Organizational Learning Theory: Definition & Levels

Instructor: Artem Cheprasov

Artem has a doctor of veterinary medicine degree.

In a world that is constantly changing, organizations must learn to adapt if they want to survive and thrive. This lesson reviews a definition of the organizational learning theory and three levels of learning that may occur in an organization.


When you look at successful companies that have been around for decades, like McDonald's, Toyota, and Apple, you can't help but wonder what their secret to longevity is. How have they managed to outlast their competition and how do they stay relevant? If you've guessed it, the answer is: they keep on learning!

Learning is the gaining of new knowledge, and the ability to apply that new knowledge in order to improve performance. In the context of organizations, learning can help businesses become more innovative and competitive. Additionally, in light our constantly and rapidly changing environment, businesses need to learn how to adapt and evolve in order to survive. This is precisely why organizational learning is so important and exactly why we're going to discuss it here in this lesson.

The Organization Learning (OL) Theory

Organizational learning is an expansive and diverse field with influences that can be felt from sociology, psychology, philosophy, business management, and many others disciplines. While there is no one definition to this concept, the organizational learning theory is commonly described a process of developing, retaining, and transferring knowledge within an organization. From this perspective, organizational learning occurs as a result of experience and an organization is said to have learned from an experience when there is a change in the organization's behaviour or performance.

One the most influential concepts in the organizational learning theory is the notion that we learn from our mistakes. This idea was developed by Chris Argyris and Donald Schon, who suggested that learning takes place through the process of detecting and correcting errors. For example, when you perform a task and the actual outcome is not what you expected, you (or the team) will likely investigate what happened and correct the mistakes as needed. According to this notion, when you are interacting with your fellow colleagues, learning occurs within the organization.

Donald Schon, one of the men who developed the idea of learning through detecting and correcting errors

Furthermore, this interaction is often dependent on two sets of behaviors. The first set of behavior relates to the organization's formal rules, policies, and procedures. These represent the organization's espoused theory, which are their values and assumptions on how things are thought to be done. A good example is if you were having an issue with a computer program, you might read manual and restart your computer.

By contrast, the second set of behavior relates to how things are actually done. In other words, it's what you actually do to solve a problem. This is called theory in use. For example, to fix the issue with the computer program, you will probably use Google or brainstorm some solutions with your peers and colleagues.

Not surprisingly, these two sets of behaviors don't really mesh well with one another. While following formal rules, policies, and procedures may seem like the most appropriate way to solve a problem, they can also be too specific, and therefore too restricting. Thus, organizations that want to foster a productive and creative learning environment should encourage more theory in use.

In addition to all of the notions we just went through, there are three levels of learning that may occur in an organization. These include:

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