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An inbuilt mechanism for innovation: organic & ecological

Posted on: 06 March '09

Over the last few months I have presented, to audiences in India, Singapore, US, and UK the following 2 columns, and asked them a simple question: Which set of words do you like as a human being? The ones on the left or right? What about your preference?

Prescriptive Process

Self Organized

Brittle

Configurable

Mandated

Voluntary

Closed, Static

Open, Dynamic

Inertia, Detached

Energy, Passion

Compartmentalized

Social

Isolated

Connected

Well, by and large — everyone prefers the right hand side. When asked why – people respond by saying these words are more positive because they provide a feeling of freedom while the ones on the left feel claustrophobic. Now isn’t that a surprise? Well, I’m not trying to be totally facetious here, but why is it that we rollout organizational interventions that feel more like the left side. Often, we roll out company level strategies, initiatives, policies, and systems that are more prescriptive, brittle, mandated, compartmentalized, etc. We design our systems as if we were still in the industrial age, where machines are the central unit and important means of production, and humans are part of the peripheral support structure. So too, then, becomes our approach to Knowledge creation and Innovation when using such mental models. The inherent drive is then towards creating a factory-like approach driving towards efficiencies and economies of scale.

Now if we believe that knowledge creation and innovation is largely a human and social act, and very importantly, if we believe that such acts are voluntary and self-determined, then strategically we have to pay a lot of attention to the words on the right hand side. The strategy then becomes one of creating an overall environment and ecosystem, whereby constituents of the ecosystem are effected by it and in turn effect the ecosystem. Then innovation becomes a way of being because of an alignment in value system, purpose and meaning of existence in the ecosystem, and overall interdependence of parts of the ecosystem that form a mutually supportive architecture. This creates an indirect way of bringing in human behavior and action, but is much more sustainable because it is intrinsic to people that exist in it and hence to the organization.

Further, as long as evolution of the ecosystem is inherent in its architecture, it adapts more quickly to the pace of change, whether internal or external. In short, the knowledge enterprise is more like an organism ready to sense and respond. The global knowledge economy is increasingly bringing about an accelerated pace of change and a strategic need for rapid and intelligent decision making. In such a scenario, you cannot have a small think-tank at the top keeping track of everything and rolling out initiatives constantly. The need to adapt and evolve in a self-organized manner becomes essential and immediate. In such a case, the knowledge ecosystem should be considered as a primary model of organization design, augmented by a factory model in places where efficiencies and economies of scale can be achieved. At a canonical level, the constituent would be the human, all inclusive with its values, its creative and rational mind, its social nature, and ability to interact and effect its environment.

If we wanted an inbuilt sustainable mechanism for continuous innovation, we need to think of organization design in the form of an organic ecosystem. I look forward to some reactions to this, and will respond, write further and expand on this over the next few weeks and months.

Regards,

Raj

  • Geetha Manichandar

    Dear Mr. Datta,

    Have been reading your very interesting posts in your blog. Thank you very much!

    Your most recent post on 6th March:

    “The global knowledge economy is increasingly bringing about an accelerated pace of change and a strategic need for rapid and intelligent decision making. In such a scenario, you cannot have a small think-tank at the top keeping track of everything and rolling out initiatives constantly.”

    Would it help if all organizations are willing to adopt GE’s Work-Out method as part of their DNA please? Then, all organizations could become “boundaryless organizations?”

    Would love to know more about this from you please.

    Regards,

    Geetha

  • Dear Geetha,

    I think you have the essence — to have people more empowered to self-organize. This can be through multiple ways. GE used Workouts very effectively to attack bureaucracy and enable change. But its not the only way to make it happen. I have long been an admirer of GE for creating large scale change through practices like this. But it is important to not just blindly force fit another organization’s practice to yours — you have to come up with what is contextually right for you. Maybe that’s Workout, maybe its a variation of it, maybe its something else altogether. All too often people have a silver bullet mentality, and just try to copy some practice used by another company without giving it any contextual thought. But success is not guaranteed just because it worked in another company – you have to find your own path (look up the academic concept of path creation and path dependence for some theoretical insights.)

    To create a culture of self-organization is the most important thing here to make sure you are more capable to sense and respond quickly to both internal and external stimuli.

  • Geetha Manichandar

    Dear Mr. Datta,

    Thank you very much!

    Yes, I did want to say that may be organizations could adopt something akin to GE’s Work-Out method. We can read about a whole lot of best practices, but ultimately we definitely need to customize them to suit our own needs when it comes to implementing them. After all, there is no one-size-fits-all program that works for all people and all organizations.

    And thank you for: “you have to find your own path (look up the academic concept of path creation and path dependence for some theoretical insights.)”

