Intermittent Aberrations: Can Mature Companies Innovate?
First Monday

Intermittent Aberrations: Can Mature Companies Innovate? by Sharon Doheny

A whole literature has grown up around the apparently intractable hostility between innovation and bureaucracy, between those who create and those who control. Smart and speedy start-ups blindside mature companies with their inventiveness then grow up into mature companies and are outsmarted in their turn. The only way for innovation to survive in mature companies is to isolate the creators from the managers in protected enclaves. If this is true, it means that it is virtually impossible for sustained innovation to be built into the everyday operation of mature companies; it can only ever be an intermittent aberration.

Contents

Introduction
Whither innovation?
Conclusion

 

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Introduction

In an entertaining series of articles that appeared between July and October 2000 [1], Fool.com writer Robert Landley presented an interpretation of how companies evolve from start-up to conglomerate. His view is based on that of Robert X. Cringely, who in his book, Accidental Empires, likens the growth of a company to a military operation.

In Cringely's analogy, the first wave to hit the beach are the commandos, those who invade the new territory, taking the enemy by surprise and establishing a beachhead before their presence is properly noticed or resisted. The commandos represent the kind of people who found start-ups; they are the dynamos with the ideas and driving energy to create the new products that explode into the marketplace while traditional companies snooze.

They "create something out of nothing ... A commando can literally do the work of a hundred normal employees when they've got the right problems to work on. A start-up without commandos has nothing to sell" (Landley, 2000a, p. 1). In the Internet pantheon of superheroes, these are the teenagers and twenty-somethings, who perform herculean feats in the family garage with two old computers and endless supplies of fried chicken and soda. The Australian version of this kind of commando is Steve Outtrim, who founded Sausage Software in 1995 at the age of 23 with Hotdog, his HTML editor that enabled authors to publish content on a new platform just taking off called the World Wide Web.

The second wave on the beach is the infantry, who exploit the opportunity created by the commandos. These are "the people who turn a promising start-up into a profitable business with systematic development, manufacturing and sales effort. They provide structure to a company that allows it to grow beyond an activity shared by a half-dozen friends into a real business" (Landley, 2000a, p. 1). Without the infantry, the opportunity created by the commandos would most likely be lost, since commandos notoriously prefer finding new worlds to conquer to consolidating the territory they have already gained.

For Sausage Software, this phase probably commenced with the appointment of Wayne Bos as Director in January 1999. Although Outtrim had floated Sausage in 1996 in an attempt to put the company on a firm business footing, corporate Australia had not been impressed by his lack of business experience and Sausage's fortunes had languished, with shares plummeting from a high of $2.75 to a low of 8.5 cents (Cave, 1999, p. 22). Bos, in the space of nine months, migrated the company from a one-product former wonder to a flourishing Web business. He presided over the purchase of six other Web-based companies and boosted projected turnover from $5 million to $35 million (Cave, 1999, p. 22).

According to Cave, writing in September 1999, the difference between Outtrim and Bos was the latter's "experience with balance sheets and big budgets ... He wears the uniform and speaks the language of corporate Australia. He brings to Sausage the corporate credibility and depth of experience it desperately needed" (Cave, 1999, p. 22). Bos's appointment marked the end of Sausage as a "cottage industry".

Although at the time of Cave's article, Outtrim at 26 and Bos at 33 were not remarkably distant in age, they were depicted as completely divergent in appearance, personality and experience. Bos, appropriately photographed in a business suit, had an extensive background in finessing big-ticket finance and technology projects for the cream of Australia's large corporates. Outtrim, the Internet prodigy who cut the code for Hotdog in his loungeroom, was photographed in jeans, open-necked shirt and reversed baseball cap, the quintessential Web geek.

Landley's third wave of business growth is what he describes as the police stage. Once the infantry has consolidated the company's position, the third wave "takes over with the task of holding the captured territory like police, and milking it for all it's worth. By codifying business practices into bureaucratic procedures, they sustain the profitability of each market niche by preventing anyone from changing a winning formula" (Landley, 2000f, p. 1). The third wave is distinctly marked by the appearance of middle managers, who are in Landley's schema the dead hand of bureaucracy (see Appendix 1). Their function is to stifle creativity, which is inherently destabilising, and push the company into the kind of growth and profitability that comes from reducing expenses, absorbing smaller companies with potentially profitable products and above all avoiding risk. Like Microsoft, they buy the potential competition or kill it; occasionally, they do both.

