Product and Process Innovation in Small and Medium Sized Firms, using Action Learning

This paper was presented at the MIT Conference in Fiesa, Slovenia

Product and Process Innovation in Small and Medium Sized Firms, using Action Learning.

Paul Levy and David Knowles1

1University of Brighton, CENTRIM, UK




This paper describes early results from a research project aimed at assessing the impact of action learning on the innovative capability of small and medium sized firms. Teams of senior managers from non-competing sectors embarked on a one year process of group-based learning, underpinned by the methods and approach of Action learning. Each participant identified an innovation goal of critical importance to their organisation. Action learning sets and targeted learning were employed to support the learning required to allow action towards the achievement of these goals. The paper tests the proposition that Action Learning, supported by targeted learning, is an effective, time and cost efficient method for supporting technological product and process innovation. The paper argues that action learning develops innovation managers into “reflective practitioners”. Reflective practice is a fundamental competence needed to enable effective innovation management. Initial thinking and results are presented.


Key words: Action Learning, Product and Process Innovation, Innovation Management, Reflective Practice


Action Learning is a process developed by Reg Revans (1984) to support groups engaging in learning from taking action. It is used on many different sectors and industries all over the world as a basis for teamwork. The process is one, which follows what is sometimes known as “the learning cycle”, where people reflect on their experience, leading to the development on new ideas and concepts, which are then tested out in practice.

Writers such as Foy (1977) have described the impact and relevance of action learning in industry. And Jubilerer (1991) has suggested an explicit link between Action Learning and competitive advantage. The link to the benefits of Action Learning to the “bottom line” has also been anecdotally made by Bunning 1993.

The underpinning processes of action learning has been comprehensively described by Pedler (1996), McGill and Beatty (1992) and Weinstein (1998). Dixon (1998) sees action learning as more than just a group or team for realising work tasks or projects. Learning is key.

According to Marquardt and Revans (1999): “The group is composed of four to eight individuals who examine an organisational problem that has no easy solution. Ideally, the makeup of the group is diverse, so as to maximise various perspectives and obtain fresh viewpoints.”

They go on to point out: “In action learning the learning is as important as the action. Action learning places equal emphasis on accomplishing the talk and on the learning/development of individuals and organisations.”

What makes action learning particularly suited to team working in a small business environment is this use of a cycle of learning:

–         Reflecting on the past (with the help of the team or ‘action learning group’)

–         Developing new ideas for the future

–         Testing these out in practice

Team members each have allocated time slots to cover a range of practical issues, questions, problems, and are then encouraged to identify actions to be completed by the next set meeting. A team facilitator or advisor ensures the meeting is well run and follows the process of action learning.

So, action learning is about:

–         Learning from experience through reflection

–         Taking and testing out action in the real world

–         Support and questioning from the rest of the team

–         Personal and management development

–         Team coaching and mentoring

Action Learning and the Small Firm

Setting up and successfully managing a small business is a challenge which calls on a wide range of skills and knowledge. Many of the “basics” can be found in the start-up guides of banks, enterprise agencies and books.

There is also the advice and help to be gained from business counsellors and advisors. How to draw up a business plan. Managing cash flow. Creating a business and marketing strategy. The legal side of business.

Yet most small business managers will tell you that it is the hard schooling of experience that generates most useful knowledge and competence.

Also, there seem to be few useful books or guides on one key critical success factor: innovation. Innovation is critical to business success. A firm’s ability to learn, to identify incremental and radical opportunities to develop products, services and business processes. Attending a local course or lunchtime seminar will not usually provide a playground for the creativity and innovative thinking critical to many firms’ success.

In order to innovate, our research suggests that businesses need to be proactive, able to audit the environment to identify change and opportunity, to be open to challenge, and to be prepared to experiment. But most of all, learning is key. To be a learning organisation is on the agenda of many firms (Bessant et al 2001)

The opportunity to learn from experience, to think ‘out of the box’ is provided by this well established approach called Action Learning. Small business managers meet in groups,  in a non-competitive environment based on a process of learning from each other.

By being in a team of six managers from other small businesses, in a confidential environment, the potential knowledge and experience is increased 6-fold.

In the facilitated team meetings, the action learning process allows each member to explore key business problems and challenges, court challenge, advice and feedback, tapping into the experience of real practising managers, test out ideas, and set actions and tasks to be completed by the next team meeting.

At the next team meeting, set members are encouraged to reflect on and learn from that action and the experience gained from it.

In this way participants complete a “cycle of learning” – reflecting on experience, coming out with new ideas, testing them out in practice and reflecting again! As their experience grows, so do their skills and knowledge develop.

The ALPINE (Action Learning Pilot in New Enterprises) Project

In this pilot project, based at the Centre for Research in Innovation Management (CENTRIM) at the University of Brighton, UK, Action Learning is augmented with a programme of programmed and emergent learning.

