate. Furthermore, theoretical and conceptual developments frequently follow rather than precede practice, yet they are needed to advance both theory and future applications [24]. A more elaborate multi-dimensional comprehension can help identify the options and tradeoffs among alternative practice configurations in implementing process-oriented innovations. There is also a need to address ethical and social responsibility issues [72 , 114], to enable both value creation and integrity.

From a different research tradition, organizational learning is a major factor that explains variations in performance. Some firms are capable of learning from experience, and constructively manage the knowledge they acquire, while others are less adept at organizational learning and knowledge management [4, 112]. The knowledge-based view of a firm [5 , 112] argues that organizational learning and knowledge creation are sources of competitive advantage. To the extent that process-oriented innovations enable a genuine learning environment for knowledge creation, as advocated by the organizational learning tradition [4 , 112] they should be a source of competitive advantage and the creation wisdom systems.

The concept of the learning organization, originally developed by Dewey [28] and popularized by Senge [84, 86] has its origins in the behavioral-sociological tradition and theories of organizational learning [9]. As defined by Garvin [39], a learning organization is “skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights.” Senge [85] specifies the relevant leadership skills for organizational learning as building a shared vision, surfacing and testing mental models, fostering systemic patterns of thinking, and involving personal mastery and team learning. Also, the learning organization’s idealistic and ethical orientation directs aspirations towards integrity and wisdom systems [72, 114].

This article makes several contributions. First, it introduces the methodology of Facet theory and applies it to integrate two important management orientations: organizational learning and process-oriented innovations. Both approaches advocate comparable philosophies regarding the need for systems thinking, organic structures, learning and managerial mental sets that encourage challenging existing ways of thinking as key to innovation. However, they each uniquely contribute in different ways and employ different methodologies. The application of Facet theory in this study helps develop a nuanced insight regarding the multidimensionality and complexity of the dynamic interrelationships between organizational learning and process-oriented innovations. An additional contribution is the development of an integrated facet design, and configurational hypotheses regarding facet profiles differentially contributing to improved practices. These configurations can be applied to help advance practice or be empirically tested to guide future research.

The organization of this article is as follows. It begins with a brief literature review of the two orientations, process-oriented innovations, and learning organizations. Next follows the introduction to the methodology of Facet theory, and subsequently the definition of the three facets of the design, along with the mapping sentence. The article concludes with the resulting configurations and associated hypotheses, which provide a framework to be applied in practice and potentially be tested by future research.

1.1 Process-oriented innovations

Process-oriented innovations have evolved over the past decades since the original conceptualizations. The founder, Deming, believed in attaining a “profound knowledge of the system.” The focus is on gaining insights on organizations as “hidden, invisible, underlying, and interrelated processes that lead to visible outcomes” [116]. A process perspective implies adapting a horizontal view of the business, involving units across the organization, with product inputs, processes, outputs, and customers, incorporated in the system. Quality management also refers to “a managerial innovation that emphasizes an organization’s commitment to the customer and continuous improvement of every process through the use of data-driven, problem-solving approaches on empowerment of employee groups and teams” [109]. Aligning the organization around the core processes aims to fulfill customer needs and consequently drive business results to create value.

The philosophy of quality and associated process management methods can be viewed as a comprehensive problem-solving heuristic [111]. Managing processes involves end-to-end responsibilities and accountabilities assigned to process owners. The use of data and facts along with a customer focus guides the decision-making process. Shared among these approaches is the application of the scientific method, the integration of technological and human innovations and process methodologies. Process-oriented innovations require a strong cultural commitment, organizational discipline, a measurement orientation, a process mindset, and the willingness to adapt and change to create value.

A process orientation can uniquely address innovation in open contexts and meta-organizations [44], but needs to continuously evolve with advances in information technologies [23, 78] and must be part of an organizational infrastructure supporting these practices to address technical and behavioral dynamics [17, 51]. Recognized among scholars is the fact that process-oriented innovations must adopt a learning orientation, so as to be responsive to unique circumstances [92]. To be a source of competitive advantage processes-orientated interventions must pursue not just efficiency but also innovation and renewal [11]. Research also indicates [109] that the adoption of these practices must be substantive and genuine, rather than imitative or symbolic.