The appointment of Lloyd Roberts as CEO of Sausage Software in July 2000 marked the transition of that company into the third wave of business growth. Roberts, founder and CEO of SMS Consulting, a Sausage Software acquisition, described his own strengths as being "a good manager and operational guy" (Roberts as quoted by Sainsbury, 2000, p. 1), solid third-wave virtues. His plans for Sausage included bureaucratising the company by dividing it into products, R&D and services divisions, seeking new markets for its existing products, and continuing with an ongoing program of acquisitions. There was no declared manifesto to create new products.

According to Landley, commandos, infantry and police are uneasy corporate bedfellows. Commandos and infantry can co-exist, provided the former stay in their role as agents of change, while the latter act as facilitators of change, taking "much of the non-creative role off of commandos, giving them a protected environment in which to work free from distraction" (Landley, 2000a, p. 2). But, infantry cannot survive in third-wave companies unless they assume an executive position so that they outrank the middle managers. And commandos cannot survive in third-wave companies at all. "A third-wave company cannot keep commandos around. Period. Commandos create change, middle managers prevent change. When the 'suits' take over, the commandos are outta there" (Landley, 2000a, p. 2).

This is an exodus that can be seen again and again in corporate histories: Steve Jobs and Steve Wozniak at Apple, Paul Allen at Microsoft. Sometimes it is precipitated by the growing boredom of the commandos, sometimes by the unwillingness of third-wave bureaucratic structures to tolerate the instability caused by creative mavericks. At Sausage Software, both Steve Outtrim and Wayne Bos quit the company within a few days of Lloyd Roberts' appointment. Steve Outtrim departed "believing [Sausage] no longer needed his input ... [B]y his own admission, his expertise was building Web sites, not managing a multi-million dollar business" (Scevak, 2000, p. 1). And in a remarkable public discussion in Melbourne six days before his own departure, Bos described Outtrim as "uncouth" and Roberts as "old school and ... slow to move" (Greenblat, 2000, p. 1).

 

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Whither innovation?

Taken literally, Landley's scheme means there is little room for innovation - the creation of "an idea, practice or object that is perceived as new" (Rogers, 1983, p. 11) - in third-wave or mature companies. For Landley, innovativeness is a quality of individuals, not a process that can be encouraged or built into a corporate structure. If there are no commandos left in a company, there is no innovation.

Yet the literature does contain studies of mature companies where innovation has been successfully encouraged. Shapiro (1995, pp. 84-86) relates the story of the Caterpillar Tractor Company in the United States. In 1986, the company launched a program to involve workers in decisions about running its plants. This was a risky strategy, since the company had weathered a bitter 204-day strike only four years previously and still employed many of the people who had been involved in that strike. Yet, the program was successful. In one plant alone, employee ideas saved more than $13 million in three years (Shapiro, p. 84), by improving processes and minimising downtime.

The kicker in Shapiro's story came in 1991, when a new chairman, Donald Fites, was appointed. For Fites, power belonged with management, not with employees [2] and the company chose to pursue that through direct confrontation with its workers and their union. Employees responded by working to rule - one of the classic ways workers punish a management that is more interested in control than flexibility - and abandoned all efforts to create and implement improvements in the way they worked [3].

Fites' actions contributed positively to Caterpillar's bottom line: his tough stance with the union considerably cut labour costs and he put the company back in the black after several years of severe losses. But for Shapiro, the loss to the company was substantial, if not quantifiable - the "missed opportunities and lost ideas - the hundred or so times over the course of a day when each person faces the opportunity either to take an action that challenges the status quo or to do nothing" (Shapiro, p. 86).

The Caterpillar example seems to support Landley's analysis, and the importance he attributes to individuals rather than processes. For Landley, business innovators are just as important as technical innovators. He cites the examples of Bill Gates [4], Steve Jobs and Walt Disney, people without any great technical skill, but who are distinguished by "passion and vision, ... [not just] the ability to come up with ideas, but the drive to pursue and actually implement them" (Landley, 2000e, p, 1). At Caterpillar, when a third-wave policeman succeeded a business commando, innovation died since without that kind of person being in a position of power, the processes that supported innovation were meaningless.

