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Myths in management
However, I really think these things are useless (if not dangerous)
if done in isolation; the documents and models make little sense
without the explanation or (even better) involvement of the
individuals who created the knowledge in the rst place.
They can even be dangerous because they may create a false sense
of security, because every acquisition is unique, and you may
be following steps that, if taken out of context, do more harm
than good, and because it prevents you from really tailoring and
thinking things through. In such cases – when it concerns the
transfer of abstract, complex knowledge – unless you accompany
a database with a system to organize for human interaction, you
may actually be better off without it.
R&D – it’s a steal
One last question about knowledge in organizations, and that is
about these knowledge-generation units called R&D departments:
can you have a useful R&D department that is perfectly useless?
Perhaps I should explain the question . . . Most R&D departments
are supposed to generate new technologies, products, processes,
etc. But not all do. Some R&D departments seem to never come
up with anything that makes it to market. Clearly a waste of
money, these lab-rats, right?
Well, maybe not.
For a long time, economists and other folks studying organiza-
tions assumed that R&D departments are supposed to come up
with stuff. And only if they come up with good stuff – which
eventually makes it into a sellable product and reaps a prot – is
an R&D department worth the investment. Clearly, if they never
come up with anything at all, that’s money down the drain – or
at least, that’s what everybody assumed.
Then, two professors of strategy (note, not economists!), Wesley
Cohen and Daniel Levinthal, discovered an interesting insight.
To put it in a nutshell: sometimes, rms with R&D departments
that never come up with anything at all still seemed to benet
Business Exposed158
from them. How can such a seemingly useless bunch of Gyro
Gearlooses still be worth their while?
The trick is that, in many industries (and in most industries
to some extent), whatever rms invent comes into the public
domain, much like radio signals or air pollution. Hence, other
rms can easily access and imitate it. Economists always assumed
that this process is costless; you just pick it up and do it too.
Therefore, unless you’re in one of those rare industries in which
patents really work, it’s actually kind of nice if your competitor
invents something new; you can do it too without having had to
spend all this R&D money!
However, this turned out to be an over-simplistic view of the
world. Imitating your competitor is not that easy. It turns out
that rms that never invest anything in R&D actually have quite
a lot of trouble nicking ideas from others. They just don’t quite
understand them well enough. In contrast, rms that do have
an R&D department – even if the geeks never invent anything
themselves – appear to be much better at copying others. That’s
the unexpected benet of having your own R&D: it equips you
to steal from others. Because of your investments in R&D, you
are better able to really understand the technology and apply it
in your own products and processes.
Wes and Daniel examined this phenomenon at length and wrote
a series of articles about it in a bunch of heavyweight academic
journals, with telling titles such as “Innovation and learning:
The two faces of R&D”, “Absorptive capacity: A new perspective
on learning and innovation” and, my favourite, “Fortune favors
the prepared rm”. It shows that there are two benets from
investing in R&D: the rst one is to invent stuff; the second one
is to build up the capacity to understand, assimilate, and apply
the things that others come up with in your own products and
technologies.
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