    Regards,

    Geetha

  • Raghu Garud

    GE’s workout and six sigma methodology, if not applied appropriately, can dampen, not enhance innovation (of course, this all depends upon what we mean by innovation). 3M employees reported such a chill when six sigma was brought into their culture. If someone wants a copy of a paper that we have been writing (on “kairos” and innovation), please email me. It is but a first draft and written in an academic style.

  • Here’s also a short article from BusinessWeek that illustrates Raghu’s point:

    http://www.businessweek.com/magazine/content/07_24/b4038406.htm

    Another way to think of this is that many significant innovations are inherently inefficient so any efficiency-chasing process or mindset (with tunnel vision) could do away with innovation, using what may seem to be very logical reasons. There has to be space and slack given to people to muck around and experiment, and belief in emergence. The trick is to figure out the right balancing act in line with a company’s overall strategy and positioning. This is what will determine the lifeline of a knowledege enterprise.

  • Raghu Garud

    It was Joseph Schumpeter who pointed out that any system designed to be efficient at a point in time would become inefficient over a point in time. A different way of thinking about the relationship between innovation and knowledge is that knowledge has “options value” that cannot fully be pre-determined by discounting the future (using discounted cash flow techniques such as NPV, for instance). The full options value of knowledge for innovation can only be realized if it is possible to maintain, re-activate and re-contextualize pre-existing knowledge when the time is right (kairos) and not at pre-determined points in time (chronos). The creation of knowledge in real time to be used over time flies against many traditional organizational measurement systems that require actors to justify the usefulness of their ideas in real time. The latter approach results in an under-estimation of the options value of knowledge. If one recognizes the options value of knowledge, then, innovation is as much looking backwards (to what an organization already has) as it is looking forward. Indeed, many of these knowledge options become “solutions look for problems” (3M’s Post-It Notes, Pfizer’s Viagra) rather than the other way around.

  • Geetha Manichandar

    Dear Mr. Datta,

    Thank you for:
    http://www.businessweek.com/magazine/content/07_24/b4038406.htm

    May I please share here an excerpt from a very interesting book which I am currently reading?

    THE DNA OF LEADERSHIP – LEVERAGE YOUR INSTINCTS TO
    COMMUNICATE
    DIFFERENTIATE
    INNOVATE

    ~ JUDITH E. GLASER
    “The Seven Vital Leadership Genes: C-H-A-N-G-E-S

    Like our cellular DNA, these leadership practices always bond together in pairs. The seven “pair bonds” determine the culture of your organization, how it responds to the constant change associated with personnel, products, vendors, partners, and customers. The following table illustrates these pair bonds.

    Leadership Genes and Corresponding Cultures

    Leadership Gene Pair Bond Progressive Culture
    C Gene: Community Including vs. Excluding. Instead of dictatorship, open communication where people feel included, involved in the strategy, engaged in the business, and accountable for results.
    H Gene: Humanity Appreciating vs. Blaming. Instead of a climate of judgment and retribution, create an atmosphere that values uniqueness and diversity, and respects the talents of each individual.
    A Gene: Aspiration Striving vs. Fearing. Instead of using overt and covert threats to meet targets, marshal the wonder of individual imagination
    N Gene: Navigation Sharing vs. Withholding. Instead of hiding the “map,” ask others within teams and across divisions for guidance in making headway toward common goals
    G Gene: Generativity Wondering vs. Knowing. Instead of micromanaging and enforcing compliance with what has always been, nurture innovation that leads to inspired breakthroughs.
    E Gene: Expressing Developing vs. Dictating. Instead of stifling voices in favor of one voice, encourage all to speak up, take risks, and develop themselves to develop the organization.
    S Gene: Spirit Celebrating vs. Conforming. Instead of cold calculations and expectations, create an atmosphere of ongoing homage, accomplishment, and evolution so that everyone pulls together to move toward the future.

    Each half of the practice pairs will either lead to growth – capitalizing on change – or stagnation – resistance to change. When leaders are mindful of the power of these genes, and the positive effect the progressive half of the pair bond has, they will sustain and develop their organizations in the face of business challenges. Within each pair is one gene that, when “grafted” into meetings, conversations, new product development, and strategic business transformations such as mergers and acquisitions, will enable you to successfully manage change – instead of change managing you.

    The progressive half of each gene is all about leading from WE instead of I.”

    There’s so much that we are learning from your blog. Thank you once again, Mr.Datta! And many thanks to Mr. Raghu Garud also. Would love to know more about “kairos”, “chronos” and “innovation” also.

    Warm regards,

    Geetha

  • Geetha,

    this is wonderful – thank you for sharing this valuable insight. I will have to lookup this work now. This is exactly my motivation for blogging – — learning from people like you. I hope we’ll get to meet someday. Thanks & Cheers.

  • Geetha Manichandar

    Dear Mr. Datta,

    Thank you!

