How organizations react to ideas

It’s time to talk about disruption again. This article in The Economist contains some bits I very much agree with:

Yet even short-sighted or embarrassed managers should react when the threat from upstart technologies becomes clear. They do not, economists reckon, because of organisational rigidities. Ms Henderson suggests firms can be seen as giant information-processing organisations that evolve a structure and personnel to fit their respective business. Information on sales or production is efficiently filtered to decision-makers, who can then direct new research. When new technologies are no more than tweaks to old ones, this set-up is a competitive advantage. When innovations are more radical, however, the old networks are a hindrance.

In other research with Sarah Kaplan of the Wharton School of Business, Ms Henderson considers why older firms struggle to pursue new technologies. Many of them have systems in place to detect and respond to changing market conditions or new technologies. But they have also built up a system of incentives to ensure employees meet existing goals. Systems designed to encourage consistency and efficiency in the production of established goods or services might be a powerful deterrent to experimentation or creative thinking about new markets, regardless of what the corporate memos say.

Companies and other organizations are systems set up to produce certain results. One might hope that they are set up consciously, designed and monitored to produce clearly defined results, but in my experience this is not often the case. Companies tend to form and develop organically, rather than consciously. But maybe my impressions are skewed because I work in games.

In any case: this is why, among other things, you usually don’t have to worry about companies stealing ideas. Those companies have their own thoughts about what they are going to do. To quote Howard H. Aiken:

Don’t worry about people stealing an idea. If it’s original, you will have to ram it down their throats.

The ideas people inside companies have are often based on incentives that are hard to see, or easy to forget, from the outside, such as “don’t get fired”. Sometimes, especially with projects that are very stressful and difficult (hello, games industry), people cling very, very hard to the one way they can conceive of finishing the project, and they do not want to hear about other ideas. I’ve been on both sides of this situation. My gut feeling is that this is related to studies that found people are biased against creative ideas, even if I’m not sure I agree with many of the popular interpretations of those studies.