A sheltered workshop for innovators

Landley's solution for third-wave companies that wish to encourage innovation is to isolate the innovators, the commandos, from the rest of the organisation and leave them to innovate in peace - the proverbial skunkworks [5]. Landley cites the examples of AT&T's Bell Labs, Xerox's Palo Alto Research Center (PARC) and IBM's Boca Raton facility that produced the IBM personal computer.

Peters' article (Peters, 1997) addresses the chaotic, sloppy and unpredictable ways in which innovations appear inside companies. Almost invariably they are not the result of strategic planning. After studying the record of America's major corporations, his conclusion is that despite the gloss that companies habitually put on their histories, "[i]nnovation just doesn't happen the way it's supposed to ... . [W]henever a practical innovation has occurred, a skunkwork, usually with a nucleus of six to 25 people, has been at the heart of it" (Peters, pp. 348, 351).

One of the drawbacks with the skunkworks approach, pointed out with some acerbity by Landley, is that whatever these little islands of creativity develop will only go to market if the people who control the company can come up with an application they are convinced is profitable (see Appendix 2). AT&T's think tank "full of carefully insulated commandos" (Landley, 2000d, p. 2) invented the transistor, which the company used to upgrade its telephone switching network. It took new start-ups, such as Texas Instruments, Sony, Hewlett-Packard and Intel, to see the potential of the transistor, licence it from AT&T and go on to make their various fortunes.

The story of the personal computer is a familiar tale in the lexicon of missed opportunities. Xerox's PARC facility developed practically all the technology of modern personal computing - windows, icons, the mouse, pulldown menus and WYSIWYG printing, but the company could not bring itself to risk disrupting its core business of making copiers. Instead, over the objections of its PARC commandos, the company gave a tour and demonstration of the work to Apple, then a new start-up. "The result was the Apple Macintosh, which Microsoft later copied to create Windows" (Landley, 2000d, p. 2)

According to Peters, this is a familiar tale. He describes the reaction of many companies to their own and other company's innovations as "truly frightening" (Peters, p. 350). Such is the desire to protect their current sources of profit and avoid the risk of gambling on something that has no proven market value, that faced with a new innovation in their industry 94% of current product leaders choose to reduce their investments in new technology in order to pour more money into the old (Peters, p. 350).

Another drawback of the skunkworks approach is that it may create a climate of us and them. Just about every software developer's bookshelf includes Edward Yourdon's provocatively titled Death March: The Complete Software Developer's Guide to Surviving "Mission Impossible" Projects. The book is about how organisations hamstring or even sabotage creative projects by setting impossible tasks and deadlines. Anecdotal [6] evidence suggests the book is passed from hand to hand in development teams with the same evangelistic fervour with which a previous generation of teenagers circulated bootleg copies of Lady Chatterley's Lover. While the managers may be reading the business and financial press, their developers are reading Death March. And little wonder. There is no doubt who are the heroes of this narrative: the dauntless developers who battle the cupidity and ignorance of the managers.

To Yourdon, death march projects happen because "corporations are insane, and ... corporate insanity is doing the same thing again and again, and each time expecting different results" (Yourdon, p. 2). The terms and conditions of typical death march projects are set through negotiation, where "the demands of the other side (in terms of schedule, budget, etc.) are usually so extreme that they overwhelm any safety factor ... What senior management really wants is a firm commitment - a promise that the project will be finished on a certain deadline, with a budget of a certain number of dollars, and a staff of a certain size. This gives them the enormous luxury of (a) no longer having to worry about the problem for the duration of the project, and (b) having a convenient scapegoat to blame if the promise is broken" (Yourdon, p. 80, p. 87).

This is language that presumes and fosters antagonism. If innovation is achieved, it is despite the best efforts of 'the other side': the managers with their impossible demands and the bureaucrats who make people "fill in 17 forms in triplicate and then wait six months" (Yourdon, p. 117) for basic facilities like a desk. It also presumes that innovation is the sole preserve of the skunkworks; no one outside the group is capable of creativity. Yourdon's view of fellow employees who are not part of the skunkworks is summed up in his recommendation that developers do their work outside the physical boundaries of the organisation and "put scarecrow dummies at the desks normally occupied by the project team; management will have a hard time distinguishing them from the other zombies in the office" (Yourdon, p. 122).

