In the 1990s, outside the dot.com revolution, the corporate world was focused on a Six Sigma concern for quality and cost. New training, systems, and cultures were installed. While a wild west was exploding in Silicon Valley, the rest of the corporate world was buttoning down. “To achieve Six Sigma quality, a process must produce no more than 3.4 defects per million opportunities. Now, thats buttoning down.
That was then, this is now. BusinessWeek says that the corporate world is committing to something freer, franker, and more dynamic that Six Sigma. The focus is now on innovation. GE CEO Jeffrey R. Immelt is moving the corporate culture from deal making and cost cutting to new products and markets. He is insisting that each manager bring him three “imagination breakthrough ideas each year. What a change! Now the GE must think less about defect and more about defection, how to escape perfect systems for the new. Will it work? Diane Brady says,
Immelts GE can be seen as a grand experiment to determine whether bold innovation can thrive in a productivity-driven company.
For anthropological purposes, it is hard to overestimate the importance of this development. Traditionally, corporations have been the dragging anchors of a dynamic society. They slowed things down. No longer. If innovation is the new modus operandi of the corporate world, we have only begun to glimpse the dynamism of which we are capable. When the biggest, smartest, wealthiest actors in our midst commit to change, we will lift off and move away at speed.
Clearly, not everyone has signed on to this corporate revolution. I fell to thinking about Microsoft. Is Bill doing at Microsoft what Immelt is doing at GE or Lafley is doing at P&G? Chances look slim. We may recall that Bill almost missed the significance of the Internet, and he was obliged to call a press conference and declare that Microsoft would become internet-centric. And it looks as if the spam crisis is creating a terrible brand migration. Stay tuned for another recantation.
What happened here? Why did Microsoft think that spam was somebody elses problem? It was only the Microsoft programs Outlook and Explorer that exposed the consumer to risk. As long as the alternative was migration to a new operating system (Apple), the transition cost was prohibitive. But the moment that Mozilla and Gmail emerged, surely it was time to snap out of it.
Of course, this spam came in sheeps clothing. It appeared to be extra systemic, beyond the domain of things Microsoft was obliged to care about. It wasnt “about consumer needs like word processing or number crunching. No, it was exogamous, an industry problem, or the consumers problem. Merino wool, apparently. No one ever saw this as Microsofts problem .
Its times like this that one thinks of Levitts “marketing imagination, and his idea that the marketers job is to ask constantly “what business am I in. From the Levittian point of view, spam was so intrusive, viruses so dangerous, and the two together so destructive of consumer value, that spam had to be Microsofts problem from the very beginning.
But forget the consumer. Spam was Microsofts problem from the simplest strategic point of view. Five years ago Microsofts installed advantage was overwhelming. All those people, all those corporations, committed by years of deep familiarity to a suite of software that was “good enough in every category and exemplary in one or two. Talk about stickiness! Who was going to break this hold?
Spam. Spam turned out to be an “application killer. How the world turns topsy turvy. I know the killer app that brought me to Microsoft. It was Flight Simulator. The idea of this software so impressed me I went out and spend $6,000 on a PC, thereby beginning a life long commitment to the Microsoft regime. I have a friend for whom the killer app was Excel. And once “lock in had taken place, it was pretty clear that you could make Bill the richest man in the world just by showing up with a “good enough+exemplary package. The installed base had its own formidable gravitational powers. Microsoft was its own planet.
And something snuck in. Plainly, it is too early to say that Microsoft lies in ruins. But just as clearly, one of the youngest, smartest, best staffed, corporations in the world has stumbled. And I think this tells us how tough dynamism is going to be to manage.
An innovative marketplace is always going to throw up “spams of one kind or another, threats that come in sheeps clothing, concealed from strategic scrutiny. We will exercise Levittian mobility and see the threat/opportunity they create for us. Or we will take refuge in a corporate culture that says, “not my problem, not my business.
And this tells us that corporations when they create new dynamism through Immeltian innovation will have to respond to it with a new dynamism on the strategic side. Innovation will take Levitts imagination in the first instance (as cause) and the last (as effect). It will take new intellectual nimbleness to create and to survive.
