new models of the corporation

tushman.jpg

I attended the Marketing Science Institute Meetings in Boston last week.

Two papers stood out:

Innovation Streams, Senior Teams and Ambidextrous Design by Michael Tushman (Harvard Business School)

Best Face Forward: Interface Systems and the New Frontier of Competitive Advantage by Jeffrey Rayport (Marketspace LLC)

A brief account of Tushman’s presentation:

Tushman distinguishes between two modalities in the life of the corporation:

1) The exploitative modality in which the corporation works the world it knows. This is a matter of extracting maximum advantage from the market as presently constituted. This is the traditional modality of the corporation, the very method of “business as usual.” But it is now haunted by a new, tragic understanding: that what makes corporation successful also make it vulnerable to discontinuous technology. Success is now sometimes a tragic flaw.

2) The explorative modality in which the corporation prepares for the world it doesn’t know and can’t fully anticipate. This is the new modality of the corporation, the place it is obliged to give up some of its problem solving, quality controlling, administrative elegance. Here it is obliged to be messy, complicated, iterative, and wrong.

These two modality are mutually presupposing. If the corporation is only exploitative, it cannot survive sudden change. But if it is only explorative, it cannot manage its affairs, exploit opportunity, or “get down to business.” The corporation must do both to make its way in the world.

The trouble is that these are effectively different cultures. They are driven by different assumptions and objectives. It is pretty hard to stuff them into the same organization, because they are often mutually mysterious and perpetually distrustful. In many cases, the explorative and the exploitative camps end up fighting one another, a contest between bean counting, risk-adverse bureaucrats on one side and reckless, restless, risk-crazy adventurers on the other. Or so they see one another, for these modalities are deeply contradictory.

What I like about Tushman’s scheme is that it moves us two steps forward. In effect, it says to the exploitative people., “Look, you have just going to have build explorative modality in. Stop treating change as the unwelcome guest who must be asked to dinner periodically and then sent packing. These are not the odd men out. They are now the odd men in.” Useful! Tushman formalizes something that have known for sometime: that change is a structural reality for the corporation and it must be embraced as such.

But he’s ecumenical, this guy is. For Tushman now says to the explorative people, “You have to stop saying things like ‘everything you know is wrong. Change is the only constant. The new rule is that there are no rules. There is no form upon the deep. It’s all just chaos now.’” Having given them a secure place in the proceedings, Tushman now says to the explorative group, “shut up already. And enough with the scare mongering.” [All these attributions to Tushman are purely my invention. I am merely trying to capture his argument in a vivid way. I have taken liberties in the process, for which all apologies!]

Tushman understands that the corporation can segregate the two modalities into separate functions and different personnel streams, but at some point these two violently contradictory modalities are going to have to co-exist in the same individual. Somewhere there has to be a senior player who understands them both, not as mutually exclusive impulses, but as exclusively mutual. The senior manager is going to have be powerfully, equally, and simultaneously explorative AND exploitative. Hence the notion of “ambidextrous design.”

I have to tell you that at this point in the proceedings I could hear the earth move. Here’s a professor at the Harvard Business School making the case for plenitude and transformation, not as a wild-eyed call for poetic refusal of bourgeois rigidities…but because ambidexterity is good for business.

Hah! So much for the man in the gray flannel suit. Now this guy or gal must be capable of arguing X and not X. This is a Dostoyevskian enterprise that does not come easily to the average MBA, and this is true because there is not instruction in this matter at any business school. (No, not even Tushman’s own.) But now we have an account of the corporation that says that the individual must possess and cultivate his or her own internal complexity to do their jobs.

I know a guy who works for corporate America who has tremendous range. Nick Hahn (Vivaldi Partners) can look at explorative and exploitative problems with perfect simultaneity. When you asked how he manages this, he says that it is a gift from the family. His father was an executive in the world of packaged goods and his mom was an artist. He was accustomed to skipping back and forth between the explorative and the exploitative often and at will

The question is, 1) “how do we build this into the corporate mind set?” and 2) “what MBA program, or change in personnel, would solve this problem?”

Ok, I will complete the second half of this blog tomorrow when I will describe the presentation of Jeffrey Rayport. Oh, and that reminds me. For those in the New York area, I will be talking at the Brand Identity Package Design conference at the Plaza hotel on Wednesday, the 20th. I’m talking at 9:00. Just come in. If challenged, say you are, 1) “his brother,” 2) “his sister,” 3) his “voice coach,” 4) “spiritual advisor,” 5) his “parole officer.” Used individually, I think these will all work.

9 thoughts on “new models of the corporation

  1. Tom Guarriello

    Grant, here’s a very brief version of a thing that’s been rolling around in my head recently (I actually said these words to a guy on a sales call a couple of weeks ago): “I’ve really had it with either/or thinking. We have to get beyond this, it can’t be aesthetics or process rigor anymore; it can’t be six sigma or innovation; it can’t be quality or quantity.” Maybe I went on a little more.

