Fostering a Spirit of Innovation in Mature Industries LO14752

Michael Gort (
Tue, 26 Aug 1997 12:34:12 -0400

Replying to LO14725 --


Steven P. Feldman published an interesting paper on this topic: "How
Organizational Culture can Affect Innovation", Organizational Dynamics,
Summer, 1988. He contrasted two "types": the inner-directed entrepreneur
who was motivated by internalized ideals of self-reliance, strict self
control and a strong need for achievement and the other directed
bureaucrat, who is highly sensitive to the preferences of others.
Innovation is driven by the inner-directed entrepreneurial type, and is
inhibited by the other-directed, bureaucrat type.

Consider the general failure of large corporate R&D. Despite billions of
corporate investments in R&D, how many technological innovations do we see
coming from small startups? Why was Netscape a startup instead of a new
venture from Microsoft, IBM, Apple or other major players? Over the past
several years, we have seen new technologies sprouting up from all kinds
of small, new, flexible and entrepreneurial organizations. Larger
companies, to get the technology they need, frequently buy up the
startups. But why doesn't the R&D function in the large organization,
which is probably better funded and staffed with excellent technologists,
develop the needed knowledge themselves.

In a bureaucratic organization, new is difficult. The whole culture is
designed to slow down change, to hold back innovation. Multiple levels of
approval; on-again, off-again funding; review committees; regulations and
procedures - all are designed to inhibit rapid change, provide continuity
to the status quo and discourage innovative thinking. In the
entrepreneurial organization, the founder(s) probably have a very clear
vision of the technology they are building and the business problem it is
designed to solve. The culture encourages risk-taking and decentralizes
decision-making. There are few formal policies or procedures, and
decision-making is fluid and fast.

The description below of the existing climate surely sounds like a mature,
bureaucratic organization, so it should not be a great surprise that
innovation is difficult and transitory. Feldman's work suggests that you
begin by assessing the culture, and that you should expect a long,
difficult change effort since corporate culture is so very difficult to

-- Mike


Michael A. Gort (203) 637-9279

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