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.