Other current theoretical developments in management and related domains highlight the importance of incorporating processes oriented innovations in management frameworks. This includes orientations such as dynamic capabilities [51 , 110], ambidexterity [11, 73] business model innovations [2 , 118], and information related business transformations [23 , 115]. The evolution of these perspectives further demonstrates the importance of comprehending and managing systems and leading process innovations in dynamic contexts.

1.2 Organizational learning

Organizational learning refers to a change in the organization’s knowledge that occurs as a function of experience [6 , 112] whether the knowledge generated is explicit or tacit and hard to articulate [71]. It is a major factor that explains performance differences and is particularly relevant in the era of open and distributed innovation. The experience incorporated in organizational learning could either be the organization’s experience or it could be the experience of other firms, often referred to as vicarious learning or knowledge transfer [21]. Learning concepts such as exploration and exploitation [65], absorptive capacity [62, 104], systems thinking and learning [86], and transactive memory systems [5, 79], when extended to the organization level, support that a learning orientation can be a source of competitive advantage in firms.

From a somewhat unique perspective, the concept of learning organizations has been prevalent in the organizational literature. Its origins are in the behavioral-sociological tradition and theories of organizational learning. Argyris and Schön [9] differentiate between two types of learning. “Single loop”, or adaptive-exploitative learning, is contrasted to “double loop” learning, which is riskier, involves exploration of the unknown, providing more indirect as opposed to direct results. They point to “higher order learning” as the one that organizations need to cultivate.

In the management literature, Senge [84, 85] popularized the concept of learning organizations. Connecting systems thinking and organizational learning, as enabling local action and global thinking [86], Senge defines a learning organization as a work environment “where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together”. Along similar lines to the Argyris behavioral tradition, Senge [84] differentiates between “adaptive” learning, which is about coping, and “generative” learning, which is about creating. Higher order organizational learning occurs when companies explore and challenge the status quo so as to adopt new principles, paradigms or assumptions, which ultimately contribute to competitive advantage. These concepts have been later connected to process management methods [39, 40] and subsequently, efforts were made to addresses the challenge of articulating learning organization principles [41], into more concrete, practical applications.

This article focuses on organizational learning principles as a lens to help identify conditions for implementing process-oriented innovations towards systems of value creation and integrity. The orientation in this article is consistent with the view of the integration of knowledge management, and systems in the concept of “human systems management” [113]. It should present a synthesis of the fields of knowledge management, systems sciences, human processes organization, as well as incorporate a philosophical orientation [42] to probe into issues of ethics and integrity. Facet theory facilitates integration that can incorporate these principles in a synthesized manner.

2 Method

2.1 Facet theory

Facet theory is a formal approach to theory construction and research originally developed by Guttman [46–48 , 61]. It has been applied in a variety of contexts and disciplines [13 , 97] including the behavioral sciences and organizational research. It can be viewed as a research strategy, integrating the formal design of empirical observations with intrinsic data analysis procedures to discover lawfulness in complex behavioral systems.

The methodology of Facet theory is based on set theory in mathematics and was intended to introduce into the social sciences a discipline similar to that in mathematics and the natural sciences. The use of the mapping sentence in Facet theory helps present a holistic picture of the overall definitional system, which generalizes Fisher’s [36] design of experiments to the design of any observations.

The application of Facet theory, which combines qualitative with quantitative analysis to deeply explore research domains, enables a holistic approach leading to the discovery of scientific laws. Facet theory enables both analysis and anasyntheis of concepts, enabling reframing and clarity in thinking about theories, through a new underlying logic. Because it provides a higher order template for explicating and testing of structural relationships, Facet theory is ideally suited for comparisons across approaches and levels of analysis. Examples of Facet theory applications in organizational settings include attitudes to innovation [32], leadership [18], inter-organizational networks and cognition [74, 97], virtual collaborations [77], corporate governance [95, 96], personality dimensions [63, 102], job characteristics [94], values [83], and resource exchange theory [80].

The methodology of Facet theory is uniquely suited to the systematic development of taxonomic frameworks in a manner that elucidates complex research areas and facilitates their empirical testing in a manner contributing to cumulative research. It requires identification of the key dimensions for differentiating among variables within an area of content, or set of interrelated areas, to expression these dimensions as facets. Facets are independent classifications of content areas and are sets consisting of several elements. Multiple facets are examined in each analysis, since Facet theory deals with multivariate systems. For designing the observations, Guttman introduced the mapping sentence device [48, 94], which integrates the research design.

