Steering Complex Innovation

Technology leaders need to view uncertainty and instability as the expected condition, failure as essential to learning, and rapid adaptability as the new bottom line. ovERVIEW: Participation in self-organizing networks of firms that exist to carry out the repeated innovation of complex technologies is becoming increasingly important. To achieve and maintain leadership, these networks must achieve a mutually reinforcing fit among organizational core capabilities, complementary assets, learning, and linkages to the external environment. Three distinct patterns have been identified within which these networks operate: transformational, normal and transitional. Each presents its own management opportunities and requirements, but all call for a premium to be placed on exploratory, experimental approaches to decision making. The economic success of companies today increasingly depends on participation in complex self organizing networks that innovate complex technologies. We define complex technologies as those products or processes that cannot be understood in full detail by an individual expert sufficiently to communicate the details across time and space. Aircraft and telecommunications equipment are common examples of complex product technologies; "lean" or "agile" production systems are examples of complex process technologies. Complex networks are those linked organizations (e.g., firms, universities and government agencies) that create, acquire and integrate the diverse knowledge and skills, both tacit and explicit, required to innovate complex technologies. Strategic alliances, joint ventures and other types of more informal collaboration are examples of complex networks. Self organization refers to the capacity these networks have for reordering themselves into more complex structures and for using more complex processes without centralized, detailed management guidance. The trend toward complexity is suggested by the fact that in 1970 complex technologies comprised 43 percent of the 30 most valuable world exports of goods, but by 1996 complex technologies represented 84 percent of those goods. The innovation of complex technologies is often characterized by rapid, highly disruptive, discontinuous change. We described a number of indicators of these disruptions, and provided some preliminary "rules of thumb" for managers confronting them, in a recent issue of Research Technology Management (1 ). Here we want to go a step further by outlining three distinct innovation patterns and characterizing the opportunities and challenges each poses for managers. We begin with two insights from the study of complex technological innovation. First, managers must be deeply immersed in any complex innovation process, but must avoid seeking to control it. The reason for this is that managers operate without sufficient understanding of the diverse knowledge needed to direct successful innovation in detail. Moreover, complex network organizations often react to direction in nonlinear ways-they may generate new adaptations in the form of novel organizational properties or characteristics (e.g., new ways of interaction among work groups) that are "emergent" and thus difficult to predict or guide. Rather, managers must try to affect the context of innovation-to establish and modify the direction and the boundaries within which effective, improvised and self organized solutions can evolve. Instead of trying to directly shape a strategy or decision, managers must shape the organizational environment within which these choices emerge (2). Second, the modification of the context of organizational choices is heavily dependent on the language that managers use. We believe a new terminology is one of the major contributions that the study of complexity makes to the management of complex organizations and their technologies. Terms like "self organization" or "emergence" gives voice and substance to the creative, dynamic, non-linear, and evolutionary work that is already typical of much management and is likely to become the focus of many more managers in the future (3). …