Complexity and Innovation in Organizations

Jose Fonseca

• Publisher: Routledge
• Year: 2001
• eBook ISBN: 9781134577118
• Topic: Business
• Subtopic: Organisational Behaviour
• Index: Business

Taking a critical look at major perspectives on innovation, this book suggests that innovation is not a designed functional activity of a firm or an intentional process through which firms anticipate changes in conditions.  Jose Fonseca proposes that the concepts behind the innovation experiences cannot be traced to any particular time, space

1 Introduction

• The paradox of innovation
• The inevitability of change
• Innovation as complex responsive processes of relating
• Outline of the book

Over the last few decades, innovation has become widely recognized as both a major goal of economic activity and one of the most important instruments through which organizations and countries gain and sustain competitive advantage in globally competitive marketplaces. A central plank of the European Community’s industrial policy, for example, is that:

The Community and the Member States shall ensure that the conditions necessary for the competitiveness of the Community’s industry exist. For that purpose, in accordance with a system of open and competitive markets, their action shall be aimed at: . . . fostering better exploitation of the industrial potential of policies of innovation, research and technological development.

(European Act of 1986 – 130.1 Th.)

A close link is usually made between science and innovation as a source of competitive advantage, for example, when “Science and Technology” are identified as a cause of economic progress and a reason for the acquisition of firms in the “new” knowledge society. At the organizational level, some claim (for example, Crawford, 1991) that innovation is a key functional activity in organizations, in much the same way as marketing or finance are. Product innovation is then thought of as a routine operation like any other that organizations perform. Others suggest (for example, Eisenhardt and Tabrizi, 1995; Kanter, 1989) that innovation is a key survival strategy for organizations because it enables more rapid adaptation to turbulent environments. Innovation then becomes a primary indicator of an organization’s ability to adapt to its environment (Ansoff and McDonnell, 1990). Over the past few decades, this acclamation of innovation has become highly prominent as technological and scientific advancement, particularly in information and communication, increasingly affects every aspect of people’s lives.

However, when one moves away from discussing innovation at a highly abstract, macro level and turns to the literature for advice on how to be innovative in one’s own organization, one finds a variety of prescriptions. These prescriptions are derived from perspectives in which innovation may be seen variously as: a characteristic of organizations called innovativeness (Quinn, 1991; Kanter, 1988; Mintzberg, 1991); an economic process of applying and spreading scientific advances (Gomory, 1989; Gibbons and Johnston, 1974); a marketing process of addressing unsatisfied needs (von Hippel, 1988); a strategic dimension of competition in high technology industries (Pavitt, 1984; de Woot, 1990; Dussage et al., 1992); a routine function of organizations (Crawford, 1991); a cause of economic development through cumulative (self-reinforcing) complex interactions (Freeman, 1988); or a determinant of industrial structures and barriers to entrance (Porter, 1980).

A key question in all of these perspectives relates to how manageable the innovation process is. Those arguing that innovation is a manageable process see it as: an administrative problem (Souder, 1987; Twiss, 1992); a technical process (Wheelwright and Clark, 1992); a marketing issue (Crawford, 1991; Kotler, 1988); a social and political matter (Kanter, 1988; Frost and Egri, 1991); a cognitive and behavioural phenomenon (Van de Ven, 1988; Maidique, 1988; Howell and Higgins, 1990); or an evolutionary process (Quinn, 1991; Marquis, 1988; Gould, 1988). Furthermore, the levels at which innovation is analysed cover the range of: social systems (Lundvall, 1992); international and national economies (Freeman, 1974); industries (Abernathy and Utterback, 1988); organizations (Burns and Stalker, 1961; Quinn, 1991; Souder, 1987); groups (Kirton, 1980); and individuals (Kanter, 1984). Some claim that innovation is incremental rather than revolutionary (Quinn, 1991; Marquis, 1988). Others claim that the strategic planning of innovation is far superior to intuitive approaches (Johne and Snelson, 1990; Crawford, 1991; Cooper and Kleinschmidt, 1991). Yet others justify the superiority of soft human-centred approaches compared to strategic planning (Kanter, 1988). There are many claims of empirical validation of these perspectives. Wolfe (1994: 105) seems to be right when he says that “the most consistent theme found in the organizational innovation literature is that its research results have been inconsistent”.