The definition of facets and specification of order among the facet elements, along with the rationale for such ordering, provide a multiple classification system that facilitates generation of structural hypotheses. Geometric mapping of similarity data test the structural hypotheses by applying multivariate procedures. The interpretation of structures by reference to the theoretical framework and context facilitate iterative replication, theory refinement; construct validation and advances cumulative theory building.

3 The facet design

Based on a comparative analysis of the relevant literature on organizational learning and process-oriented innovations, the key dimensions were identified which can distinguish practices of process-oriented innovations, concerning whether they incorporate organizational learning principles. Content areas were explored and systematically organized into a facet definitional system. The critical dimensions of differentiation were defined and expressed as facets, integrated into a mapping sentence, a unique feature of Facet theory.

Table 1 presents the mapping sentence, which represents a high order template for the complete design. The mapping sentence consists of the three facets connected by a narrative, along with the population facet, and the common range.

Table 1

As depicted in Table 1, the following three facets represent the classification system of this design: Facet S, “Systems Orientation”; Facet P, “Participation Level”; and Facet G, “Growth Depth.” In their totality, these three facets define dimensions of differentiation among organizations regarding the degree to which they incorporate organizational learning principles while implementing process-oriented interventions. The mapping sentence in Table 1 reflects the common range for the design, which is: from a high to low degree of integration towards systems of value creation and integrity.

The subsequent three sections of the article present the three facets of the design. They introduce the facet definitions, the order specifications among their elements, along with the rationale based on the appropriate research literature.

4 Facet S: Systems orientation

Element s₁: Day-to-day transactional processes

Element s₂: Core strategic businesses processes

Facet S entitled “Systems orientation” represents the first facet classification of the design, and consists of two elements. This facet differentiates between two levels at which process-oriented innovations can be applied. Element s₁, “day-to-day transaction processes” is defined as interventions addressing individual processes and focusing on specific transactions and subsystems. Element s₂, “core strategic business processes”, is defined as encompassing business processes which are core and address strategic organizational challenges, reflecting a broader systemic orientation.

Variations in system orientation addressed by Facet S are part of a continuum, but for purposes of formalization in this model, the two facet elements represent the ends of the continuum. The systems orientation, which progresses from a lower to a higher degree, also corresponds to the depth of incorporating organizational learning principles while applying process-oriented innovations, as detailed below.

4.1 Element s₁: Day-to-day transactional processes

Fundamental in both organizational learning and process-oriented innovations is the focus on systems and interlinked sets of processes. However, adopting a truly systemic holistic orientation is one of the most challenging aspects of practice, and applications often focus on narrower implementation, defined here as s₂ day-to-day transactional processes.

Systems thinking is at the heart of process-oriented innovations. Deming’s [25] framework emphasizes the systemic nature of organizations, the importance of leadership, and the need to pursue “a system of profound knowledge.” In his formulation, such an orientation provides a map of a theory for organizations, and involves developing competencies for appreciation of a system, knowledge of variation, the theory of knowledge, and knowledge of psychology [116]. Similarly, Juran’s [55] framework involves a systemic orientation including a three-phase cycle of activities for process management and innovation. These include a three-phase cycle of quality planning, control, and breakthrough for addressing chronic problems towards long-term value creation. The origins of process-oriented innovations are in quality management, which in addition to a focus on problem-solving oriented cultures and a team focus, emphasize statistical and quantitative methods for control and bringing about discipline in processes. These more concrete, quantitative aspects are often applied in a relatively narrow scope, as represented in facet element s₁, the application on improving “day-to-day transactional processes.” Practices classified as s₁ involve the use of statistical tools, a disciplined approach to experimentation and problem-solving in addressing individual processes, with a focus on specific transactions and subsystems rather than requiring systemic, holistic thinking.

Such an approach as in s₁, although making a contribution by applying these disciplined process methodologies, is inconsistent with an organizational learning philosophy and true process management philosophy as envisioned by the founders. While Deming was concerned with developing profound knowledge in the organization and emphasizes systems and optimization, applications by some of his interpreters, have been narrower. There are several criticisms regarding such limited orientations [11 , 116] because they are not holistic, but their focus is limited and mostly on statistical aspects, efficiency, and control. Rather than seeking to correct defects within an inferior system, system processes need to be redesigned to have built in quality rather than relying on inspection and correction. The narrow interpretation in implementations as in element s₁ is also inconsistent with an organizational learning philosophy, as described below.

