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 p rocess 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 innovation systems’ and their long tradition of work organization development programmes, university-industry cooperation in issues related to the work organization is much of an unexplored area for many companies, let alone universities (Gustavsen et al. 2001; Nieminen and Kaukonen 2001; Svensson et al. (Ed.) 2002; Tell 2001). 7 University-Industry Cooperation in Finnish Work Organization Development – the Case of FINWDP Network Projects The Finnish Workplace Development Programme (FINWDP) is the first of its kind in Finland in terms of its conceptual foundation and scale, i.e. it is a national initiative in which the focus is on work organization development. FINWDP was launched at the beginning of 1996 as part of the programme of Prime Minister Lipponen’s first administration, and will continue until the end of 2003 under the programme of the second Lipponen Government. The aim of the programme is to improve productivity and QWL by promoting new work and HRM practices in Finnish workplaces. FINWDP is funded by the Finnish Government. The total budget of the programme from 1996 to 1999 was EUR 16 million, and EUR 28 million for the second programme phase from 2000 to 2003. The programme can provide expert support to workplaces. Expert support is used mainly for funding the use of researchers or consultants in the projects. 1,300 workplaces and 120,000 employees in 550 development projects have so far taken part in the programme. The main goals of the projects include the development of work processes, establishment of teams and groups, and improvements in leadership, personnel management, external networking and the functioning of workplace communities. About a third of the programme budget is earmarked for networks projects of a special kind. This funding is intended for research and experimentation to support the creation and testing of organizational innovations that have a potential for job creation. The projects must involve a sufficient number of companies in close and open cooperation based on mutual trust. Cooperation between companies can be based on vertical (production) or horizontal (development) networks. Vertical networks can be further divided into principal- and supplier-driven networks, and horizontal networks into topic-, region- and sector-based networks. Most network projects are jointly funded by FINWDP and other R&D funding sources such as the Technology Development Agency Tekes. The following takes a look at network projects with regard to their potential to act as learning networks. Network Projects as Learning Networks So far FINWDP has supported 33 network projects, a half of which have been completed. 20 of the projects are horizontal networks, and most of them (N=17) are primarily topic-based. Where vertical networks are concerned, there are more supplier-driven networks (N=7) than principal-driven ones (N=5). The first type is typically a case of several small or medium- sized supplier companies led by one or two ‘core’ companies in trying to create system supplier capacity for their mutual production network through intensifying their cooperation. There is one network project, which does not clearly belong to either of the two above groups. This project aims to create technological and organizational infrastructure for networking between a group of workplaces. There is only one project in which the primary justification is that it is regionally based, but about ten projects have this as their secondary justification for networking. Metal and engineering industry companies have participated more actively than anyone else in network projects. One third of the projects consist only of such companies, and they are also involved in many other mixed projects. The other most active participants include the mechanical wood-processing industry and the electronics industry. The total number of 8 participating companies is from 250 to 300, depending on the precise definition of ‘participation’. Most of them are SMEs. Table 1 shows how extensively different kind of actors take part in the network projects. In 15 projects, the development coalition comprises only a group of companies and an individual expert organization. The other extreme is demonstrated by two projects in which one can find as many as six different types of actors involved. Of all expert organizations, research institutes (N=15), technical universities and faculties (N=14) and consultancy firms (N=11) are the most active participants in the projects. The distribution of expert organizations in Table 1 seems to correspond to the situation in Finland on the whole. Nieminen and Kaukonen (2001) have conducted a survey of how important companies consider innovation- related cooperation with different partners. Based on their material (374 companies in manufacturing and knowledge-intensive business services), the companies considered cooperation with their own client companies, equipment suppliers, material suppliers and subcontractors fairly or very significant clearly more often than with any other partners. 31% of the companies also considered cooperation with research institutes such as the Technical Research Centre of Finland (VTT) to be important. Cooperation with private consultancy and development agencies (28%) and technical universities and faculties (23%) was considered more important than cooperation with polytechnics and other educational institutes (21%). Meanwhile, the figure for universities was only 12% and for schools of business administration only 3%. Table 1. Development coalitions and different types of participants involved in FINWDP network projects. Number of different types of participants 2345 6 TOTAL Companies 15772 2 33 Research institutes 4461 15 Technical universities and faculties 6232 1 14 Consultancy firms 2341 1 11 Educational institutes 2 2 1 1 6 Universities 2 2 1 5 Development agencies 1 2 1 1 5 Public-sector workplaces 1 1 1 2 5 Polytechnics 1 1 2 Residents 2 2 Schools of business administration 1 1 Rehabilitation institutes 1 1 Organizations of entrepreneurs 1 1 The number of different types of expert organizations involved, the number of companies involved, their variation by factors such as industrial sector and size, and the project duration are some of the most critical structural characteristics depicting the ability of a project to function as a learning network. In actual fact, a project’s ability to function as a learning network depends on many other factors too, as for instance the forms of interaction between different participants in the course of the project, how advanced the methods are that the project applies and how committed the various participants are to the project. 