Great Moments in Tacit Knowledge, High-Energy Physics Division

From Alan Krisch’s 2010 account of research involving the (still-unresolved) anomalous behavior of tranversely polarized colliding protons:
After all this hardware was installed, an even larger problem was tuning the AGS. In 1988, when we accelerated polarized protons to 22 GeV, we needed 7 weeks of exclusive use of the AGS; this was difficult and expensive. Once a week, Nicholas Samios, Brookhaven’s Director, would visit the AGS Control Room to politely ask how long the tuning would
continue and to note that it was costing $1 Million a week. Moreover, it was soon clear that, except for Larry Ratner (then at Brookhaven) and me, no one could tune through these 45 resonances; thus, for some weeks, Larry and I worked 12-hourshifts 7-days each week. After 5 weeks Larry collapsed. While I was younger than Larry, I thought it unwise to try to work 24-hour shifts every day. Thus, I asked our Postdoc, Thomas Roser, who until then had worked mostly on polarized targets and scattering experiments, if he wanted to learn accelerator physics in a hands-on way for 12 hours every day. Apparently, he learned well, and now leads Brookhaven’s Collider-Accelerator Division.
Score a data point for the individualist view of organizational capability.

Crowd-sourcing Strategy Formulation

The current issue of McKinsey Quarterly features an interesting article on firms crowd-sourcing strategy formulation. This is another way that technology may shake up the strategy field (See also Mike’s discussion of the MBA bubble). The article describes examples in a variety of companies. Some, like Wikimedia and Redhat aren’t much of a surprise given their open innovation focus. However, we should probably take notice when more traditional companies (like 3M, HCL Technologies, and Rite-Solutions) use social media in this way.  For example, Rite-Solutions, a software provider for the US Navy, defense contractors and fire departments, created an internal market for strategic initiatives:

Would-be entrepreneurs at Rite-Solutions can launch “IPOs” by preparing an Expect-Us (rather than a prospectus)—a document that outlines the value creation potential of the new idea … Each new stock debuts at $10, and every employee gets $10,000 in play money to invest in the virtual idea market and thereby establish a personal intellectual portfolio Read the rest of this entry »

How do you grow a capability?

The “dynamic capabilities” literature, I think, is a bit of a mess: lots of jargon, conflicting arguments (and levels of analysis) and little agreement even on a basic definition.  I don’t really like to get involved in definitional debates, though I think the idea of a capability, the ability to do/accomplish something (whether individual or collective), is fundamental for strategy scholars.

Last weekend I was involved in a “microfoundations of strategy” panel (with Jay Barney and Kathy Eisenhardt).  One of the questions that I raised, and find quite intriguing, is the question of how we might “grow” a capability.  The intuition for “growing” something, as a form of explanation, comes from simulation and agent-based modeling.   For example, Epstein has argued, “if you didn’t grow it, you didn’t explain it” (here’s the reference).   I like that intuition.  As I work with colleagues in engineering and computer science, this “growth” mentality seems to implicitly be there.  Things are not taken for granted, but explained by “growing” them.  Capabilities aren’t just the result of “history” or “experience” (a common explanation in strategy), but rather that history and experience needs to be unpacked and understood more specifically.  What were the choices that led to this history?  Who are the central actors?  What are the incentives and forms of governance?  Etc.

So, if we were to “grow” a capability, I think there are some very basic ingredients.  First, I think understanding the nature, capability and choices of the individuals involved is important.  Second, the nature of the interactions and aggregation matters.  The interaction of  individuals and actors can lead to emergent, non-linear and collective outcomes.  Third, I think the structural and design-related choices (e.g., markets versus hierarchy) and factors are important in the emergence (or not) of capabilities. Those are a few of the “ingredients.”

I’m not sure that the “how do you grow a capability”-intuition is helpful in all situations.  However, I do find that there is a tendency to use short-hand code words (routines, history, experience), and the growth notion requires us to open up these black boxes and to more carefully investigate the constituent parts, mechanisms and interactions that lead to the development or “growth” of capability.

Best governance structure for b-schools?

Here is the headline from Financial Times editor Della Bradshaw: From the editor: Trouble at the top. “A spate of deans’ departures raises questions about the way they were appointed,” writes Bradshaw. The examples given in the article are the short tenures of Robin Buchanan at LBS, John Wells at IMD, and Frank Brown at Insead. The basic gist of the article is that these examples illustrate bad governance practices at non-university-based schools. What’s bad? Well, according to Ms. Bradshaw, too much faculty involvement in the Dean selection process.

Of course, most US and UK university-based business schools follow a straight­forward system in which the president (US) or vice-chancellor (UK) appoints the dean of the business school based on recommendations from a search committee or firm. Presidents hire and only presidents can fire.

