Reasons and Rationalizations:

The Limits to Organizational Knowledge

By Chris Argyris

Oxford University Press (UK), 2004

This summary draws on the authors own words
as they appear throughout the book.

Overview

A book summary by
J anine Martyr

Learning Innovations
Laboratory,
Harvard Graduate
School of Education

June, 2006

Why is there persistent poor organizational performance and a lack of
learning in tackling it? Why and how are there processes in place that
inhibit learning and hence reduce effective action and organizational
performance?

Answers to these questions are the central concern of this book, the
argument of which Argyris summarizes thus:
1. Organizations contain powerful (counterproductive) defensive
routines, which scholars and practitioners reason are natural
and necessary for survival.
2. Scholars conduct little research on how to reduce these
routines, thus violating the fundamental norms of scholarly
inquiry by self-imposing limits.
3. Such reasoning by practitioners and scholars is consistent with
a defensive reasoning mindset and single-loop learning.
4. Changing this Model I (defensive reasoning) mindset requires
Model II (productive) double-loop learning. (pp.16-17)

Rather than abbreviating each chapter, this summary takes a holistic
view of the contents of this book, drawing out points and examples
viewed as central to the main argument. Thus this summary presents
key ideas in the same sequence as they appear in the book but
elaborates on some sections more than others. Chapter 1 details much
of the theory and definitions used throughout the book. Chapters 2 to 5
document defensive routines in organizations and in scholarly inquiry.
Chapters 6 and 7 examine how double-loop learning can be facilitated,
and chapter 8 presents closing comments.

Chapter 1: Introduction

In chapter 1, Argyris explains defensive and productive reasoning, his
Theory of Action regarding Model I and Model II theory-in-use,
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organizational defensive routines, single and double loop learning,
skilful incompetence and unawareness, internal and external
implementation and implementable validity.

Argyris begins by stating that in order to act, human beings diagnose
problems, invent solutions, produce the solutions, and evaluate the
effectiveness of what they have produced (p.1). The basis for this is
their mind-set, and Argyris defines two types defensive and
productive whose characteristics are given in Table 1.

Table 1. Characteristics of Defensive and Productive Mindsets
Defensi ve Reasoning Mindset Producti ve Reasoning Mindset
Objective: Protect and defend. Creates informed choices.
Primary reasoning processes include making
the assumed valid premises explicit and
testing them by the use of self-referential logic.
Makes personal reasoning transparent in
order for the claims to be tested robustly.
Transparency is avoided to protect the self
and deny that one is doing so.
Produces valid and validatable knowledge.
Self-deception is denied by a cover-up that is
then covered up.


Defensive reasoning is counterproductive, but although known to exist
in organizational settings is deemed vital to organizational survival
and kept hidden. This only ensures that defensive consequences
persist, with people creating the very conditions they abhor. As people
use both defensive and productive reasoning mindsets, there are inner
contractions. Not only does successful productive reasoning require
the existence of defensive reasoning, both are also strengthened
simultaneously (p.3). Although crisis can expose defensive routines,
e.g. the Enron-Arthur Anderson calamity, they tend to remain hidden
and powerful. After all, executives voted Enron one of the best-
managed companies, noted for its excellent human resources policies
supporting openness and honesty (Salter, 2003).

The why and how of this compulsive repetition of errors is Argyris
focus. In the end, Argyris claims that executives promote changing
the status quo while actually maintaining it, and scholars similarly
uphold the search for truth while resisting fundamental change. The
basis for these claims is his Theory of Action, developed with Donald
Schn.

A Theory of Action
Effective action is the fundamental objective of human and
organizational performance. Action is effective to the extent that it is
consistent with intention, that it persists, and that it does so without
harming the existing level of organizational performance, and learning
at any level is about producing action that approximates as closely as
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possible to the three criteria just identified (p.7). To act effectively,
people construct theories of action. There is the espoused theory,
composed of values, beliefs and action strategies. Then there is the
theory-in-use, stored as designs made up of action strategies or
intended consequences organized in causal sequence.

