Reasons and Rationalizations:

The Limits to Organizational Knowledge

By Chris Argyris

Oxford University Press (UK), 2004

This summary draws on the authors own words as they appear throughout the book.

Overview

A book summary by Janine Martyr Learning Innovations Laboratory, Harvard Graduate School of Education June, 2006

Why is there persistent poor organizational performance and a lack of learning in tackling it? Why and how are there processes in place that inhibit learning and hence reduce effective action and organizational performance? Answers to these questions are the central concern of this book, the argument of which Argyris summarizes thus:

1. Organizations contain powerful (counterproductive) defensive routines, which scholars and practitioners reason are natural and necessary for survival.

2. Scholars conduct little research on how to reduce these routines, thus violating the fundamental norms of scholarly inquiry by self-imposing limits.

3. Such reasoning by practitioners and scholars is consistent with a defensive reasoning mindset and single-loop learning.

4. Changing this Model I (defensive reasoning) mindset requires Model II (productive) double-loop learning. (pp.16-17)

Rather than abbreviating each chapter, this summary takes a holistic view of the contents of this book, drawing out points and examples viewed as central to the main argument. Thus this summary presents key ideas in the same sequence as they appear in the book but elaborates on some sections more than others. Chapter 1 details much of the theory and definitions used throughout the book. Chapters 2 to 5 document defensive routines in organizations and in scholarly inquiry. Chapters 6 and 7 examine how double-loop learning can be facilitated, and chapter 8 presents closing comments. Chapter 1: Introduction

In chapter 1, Argyris explains defensive and productive reasoning, his Theory of Action regarding Model I and Model II theory-in-use,

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organizational defensive routines, single and double loop learning, skilful incompetence and unawareness, internal and external implementation and implementable validity. Argyris begins by stating that in order to act, human beings diagnose problems, invent solutions, produce the solutions, and evaluate the effectiveness of what they have produced (p.1). The basis for this is their mind-set, and Argyris defines two types defensive and productive whose characteristics are given in Table 1. Table 1. Characteristics of Defensive and Productive Mindsets Defensive Reasoning Mindset Productive Reasoning Mindset

Objective: Protect and defend. Creates informed choices.

Primary reasoning processes include making the assumed valid premises explicit and testing them by the use of self-referential logic.

Makes personal reasoning transparent in order for the claims to be tested robustly.

Transparency is avoided to protect the self and deny that one is doing so.

Produces valid and validatable knowledge.

Self-deception is denied by a cover-up that is then covered up.

Defensive reasoning is counterproductive, but although known to exist in organizational settings is deemed vital to organizational survival and kept hidden. This only ensures that defensive consequences persist, with people creating the very conditions they abhor. As people use both defensive and productive reasoning mindsets, there are inner contractions. Not only does successful productive reasoning require the existence of defensive reasoning, both are also strengthened simultaneously (p.3). Although crisis can expose defensive routines, e.g. the Enron-Arthur Anderson calamity, they tend to remain hidden and powerful. After all, executives voted Enron one of the best-managed companies, noted for its excellent human resources policies supporting openness and honesty (Salter, 2003). The why and how of this compulsive repetition of errors is Argyris focus. In the end, Argyris claims that executives promote changing the status quo while actually maintaining it, and scholars similarly uphold the search for truth while resisting fundamental change. The basis for these claims is his Theory of Action, developed with Donald Schn. A Theory of Action Effective action is the fundamental objective of human and organizational performance. Action is effective to the extent that it is consistent with intention, that it persists, and that it does so without harming the existing level of organizational performance, and learning at any level is about producing action that approximates as closely as

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possible to the three criteria just identified (p.7). To act effectively, people construct theories of action. There is the espoused theory, composed of values, beliefs and action strategies. Then there is the theory-in-use, stored as designs made up of action strategies or intended consequences organized in causal sequence. The theory-in-use in the Theory of Action is called Model I. Its governing values are:

1. be in unilateral control over others 2. strive to win and minimize losing 3. suppress negative feelings 4. act rationally, which means using defensive reasoning.

