Learning in High Gear: Hyper-learning and Dynamic Capability in Seven Software Firms

Building on the literature of dynamic capability and organizational learning, we examine strategy execution in hyper-competition as a problem of how organizations can re-configure their learning capability to match with their radically different learning demands. Organizations in hyper-competitive environments face an increasing gap between their learning opportunities and needs, and actual learning performance. In order to survive they must improve their absorptive capacity so that they can learn simultaneously broad, deep and fast. We define such a learning contingency as hyper-learning. To do so, the organization must systematically interlace exploration-that seeks to maximize learning breadth- and exploitation-that seeks to maximize learning depth. Unlike in traditional learning cycles, exploration and exploitation during periods of hyper-learning are not insulated from each other through time or structure. We explore seven software firms engaged in Web system development during the hey-day on dot.com frenzy and investigate how these companies were able to hyper-learn. We distinguish two mechanisms to speed up exploration: distributed gate-keeping and extended grafting of external knowledge; and two mechanisms to speed up exploitation: simple design patterns and peer networks. These mechanisms were nearly uniformly recognized in all studied organizations. We also examine the systemic configuration and patterning of these activities, which enables organizations to learn in high gear. This organizational learning model is contrasted with the punctuated equilibrium model of learning articulated in mainstream strategy research. Finally some implications for future research and management practice are drawn.