Articles

What kinds of companies and products can benefit most from the use of new information technologies (NIT), such as the Internet, broadband networks and mobile communications? Books and airline tickets sell readily over the Web whereas automobiles do not. Furthermore, what types of business transformations does NIT enable? A company might, for example, use NIT to eliminate middlemen, such as distributors, that separate it from its customers (called classic disintermediation). Or, instead of getting rid of middlemen, it might choose to embrace them (remediation). Or it might build strategic alliances and partnerships with new and existing players in a tangle of complex relationships (network-based mediation). All three mediation strategies depend on various factors, such as a product's customizability and information content. By fully understanding those drivers of NIT, companies can begin to predict the potential transformations of their industries, especially in terms of how products are marketed and sold. To that end, the authors have developed a systematic framework that identifies which drivers are important for each of the three mediation approaches. Using this tool, companies can determine both the optimum ways to transform their businesses and the NIT investments required to accomplish such changes.

Disruptive innovation has usually been considered by established businesses as an attack that must be met through defensive measures. And indeed, disruptive technologies and business models have toppled many established industry leaders and will likely continue to do so. The real story behind disruptive innovation, however, is not one of destruction, but of its opposite: In every industry changed by disruption, the net effect has been total market growth. Moreover, disruption can be a powerful avenue for growth through new market discovery for incumbents as well as for upstarts. There are several keys to the successful navigation of this growth path. The first is recognizing that disruption is not an immediate phenomenon -- it can take years and even decades before the upstart business encroaches heavily on the established market. The second is finding the new customers who are eager to be served by the disruption. The third key is building an organization that is capable of serving the new customers. The author explains each aspect in detail, drawing on extensive research involving online newspapers, minicomputers, cardiology and semiconductors.

A misapplied bottom-up approach can often lead to unintended consequences.

A trend toward fewer managerial layers may be a response to technological and environmental change.

As competition intensifies and profit margins shrink, managers are under overwhelming pressure to create value. Traditional prescriptions such as cost reduction, reengineering and outsourcing, while critically important, cannot solve the problem. The need to innovate is greater than ever, but the focus of innovation must change, say the authors. Managers are discovering that neither value nor innovation can any longer be successfully and sustainably generated through a company-centric, product-and-service-focused prism. By synthesizing societal trends and early experimentation in companies such as General Motors, LEGO and Medtronic, the authors paint a picture of the "next practices" of innovation in which the locus of value creation will inevitably shift from products and services to "experience environments." The intent of experience innovation is not to improve a product or service, per se, but to enable the co-creation of an environment in which personalized, evolvable experiences are the goal, and products and services are a means to that end. Profitable company growth will then result from individual consumers co-creating their own unique value, supported by a network of companies and consumer communities. From that perspective, say the authors, managers must learn to view existing and emerging technologies not as enhancers of products, features and functions, but as facilitators of experiences. They offer examples of how technological capabilities such as miniaturization, networked communication and adaptive learning are fostering experience innovation at companies such as Sony, Apple, Microsoft and TiVo, illustrating their contention that technology will be the key facilitator of the nascent trend toward experience innovation.

Dispelling the notion that today's business milieu is one of unremitting change, Huy and Mintzberg urge managers to realize that we perceive our environment to be in constant flux because we tend to notice only those things that do change. While conceding that some important changes have taken place in recent decades, they point out that stability and continuity actually form the basis of our experience, providing the contextual meaning of change. And because many things remain stable, change has to be managed with a profound appreciation of stability. Accordingly, there are times when change is sensibly resisted; for example, when an organization should simply continue to pursue a perfectly good strategy. Having acquired in-depth familiarity with many organizational-change situations (some gleaned from their experiences as consultants or when working in managerial capacities, others as part of research projects to track the strategies actually used by companies over many decades), the authors present a framework in which pragmatic, coherent approaches to thinking about change can be explored. Although a lot of attention is focused on the type of change that is imposed dramatically from the top, Huy and Mintzberg believe that this view should be tempered by the realization that effective organizational change often emerges inadvertently (organic change) or develops in a more orderly fashion (systematic change). Because dramatic change alone can be just drama, systematic change by itself can be deadening, and organic change without the other two can be chaotic, the authors argue that they must be combined or, more often, sequenced and paced over time, creating a rhythm of change. When functioning in a kind of dynamic symbiosis, dramatic change can instead provide impetus, systematic change can instill order, and organic change can generate enthusiasm. The authors illustrate their framework with older and newer examples, saying that this highlights another crucial point: The problem with change is the present. Today's obsession with change tends to blind managers to the fact that the basic processes of change and continuity do not change.

Stakeholder theory may be more conducive than shareholder theory to curbing company impropriety.

Companies are increasingly looking beyond their boundaries for help with innovation -- working with customers, research companies, business partners and universities, and even competitors. They are also expanding the purposes for which they consider external sources appropriate. Businesses today are using external sources for all phases of innovation, from discovery and development to commercialization and even product maintenance. While these changes sound good and are benefiting a great many companies, they add a new layer of complexity to the manager's tasks. And unfortunately, despite the growing acceptance of external innovation, the authors have found that many companies lack a sourcing strategy to guide them in managing it. They often take an ad hoc approach that produces uneven results, the very problem they are trying to avoid. Instead of dealing with external sources one by one and one at a time, companies should systematically examine and rationalize the increasingly important activity of innovation sourcing. The authors explain how companies can organize their use of external sources holistically, using innovation channels just as they manage specific distribution channels to reach end customers.

Is energy truly related to performance or learning in organizations? And how is it created?