Leadership Functions And Organizational Learning In Tecnalia Javier Ruiz

Organizational learning and leadership styles in
RTOs: A multilevel perspective in Tecnalia

Javier Ruiz
Tecnalia Innovation Systems, Parque Tecnológico de Bizkaia Ed. 700
48160, Derio, Spain.
E-mail: jruiz@labein.es

Abstract: Complexity leadership theory has been used to understand
organizational learning processes (exploration and exploitation and 4I
model) in complex multidisciplinary R&D projects in RTOs merging in
Tecnalia. Qualitative research and propositions are discussed in the
case study. Mechanisms and context in which adaptive, enabling and
administrative leadership functions at operational and strategic level
are identified and described.

Keywords: organizational learning processes, complexity leadership functions,
multidisciplinary R&D projects, merging RTO Tecnalia.

1 Organizational learning and leadership in a complexity context

Organizational learning is generally defined in terms of such distinct processes as
“individual change” and “sustainable competitive advantage” (De Geus, 1988; Senge,
1990). Though early work tends to separate individual and organizational learning,
recently integration of learning formulation at different levels of analysis has been done
(e.g. Bontis, Crossan, & Hulland, 2002; Matusik & Heeley, 2005). The specification of
learning processes at different levels of analysis provides an opportunity to uncover a
detailed picture of the role of leaders in facilitating organizational learning. However,
limited systematic research directly linking leadership and learning has been published. A
few such studies have used learning variables as outcomes to common measures of
leadership, such as transformational leadership (e.g., Amitay, Popper, & Lipshitz, 2005),
or examined leadership roles in learning in certain settings. By contrast, recent theoretical
work by Vera & Crossan (2004) and by Jansen, Vera & Crossan, (2009) systematically
linked strategic leadership and organizational learning. Transformational leaders usually
inspire learning that challenges the status quo (exploratory innovation), and transactional
leaders facilitate learning that reinforces existing practices (exploitative innovation).
In this paper, we explore multiple approaches to learning and leadership in two levels
of analysis: strategic (top executives in a merger process of six Research and Technology
Organizations RTO) and operational (EDEN & ATN complex R&D project level). After
analysing standarization (Ruiz, 1996), leadership (Ruiz, 2003) and knowledge
management (Ruiz, 2005) in R&D activities, now we are using the framework provided

by Berson et al. (2006) who organize the relevant literature to forming connections
between organizational learning and leadership.
Classic distinction between exploration and exploitation (e.g. March, 1991) and the 4I
framework (Crossan et al., 1999) were used as taxonomies to describe learning processes.
A tension exists between exploration and exploitation as they compete for organizational
resources and require different organizational contexts for support (Gibson &
Birkinshaw, 2004). While exploration includes search, variation, risk taking,
experimentation, play, flexibility, discovery, innovation; exploitation includes
refinement, choice, production, efficiency, selection, implementation or execution.
Exploration is variance-seeking and encompasses the constructs of creativity and
innovation, whereas exploitation is reliability-seeking and incorporates learning of
standard routines, transfering knowledge, and incremental adaptation (March, 1991).
The view of organizational learning as a process of change in thought and action both
individual and shared – embedded in and affected by the institutions of the organization
(Vera & -Crossan, 2004, p.224) is consistent with the strategic renewal perspective. They
suggest four processes: intuiting, interpreting, integrating, and institutionalizing through
which learning occurs at three levels of analysis: individual, group and organization.
Learning begins with individuals at the intuiting stage as a subconscious process and later
becomes conscious at the interpreting stage, where it is often shared with other group
members. Group members’ input gets integrated at the group and organization level,
where information is institutionalized and imbedded in systems, structure or routines.
Learning transfers among these four processes (4Is) are closely related to exploration and
exploitation. Exploration starts with the processes of entrepreneurial intuition and
interpretation of new ideas, while exploitation starts with the transfer of institutionalized
organizational learning. Integration ties the two types of learning together; it facilitates
the institutionalization of the results of exploration and the interpretation by individuals
and groups of institutionalized learning.
Leadership is a process of influencing and teaching others to understand why and
how certain activities and goals need to be accomplished (Jukl, 2006). As such, it
constitutes a process of facilitating individual and collective efforts to learn and
accomplish shared goals in organizations. But differences exist between leading and
leadership. Hannah & Lester (2009) define leading as an influence process where
individual leaders behave in ways that set the proper conditions for individuals, groups,
networks and systems to enact emergent behaviors that promote learning and adaptation.
These individual leader actions then serve to either promote or deter effective leadership
and its development, which can be defined as the collective capacity of organizational
members to engage effectively in formal and informal leadership roles that promote
learning and knowledge diffusion.
However, leadership research has explored the implementation of top-down
organizational forms by drilling deeper into human relations models (aimed at alignment
and control (Gronn, 1999; Huxham & Vangen, 2000). There seems to be e contradiction
between the needs of the Knowledge Era and the reality of centralized power. “The
dominant paradigms in organizational theory are based on stability seeking and
uncertainty avoidance through organizational structure and processes. But those
paradigms are inadequate for global, hyper-competitive environments, although their
replacements are not clear yet” (Ilinitch, D’Aveni, & Lewin, 1996, p. 217). In this
context, we are using the Complexity Leadership Theory (Uhl-Bien, Marion, &
McKelvey, 2007) to explore its constructs in the case study observations.