    But the point is, this damned Cartesian dichotomous mindset will be our downfall if we don’t figure out how to transcend it.

    Right brain, left brain aside, we’ve got to do better at whole brain. Hard to do, but just about imperative. (I wrote a post about the challenge facing Jeff Immelt on this stuff; take a look if interested at truetalk.typepad.com/truetalk/2005/03/jeff_gets_innov.html)

  2. steve

    Very well put. The problem is as old as the large corporate firm, which was born into a world of transformation and confusion (the post-bellum industrial revolution) that it helped to create, paradoxically, by harnessing productive routinization. For a high-hat reference, Olivier Zunz commented in passing in his book about early middle managers that the corporation needed to have both entrepreneurial responsiveness to the shifting market and bureaucratic discipline over its systems and technology. Ambidexterity, to adopt the vogue term.

    I think the key issue for innovating firms is attaining “useful continuity.” If the exploration process leads to venture proposals for which the existing organization is less well-suited than a brand-new one would be, then there is a strong argument not to do it. There is not enough continuity between the new venture and the firm’s capabilities and culture. Start up a new firm instead.

    On the other hand, if the organization rejects venture proposals whenever they require any new capabilities at all, then there is too much continuity. Excess capacity in existing capabilities will not be fully exploited, and negative shocks to existing lines of business will not be countered. If you’re not going to develop any new capabilities, then you probably can’t justify having most of the managers you employ–it doesn’t take that big of an administrative staff just to maintain homeostasis with a stable process.

  3. Brian

    I’m not sure how to phrase this; it is possible I lack the vocabulary but ..

    This duality is something that the military dances around all the time.

    Exploitative modality – the work-a-day world. Up at dawn, the organization cranks along in a training routine, or maintennance, or just the day-to-day life of keeping things running. Need to know how to do X? Consult the SOP, work instruction or ALLMAR.

    Explorative modality – war. And operations other than war. Yes, the military trains exactly for these tasks but when you go to war, nothing is ever quite like you planned. Murphy rules and for all the planning you might find yourself making things up as you go.

    So, yes, different modes but the same culture.

    It is possible that the Marines can operate in dual modalities by not making a fine distinction. Mission First goes the saying. So you operate when you can in exploitative modality, but ready at need to break into explorative mode to get the job done.

    Thinking further; one basic of getting things done in our military is ‘Commander’s Guidance’. The C.O (at every level) explains what he wants, including operating parameters, and lets his subordinates accomplish the mission as they need. Is this the big secret for making a lot of stuff happen?

  4. Dal Timgar

    What you are describing isn’t new. It is Yang and Yin. Left brain and right brain. Some problems are better solved by the right brain and others by the left. The trouble is most people get stuck in one mode or the other. European culture is very left brained. It is curious that the word sinister is Latin for left but we now know that the left side of the body is controlled by the right side of the brain.

    check out:

    The Art of War by Sun Tzu
    Mastering The Art of War
    translated and edited by Thomas Cleary

    We’ll have to change the culture to solve the problems. Of course accounting should be mandatory in highschool so consumers know not to buy junk designed to become obsolete from the corporations. What happeened to all that depreciation of durable consumer goods?

    Dal Timgar

  5. Timgar Posse

    First lets try the correct term Yin and Yang; fortunately for the rest of us we do not require a degree in Neuro Surgery to understand this conclusions to the argument. Dal Timgar believes that there is no harmony or working together of the mind. He clearly believes that individuals are simple and sheep like in their economies of scale. It is clear that Sun Tzu was the key at his time in the century, however the idea of Timgar to infuse accounting as a mandatory replacement for consumer social skills, clearly is an outlier to thought. Timgar’s approach to using Macroeconomics to explain Microeconomic events is beyond the control the balance of the forces of Yin-Yang.

  6. GRP

    First lets try the correct term Yin and Yang; fortunately for the rest of us we do not require a degree in Neuro Surgery to understand this conclusions to the argument. Dal Timgar believes that there is no harmony or working together of the mind. He clearly believes that individuals are simple and sheep like in their economies of scale. It is clear that Sun Tzu was the key at his time in the century, however the idea of Timgar to infuse accounting as a mandatory replacement for consumer social skills, clearly is an outlier to thought. Timgar’s approach to using Macroeconomics to explain Microeconomic events is beyond the control the balance of the forces of Yin-Yang.

  7. Gyro

    Dal Timgar has been trying to peddle this document through the internet for years now. He has been to every econ web site and has been proven incorrect. On the Dead Economist Society Dal Timgar was basically proven incorrect on every post. What we see with Economic Wargames is an individual with no Economics background attempting to use Macro principles to explain Micro events. Drawing conclusion without basis is the common thread of Dal Timgar analysis of theorems and his constants trivial annoyances of accounting being the holy grail of thought. It you decide to read the text of his argument, you will quickly see that it is not only a waste of time but also a lassitude of a cretin.

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