Rethinking Markets

A friend/colleague/friend tweeted this from an IBM ‘innovation discovery client briefing’, from IBM research in Switzerland: “Incrementalism is the enemy of innovation.” -Nick Negraponte

Which, ok, part of Negraponte’s gig is to go to things like an IBM innovation discovery client briefing. Sounds nice. But the other part of this is the actual assertion. Is incrementalism, in fact, the enemy of innovation?

At the level of what Negraponte is saying, his assertion is pure pap. Why? Because sometimes incrementalism is the enemy of innovation, and sometimes it isn’t. You don’t get to the bottom of the Mariana Trench by ignoring every innovation that came before you; sometimes you build on existing designs, and sometimes you think about new designs. His point is possibly closest to being something real if by incrementalism he means that any existing solution to a problem gains stakeholders who are tied to that solution; and then innovative solutions that dislodge those stakeholders are more difficult. It just depends so much more on what you’re talking about. To just be an evangelist for innovation is awesome for IBM meetings, but unhelpful for the rest of us.

I’m intensely interested in questions like these, and they dot (and sometimes define) the fields of organizations, political science, sociology, social movements, social studies of science and technology.

If we are talking about institutional change, then the answer to the innovation/incrementalism solution is a combination of: 1) Lis Clemens’ insight that institutional changes work best when they are wrapped in the language and form of existing institutions (that is, they are transformed, sometimes radically, via creep); and 2) Steve Barley’s insight that external shocks (‘technologies’ for him, in the broadest meaning of the term) disrupt existing patterns of behavior and meaning, and then those patterns are potentially and really reconstituted. That’s my answer, at least.

If we are talking about socio-technical change, I think the SCOT studies folks basically have it right, that a given technology creates relevant social groups, which rally around particular meanings and structures for that technology; which makes for interpretive flexibility; which creates theoretical closure around a particular solution that technology solves (what could have been many possible solutions is transformed into one solution and a bunch of solutions that ‘don’t work’). Depending on whether this is an open field, or a field with a dominant solution and some alternatives, or a couple/few/many dominant solutions, the dynamics will play out somewhat differently. But the underlying structure is the same.

In the marketplace for consumer products, the problem is a tricky one. Some have argued that Apple’s giant innovations are often innovations built on a surprisingly large amount of incremental improvement that only looks massively innovative in retrospect. This is where the best source for your money is James March’s argument about exploration vs. exploitation (seemingly ungated .pdf is here).

His argument is that organizations trade off between exploring new opportunities and exploiting existing ones. Via a simulation experiment, he argues that organizations ‘learn’ through their members (via creation of capabilities, routines, culture, knowledge management); and members learn through their organization (via socialization). But the more people just accept the organization’s way of doing things, the less likely the organization will see the world for what it is – endless exploitation means you are eventually in trouble.

What’s worse is that the payoff of exploration is highly uncertain and off into the future, so organizations tend to instead focus on reliability and exploitation, which is more proximate. Ultimately, in typically-quixotic fashion, March concludes that “the development of knowledge may depend on maintaining an influx of the naive and ignorant, and that competitive victory does not reliably go to the properly educated” (March 1991: 85). So ok, if this is what we mean in saying that incrementalism is the enemy of innovation, then perhaps I’m on board.

There’s an old talk by Paul Depodesta at a CSFB ‘thought leader’ conference which is also on the subject of disruption, innovation, and incrementalism – through the Moneyball-type transformation of the A’s. Totally worth looking at, if you are at all interested in these things.

And finally, a clip from the Moneyball film, which puts it so nicely.