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Do learning organizations have strokes of genius? An empirical study of 34 high technology R&D and manufacturing organizations suggests not. The roots of punctuated equilibrium in organizational learning can be traced to learning activities that occur within organizational subsystems, primarily during R&D. Continuous improvement at the subsystem level contributes significantly to a delayed, rapid surge in organizational performance. Managers coordinate subsystem-level activities to maximize organizational performance by trading off the revenues expected from timely learning against the expected costs. Knowledge accumulated within organizational subsystems can remain hidden from organization-level performance metrics for prolonged periods of time