Innovation—Building ambidextrous organizations

Another

quarter and more results-the big are getting bigger and some of the smaller

firms are doing very well too, confounding the predictions of many analysts and

pundits who seem to believe that there is no place under the sun for any firm

which does not employ at least ten thousand people in this country.

The success of

companies like Geometric Software, Mindtree, and Zensar establishes clearly the

value that innovative niche players can add to the exciting software exports

industry. The showcase during the Nasscom Annual extravaganza in February will

see four small and four large innovation stars demonstrate just how this is

being done. While it could be argued that innovation is a do or die initiative

for smaller companies, the larger companies too, have shown that there is no

complacency in the industry. And the lead that India undoubtedly has over new

entrants into the offshore outsourcing space will continue to be sustained and

even extended.

The way to nurture

innovation in large organizations has been brilliantly laid out by Michael

Tushman, professor of innovation at the Harvard Business School. The “failure

of success,” as Tushman puts it, is three-fold-the structural inertia caused

by size, the social inertia caused by the age of organizations, and finally, the

pride and arrogance that is the result of success. The internal forces of

stability that result from organizational growth and success are a true double

edged sword since the pressure to continue to do what has been done in the past

with significant success can also lead to sluggishness in response to new

environmental dynamics.

Where does the

“locus of innovation” lie in any industry? Tushman argues that in emerging

industries where much is still to be discovered in terms of products or services

to be offered to existing or new customers, the rate of innovation is very high

in the technology cycle in the initial stages and declines over time as services

grow. These move towards a state of maturity. This is the time when a dominant

design emerges that characterizes the service. Also, opportunities arise for

process innovation around the design. Hence, the locus of innovation shifts from

the service itself to the process calling for a very different set of skills and

capabilities in a new alignment of the service. A case in point from the IT

services industry is the use of solution blue prints and automated code

generation that Zensar employs to automate the error prone and time consuming

processes of programming, is transforming the application development process in

the traditional system development life cycle in some organizations.

This is not to say the

product or service innovation ceases to be relevant in any mature industry.

Tushman argues that for large organizations to embrace innovation they have to

develop the skill of ambidexterity where they are able to continue exploitation

of clients with their core services while launching exploration into new

opportunities. Organizations, which are truly committed to this ambidexterity,

will have to make a strategic choice between the desire to set the innovative

teams free and the practical wisdom of leveraging managerial capabilities from

the successful exploitation of organizations for the benefit of the exploration

unit.

Finally, there is no

better advocate for innovation than Lou Gerstner, the legendary former CEO of

IBM who says, “I am a big believer in forcing change on large institutions

just for the sake of forcing change. The longer an organization stays intact,

the less successful it is. I've been absolutely convinced that you have to blow

things up and start all over again every few years, and that puts a whole new

face on people's jobs. It gets them focused externally rather than

internally.”

In an industry where success can no longer be taken for

granted in the long term, with costs going up and competition looming, this may

well be one solution!