The theory-in-use in the Theory of Action is called Model I. Its
governing values are:
1. be in unilateral control over others
2. strive to win and minimize losing
3. suppress negative feelings
4. act rationally, which means using defensive reasoning.
The three dominant action strategies are to:
1. advocate ones position
2. evaluate the actions of others and oneself
3. make attributions about others and ones own intentions.

Put in place to reduce inquiry and testing, Model I theory-in-use leads
to the same consequences as defensive reasoning. While actions may
vary, they are always implemented in ways and using logic consistent
with Model I. One of the most powerful features of behavioral worlds
produced accordingly is the organizational defensive routine, which is
any policy, practice, or action that prevents embarrassment or threat,
but does so in ways that prevent discovery of the cause. Inhibitory to
learning, an example is organizational mixed messages, such as
Mary, you are in charge, but check with Charles (p.9).

Double Loop Learning
Model I theory-in-use leads to single-loop learning, i.e., fixing errors
without changing governing values. Double-loop learning, produced
by Model II theory-in-use, involves change in both action strategies
and governing values. Model II governing values are:
1. producing valid information
2. informed choice
3. vigilant monitoring of the effectiveness of the implemented
actions to assess its degree of effectiveness.

These are not the opposite of the Model I values, as such values did
not enhance desired double-loop learning of, for example, early
leadership education (Argyris, 1982). Model IIs action strategies are:
1. to advocate a position, making evaluations and attributions.
2. in the service of Model II rather than Model I.
3. to place emphasis upon inquiry and testing. (p.10)

To achieve this, the solution is not to eliminate Model 1, but to use it
appropriatelye.g., in routines, provide people with the freedom to
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choose either Model, and create an environment that encourages
double-loop learning.

However, theories-in-use, be they Model I or Model II, are generated
as human beings learn to act skillfully and consistently with their
requirements (p.11). Argyris proposes that Model I produces
actions that are skillful yet incompetent because they produce
consequences that the actors do not intend. The actors are unaware of
their skillful incompetence while producing it (p.11). Scholars
document the defensive reasoning mind-set created and maintained
by Model I theories-in-use and organizational defensive routines
(p.12). However, they do not continue with research to change them
due to their lack of respect for implementable validity.

The effectiveness of implementing actions increases as:
the validity of the models used to diagnose and solve the
problems increases;
the actors intend to implement the models;
the actors have the skills to implement the models; and
the context in which the implementation occurs is supportive of
the implementing actions (pp.12-13).
Internal implementation means implementing the model correctly so
that the predicted consequences ensue, while external implementation
refers to the actions taken to implement the recommendations
throughout the organization. However, most research offers advice
without the prescriptive knowledge of how to produce it (p.13).
Argyris proposes that implementable validity needs to be elevated to
the same status as internal and external validity if we are to provide
actionable knowledge about effective action. Otherwise, one is
likely to retain and reinforce the defensive reasoning mindset (p.15).

Chapter 2: The Corrosion of Character Capitalist
and Social Economics

In the second chapter, Argyris first describes the development of
hierarchical control systems and employee resistance. However, he
mostly discusses Sennetts (1998) idea of the corrosion of character
in capitalist countries, expanding on internal and external commitment,
and examining bureaucracy in socialist countries briefly.

To get employees to create and maintain effective performance, it was
historically assumed that managers induce and employees produce
(p.18). Labor simplification was deemed economically sensible, but
many workers resisted unilateral control and job molecularization.
Management tried to maintain authority and control, but the resulting
defensive rigidities negatively affected competitiveness.
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Corrosion of Character in Capitalist Countries
So, flexibility became the hallmark of the new capitalism (p.20).
But as Argyris interpreted Sennett, flexible capitalism was
managements subtle way to concentrate and maintain top-down
power despite claims of decentralization. Argyris believes instead that
executives were sincere but were relying upon Model I theory-in-use.
Thus, they were skillfully incompetent (producing programs that
were counter to their intentions) and skillfully unaware of their
incompetence (p.21). One example cited was the CEOs of Xerox,
Pepsi-Cola N.America and SmithKline Beecham, who espoused that a
tight control of process led to freedom and creativity, not realizing that
resulting competence did not mean empowerment or internal
commitment.

