Threats and opportunities for learning organizations – Nordic perspective and experience

In this special issue guest edited by Brandi & Sprogøe (2022), the authors discuss the Nordic organizational model and its compatibility with the concept of the learning organization, particularly from the perspective whether and to what extent the Nordic model stimulates or is compatible with organizational learning, change and transformation. In his viewpoint, Tryding (2022) questions whether recent trends, particularly digitalization, negate the Nordic model and lead to its abandonment, which in turn raises the question of whether other modern trends also lead to the abolition and abandonment of the learning organization philosophy. Dahl & Irgens (2022) discuss organizational learning in Nordic organizations as learning through greater participation and empowerment. Nerland (2022) discusses organizational learning in complex epistemic environments based on professional work in Norwegian organizations. Finally, Pregmark (2022) discusses models of change management and proposes a new formula for change management with a foundation deeply rooted in the ideas of the Nordic organizational model.

There is no consensus on the definition and conceptualization of the Nordic model (Tryding, 2022). The Nordic model is a product and a result of the culture from which it emerged, namely, the Nordic culture in the geographical region occupied by the Nordic countries (Sweden, Norway, Finland, Denmark and Iceland). However, it would be more accurate to say that there are several Nordic models or different versions of the Nordic model, each with a particular cultural and political background related to the four major Nordic nations. Nordic culture has not only influenced organizational work and development, its foundations are also deeply rooted in the governance processes of these countries. For this reason, the Nordic organizational model applies to both profit and nonprofit organizations in this region.

General or common characteristics of the Nordic model are as follows (Schramm-Nielsen, Lawrence, & Sivesind, 2004; Cazier, Benjamin, & St. Louis, 2007):

• flat, organic and network-based organizations; an organization that serves as a tool to enable creativity, participation and democratization;

• a high level of delegation and empowerment of employees based on learning, dialog, information and knowledge sharing;

• participative, distributed and often consensual decision-making based on democratization, transparency and social emancipation; and

• benevolent, servant and adaptive leadership based on building trust, value congruence and employee needs.

Even though the leader has primary responsibility under the Nordic model, power and resources are shared. Employees are invited to participate in decision-making by attending various events to experience things firsthand and learn from their experiences and from others through a dialogue based on trust. Managers are aware of the fact that employees often have the best and most accurate information about the market and customers (Normann, 1984). Trust among employees and managers is seen as a tool for effective management, replacing the need for control. In this context, even inspection is seen as a learning process. This is possible because trust is based on morals and moral values (Andreasson, 2017) and relies on shared values. Trust enables leaders to share their ideas and goals internally and externally (Katzenbach & Smith, 1993). This allows for a shared experience and vision that further guides individual and collective action. Frequent communication and discussion about the purpose of the organization is encouraged and is a typical activity of a Nordic organization. This practice is also found on corporate boards, as large companies appoint employees to their boards to influence strategic management regarding vision, goals and strategic direction.

These characteristics are not only relevant to learning organizations but also enable organizations to develop and change through collective or organizational learning. Thus, the emphasis on individual learning and development leading to employee participation and empowerment reflects the discipline of the learning organization, namely, personal mastery. Sharing information and knowledge through collective events leads to a shared vision that guides further action. Participation in collective actions also leads to further teamwork, sharing of information and knowledge within the team, and thus team learning. Transparency and democratization of relationships, followed by participatory decision-making, lead to current business assumptions being challenged and result in changed mental models. In this way, practitioners who have embraced the Nordic model and strive to implement it in their organizations can be assured that they are developing a learning organization in the sense of the learning disciplines described by Senge (1990).

