Forbes, 2 December 2011
Just the other day, a colleague asked me whether I could suggest some examples of organizations that have been successful with “innovation initiatives” in a commercial setting? He said that he had a CEO who wanted to launch an “innovation initiative” that would provide a laboratory for experiments in-house, so that his firm could become known as an idea factory in their sector.
I replied that I didn’t know of any “innovation initiative” that was ultimately successful on a sustained basis. That’s because if an organization is looking at innovation as “an initiative”, and it introduces that initiative into a culture that doesn’t support innovation, then the culture will sooner or later crush the initiative—usually sooner. So you can have temporary “successes” as “initiatives” with a lot of flag waving and hoopla ceremonies and celebrations of victories, but they don’t last.
If the firm wants innovation, which they should, since innovation is an essential ingredient for survival in today’s marketplace, then they need to ask themselves why are they thinking of an innovation as “initiative”. They need to look more deeply at how the organization is being run and think through what would be needed to make innovation a central part of the organization’s culture.
The three phases of the 20th Century organization
In the 20th Century, organizations tended to go through three phases, as sketched by f Robert X. Cringely’s Accidental Empires, by analogy with a military operation.
- In the first phase, you had startups run by commandos. They were unpredictable and uncontrollable yet remarkably productive. They worked hard and fast. They succeeded with surprise and teamwork, establishing a beachhead before the enemy is even aware they exist. They pushed the state of the art, ideally providing creative solutions to customer needs and making existing products irrelevant. However most startups fail because they don’t meet customer needs. Sometimes the product was close to meeting customer needs but it wasn’t ideal and had bugs or even major failings that need more work. However commandos were useless of this type of work: they got bored.
- In the second phase, the infantry moved in, i.e. the obedient workers who followed orders and methodically grew a company from its IPO to market dominance. They exploited the opportunity created by the commandos. They took the prototype, tested it, refined it, made it manufacturable, wrote the manuals, marketed it and ideally produced a profit. This work was governed by rules and procedures—all the stuff that commandos hated. While the commandos make success possible, the infantry makes success happen.
- In the third phase, the firm was run by police: the bureaucrats and middle managers who defend the entrenched position of an established market leader. The third phase was an occupying force intent on holding territory. A middle manager’s job was to say no to ideas that don’t originate from on high, preferably near the CEO, or which don’t improve the bottom line for the quarter.
In the 20th Century, “management” was seen as the set of bureaucratic practices designed to run the second and third phases. Management comprised hierarchy, command-and-control, tightly planned work, competition through economies of scale and cost reduction, impersonal top-down communications, all focused on making money for the shareholders.
These management practices were seen as timeless truths of the universe, so obvious that there was scarcely any need to articulate them, let alone re-examine them. They are still pervasive in large organizations, business schools and management textbooks. John Sculley tried to run Apple [AAPL] as a third-wave organization. Most big old mastodons today like GE [GE] or Walmart [WMT] are still third-wave organizations.
This way of managing systematically kills innovative activities in organizations. The phenomenon can be observed in:
It isn’t just one or area. It’s every area. It isn’t just one organization. It is most of the big organizations.
How traditional management kills innovation