Becoming a Learning Organization

What does it mean to be a learning organization?  How do you go about creating one?

As is often the case here at The Investment Ecosystem, those questions were prompted by an unexpected source.  The Central Intelligence Agency (CIA) to be exact.

The spies have been working on a learning-organization project for almost seventy years.  The history of it is told in “Becoming a Learning Organization: Reflections on the Study of Intelligence,” by Peter Usowski.  That article appears in the latest edition of the quarterly journal from the CIA, Studies in Intelligence.

Since intelligence analysis ought to be a component of investment processes, the journal and other publications from the CIA often provide insights that readily translate to those who investigate market opportunities instead of foreign threats.  (One notable example is Psychology of Intelligence Analysis, a book by Richards Heuer.  A quick review of its table of contents reveals its applicability to investment decision making.)

History and analogy

The article walks through much detail about the foundation of a “history staff” at the CIA, the creation of Studies in Intelligence in 1955, and the establishment of the Center for the Study of Intelligence (CSI) in 1974.

The sections that appear in italics below relate the developments at the agency to the creation of a learning investment organization.

According to the author,

CIA’s leaders set out on a path, rocky at times, to conscientiously devote resources to studying intelligence and building up a fund of knowledge.

Those developments start with the establishment of that history staff in 1951, just four years after the CIA was formed, to document events for the purpose of benefitting from the successes of the organization and avoiding repeats of its failures.  The leaders of the agency wanted “an objective narrative” to inform future activities.

Those are laudable — but elusive — goals.  A rocky path is to be expected.

The “size, professional makeup, mission, output, and organizational alignment” of the history staff would vary over the coming decades in response to changing leadership and priorities at the agency, while advocates for the strategy stressed its value.  Legendary intelligence expert Sherman Kent wrote of the importance of “official memory for its own sake, [and also] for effective offensives and rear-guard actions in the great bureaucratic war within the Federal Government.”

Divergent opinions about the importance of a particular activity are part of organizational life.  Without a shared belief in the purpose of an endeavor, it can ride a rollercoaster of funding, attention, and effectiveness.

In 1980 the history program at the CIA was “on the verge of being abolished,” after having been cut back dramatically.  A report prepared at the time argued that a “fundamental premise was that a historical activity is useful to the organization.  Such an activity was not a luxury but rather an important function that could support and facilitate the agency’s work.”

This offers an easy comparison to debates within investment organizations.  Many of those directly involved in the investment process argue that more resources should be provided for their work (and not wasted on other activities that they view as luxuries), just as those immersed in the business of spying might believe.  That raises the question of what is a luxury and what is essential to long-term success.

Early on, Sherman Kent argued for the publication of the Studies in Intelligence journal.  According to Usowski, Kent believed that “the intelligence profession lacked a body of literature, a written fund of knowledge, that could be passed on to current and future practitioners.”  Kent wanted to capture “the institutional mind and memory of our discipline.”  That was echoed by CIA head Allen Dulles in an early edition of the journal:

The Studies are designed to bridge the gap between experience and inexperience, between theory and practice, and to provide for professional growth.

Coincidentally, modern finance was born around the time of that publication.  Theory and practice have expanded in innumerable ways since then, so the digestion of the existing body of knowledge is as important as the creation of new elements of it, especially as related to the work of a particular organization.  And there is a constant need to examine the intersection of theory and practice as the investment ecosystem evolves.

Sustaining organizational excellence also requires that bridging of the gap between experience and inexperience — and providing a foundation for professional growth, not just for new arrivals, but for those with years of experience whose growth often stalls when they settle into a long-term investment roles.

Upon his retirement, Kent said, “That Studies has in fact contributed to a richer understanding of the bones and viscera of the intelligence calling is beyond argument.”  But despite the wealth of information available to them, Usowski writes that “for the practitioners, the challenge today remains what it was in 1955 — finding time in a busy schedule to spend with the rich content available in Studies.”

This is a familiar dilemma for investment professionals.  It seems as if there is never enough time to spend on analytical work and the other required parts of the job, so little attention is paid to furthering a broader base of knowledge that could yield dividends over time (or, for that matter, on developing personal skills that might do the same).

In 1996, the Center for the Study of Intelligence started interviewing intelligence officers about their experiences, and then extended that practice to get the perspectives of former senior policymakers.  That furthered its goal to “document the institutional memory of the intelligence professionals, provide a forum for informed dissent, and support professional development opportunities through research, reflection, and articulation of ideas.”

Institutional learning from those directly involved in events can provide context for situations of the future.  As time passes, people move on, memories fade, and important lessons are lost — or misremembered.  After-action reports of significant events can illuminate investment dilemmas of the future and, perhaps more importantly — if objectivity versus blame drives the culture and interviews are conducted with that intent — the social and psychological factors that affected those involved.  

For CSI’s Lessons Learned program, a study team uses those interviews and the other available information to conduct “an objective interpretation and analysis to dispassionately describe what actually happened and generate findings that offer both lessons learned and best practices.”

We all feel like we inherently do this and tuck the information away in our memory banks for later retrieval, but such reflections are not dispassionate and offer one perspective that reflects only part of the overall picture.  An organizational learning process shouldn’t be overly structured, but expecting lessons learned and best practices to grow out of ad hoc reactions is wishful thinking.

In the last decade, CSI has created an Emerging Trends (ET) program, “so that the CIA could be best postured to confront the challenges or take advantage of the opportunities arising from the expected changes.”

Using an array of rigorous foresight activities, ET researchers and writers produced an impressive collection of short essays and longer monographs on a wide range of potentially disruptive changes such as ubiquitous technical surveillance, artificial intelligence, identity in the digital age, a world of abundant data, synthetic media, neurodiversity at work, the internet of things, and organizational transformation.

One of the wonderful aspects of the investment business is that those sorts of ideas are continually evaluated for their investment prospects.  But they receive much less attention in terms of how they will affect investment methodologies and the operating environment of the organization.  That should be an integral part of ongoing R&D.

In 2009, the Select Committee on Intelligence wrote, “The Committee firmly believes that for the CIA to truly become a learning organization — one in which knowledge is captured, preserved, and shared with those who can benefit — the CIA must institutionalize the lessons learned process and develop policy supporting that effort.”

One of the impediments for the agency is that the knowledge management function is inhibited by the decentralized nature of the intelligence it seeks to leverage.

Similarly, the “evidence” underlying investment decision making is often widely dispersed in an organization, stored in different locations (some communal, some individual).  And the work product of one person — especially spreadsheets — can be unintelligible to others.  Some standards for the aggregation of material can allow for easier consumption of it across the organization.

Principles

Usowski’s history illustrates the difficulties of becoming a learning organization and staying the course over time.  Budget pressures and conflicting priorities can cause an effort to wax and wane.  And practitioners may not always see the value of the initiative, unless and until it pays off on their behalf.

Thus, a clear philosophy as to the importance of the work and a lasting commitment to it are the foundation on which a learning organization is built.  A knowledge management effort that is not viewed as an essential part of organizational health and survival is likely to wither away.  And by nature it is a communal activity, existing for the organization, which is a hard sell for those who view themselves as autonomous contributors above all.

The nuts and bolts of it present knotty problems, which aren’t addressed in the article or in this posting.  The goals are desirable but the execution will be hard — and the learning will never end.