The three dominant action strategies are to: 1. advocate ones position 2. evaluate the actions of others and oneself 3. make attributions about others and ones own intentions.

Put in place to reduce inquiry and testing, Model I theory-in-use leads to the same consequences as defensive reasoning. While actions may vary, they are always implemented in ways and using logic consistent with Model I. One of the most powerful features of behavioral worlds produced accordingly is the organizational defensive routine, which is any policy, practice, or action that prevents embarrassment or threat, but does so in ways that prevent discovery of the cause. Inhibitory to learning, an example is organizational mixed messages, such as Mary, you are in charge, but check with Charles (p.9). Double Loop Learning Model I theory-in-use leads to single-loop learning, i.e., fixing errors without changing governing values. Double-loop learning, produced by Model II theory-in-use, involves change in both action strategies and governing values. Model II governing values are:

1. producing valid information 2. informed choice 3. vigilant monitoring of the effectiveness of the implemented

actions to assess its degree of effectiveness. These are not the opposite of the Model I values, as such values did not enhance desired double-loop learning of, for example, early leadership education (Argyris, 1982). Model IIs action strategies are:

1. to advocate a position, making evaluations and attributions. 2. in the service of Model II rather than Model I. 3. to place emphasis upon inquiry and testing. (p.10)

To achieve this, the solution is not to eliminate Model 1, but to use it appropriatelye.g., in routines, provide people with the freedom to

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choose either Model, and create an environment that encourages double-loop learning. However, theories-in-use, be they Model I or Model II, are generated as human beings learn to act skillfully and consistently with their requirements (p.11). Argyris proposes that Model I produces actions that are skillful yet incompetent because they produce consequences that the actors do not intend. The actors are unaware of their skillful incompetence while producing it (p.11). Scholars document the defensive reasoning mind-set created and maintained by Model I theories-in-use and organizational defensive routines (p.12). However, they do not continue with research to change them due to their lack of respect for implementable validity. The effectiveness of implementing actions increases as:

the validity of the models used to diagnose and solve the problems increases;

the actors intend to implement the models; the actors have the skills to implement the models; and the context in which the implementation occurs is supportive of

the implementing actions (pp.12-13). Internal implementation means implementing the model correctly so that the predicted consequences ensue, while external implementation refers to the actions taken to implement the recommendations throughout the organization. However, most research offers advice without the prescriptive knowledge of how to produce it (p.13). Argyris proposes that implementable validity needs to be elevated to the same status as internal and external validity if we are to provide actionable knowledge about effective action. Otherwise, one is likely to retain and reinforce the defensive reasoning mindset (p.15). Chapter 2: The Corrosion of Character Capitalist and Social Economics In the second chapter, Argyris first describes the development of hierarchical control systems and employee resistance. However, he mostly discusses Sennetts (1998) idea of the corrosion of character in capitalist countries, expanding on internal and external commitment, and examining bureaucracy in socialist countries briefly. To get employees to create and maintain effective performance, it was historically assumed that managers induce and employees produce (p.18). Labor simplification was deemed economically sensible, but many workers resisted unilateral control and job molecularization. Management tried to maintain authority and control, but the resulting defensive rigidities negatively affected competitiveness.

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Corrosion of Character in Capitalist Countries So, flexibility became the hallmark of the new capitalism (p.20). But as Argyris interpreted Sennett, flexible capitalism was managements subtle way to concentrate and maintain top-down power despite claims of decentralization. Argyris believes instead that executives were sincere but were relying upon Model I theory-in-use. Thus, they were skillfully incompetent (producing programs that were counter to their intentions) and skillfully unaware of their incompetence (p.21). One example cited was the CEOs of Xerox, Pepsi-Cola N.America and SmithKline Beecham, who espoused that a tight control of process led to freedom and creativity, not realizing that resulting competence did not mean empowerment or internal commitment. Sennett also claims that these types of programs contribute to the corrosion of character as expressed by loyalty and mutual commitment or by the practice of delayed gratification for the sake of a future end (p.24). With managers concerned with short-term goals characteristic of the new capitalism, workers would be unable to maintain long-term commitment and loyalty. Argyris argues that workers are in fact quite reality-centered. One critique is that Sennett concludes that the old capitalism did not corrode character without addressing organizational Model I thinking and defensive routines. Another is that the loyalty to others generated by processes of external commitment, as noted in Table 2, is limited to where it is produced. Table 2. External vs. Internal Commitment (From Box 2.1, p.27) External Commitment Internal Commitment

