Implication for Management

This debate has two sets of implications for managers. The first concerns the practice of corporate strategy, which should be seen as a form of corporate learning for analysis and experience on how to cope more effectively with complexity and change. The implications for the process of strategy formation are the following:

1) Given the uncertainty explore the implications of a range of possible future trends.
2) Ensure broad participation and informal channels of communication.
3) Encourage the use of multiple sources of information debate and skepticism
4) Expect to change strategies in the light of new (and often unexpected) evidence.

The second implication is that successful management practice is never fully reproducible. In a complex world, neither the most scrupulous practicing manager nor the most rigorous management scholar can be sure of identifying — let alone evaluating – all the necessary ingredients in real examples of successful management practice. In addition the conditions of any (inevitably imperfect) reproduction of successful management practice will differ from the original, whether in terms of firm, country, sector, physical conditions, state of technical knowledge or organizational skills and cultural norms.

Thus, in conditions of complexity and change — in other words the conditions for managing innovation – there are no easily applicable recipes for successful management practice. This is one of the reasons why there are continuous swings in management fashion. Useful learning from experience and analysis of others necessarily requires the following:

A critical reading of the evidence underlying any claims to have identified the factors associated with management success. Compare, for example the explanations for the success of Honda in penetrating the US Motorcycle market in the 1960s give (1) by the Boston Consulting Group: exploitation of cost reductions through manufacturing investment and production learning in deliberately targeted and specific market segments and (2) by Richard Pascale: flexibility in product market strategy in response to unplanned market signals, high quality product design, manufacturing investment in response to market success. The debate has recently been revived although not resolved in the California Management Review.

A careful comparison of the context of successful management practice, with the context of the firm industry technology and country in which the practice might be reused. For example one robust conclusion from management research and experience is that major ingredients in the successful implementation of innovation are effective linkages amongst functions within the firm and with outside sources of relevant scientific and marketing knowledge. Although very useful to management this knowledge has its limits. As we shall know later conclusions from a drug firm that the key linkages are between university research and product development are profoundly misleading for an automobile firm, where the key linkages are amongst product development, manufacturing and the supply chain. And even within each of these industries, important linkages may change over time. In the drug industry the key academic disciplines are shifting and chemistry to include more biology. And in automobiles computing and associated skills have become important for the development of virtual prototypes and for linkages between product development, manufacturing and the supply chain.

The management tools and techniques described in this article represent only very imperfectly the complexities and changes of the real world. As such, they can be no more than aids to systematic thinking and to collective learning based on analysis and experience. Especially in conditions of complexity and change tacit, knowledge of individuals and groups (i.e. know how that is based on experience and that cannot be easily codified and reproduced) is of central importance, whether in the design of automobiles and drugs, or in the strategic management of innovation.

Source: Managing Innovation