Coevolving Innovations

I had done some briefings for a client in western Canada, and the client executive asked if I would be interested in coaching one of their senior executives on some case studies. The client has retained an independent consultant specializing in executive development, and that consultant had suggested that the board work their way through some Harvard Business School cases, namely Emerging Business Opportunities at IBM (A), Emerging Business Opportunities at IBM (B) and Emerging Business Opportunities at IBM (C): Pervasive Computing. This key executive that I was to coach was to prepare himself to act as a resource to the board members. Our preparatory teleconference ended up with some discussions on organization culture, deeper than I would have anticipated.

The cases describe an IBM study in 2003 that recognized difficulties in starting up new businesses in six root causes:

1. Our management system rewards execution directed at short-term results and does not place enough value on strategic business building.
2. We are preoccupied with our current served markets and existing offerings.
3. Our business model emphasizes sustained profit and earnings per share improvement rather than actions to drive higher P/Es.
4. Our approach to gathering and using market insights is inadequate for embryonic markets.
5. We lack established disciplines for selecting, experimenting, funding and terminating new growth businesses.
6. Once selected, many IBM ventures fail in execution.¹

A book that captured many of the issues, The Alchemy of Growth², decribes the company’s business portfolio in three horizons, based on their stages of development:

• Horizon 1 (H1) businesses were mature and well established and accounted for the bulk of profit and cash flow.

A large portion of managers prefer to run their businesses “by the numbers”. Gary Metcalf wrote about measurement and mathematics, but they’re two different things. Actually, mathematics is a subset of measurement. This is clear in the writings of C. West Churchman.

I got into reading West Churchman‘s writing, since he was Russell Ackoff‘s dissertation supervisor. (Russ is 87 years old, now. Churchman passed away in 2004 at the age of 90, so it’s not like he was a generator older.) In my reading of Churchman’s writings, I came to understand that his dissertation was actually on metrology — the philosophy of measurement. Given that background, it shouldn’t be a surprise to find that progress is the guarantor of the Singerian inquiring system (in The Design of Inquiring Systems).

Making a distinction between measurement and mathematics is straightforward in Churchman’s framework. Progress (including the sweeping in of new content) is the “fifth way of knowing” (if I use the ordering presented by Mitroff & Linstone in The Unbounded Mind. Mathematics is primarily an analytic-deductive inquiring system, which is the “second way of knowing”.

The important distinction between the second way and fifth way of knowing is openness. Mathematics is a closed system, In a Singerian inquiring system, new ideas are constantly “swept in” to ensure freshness and preclude groupthink. These ideas are applied by Barabba and Zaltman in Hearing the Voice of the Customer, and by Barabba in Meeting of the Minds.… Read more (in a new tab)

Everyone seems to get the idea about disruptive innovation in product development.  Clayton Christensen‘s original research that led to The Innovator’s Dilemma was based on the challenge of 3.5″ disk drives and 5.25″ disk drives.  The ideas on disruptive innovation in services wasn’t so obvious to me, until I heard Christensen’s lecture on how business schools such as Harvard and Stanford seem to be overshooting the marketplace.

I was listening to an audio recording from IT Conversations, with Clayton Christensen speaking at the Open Source Business Conference 2004.  I’ve read Christensen’s writing some time ago, and was impressed by his style of presenting.  He speaks slowly and clearly, and his students must love him.  I’d heard most of the content before, but was impressed by an anecdote that is actually written up in The Innovator’s Solution (in Chapter 9):

[Clayton Christensen] … had written a paper that worried that the leading business schools’ traditional two-year MBA programs are being threatened by two disruptions. The most proximate wave, a low-end disruption, is executive evening-and-weekend MBA programs that enable working managers to earn MBA degrees in as little as a year. The most significant wave is a new-market disruption: on-the-job management training that ranges from corporate educational institutions such as Motorola University and GE’s Crotonville to training seminars in Holiday Inns.

Christensen asked for a student vote at the beginning of class:  After reading the paper, how many of you think that the leading MBA programs are being disrupted?