Innovation happens elsewhere!

“The innovators dilemma” is a book by Clayton Christensen, first published in 1997. In it, he explores the paradox that successful companies that do everything right can still fail. The source of this failure, or that observed by the book, is new entrants to markets pushing market disrupting technologies and products, allied to a management inertia avoiding the necessary changes.

Strategy

I was working at Sun Microsystems which briefly became the largest [computer] server vendor in the world, four years later it had gone. I was present at a sales conference when sales staff were criticising the introduction of intel based and other rack optimised blade servers as they competed with Sun’s midrange and super servers. The speaker replied, that if Sun did not introduce these products their competitors would. This is what happened and while Sun arguably had products that could compete, its sales force never learned to sell them and/or chose to push the more expensive and outdated technology. In Sun’s case, it should also be noted that a long term competitor IBM funded the development of Linux which was one of the disruptive technologies that undermined Sun; in this case it wasn’t new entrants. The example we i.e. Sun people studied, or at least those of us that were interested in learning, was that of Kodak whose near monopoly on film was destroyed by digitisation.

The problem is partly one of management and strategy renewal. Tiredness will affect all organisations led by a small cadre of leaders. It is one of the reasons that the leading management consultancies use or emulate a partner structure, which if done well provides a scalable leadership. In such a networked leadership structure, parts can fail and the organisation survives.

I have also been influenced by a McKinsey Quarterly article, “Distortions and deceptions in strategic decisions”, which examined the role of human bias in investment decisions. This is more important in organisations with a hierarchic and deferential management such as most British corporates and public sector organisations.

Decision making

While preparing my evidence to the London borough of Lewisham ‘s democracy review I reviewed the article and made a little blog post. In that article I quoted McKinsey in saying that to remove such bias companies needed to establish a culture of constructive debate. In my original post on the McKinsey article, I said,

Despite identifying over-optimism as a frequent occurrence once a proposal has been made, the decision not to proceed is often taken in private and so collaborative decision making cannot neutralise these human shortcomings. One suggestion is to ask the proposer, what their next best proposal is.

Dave Levy, on this blog

McKinsey concludes the article with,

Companies can’t afford to ignore the human factor in the making of strategic decisions. They can greatly improve their chances of making good ones by becoming more aware of the way cognitive biases can mislead them, by reviewing their decision-making processes, and by establishing a culture of constructive debate.

Dan P. Lovallo and Olivier Sibony – McKinsey Quarterly

While in this post, I have focused on eliminating human bias, the McKinsey article also argues that portfolio management techniques help hedge against single or even multiple project failures just as scalable and networked management structure protect against single points of failure.

What made me remember the article was its listing of what they call tools to isolate any human bias to me most importantly, is the demand that managers show more of their cards: some companies, for instance, demand that investment recommendations include alternatives, or “next-best” ideas. This was always an essential stage in the Prince 2 project management methodology that I was taught. At the time, I wondered how many of these lessons need to be applied to local authority planning decisions and with the recent news from Brimingham, I can add major IT procurements or even railway line extensions.

Politics

Even political parties, I say, even, on thinking about it, most obviously political parties can suffer from the innovator’s dilemma and cognitive bias. The innovation problem for political parties was brought to my attention in an unfinished white Paper by Emmanuelle Avril of the Université Sorbonne Nouvelle and in the text she quotes the Innovator’s Dilemma. The paper is called, The (Unintended) Consequences of New Labour: Party Leadership vs Party Management in the British Labour Party. and was presented to the Political Studies Association 2015 conference, in March so before the election. The abstract states, 

The Labour Party illustrates the paradox of highly efficient management tools and techniques leading to systemic failure. Since the mid-90s, in the pursuit of electoral success, leadership of the Labour Party has been subsumed in management of the party. Despite rhetorical emphasis on consensus-building and transparency, the party structure has evolved towards increased centralization and control, with strategic planning limited to delivery of the leadership’s dictates. Such emphasis on results rather than on behaviour in the management of change in the party has had a damaging impact on the organisation, leading, first, to loss of trust and demoralization among members, and, second, to the erosion of party loyalty and civic pride among voters. This paper draws from the fields of political science as well as organisational studies to explore the impact of recent Labour Leaders on the quality of party processes as well as on party reputation. It is based on the long-term participant observation of the Labour Party at local and regional levels, as well as national events such as annual conferences. This paper starts by identifying the distinctive features of New Labour’s party management. It then examines the “unintended consequences” of this brand of party management, showing this model to be mainly self-defeating. The final section provides a general assessment of the impact of this brand of management on organisational learning and innovation. The conclusion points to some of the main weaknesses of the New Labour leadership model and identifies the potential to re-engage with members – and, therefore, with voters – through more transparent, open and responsive structures.

Emanuelle Averil

Innovation happens elsewhere and is inexorable.

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Also posted on my linkedin blog.