Despite their differences, most writers seem to accept that innovation leads to new ways of doing things and to new solutions to the problem of resource scarcity. However, even this is contested by, for example, evolutionary economists who regard innovation as more an effect than a cause of self-reinforcing, cumulative patterns of economic growth. Evolutionary economists argue that technological innovation should not be reduced to the narrow perspective of technological determinism. Others also take this position:

The term “innovation” makes most people think first about technology . . . this is unfortunate, for our emerging world requires more social and organizational innovation. . . . Indeed, it is by now a virtual truism that if technical innovation runs far ahead of complementary social and organizational innovation, its use in practice can be either dysfunctional or negligible.

(Kanter, 1984: 20)

Regardless of whether innovation is thought of as a “hard” scientific and technological process, a rational management process, or a “soft” intuitive human process, all these perspectives have in common the assumption that innovation is a phenomenon that can be subjected to human control. It is taken for granted that humans can purposefully design, in advance, the conditions under which innovation will occur. In this book, I will argue that this assumption of controllability is the distinguishing feature of what I will call mainstream thinking about innovation. In my view, mainstream thinking is basically systems thinking. The purpose of this book is to argue for a very different understanding of innovation, one drawing on the perspectives developed in some detail in earlier volumes of the series of which this book is part (Stacey, 2001; Stacey et al., 2000). Innovation will be presented as the emergent continuity and transformation of patterns of human interaction, understood as ongoing, ordinary complex responsive processes of human relating in local situations in the living present. It is in such patterns of interaction that innovative meanings emerge, often to be expressed in the reified symbols of books, procedural manuals and computer programs, for example, and in material artefacts such as communication equipment. Mainstream thinking about innovation tends to downplay the messy relational processes in which reifications and artefacts have emerged to become tools in the ongoing interactive processes of organizing and earning a living. Instead, mainstream thinking tends to focus attention on the emergent reifications and tools as if they were innovation itself. In this book I will be focusing attention on the ongoing self-organizing processes of communicative interaction in which the products of innovation emerge, and I will be arguing that these are not controllable. I will be drawing on actual experiences of innovation in order to develop my argument. These experiences are not idealizations of the innovation process that recount huge success stories in the world’s largest organizations in the world’s most advanced economy. Instead, they are accounts of the ordinary everyday processes in which organizations evolve, at a particular time, in a particular country, namely, Portugal.

But, first consider the kind of problem that mainstream ways of thinking about innovation lead to.

The paradox of innovation

Organizations create novelty in the form of better, more reliable, attractive and useful products and services. As consumers, we have become addicted to this spiral of novelty, demanding more and more from organizations. However, those organizations seem to be the first victims of their creations. Each individual organization struggles to get ahead of the competition in order to enjoy, even if only for a short time, some security and market protection. In doing so, they jointly create immense instability. Nowadays, facing the world as their market, and so even more competitive threats and demanding consumers, organizations seem to have no alternative but to keep innovating. As they struggle to achieve some stability, so they keep creating more and more complexity. This, it seems to me, is the paradox of innovation: the activity of innovating so as to create security and stability is that which produces insecurity and instability. There is, however, no escape from this paradox in the modern world. Individually, organizations adopt extraordinarily complicated and sometimes senseless procedures to predict and control their futures. They strive to keep up with whatever prospects they envision. Ironically, however, the more they act in order to secure their future, the more the compound outcome of their individual behaviours results in complex interrelations that render the future even more unpredictable and surprising.

People in organizations often talk about innovation as if there was some ultimate novelty, one that would finally deliver them from the pressures of competition, if only they could make the right rational choice. But as they all do this, they become trapped in the paradox described above, to which there is no resolution. And since they believe that innovation is the realization of a rationally chosen goal, it is difficult for them to explain, even to themselves, why they never reach the “Promised Land” but must keep innovating. From the perspective of rational choice, one can only conclude that failure to identify an innovation in advance is due to incompetence and this inevitably leads to frustration and anxiety. However, the range of feelings is quite different if one thinks of innovation as new meaning emerging in ordinary, everyday work conversations holding the potential for the construction of reifications and material artefacts. Innovation is then simply new patterning of our experience of being together. From a complex responsive process perspective, innovation feels less menacing and becomes a challenging, exciting process of participating with others in the evolution of work.

