Popular opinion is that product innovation is sparked primarily from a single individual.  Some think that companies need a Steve Jobs or a Gordon Moore in order to be innovative.  But, my experience as a product development manager has confirmed time and again that most product innovation is the result of organizational learning.  Of course, everyone can see the relationship between organizational process innovation and organizational learning, but what about product innovation?  This post explores these questions in the context of organizational structure and change.  It is also an impetus for a change in my own thinking about product development processes. 

In Built to Last (2004) and Good to Great (2001), Jim Collins profiles several companies that exhibited highly thought of attributes that enabled them to persist valiantly.  The reality is that more than half of the companies profiled in Built to Last didn’t.  And, many of the companies profiled in Good to Great are no longer with us or not great any more.  In Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant, W. Chan Kim and Renee Mauborgne postulate that there are no long lasting great companies, but instead, great innovations, and the best companies are those that can consistently (or at least more often) be the first shark in a niche’s blue ocean market (2005).  So, to summarize, the most successful and seasoned companies are those that have learned to consistently innovate into new markets.

So, what is innovation (as applied to products), and how do companies innovate?  It is helpful to consider learning and innovation as tightly related.  This way, learning theory can help in understanding innovation.

A common dictionary definition of learning is “the acquiring of knowledge or skill”.  But knowledge and skill are really two different things.  Skill refers to an ability to act, sometimes physically.  Knowledge is an ability to understand and articulate conceptually.  Daniel Kim, in his article “The Link Between Individual and Organizational Learning” (1993) equates the skill part of the definition to “know how” and the knowledge part to “know why”. 

Innovation is less about skill than gaining new knowledge.  So, therefore, innovation is directly related to the “know why” part, or the conceptual part, of learning.  It is during examination of why or whether something is the way that it is commonly perceived that innovation occurs.  In other words, innovation is inquiring about the why of our current mental models and when we detect discontinuities with the observed world, this realization allows the synthesis of a new mental model in our brain.  This is innovation in learning terminology.

The Gibson CEO that I worked for was actually a very talented individual product innovator.  In his solo innovator mode, he was very good at breaking out of his own mental models of his world and synthesizing new ways of seeing.  This has been called “thinking outside of the box”.  However skilled he was in exploring and revising his own mental models, he acknowledged to me that he learns more by involving other people in this activity.  This is the critical link between individual learning and organizational learning.

When two or more people interact, each of them has their own mental model, and they are most likely different.  The main skill of interacting productively in a situation like this is dialogue.  Dialogue can be defined as ping ponging inquiry and advocacy between two people.  In an innovation context, this has been called “brainstorming”.   But, in learning theory terminology, what is happening is the examination of each other’s mental models, searching for discontinuities in your own.  This is why one can always do a better job of examining their mental models during dialogue with another person.  This is why people are usually more innovative if they brainstorm with other people.  And, this is why Blue Ocean Strategy authors Kim and Mauborgne  say that the companies that have learned to do this type of organizational learning are at an advantage.

Now, there is yet another aspect of learning (both individual learning and organizational learning), and that is memory.  In the discussion of memory, it is important to realize that, although in most psychological research memory and learning are thought of as not the same thing, in real life, they are tightly entwined.  I think the dictionary definition mentioned above needs to incorporate the concept of memory, because learning cannot exist if it is not remembered.  If one learns something and then forgets it, have they really learned it?  It is true that one thinks of learning as a process of acquisition and memory as a process of retention.  But, to make any difference in our lives or our organizations, we need both working together.

Daniel Kim (1993) separates memory into two structures – static and active.  Static memory includes facts, figures, or procedures, whereas active memory is that which guides how we perceive the world and act within it.  Mental models are made up of primarily active memories.

One way companies institutionalize product innovation is through structured methods such as Project Management Institute project management, business process management workflows, Stage Gate product development processes, etc.  But, the learning happening in these processes is also two-fold, and it is helpful to examine this duality.  Again, there is skill and there is knowledge; there is know-how and know-why; there is static memory and active memory; and, I submit, there is structure and innovation.  The structure is built upon static organizational memory and is important to help people remember what they need to dialogue about, but it is the dialogue itself that creates innovation, active memory, or organizational learning.  This is why I am saying that innovation is organizational learning.

One of the toughest challenges in organizations is balancing structure to improve quality and lower risk with the encouragement of dialogue to improve innovation.  Many people stumble on the difference, thinking that the structure is the most important, or that if the structure is followed that innovation will naturally occur, or even that the structure itself creates the innovation.  They forget to accomplish the dialogue, therein discouraging innovation.

Within the last 20 years or so there have been new types of structures supporting product innovation.  The one thing these structures have in common is that they are short, rapid, and spiral in nature, not linear/sequential and fully planned out.  This type of process also supports organizational learning through dialogue, but they also make better use of active memory.

When groups of people dialogue and build new mental models together, they create shared mental models, which in essence are the organization’s memories.  The short spiral processes (often called “agile processes”) make it easier to maintain the shared mental model, as it is  refreshed sooner and more often than in longer processes such as Stage Gate development.  The agile processes, by their very structure promote the idea that what we learn today will likely change tomorrow.  So, these types of processes can encourage innovation through rapid cyclic organizational learning, mainly through cross-functional dialogue.  Could this be the reason behind their widespread adoption as a more innovative way to design products?

In conclusion, there is much to be gained by looking at innovation as learning.  And, there is benefit in looking at organizational structure and its impact on dialogue, learning, and innovation.  If we could devise structures (i.e. product development processes at Gibson) that actively encouraged dialogue and retention of new shared mental models, we would certainly have an organization that is more likely to innovate and consistently create new blue oceans of business.  That is truly great and lasting.



Kim, D. 1993. The link between individual and organizational learning, Sloan Management Review, Fall 1993, pp. 37-50.

Collins, J. 2001. Good to  great: Why some companies make the leap…and others don’t.  New York: Harper Business.

Collins, J. & Porras, J. 2004. Built to last: Success habits of visionary companies. New York: HarperBusiness.

Kim, W. & Mauborgne, R. 2005. Blue ocean strategy: How to create uncontested market space and make competition irrelevant.  Cambridge: Harvard Business Press.

Senge, P. (2006), The Fifth Discipline (Revised ed.). New York: Currency.