The mobile innovators

In September 2000, Walker Information Global Network and Hudson Institute published a survey of the attitudes towards their employers of 9,718 staff from 32 countries. The survey found that Australian employees are the least "loyal" on earth, with more than half believing they will have moved on to another job within two years (Patrick, 2000, p. 3). Seventy-two per cent said they felt no obligation to stay with their company and 64% thought their employers' problems belonged to their employers and had nothing to do with them. The study was intended to establish an international benchmark for companies to measure the happiness of their staff, but the figures quoted above do not mean Australian employees are unhappy. On the contrary, they are "among the most satisfied with their pay, the fairness of their organisation and the way they are treated" (Patrick, p. 3). They are just more interested in their own well-being than the fate of the organisations that employ them.

The study did not delve into the reasons why employees feel this way; it may possibly be an ironic outcome of the economic rationalism that has dominated Western economies for the past few decades. Why would people feel any loyalty to a company that may rationalise their job out of existence without a moment's thought? But, far from being an adaptation borne out of resentment, the so-called lack of loyalty appears to be a positive adjustment to modern working conditions. The widespread belief of workers that they will move on to another job in the near future and their unwillingness to buy into corporate commitment lends credence to another model of organisational innovation - the notion of mobile innovators.

Web companies have led the modern push into fluid workforces, where only a core of the organisation may be employees, surrounded by a floating population of contractors brought in to drive a program of constant development with no expectation of permanency on either side. With the speed of Web growth demanding a constant flow of "new ideas, new perspectives, new ways of thinking about its products, its services, and its customers ... every company needs a constant infusion of new blood" (Reich, 2000, p. 3). Management then becomes a question of "managing turbulence - monitoring the flow of new people into a team or a department to produce a creative tension between the old hands who know the ropes and the new hires who are there to disturb the status quo" (Reich, p. 3).

The logical extension of this idea may be organisations whose boundaries are almost completely permeable or at least constantly shifting, where what are seen as core internal processes by traditional corporates are managed by a shifting array of external people and companies [7].

 

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Conclusion

The record of third-wave companies for sustained innovation is not promising. Although examples such as 3M (see Appendix 2) and Caterpillar show that individuals inside mature businesses are capable of innovating, whether those ideas are taken to market and which company takes them there, seems to be largely a matter of chance. The chance can be as fine as the difference between the day before and the day after Fites took over Caterpillar or Lapin came on board THQ (see Appendix 1).

Mature companies talk the talk of innovation, but rarely if ever seem to manage to breed organisational cultures that identify, nurture and reward creativity. Again and again, they restructure, downsize, upsize, rightsize, bring in a new management team, cut the fat, discover quality assurance or best practice or the ouija board, tip the hierarchical pyramid on its side or upside down or inside out. But, bureaucracies are notoriously resilient and if the leaders who support innovation are replaced by those who favour control, their processes do not appear to have a sufficiently independent life to survive the change.

The growth of Web companies and the change in workforce culture that has seen a growing ease with the notion of impermanence in employment may result in new models of innovation that accompany the new models of organisation. But, flying squads of creative mavericks floating in and out of businesses injecting innovation on demand is a contentious notion in the face of the flight back to financial conservatism that has come with the fall of the damn braces, bless relaxes ways of the discredited .coms.

Despite the lip service they pay to the importance of innovation, mature companies are sterile ground for creativity. The desire to survive becomes more important than the drive to experiment, even though this means they could stray down evolutionary cul-de-sacs. Each one, eventually, may go the way of the dinosaur. And that, considering their size and insatiable appetite, may be just as well. End of article

 

About the Author

Sharon Doheny is an Executive Director of e-marketing, an Australian marketing and marketing consultancy. She specialises in assisting companies to use new communications technology in order to enrich their marketing and business development. Her current interests lie in electronic commerce, e-mail marketing, Web content development and useability testing. Sharon has a Bachelor of Social Science (Communications) and is completing post-graduate degrees in Interactive Web and Internet Technology and in Electronic Commerce.
E-mail: shadoh@e-marketing.com.au

 

Notes

1. See Landley, 2000a to 2000g in References.

2. Shapiro (p. 85) quotes the new chairman as saying "How much is it worth to run your own company?"

3. Shapiro (p. 85) relates the example of one worker who went back to the rulebook way of attaching the large hose first in the off-highway trucks he helps assemble, and then reaching behind the large hose to attach several smaller hoses, instead of the other way around which "he knows is faster".