Complexity Leadership Theory is a framework for leadership that “enables the
learning, creative, and adaptive capacity of complex adaptive systems (CAS) in
knowledge-producing organizations or organizational units. This framework seeks to
foster CAS dynamics while at the same time enabling control structures appropriate for
coordinating formal organizations and producing outcomes appropriate to the vision and
mission of the organization. It seeks to integrate complexity dynamics and bureaucracy,
enabling and coordinating, exploration and exploitation, CAS and hierarchy, and
informal emergence and top-down control” (M. Uhl-Bien et al.,2007, p. 304; Uhl-Bien &
Marion,. 2009, p 632 ). Below we are exploring how adaptive and enabling functions
operate at individual and group level in complex multidisciplinary R&D projects. In
addition, how administrative function operates at the strategic level of merging 6 R&D
organizations is discussed.

2 Research method and case study of Tecnalia as RTO

Research method
Two levels of observation were adopted: The strategic level of the merger process
and the operational level of two multidisciplinary R&D projects described above.
Data were collected and analyzed by a team of four researchers who, over fourteen
months period, participated in meetings, taking extensive field notes and discussed these
in post hoc research meetings. In addition, twenty people were selected to be interviewed
in such a way as to obtain information on different perceptions, funcions (technology,
market, management) and activities at the operational (EDEN and ATN) and strategic
level of the merger process. A semi-structured questionnairei was used after being tested
following a first round of five interviews. The information gathered was recorded,
transcribed, analyzed and coded for emergent issues, using inductive qualitative methods
appropriate for exploratory research (Corbin & Strauss, 1993; Miles & Huberman, 1994).
At the same time, individual case studies of multidisciplinary projects (EDEN & ATN)
and merger process were developed and compared in order to identify emergent routines
and practices being transferred across projects (Yin, 1984). All this data were analysed
for the presence of drivers and interaction patterns within the organization as a whole,
eventually developing a single map that identified the double level perspective discussed.

Strategic level: The merger process of Tecnalia
After signed up a merged protocol last June 24th 2009, the six research and technology
organizations Cidemco, Esi, Fatronik, Inasmet, Labein and Robotiker, are progressing
into their merger process. The new RTO named “Tecnalia Research and Innovation” is
starting operations in January 2011 with 1300 staff and more than 110 millions € of
turnover. Tecnalia, resulted from a strategic alliance founded on July 2001, promoted by
the directors of the above mentioned RTOs. Azti and Neiker joined afterwards, and
remain in it, but not being involved in the current merger process. Additionally, Euve and
Leia, RTOs located in the province of Alava have applied to be part of Tecnalia.
Since 2001 up to now, Tecnalia has deployed an organization splitted in “sectoral
business units”, where technology competences are allocated with a market orientation.

Rationalizing specialization and competence building involved also the creation of some
“Polycentric Units”. Such polycentic business units are the combination of groups of
researchers located in different centres of Tecnalia. Its purpose is to create synergies and
to reach critical mass. These units usually share the same or close fields of activity,
segments of clients and knowledge. According to the source of incomes, Table 1 shows
the structure of the RTO involved in the merger process of Tecnalia. .

