IN A LEARNING ORGANIZATION: Case Study and Causal Diagramming

Warren Willard Tignor


The quest for profit in the competitive marketplace requires businesses to leverage capabilities at every opportunity. Many businesses use information technology as a strategic asset to improve their competitive positions. In the context of this study, information technology includes the technologies of computers and telecommunications (hardware and software), (Sprague & McNurlin, 1993).

In contrast to computers and telecommunications, case study has provided a low technology method to learn about business capabilities. Case study has produced insights that help businesses leverage or avoid situations similar to those documented in business cases. Presently, a typical way that decision makers are trained to prepare for business careers is learning through the case study of hypothetical or actual business situations. In general, the case study process involves reading the case text to determine the facts of the case, the issue or problem, the business decision, and lastly, some reasoning as to whether the decision is supported by the factual results of the case from the readerís perspective.

With the advent of computerized information systems, a new tool is available to help businesses use information technology and case study as a competitive, strategic asset, System Dynamics. According to Wolstenholme (1990), System Dynamics is a rigorous method for qualitative description, exploitation and analysis of complex systems in terms of their processes, information, organizational boundaries and strategies. Additionally, System Dynamics facilitates quantitative simulation modeling and analysis for the design of the system structure and control.

Within System Dynamics, causal diagramming offers a convenient way to represent the structure and behavior of systems composed of interacting feedback loops. Causal diagrams identify the principle feedback loops without distinguishing between the nature of the interconnected variables. These diagrams play two important roles in System Dynamics:

1. They serve as preliminary sketches of causal hypothesis during model development.

2. They can simplify the illustration of the model as a ìmental modelî.

In both roles, causal diagrams will allow the business analyst to quickly communicate the structural assumptions underlying a case study. The combination of causal diagramming and case study will support the business analyst in achieving a ìsystemicî view of a business to learn more about its fundamental attributes and characteristics.

The effective use of case study and causal diagrams fits well in a learning organization framework that requires a consistent examination of the whole business system, rather than just trying to fix isolated problems. According to Dodgson (1993), a learning organization is a business that purposefully constructs structure and strategies to enhance and maximize organizational learning.

The ìfifth disciplineî uses this conceptual framework of examination of the whole and tools of systems thinking to clarify problems to understand how to change them most effectively, Senge (1990). System Dynamics readily lends itself to learning organization environments in this context. Forrester (1991) describes System Dynamics as the theory, method, and philosophy needed to analyze the behavior of systems in not only business, but also in environmental change, politics, economic behavior, medicine, engineering, and other fields using simulation technology.

Statement Of The Problem

Businesses need to continuously find better and faster ways to adapt to the competitive marketplace in order to compete in todayís high technology and fast paced environment. Learning organizations provide a framework that encourages finding better and faster ways to adapt in todayís high technology and fast paced world by:

1. Looking at the ìwholeî vs. the ìpartsî, a systemic perspective

2. Detecting and correcting errors

3. Improving actions through knowledge, and

4. Developing the broad skills of their work-force.

Businesses that are ìlearning organizationsî will capitalize upon techniques and tools that improve competitiveness. A learning organization that uses case study and causal diagramming to inquire into the systemic consequences of their plans or actions will potentially improve its competitive nature.

Case study represents a vast source of past business knowledge available for learning. Causal diagrams will help the business analyst identify the major influencing factors of a case study and the feedback mechanism that impacts the case results. This study presents the hypothesis that the collaborative effect of case study and information technology using causal diagramming in a learning organization will improve the potential of businesses to adapt to new competitive situations.

Brief Description Of The Research Method And Design

A comparison of a case study and its causal diagram was performed to illustrate the collaborative role of information technology in a learning organization to test the study hypothesis.

The methodology consisted of the following procedures:

1. Determined the attributes of a learning organization as defined and referenced in the research material. This is the work of Argyris and Schˆn (1978), Fiol and Lyles (1985), Dodgson (1993), Kofman and Senge (1995), Nevis et al. (1995), and Senge (1990). Once a list of the attributes of a learning organization for each author was established, an analysis of common and unique attributes was conducted. This procedure established a basis for determining what is a ìlearning organizationî based on a set of shared attributes. This set of attributes was needed in order to support the next steps of the methodology.

2. Reviewed case study material to identify the attributes of a case study. Briefed the case in order to gather case study results in a uniform manner for comparison to the causal diagram.

3. Reviewed the System Dynamics material to identify the attributes of causal diagrams. Diagrammed the case for comparison to the case brief.

4. Compared the case brief and causal diagram to determine their collaborative role in satisfying the attributes of a learning organization.

The Xerox case study was selected for the purposes of this study, Cash et al. (1992). After completing the case brief and causal diagram, the results were compared to each other and to the learning organization attributes to determine the collaborative manner in which the two methods complement a learning organization.