4. Landley sees Microsoft as a third-wave company pretending to be a first-wave company. Its mission is to protect the primacy of Windows, a third-wave agenda that manifests itself through aggressive acquisitions and monopolistic behaviour. At the same time, the company is led by a business commando and has an upper management and corporate culture to whom "all bureaucracy is pure evil" (Landley, 2000f, p. 2).

5. According to Peters (1997, p. 351), this term was coined by the small band of Lockheed mavericks who took themselves off line in the 1950s and developed the U-2 spy plane, a machine many experts of the time said would never fly.

6. The author recently witnessed the furor this book created in the development team of one Web company, where the phrase death march entered into the everyday vocabulary of all members of the team. See also, for example, the numerous clients' reviews of Edward Yourdon's book at Amazon.com. Positive or negative, nearly all of them appear to be written by developers, all of whom seem to be routinely hauled into death march projects.

7. Web companies have an average of 14 partnerships each and this number is expected to rise to 69 partnerships within three years (Forrester Research cited by Anders, 2000, p. 1).

 

References

G. Anders, 2000. "Pick Partners That Fit," Fast Company, issue 39 (October), at http://www.fastcompany.com/online/39/partners.html.

M. Cave, 1999. "The young e-guns," Australian Financial Review, (4-5 September), pp. 21-23.

Robert X. Cringely, 1992. Accidental empires: How the boys of Silicon Valley make their millions, battle foreign competition, and still can't get a date. Reading, Mass.: Addison-Wesley.

D. Dorsey, 2000. "Growing Pains," Fast Company,, issue 39 (October), at http://www.fastcompany.com/online/39/thq.html

E. Greenblat, 2000. "Home truths from a Sausage wanker," Sydney Morning Herald (5 July), at http://www.smh.com.au/news/0007/05/bizcom/bizcom07.html

R. Landley, 2000a. "How a Start-up Evolves," Fool.com (31 July), at http://www.fool.com/news/foth/2000/foth000731.htm

R. Landley, 2000b. "Berkshire's Sustainability," Fool.com (5 September), at http://www.fool.com/news/foth/2000/foth000905.htm

R. Landley, 2000c. "How Companies Grow Up," Fool.com (13 September), at http://www.fool.com/news/foth/2000/foth000913.htm

R. Landley, 2000d. "How Xerox Forfeited the PC War," Fool.com (18 September), at http://www.fool.com/news/foth/2000/foth000918.htm

R. Landley, 2000e. "The Power of "Business Commandos"," Fool.com (25 September), at http://www.fool.com/news/foth/2000/foth000925.htm

R. Landley, 2000f. "Microsoft's Split Personality," Fool.com (28 September), at http://www.fool.com/portfolios/rulemaker/2000/rulemaker000928.htm

R. Landley, 2000g. "The Innovator's Dilemma," Fool.com (2 October), at http://www.fool.com/news/foth/2000/foth001002.htm

P.R. Nayak and J. Ketteringham, 1997. "3M's Post-it Notes: A Managed or Accidential Innovation?" In: R. Katz (editor). The Human Side of Managing Technological Innovation: A Collection of Readings. Oxford: Oxford University Press, pp. 367-377.

A. Patrick, 2000. "Australian workers 'least loyal on earth'," Australian Financial Review (20 September), p. 3.

T.J. Peters, 1997. "Creating Innovative Climates: A Skunkworks Tale," In: R. Katz (editor). The Human Side of Managing Technological Innovation: A Collection of Readings. Oxford: Oxford University Press, pp. 347-355.

R.B. Reich, 2000. "Your Job Is Change," Fast Company, issue 39 (October), at http://www.fastcompany.com/online/39/jobischange.html

E.M. Rogers, 1983. Diffusion of Innovations. 4th edition. New York: Free Press.

