|Four years ago I wrote a well-received paper entitled A Prescription for Business Innovation: Creating Technologies that Solve Basic Human Needs. I’ve updated it, broken it into three manageable pieces, and present the second part below. The first part, which reviewed the history of human innovation and technology, is here and the third part will follow next Tuesday.
Four: Innovation & Society: How Technologies Limit Freedom, Human Nature Confounds Innovation, and Consumer Decision Tools Doom Marketing
Those of you with HR backgrounds are probably wondering why I have not spoken about non-individual, community aspects of civilization and why and how these arose if the innovative individual is perfectly able to do it all him- or herself. These issues are relevant because of the role of teams, organizations and other social constructs in the process of innovation.
Let’s take another look at our proto-human, now equipped with the six basic types of manually powered machine (lever, wheel, screw, pulley, plane, and wedge — the latter in the form of flint-head arrows), plus other early innovations like controlled fire, animal domestication and crop cultivation. Like other creatures he’s adopted the family unit as a social convention, but now he’s experimenting with a more sophisticated social construct, the tribe. Question is, why? Is it Darwinian — Did humans that banded together have a higher likelihood of survival than loners? Or is it purely social — Do humans, like other creatures, have a basic need for social contact with others that goes beyond family? Whichever it is — a survival need or a social need, it required innovations to make it work, innovations like a code of laws and behaviours to prevent and resolve disputes between individuals, and shared language.
At this point, in the view of some anthropologists, a tug-of-war began between our essential individual, autonomous nature and the perceived benefits of increasingly advanced, abstract and restrictive ‘technologies’ like division of labour, specialization, private and communal property, governments and other hierarchical social organizations, including the modern corporation. All these social ‘technologies’ limit individuals’ freedom, and much of our civilization has been about trying to find a delicate balance between individual ‘rights’ and the apparent benefits afforded by technologies that compromise them. This tug-of-war continues to play out today, in our suspicion of government, the existence of ‘militias’, libertarian movements, evolution of privacy laws, and struggles over property ownership. The battle is far from over, with slavery, one particularly extreme social construct favouring hierarchical efficiency over individual liberty, still practiced in many countries, and women, children and animals treated as property with no rights or freedoms whatsoever in many others.
This tension also plays out in the modern corporation, itself a feudal social construct which is neither egalitarian nor democratic. Corporate efficiencies have produced technologies that have massively improved material wealth and (most believe) quality of life in the few centuries since they were invented. But these advantages have come with a huge cost of personal freedom — In many countries employees are virtual slaves of their employers, with no hope of realizing their full personal potential. In many companies promotion and remuneration have nothing to do with performance or competency.
Here are some of the consequences for innovation of this individual/collective tension, in today’s companies:
If people are social by nature, why are corporations so unable to tap into this to leverage the power of teams to enhance innovation? The answer may be simple. In The Hidden Life of Dogs, author Elizabeth Marshall Thomas explains that most animals have an inherent desire to socialize with their peers, that seems totally unrelated to survival needs. In fact, dogs that wander from homes where they are well-fed and cared for appear to be looking for social contact with other dogs for its own sake, just as children like to hang out with others doing things they can do just as effectively alone. At the same time, both dogs and children often become extremely jealous, competitive, possessive and unsociable when these same fellow creatures impose on their personal ‘territory’: family, toys, food bowl, and members of the opposite sex.
Perhaps this is a universal trait that we need to consider when designing innovation programs: Everyone loves to engage in social activities that are fun, challenging and unthreatening, but when the social activity impinges on individual ‘territory’ or property, or on scarce resources, social and collaborative behaviour ceases and confrontational, competitive behaviour takes over.
But isn’t competitive behaviour exactly what business thrives on? Doesn’t the rush of adrenaline and testosterone in the quest for competitive advantage and ‘winning’ yield high productivity, sharpened customer focus, and more new ideas?
I would argue that competition is at best a neutral factor in engendering innovation, and may in fact be detrimental. Most of the books on teamwork, such as The Wisdom of Teams, stress two essential preconditions to effective team behaviour:
There are other factors that affect a team’s success, of course, such as the competencies and access to knowledge of the team members, and the effectiveness of the processes by which the team works. What is important here is that nowhere is a competitive threat, competitive challenge or competition of any kind considered essential to team effectiveness. Even in sports, the best teams focus on what they do well (the attributes of their team’s excellence) and the achievement of specific objectives (like scoring points) rather than being distracted by competing with the other team, ‘winning’ and exploiting the other team’s weaknesses. Good teams usually take solace in having played well even in a losing cause, and are alarmed when they play badly but still manage to win. In fact, a major competitive tactic in business is to force one’s competitors to shift their focus to your agenda, to take their eye off their team’s goal to instead compete with you.
Furthermore, many businesses are now reaching out to involve customers, alliance partners and even competitors in their problem-solving teams, because they help bring different points of view to the creative process, and because these external partners share both the defined problem and the sense of urgency with the internal team. In a world of accelerating change, no competitive advantage is sustainable — innovations and new technologies can almost instantly reinvent industries, products, services, and offerings, and eliminate any competitive advantage the old ones may have had. Despite massive and sustained oligopolistic efforts to prevent it, customers are beginning to wrest absolute control of business direction and success from almost every industry’s producers, management strategists and marketers, and now set the agenda and reward companies that respond to their needs and build new serving capability, not those that bash the competition, sue their customers, or create barriers to competitive offerings. The Bush regime’s corporatist agenda has been only a temporary setback in this inexorable trend.