Table 1 Structure of turnover by type of contracts

Type of contracts Percentage of Turnover

Contract Research and Services 45-55
R&D Projects 35-42
Innovation Services, Testing and Calibration 3-15
Competitive R&D Programmes (EU, national and regional) 30-40
Non Competitive R&D Fundings 8-15
Source: Adapted from corporative statistics
The short term key milestones are determined by legal and structural issues, such as
creating one accountant and control system (ERP), legal change of the staff from six to
one RTO, or restructuring support services.
The Figure 1 shows the structure created to lead and coordinate the process. Ten
working groups were created in October 2009 to design and execute 102 projects with
specific objectives, milestones and deadlines to perform the merging succesfully.

Figure 1 Structure for decision making during the integration.

Structure
Integration
Commitee

Integration Office
Management Director of the
Commitee Merging Process

External
Consulting

Working Groups
Quality &
R&D Testing&Cal. Marketing & Serv.Grles y Innovation &
People (HR) Market Technology Eco-Fin Information
Programmes Laboratories Communication Legal / Fiscal IPR
Systems

Working Groups linked to support processes Working Groups linked to business processes

(source: adapted from Integration Office)

The operational level of the projects ATN and EDE
In the context of organizational design adopted at Tecnalia, based on sectoral business
units, the need to seek cross-cutting actions or projects has taken on relevance at strategic

level. The objective with this is to create a dynamic of generating (exploring and
exploiting) knowledge in order to benefit from opportunities in the interfaces between
disciplines and sectors. Thus emerges a “mitigation strategy” for limiting the
organizational dynamics prevailing in the knowledge silos of the sectoral units. It is in
this context that an approach is being made to the design of two cross-cutting projects
oriented towards promoting the development of knowledge and technology in areas of
strategic opportunity requiring the contribution of various research groups.
Case study ATN. Transversal Action in Nanomaterials is a multidisciplinary R&D
project, the objective of which is to increase competences in research and development of
nanotechnology, from the construction unit to new applications in the environmental and
iron-steel domains. Four working packages have been constituted for this , including n-
TiO2 photocatalytic activity modification (WP1), obtaining nanostructured steel (WP2),
evaluating the impact of nanoparticles on health (WP3) and study of nanoparticles for
treating soil contaminated sites (WP4). This project was selected for being at the initial
stage of its lifecycle (2009-2011), with an estimated budget of €2.4M and the
participation of researchers from the Construction, Environment and Iron-Steel units. The
dynamic of knowledge generation implied by the ATN project highlights the dimension
of exploring new knowledge through the development of additional competences in the
study and development of nanotechnology in the said research groups based on
knowledge accumulated by the group of nanomaterials in construction, currently
consisting of 20 researchers. The results exploitation model is based on the management
of IPR and spin-offs in the medium- and long-term.
Case study EDEN. Multidisciplinary R&D project to take up the challenge of
providing comprehensive solutions for both construction and energy sectors. The EDEN
project aims to provide sustainability strategies that help both sectors by focusing on
energy saving and efficiency. To this end, the EDEN project is developing new energy
products for buildings, new concept design of energy efficient buildings and
neighbourhoods, multifunctional industrialised solutions for building and energy
certification of buildings. The EDEN project was chosen due to being a project for the
period 2008-2010, with a budget of €3.8M plus investments of €1.8M, involving people
from two units (Construction & Territorial Development and Energy) located in four out
of the eight of the RTOs making up Tecnalia at the date of study. The implied dynamic of
knowledge generation emphasizes the dimension of exploitation, through the integration
of competences (materials engineering, systems for converting and storing energy and
smart networks, industrialization of the construction process and its standardization) and
the development of new products in the areas described. The multidisciplinary team
addressing the developments will evolve the project format into that of a “laboratory for
exploiting the results generated” backed by a testing, experimentation and development
infrastructure (Kubik Building Laboratory).

3 Leadership functions and organizational learning processes: development
of propositions and conceptual framework

The complexity leadership functions were connected with the organizational learning
processes discussed above, in order to explain interactions and knowledge creation in the
case study, were three propositions are formulated. Figure 2 represents a single map with
conceptual framework and propositions in the multilevel case study.