    ‘The DNA of Leadership’ is available at Viva Books Private Limited and their Bangalore address is:

    Flat No. 007, Ground Floor, Sovereign Park Apts.,
    56-58, K R Road, Basavanagudi,
    Bangalore 560 004
    Tel: 26607409

    Contact Person : Mr. T V Madhu

    Thanks and regards,

    Geetha

  • Hello
    My second attempt at posting a reply, so will keep this short.
    I agree fully with what you and Geetha have said. Yes, K&S cannot be compartmentalised and needs to be accessible to all business units in an organisation. My biggest fear about the growth of K&S is that these teams are isolated from external groups – they cater to internal needs. They do need external feedback, that alone can bring in fresh ideas. Perhaps via white papers, participation in seminars etc.
    Further K&S becomes a proprietory issue and there is an unwillingness to share knowlege within an industry.
    Would love to have your thoughts on this.
    Best regards,
    Lubna

  • Raj Datta

    Hi Lubna,

    thanks for your comment – sorry for the delay in reply — happened to be busy with fiscal year ending and planning activities.

    You have asked very pertinent questions. I thought I would respond by writing a couple of blog entries instead of just a quick comment. Please stay tuned – will do that in the next few days.

    Regards,
    Raj

  • Geetha Manichandar

    Dear Mr. Datta,

    May I please share here an excerpt from another very interesting book which I am currently reading?

    Please ignore this comment if you have already read this book!

    8 windows 2 creative thinking by Dr. Larry R. Williams

    Become a “Knowledge Sponge”

    A strong knowledge base is a requirement to use your creative brainpower to the maximum extent. Today we must absorb more knowledge than is almost
    humanly possible to keep up with advances in cyber-technology and rapid world change.

    The more knowledge we possess, the greater the opportunity to connect and create new ides or discovery. The Networking Age demands creating and
    connecting knowledge to produce new ideas and drive innovation.

    It is to our creative advantage to fill our brain-centred database with as much information as possible. Keep in mind that as you learn and increase your knowledge you learn (if you are honest with yourself) that you don’t know very much. Absorbing or becoming a “knowledge sponge” is a good habit to cultivate.

    What is the current buzzword you read about in the papers, in magazines and books? It’s the K-economy. Why is this hyphenated word so important in today’s world. The production economy of the past century has become replaced with the knowledge economy. I have termed this century the K-Thinking Era.

    The K-economy is knowledge an idea-based where the key to job creation and higher living standards are creative ideas, lifelong learning, and information technology embedded in services and manufactured products. The rules of the game in the K-economy are knowledge, speed, flexibility, networking, and innovation.

    Let’s take a look at the fundamental differences between traditional thinking and K-Thinking

    Comparison of New K-Thinking and Traditional Thinking
    |——————————–+———————+——————|
    |Thinking Paradigm |Old Thinking |K-Thinking |
    |——————————–+———————+——————|
    |Competition |National Focus |Globally Driven |
    |——————————–+———————+——————|
    |Growth Drivers |Labor/Capital |Knowledge/Creativi|
    | | |ty |
    |——————————–+———————+——————|
    |Worker Skills |Job Specific |Broad/Cross |
    | | |Training |
    |——————————–+———————+——————|
    |Education |Degree/Job Skill |Lifelong Learning |
    |——————————–+———————+——————|
    |Organization Structure |Hierarchical |Networked & |
    | | |Horizontal |
    |——————————–+———————+——————|
    |Markets |Stable |Dynamic & Changing|
    |——————————–+———————+——————|
    |Production |Mass Production |Fluid & Flexible |
    |——————————–+———————+——————|
    |Research |Lower Priority |Constant & High |
    | | |Profile |
    |——————————–+———————+——————|
    |Technology Drivers |Mechanized |Digitalized |
    |——————————–+———————+——————|
    |Competitive Advantage |Lower Cost/Efficiency|Innovation, High |
    | | |Quality & Speed |
    |——————————–+———————+——————|

    Knowledge is and will be driving the world and its economy in the twenty-first century and probably into the twenty-second century. We can sit and watch the world pass us by or we can use our brain and creative thinking to guide our progress positively into the networking, information, and communication age. No one can deny that knowledge is expanding at alarming rates. New and creative thinking will be the prime drivers now and in the years to come.

    The future holds many opportunities for innovation and new ideas in the information and networking age. A winning formula is combining information
    technology with creative thinking. This combination will yield added value and greater potential for breakthrough ideas.

    Information technology alone is not sufficient to produce innovation and creative solutions to the challenging situations facing individuals,
    companies, and even nations in the turbulent change of the twenty-first century.

    Information technology coupled with dynamic creative thinking can produce more innovation and breakthrough ideas, greater life success, competitive global skills, increased personal growth opportunities, and improved performance and results.