A side-note about branding: Many marketing people, lamenting over the passage of market control from producer to consumer, cite the increasing importance of branding as an organizational strategy, and of brand loyalty as a success factor. For this reason, they argue, aggressive, proactive marketing is not dead. They fail to appreciate that consumers, faced with the severe scarcity of (a) time to assess product alternatives and (b) objective comparative analysis like Consumer Reports, tend to use ‘brand’ as an unsatisfactory surrogate decision-making tool. If you as a consumer want to buy a car, or select a television program to watch, the ideal decision-making process would be:
In the case of a big-ticket selection like a car, you would probably invest significant time in making the final decision. In a small-ticket selection like a television program, the final decision could be greatly simplified or even fully automated, so your television would automatically go to the highest-ranked program in the two lists, and signal to you a ‘score’ showing the computed probability you will like it (since your ultimate decision may be not to watch anything).
Tools like these exist today (Consumer Reports is an example of the former; the Recommendations Lists of Amazon.com are an example of the latter), but they are not yet very robust or reliable. In their absence, brands and brand loyalty are the surrogates: ‘I always buy Chrysler products’ or ‘I usually watch CSI on Thursday nights’ is your brain’s way of substituting brand for the more ideal tools noted above. Once these tools exist (and the Information Age is ripe for them), product brands will simply become community-identification brands (‘I drive Chrysler products because they reflect who I am and I want others to see that and associate with me, or not, because of that identification’). At this point, brand community-association becomes merely one more selection criterion of the analytical tool. With the advent of the near-perfect consumer information these tools provide, traditional marketing has no remaining role, and the knowledge-driven transition of power from producer to consumer is complete.
Five: The Structure & Culture of Innovative Organizations: Business Gets Feminine and Consumers Seize Power from Producers
The real contention over this new organizational culture is whether it is efficient enough to justify a new organizational structure to support it, or whether instead some kind of balance between hierarchical and autonomous structures is needed. Is it empowering, or is it naÔve, to believe that if an organization sets specific strategies and goals and then ‘gets out of the way’, the employees will effectively figure out the best way to achieve them? Can the tools, the infrastructure of technologies, knowledge-bases and equipment, needed to achieve organizational and project objectives, be left up to project teams to develop as needed and ad hoc, or must they be rationalized and inventoried and efficiently ‘managed’? Who controls the purse-strings, and approves allocation of budgets and resources for each project — can project teams really do this themselves or do these resources also need to be centrally ‘managed’?
These issues are important to the future of business innovation. We must decide whether an organization saddled with the structures and controls of an old ‘management’ style can hope to be sufficiently agile, responsive to customers, creative and focused on new product development, to survive when that survival depends on strategic improvisation and continuous innovation.
There are two huge and contradictory trends occurring in organizational structure today: globalization and fragmentation. Globalization is occurring because small organizations cannot achieve the scale and resource capacity needed to be viable, and fragmentation, the spinning off and incubation of small, narrowly focused ‘best of class’ companies, is occurring because large organizations are too unwieldy, inefficient and inflexible to be innovative and respond to customers’ rapidly evolving needs. So we have today the worst of both worlds: large, fat, unresponsive global companies and emaciated unscalable small ones. Furthermore, because of today’s concentration of money and power in the hands of increasing global corporate giants, this system is in disequilibrium, with dysfunctional non value-added consequences such as these:
The recent macro-economic review by Credit Suisse First Boston, echoing the prognostications voiced by many economists at recent economic summits, foresees the evolution of today’s corporate structures into three new, prevailing types of enterprise, which could fix the above dysfunctions (since different economists use different names for these, I’ve used my own):
The Global Utilities would be either publicly owned or tightly regulated, operated on a not-for-profit basis. They would be measured on efficiency. The Producers and Innovators would be entrepreneurial partnerships, very project focused. Producers would be measured on agility, quality and customization, and Innovators on creativity, quality and quality-of-life improvement. All three types of enterprise would be measured additionally, of course, on customer satisfaction. None would be hierarchical, and few would spend an entire career with a single organization. I have argued elsewhere that, in fact, with today’s technologies there is no need for any of us to have to work more than a few hours a week to provide a high level of well-being for everyone anyway — the fact that we do work so unnecessarily hard and long is a function of the sustained myths of our modern Western culture and the extravagant and unsustainable wastefulness of our civilization.
Those with an entrepreneurial bent would form, or join, one or more Producer or Innovator enterprises over their working life. Those with a productivity bent would gravitate towards the Global Utilities. Many others would be self-employed, providing niche advisory services to all three types of enterprise.
You may think this is a very idealistic view of how ‘organizations should be reorganized’, but it is also a very logical one, and one that could easily be achieved today because of growing dissatisfaction with the dysfunctionality of today’s organizational structures, and the ability, thanks to the Internet and other powerful new ‘organizing’ infrastructure technologies, to bring this ‘reorganization of organizations’ about. Only a poverty of imagination, opposition from elite vested interests, and the inequitable distribution of power and resources, all of them well within human capability to rectify, are preventing us from realizing this potentially liberating, perhaps even Earth-saving, reorganization. In fact, this customer-driven revolution is already happening, quickly, quietly, and non-violently, its first manifestation being what Shoshana Zuboff in her best-seller calls The Support Economy: Why Corporations Are Failing Individuals and The Next Episode of Capitalism.
What does all this mean for today’s company looking to jump-start its innovation programs and processes, and today’s individual looking to participate in making his or her own, or his or her employer’s, enterprise more innovative? From the discussion above we can add six principles of innovation strategy to the eight principles developed earlier:
Attributes of ‘Female’ versus ‘Male’ Organization Structures
So now we have fourteen principles to guide us in creating innovative organizations.
Next Tuesday: In the final part of this paper, a prescription that draws on these principles, that organizations can use to evolve themselves into innovative companies. It will also explain the new 8-step Innovation Process diagram at the top of this post.
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