4.2 Element s₂: Core strategic businesses processes

Alternatively, an organization applying process management may focus on a more systemic adaptation and core strategic businesses processes, represented in facet element s₂. This orientation considers the entire company and its adaptation in pursuit of strategic renewal and innovation. Strategic renewal refers to “the process, content, and outcome of refreshment or replacement of attributes of an organization that has the potential to substantially affect its long-term prospects [1].”

Adopting a systemic process orientation as in facet element s₂ implies that organizations need to be aligned around the core processes, aiming to fulfill customer needs to drive business results and create value. Since organizations are systems of interlinked processes, they also need to be viewed as “circularly concatenated processes in their dynamic interdependence” [116]. Strategic integrative focus involves combination of process thinking with the appropriate use of technological and human innovations. Such comprehensive system orientation is consistent with strategic renewal and more suitable in an interconnected, information-centered world [23, 78].

Process-oriented innovations which are consistent with element s₂, represent this broader, deeper and more strategic orientation. They entail applying the discipline of process methodologies on the entire system, adopting a holistic view, consistent with a “system of profound knowledge.” Aligning the organization around the core processes aims to fulfill customer needs and consequently drive business results to create value, through managing processes with end-to-end responsibilities and accountabilities assigned to process owners.

The transition to a strategic orientation also represents the historical evolution of process management methods, which have progressed from statistical applications to strategic approaches to quality [40, 116]. In this model it is viewed as both requiring and enabling actualization of an organizational learning orientation. Interpretation of a systemic orientation at the highest level involves business model innovation [2 , 118], which is consistent with the principle of continuous system improvement.

Regarding organizational learning, there is a need for integration between these two divergent logics, and a systemic view s₂ is more consistent with its philosophy. Development of systems thinking and a holistic focus on processes, spanning across functional boundaries and involving diverse stakeholders, to jointly addressing core strategic challenges is part of a vision supportive of organizational learning. Learning concepts such as exploration and exploitation [65], absorptive capacity [62, 104], and transactive memory systems [5, 79] when extended to the organization level, support that a systemic organization is needed for organizational learning to be a source of competitive advantage. However, as previously suggested [41] this systemic strategic emphasis is also one of the greatest implementation challenges for an organizational learning orientation.

5 Facet P: Participation level

Facet element p₁: Senior management

Facet element p₂: Mid-level management

Facet element p₃: All relevant levels

Facet P entitled “Participation level” represents the second facet of the design, and includes three elements. In combination with the first Facet S, it helps further distinguish among practices regarding incorporating organizational learning while implementing process-oriented innovations. Classification according to Facet P expresses whether decision-making is mostly reserved for top management, or participation is prevalent throughout the organization. It distinguishes among three levels: element p₁, designating that “senior management” mostly make decisions; element p₂, reflecting that “mid-level management” is directly engaged; and element p₃, indicating that “all relevant levels” are involved in decision-making processes.

Although participation in practice represents a continuum, the facet design differentiates among three discrete levels for purposes of formalization. The three elements of Facet P are ordered, expressing an orientation from the most centralized decision-making p₁, through the midpoint p₂, to the most decentralized decision style p₃, in a sequence of p₁ <p₂ <p₃ among the facet elements.

5.1 Element p₁: Senior management

At a basic level of participation, p₁, senior management makes key decisions, based on formal authority and structural considerations. Senior leadership plays a critical role in effectively implementing process-oriented innovations, and as advocated by the early founders, its commitment is essential for their success. Leaders create the organizational systems that design and produce products and deliver services, and their actions profoundly impact the change efforts and learning orientation of their organizations. More recently, research has provided support for the founders’ notion that indeed, top management leadership is critical and the driver of process-oriented initiatives [38].

Scholars seeking to integrate research on leadership practices and their impact on organizational learning conclude that “leadership styles and mechanisms can facilitate and promote the development of stocks and flows of learning” [103]. Scholars refer to some leadership styles as uniquely conducive to knowledge creation. Transformational leadership [12 , 87] which supports learning efforts and authentic leadership [105] which enables the generation, promotion and realization of novel ideas and creativity [69] are conducive to learning while implementing process-oriented innovations.

5.2 Element p₂: Mid-level management

At the midpoint of the participation continuum, reflected in facet element p₂, middle management is directly engaged in the decision-making processes. The role of middle managers is emphasized as essential for learning and knowledge creation by certain theories, based on both structure and process considerations. Middle managers are expected to possess particular qualities, such as practical wisdom and an attitude of idealistic pragmatism, to enable the “middle-up-down management” [71, 72] facilitating organizational knowledge creation.