M. Sainsbury, 2000. "Top Dog," ITNews (11 July), at http://www.itnews.com.au/story.cfm?ID=3259

N. Scevak, 2000. "The End Of An Era," Internet Daily (3 July), at http://australia.internet.com/r/article/jsp/sid/903726

E.C. Shapiro, 1995. Fad Surfing in the Boardroom: Reclaiming the Courage to Manage in the Age of Instant Answers. Sydney: HarperBusiness.

E. Yourdon, 1997. Death March: The Complete Software Developer's Guide to Surviving "Mission Impossible" Projects. Upper Saddle River, N.J.: Prentice Hall PTR.

 

Appendix 1: From Cosy Family to the Prince of Darkness - THQ

In a chilling article that appeared in a recent issue of Fast Company, David Dorsey (Dorsey, 2000) described the metamorphosis of a company into a third-wave police state. Over a period of five years, THQ grew from 43 employees to 300 and from $13 million in annual revenue to more than $300 million, placing itself in third place in Fortune magazine's list of fastest-growing U.S. companies. Once a small, fast-moving start-up, THQ has grown up to be America's fourth-largest video-game publisher (Dorsey, p. 2).

As a consequence of that growth "what once was a cosy family where everyone knew everything, where e-mail was superfluous because all events were public knowledge, is now a corporation where silence has replaced easy, informal communications" (Dorsey, p. 2). THQ has replaced that communication with formal processes of reporting, voice e-mail and knowledge management systems.

In 1998, realising that he did not have the skills to implement the systems and controls he saw as being necessary to manage THQ's growth, the company's CEO, Brian Farrell, hired Jeff Lapin as his deputy. Lapin's job was to "play the role of the 'man in black', the one who teaches people how to narrow spans of control, how to hire key professionals, and how to put in place professional reporting systems and work processes" (Dorsey, p. 4). Farrell now spends the majority of his time as the public face of THQ, meeting with shareholders and business partners, creating alliances, goodwill and a positive public for the company, while Lapin manages the company itself.

Lapin presided over the introduction of new systems of control and communication, implementing formal and regular meetings, creating "new paths for decision-making: sequences, checkpoints, milestones" (Dorsey, p. 5). What was once spontaneous is now systematic and what was once a team is now a company. Those who could not adjust to the new regime resigned or were fired.

Germaine Gioia, one senior manager who did manage to adjust, attributed her success to "adopting a role of absolute humility, assuming in every case that the new regime could show her a better way to do things" (Dorsey, p. 5). She described her attitude as "I'm going to go along with this guy, or I'm going to be fired. ... Whenever Jeff says 'Hop', I make sure to ask, 'How high?'" (Gioia quoted by Dorsey, p. 9).

Gioia goes on to describe an incident that is reported without comment by Dorsey but seems to be a sinister indication of THQ's metamorphosis in culture:

"For his [Lapin's] birthday last year, the entire company made masks by stapling pictures of Jeff's face to wooden paint stirrers. Jeff almost always wears black. So we all dressed in black and held the masks to our faces. Then the whole company gathered in a conference room and sang 'Happy Birthday' to him. He was moved" (Gioia quoted by Dorsey, p. 9).

This is evocative stuff. A group of acolytes singing Happy Birthday to the Prince of Darkness while wearing a likeness of his face in some combination of fear, awe and a desire to become like the object of terror. The corporate equivalent of the Stockholm Syndrome.

In a sidebar to his article, Dorsey lists 10 rules of Lapin's regime that have enabled THQ's rapid rise into the ranks of one of America's fastest-growing companies. Number 5 is "Think cheap. Spend only when you need to. Find ways to get the most return on the least investment." Number 6 is "Fire people. Separate the wheat from the chaff. If you can't, hire someone who can." Number 7 is "Stick to your knitting. Do only what you do best. Don't expand to a new level or take major risks unless you have no other choice." Number 8 is "Do paperwork, do meetings. Create professional systems for project management, and stick to them religiously" (Dorsey, pp. 13-14).

