Out-Innovated by Management Practice Blowback - a Video Conversation with John Hagel
I had the opportunity to sit down for a discussion with John Hagel of Deloitte's Center for the Edge last week.My previous post about the 'Shift Index 2009' report is augmented by this video, and fellow ZDNet blogger Dennis Howlett attended the '‘Eastern Philosophy: Management Lessons From Emerging Markets’ Brainstorm Tech panel John and I discuss here and has some video of that on YouTube.
The following is a brief transcription of the above 15 minute conversation.
The Shift Index idea came about because short term snapshots of metrics on indices such as unemployment, inflation are important but month to month, quarter to quarter stats don't give a bigger picture identifying the context of change over longer periods.
We are seeing profound shifts over decades but there are no metrics that measure the forces of long term change - the 'Shift Index' aims to plot the longer voyage we are moving through, detailing relative speeds and pivot points.
Change is increasingly fluid rather than static, with dynamic end points. Destination points are a new set of arrangements which are increasingly dynamic, and how to play in this fast changing world to identify, create and capture value are goals of the Shift Index.
A key point is that digital infrastructure has been improving for a long time at exponential rate, but management practices haven't kept up with it.
Going forward, a lot has to do with changing mind sets and practices to using these new technologies, which have conceptually outstripped relatively moribund work practices.
Westerners tend to think of eastern business as 'just' resources for supply chain management, but the actual management innovation in these countries is not widely understood. Managing extended business processes across very large numbers of partners effectively against time and financial sensitivity is highly effective in these regions.
Changes to practices and institutional arrangements in China and India are very low tech, relying principally on the telephone and fax machine. Combining this unstructured fluidity with modern technologies is yet to come but will be powerful.
Western process driven technology platforms are considered much too hard wired and static by entrepreneurs in these areas: the primary value they are delivering is high flexibility to their customers.
There's a tremendous opportunity for unstructured technology development - taking as the architectural challenge coordinating extremely time sensitive activities across 10,000 business partners with no central point of control, no one person who mandates what technology you have to use, will be a major new source of innovation.
As an example of innovation, the Japanese motorcycle industry originally set up joint ventures with Chinese partners, bringing in hard wired technologies to run the relationship and obtained labor cost savings.
Now, a new generation of entrepreneurial Chinese motorcycle companies have subsequently completely re-architected not just the motorcycle product but also the processes for designing and manufacturing, taking dramatic share from the Japanese manufacturers. They have now started to export internationally - something described in the Shift Index as 'innovation blowback'.
A fundamental point John makes is that if we don't understand, emulate, improve and refine what these manufacturing innovators are doing to succeed, we may be overrun by companies out innovating and attacking their former partners.
The lack of entrenched mindsets and business practices which imprison western companies allows leapfrogging innovation by BRIC country entrepreneurs who have greater flexibility and open mindedness. John and his colleagues are now working on a new executive book focused on strategies to solve these problems for western companies and ignite greater innovation.
The innovation is primarily around management practices and have not yet figured out how to bring digital infrastructure into play - when they do, says John, they will be even more formidable...