    It is estimated that the world knowledge base almost doubles every seventy days. Receiving the knowledge is one matter, but more importantly, for
    creative thinking, is how we gather and use knowledge to produce new ideas.

    Thanks and regards,

    Geetha

  • Dear Mr. Datta,
    Thanks a lot for your post. I completely agree with you. I wanted to highlight and bring forth a a couple of other, probably related, aspects to this. We need a radical transformation in our management education systems. Except , perhaps, for some exceptions, management education is still oriented towards industrial age economies, with some lip-service being paid to the services and knowledge economy, by throwing in a few courses. So, you have all these managers, who are trying to manage knowledge workers and innovation and services oriented companies; with industrial age management tools. I will stick my neck out and make the second point : I think central bankers , economists and policy makers also have been forecasting, predicting and managing with industrial age tools and metrics.

    Thanks again for a very stimulating post.
    Regards
    Ashish

  • Ankit Bansal

    As a knowledge management professional, I have realized that the whole debate out industrial age paradigm versus knowledge age paradigm pretty well sums up both the need as well as the difficulty in doing KM.

    In past, when ICT was not so developed, any SME scaling up its operations and headcount, chose to create ‘divisions’ and ‘departments’ with further divisions of roles and responsibilities based not on an individual’s capabilities but by dividing work into pieces of heterogenous processes. This factory style division of work that worked well for machines in industrial age, worked equally well in services age. The reason is that the ICT required to support ‘SME’ style work division at a level of an MNC was not there.

    This division of work has since stuck and is dominant even in top of the line knowledge enterprises like consulting firms and Big 4 audit firms, whose back end business research divisions are run like a factory. The work has been divided into so many heterogeneous pieces, that most employees at the bottom are no position to see the big picture and hence contribute towards innovation for the firm.

    It is clear, that in today’s knowledge age work should be divided into jobs that are not necessarily function specific or role specific, but are more fluid and overlapping (like the ones propagated by Nonaka in Knowledge Creating Company). However, for that to happen sweeping change is required across each business ecosystem.

    I have had the chance to interact with executives of companies that are in serious need to of this new paradigm and yet fail to adopt it. The reason is not that they don’t know what KM is and why it is needed (as propounded by most KM gurus) or that they lack the courage or vision to put things into place. It is just that the business world as a whole is so tightly coupled that any revolutionary change in organization of work by a company will threaten its short term survival in marketplace.

    This is because, a company’s suppliers, customers & competitors function under the same factory style division of work. Even internally, a company needs to continuously hire employees from outside which have functioned under the old paradigm and will have a hard time adjusting to a new way. So, even when many firms realize that the new open culture should be embraced, they are quick to roll out compartmentalized HR policies. Whichever company in a business ecosystem attempts to adopt a radical redesign of organizational structure, faces the risk loosing financial viability in short run. So, what we lack is ‘how to do KM’ in the least harmful way, such that short term survival is not put at risk for long term innovative capacity.

    So, the problem with KM efforts based on redesign of organizational structure are a classical chicken and egg situation, the one faced by technology industry where hardware manufactures don’t want to take the lead and software companies don’t want to start working on Next Gen software unless the hardware to support it is already out.

    I would like to draw a parallel with healthcare industry. It is common knowledge that regular exercise and healthy food habits prolong life and reduce incidence of diseases. So, bombarding people with this obvious knowledge, is not going to help much. They rather need ‘smart interventions’ that would allow them to squeeze healthy habits in a lifestyle dictated by their employers (100 hour work weeks) and society (McDonald fast food is far more easily available than Subway).

    Talks related to top level strategy and ‘KM paradigm’ will amount to nothing but disappointment in the lack of micro level advice on how to bring out a ‘knowledge ecosystem’ kind of organizational design. I believe the KM fraternity needs to focus on micro level strategies, policies and techniques to decouple the industrial age economy slowly and consistently.

  • Geetha

    Dear Raj,

    2 Asian MAKE Awards and 4 Indian MAKE Awards – all in a row! Heartiest congratulations to you and all the MindTree Minds!

    Thanks and regards,

    Geetha

  • I would like to propose another facet to Raj’s conceptualization of the Knowledge ecosystem – i.e. an organization’s external stakeholders. In a lot of ways, work inside an organization is directly or indirectly influenced by the prescriptive metrics that external stakeholders apply on the organization. For instance, the stock market might impose a short or long-term shareholder value creation metrics, customers might use tangible product/service performance specs, creditors and investors could view the organization in narrow financial terms and so on. The problem therefore is that even if the organization develops an internal ecosystem that is based on the right side yardsticks, the same might not fit with the external metrics that could very well be on the left side. This would necessitate an interactive approach by the organization led by its key boundary spanners, that creates a translational interface through which the apparent dualism between the left and right side factors can be bridged.

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