Perform as required Perform as required and keep alert to the changing requirements

Hold management responsible for identifying and correcting gaps and errors

Hold oneself responsible for identifying and correcting gaps and errors

Depend on management. Be a pawn. Depend on oneself. Be an originator.

Finally, while Argyris agrees with Sennett that information technology meant to decentralize control can actually be used to do the opposite, he believes it is important to examine the theory-in-use being used. Model I users are fine with truth as long as it doesnt threaten their beliefs and organizational defensive routines. Operating thus, they design and create programs that limit the internal commitment they are designed to achieve. Improvements are also limited and so programs become fads. Since informational technology can make actions and processes transparent, it can be used to test Sennetts hypotheses that managers dont actually give employees control, and that lower levels are incapable of carrying out top managements promoted goals.

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The Corrosion of Character in Socialist Countries Argyris references several scholars who believe that socialist and capitalist organizations and bureaucracies share many similarities. New socialism, as does new capitalism, emphasizes flexibility, initiative and empowerment consistent with Model I. Ironically, socialism, though intended to liberate workers, perhaps acts to control workers even more than in the new capitalism (Puffer, etc.). Buraway (2001) encourages research to show how socialism can improve workers life conditions, but Argyris suggests that changes will not be liberating unless Model I theories-in use and organizational defensive routine are reduced and Model II theories-in-use are strengthened (p.33). Chapter 3: Inhibiting Double-Loop Learning in Business Organizations In much of this chapter, Argyris tells the story of Intel as given by Burgelman (2002), and analyzes Burgelmans analysis of Intels strategy as it exited the dynamic random access memory (DRAM) business. Intel saw itself as a memory company but lost its leading position as the competitive environment changed. Over a twenty-year transformation in strategic practice, it learned to exploit rising technological opportunities that resulted from its experience in the DRAM business and reinvented itself as a microprocessor company. The Intel Story: Burgelmans Analysis Analyzed Burgelmans analysis focuses on Intels failure to detect and correct error, e.g., its failure to follow up its early lead in the DRAM business, with explanations such top managements bounded rationality and blindness regarding strategy and image mismatches (p.44). He even describes some flaws as functional (e.g., delay in divestment from DRAM allowed time to see what could be leveraged in the new microprocessor environment), and internal (i.e., it was Intels middle managers who effected the new business opportunities). In his inside-out perspective (p.38), he suggests that middle managers believed top management was closed to constructive confrontation about its emotional attachment, attributions that went untested even as top management encouraged such confrontation. On the other hand, top management recognized operational defensiveness between them and middle managers, but left it unexamined and so reinforced lower levels unawareness of their impact on those at the top. Argyris argues that the analysis is incomplete without a non-self-referential explanation of the causal central processes identified and without a focus on the theories-in-use that would have given insights

