Is innovation the missing dimension?

Innovation: The Missing Dimension by Richard K. Lester and Michael J. Piore (Cambridge, MA: Harvard University Press, 2006)

Amid mounting concern over the loss of jobs to lower-wage economies, one fact is clear: America’s prosperity hinges on the ability of its businesses to continually introduce new products and services. But what makes for a creative economy? How can the remarkable surge of innovation that fueled the boom of the 1990s be sustained? For an answer, two MIT professors (Richard Lester and Michael Piore) examine innovation strategies in some of the economy’s most dynamic sectors in Innovation: The Missing Dimension.

The basic ideas developed in the book emerged primarily from a series of case studies of new product development in cellular telephones, medical devices and garments especially blue jeans. These studies, conducted from 1994 to 2002 as part of a research program at the MIT Industrial Performance Center, served both to suggest the ideas of the book and also to ground those ideas concretely. They were chosen to represent a range of different products and professional disciplines. The cell phone and medical devices cases are drawn from two of the most technologically dynamic sectors of the economy: the information/communications sector and the life sciences/health care sector. The third case is drawn from the apparel sector, where creativity tends to be associated more with fashion than with technological advance.

In each case, the authors chose one company to study extensively, with repeat visits and multiple interviews. The material gathered at the core company was then supplemented by material gathered at other companies working on the same or similar products, either in collaboration with the first company or in competition with it. Each case included companies from Western Europe and Japan in addition to the U.S.

The companies which featured prominently in Innovation: A Missing Dimension included:

• Motorola in cellular telephones, along with Lucent, Erickson, Nokia and Matsushita;
• Levi Strauss in garments, along with American Garment Finishers, Martello, Tornello, Camaieu, Toray and Onward Kashiyama;
• Aspect Medical Devices in medical devices, along with Agilent Technologies, Chiron, Daiichi Pure Chemicals, Shimadzu Corporation and Oticon

To the authors, innovation comes down to reconciling two fundamental processes in the product lifecycle development cycle that are fundamentally at odds with one another: analysis and interpretation. Analytical processes work best when alternative outcomes are well understood and can be clearly defined and distinguished from one another. Interpretative processes are more appropriate when the possible outcomes are unknown –when the task is to create those outcomes and determine what their properties actually are. These two ways of proceeding involve very different kinds of skills, different ways of working together, different forms of managerial control and authority, and ultimately different ways of thinking about the economy.

These differences, to Lester and Priori, are not merely one of degree. The two processes make it difficult to think about both of them at the same time. Yet the ability of businesses to think about these two processes separately and to manage them simultaneously is the central challenge of product development. And finding a balance between them is the key to sustaining the innovativeness, and hence the competitiveness, of the US economy as a whole.

Chapter One introduces the three main case studies of product development and design, and its central theme is the problem of how to integrate the efforts of large numbers of people, working in different technical fields and organizational units, into a practical, profitable product design. Organizational integration is one of the core managerial challenges of our time, and management experts have devised an arsenal of tools and strategies for dealing with it. Chapter 2 is about developing the concepts of analysis and interpretation in more detail, and how most engineers and managers in the 3 case studies were biased towards the analytical approach.

In Chapter 3, the authors introduce the concept of the manager’s role in animating open-ended conversations between people from different professional and organizational backgrounds as one of a “hostess at a cocktail party.” What emerges from these dinner party conversations is more like a language community, and new products emerge out of that community.

Chapter 4 exposes two of today’s most prominent prescriptions for managers as fools’ good if the manager as cocktail party hostess metaphor is to be believed: “listen to the voice of the customer,” and “focus on your core competencies.” The bias towards analytical approaches kept managers in the case studies from understanding them interpretatively and thus undermined its role. Chapter 5 showed how against all odds, some companies are able to combine analytical and interpretative processes. However, these combinations are fragile, threatened not only by managers’ unfamiliarity with the interpretative process but also the intense pressures of economic competition.

Ultimately, in a competitive business environment, analysis will prevail, or new products will never be defined in a way that allows them to be produced and brought to market. But competitive pressures also increase the difficulties of pursuing interpretation, and this creates the need for public spaces, insulated from competition, where interpretative conversation can be pursued more freely.

Chapters 6 and 7 look at sheltered spaces for interpretation – the regulatory arena and the research university respectively, but laments the fact that many of these spaces are threatened by the adoption over the past 15 years of market-oriented reforms by business and government. The final chapter closes much as the book began: with a call to action to embrace the interpretative perspective which points to the importance of cultivating a tolerance for ambiguity – the critical resource from which true innovation derives – whie preserving the system of market signals and the managerial skills required for efficient analytical decision-making.

This was a hard book to handicap and critique, as the MIT professors formulaically prove and reprove their central argument in each of the 3 case studies, and do so in a way that shows the moral bankruptcy of analysis, analysis, and analysis as the key to corporate salvation and innovation, yet doesn’t completely convince the reader that interpretation and ambiguity equals innovation. As a communications professional reading this book, I was struck by the emphasis on story-telling that a nuclear engineer and professional economist brought to the innovation discussion, but there were times where I wished a ghost-writer had worked with the two gentleman on getting the book out of the ivory tower and down to the boardroom or plant floor.