Fig 2. Leadership functions and organizational learning processes in the context of observation

Contexts of Observation Learning Processes Leadership Functions

Multidisciplinary R&D Projects Intuition P1
OPERATIONAL

P1 Interpretation
Adaptive
Leadership
Design
ATN
EXPLORATION

EDEN Development Feed-forward

P2 P2
Exploitation Integration Enabling Entanglement
Leadership
CAS context

EXPLOITATION
Merging Process
STRATEGIC

Feed-back
• Structures for decision
making
P3
• Working groups
Institutionalization
P3
Administrative
• Documents analysis Leadership
• Interviews & meeting
attendance

How Adaptive Leadership Function (ALF) influence knowledge exploration?
Complex Adaptive Systems can be used to describe the context in which EDEN and
ATN case study operates as multidisciplinary R&D projects in a RTO as Tecnalia.
Adaptive leadership is an emergent, interactive dynamic that produces outcomes in a
social system. It is a collaborative change movement that emerges nonlinearly from
interactive exchanges, or more specifically, from the “spaces between” agents. We thus
state the following proposition, summarising observations of the case study in Table 2:
Proposition 1. Adaptive Leadership Function (ALF) dominates in knowledge
exploration of complex multidisciplinary R&D projects, where intuition and
interpretation are key learning processes

How Enabling Leadership Function (ELF) influence knowledge exploitation?
The role of enabling leadership is to foster the conditions that catalyze adaptive
leadership and allow for emergence. ELF also helps to disseminate innovative products
of adaptive leadership through the formal managerial system. This is a function of
integration and entanglement between CAS dynamics and formal administrative systems
and structures.
Is the character of integration as a gate for further exploitation via formalizing knowledge
into organizational procedures what is being explored in the case study. We thus state the
following proposition, summarising observations in Table 3:
Proposition 2. Enabling Leadership Function (ELF) articulates knowledge
integration for exploitation of complex multidisciplinary R&D projects

Table 2 Findings related to proposition 1 in case study at operational level
Project Support Gathered information (summary)
ATN Supported “Intense dialogue among disciplines to understand one another, contexts and
different ways of application of knowledge” as project designer reported.
Participative leadership was underlined, “…we as researchers want to
participate in the early design of the project” (ALF)
An inspiration & strategy board provided the early design of the project
goals and competence needed. “Facilitating true dialogue, managing
diversity and conflict solving was my main job”, as a manager said. (ELF)
EDEN Partially
supported “Fluid, easy, communication within and across teams/actors was the right
context”…“Effective and frequent meetings and team working, avoiding
islands, no rigid formal meetings altogether”, team members mentioned.
Leaders provide a context of trust, open communication and commitment
with results. (ALF)
“Clarity in objectives, working plans and responsabilities, to adequate
resource allocation”. “Visionary leaders, with technical knowledge are
needed from the very beginning”, as researchers mentioned (BLF)

Table 3 Findings related to proposition 2 in case study at operational level

Project Support Gathered information (summary)

ATN Partially “Flexible & adaptive decision making during project development were
supported important”, as various researchers said. Distributed leadership
sinchronizing continuous resource re-allocation. (ALF)
“We adapted a cross-management system to have general figures as the
project evolves, but avoiding duplicating economic control in the different
organizational groups”, financial director reported (ELF). Fostering simple
project management and concise reporting documents. Mentoring and
coaching function to empower transversal leaders facing problems (ELF).
Creating tension between market latent needs and technology
developments, to formalize technical solutions. “We have to bring the
problems and challenges of the industry to the researchers…” as a
Supported
marketing engineer said. (ELF)
EDEN
“Clarifying results and impacts from the beginning” was asked by a
researcher, looking for exploitation. “We have to learn how to better
negotiate with partners”, as a manager reported (BLF).

How Administrative Leadership Function (BLF) influence institutionalization in
a merger process?
Administrative Leadership Function (BLF) refers to the actions of individuals in formal
managerial roles who plan and coordinate organizational activities (e.g. bureaucratic
function). Institutionalizing sets learning apart from individuals, and hence, manifests
itself in routines, structures, and practices of the organization (Crossan et al., 1999). A
process of merging 6 RTOs exceeds the area of exploiting knowledge, and it entails a
strategic reconfiguration of the conditions in which organizations operate in the market.
The purpose is to analyze the style of leadership predominating in the merger, where

institutionalization is a key process in organizational learning. We thus state the
following proposition, discussed in Table 4:
Proposition 3. Administrative Leadership Function (BLF) dominates the merger
process of six RTOs, where institutionalization is a key organizational learning
process

Table 4 Learning processes and leadership styles proposition 3 in case study at strategic level
Gathered information (summary)
Case Study Support

Merger Supported Hierarchy driven structures for decision making during the merger
process process, reinforced by legal requirements and processes (see Fig. 1).
(strategic Negotiation processes for power re-distribution (BLF)
level, where Top-down process of defining and creating working groups to perform
institutionali merging tasks, with external consultancy support for legal,
zation is a organizational design and strategy. (BLF)
key process)
Documents and meetings reflect simple direction flow of
communication (top-down information distribution and bottom-up data
gathering). Deadlines and risk management oriented activities. (BLF)
Formulated a common top-down strategy for knowledge exploitation
enhancing IPR management and spin-offs creation (BLF).