Sennett also claims that these types of programs contribute to the
corrosion of character as expressed by loyalty and mutual
commitment or by the practice of delayed gratification for the sake of
a future end (p.24). With managers concerned with short-term goals
characteristic of the new capitalism, workers would be unable to
maintain long-term commitment and loyalty. Argyris argues that
workers are in fact quite reality-centered. One critique is that Sennett
concludes that the old capitalism did not corrode character without
addressing organizational Model I thinking and defensive routines.
Another is that the loyalty to others generated by processes of external
commitment, as noted in Table 2, is limited to where it is produced.

Table 2. External vs. Internal Commitment (From Box 2.1, p.27)
External Commitment Internal Commitment
Perform as required Perform as required and keep alert to the
changing requirements
Hold management responsible for identifying
and correcting gaps and errors
Hold oneself responsible for identifying and
correcting gaps and errors
Depend on management. Be a pawn. Depend on oneself. Be an originator.

Finally, while Argyris agrees with Sennett that information technology
meant to decentralize control can actually be used to do the opposite,
he believes it is important to examine the theory-in-use being used.
Model I users are fine with truth as long as it doesnt threaten their
beliefs and organizational defensive routines. Operating thus, they
design and create programs that limit the internal commitment they are
designed to achieve. Improvements are also limited and so programs
become fads. Since informational technology can make actions and
processes transparent, it can be used to test Sennetts hypotheses that
managers dont actually give employees control, and that lower levels
are incapable of carrying out top managements promoted goals.

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The Corrosion of Character in Socialist Countries
Argyris references several scholars who believe that socialist and
capitalist organizations and bureaucracies share many similarities.
New socialism, as does new capitalism, emphasizes flexibility,
initiative and empowerment consistent with Model I. Ironically,
socialism, though intended to liberate workers, perhaps acts to control
workers even more than in the new capitalism (Puffer, etc.). Buraway
(2001) encourages research to show how socialism can improve
workers life conditions, but Argyris suggests that changes will not be
liberating unless Model I theories-in use and organizational defensive
routine are reduced and Model II theories-in-use are strengthened
(p.33).

Chapter 3: Inhibiting Double-Loop Learning in
Business Organizations

In much of this chapter, Argyris tells the story of Intel as given by
Burgelman (2002), and analyzes Burgelmans analysis of Intels
strategy as it exited the dynamic random access memory (DRAM)
business. Intel saw itself as a memory company but lost its leading
position as the competitive environment changed. Over a twenty-year
transformation in strategic practice, it learned to exploit rising
technological opportunities that resulted from its experience in the
DRAM business and reinvented itself as a microprocessor company.

The Intel Story: Burgelmans Analysis Analyzed
Burgelmans analysis focuses on Intels failure to detect and correct
error, e.g., its failure to follow up its early lead in the DRAM
business, with explanations such top managements bounded
rationality and blindness regarding strategy and image mismatches
(p.44). He even describes some flaws as functional (e.g., delay in
divestment from DRAM allowed time to see what could be leveraged
in the new microprocessor environment), and internal (i.e., it was
Intels middle managers who effected the new business opportunities).
In his inside-out perspective (p.38), he suggests that middle
managers believed top management was closed to constructive
confrontation about its emotional attachment, attributions that went
untested even as top management encouraged such confrontation. On
the other hand, top management recognized operational defensiveness
between them and middle managers, but left it unexamined and so
reinforced lower levels unawareness of their impact on those at the
top.