 

Appendix 2: Reengineering history - 3M and Post-it® Notes

On the strength of its invention of Post-it® Notes, 3M has long enjoyed a reputation as an innovative company. According to legend, even though major office supply distributors thought the idea of Post-it® Notes was "silly" and market surveys were "negative", 3M persevered. The company finally achieved a market breakthrough when it "mailed samples to the personal secretaries of Fortune 500 CEOs, using the letterhead of the 3M chairman's secretary" (Peters, 1997, p. 347).

The reality is somewhat different. The adhesive that is the basis of Post-it® Notes was invented by a 3M chemist in 1968. It was only in 1978 that 3M finally came up with Post-it® Notes and, in the face of bleak reports from market tests, the company almost abandoned the product before launch. Far from being a shining example of 3M's far-sightedness and innovative daring, Post-it® brand adhesive was "one of the most neglected product notions in 3M history" (Nayak and Ketteringham, 1997, p. 367).

The only reason the adhesive was still around in 1978 was because of the persistence of its inventor, Spencer Silver. In 1968, when he invented the glue, Silver was a member of a polymers research team in 3M's Central Research Laboratories. His glue did not fit into the research brief of his team, which was to come up with stronger not weaker adhesives. From 1968 through to 1973, Silver persisted in trying to convince the company that products could be developed that exploited the qualities of a less aggressive glue. But, 3M was "trapped by the metaphor that insists that the ultimate adhesive was one that forms an unbreakable bond" (Nayak and Ketteringham, p. 368). Silver even had trouble convincing the company that the glue was worthy of patenting. Eventually, 3M spent the minimum amount of money possible and patented the product only in the United States.

Silver refused to give up on his glue, working unceasingly to convince his colleagues that it had potential. "You have to be almost a zealot at times in order to keep interest alive ... It seems like the pattern always goes like this: In the fat times, R&D groups appear and we do a lot of interesting research. And then the lean times comes just about at the point when you've developed your first goody - your gizmo, And then you've got to go out and try to sell it. Well, [nobody] wants to touch it. They don't have time to look at new product ideas with no end product already in mind" (Silver as quoted by Nayak and Ketteringham, p. 369).

Finally, in 1974 another 3M chemist came up with the notion of using the glue for temporary bookmarks, the forerunner of Post-it® Notes. Within two years, his division had developed the product as we know it today. They distributed the sticky notes to every 3M office and it rapidly became a hit. Despite that, the product was almost a victim of the company's traditional approach to market testing, which relied on advertising to generate enthusiasm in distributors rather than putting the product in front of people and encouraging them to discover its indispensable usefulness.

3M explicitly integrates innovation in its corporate goals. In any given year's sales, 30% of revenue must come from products less than four years old and 10% from products less than one year old. All of the company's 70,000 employees worldwide are encouraged to spend 15 per cent of their work time in dreaming up and developing their own new product ideas.

According to Geoffrey Nicholson, 3M's vice president of corporate technical planning and international planning operations, it is not the time spent in thinking that is important, "it's the message that it's OK to dream." If employees consider they have dreamed up a potentially commercial notion, they seek a senior executive sponsor, who then subjects it to an assessment by a team of engineers, marketers and accountants. If the idea passes muster, it goes into development. If not, an employee can either go back to dreaming or, like Silver, keep pushing his original idea.

3M literature about Post-it® Notes refers effusively to this process, the encouragement provided to creative people by champions and patrons, but "Silver often wonders where all that management encouragement was during ... his struggle to be heard. [T]he flame was borne by researchers from below, acting largely in solitude and occasionally in defiance of the organization's implicit desires" (Nayak and Ketteringham, p. 375).

3M's sponsoring process means that innovators must shop their ideas around the company's many divisions looking for a champion. Although they are rarely stopped outright, they "labour in their spare time, experiencing mounting rejections from managers, most of whom do not have the imagination, the patience, or the budget to take a serious look at their ideas. As in other companies, product ideas die at 3M, but their deaths are often more slow and lingering" (Nayak and Ketteringham, p. 375).


Editorial history

Paper received 4 February 2001; accepted 1 March 2001.


Contents Index

Copyright ©2001, First Monday

Intermittent Aberrations: Can Mature Companies Innovate? by Sharon Doheny
First Monday, volume 6, number 3 (March 2001),
URL: http://firstmonday.org/issues/issue6_3/doheny/index.html





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