University Times

Concepts imbued in today’s standard business model — benchmarking, best practices and strategic plans — bear little relation to a company’s chances of success, according to a national public administration expert scholar and teacher.

That holds true for private companies and even more so for public organizations such as government agencies, public universities and nonprofits, said George Frederickson, Edwin O. Stene Distinguished Professor of Public Administration at the University of Kansas.

George Frederickson

Frederickson last week delivered the 2010 Wherrett Lecture, sponsored by the Innovation Clinic at the Graduate School of Public and International Affairs. He spoke on “When Innovation Meets Sustainability.”

In this context, Frederickson defined innovation, or creativity, as an organization’s ability to adapt and grow; he defined sustainability in a traditional sense as a company’s fiscal stability over at least a generation (as opposed to the word’s current popular connotation of “greening” efforts).

“I have one primary argument: Innovation and management are not particularly compatible ideas. To some extent innovation defies being managed,” said Frederickson, who also is director of the Metropolitan Studies Center at Kansas.

“On the other hand, sustainability is very compatible with the idea of innovation. Approaching innovation as something that is often a part of sustainable approaches to organizations is the message I want to leave you with today.”

Successful innovative organizations are characterized by core ideals and lofty goals, Frederickson said. He cited several studies of successful private-sector businesses and public organizations.

“Usually, we think of innovation as something like the light bulb, or important social ideas like the rule of law, or technological developments,” Frederickson said. “But in fact much of what we call innovations are not ordinarily that big. They tend to be incremental adaptions of things with which we’re already familiar.”

As an example, he said that Idaho farmer Philo Farnsworth tinkered with vacuum tubes, common in the 1920s, and is credited by some with inventing the major communication device of the 20th century — television — clearly a case of an add-on to already available technology.

Frederickson pointed to the book “Breakthroughs!” where the authors examined 14 important innovations, such as the compact disc, the VCR and the CT scan, as well as business breakthroughs such as overnight packaging services like FedEx.

“They didn’t find what the business consultants would say,” Frederickson said. “They found that breakthroughs come from organizations that foster creativity as well from those with poor records of creativity. Breakthroughs, innovations, come from rich soil, but also from barren soil, rocky soil or no soil at all. So if you prepare a rich field to have a breakthrough, does that mean you’ll have one? Not necessarily.”

In other words, the concept that managers can manage innovation or build a culture of creativity should be met with considerable skepticism, he said.

“Generally, creative people don’t like to be told what kind of culture they need. I think that’s particularly true at universities,” Frederickson said.

Innovations can emerge “where creative teams are joined by their management or ignored by their management or supported only belatedly by the management, and some breakthroughs emerge in settings where there is no organization at all,” he said.

The “Breakthroughs!” authors also argue that management can construct barriers to innovations, Frederickson said. “One in particular: If failure is punished, that will inhibit innovation and discourage experimentation. Many innovations by definition are risky. Managers, those who wish to look smart, tend to attack ideas that are unproven, unfamiliar or risky. It’s really easy for a manager to balk at ill-formed ideas,” a situation that is exacerbated by the fact that innovators often have difficulty articulating their creative ideas, he said.

In another study, published in “Built to Last: Successful Habits of Visionary Companies,” researchers examined the characteristics of 18 successful companies, including IBM, Sony and Walt Disney.

“What did they have in common? Did they have strategic planning processes? Did they have brilliant mission statements? Did they have an overriding commitment to maximize profits? They had none of those,” Frederickson said.

What they did have in common was a core cohesive ideology with which most of their employees identified. “Each company had a separate core, but they all had a core ideal. Importantly, that value was not the same thing as making money. Nobody was opposed to making money, but that was not primary,” he said.

Most of the companies also shared grand goals. “Steve Jobs, of Apple, is all about a guy with those kinds of goals: building the latest, the most-important technology,” Frederickson said. “These kinds of goals keep the staff energized, keep people working hard, keep people committed.”

Going against standard business practice, Jobs’s presentations to the public about his company make “absolutely no mention of making money or stockholders or other mundane corporate ideas, even though he obviously knows all about those,” Frederickson noted.

