Learning from experience is critical for organizations to thrive in increasingly competitive markets. However, most studies of experiential learning focus on situations in which actors face a repeated event. Thanks to HKUST’s Jaeho Choi and a colleague, we now know much more about the power of learning through generalization in a world of novelty.

“In the more general and arguably more typical setting,” the researchers note, “actors are faced with a changing set of options.” This poses the challenge of generalization: what can be gleaned from prior experience that is distinct from, but related to, one’s current circumstance? “To cope with this challenge,” explain Choi and colleague, “learning may be augmented by generalizing from past experiences.”

The researchers developed a formal computational model to capture how generalization both facilitates and impedes learning. “The model depicts the process by which an organization responds to a stream of heterogeneous opportunities over time,” say the authors, describing an environment in which traditional learning frameworks may fall short.

Importantly, they found that how opportunities are categorized shapes learning outcomes, noting that “the degree to which experience is aggregated with categories impacts learning.” This means that organizations must carefully consider how they encode their experiences—whether in broad or fine-grained categories—to optimize their learning from past events.

A well-structured category system can make it easier to generalize from unique experiences. Yet the effectiveness of generalization is contingent on the opportunities available. In the authors’ words, “the characteristics of opportunities and their relatedness influence the performance of different category structures.”

The researchers conclude that “wisdom in the wild” arises from the interplay of generalization and adaptive learning, enabling organizations to thrive amid uncertainty. This work not only makes an important theoretical contribution but also provides much-needed guidance for managers on enhancing their strategic decision-making.