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Deliberate Learning and the Evolution ofDynamic CapabilitiesMaurizio Zollo ~ Sidney G. WinterDepartment of Strategy and Management, INSEAD, 77305 Fnntainebleau, FranceThe Wharton School, Department rifManagement, University of Pennsylvania, Philadelphia, Pennsylvania /9104maurizio.zallo@insead.fr - winter@whart0n.upenn.eduAbstractThis paper investigates the mechanisms through which orga-nizations develop dynamic capabilities, dened as routinizedactivities directed to the development and adaptation of oper-ating routines. lt addresses the role of (1) experience accumu-lation, (2) knowledge articulation. and (3) knowledge codi-cation processes in the evolution of dynamic, as well asoperational, routines. The argument is made that dynamic ca-pabilities are shaped by the coevolution of these leaming mech-anisms. At any point in time, rms adopt a mix of leamingbehaviors constituted by a semiautomatic accumulation of ex-perience and by deliberate investments in knowledge articula-tion and codication activities. The relative effectiveness ofthese capability-building mechanisms is analyzed here as con-tingent upon selected features of the task to be leamed, such asits frequency, homogeneity. and degree of causal ambiguity.Testable hypotheses about these effects are derived. Somewhatcounterintuitive implications of the analysis include the rela-tively superior effectiveness of highly deliberate learning pro-cesses such as knowledge codication at lower levels of fre-quency and homogeneity of the organizational task, in contrastwith common managerial practice.(Organizational Learning; Dynamic Capabilities; Organilutimnzi Routines;Itnowledge Cndit alinn: Knowledge Artirnlatinn: Learning by Doing; TaskFrt'qimic_v: Task Hr'k'r0geneif)2 (.r1u.m[.4nihigtiiIy)IntroductionExplaining the variation in the degree of success of busi-ness organizations by reference to different degrees andqualities of organizational knowledge and competencehas been a major focus of recent theorizing in both stra-tegic management and organizational theory. Conceptsand labels coined to characterize the phenomenonabound. From pioneering efforts such as Selznicks(1957) distinctive competence," to the more recent andrened notions of organizational routines (Nelson andIO47-7039/02/l 303/0339/$05 .001526-5455 electronic ISSNWinter i982), absorptive capacity (Cohen and Levinthal1990), architectural knowledge (Henderson and Clark1990), combinative capabilities (Kogut and Zander 1992)and, nally, dynamic capabilities (Teece et al. 1997),there are decades of investment in sorting out the traitsand the boundaries of the phenomena. Recent contribu-tions (Eisenhardt and .\/iartin 2000, Dosi et al. 2000) aimat clarifying distinctions among the van'ous constructs. Asthe eld progresses in the characterization ofthe phenom-ena. however, the need for a better understanding of theorigins of capabilities becomes increasingly apparent.What ultimately accounts for the fact that one organiza-tion exhibits "competence in some area, while anotherdocs not? And how do we explain the growth and decayof that particular competence, other than the simple repe-tition. or lack thereof, of decisions and behavior?This paper sets forth a theoretical account of the gen-esis and evolution of dynamic capabilities that focuses onthe role of several learning mechanisms and their inter-action with selected attributes of the organizational taskbeing learned. We begin our discussion by presenting ageneral framework linking learning mechanisms to theevolution of dynamic capabilities. and these to the evo-lution of operating routines. We then draw on evolution-ary economies to develop a more ne-grained represen-tation of how organizational knowledge evolves at thelevel of operating routines as well as of dynamic capa-bilities. In 3, we discuss the different learning mecha-nisms in terms of a spectrum of leaming investments andidentify the contextual features that shape their roles. Fi-nally, in 4, we explore in detail how some key attributesof the organizational task under consideration affect therelative effectiveness of these leaming mechanisms anddevelop testable hypotheses for future empirical work.1. Organizational Learning andDynamic CapabilitiesOur rst objective is to develop a framework describingthe linkages among the processes we intend to study. WeORGANIZATION SCIENCE, 2002 INFORMSVol. 13, No. 3, MayJune 2002. pp. 339-351Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