But, at non-university schools, faculty meddling is allowed to a shocking degree …

It is hard to imagine any other organisation – commercial or academic – allowing the workers to effectively decide who will be their new boss. When the FT is next looking for an editor, will jobbing journalists be asked to vote?

Can you imagine?!

I’m not quite sure where to begin with this. But, let me try. First, Bradshaw cites no evidence  that these short tenures were bad outcomes. Rather, they may be the kind of flexible, timely, and appropriate decisions that schools should make upon learning that the new Dean is a dud. Managing a research-based business school is a tricky endeavor. On the one hand, a Dean needs to have the management chops to run an organization constrained (yes, constrained) by insanely dense complementarities between policy variables. On the other hand, he or she also needs to understand the research world, both in order to construct a sensible educational vision as well as to manage faculty resources. The problem is that each of these skill sets typically takes a career to develop and, hence, are rarely co-occurrent  in a single individual. Perhaps we should be surprised that the rate of Dean turnover isn’t higher.

Second, it appears that Ms. Bradshaw has never heard of a governance form called the “partnership.” Traditionally, faculty have been run along the lines of a partnership, much the same as in law firms and consulting practices … and for most of the same reasons (aligning decision rights with inherently decentralized information and creating effective incentives). True, the partnership model for b-school governance has been greatly degraded in recent years.  In its place, we now have the corporate-style administration. This modern administrative form — untethered from from faculty oversight — is, in the parlance of our times, a bug and not feature. Treating faculty as mere “workers” (or, worse, as a frustrating “problem” to be sidestepped whenever possible) results in misaligned decision rights and incentives, which then contribute to undesirable behaviors like: the mindless chasing of rankings put out by popular business periodicals; expanding capacity to what may be an unsustainable level; the dumbing down of graduate business education; and, a shocking rate of tuition inflation. This is why, whenever I hear university administrators refer to themselves as “The Senior Management Team” (typically, embedded within some self-congratulatory announcement), it really makes my skin crawl.

By the way, in terms of her own experience, Ms. Bradshaw was an English teacher before joining the FT, where she has served as a journalist for the past 20 years. As far as I can ascertain, her experience includes neither scholarly research nor business unit management. She has been involved in the FT rankings since their inception in the 1990s. Think on that.

Psyched Out Strategy: What is a firm?

Glenn Hoetker recently gave me the opportunity to consider what new contributions the field of psychology could offer to the strategy literature (see the description here). The video illustrates how behavior often depends more on perception than on reality — does it matter if the steering wheel is attached or not if the other driver acts as if it is? Often, researchers are interested in organizational outcomes and theorize that the underlying behaviors are driven by objective reality. What research opportunities are highlighted as we take seriously the subjective nature of our most central constructs?

In this installment, we explore the question, “what is a firm?” This is so taken for granted in the field that most of you will probably stop reading here. Read the rest of this entry »

Occupy Wall Street and Innovation

I just searched for Occupy Wall Street apps on my phone – and the result is below.  I think there will possibly be novel organizational innovations that will emerge (structure of protests, communications, organizational forms etc), but these apps also have elements of novelty.  BusinessWeek talks about a few of these apps, under the title million app march.

Steve Jobs – the man was fallible

Steve Jobs at the WWDC 07

Image via Wikipedia

As a student, at Reed College, Steve Jobs came to believe that if he ate only fruits he would eliminate all mucus and not need to shower anymore. It didn’t work. He didn’t smell good. When he got a job at Atari, given his odor, he was swiftly moved into the night shift, where he would be less disruptive to the nostrils of his fellow colleagues.

The job at Atari exposed him to the earliest generation of video games. It also exposed him to the world business and what it meant build up and run a company. Some years later, with Steve Wozniak, he founded Apple in Silicon Valley (of course in a garage) and quite quickly, although just in his late twenties, grew to be a management phenomenon, featuring in the legendary business book by Tom Peters and Bob Waterman “In Search of Excellence”.

But, in fact, shortly after the book became a bestseller, by the mid 1980s, Apple was in trouble. Although their computers were far ahead of their time in terms of usability – mostly thanks to the Graphical User Interface (based on an idea he had cunningly copied from Xerox) – they were just bloody expensive. Too expensive for most people. For example, the so-called Lisa retailed for no less than $10,000 (and that is 1982 dollars!). John Sculley – CEO – recalled “We were so insular, that we could not manufacture a product to sell for under $3,000.” Steve Jobs was fantastically able to assemble and motivate a team op people that managed to invent a truly revolutionary product, but he also was unable to turn it into profit. Read the rest of this entry »