Argyris argues that the analysis is incomplete without a non-self-
referential explanation of the causal central processes identified and
without a focus on the theories-in-use that would have given insights
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into improvements. It should explain how subordinates colluded with
their superiors to create domains of undiscussables that would inhibit
learning around these issues (p.41). From a Theory of Action
perspective, top management used Model I action strategies consistent
with a Model I theory-in-use, producing organizational defensive
routines that the Intel management acknowledged existed. Structural
solutions, such as bringing together departments, had brief limited
effectiveness. Managements hypothesis that defensive actions were
unchangeable was implemented in ways such that it was not testable.
Although they espoused Model II leadership strategies, subordinate
collusion and work policies and practices appeared to keep them aware
of the discrepancy with their actual theory-in-use.

Groves leadership actions, also examined by Argyris, are an example.
Grove espoused a leadership that, among other things, focused on
content and not style (p.50) and encouraged executives to do what is
right, not what you are ordered to do. However, J ackson (1997) notes
that control was tight and detailed, and constructive confrontation
dialogue was abrupt, aggressive and interrogatory (p.51). To
Argyris, Groves theory-in-use included advocating courage, honesty
and trust in ways that inhibited them, using effective leadership rules
that maintained his unilateral control, and making his mixed messages
about leadership seemingly non-existent and undiscussable. In turn,
subordinates developed defensive routines to counteract him.

Chapter 4: Inhibiting Double-Loop Learning in
Government and Information Technology

In Chapter 4, Argyris mostly reviews the works of several authors who
report on patterns of decision making in government (often the White
House) and information technology, with a brief section on knowledge
management. However, throughout the lament is the same. Since the
authors do not focus on the causes of the patterns that they reported,
this results in advice that has low implementable validity (p.73).

For example, Kaufman (1981) describes how White House staff dealt
with their fears of agencies becoming too independent by increasing
controls. However, this became a self-reinforcing, self-sealing
process as the agencies attempt to bypass the control prompted
increased White House controls (p.70). Of Kaufmans (1977) three
solutions to stronger control, Argyris labels the advice abstract as it
does not say what specific actions are required and it bypasses the
very dysfunctional processes that Kaufman describes (p.73). In
government organizations, Argyris argues that action consistent with
Model I theory-in-use and organizational defensive routines occurred
where there were multiple, complex, non-trivial issues that contained
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a potential for, or an actual component of, embarrassment or threat
(pp.72-73). Thus, recommendations that do not account for this are
not actionable. Argyris gives similar criticisms regarding literature and
advice on information technology and knowledge management.

Chapter 5: Features of Scholarly Inquiry that Inhibit
Double-Loop Learning and Implementable Validity

In Chapter 5, Argyris looks at scholarly research, which under various
perspectives suffers from the same problem as the work of the authors
in Chapter 4. Despite their ideals, scholars focus primarily upon
diagnosing the existence of double-loop issues and significantly less
upon resolving them in such ways that the solutions have
implementable validity (p.92).

Three causes are suggested for the limitations of scholarly inquiry.
Complete descriptions of the universe as is tested through empirical
methods, and current best practices in research methods that bias and
limit exploration even as they espouse the opposite (p.92), are both
norms in the scholarly community [that] enable and maintain
limitations to double-loop learning and implementable validity (p.93).
Third, social scientists utilize Model I theory-in-use while espousing
Model II, and so too are subject to phenomena such as skilled
incompetence and unawareness, plus the use of defensive reasoning
(p.93).

Perspectives examined include the behavioral theory of the firm, a
narrative-interpretive perspective, the narrative-interspective approach
and pluralism. As for research methodologies used by scholars
conducting normal-science research, they are all consistent with Model
I governing variables.

In the end, Argyris concludes that none of the authors tackle issues at
the theory-in-use level, and that it is erroneous to believe that the best
way to get scholars to examine their defensive routines is to have them
do it privately (p.128). For example, Burgelman (2002) allows that
defensive routines exist but claim they are not correctable. [He] also,
by design, [does] not seek to test these claims. While he states, in
effect, that he is not acting defensively, he also admits that his
actions could create a self-fulfilling prophecy (p.128).