Brady, Diane. 2005. The Immelt Revolution. BusinessWeek. March 28, 2005, pp. 64-73.
McCracken, Grant. 2005. My Gmail conversion. here
Historically, big corporations were the most dynamic things around–scarily so. In 19th century America, they applied innovative manufacturing technologies that destroyed hundreds of years of craft tradition, undermined the social structure of towns across the nation, and made a class of entrepreneurs, financiers, managers, and operators richer than any non-emperor in history. Whole new systems of accounting, distribution, control, etc. were needed to accommodate the awesome productive power they liberated. Whole new classes of people–managers–had to be recruited, trained, socialized on the fly. The railroads even invented time zones!
I am skeptical that Immelt’s innovation thrust will have comparable results. I see his initiative here as being one more in the Welch mode–an attempt to diffuse a best practice throughout a fairly diverse set of businesses. One of my students this semester works at GE and is participating in an innovative technology/finance venture the company is spawning. The hard part for such ventures is to be big enough to quickly have a perceptible impact on GE’s gargantuan income statement.
When you’re on top of the world, there’s nowhere to go but down.
Microsoft’s big, #1 success secret was the avoidance of hubris. In their case, it was very much an attempt to burn the ladder they’d climbed up on…if IBM hadn’t thought of themselves as _immovably_ dominant in the industry, Microsoft never could have stolen that dominance from them. And so Microsoft’s executive team, in full knowledge of how they’d gotten to where they were, strove to create a culture that didn’t foster a belief in the inevitability of its own success.
This domination of the corporate culture by fear of hubris occasionally pushed the business into behavior that was downright paranoid…and some of the consequences of that paranoia eventually led to their legal troubles.
But in spite of their massive campaign of intentional paranoia, they’ve now finally started to get soft. We may yet be able to kill them.
I seem to have stumbled into Luddite Central. The industrial revolution, demise of buggy whips, emergence of department stores was “scar[y]”?
And do we really want to “kill” Microsoft?
What’s the phrase…..ah, yes.
“Nostalgie de la boue” — ascribing higher spiritual values to people and cultures considered “lower” than oneself, the romanticization of the faraway primitive which is also the equivalent of the lower class close to home.
Go back to bed, Beth, it’s only postmodernism.
“And this tells us that corporations when they create new dynamism through Immeltian innovation will have to respond to it with a new dynamism on the strategic side. Innovation will take Levitts imagination in the first instance (as cause) and the last (as effect). It will take new intellectual nimbleness to create and to survive.”
Well, sure. But. However.
There are some corporations – or at least bits of them – that I want to retain Six Sigma quality. GE makes and repairs jet engines. I rather like the thought that the people that make jet engines are devotees of six sigma.
Can the folks inside GE that make jet engines survive in an environment where the leaders don’t want Six Sigma quality but “imagination breakthrough”?
I can only imagine the schizzy management desicisions resulting.
For anthropological purposes, I always thought government bureaucracies and anthropology departments were the dragging anchors of a dynamic society.
Brian, well said, sir; right on both counts. Best, Grant
Hey, I’m all for corporate dynamism. Creative destruction is the only way to have progress. But let’s not pretend that people weren’t pretty freaked out about having their entire social structure transformed, whole ways of life disappearing, etc. over a very short time period. A great thing about the United States was that despite some serious political and social convulsions, including plenty of violence, progress wasn’t choked off by the losing factions.
My point was that it isn’t wise to assume that large corporations are status quo players, and I don’t think Jeff Immelt tossing another corporate initiative on the stack is comparable to the 19th century level of turmoil and change.
I think Brian’s point is crucial: can GE have a culture that embraces both Six Sigma AND innovation? These are difficult mental models to integrate, usually leading to the creation of “Skunkworks” and other such deviant outposts in which to incubate innovation. This kind of “creative ghetto” then presents other problems of idea acceptance, product integration, and just plain jealousy. I think Immelt’s on the right track, but balancing these two cultural streams will be a significant management challenge.