The pilot project breaks new ground in combining action learning with programmed input as well as learning support designed specifically for each action learning set based on issues and questions, challenges and identified knowledge and skills gaps identified during and between set meetings.

The project is called ALPINE – Action Learning Pilot for New Enterprises. By “new” we do not mean start-up firms. As already mentioned there is targeted support available for these organisations at the very first stages of development, though action learning would no doubt benefit these enterprises too!. The ALPINE project has focused on firms over one year old, who are interested in taking the next steps of innovation and change to sustain business survival and generate growth.

The action learning set process is supported by expert facilitation and a support programme of learning and development customised by participants and combined with a programme of default learning identified from an initial self assessment at the start of the process, as well as research carried out by programme designers.

New ideas, tools, techniques and approaches are made available to set members to enhance their chances of making their businesses a sustained, long-term success. Workshops, learning materials, new thinking, and a chance to reflect and experiment are all part of this process.

So, this is an innovative programme of business development. This pilot research is based on the premise that the best teachers and trainers of innovation for small business managers are the managers themselves.

Sharing experience, asking questions, challenging and coaching each other, supported by a programme of targeted and creative learning. Managing change and innovation, thinking creatively, developing flexibility and customer focus, business values and culture, managing technology – these are just a few of the areas covered by this action learning programme.

Key features of the programme

The key features of the programme are based on a combination of targeted learning and action learning. The programme interfaces with learning resources at CENTRIM (the research institute) and other support services and resources:

–         a regular action learning team(every  4-6 weeks), facilitated with short topic briefings at the beginning of the team meeting.

–         Access to business advice and support services

–         Favourable business finance and other business support services in recognition of the commitment of participants to the programme

–         Access to innovative learning and training resources

Potential outcomes of the programme

A number of potential outcomes will form the basis of research in the pilot project:

–         improved capability of running the small business

–         innovation of products and business processes

–         improved innovative skill

–         enhanced creative thinking

–         a shared experience of the skills and knowledge of a peer group of small business manager

–         a skilled ability to learn from experience and take action

–         improved business performance

What Makes This Unique?

Unlike the one off training programme that leaves the participants to implement the knowledge gained, an action learning set provides the all-important forum for reflection.

Traditionally training courses provide a great deal of information in a short space of time. Whilst this approach is very informative, there is little time for the participants to absorb the information and think through how it can be applied to their own particular circumstances. The result is that by the time the participants return to their workplace and get involved in the day-to-day much of the course content is lost.

Most attendees acknowledge the benefits of training courses but also recognise the difficulties of translating the knowledge into the work environment. Through the action learning set, knowledge gained can be discussed with a peer group before, during and after any intervention.

Added Value of the University’s Involvement

The benefit of the action learning set being facilitated by university researchers means that new research findings relevant to SME development are always available to enrich the ALS thinking. The university also intends to offer the opportunity for participating companies to remain in touch with ongoing research through networks.

ALPINE Learning Framework

The ALPINE learning framework employs a mix of learning methods. At its core is action learning, a group process of reflective practice. Supporting this is targeted didactic and interactive learning based, partly on a default programme targeted learning derived from pre-programme learning needs analysis and targeted learning designed “on the hoof” so to speak, based on emerging needs identified during action learning set reflection.

Induction and Lead-in

Pre-programme research and a short induction will orientate both participants and facilitators to the learning agenda for the programme. Participants will set at least one goal of strategic importance to their business that has identifiable sub elements of:

– personal development

-management/leadership development

-organisational development (improvement of products and processes)

The identified goal may change or be reframed during the programme indeed this is likely. There may be more than one goal. The goal should be directed towards a step of change and innovation that will sustain and enhance the business’s opportunity to thrive and survive. The goal may be set for fulfilment within or beyond the life of the programme. The business goal should be concerned therefore with innovation and not simply to ensure survival or be a “maintenance” goal.

There should be nothing tokenistic about the goal. It should challenge mediocrity and encourage the business to explore and experiment, to push boundaries and generate new learning which can be harvested in bottom line terms. The goal should be linked to tangible business targets which can therefore be measured in terms of impact before, during and after the programme.

An induction event will orientate participants to the style of learning unique to the programme and finalise the starting “goal” for each participant. The ground rules of action learning and the programme format will also be set. These include confidentiality and agreeing to commit to the action learning process.

Action Learning Sets

There will be eight full day action learning set meetings taking place approximately every six weeks during the programme.

The action learning process forms the basis of the programme. A place of exchange and challenge for participants, the set meetings follow a cycle of learning based on idea building, experimentation, practical experience and reflection.