About Authom"nizational impliczttions of lntemet technologies. Address: SloanSchool of Management. MIT (F53-325). 50 Memorial Drive,Cambridge, MA 02141: telephone: (617) Z53-U-'14}; e-mail:(wanda( Learmttg um! the Evolution of D_\IZLl77IfL' Clrptibilitim"One implication of the analysis is the perhaps provoc-ative suggestion that knowledge codication (and to alesser extent knowledge articulation) activities becomesuperior mechanisms with respect to the accumulation ofexpertise as the frequency and the homogeneity of thetasks are reduced. This learning-oriented appraisal runscounter to the logic of codication that now dominatesboth theory and practice. Ordinarily, a bank would co-piously codify its branch operations (how to open an ac-count, execute a wire transfer, etc.) and a manufacturerwould do the same with its standard operating procedures,hut neither would typically be prepared to do so when itcomes to managing a reengineering process or the acqui-sition of a company. This is the natural result of a habitof thinking that the costs of codication activities arejus-tied only by their outputs, and not by the leaming bene-ts of the codication process itself. In our perspective.the creation of a manual or a decision support tool aimedat the facilitation of a relatively infrequent and hetero-geneous task may be more valid (or at least as valid) asa capability-building exercise as for the benet derivedfrom the actual use of the tool. It can affect the level ofperformance on subsequent tasks. even if limited in num-ber, and it can affect performance even if individualminds, and not the nished tool. are the key repository ofthe improved understanding. Codication efforts forcethe drawing of explicit conclusions about the action im-plications of experience. something that articulation alone(much less experience alone) does not do.While the standard logic of codication correctly di-rects attention to the costs of codication and the scaleof application. the learning perspective suggests other im-portant desiderata for codication to be done right. Ap-plying the logic of our argument here, and drawing on aconsiderable amount of related empirical work and dis-cussion, we propose four guiding principles. First. cod-ication should aim at developing and transferring knowwhy as well as know how. We have emphasized thatcodication efforts provide an occasion for valuable ef-forts to expose action-performance links. Aiming at pro-cess prescriptions alone forfeits this advantage and in-creases risks of inappropriate application. Second.codication efforts should be emphasized at an appropri-ate time in the course of learning. Attempted prematurely.codication efforts risk hasty generalization from limitedexperience, with attendant risks of inflexibility and neg-ative transfer of learning. When codication is long de-ferred, attempts at careful examination of the causal rc-lations may be frustrated by the entrenched results of tacitaccumulation, which may have attained high acceptancefor both superstitious (Levitt and March 1988) and ra-ORGANIZATION SCIENCE/Vol. 13. No. 3. May-June 2002tional (March and Levinthal l993) reasons. What consti-tutes the right time depends on the overall heteroge-neity of the tasks and the reprcsentativeness of the earlysample; high heterogeneity and low representativenessurge deferral.The third principle calls for the codied guidance to betested by adherence. The implementation issues here areparticularly delicate. lt is clear, to begin with, that codi-cation cannot be an instrument of continuing learning ifthe guidance developed after Trial 7 is simply ignored atTrial 8 and later. Subsequent application provides the ex-pcrimental test for the causal understanding that the guid-ance is supposed to embody; the shortcomings of thatunderstanding cannot be identied if the guidance is tooeasily dismissed. Because, however, it is implicit herethat the guidance could be awed, the desirability of test-ing by adherence is obviously qualied by the need toavoid inappropriate application. The need for judgmentis inescapable, but the fourth and nal point here is thatthere is also a need for some supporting structure. Sig-nicant departures from the guidance should not be en-tirely at the discretion of the task team, hut should hesubject to review and approval by a body that can assessthe case in the light of the longer-term interest in capa-bility building. At a minimum. such a process can servethe function of making sure that the subsequent discus-sion in the selection stage of the knowledge cycle is cor-rectly informed about the path actually taken and can con-sider, for example, whether the departure should beadopted as part of the standard guidance. Such a reviewpolicy brings its own hazards, of course, particularly therisk that the review process may become a bottleneck.The processing of engineering change orders presentsstrong parallels with the organizational issues involvedhere.In our view, a more nuanced assessment of knowledgecodication and, more generally, of deliberate learningprocesses, is just one example of the potential benets,both for theory building and management, of an inquiryinto how competence is generated and evolves within anorganization. The framework introduced in this paper-particularly the knowledge evolution cycle and the rela-tionships among learning, dynamic capabilities, and op-erating routinesconstitutes. we believe. a signicantclarication of the structure of the phenomena. This in-quiry is, however, still in its infancy. We know little, forexample, of how the characteristics of the organizationalstructure and culture interact with the features of the taskto be mastered in determining the relative effectivenessof the various learning behaviors. Why is it that certain349