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into improvements. It should explain how subordinates colluded with their superiors to create domains of undiscussables that would inhibit learning around these issues (p.41). From a Theory of Action perspective, top management used Model I action strategies consistent with a Model I theory-in-use, producing organizational defensive routines that the Intel management acknowledged existed. Structural solutions, such as bringing together departments, had brief limited effectiveness. Managements hypothesis that defensive actions were unchangeable was implemented in ways such that it was not testable. Although they espoused Model II leadership strategies, subordinate collusion and work policies and practices appeared to keep them aware of the discrepancy with their actual theory-in-use. Groves leadership actions, also examined by Argyris, are an example. Grove espoused a leadership that, among other things, focused on content and not style (p.50) and encouraged executives to do what is right, not what you are ordered to do. However, Jackson (1997) notes that control was tight and detailed, and constructive confrontation dialogue was abrupt, aggressive and interrogatory (p.51). To Argyris, Groves theory-in-use included advocating courage, honesty and trust in ways that inhibited them, using effective leadership rules that maintained his unilateral control, and making his mixed messages about leadership seemingly non-existent and undiscussable. In turn, subordinates developed defensive routines to counteract him. Chapter 4: Inhibiting Double-Loop Learning in Government and Information Technology In Chapter 4, Argyris mostly reviews the works of several authors who report on patterns of decision making in government (often the White House) and information technology, with a brief section on knowledge management. However, throughout the lament is the same. Since the authors do not focus on the causes of the patterns that they reported, this results in advice that has low implementable validity (p.73). For example, Kaufman (1981) describes how White House staff dealt with their fears of agencies becoming too independent by increasing controls. However, this became a self-reinforcing, self-sealing process as the agencies attempt to bypass the control prompted increased White House controls (p.70). Of Kaufmans (1977) three solutions to stronger control, Argyris labels the advice abstract as it does not say what specific actions are required and it bypasses the very dysfunctional processes that Kaufman describes (p.73). In government organizations, Argyris argues that action consistent with Model I theory-in-use and organizational defensive routines occurred where there were multiple, complex, non-trivial issues that contained

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a potential for, or an actual component of, embarrassment or threat (pp.72-73). Thus, recommendations that do not account for this are not actionable. Argyris gives similar criticisms regarding literature and advice on information technology and knowledge management. Chapter 5: Features of Scholarly Inquiry that Inhibit Double-Loop Learning and Implementable Validity In Chapter 5, Argyris looks at scholarly research, which under various perspectives suffers from the same problem as the work of the authors in Chapter 4. Despite their ideals, scholars focus primarily upon diagnosing the existence of double-loop issues and significantly less upon resolving them in such ways that the solutions have implementable validity (p.92). Three causes are suggested for the limitations of scholarly inquiry. Complete descriptions of the universe as is tested through empirical methods, and current best practices in research methods that bias and limit exploration even as they espouse the opposite (p.92), are both norms in the scholarly community [that] enable and maintain limitations to double-loop learning and implementable validity (p.93). Third, social scientists utilize Model I theory-in-use while espousing Model II, and so too are subject to phenomena such as skilled incompetence and unawareness, plus the use of defensive reasoning (p.93). Perspectives examined include the behavioral theory of the firm, a narrative-interpretive perspective, the narrative-interspective approach and pluralism. As for research methodologies used by scholars conducting normal-science research, they are all consistent with Model I governing variables. In the end, Argyris concludes that none of the authors tackle issues at the theory-in-use level, and that it is erroneous to believe that the best way to get scholars to examine their defensive routines is to have them do it privately (p.128). For example, Burgelman (2002) allows that defensive routines exist but claim they are not correctable. [He] also, by design, [does] not seek to test these claims. While he states, in effect, that he is not acting defensively, he also admits that his actions could create a self-fulfilling prophecy (p.128). Chapter 6: Interventions that Facilitate Double-Loop Learning

Argyris uses four illustrations in this chapter to describe several intervention strategies that can be used to help individuals diagnose the

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degree to which they adhere to Model 1 theory-in-use, and thus produce and maintain organizational defensive routines. The point is to help individuals reflect upon their skilled incompetence and skilled unawareness, and their counterproductive consequences (p.129). Further, he proposes that the seminars described in the first three cases can be used to test claims that if we place [people] in situations where the system processes support double-loop learning, and if the [people] use Model I theory-in-use, they will create consequences that are counter to double-loop learning (p.130). The Left-Hand/Right-Hand Case Method In the first illustration, each individual writes a case that includes a statement of the problem; the intended strategy to begin to solve the problem; the actual conversation that did or would occur as envisioned by the writer; and the information that the writer did or would not communicate for whatever reason (p.132). The last two are written in right and left hand columns respectively, as illustrated in Table 3. Table 3: Left-hand / Right-hand Example (From Table 6.1, p.133) Thoughts and feelings not communicated Actual Conversation

Hes not going to like this topic, but we had to discuss it. I doubt that he will take a company perspective, but I should be positive.

