Management

Innovation of Institutional Cultures

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John Hagel is in a small category of thinkers who manage to routinely be thinking ahead of the curve ( he calls his blog, where he features longer but more infrequent posts than is typical, Edge Perspectives). I want to draw attention to the core conclusion of his latest:
Challenging Mindsets: From Reverse Innovation to Innovation Blowback

Innovation blowbackFive years ago, John Seely Brown and I wrote an article for the McKinsey Quarterly entitled “Innovation Blowback: Disruptive Management Practices from Asia.” In that article, we described a series of innovations emerging in Asia that were much more fundamental than isolated product or service innovations. We drew attention to a different form of innovation – institutional innovation. In arenas as diverse as motorcycles, apparel, turbine engines and consumer electronics, we detected a much more disruptive form of innovation.In these very diverse industries, we saw entrepreneurs re-thinking institutional arrangements across very large numbers of enterprises, offering all participants an opportunity to learn faster and innovate more effectively by working together. While Western companies were lured into various forms of financial leverage, these entrepreneurs were developing sophisticated approaches to capability leverage in scalable business networks that could generate not just one product innovation, but an accelerating stream of product and service innovations.

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“Protocols” and Wealth Creation

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Here’s David Brooks, writing in The New York Times:

In the 19th and 20th centuries we made stuff: corn and steel and trucks. Now, we make protocols: sets of instructions. A software program is a protocol for organizing information. A new drug is a protocol for organizing chemicals. Wal-Mart produces protocols for moving and marketing consumer goods. Even when you are buying a car, you are mostly paying for the knowledge embedded in its design, not the metal and glass. (via Isegoria)

Read the whole thing. The argument that Brooks is making here is very similar to the argument made by Rich Karlgaard of Forbes, which I critiqued in my post myths of the knowledge society.

In summary: The 19th and 20th centuries were also “knowledge economies” (in Karlgaard’s formulation) or “protocol economies” (in the Brooksian terminology). The value of a Boulton & Watt steam engine was not in the “stuff” it was made out of (which could be purchased for a far lower amount than you would pay for the steam engine itself) but rather for the design knowledge contributed by James Watt and the manufacturing process knowledge (protocol knowledge) contributed by Matthew Boulton..and for innumerable additions to that knowledge base by their employees. To take a more recent example, the early 20th century assembly line as implemented by Henry Ford, and the kinds of precise work planning and industrial engineering developed by Taylor and the Gilbreths, certainly represent “protocols” just as much as do Wal-Mart’s supply-chain management procedures.

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Computers and Health Care

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In recent years, there’s been a lot of talk about computing technology as a potential enabler of major cost reductions and quality improvements for healthcare.

A recent study by the Harvard Medical School suggests that results with hospital computer systems so far are disappointing, to put it mildly.

Holiday Book Ideas — Four That Are Good to Go

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I’m late, late, incredibly late on four books that authors gave me to review. That doesn’t mean that I can’t give credit where credit’s due … in plenty of time for the book-buying frenzy before the holidays. With luck, I’ll finish off the full reviews in December but since *I’m* buying copies of these books for friends and family, maybe one or more of them might fit someone on your list. All recommended for the categories of people headlined.

Economists, Physicists, History of Science buffs

Newton and the Counterfeiter describes Isaac Newton’s multi-year battle with one of London’s most successful counterfeiters. No surprise who wins in the end, but it is surprising how well Levenson provides background on the protagonists … without overwhelming the reader. Recommended for students or professionals with an interest in the history of money, finance, or just a fascination with what the great Newton did after he polished off the Principia. The counterfeiter’s “colourful” life precludes giving this book to a pre-teen but all others will find it, like the earlier-reviewed The Ghost Map, a fascinating snapshot of life in London.

Japanophiles, Asian culture fans, World History Buffs

I’m years late on this one but Through the Looking Glass is highly recommended for anyone wondering how Japan ended up with such a different culture … and why their adoption of Western technology at a breakneck pace in the late 19th century was so successful. Thought-provoking and such a good summary of Japanese culture that I’ve struggled for over 50 hours to epitomize in writing what the author has written in hopes of getting a full book review out the door. I’ve failed, but I’ve also bought more than a half-dozen copies of this book for friends on two continents with an interest in Asian culture.

Entrepreneurs, Fortune 500 cube jockeys, Economics students, Anglosphere buffs

Free: The Future of a Radical Price by Wired Editor-in-Chief Chris Anderson picks up where his Long Tail finished. The halving of computation, bandwidth, and data storage costs each year has made a new generation of businesses financially feasible. The freemium service (like Flickr, LinkedIn, Facebook, etc.) where basic services are free and a small set of customers pay for additional features, has become so common that it is now unremarkable. Anderson looks at the history of the word, the different definitions of free in the context of culture and business, and the gap in the academic literature in understanding the new generation of businesses that leverage “free” in profound ways. My book review will, like my earlier review of Long Tail, look at why the Anglosphere has been the source of so much “free” over the last couple of centuries and why it leads the way in both charitable and profitable businesses that leverage the idea. A “must have” for anyone thinking of starting a business. People under 30 will think “d’uh” but Anderson still offers a lot of context and some very good background on the history of “free” in business in the 20th century for younger readers. And a fun, even revolutionary, read. I’m buying copies for nieces and friends with an interest in media.

Ambitious NCOs, Military Officers, World History buffs, Prognosticators of the American future

Empires of the Silk Road: A History of Central Eurasia from the Bronze Age to the Present is a grand summary of the culture of the steppes, from the time of the domestication of the horse and the appearance of lactose-tolerant humans (see 10,000 Year Explosion), to the 21st century suppression of the Chechens, Tibetans, and Uighurs. A fascinating source book on the ebb and flow of culture across the “ocean of grass” and the firm focus these cultures had on trading with the great empires on their periphery. Trade with us … or die. Most of these cultures, and the direct influence they had on world history, has been largely unknown except to a handful of scholars. In Empires, the author brings all this background information together in one place, draws on the most modern scholarship in linguistics, history, and archaeology, and provides a ground-breaking introduction to the general public. The striking parallels with the European nations that built empires based on liquid oceans becomes clear only by the end of the book … as is the tentative nature of Russia and China’s hold on the vast interior steppe (triggered by the introduction of firearms, and only solidified in the final massacres of the Junghars by Qing China in the mid-18th century). Anyone with an interest in Russia, the Middle East, or China will learn a great deal about the role of the Central Asian Culture complex on these areas in the last 4,000 years. Nowadays, military folk posted to the ‘Stans or places like Mongolia will find this book invaluable … firstly as a brisk introduction to the cultural roots of the place, and secondly as a reference book to read and re-read in future years to grasp “the big picture.” If you have friends or family that are ambitious for learning about the continent (let alone the region), start them off at the beginning. Anyone senior to Captain should buy this book simply to have it ready when needed. Because it will be needed. You can’t understand the Chinese and Russians without understanding the “enemy” they faced for centuries and the echoes that continue in their territorial obsessions. Highly, highly recommended. My full review will comment on the author’s more personal assessments but his account of Central Asian history is a entirely straight-forward, well referenced, and real service to the English-speaking public. I’ve bought copies, again, for friends in Europe and North America.

Drucker and Lewis on Theory and Experience

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One of the issues raised in my post Myths of the Knowledge Society, and in the discussion thereof, is the question of formal, theory-based knowledge versus tacit, experience-based knowledge. What is the appropriate scope of use of each of these modalities?

Several years ago, I excerpted some thoughts from Peter Drucker which are relevant to this subject. I think they’re worth re-posting here…

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