Several trends have recently emerged that could pose a serious threat to the implementation of learning organization ideas. One of them is increasing regulation. Regulation refers to predetermined changes based either on general or average interests of myriad stakeholders or on the interests of a particular organization pursuing a particular agenda. This results in compliance management (Tryding, 2022) or managing to meet externally imposed goals by following established standards and protocols and documenting each step of the process. Thus, compliance management is not based on employee participation, but on obedience and control. Increased regulation has recently been seen in finance, healthcare, educational institutions, etc. When individual learning and personal mastery are required or allowed, they are based on predetermined set of skills or a catalog of knowledge that requires strict adherence to predetermined procedures in certain situations.

These processes diminish or negate individual engagement in the sense of empowerment and individual judgment when unforeseen problems or situations arise. Expert judgments based on competence and experience are not allowed or are heavily regulated by procedures that only instill fear of failure or missteps and prevent proactive engagement. Interpersonal relationships are also undermined, especially informal organization, as all interpersonal relationships are also predetermined and regulated to serve a predetermined purpose. There is no shared vision, other than the externally imposed vision that is forced upon employees to ensure compliance. Leaders also strive to meet goals and milestones and prove it by documenting every step and measuring a set of “quality standards.” Reporting diverts their attention from innovative ideas or building internal cohesion based on trust. Confidence in the system and the leader should be evident from results reports that reflect established plans and milestones. The leader loses sight of the system perspective and instead focuses on the building blocks whose performance should be optimized, often to the detriment of other parts of the system. This management approach is best described as administration which serves to preserve the imposed system and prevent democratic change by insisting on rules and regulations. Employees who point out the futility of regulations are viewed as obstacles and are told to comply or leave. Professional ethics is challenged and often threatened.

Regulation is supported by digitalization. Digitalization can also be seen as a trend in its own right, affecting organizations and organizational learning. Digitalization enables the collection of large amounts of data and its rapid processing. In this way, digitalization can enable the collection of data and information in real time (when the data is put into context and given meaning and purpose), which can speed up the decision-making process and enable information sharing. However, digitalization also enables total monitoring and control. In this way, digitalization can simultaneously promote empowerment based on more information and knowledge and hinder it by emphasizing control. Furthermore, access to information could be granted to certain individuals based on their status. Only one person, the manager, could have access to all information, centralizing the organization, which is in contrast to the decentralization promoted by learning organization ideas.

In this way, advanced digital tools are transforming the cognitive and social dimensions of work, creating new tasks and responsibilities (Nerland, 2022). While the organization is seemingly boundaryless and contributes to knowledge sharing, new boundaries may emerge that contribute to the problem of knowledge claims and new challenges for organizational learning. External stakeholders such as specialists and experts may also be involved in the value creation process, leading to changes in knowledge practices through new connections. However, specialists and experts are also part of specific professional communities where they share and exchange knowledge, which contributes to the development and expansion of their knowledge capabilities. With the advances in digital technologies, professional work is becoming more complex and has multiple objectives, ranging from problem solving to mastering new knowledge sources and technological capabilities.

It is well known that the Nordic workforce is highly engaged in knowledge-intensive work supported by a digital infrastructure (Tikkanen & Nissinen, 2016), which means that they need to have and maintain a high level of digital skills. The education system supports this process, as in the Nordic countries the education system is public and formal education is prioritized over alternative skill pathways (Underthun & Drange, 2018). Flat organizations and low power distance in Nordic organizations mitigate status differences and stimulate knowledge-generating activities, especially by challenging existing practices and distributing learning opportunities (Warner-Søderholm, 2012). Professional communities play an important role in individual and organizational learning. Whenever some work practices, procedures and policies are explored, tested and eventually approved as part of professional work-related learning, they are further disseminated and improved. Digitalization initiatives contribute to information flow, analytics and data-based and data-driven development. In this context, some people need to act as project leaders and technology coordinators, especially in view of the need to enable interaction between various stakeholders.