Imagine what would have happened if, before setting off to India to establish the first sea route between West and East in the fifteenth century, the Portuguese navigator, Vasco da Gama, had been required to fill in the paperwork that the European Union now demands before it will fund a new venture. Portuguese children today would not be fascinated by stories of sea monsters, mermaids, storms, famine, suffering, perseverance and courage. Instead, they would be puzzled by epic narratives about milestones, deliverables, accounting procedures, reports, review meetings, market plans, and detailed discounted cashflow analyses. One of the consequences of mainstream thinking is the loss of a sense of the excitement of creating the truly new. This is replaced by the belief that movement into the future is simply the uncovering of hidden order, the realization of some chosen goal, the unfolding of some stable form already enfolded, or the

The inevitability of change

We are repeatedly told that we live in a world of accelerating change and the word “globalization” seems to capture both the menace and the promise of this change. We are frequently exhorted to jump onto the high-speed train of change if we want to avoid extinction. However, there is nothing new about change: there has been change since the beginning of the universe. Globalization began as soon as the first humans wandered across the continents and later, Roman roads, Portuguese and Spanish sailing ventures, industrial revolutions and many other economic and technological developments were quantum leaps in globalization. Innovation and globalization have always been features of life.

However, while there is always change, periods of change differ from one another. Unlike previous economic revolutions, in which the input was energy and matter (coal, steam, oil, electricity, steel, plastic), the present revolution in economic productivity is based on information and knowledge (Freeman, 1988). This is a monumental shift. Previous changes could be adequately understood in terms of linear relations between material realities, enabling us to hold onto what may be the “illusion of control”. The new dimensions of change can only be understood in nonlinear terms (Arthur, 1996). We have moved from an economy based on the transformation of energy and matter to an economy of knowledge creation. Thus, we have moved from one reality of designing machinery, for which the natural sciences could supply the tools of measurement and calculation, to a more subjective reality, where the old notions of measurement and calculation do not apply (Caraça, 1993). Many do not really believe this and so engage in extraordinary efforts to develop “frameworks” for measuring, and thus controlling, relationships, knowledge and conversations.

Innovation is part of humankind’s struggle for identity and survival. The human race has faced the problem of resource scarcity and other natural constraints and has, so far successfully, dealt with this situation by creating new solutions, some of which also turn out to be harmful. And we have been able to do this in relating with others in dynamic processes of communicative interaction in which new patterns of meaning (action) have been constantly arising. Perhaps now, however, we have passed a critical point and entered a more intense sphere of interrelating. Perhaps we have been developing greater diversity and greater complexity and this has led us to be less dependent on our natural environment and its material and energy constraints. If this is so, then our sense-making requires a much more human-centred approach, one that focuses attention on our experience of being together, than that to be found in mainstream thinking about innovation. This book explores innovation from such a perspective, in which innovation is understood to emerge in complex responsive processes of relating.

Innovation as complex responsive processes of relating

The complex responsive process (Stacey, 2001; Stacey et al., 2000) view of organizational life understands organizations to be patterns of relationship between people:

All human relationships, including the communicative action of a body with itself, that is mind, and the communicative actions between bodies, that is the social, are interweaving story lines and propositions constructed by those relationships at the same time as those story lines and propositions construct the relationships. They are all complex responsive processes of relating that can be thought of as the interweaving of themes, and variations on those themes, that recursively form themselves.

(Stacey, 2001: 140)

These processes of communicative interaction are self-organizing and their patterning changes in unpredictable ways. But at the same time, the constraints of power and ideology, and the dynamics of inclusion–exclusion, emerge in communicative interaction, providing coherence and control although no one is in control. It is the very features of the process of interaction, namely, taking turns, using rhetorical devices, categorizing, and so on, in the context of mutual expectations, that imparts coherence and pattern to people’s ongoing communicative interactions.

