Business Exposed188
for the good of the rm. Yet, in SEI people don’t get a chance to
create efdoms and accumulate inuence beyond what’s good
for the company. Al doesn’t give them the time to do it.
That’s what my good friends and colleagues Phanish Puranam
and Ranjay Gulati found when they examined periodic structural
changes within Cisco. They found that Cisco’s many reorgani-
zations helped to solve some tricky co-ordination problems
within the rm. In many organizations, over time, employees
become focused on their own unit, group or department. It’s
their perspective that they view things from; that’s where their
social networks lie, and whose interests they pursue. By regularly
reshufing departments, however, Cisco’s people are not only
forced to develop new perspectives and co-operate with other
people, but the contacts and perspective of their old group (now
dispersed across the rm) are also still available, so the rm gets
the best of both worlds. Professors Nickerson and Zenger found
similar patterns while examining Hewlett-Packard’s regular
switches between centralization and decentralization.
Regular changes to an organization may be perceived by people
working in the rm as a pain (in all sorts of body parts) if not
completely unwarranted (“We’re performing well, aren’t we?
Why would we change anything?”) but it helps avoid more
serious trouble in the long run.
All of this ties back to the very rst chapter of this book, namely
how rms – especially the very successful ones – really make
strategy. It is not a rigid set of decisions; it is something that
emerges from the organization. In uncertain, foggy environments
– and show me an environment that isn’t! – rms can’t plan every-
thing and expect it to work. But you can organize – and reorganize
– your rm in such a way that you can rely on it working well, and
coming up with the goodies in some way or another.
“Innovation networks” and the size of the pie
The inevitable unpredictability of our world necessitates rms to
organize in such a way that they will behave in equally unpre-
1897
n
Making far-reaching decisions
dictable ways: hence, using some of the characteristics described
above. However, the characteristics of how to organize do not
merely concern the rm’s internal features, but also concern how
it connects to the outside world, for example through innovation
networks.
“Innovation networks” is becoming a bit of a corporate buzzword
so I write this with some level of embarrassment, but it happens
to be one that (to my slight disappointment) I actually believe in.
More and more companies I see and talk to seem to realize that
it is difcult to be innovative on your own. For true innovation,
almost by denition, you need a wide variety of capabilities,
knowledge, and insights. It is difcult to nd such diversity
within one organization. If you, as a rm, are trying to come up
with fundamentally new things, you would likely do well to look
outside your organization’s boundaries, to see whether anyone
knows anything that might be useful to you.
This is what “innovation networks” are about; combining and
tapping into other companies’ knowledge resources to, collec-
tively, come up with something that neither rm could have
done by itself. IBM, for example, does this consistently and in a
highly structured way, working with specic partners on specic
projects. Some of these partners are from outside their industry
but others could even concern straight competitors. For example,
in their Cell Chip project, developing multimedia processors,
they work with Sony, Toshiba, and Albany Nanotech. In their
Foundry R&D project, designing manufacturing processes for
cell phone chips, they work with Chartered, Inneon, Samsung,
Freescale, and STMicroelectronics. And they have several other
similar projects, with yet different groups of partnerships.
However, networks can also be of a more informal nature. For
example, the successful Sadler’s Wells theater in London that
I described earlier, which focuses on the creation of ground-
breaking modern dance, has no orchestra or ballet of its own.
Instead, it tries to create innovative modern dance shows by
putting artists in touch with each other who otherwise would
not have worked together. It organizes dinners during which
Business Exposed190
those artists meet; it gives them some studio time and budget
to improvise and experiment, and assists them with advice and
other facilities to get them to combine their skills and talents to
create new forms of modern dance. What they ask in return is
that the artists premiere their performance in Sadler’s Wells.
The most striking example of informal innovation networks
I have seen, however, is that of Hornby, the iconic British
producer of model trains and Scalextric slot car racing tracks.
They have some more or less formal alliances with software
producers and digital electronics companies, which for instance
led them to develop virtual-reality train systems and digital
slot car racing tracks (allowing multiple cars in lanes, which
can overtake each other; clearly the most common schoolboy
dream since the emergence of Samantha Fox!). Yet, they also
have some informal networks, which stimulated their innova-
tiveness. For example, one of their latest innovations is a real
steam train (which retails at a whopping £350), and I mean
real steam. The little whistler doesn’t run on electricity but on
actual steam. The interesting thing is how they came up with
it. But, actually, they didn’t . . . One of their customers did.
They maintain close networks – online, by organizing collector
clubs, tournaments, etc. – with their collectors. Through these
networks, they learned about a hobbyist who had invented a
real model steam train. They went to visit him and adopted his
rudimentary technology.
But the most striking example of their informal innovation
networks I saw when I visited Frank Martin, Hornby’s CEO, at
the company in Margate some time ago. In his ofce lay a piece
of slot car racing track. “Look,” he said, “A very innovative
and sophisticated new surface, which is not only much more
realistic but also much less slippery for the toy cars. Our Spanish
competitor sent it to us.” I said, “What?! Why would your
competitor do that? Are you sure it is not a uke? Are you
paying them for it?” And he replied, “No, whenever they invent
something new, they send it to us. And we also send them
stuff.” I offered to try to explain to him the meaning of the word
“competition” but to no avail . . .
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