Professional work-related learning and digitalization in various occupational fields thus lead to greater standardization, which restricts the freedom of individual operational action. However, not everyone is affected equally. High-skilled workers may benefit from greater autonomy and decision-making power, especially in terms of creative work in developing existing work practices, procedures and policies, while low-skilled workers may face greater formalization, standardization and thus tighter control (Ivaldi, Scaratti, & Fregnan, 2021). However, it is important to also give more autonomy to low-skilled workers who are responsible for following certain policies and procedures, as they can serve as a great source of information for future learning and improvement. It is good to see workers in the Norwegian education and healthcare sector being given such an opportunity (Nerland, 2022).

By moving work to the digital realm, interpersonal relationships, knowledge sharing and trust can be further compromised. Work is no longer a social process but can become a series of digital transactions that further undermine dialog, trust and learning. Even the time spent with a customer, client, student or patient is predetermined, leaving no room for the development of social relationships or mutual learning. Despite logical expectations, service relationships have become increasingly automated. While the focus is on meeting the client's needs in the best or predetermined way, employees are expected to mimic robotic behavior. Any initiative is seen as a potential disruption to the perfectly optimized system, which is designed to be infinitely repetitive and error-free. Customers are often given no real room to complain or make suggestions, further hindering the learning and change process. Individual and organizational learning is replaced by machine learning, where the system recognizes patterns and responds by making adjustments, leaving employees and customers to follow suit. This process is not only at odds with the Nordic model but also with the ideas of the learning organization, because it leads to digital-authoritarian management. Practitioners should be especially careful about what kind of organization they actually want to build or develop.

Any practice, including management practices, can be good under certain circumstances, depending on the result we want to achieve. If we want to achieve destruction, conflict is good. If we want to develop a system, a problem-solving approach is much better. Cultural context and circumstance is also an element that is often not considered, or only partially considered. The result is that certain practices are implemented but do not fit the cultural context and/or the goals that people want to achieve in that context.

According to Hofstede's (1980) complex research, countries and regions differ in terms of specific cultural characteristics that are reflected in their work practices. Thus, organizational work practices reflect large or small power difference, short- or long-term orientation, masculinity and femininity, collectivism or individualism, and high or low tolerance for risk and uncertainty, which are reflected in the degree of organizational formalization and standardization. It should be noted that many management practices originated in the United States, a country known for high individualism, small power distance, short-term orientation, high risk and uncertainty tolerance and masculinity (Hofstede, 2022). The emphasis on individualism and masculinity has contributed to management practices that emphasize the role of a strong and charismatic leader who is paid exceptionally well to set goals that lead to the achievement of great short-term results based on the employee followship or following orders.

This approach is not compatible with countries with collective and democratic traditions reflected in organizational practices based on extensive employee participation and empowerment, such as in the Nordic countries. These countries also score very low on the masculinity dimension, while individualism is less pronounced than in the United States (Schramm-Nielsen et al., 2004). The dimensions that the Nordic-Dutch cluster share with the Anglo-Saxon countries are low uncertainty avoidance and low power distance (Brandi & Sprogøe, 2022).

Dahl & Irgens (2022) explain how US management consultant George Kenning worked with several large Norwegian companies in the 1950s, resulting in the so-called Aker model, named after the industrial company with which he was most closely associated. The model proposed a top-down decision-making process based on an objective-based, autocratic management style and control, leaving little room for democratic decision-making, consensus and cocreation of knowledge based on collaboration. Not surprisingly, this model sabotaged innovation based on employee participation.

On the other hand, Einar Thorsrud (Sørhaug, 1994), together with other researchers and under the influence of the Tavistock Institute of Human Relations in London, experimented with some other ideas. They took a different point of view and advocated the introduction of teamwork, participation in decision making and cooperation between employers and employees. Even the Norwegian government participated in this project, and learning processes were introduced in the public sector. Later, the concept of organizational learning was introduced, supported by a learning culture in which learning is seen as a collective endeavor, as opposed to a hierarchical way of learning in which learning and actions are determined from the organizational top (Herbst, 1977). According to this view, learning cannot be planned in advance and its outcomes cannot be fully determined. Learning is a nonlinear, step-by-step process in which it is not uncommon to take a step or two backward while trying to move forward (Thorsrud, 1977). Similar to the ideas of Mary Parker Follett (1940), the role of the leader is to promote the democratization of work and to ensure “effective democracy” (Emery & Thorsrud, 1969, pp. 4–5).