Major Findings And Their Significance

As a starting point, this study adopts the definition of a learning organization as an enterprise that purposefully configures itself to improve its future performance by learning from its past and current experience. Based on the literature, there is a set of characteristics that describe learning organizations. These characteristics were derived from attributes of learning organizations as discussed by various authors; they are summarized in Figure 1. Related attributes were clustered based on similar features. Each cluster represents a distinguishing characteristic of a learning organization. For example, attributes such as ìInquire into systemic consequencesî (6), ìAcknowledge primacy of whole v. piecesî (9), ìFacilitate-systems perspective (systemic relationships)î (26) and ìSystems thinking (exam whole v. parts)î (31) from Figure 1 are clustered as the distinguishing characteristic - 1.0 ìTotal Systems Perspectiveî, Table 1, below.
Attributes Senge NevisKofman & Dodgson Fiol & Argyris &
Senge Lyles Schon
1Detect & Correct Errors Yes
2Act on knowledge & understanding Yes
3Constructs structures & strategies to improve Yes
organizational & workforce skills
4Build community of servant leaders Yes
5Arise through performance and practice Yes
6Inquire into systemic consequences Yes
8Use "managerial practice fields" Yes
9Acknowledge primacy of whole v. pieces Yes
10Use nonlinear thinking Yes
17Facilitate-scanning imperative (aware of environment) Yes
18Facilitate-performance gap (actual v. desired state) Yes
19Facilitate-measurement (strive to quantify) Yes
20Facilitate-experimental mindset (act like researcher) Yes
21Facilitate-open climate (share problem/error/lesson) Yes
22Facilitate-education (sense that learning is never over) Yes
23Facilitate-operational variety (diversity v. singularity) Yes
24Facilitate-multiple advocates (no one champion) Yes
25Facilitate-involved leaders (engage in vision actions) Yes
26Facilitate-systems perspective (systemic relationships) Yes
27Team Learning (suspend assumptions & think freely) Yes
28Build Shared Vision (truly shared picture of the future) Yes
29Mental Models (separate the map from the territory) Yes
30Personal Mastery (to be the best possible) Yes
31Systems Thinking (exam whole v. parts) Yes

Figure 1 Summary of Learning Organization Attributes by Author

1.0 ìTotal Systems Perspectiveî (6, 9, 26, 31, 10)

1.1 Inquire into systemic consequences (6)

1.2 Acknowledge primacy of whole v. pieces (9)

1.3 Facilitate systems perspective (systemic relationships) (26)

1.4 Systems thinking (exam whole vs. parts) (31)

1.5 Facilitate-scanning imperative (aware of environment) (17)

1.6 Use nonlinear thinking (10)

2.0 ìPerformance and Practiceî (1, 5, 18, 2)

2.1 Detect and correct errors (1)

2.2 Arise through performance and practice (5)

2.3 Facilitate performance-gap (actual v. desired state) (18)

2.4 Act on knowledge and understanding (2)

3.0 ìServant Leadersî (4, 24, 7, 3, 25)

3.1 Build community of servant leaders (4)

3.2 Facilitate-multiple advocates (no one champion) (24)

3.3 Construct structures and strategies (organization & workforce skills (3)

3.4 Facilitate-involved leaders (engage in vision actions) (25)

4.0 ìExperimental Mindsetî (8, 19, 20)

4.1 Use ìmanagerial practice fieldsî (8)

4.2 Facilitate-measurement (strive to quantify) (19)

4.3 Facilitate-experimental mindset (act like a researcher) (20)

5.0 ìShared Problem Solvingî (21, 22, 27, 23)

5.1 Facilitate-open climate (share problem/error/lesson) (21)

5.2 Facilitate-education (sense that learning is never over) (22)

5.3 Team learning (suspend assumptions & think freely) (27)

5.4 Personal Mastery (to be the best possible) (30)

6.0 ìShared Visionî (23, 28, 29)

6.1 Facilitate-operational variety (diversity v. singularity) (23)

6.2 Build Shared Vision (truly shared picture of the future) (28)

6.3 Mental Models (separate the map from the territory) (29)

Table 1 Clustered Attributes of a Learning Organization

Next, the case, Xerox Corporation: Leadership of the Information Technology Function (A), was briefed. The brief is presented below as Figure 2.