MAURIZIO ZOLLO AND SIDNEY G. WINTER Deliberate Lmrmng mid the l:'vrIli1ti'0/i 0f'Dyrzzi/ttic ('0/Jahilitiesrms, with comparable levels of expertise, codify a set ofactivities more than others do? And under what condi-tions does that enable, as opposed to inhibit, perfor-mance? To what extent is intentionality necessary to pro-duce adaptive adjustments in existing routines? Thecomplexity of these questions. compounded by the factthat we have only recently started to converge on a par-simonious vocabulary for these concepts, is only com-parable to the magnitude of the expected returns from theadvancement of our knowledge on these issues.Beyond theory building, we hope that the present paperprovides useful guidance for future empirical inquiry intothe role that articulation and codication processes playin creating dynamic capabilities. That is its principal pur-pose, and although the existing empirical base is thin, weconsider that there is already good reason to believe thatsignicant progress in that direction is quite possible.More speculatively, we hope we have contributed in asmall way to a major research thrust that seems to beemerging. the effort to expand our understanding of howcognitive activity of a deliberate kind shapes organiza-tional learning, knowledge, and action. Although therehave long been important voices urging a different course(Weiek 1979, 1995), too much of our theoretical under-standing of organizations and competitive processes hasbeen framed either by the unrealistic models of hyper-rationality favored in economics or by the more realisticbut still distorted versions of bounded rationality favoredin the behavioral tradition. People acting in organiza-tional contexts often think imperfectly but constructivelyabout what they are doing, and theorists of organizationsurgently need to gure out how to think in a similar fash-ion about how to cope with that fact.AcknowledgmentsThe authors would like to acknowledge the support received from IN-SEAD's R&D department and the Reginald H. Jnnes Center ofThe Whar-ton School. They are also grateful for the many suggestions. comments,and critiques generously offered by Ron Adtier, Max Boisot. Tim Folta.Anna Grtindori. Bruce Kogut, Arie Lewin. Bart Nooiebuom, GabrielSztilanski. Christoph Zott. and three anonymous reviewers. Of course, theauthors are responsible for any remaining errors and omissions. ln its work-ing paper version. this article was titled "From Organizational Routines toDynamic Capabilities."EndnotesOf course. this is not to say that rms do not articulate and codifyknowledge obtained from the external environment. As we will sec in2, environmental scanning activities are an important antecedent togenerative variation processes. However. we argue that such activitiesare usually better untlerstootl as stimuli to the initiation of proposals tomodify existing routines. rather than as mechanisms directly shapingthc development of dynamic capabilities. To illustrate. a sound tinder-standing of what competitors do and customers desire represents a cru-cial element of any rm's competitive strategy, but in and ofitselfdoes350not make it any more capable of creating and modifying its own set ofoperating routines. Also, operating routines typically involve tacitlcriowledge: hence they are highly unlikely to be developed or shapedsimply by the observation of competitors, Suppliel'S. customers. or otherextemal constituencies. Such knowledge has to be developed inhouse" through a set of activities and cognitive processes fticiised onthe organization's own routines.:This model has signicantly beneted from many discussions hadduring the Knowledge and Organization" workshop held at WarwickUniversity. Wc would like to acknowledge the contributions of ArieLewin, Anna Graiidori, and Bart Nootebtinm, among many other par-ticipants. The model is also closely related to Wax Boisots notion ofthe social leaming cycle (Boisot 1998), which inuenced our thinkingand spurred some of the insights that follow.The justicatioti for the explicit consideration of replication processesas distinct from the retention ones becomes considerably weaker as thenature and the .\ile of the rm considered changes. Small entrepre-neurial start-ups. for example. might necessitate replication processesto a far lesser (and perhaps negligible) degree, compared to a multi-national, inultidivisional organization.For those interested in this specic empirical context. please refer toan article entitled Two grandmasters at the extremes," which appearedin the Alliance Analyst on Nov. 25, l995.5Kale (1999) is the only empirical work, to our knowledge. that hasmeasured all the three rricchamsms theorized about in this paper.Knowledge articulation processes are positively and signicantly cor-related with alliance performance, with an overall explanatory powercomparable to the knowledge codication proxy, and larger than ex-perience accumulation.See especially the discussion and references in Adler and Borys t i996)and empirical work cited m 4.ReferencesAdler. P. S., H. Borys. 19%. Two typcs of bureaucracy: Enabling andcoercive. Admin. Sci. Quart. 41 oi-89.Argote, L. 1999. Orgnnizalimntl Lcarrmtg." 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Organizational routines are stored asprocedural memory: Evidence from a laboratory study. Organ.Sci. 5 554-568.Cohen. W. M.. D. A. Levmtlial. 1990. Absorptive capacity: A newORGA!\l7.A'l tow SciF\r:i5/Vol. 13, No. 3. May-June 2002Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

MAURIZJO ZOLLO AND SIDNEY G. WINTER Deliberate Learning and the Evctltttiun