Chapter 6: Interventions that Facilitate Double-
Loop Learning

Argyris uses four illustrations in this chapter to describe several
intervention strategies that can be used to help individuals diagnose the
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degree to which they adhere to Model 1 theory-in-use, and thus
produce and maintain organizational defensive routines. The point is
to help individuals reflect upon their skilled incompetence and skilled
unawareness, and their counterproductive consequences (p.129).

Further, he proposes that the seminars described in the first three cases
can be used to test claims that if we place [people] in situations where
the system processes support double-loop learning, and if the [people]
use Model I theory-in-use, they will create consequences that are
counter to double-loop learning (p.130).

The Left-Hand/Right-Hand Case Method
In the first illustration, each individual writes a case that includes a
statement of the problem; the intended strategy to begin to solve the
problem; the actual conversation that did or would occur as envisioned
by the writer; and the information that the writer did or would not
communicate for whatever reason (p.132). The last two are written in
right and left hand columns respectively, as illustrated in Table 3.

Table 3: Left-hand / Right-hand Example (From Table 6.1, p.133)
Thoughts and feelings not communicated Actual Conversation
Hes not going to like this topic, but we had to
discuss it. I doubt that he will take a company
perspective, but I should be positive.
I: Hi, Bill. I appreciate the opportunity to talk
with you about this problem of customer
service versus product. I am sure that both of
us want to resolve it in the best interests of the
company.
Bill: Im always glad to talk about it, as you
well know.

In this case, the executives focus was on increased customer service.
After analyzing their left-hand columns and finding that they similarly
blamed problems on each other, the next step was redesigning their
actions using handouts that described the Model II set of behaviors so
that the chosen episode would not have negative consequences. They
realized, as Argyris underscores, that developing this new skill
requires time and plenty of practice.

Conducting Diagnoses in Large Groups
The second illustration shows how the left-hand/right-hand case
methodology can be used in large groups. Argyris proposes that the
method can generate data about the existence and power of
organizational defensive routines and, if the participants are from the
same organization, be used to develop solutions to defensive
routines (p.135). Absent, Argyris argues, is the explicit
connection between counterproductive consequences [of Model I
theory-in-use] and organizational defensive routines (p.141). As
an example, he quotes managing partners in a large accounting firm
who participated in a workshop. They had previously spent several
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million dollars and participated in highly evaluated culture change
workshops meant to reduce many of the counterproductive actions
illustrated by their cases.

The Andy Case
Participants in the Andy case engage in role-play after reading about
how Andy failed to be appointed CEO despite that being the
expectation of himself and others, when he was hired as COO. The
faculty member, acting as Andy, stresses that he is well aware of his
errors such as failing to learn enough about the company and making
several bad judgments, and genuinely wants to learn how not to repeat
them. The participants try to help Andy in this regard. However,
they produce unactionable advice and deal with Andy as ineffectively
as he dealt with his company. Moreover, they blame him for their
inability to help him just as he blames them for their inability to help.

From a Theory of Action perspective, these kinds of interactions
created conditions that were not only counterproductive to learning
but also were self-reinforcing and self-fueling of this lack of learning
(p.154). Argyris also details how the Andy Case can be transformed
into a quasi-experiment.

The Richard Case
In the Richard Case, it is actually Richard being questioned by his
peers on his actions strategies and reasoning when dealing with his
client and line managers. For example, he attributes the clients desire
to use video to wanting to hook people in but neither tests this by
asking or tries to correct any perceived difficulties. Eventually, both he
and the other eleven professionals involved in the discussion come to
realize that they all used defensive reasoning and that this led to a
counterproductive lack of learning that could be related back to
organizational consequences (p.171).

Chapter 7: Organizational Interventions that
Facilitate Double-Loop Learning

This chapter also presents four illustrations, this time of interventions
in organizations.

The Responsibility Virus
Argyris recounts the work of Martin (2002), who reveals the causal
process by which leaders typically become over-responsible and
followers typically under-responsible (p.174). Activated by failure
or fear of failure (p.174), the responsibility virus leads to self-
fulfilling and self-sealing processes. For example, when errors are
committed, the leader feels confirmed in his belief that he must take
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charge, while subordinates feel confirmed in their belief that the leader
will not change, and hence become passive, run silent, run deep, and
hide the fact that they are doing so (p.175).

