Perturbation needed for innovations

I just stumbled upon an interesting research paper of the Harvard Business School (via Collaborative Thinking of Mike Gotta) that discusses the “struggle of balancing the conflicting demands of efficiency and innovation”. While it’s clear that efficiency (in the means of constant or better business results at less or at least constant expenses) and innovations (in the means of new or better products or processes for new or faster exploitation of the markets) are the two main strategies within highly competitive markets, it is mainly unclear how to enhance both in the same matter as it seems that they are two ends of a bi-polar scale.

The HBS paper concludes this with the following:

Organizations can become more efficient in the short run by replacing costly, unpredictable problem solving activity with consistent, streamlined routines. However, this efficiency often comes at the cost of long-run adaptability. The more organizational activity is dominated by stable routines, the less the organization learns, and the more rigid and inflexible it becomes.

For the solution in the middle the authors discuss the role of perturbations as novel stimuli that disrupt organizational routines and drive innovation. In regards to this the authors submit the following:

“… highly disciplined organizations can sustain exploration by deliberately perturbing themselves and by creating knowledge for exploratory interpretation that translates perturbations into problemsolving, learning, and adaptation”

As lever to this the organisation needs to reach “ambidexterity – the capability to sustain both exploitation and exploration simultaneously” by inforcing a “lively intellectual debate”. As research object the paper discusses the production system of Toyota and its application of the “principle known as autonomation or jidoka”.

Processes are designed to stop production when faults occur, thereby calling attention to accidental perturbations.

Means every occuring problem within the production process leads towards a complete process stop of the production line (by ringing the “andon cord”). That drives the full awareness of all workers and managers towards this problem and leads towards a more immediate solving-process.

The authors conclude:

Perturbations disrupt exploitation and create opportunities for exploration. Thus, they impose a short-term cost in the form of reduced exploitation performance in order to obtain a longer-term benefit in the form of new knowledge. If such new knowledge enables more effective exploitation, then exploitation performance in the presence of perturbations may quickly rise above the level that would have been obtained without perturbations, even after taking into account the cost of perturbations.

The question is how do organization induce perturbation – and therefore the exploration of new ideas and innovations:

Organizational exploration can be sustained in two ways: unconsciously, through natural processes of variation, selection, and retention (C.f. Campbell 1960); or consciously, by intentionally influencing the flow of perturbations that the organization experiences or the exploration undertaken in response to perturbations.

In regards to Toyota the authors come up with the following statement:

A former executive VP at Toyota notes, “Toyota’s top managers berate people who don’t try to come up with new ideas or who don’t take up new challenges, but not people who try something and fail. The role of senior managers is … to help subordinates with new ideas or challenges … That’s what makes trial and error possible (Hino 2006: 91-92).”

Therefore a culture or organizational scheme of accepting trial and failure supports perturbation and exploration of innovations.

[At Toyoata] routines for inducing perturbations include shortening cycle times, shrinking buffers between process steps, and training programs that teach front-line workers to formulate and conduct experimental changes.

But perturbations needs to be induced carefully:

As Nonaka observes, “Without reflection, the introduction of fluctuation [perturbations] tends to produce ‘destructive’ chaos” (Nonaka 1994: 28). Organizations that possess such knowledge respond to minor perturbations with vigorous exploration, while organizations without such knowledgestubbornly revert to established processes even in the face of severe and highly destructive perturbations.

As key levers for exploiting the relationship between perturbations and exploration the paper concludes two five aspects:

  • Agency: including commitments of the members of the organization, heuristics asat Toyota that valorize the pursuit of seemingly-impossible goals or the obsessive elimination of waste, even in miniscule amounts and routines that determines the degree to which perturbations drive productive exploration.
  • Saturation Frequency of Processes: defines the maximum rate at which organizational units can learn from perturbations
  • Dispersion of perturbations:Perturbations contribute most to long-term organizational adaptability when they are widely dispersed across the organization’s process hierarchy, instead of being concentrated in particular levels or functions
  • Upward and Downward Filtering: determines how perturbations propagate through the organization’s process space
  • Signal Content of Perturbations

Concluding implications made from the authors are the following:

  • To sustain adaptability in the long term, perturbations must occur throughout the organization.
  • In highly disciplined organizations, adaptability depends on the active participation of organization members in inducing and interpreting perturbations.
  • Management must trust employees to perturb processes, teach them to detect and interpret perturbations, and motivate them to do so.
  • In the long term, business success depends as much on the commitment and knowledge of frontline employees as on strategic decision-making by senior management.

While this research gives a very organizational approach to the topic of how to change organization while still being efficient, I see also some implication in regards to the Enterprise 2.0 discussions. I think the paper gives a very sharp insight towards the underlying mechanisms that can be realized by introducing social software within organization. Because the instant and collaborative approach of social software tools help to build up a constant and to all members of the organization transparent level of perturbation – wikis,  weblogs and micro blogging that are distributed and aggregated by RSS and social presence solutions as internal lifestreams supporting the distribution of organisational knowledge and keep up a steady stream of disturbance in the streamlined organization that may lead to problem-solving solutions across the organization.