Practitioners could benefit from other ideas that have been promoted in the Nordic context. For example, it was suggested that learning and action should be based on consensus. Fred Emery introduced what he called “consensus conferences” to provide common ground for further action and learning based on democratic dialogue in which all relevant stakeholders could participate. Although disagreements and conflicts are to be expected, dialogue gives everyone the opportunity to contribute and prevents autocratic or reformer-driven change. Like action, learning is a political process based on multiple interactions and negotiations that can lead to consensus or a shared understanding and common vision of what the group wants to achieve.

In this process, practitioners should not shy away from the problems of internal chaos. This can be described by the “garbage can” model (Olsen, 1971), according to which an organization is an environment full of ambiguity, diverse interests and conflicts, where problems may be poorly understood and perspectives on their resolution may vary as various external influences enter the system. In this way, the organization and its members are constantly learning how to act democratically by sharing information and knowledge and engaging in dialog and sense making. In this way, members of the organization can come to a shared understanding (consensus) about future actions and the direction of learning, which can further promote participation, democracy, internal cohesion and shared values.

In 2014, the Norwegian Parliament introduced a reform based on the promotion of learning culture and the idea of developing schools as learning organizations (Dahl & Irgens, 2022). According to this reform, learning was based on learning outcomes, even though the term was not used by the Educational Committee because it sounded foreign and nonnative in the Norwegian context. However, the international trend was to measure what schools provided as added value in the context of the “school effective movement” introduced and promoted in Anglo-Saxon countries (United States and United Kingdom) and by the World Bank and OECD (Dahl & Irgens, 2022). These ideas are related to the New Public Management paradigm and aim to establish a clear correlation between inputs (teacher resources and competencies) and outcomes (student learning outcomes). Moreover, learning outcomes were determined as indicators of school quality. The management process should have been based on quality indicators and continuous data management from which schools should have learned. However, this relationship is not straightforward, as it requires active participation from both sides.

It is important to note that the process of developing schools as learning organizations has been the responsibility of school owners or leaders, who have been expected to produce results based on data management and learning outcome indicators. However, this process gave rise to what has been called “submissive leadership” to those enforcing this reform, but also “strong leadership” to teachers focused on results based on imposed learning goals and outcomes. Learning was standardized, formalized and based on a centralized decision-making process where outliers in content or grading were considered a problem and should have been corrected or eliminated. Interestingly, the process of developing schools as learning organizations was based on obedience, submissive leadership and centralization and formalization based on hierarchical relationships, rather than democratization, participation and empowerment of teachers. This approach is also not consistent with the organizational learning process, which is based on dialog, participation, joint sense-making and development of a shared vision. Leaders in such a context are stewards and mentors who are not afraid to be vulnerable to the internal and external environment, as they and their followers continually examine their beliefs and mental models that shape individual and organizational learning and action. For this reason, leadership in learning organizations is fundamentally transformative and based on the collective ability to solve problems.

In view of these developments, it is not surprising that the measures taken were not successful, since they did not correspond to local conditions. The new reform proposed that schools operate according to general principles and values that would help people learn and work together (Dahl & Irgens, 2022). Good leadership was identified as a process based on understanding all the challenges teachers face and developing democracy, collaboration and trusting relationships. The main role was assigned to teachers and their professional judgement about the educational process and its outcomes. In this way, teachers were finally truly empowered to work on the basis of their professional integrity. The assumption is that those who spend the most time in schools and with students should know best how to develop the educational process and fulfil its purpose in terms of meaningful learning and action. Practitioners may find it interesting to note that in the Nordic educational context, there is an additional element – hygge as a process that leads to cosiness, warmth, contentment and well-being (Dahl & Irgens, 2022). This can be achieved through genuine participation and strengthening the feeling of being part of a community.