  1. In ë70s key patents expired and Xerox faced increased competition.
  2. In ë80s Japan sold copiers for what it cost Xerox to make them.
  3. In ë86 Business Products and Systems Group (BPSG) accounted for $9.4B in revenue (72%).
  4. In ë86 Financial Services (FS) accounted for 28% of total revenue.
  5. In ë86 FSís profit of $278M exceeded for the first time BPSGís profit contribution.
  6. Corporate Information Management (CIM) mission was to develop Information Technology (IT) strategy role to ensure implementation by all business units.
  7. BPSG segment developed, manufactured, marketed and serviced a complete range of document-processing products.
  8. FS division provided financial products and services.
  9. There was no clear definition of the responsibilities of the centralized CIM group and the decentralized business units.
  10. Barron became Director of CIM in ë87.
  11. The IS budget was $500M with a growth rate of 20% per year.
  12. CIM had two sets of customers: Corporate management and BPSG.
  13. CIM provided consulting services, as requested, to FS.
  14. Corporate management expected CIM to ensure that the $500M IT budget was well spent.
  15. Business managers (BPSG) resented CIM ìauditingî how IT $ were spent.
  16. CIM managers felt they should be advocates for how IT $ were spent, e.g., support and visibility to Corporate.
  17. Barron created a new CIM mission statement in ë88 to emphasize ìpeople developmentî, and an IT and Business Advocacy Role for CIM.

Issue: Will the new mission statement direction for CIM provide the information technology and business leadership the corporation needs?

Decision: Yes. Allaire will endorse Barronís new mission statement.


  1. The CIM vision statement supports Allaireís position that more and better IS/Business capable staff be added, the Advocacy Role to develop more and better business savvy information technologists.
  2. The CIM statement essentially represents a status quo in the short term for BPSG.
  3. The statement does not change corporate managementís position that CIM ìensureî proper use of its $500M.
  4. The statement leaves FS alone except for providing them consulting services as requested.
  5. The statement continues to support Executive Support System (ESS) for Corporate Management.

Lastly, the Xerox case was diagrammed as illustrated below in Figure 2. The causal diagram presents three feedback loops that affect the corporate profit. The first one represents the negative impact of CIMís role considering the new mission statement relative to IT Strategy, Business Unit Revenue and Profit. The negative impact that this loop has on Profit is a major, internal to Xerox, reason that the new mission statement emphasizes the Advocacy Role to improve business knowledge by the technologist in the CIM organization. The second loop, which represents the issue of the case, shows that the new CIM mission statement positively impacts the Advocacy Role which in kind positively impacts the Business Unit revenue that still results in a Profit decrease. This last deduction is ìconjectureî since there are no facts in the case to substantiate the result one way or another. At minimum, there will be some siginificant time delay before there is an increase in Profit, considering the magnitude of revenue increase required to make Profit positive. Based on the case, the Business Unit profit was $240M on $9.4B in revenue ($7B of which was from copier sales) or 2.6% Return on Sales. Financial Servicesí profit was $278M based on an estimated $3.6B, or 7.7% Return on Sales. The Business Unitís ability to generate enough revenue to approach 7.7% Return on Sales or to cut costs enough to improve the profit margin to approach the same return on sales is dramatic; therefore, supportive of the deduction that the Business Unitís contribution to profit will continue negative in the near term. Moving the causal diagram to a System Dynamics model would support ìwhat ifî scenarios and a managerial practice field approach to learning about the problem. As it is, Xerox appears to believe that the change in CIMís mission statement will move them along the way to improved business operations and profit. Lastly, the Financial Services loop shows that as Financial Services revenue increases so does its contribution to profit; this is supported by the case facts. It appears that the primary influencing factor on the Business Unitís profit is the loss of patent rights by expiration. The subsequent loss of market share has directly impacted Xeroxís Business Unit profitability and will continue to have a significant effect based on the case information that competitors sell copiers at prices that it costs Xerox to build them.

Xerox Case Causal Diagram


Case study and causal diagrams will collaboratively affect a learning organizationís ability to adapt to competitive situations. For the Xerox case, both case study and causal diagramming provide insights to the problem at hand. The case approach as presented in the brief clearly frames the Xerox facts and issue. The causal diagram presents a picture of the case dynamics and the role the new mission statement will play relative to profit. Taken together, it is easier to see that the act of writing the new mission statement may have little influence on the course of the Business Unitís profitability; however, more detail with direct regard to revenue generation and profit margin are needed. Similarly, both approaches recognize that Financial Services is a profit maker; some may say it is more clearly evident from the causal diagram than the case brief. One might speculate that failure to recognize the potential of Financial Services to impact profit may be an opportunity lost.

Comparing case study and causal diagramming to the learning organization attributes of Table 2 shows that both techniques complement each other in some instances. Table 3 presents a comparison of their collaborative nature for the Xerox case.
Clustered Learning AttributeCase Study Causal Diagram
Total System PerspectiveNo Yes
Performance and PracticeNo Yes
Servant LeadersNot Applicable Not Applicable
Experimental MindsetNo Yes
Shared Problem SolvingYes Yes
Shared VisionYesYes


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