From this perspective, organizations are thought of as groups of biological individuals relating to each other in the medium of symbols, thereby forming, while simultaneously being formed by, figurations of power relations between them, and between their group or organization and others in a community. The ongoing processes of relating always have a history: the history of each individual and of the group, organization, community and wider society, all of which are processes of relating. The processes of relating also encompass a particular physical place, particular resource availabilities and particular tools and technologies.

To put it in another way, organizational life is social practice, that is, patterns in the ongoing dealings of individuals with each other, sustained through time and across space in the medium of the very practices themselves. These practices are both the outcome and the medium of individual interactions in the process of which individual capacities for action are themselves formed. Human subjects and social institutions are jointly constituted through recurrent practices.

From this perspective knowledge is meaning and it can only emerge in the communicative interaction between people. It emerges as meaning in the ongoing relating between people in the living present. This is an evolutionary concept of knowledge as meaning continuously reproduced and potentially transformed in action. Knowledge is, therefore, the thematic patterns organizing the experience of being together. The process of learning is much the same and there does not seem to be much point in trying to distinguish the one from the other. Identity, both individual and collective, evolves and communicative interaction, learning and knowledge creation are essentially the same processes as the evolution of identity. It is meaningless to ask whether organizations learn or whether people in organizations learn. It is the same process. It is meaningless to ask how tacit knowledge is transformed into explicit knowledge, since unconscious and conscious themes organizing experience are inseparable facets of the same process. Organizational change, learning and knowledge creation are the same as change in communicative interaction, whether people are conscious of it or not. This perspective suggests that the conversational life of people in an organization is of primary importance.

This view of complex responsive processes is the point of departure for a way of understanding innovation and knowledge creation that I will be exploring in this book. I will argue that innovation is the emergence of new meaning and that such new meaning emerges in conversations between people that are characterized by a paradoxical dynamic of understanding and misunderstanding at the same time. One strand of the complexity sciences is the theory of dissipative structures (Prigogine and Stengers, 1984). A dissipative structure is a natural phenomenon that is continuously sustained by the process of dispersing energy or information. It is the process of dissipating, even wasting, energy that imparts changeability to the phenomenon and it is in the unstable, even chaotic, dynamics at bifurcation (change) points that the phenomenon is transformed. In other words, new order emerges in disorder, that is, diversity and what seems like wasteful interaction. Drawing on analogies from dissipative structure theory, I will be suggesting that innovation in organizations is fundamentally a conversational process in which meaning is continuously dispersed. Innovation as the potential for transformation emerges in conversations between people that are characterized by redundant diversity, which is experienced as mis/understanding. By this I mean that conversations having the potential for transformed meaning do not simply reproduce knowledge already formed, so sustaining identity, but rather dissipate meaning, leading to the transformation of identity. In speaking of the dissipation of meaning, I am referring to the misunderstanding in the midst of understanding that provokes people into searching for new ways of being together in the living present. It is in the communicative interaction of such searching that new meaning might emerge.

I will argue that these processes of probing interaction generate anxiety as identities are questioned, consciously and unconsciously. The emergence of trust is required to sustain the anxiety-provoking conversations, characterized by redundant diversity experienced as misunderstanding, which are required for innovation to emerge. I will argue that these processes of dissipation are fundamentally uncertain, making it impossible to design in advance the settings that will produce innovations. I will argue that innovation, new meaning, is prior to the “phases” generally identified in models of innovation “management” and that these phase models start at the stage where innovation has already emerged. What these models are able to supply, therefore, is a set of tools, that is, reifie...

Table of contents

• Cover Page
• Complexity and Emergence in Organizations
• Title Page
• Copyright Page
• Series preface: Complexity and Emergence in Organizations
• 1 Introduction
• 2 Mainstream thinking about innovation in organizations
• 3 The role of the individual in the process of innovation
• 4 The conversational nature of the innovation process
• 5 Innovation as complex responsive processes
• 6 Innovation and the reconfiguration of power relations
• 7 Conclusion
• Bibliography