Since processes transcend hierarchical, functional, and organizational boundaries, teamwork is the linking mechanism for integrating functions across boundaries and levels, and for initiating and implementing process-oriented innovations. While leaders create the systems responsible for production and delivery of goods and services, problem-solving teams identify needs, seek solutions, and share responsibility and credit for decisions and outcomes.

Participation in cross-functional teams includes members from diverse backgrounds. Teamwork encompasses the concept of an extended “process” involving cooperation with customers and suppliers, viewing them as part of the system, in this ongoing effort towards value creation. Solving problems requires members to get socialized in the team, establish shared interpretations, and create new ideas through dialog and discussion, particularly when members addressing these complex problems come from diverse backgrounds. More recently, business model innovation [2 , 111] extends this beyond the organizational boundaries, since it involves coproduction with customers and stakeholders to identify mutually beneficial solutions for value creation.

5.3 Element p₃: All relevant levels

The third element p₃ defined as engaging “all relevant levels,” represents the highest level of involvement in a genuinely participative culture. It involves flexibility in the locus of decision-making so that decisions can take place at any level of the organization where the necessary and most appropriate information is available.

Research has identified team-level inputs and processes supporting team innovation [52], which are critical for process-oriented innovations, particularly in environments with high levels of uncertainty, time pressure, and competition. Employee voice in teams [29, 31], has repeatedly been documented as playing a critical role and teamwork. It also contributes to the creation of a “collective mind” [106] around a plurality of perspectives incorporated into system-wide knowledge. Studies of high-reliability organizations [107] highlight the importance of input from employees at all levels and involvement to help develop a culture of vigilance for avoiding errors in contexts where reliability is key to performance. Joint efforts involve all in collective sensemaking, and patterns of interrelated activities help disrupt dysfunctional momentum.

Regarding organizational learning, given the behavioral sciences origins, broad participation is part of the philosophy and critical both for decision effectiveness and motivational outcomes. To enable vicarious learning or knowledge transfer [21], and to incorporate explicit as well as tacit knowledge [71], all organizational levels need to be involved in the knowledge creation process. Also, building blocks for learning include a supportive learning environment, concrete learning processes, and leadership [41]. Systematic problem solving involves experimentation with new approaches, learning from experiences and history, learning from the best practices of others, and transferring knowledge quickly and efficiently throughout the organization. Leadership reinforces learning through dialogue [84], which nurtures the company and its processes towards the ideal of high-level learning. The term “knowledge creating” companies [71] describes organizations for learning as settings where “inventing new knowledge is not a specialized activity... it is a way of behaving, indeed, a way of being, in which everyone is a knowledge worker.” Such principles clearly imply the need for deep involvement of levels across the organization, in the sense of element p₃, through dialogue to truly enable organizational learning while implementing process-oriented innovations.

6 Facet G: Growth depth

Element g₁: Information-knowledge

Element g₂: Wisdom systems

Facet G entitled “Growth depth” represents the third facet classification of the model, and consists of two elements. It differentiates between element g₁, which we define as generating “information and knowledge,” and a deeper level of growth in element g₂, defined as enabling the development of “wisdom systems.”

Growth depth is a continuous variable, however, for purposes of formalization the two facet elements represent the two ends of the continuum. The variations in maturity towards integrity and wisdom systems in Facet G are hypothesized in our model to also reflect the degree of incorporating organizational learning while applying process-oriented innovations.

6.1 Element g₁: Information-knowledge

Implementing processes oriented innovations at the more fundamental level addresses primarily generating knowledge and information. We define element g₁ as encompassing a broad range of quantitative, technical, and behavioral methods for improving organizational performance and generation of knowledge. These include analytical, statistical skills, and a disciplined orientation to experimentation and problem solving, along with those needed for deployment of process documentation, analysis, control or redesign and reengineering to meet and exceed the expectations of external and internal customers.

These practices involve participation by organizational members to examine interlinked systems and processes: designing and improving them to achieve long-term value creation while innovating in products, services, and the cultures in which the employees work. Subsequent evolutions of these processes including lean, Six Sigma, and other similar practices which currently need to be integrated into evolving information systems and networks [78].