In addition, the study authors found that these successful companies were not efficient in the classic sense. “These are companies that do a lot of experimentation, have a lot of R&D. They pay only lip service to strategic planning. They’re not the type to say, ‘We won’t do that because it doesn’t fit our plan.’ These companies try a lot of stuff and see what works. That’s a simplistic way to put it, but it’s an interesting strategy for encouraging creative people, that you’re not weird for trying stuff that might or might not work,” he said.

Frederickson also discussed findings published in “The Innovator’s Dilemma: When New Technology Caused Great Firms to Fail.”

“The authors offer a provocative argument: Customer responsiveness does not lead to innovation, because customers seldom know, or can even imagine, what they do not now need,” he maintained.

Apple, for example, does not use focus groups or poll its customers, Frederickson noted.

“The argument is that if we adapt and innovate, those adaptions and innovations will anticipate what people want. That’s so alien to what we know as a model for business,” he said.

“How many of you imagined 10 years ago there would be a little device you can stick below your rearview mirror that can show you all the highways in front of you and tell you where to go? Did you imagine paying $200 for that? Now, they can’t make enough of those things. They weren’t exactly sure what they were building and the public didn’t know it might be useful,” he said.

A second argument is that successful companies with a strong market niche can collapse on themselves from stagnation. Such a company “will look upon innovation as destructive technology that disrupts how they’re presently making money. They are to some extent resistant to innovation. Success drives down innovation,” Frederickson said.

The corollary to that is what encourages innovation are stresses, crises and less-than-ideal circumstances, he said.

Those successful companies that are so well-heeled that they manage to survive become prisoners in an “iron cage,” a phrase Frederickson borrowed from noted sociologist Max Weber. “Just try to change them! The price is rigidity,” he said.

In the 1998 book “Sustaining Innovation: Creating Nonprofit and Government Organizations That Innovate Naturally,” author Paul Light studied 25 long-standing successful organizations in Minnesota.

Among Light’s findings were that these organizations did not operate under anything like a military-style reporting structure.

Frederickson said, “Many of these organizations got away with a staggering amount of confusion about the chain of command, the hierarchy, who people report to. They tended to be ill-organized and endure a lot of ambiguity. Tasks are not clear, reporting lines are shifting. You wouldn’t find these effective, innovative organizations to be well-managed — particularly so with nonprofits, less so with government agencies.”

Light posited two essential characteristics for any public organization to succeed, Frederickson said. One is that companies need a competent financial management system. “There can be lots of inefficiency and lots of ambiguity about the chain of command, the tasks, but if you don’t know where your money is or who it’s coming from, that doesn’t work,” Frederickson said. “That part of successful organizations is sacrosanct.”

Second, companies cannot ignore outcomes, because results matter. “But if they prevent financial disaster and leave room for adaption, they can be innovative,” Frederickson added.

On the other hand, “Light found there are no shortcuts or gimmicks to innovation. Good old-fashioned democratic organizations that were successful tend to think and work in groups, and tend to not respond well to harsh forms of management,” Frederickson said.

He added that “Light found very little mention of these words: best practices, benchmarking and managed innovations. In the corporate formula, these are the list of things you should do; they’re not there in these successful organizations. What Light did find is the core of values shared by employees: trust in authority; genuine concern for clients, and honesty with each other about their mission.”

Frederickson said his own studies show that seeking out best practices can be useful for an organization, as long as the quest isn’t overemphasized, because a one-size-fits-all approach is an oversimplification in a constantly evolving world.

His studies also show that benchmarking often leads to institutional isomorphism, a copy-cat syndrome that stymies creativity. Institutions, especially universities, need to avoid a rankings trap, he said. “Rankings are the fashion: They’re ubiquitous. Anyone can do them. The best that can be said of them is that they simplify complexities and give us bragging rights.”

However, rankings tend to make institutions simply look like vanilla copies of each other. “Universities all look so much alike — their organization, their logic — are almost all the same. [Seeking better] rankings is not the same as striving to do better.”

—Peter Hart