Each participant has a dedicated time slot during the set meeting and fellow participants ask questions and act as internal “consultants”. The set meeting agenda is emergent though the facilitator will bring the participant back at key points to their goal(s) set at the start of the programme. So the set meeting fulfils several potential roles but will be emergent depending on individual and set development:

– it will act as a project/goal progress meeting

– it will be a place for participant to develop themselves personally and as managers of small businesses

– it will be a place for advice and targeted “consultancy”

Set structure

The structure of the seven hour set meeting is based on a number of processes:

– A check in at the start of the meeting (housekeeping and a quick review of agreed actions)

– A short targeted one hour session of didactic and/or interactive learning from a guest facilitator/speaker

– 45 minute (approximately) time slots for each member of the set (including a minuting of agreed actions to be achieved, learning to be gained, or questions to be addressed by the next set meeting)

– a reading circle – an hour of shared reflection of an article suggested by the facilitator, the guest speaker and/or a set member, read by participants between set meetings, focusing on emerging themes or themes identified during the guest facilitated slot at the beginning of the day

– A short final review at the end of each day

Agreed actions are minuted by the facilitator or a set member (as agreed) and distributed to set members

Possible default topics for targeted learning might include:

– How to be radically creative with your products services and business processes – problem solving that really works

– The signs of death in an organisation – how to be proactive and move beyond mere survival

– Product and process innovation

– Being agile – the flexibility agenda

– Real customer service – the theory of contempt

– Creating the right culture for your businesses – values and the collusion of mediocrity

Learning Support Materials

Participants will be joining a learning community; the agenda for learning is agreed individually in advance by each set member. However, we envisage much common ground emerging and the opportunity for an emergent learning network to form is great. Learning within businesses, sectors and across businesses and sectors will be a big benefit of the programme. There we envisage a number of emerging events and resources which we need to budget for. These include:

– Workshops and meetings attended by all of the sets

– Access to CENTRIM learning events and resources

– Development of bespoke events and online learning resources.

Participants will have access to a notice board and online conferencing as well as a set of innovative learning resources to support their learning. We want to encourage participants to visit each other, exchange learning beyond the formal set meetings, reviews and other events. Common ground may well include:

– sharing ideas and experiences on the management of resources

– sharing ideas and experiences on innovation of product, service and business processes

– sharing common research materials

– helping each other to identify, examine and solve business problems.

We will therefore create an online resource where participants across the whole, programme can support each other, network and exchange learning.

The research project plan

The project would be run over one year. The facilitators would investigate all participating companies in order to develop a company profile. This information would be collected through interviews and surveys conducted within the companies. The information would be confidential and available back to the company.

The profiles would allow the facilitators to decide the 10 months ALS programme. Closing interviews and surveys would provide the final piece of research. A report will be made available to the funding bodies on completion. The academic content of the research could be published in journals subject to the companies agreeing and assurance of their anonymity being preserved.

Programme outcomes

There are three outcomes identified as part of the research agenda for this pilot project:

We believe this programme could increase the innovative capability of participant as well as the bottom line benefit of improved profitability and/or growth of the SME, particularly through focus on product and process innovation.

The achievement and reframing if needed of a critical business goal identified at the start is a key potential benefit

Varying with the needs of each participant, one might envisage significant personal, management and organisational development

Progress so Far

Two action learning sets are ready to run. The first is a set based around entrepreneurs from different sectors. The second is a set drawn from the creative industries.

From a research point of view it will be necessary to analyse each action learning set as a “case study”. Eventually 4-6 such case studies will be completed over a 12-18 month period. Before, during and after- evaluation is being undertaken to assess the impact of the programme on business innovation and success. Research design is till being undertaken and questionnaires piloted and tested.


Bunning, R. L. (1993) “Action learning: Developing managers with a bottom-line payback.” Executive Development. 7 (4), 3-6.

Dixon, N. M. (1998) “Action learning: More than just a task force.” Performance Improvement Quarterly 11 (1), 44-58.

Foy, N. (1977) “Action learning comes to industry.” Harvard Business Review 55 (5), 158-168.

Jubilerer, J (1991). “Action learning for competitive advantage.” Financier, 15 (9), 16-19.

Marquardt, M. J. and Revans, R,. (1999  “Action Learning in Action: Transforming Problems and People for World-Class Organizational Learning”, Davies-Black Pub;)

McGill, I and Beaty, L/ (Editors) , (1992) “Action Learning: A Practitioner’s Guide

“Kogan Page Ltd;

Pedler, M., (1996), “Action Learning for Managers”, Lemos & Crane; (May 1996)

Revans, R. (1984) “Action Learning”, Blond & Briggs, London

Tidd, J.,  Pavitt, K.,  Bessant, J., (2001)  “Managing Innovation”, John Wiley and Sons Ltd, Second Edition

Weinstein, K. (1998), “Action Learning: A Practical Guide for Managers”, Gower Pub Co; 2nd edition

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