Wednesday, April 02, 2008

The People Vs Company innovation ...

Activity (a process, sub-process or the result thereof) is an important concept, because the firms that we work for are organisations formed from such activities and the people, or actors, who perform them. Whilst it is easy to be seduced by the idea that an organisation is something concrete or real, like a building, in reality an organisation is defined by and only exists within the relationships between these actors and their activities. Take the actors and activities away and then, unlike a building, an organisation vanishes.

People come and go, relationships are forged and broken and activities change. Within any industrial ecosystem, new activities or innovations are a constantly emerging consequence of competitive life. Any innovation which is successful will be copied and the innovation will spread. Over time, given the right conditions, a once novel innovation, like the telephone, will become common and commodity-like. Of course, it doesn't have to be a product, it could be a process such as computerised payroll. Activities are on a constant conveyor belt from innovation to commodity.

The constant flux of activity and actors means that organisations are in a permanent state of change. Within this maelstrom, a company needs to constantly adapt as activities will continue to evolve in the outside world. This is the business equivalent of the Red Queen Effect from evolutionary theory, in which organisms must continuously evolve just to remain stationary relative to their competitors. However, standing still is not enough as innovation is a necessity for long term survival, as shown by Schumpeter's work on "creative destruction". To make matters worse, at the heart of innovation is a paradox between the order we need to exploit our current competencies and the disorder we need to create new ones.

Could it be any more challenging for a company? Why, yes;

"Innovation is a complex process [not static] produced by the interaction between structural influences and the actions of individuals."

Perspectives on Innovation in Organisations, Slappendel, 1996.

Hence organisational innovation is an interaction between the activities undertaken and the skill, knowledge and interactions of the actors who are part of that structure. In other words, organisations don't innovate, people do.

So in summary:

  • change is a constant necessity in order for a organisation to remain competitive today.
  • innovation is a constant necessity in order for a organisation to remain competitive tomorrow.
  • an organisation only exists in the interaction between people and activities.
  • organisations don't innovate, people do.

I mention this as someone said to me today, "our people are an important asset" and we're an "innovative company". I'd say that the former statement is a short-term approach to company survival and the latter statement is just plain wrong.

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