Professional Documents
Culture Documents
TONY DAVILA
and Brownell 1997). The concept of enabling bureaucracy (Adler and Borys
1996) ‘‘enhances the users’ capabilities and leverages their skills and intelli-
gence’’ rather than with ‘‘a fool-proofing and deskilling rationale’’ typical of a
traditional view. Companies exploit knowledge through flexible, user-friendly
systems that facilitate the learning associated with innovation. Formal systems
need not be coercive tools that suppress variation; rather, they support the
learning that is derived from exploring this variation. Interactive systems
(Simons 1995) have similar learning properties. They provide the informa-
tion-based infrastructure to engage people in the communication required to
address strategic uncertainties.
This chapter describes how MCS support different types of innovation and
provides a framework to analyze their design. In developing this framework,
it first examines how the concept of strategic process has evolved over time.
the power structure, redefining the relevance of core competencies, and requir-
ing a redesign of the competitive positioning. These innovations are grounded on
significantly different technologies and organizational capabilities, and depart
from the current strategic trajectory of the firm.
Radical innovation is unpredictable, emerges throughout the organization
from individuals or small groups with little if any awareness from top manage-
ment, and is outside the current strategy; radical innovations are autonomous
strategic actions (lower right quadrant). But lack of predictability does not mean
that it should not be managed. Rather, top management has to put in place the
soil for these innovations to happen and to be nurtured; MCS are among the
tools to create this environment. Consider Intel’s transition from a memory
company to a microprocessor company. The shift into microprocessors did not
start at the top of the organization; rather, by accepting and rejecting certain
orders, developing the manufacturing technology, and designing the products,
middle management shifted Intel’s strategy toward microprocessors without
much top management awareness. By the time top management decided to
shift Intel’s deliberate strategy, these products were already a substantial percent-
age of company sales. Other well-known examples include Post-it notes and
NutraSweet. In these cases, radical innovations below the top management team
were picked up by the company and transformed it.
But radical innovations are not limited to independent efforts across the
company; top management itself can be the innovator. In the same way that
top management shapes the current strategy, it can fully redefine the strategy of
the company and become the source of radical innovations. The concept of
strategic innovation (upper right quadrant) captures the idea of radical innova-
tion happening at the top of the organization (Markides 2000). Consider Dell.
While its success is associated with the ability to execute, its seed is a funda-
mentally new way of selling computers. Strategic innovation captures how strat-
egy can be radically modified through the strategy formulation process that
happens at the top of organizations. Strategic MCS (as they have been labelled)
shape the information that top management has access to and become an
important design variable (Lorange, Scott-Morton, and Goshal 1986).
and belief systems (Simons 1995) are potential approaches to motivate people to
go beyond the current strategy. Strategic boundary systems (Simons 1995) focus
these search efforts within certain parameters. Alternative approaches include in-
ternal processes, such as interest groups that bring together people with different
training and experiences and external collaborations to explore alternative views.
Access to resources—such as free time to ‘‘play’’ with new ideas—permits explo-
ration of new ideas. Finally, the generation of ideas requires systems to exchange
information so that promising ideas are identified and supported. The roles of
‘‘scouts’’ and ‘‘coaches’’ (Kanter 1989), or the concept of an ‘‘innovation hub’’
(Leifer et al. 2000) where ideas receive attention are examples of solutions
through formal systems to managing autonomous ideas.
The selection of ideas to invest in also relies on MCS. But these systems are
very different from the ones used for incremental innovation. Moreover, resour-
ces should be committed to each type of innovation prior to examining the
investment opportunities (Christensen and Raynor 2003). Because of their
higher level of technological, market, and organizational risks, and longer time
horizons, radical innovations appear as less attractive than incremental innova-
tions using criteria—usually financial criteria—applied to these latter types of
innovations. Radical innovations require a selection process that relies to a larger
extent upon the qualitative evaluation by different experts, generates commit-
ment from various players in the company to make specific resources available,
and has frequently been compared to venture capital investments. MCS are also
needed to monitor and intervene in the project if required, to balance the ten-
sion between having access to resources and protecting the innovation from the
current strategy that is designed to eliminate significant deviations, and to
develop the complementary assets that the innovation requires.
Growing the business model also requires dedicated systems. The out-
comes of a radical innovation are not limited to incorporating the innovation
in the current organization—as for incremental innovation. Radical innovation
can redefine the entire organization, become a separate business unit or a sep-
arate company as a spin off, sold as intellectual capital, or included in a joint
venture (Chesbrough 2000). Moreover, the transition has to be managed care-
fully, especially if it becomes part of the existing organization, and MCS help
structuring this integration through planning, incentives, and training.
CONCLUSION
MCS are a key element in managing innovation and bringing it to strategy.
This chapter frames this relationship along four lines: delivering value from
190 THE CREATIVE ENTERPRISE
the current strategy, refining the value creation process from the current strat-
egy, crafting radical innovations throughout the company, and building new
competencies for strategic innovations. Certain MCS are more attuned to the
particular demands of each of these four roles, but they should not be seen as
mutually exclusive categories. For example, the execution of a particular pro-
ject—governed through systems to generate value—may raise some questions
that lead to a radical idea. Similarly, systems to refine the current strategy may
uncover a potential risk that leads to strategic innovation. Moreover, the impor-
tance of each type of system evolves as the strategy changes. Young strategies may
require that organizations put more weight on systems for incremental innova-
tion to accelerate the learning process. As strategies mature, the weight on these
incremental learning mechanisms is expected to decay in favor of systems to
implement strategy. Similarly, the emphasis on radical innovations varies with
the success of the current strategy, with the location of relevant knowledge, and
with the dynamism of the environment.
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