It is common for leaders of large companies and other organizations to feel frustrated by the way innovation happens—or doesn’t—in their organizations. They wonder why development of a new offering takes longer than planned, why ideas that start with a bold vision become normalized, why they always seem to be a step behind the market-leading offerings. They are faced with the ironic situation of having an unprecedented ability to make almost anything but being uncertain about what to make.
These frustrations are not isolated problems that can be solved in an ad hoc manner. They are symptoms of organizational friction, caused by using a previous era’s management norms to solve problems that belong to a new era. The current manifestation of this friction is the use of industrial-age frameworks and methods—developed to support competitive advantage based on economies of scale—to solve today’s very different problems. The central challenge for management in the era of economies of scale was increasing the certainty of their bets when investing in ever-larger factories, distribution channels, advertising campaigns, and related elements of mass production for mass markets. But industrial-age practices that supported this need are strained by current needs and solutions, which require variety and responsiveness. It is the equivalent of racing forward while looking backwards.
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Volume 60, Issue 1, January-February 2017