Also included, as part of the information-knowledge element g₁, are interpersonal communication and team development skills, which are part of an integrated orientation for process innovation initiatives, carried out by cross-functional teams. In this facet design, the information and knowledge creation element g₁ also involves the creation of transactive memory systems [58, 80]. They enable shared insights among team members, which facilitate investment in the cooperative division of labor necessary for processes oriented innovations.

Management has experienced a progression from data processing, and information technology, to knowledge management. In contrast to information, which allows doing things right in pursuit of efficiency, concrete learning processes are an integral part of process-oriented innovations and focus on knowledge, which already aspires to do the right things. As previously suggested, [115] integrating knowledge and information includes a variety of transformations, in the knowledge-information autopoietic cycle A-C-I-S, consisting of articulation, combination, internalization, socialization. This orientation along with the knowledge spiral framework [71] consisting of socialization, externalization, combination, and internalization help clarify knowledge creation. These learning processes are circulatory in nature, and only at their basic levels address managing information and knowledge of the enterprise.

6.2 Facet element g₂: Wisdom systems

At a deeper level, developing “wisdom systems,” element g₂, involves not just the development of technical expertise, knowledge, and information, but is oriented towards personal and organizational growth. The pursuit of wisdom systems here is defined as balancing expertise, knowledge, and information, with ethics, integrity and expressing resilience, situational humility, and an action orientation.

While g₁ is neutral regarding ethics, g₂ represents the development of character, including employee empowerment through leader integrity. The second element g₂ is infused with values, and personal growth, creativity, and wisdom. Facet G refers to the choice as to the orientation, and skills or expertise the organization seeks to cultivate among its employees, reflective of the company values and the technologies it views as critical.

Regarding organizational learning, g₂ encompasses the competencies of “surfacing and testing mental models” and “personal mastery”. Process-oriented innovations which enable a broader motivational impact are consistent with organizational learning principles, as envisioned by the original theorists. Their focus is on inspirational aspects, integrity, and ethics. The concept of wisdom systems in g₂ involves developing organizations that are empowering, enabling, and ethical.

Behavioral research suggests that individuals tend to act in ways that inhibit learning when faced with the potential for threat or embarrassment, as proposed by Argyris [7]. Here, tacit beliefs about interpersonal interactions [8] can enhance or interfere with collective learning while applying process-oriented innovations. Edmondson describes the term team psychological safety” [31] as “a shared belief that well-intentioned interpersonal risks will not be punished,” therefore appropriate for interpersonal risk-taking. It has been shown to foster learning behavior in work teams [29]. Creation of a supportive learning environment is one of the building blocks for learning [36], and for developing transactive memory systems [79] and part of wisdom systems in our definitional system. They include psychological safety [29, 31], appreciation of differences, openness to new ideas, and time for reflection.

To support organizational learning, a wise leader should embody “phronesis” as distributed practical wisdom fostered throughout the organization. Phronesis [71, 72], is defined by Nonaka as “experiential knowledge that enables people to make ethically sound judgments.” Members at any part of the organization can embody phronesis exercising contextual judgment and acting based on beliefs, values, and purpose. Wise leaders develop followers and model higher ethical standards, exhibiting intuitive judgment based on tacit knowledge from past experiences, in a manner that it synthesizes “the art and the science” [108]. The wisdom enterprise should incorporate ethics, involve explicability regarding individual action, with a focus on deciding, doing, and acting [114] and exhibit situated humility.

Wisdom systems in this model also refer to support for behavior integrity. Scholars define integrity as “the perceived pattern of alignment between an actor’s words and deeds” [91], where employees perceive that their managers keep their promises and accurately represent themselves and their values in communications. Leadership styles consistent with wisdom systems include theories of authenticity and integrity [76] expressed humility [75], transformational leadership [12 , 87] and ethical leadership [117]. Another term consistent with g₂ wisdom systems is “multidimensional wisdom,” coined by leadership scholars Tichy and Bennis [100] to help clarify processes for making the right “judgment call” in choosing the best path forward. It requires knowledge at different levels, those of the self, the social network, the organization, as well as contextual knowledge. Such multi-dimensional dynamic explication is needed to help address ethical and social responsibility issues [72 , 114] with a view towards enabling both value creation and integrity.

7 Facet profile configurations on organizational learning orientations in process-oriented innovations

Theory development applying Facet theory enables the creation of facet profiles or configurations combining elements from each and every facet. Unique facet profiles help distinguish the relative impact of each facet and its elements on the outcome of interest.