I: Hi, Bill. I appreciate the opportunity to talk with you about this problem of customer service versus product. I am sure that both of us want to resolve it in the best interests of the company. Bill: Im always glad to talk about it, as you well know.

In this case, the executives focus was on increased customer service. After analyzing their left-hand columns and finding that they similarly blamed problems on each other, the next step was redesigning their actions using handouts that described the Model II set of behaviors so that the chosen episode would not have negative consequences. They realized, as Argyris underscores, that developing this new skill requires time and plenty of practice. Conducting Diagnoses in Large Groups The second illustration shows how the left-hand/right-hand case methodology can be used in large groups. Argyris proposes that the method can generate data about the existence and power of organizational defensive routines and, if the participants are from the same organization, be used to develop solutions to defensive routines (p.135). Absent, Argyris argues, is the explicit connection between counterproductive consequences [of Model I theory-in-use] and organizational defensive routines (p.141). As an example, he quotes managing partners in a large accounting firm who participated in a workshop. They had previously spent several

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million dollars and participated in highly evaluated culture change workshops meant to reduce many of the counterproductive actions illustrated by their cases. The Andy Case Participants in the Andy case engage in role-play after reading about how Andy failed to be appointed CEO despite that being the expectation of himself and others, when he was hired as COO. The faculty member, acting as Andy, stresses that he is well aware of his errors such as failing to learn enough about the company and making several bad judgments, and genuinely wants to learn how not to repeat them. The participants try to help Andy in this regard. However, they produce unactionable advice and deal with Andy as ineffectively as he dealt with his company. Moreover, they blame him for their inability to help him just as he blames them for their inability to help. From a Theory of Action perspective, these kinds of interactions created conditions that were not only counterproductive to learning but also were self-reinforcing and self-fueling of this lack of learning (p.154). Argyris also details how the Andy Case can be transformed into a quasi-experiment. The Richard Case In the Richard Case, it is actually Richard being questioned by his peers on his actions strategies and reasoning when dealing with his client and line managers. For example, he attributes the clients desire to use video to wanting to hook people in but neither tests this by asking or tries to correct any perceived difficulties. Eventually, both he and the other eleven professionals involved in the discussion come to realize that they all used defensive reasoning and that this led to a counterproductive lack of learning that could be related back to organizational consequences (p.171). Chapter 7: Organizational Interventions that Facilitate Double-Loop Learning This chapter also presents four illustrations, this time of interventions in organizations. The Responsibility Virus Argyris recounts the work of Martin (2002), who reveals the causal process by which leaders typically become over-responsible and followers typically under-responsible (p.174). Activated by failure or fear of failure (p.174), the responsibility virus leads to self-fulfilling and self-sealing processes. For example, when errors are committed, the leader feels confirmed in his belief that he must take

