The Global Human Capital Journal

Adam Hartung of Spark Partners led a compelling and thought-provoking discussion at this month's MITEF meeting on 14 March in Chicago. Adam is a veteran of a bevy of management consultancies and large corporations who has spent the last four years researching a hypothesis about innovation, writing a book (The Phoenix Principle) and consulting. His observations are straightforward, profound and potentially healing for industrial economy companies.

Summary of the Meeting and Discussion

• "Lock-in" is a corporate phenomenon that is fatal for organizations because it prevents new thinking. New thinking is increasingly important because the market is more volatile than ever. Lock-in happens in a cycle: in its formative stage, the corporation experiences success, and success "hardens" into a success formula; it leaves an imprint on executives, workers and customers, who all identify with the success. Of course, the problem arises when the market moves and nullifies some key assumptions that are embedded in the success formula. There are three types of lock-in:
  • Behavioral lock-in: group-think, not invented here; slow decision making; rigid ideas about customers and products; sacred cows. Profits from financial manipulation.
  • Structural lock-in: many, but one stood out--"biased toward easily quantified, traditional actions and against more speculative ventures." Tightly integrated processes; relentless focus on process excellence; creative financial accounting.
  • Cost lock-in: costs always increase in real terms and are difficult to escape beyond a certain point without cutting innovation.