In this design, the combination of the three facets helps create twelve different profiles or types of configurations. They emerge from the joint effect of the elements of the three underlying facets of the design 2×3×2, which yield a typology of practices.

The three facets include: Facet S, on Systems orientation, defined as consisting of two elements; Facet P, on Participation level, which has three elements; and Facet G, on Growth depth, with two elements. The hypothesized common order among the facets and their elements can also be expressed as s₁ <s₂, p₁ <p₂ <p₃, and g₁ <g₂. The common range for the design is from high to low regarding the degree of integration towards systems of value creation and integrity.

The twelve profiles range between practices exhibiting the highest degree of consistency with organizational learning in facet profile s₂ p₃ g₂, all the way to facet profile s₁ p₁ g₁ reflecting the lowest level of consistency. Intermediate patterns, such as s₁ p₂ g₁ and s₁ p₂ g₁, as opposed to further away profiles s₁ p₂ g₂ and s₂ p₂ g₁, etc. are hypothesized to reflect the definitions and specifications of the design regarding the degree of incorporating organizational learning while implementing process-oriented innovations.

Facet theory is complimentary to other configurational approaches increasingly applied in management research [68]. A configuration refers to a “multidimensional constellation of conceptually distinct characteristics that commonly occur together” [64]. Configurational thinking has been elaborated by Miller and colleagues [66, 67], and represents “a number of specific and separate attributes that are meaningful collectively, rather than individually, and are characterized as representing a tightly integrated set of dynamics” [66, 67]. Set-theoretic approaches to configurations were recently reintroduced [37] in the management literature and increasingly applied in several domains. These include dynamic capabilities, [110] absorptive capacity in supply chains [62] or information systems [33]. In this article, the application of the formal approach of Facet theory helps advance a configurational approach in the domains of process-oriented innovations, organizational learning and integrity.

8 Conclusion

This article presented a framework incorporating two contemporary approaches, organizational learning, and process-oriented innovations, as a promising direction to help address emerging leadership challenges. The application of Facet theory in this study helps develop a more nuanced appreciation of the multidimensionality and complexity associated with the dynamic interrelationships between the two approaches. Based on points of intersection, facets were defined and integrated into a mapping sentence expressing the design and led to configurational hypotheses on facet profiles differentially contributing to improved practices. The integration of these two approaches can address some of the challenges in dynamic environments towards value creation, organizational renewal, and integrity.

Formulating facet profiles enables depicting combinations as a set of “rich gestalts.” The characterization of configurations that are hypothesized to outperform others is based on their explicit facet definitions and has obvious implications for practice. At the highest level of incorporating organizational learning, process-oriented innovations focus on a systems orientation s₂, involve broad participation engaging all levels p₃, and include ethics in pursuit of growth and integrity towards wisdom systems g₂. The profiles represent hypotheses about practices that outperform those with different combinations and can be empirically tested by future research. The twelve profile types differ not only in their underlying orientations regarding incorporating these practices, but also regarding the mechanisms by which they are likely to influence learning outcomes towards value creation and integrity. They offer a valuable way of theorizing. A more elaborate multi-dimensional dynamic appreciation also helps address ethical and social responsibility issues. The model developed in this article can help advance future research and cumulative theory building for incorporating an organizational learning orientation while pursuing process-oriented innovations, towards value creation and integrity.

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Organizational learning,integrity and value through process-oriented innovations

Abstract

Keywords

1 Introduction

1.1 Process-oriented innovations

1.2 Organizational learning

2 Method

2.1 Facet theory

3 The facet design

Table 1

4.1 Element s1: Day-to-day transactional processes

4.2 Element s2: Core strategic businesses processes

5 Facet P: Participation level

5.1 Element p1: Senior management

5.2 Element p2: Mid-level management

5.3 Element p3: All relevant levels

6 Facet G: Growth depth

6.1 Element g1: Information-knowledge

6.2 Facet element g2: Wisdom systems

7 Facet profile configurations on organizational learning orientations in process-oriented innovations

8 Conclusion

References

4.1 Element s₁: Day-to-day transactional processes

4.2 Element s₂: Core strategic businesses processes

5.1 Element p₁: Senior management

5.2 Element p₂: Mid-level management

5.3 Element p₃: All relevant levels

6.1 Element g₁: Information-knowledge

6.2 Facet element g₂: Wisdom systems