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charge, while subordinates feel confirmed in their belief that the leader will not change, and hence become passive, run silent, run deep, and hide the fact that they are doing so (p.175). Among Martins hypotheses is the participants Model I theory-in-use. He defines a six-level responsibility ladder, with six the lowest level and one the highest level of responsibility involving the consideration of choices and decision-making. An effective choice structuring process involves framing the choice, increasing the amount of positive options, specifying necessary conditions and testing those identified as key barriers. The tests aim to produce internal commitment to the choice, which is made under the proper conditions as defined by Martins concepts. Argyris also discusses Martins views on redefining leadership and followership (p.176). The Car Launch This example is meant to describe the diagnosis of defensive reasoning and routines in an automotive organization trying to create and implement innovation, and to encourage the use of learning histories in the reflection of individuals about innovation in organizations. The learning historys key features are descriptions of the event sequence; how the interveners developed a strategy for double-loop learning and change; the intense personal and emotional interactions that occurred as the participations learned about features such as their defensive reasoning, skilled incompetence and unawareness, and organizational defensive routines; and their fundamental assumptions and methods throughout in telling the story. In this case, group discussion around problems in new product development results in affinity diagrams that are used as a basis for formulating corrective action (p.182). The map helps the participants to both see the need and develop rules for increasing trust and cooperation. However, the decision of the team to exclude top management in order to allow the program to happen backfired when management failed to commit to the program although it appeared successful. Recreating the Organization This illustration recounts Ackoffs recent work on Recreating the Corporation (1999). Ackoff has worked with both Donald Schn and Argyris, and promotes the concepts of democratic hierarchy (circular organization) and internal labor markets (p.187), both of which Argyris describe along with a brief account of Ackoffs model of an organizational learning, adaptation, and management system (p.192). Ackoff believes that, if such ideas are implemented effectively, the dysfunctionality of organizations being managed by Model I theories-

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in-use and organizational defensive routines would be reduced (p.186). Moreover, his designs are based on requirements reminiscent of the characteristics of productive reasoning. An Organizational Intervention Here, Argyris provides a partial description of an orientation aimed at helping the organization move from an Organization Model I to an Organization Model II learning system (p.193). The directors of the management consultant firm wanted to avoid developing the negative internal characteristics they had left that could also reduce the quality of their work. They also felt that they needed to manifest the learning competencies of double-loop learning, which would be increasingly important in producing added value for clients. This learning would be among all parties, including clients, and would persist under conditions of stress, embarrassment or threat (p.194). At the first seminar with an intervener, after framing the problem, generalizations were developed about how to reduce organizational defensive routines and skilled incompetence and increase skills necessary for success. An organizational map that made these patterns explicit was developed, reviewed and critiqued by the directors. The action map for the feedback session, i.e., the hypotheses about what drives learning and anti-learning activities within the organization (p.197) was tested for validity and discussed. The second seminar aimed to provide learning and practice in a new productive theory-in-use, and explore the organizational changes it could create. The left-hand/right-hand case method was used, and the cases and discussion confirmed features of the [earlier] action map (p.207). Later, the directors conducted their own follow-up sessions within the firm, and expanded the intervention to their routine work. Chapter 8: Conclusion Defensive reasoning, Argyris argues, is manifest at all organizational levels, present in a wide range of activities, is omnipresent, powerful, inhibits learning and is dangerous to organizational performance and effectiveness (p.212). It can overwhelm productive reasoning (p.212) and become dangerously natural, realistic and necessary (p.213). Thus, people need to dismantle the multi-level network of defensive reasoning activities in order to strengthen productive reasoning (p.213). Further, scholars need to conduct research about double-loop learning that appears to produce knowledge with a high degree of implementable validity (p.222). Changes that genuinely transform organizations are not likely to persist as long as the defensive reasoning mindset is not reduced (p.222).

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OverviewChapter 1: IntroductionA Theory of ActionDouble Loop Learning

Chapter 2: The Corrosion of Character Capitalist and Social EconomicsCorrosion of Character in Capitalist CountriesThe Corrosion of Character in Socialist Countries

Chapter 3: Inhibiting Double-Loop Learning in Business Organizations The Intel Story: Burgelmans Analysis Analyzed

Chapter 4: Inhibiting Double-Loop Learning in Government and Information TechnologyChapter 5: Features of Scholarly Inquiry that Inhibit Double-Loop Learning and Implementable ValidityChapter 6: Interventions that Facilitate Double-Loop LearningThe Left-Hand/Right-Hand Case MethodConducting Diagnoses in Large GroupsThe Andy Case The Richard Case

Chapter 7: Organizational Interventions that Facilitate Double-Loop LearningThe Responsibility VirusThe Car LaunchRecreating the OrganizationAn Organizational Intervention

Chapter 8: Conclusion