Change is a very difficult process. In managing change, leaders and organizational members benefit from clear direction and a sense of urgency that guides change initiatives. However, even when urgency is present, it is often difficult to establish a clear direction and vision from management and leadership under conditions of high risk, uncertainty and ambiguity. In her article in this issue, Pregmark (2022) discusses change management and change journeys in a dynamic environment where the future is difficult to predict. This leads to new models for change that focus on agility, flexibility, innovation and entrepreneurship, as opposed to older models that focus on overcoming resistance and strengthening the drivers for change based on a specific direction, a strong vision and a clear process, as is characteristic of the Lewin model of change management.

This model is based on three steps – the “Unfreeze,” in which the current state is identified and motivation for change is developed; the “Move,” in which change is initiated; and the “Refreeze,” in which the new state is reinforced through educational and incentive activities. In this process, benefits of change should be greater than costs of change (material, relational and emotional). In the first stage, it is important to identify the reasons for dissatisfaction with the current situation. Practitioners usually emphasize why the goals could not be achieved, why the goals are not valid in current or future circumstances, why certain processes or systems do not meet the needs, etc. In addition to raising awareness, this process also helps convey a sense of urgency or impending crisis that change is needed and should be implemented quickly. Change means that new systems, processes or goals should be introduced, accompanied by new behavioral routines. These are then established based on the vision and direction of the leadership.

However, in today's volatile, uncertain, complex and ambiguous conditions, a different approach may be appropriate. Not many organizations today are able to maintain a status quo for a long time so that they suddenly unfreeze current conditions and initiate a change process that moves the organization from state A to state B. More of today's organizations view the change process as continuous and ongoing, in which many new goals, activities, systems and processes simply emerge in the process of continuous adjustments to internal and external circumstances and based on stakeholder interactions and management. Therefore, it is important to create awareness of new conditions and possible actions among all organizational members so that change actions can be designed and implemented. Pasmore (2015) suggests an iterative change management process consisting of discovering, deciding, doing and discerning.

However, a key process in modern change management is the learning process, which contributes to the awareness that change is necessary and that new ways of acting should be discovered and adopted. In this context, several elements could play a key role: dialogue, trust, learning and creative pressure. Dialogue creates a space for the exchange of ideas and the development of a collective awareness of the need for and direction of change, which builds confidence in action and the collective, followed by further learning on how to create meaningful change, which strengthens creative pressure and creativity to design adequate change measures. In this context, it is not necessary to strengthen the drivers of change and address resistance to change, as change is a democratic and participatory process based on collective action. A clear direction is also not required; it simply emerges through collective action and dialogue. The results do not need to be reinforced, as they come from the organizational members and their collective actions. Practitioners should remember to create space for learning and display of progress so that organizational members know what path the group is taking and what knowledge it is acquiring.

The Nordic environment is particularly suited to this process of change because it is characterized by low power distance, high democratization, participation and learning. Nordic managers have been found to rely more on subordinates and peers than on formal rules when compared to other European managers (Smith, Andersen, Ekelund, Graversen, & Ropo, 2003). This contributes to a bottom-up approach in shaping the change process and to higher motivation and emotional engagement, as Pregmark (2022) found in her study. She found that a shared purpose and a sense of being on the right track are more important than a traditional vision. Therefore, she suggests replacing the old change formula (vision*process*dissatisfaction) with a new one (purpose*progress*trust). Practitioners should also keep in mind that positive emotions are an important driver of change and should be continuously encouraged.

This work is a part of the project “Development of management in the entrepreneurial economy and society” supported by the University of Rijeka, Croatia, grant number: 18-44 1174.