The Re-routing Routine

Routines Evolve Into Dynamic Capabilities

Maurizio Zollo , Sidney Winter

How do companies learn to learn? Maurizio Zollo, Associate Professor of Strategy and Management at INSEAD, and Sidney G. Winter, Professor at the Wharton School, University of Pennsylvania, investigate this topic in their working paper. “This research aims to improve our understanding of how companies develop their competencies,” says Professor Zollo.

From run-of-the-mill routines to definite dynamism – how do organizations find the right route? The authors identify three consistent catalysts building and reshaping organizational routines: how an organisation builds experience, how it articulates knowledge and how it codes that knowledge into task-specific tools. The combination of the three mechanisms result in the development of expertise specific to the manipulation and improvement of routines, what scholars call "dynamic capabilities."

The relative effectiveness of the three catalysts, however, can vary depending on several factors, such as the characteristics of the process considered (e.g. its frequency, diversity and complexity), of the organization itself (its attitude towards knowledge exploration, its organizational structure, etc.), and of its environment (e.g. fast paced high-tech industries, or slow-moving commodity businesses). This paper identifies limitations to the functioning of these three mechanisms and produces relevant guidelines for managers interested in developing their organization’s learning capability.

"The ‘grand finale’ in my Mergers and Acquisitions course is dedicated to the problem of developing an organisational capability specific to the management of acquisition processes," Professor Zollo says. "The notions and the arguments used in this paper are theoretical in nature, but highly applicable to several key managerial challenges."

Source: INSEAD

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