Among Martins hypotheses is the participants Model I theory-in-use.
He defines a six-level responsibility ladder, with six the lowest level
and one the highest level of responsibility involving the consideration
of choices and decision-making. An effective choice structuring
process involves framing the choice, increasing the amount of
positive options, specifying necessary conditions and testing those
identified as key barriers. The tests aim to produce internal
commitment to the choice, which is made under the proper
conditions as defined by Martins concepts. Argyris also discusses
Martins views on redefining leadership and followership (p.176).

The Car Launch
This example is meant to describe the diagnosis of defensive reasoning
and routines in an automotive organization trying to create and
implement innovation, and to encourage the use of learning histories in
the reflection of individuals about innovation in organizations. The
learning historys key features are descriptions of the event sequence;
how the interveners developed a strategy for double-loop learning and
change; the intense personal and emotional interactions that occurred
as the participations learned about features such as their defensive
reasoning, skilled incompetence and unawareness, and organizational
defensive routines; and their fundamental assumptions and methods
throughout in telling the story.

In this case, group discussion around problems in new product
development results in affinity diagrams that are used as a basis for
formulating corrective action (p.182). The map helps the participants
to both see the need and develop rules for increasing trust and
cooperation. However, the decision of the team to exclude top
management in order to allow the program to happen backfired when
management failed to commit to the program although it appeared
successful.

Recreating the Organization
This illustration recounts Ackoffs recent work on Recreating the
Corporation (1999). Ackoff has worked with both Donald Schn and
Argyris, and promotes the concepts of democratic hierarchy (circular
organization) and internal labor markets (p.187), both of which
Argyris describe along with a brief account of Ackoffs model of an
organizational learning, adaptation, and management system (p.192).
Ackoff believes that, if such ideas are implemented effectively, the
dysfunctionality of organizations being managed by Model I theories-
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in-use and organizational defensive routines would be reduced
(p.186). Moreover, his designs are based on requirements reminiscent
of the characteristics of productive reasoning.

An Organizational Intervention
Here, Argyris provides a partial description of an orientation aimed at
helping the organization move from an Organization Model I to an
Organization Model II learning system (p.193). The directors of the
management consultant firm wanted to avoid developing the negative
internal characteristics they had left that could also reduce the quality
of their work. They also felt that they needed to manifest the learning
competencies of double-loop learning, which would be increasingly
important in producing added value for clients. This learning would
be among all parties, including clients, and would persist under
conditions of stress, embarrassment or threat (p.194).

At the first seminar with an intervener, after framing the problem,
generalizations were developed about how to reduce organizational
defensive routines and skilled incompetence and increase skills
necessary for success. An organizational map that made these patterns
explicit was developed, reviewed and critiqued by the directors. The
action map for the feedback session, i.e., the hypotheses about what
drives learning and anti-learning activities within the organization
(p.197) was tested for validity and discussed. The second seminar
aimed to provide learning and practice in a new productive theory-in-
use, and explore the organizational changes it could create. The left-
hand/right-hand case method was used, and the cases and discussion
confirmed features of the [earlier] action map (p.207). Later, the
directors conducted their own follow-up sessions within the firm, and
expanded the intervention to their routine work.

Chapter 8: Conclusion
Defensive reasoning, Argyris argues, is manifest at all organizational
levels, present in a wide range of activities, is omnipresent, powerful,
inhibits learning and is dangerous to organizational performance and
effectiveness (p.212). It can overwhelm productive reasoning
(p.212) and become dangerously natural, realistic and necessary
(p.213). Thus, people need to dismantle the multi-level network of
defensive reasoning activities in order to strengthen productive
reasoning (p.213). Further, scholars need to conduct research about
double-loop learning that appears to produce knowledge with a high
degree of implementable validity (p.222). Changes that genuinely
transform organizations are not likely to persist as long as the
defensive reasoning mindset is not reduced (p.222).

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