9 The following includes short descriptions of three network projects which demonstrate aspects of learning networks. They also constitute examples of three different kinds of networks, a horizontal (The Lohja Area Environmental Cluster), a vertical (The VAVE Network) and an infrastructure-creating network (The TEL LAPLAND Network). Case I – The Lohja Area Environmental Cluster The Lohja area is an old industrial area in western Uusimaa province in southern Finland. The Environmental Cluster comprises 18 local companies, the organization Entrepreneurs of Lohja, the Lohja Hospital District and the City of Lohja itself. The companies involved are among Finland’s leading corporations in the paper, wood processing, electronics and building materials industries and in energy production. The University of Helsinki’s Länsi-Uusimaa Institute for Continuing Education acted as coordinator in a project (1999-2002), which gave rise to the establishment of the Cluster. Various subprojects have brought also many consultancy firms into the Cluster. The Environmental Cluster is intended to launch and implement projects that aim to improve the state of the environment in the Lohja area, to create cooperation in environmental issues between authorities, companies and local residents, and to increase and utilize environmental know-how in the area. It is hoped that cooperation will help find solutions and operating models that reduce environmental impacts arising from raw material acquisition, energy use and the manufacture, transport, distribution, use, recycling and disposal of various products. The Cluster was a consequence of a competitiveness analysis of the area, carried out by a local partnership project in 1998. This showed that efficient handling of environmental issues was an important factor for companies’ competitiveness and for that of the area as a whole. The Cluster is an open learning network seeking to expand. Specific rules were set down right at the outset, covering decision-making, the implementation of subprojects, funding, agreements and internal and external provision of information. The companies have formed clubs amongst themselves for the personnel in charge of environmental issues, logistics, information and acquisitions, and for technical staff. The operations of the Cluster have been aimed at both local residents and company personnel, and have taken the form of environmental and company surveys, training seminars, visits, joint development projects and various other events, such as a car-free day and a car-pool day. The companies’ joint development projects focused on reducing the environmental impact of logistics chains, on more effective waste recycling, on efforts to boost the user value of Lohja lake, on developing environmental indicators and on working together on developing environmental management systems. The Environmental Cluster is still operating even after its specific project funding ran out in 2002, and it has made deliberate efforts to assess and develop its own capacity to act as a learning network. Case II – The VAVE Network The VAVE Network is a cooperation forum for the Tampere unit of Sandvik Tamrock Oy, which manufactures drill rigs, and eight of its suppliers. The Network seeks to develop the competitiveness of the entire network through improved cost effectiveness, shortened throughput times and better delivery accuracy. The acronym VAVE comes from ‘Value [...]... regionally based learning networks will probably be rare in countries with small populations such as Finland Experiences from FINWDP suggest that both vertical and horizontal networks can be successful as learning networks The ability of vertical networks to produce generative learning (which is the aim of learning networks in the final analysis) can be severely restricted if the value chain contains... specific needs The Network has a vision, strategy and organization for its development work Cooperation within the Network is based on a framework of joint development seminars and multilateral and bilateral development projects between the companies The development projects have focused on issues such as joint acquisition of paints, cost accounting and cost awareness, demand forecasts and order procedures,... of coalition between expert organizations has in fact already been formed in some FINWDP network projects, e.g TEL LAPPI In future, forming such coalitions and studying how they work could become an increasingly important aim and function of work organization development programmes References Alasoini, T (2001), “Promoting network-based organizational innovations: a new approach in Finnish labour and... innovations from Japan”, Organization Studies, Vol 16, No 6, pp 971-989 Nahapiet, J and Ghoshal, S (1998), “Social capital, intellectual capital and the organizational advantage”, Academy of Management Review, Vol 23, No 2, pp 242-266 Naschold, F (1993), Organization Development: National Programmes in the Context of International Competition”, in Naschold, F., Cole, R.E., Gustavsen, B and Van Beinum,... programmes, Enterprise Development 2000 and Value Creation 2010 (Gustavsen 2001) Much the same fundamental principle has been applied in recent work organization development in Sweden, where for instance the European Social Fund’s Objective 4 programme in 1995-1999 was more of a work organization development programme than a training programme (unlike the case in Finland), being based on regional partnerships... subprojects aimed at improving operating methods, using a method based on cooperation and learning by doing A natural factor which fosters cooperation among companies is if they operate in the same geographical area Horizontality and – as a horizontal criterion – this geographical proximity are used as the main networking principle in the ‘module’ and development coalition’ concepts of the latest Norwegian development. .. to participate directly in planning and implementing change are more critical than ever for the preservation of individual employees’ own labour market status (Alasoini 2002) Interaction between Companies There can be many different obstacles and barriers to development cooperation between companies Those which are part of the same value chain usually find it easier to define a 13 shared target for. .. mutual cooperation The main types of interaction and cooperation occur within companies, between companies, between companies and expert organizations, and between expert organizations (figure 3) In the following, the last two types will, however, be examined as one entity Figure 3 Types of interaction and cooperation in learning networks Expert organization A Company A Expert organization B Company... cooperation with other health centres and project teams at the Central Hospital The aim is to productize the new ICT-based services created by different pilot units for general use through joint planning and evaluation seminars Learning Networks – a Model for Interaction and Cooperation Learning networks can be examined through the interactive relationships between the various parties involved and their... company has a special VAVE team and each supplier company has a VAVE coordinator External support for the Network’s discussions, training and development has been provided by the Industrial Systems Unit of VTT Automation and Tampere University of Technology’s Institute of Industrial Management, Institute of Machine Design and Centre for Continuing Education In addition to FINWDP and the companies involved, . deliberate efforts to assess and develop its own capacity to act as a learning network. Case II – The VAVE Network The VAVE Network is a cooperation forum. following takes a look at network projects with regard to their potential to act as learning networks. Network Projects as Learning Networks So far FINWDP