Articles

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?

Companies with the best connections to their customers focus on the people and businesses that buy from them.

Organizations, like people, have essential natures & #8212; defined by their formative experiences, their beliefs, their knowledge bases and their core competences & #8212; which may remain tacit and unquestioned until some event, such as a new strategy or a radical shift in the environment, makes an old identity obsolete. A disruption in a strongly anchored identity can be fatal, unless managers can align their company’s identity better with current business conditions. Hamid Bouchikhi, of France’s ESSEC Business School and John R. Kimberly of the University of Pennsylvania’s Wharton School note that while the “identity trap” threatens every organization, escaping a restrictive identity is possible. They identify two ways enterprises do this successfully & #8212; through evolution (a gradual change in their strategic and organizational layers) and revolution (a change that bursts up through companies’ outer layers). Through field-based and clinical research in a variety of industries and companies, including Moulinex, Polaroid, Groupe Danone and Aventis, the authors have developed an “identity audit” to help managers learn to recognize the conflicts and initiate identity change to make their companies more adaptive. By regularly assessing how well their identity fits with current business conditions, companies can rethink their identity before it becomes obsolete.

Why do motivated managers often fail to follow through? Because motivation is not enough. Superficial and dependent on incentives, motivation gives up in the face of serious obstacles. For purposeful action taking at work, managers must engage a more powerful attribute, their willpower. The best already do, crossing a personal Rubicon to deep commitment. How that happens is the subject of studies by professors from the London Business School and the University of St. Gallen. The researchers find that managers commit for highly individual reasons but that five strategies can help enterprises create the right environment. The companies studied included large ones such as ConocoPhillips and Lufthansa and small ones such as Micro Mobility Systems of Switzerland. The managers who achieved their apparently impossible goals had in common an intense inner struggle to commit. Once their willpower was engaged, they were able to deal with setbacks and persevere. The best way to build persistent organizational commitment is bottom-up, on the foundation of personal ownership of and commitment to specific initiatives and goals. In the world of mobile employees, frontline entrepreneurship and constant, unavoidable organizational restructuring, corporate leaders must develop that kind of commitment if they want to see action and follow-through in their companies.