And when centralised organisations finally adopt new approaches, they tend to deploy them on too large a scale. State agencies are slow to acknowledge failure and prone to cover it up or even to proclaim that failure is success. The same is true of large corporate organisations, which is why disruptive innovation most often comes from outside.
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This brings us to a central truth about organizations: they are inherently messy. There are no panaceas, no structures that solve all problems. Any attempts to completely eliminate the mess are doomed to failure. Yes, there are costly inefficiencies in decentralization, but the fire of personal ownershipâof being our own little businessâelevates human motivation and stimulates innovation in powerful, albeit somewhat chaotic, ways.
The irony, of course, is that large organizations are open. Employees interact with thousands or millions of customers each day. Executives and managers talk constantly with suppliers, consultants, regulators, and other stakeholders. Why, then, hasnât open innovation made a bigger difference? Why isnât the typical corporation as resilient and innovative as a city or a university? Because, to put it bluntly, theyâre often run by people whose minds are hermetically sealed against unconventional ideas.
The dilemma is that when the challenges facing an organization are not about repeatable execution, but about innovation or responding to complexity, the idea of breaking things down into well-understood parts is not only unhelpful, it can also be a dangerous trap.
I suspect that many successful companies that have fallen on hard times in the pastâincluding IBM, Sears, General Motors, Kodak, Xerox, and many othersâsaw perhaps quite clearly the changes in their environment. They were probably able to conceptualize and articulate the need for change and perhaps even develop strategies for it. What I think hurt the most was their inability to change highly structured, sophisticated cultures that had been born in a different world.
In many large organizations, the challenge is often diagnosed as internal. That is, the organizationâs competitive problems may be much lighter than the obstacles imposed by its own outdated routines, bureaucracy, pools of entrenched interests, lack of cooperation across units, and plain-old bad management. Thus, the guiding policy lies in the realm of reorganization and renewal. And the set of coherent actions are changes in people, power, and procedures. In other cases the challenge may be building or deepening competitive advantage by pushing the frontiers of organizational capability.