Discussion and implications
Observations support proposition 1 in the context of the ATN project, where the
exploration of new knowledge prevails. The CAS dynamic functions in laborious, slow
conversational processes. Asymmetries in language and applications create the
emergence of new solutions through nanomaterials. Nevertheless, the CAS dynamic
shows itself to be fragmented in the project subgroups of each RTO in EDEN
(exploitation domain), reflecting the merger process. In this project, the space for ALF
appears to be confined to the external network and to the technical level. Authority
asymmetries occurred between group leaders of each RTO in the assigning of resources.
Asymmetries in technological preferences between subgroups determined the types of
solutions adopted. Accredited node mechanism on glass photovoltaic solutions for
buildings succeed. Resonance mechanism was observed during the creation of the
KUBIK laboratory.
The Proposition 2 was partially supported in the operational context of the ATN and
EDEN projects. The “entanglement” between adaptive and administrative functions
appears to be particularly complex, showing itself to be more difficult in EDEN than in
ATN. The profile of middle managers determines the space for CAS, facilitating the
prevalence of ALF or BLF. It is necessary to make a more detailed study and in more
cases of mechanisms for converting interaction into interdependence, and of how to
identify and analyze the principal creators of tension. In EDEN, some of these tensions
were the adoption of procedures and contracts to exploit results integrating the innovating
products to the corporate structure. In ATN the language asymmetries and knowledge
and applications domains were tensions created from the ELF.

The observations support proposition 3 in the strategic context of the merger between
6 RTOs. Even in the operational domain of the projects greater agility is requested in the
taking of decisions and clarity of responsibilities, so much so that mechanisms of
transmitting organizational culture instituted around BLF operate on the operational level
of the projects. It is therefore no exaggeration to affirm that governance of the merger
between 6 RTOs is done from a clear-cut prevalence of BLF, in a top-down process.

4 Conclusions, limitations and further research
Complexity leadership construct has been used to understand organizational learning
processes in complex multidisciplinary R&D projects in RTOs in process of merging in
Tecnalia. Administrative leadership function dominates at strategic level in the merger
process, where reinforcing institutionalized learning moving from organization to groups
and individuals is a key process. Context and mechanisms have been identified for
adaptive leadership function operating in exploration activities (feed-forward from
intuition and interpretation to integration), which dominates at operational level (ATN
project). Also the observations permitted to identify mechanisms for enabling leadership
function operating in exploitation activities (feed-back from institutionalization to
integration) at operational level (EDEN project). However, the spaces for the enabling
function to operate were determined by the middle managers’ style, underlining
administrative or adaptive functions.
The main limitation of this study is its sample size of six companies, being similar
type of contract R&D organizations. There are always limitations to the generalizability
of case study research, particularly with a relatively small number of cases. Further
research is needed to deeper understand and extend the findings. Complexity leadership
theory needs experimental research with field surveys and comparative studies in R&D
and other organizations, in order to verify the mechanisms and contexts in which
complexity leadership operates. If leadership is not merely the influential act of an
individual or individuals but rather is embedded in a complex interplay of numerous
interacting forces, new research strategies should be tested to study this form of
leadership, connecting it with how learning processes operate at micro (individual), meso
(group) and macro level (organization). Integrating network analysis (Hannah & Lester,
2009) is also a promising approach to understand how do leaders interact with knowledge
networks to facilitate learning.

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i
For the multidisciplinay R&D projects the semi-structured questionnaire had the blocs:
What went well? What went badly? What have we learned from the EdEn/ATN project?
What would we improve next time when working on projects like EdEn/ATN? Where do
you think backing is required for this kind of project. The script established made it
possible to extract information from the interviewees on the Project stages, the Team
(creation, motivation, teamwork dynamics), the Organizational context (centres, units,
fields of application), Technology/knowledge (harnessing, collaborations...) and
Exploitation /commercialization.

Leadership Functions And Organizational Learning In Tecnalia Javier Ruiz

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