BusinessPundit: Why "Good to Great" Isn't Very Good

BusinessPundit: Why "Good to Great" Isn't Very Good

This article talks about how "Good to Great" isn't that great a book, after all. What caught my attention in the linked article was this point by the author:

"humans tend to conveniently make random demarcations in data to get the patterns and results that we want, when you are looking for something specific, it is amazingly easy to find data to support your preconceptions."

Clayton Christensen in The Innovator's Solution talks about the same problem in the world of business. He explains how most "theories" are based on attributes rather than circumstance, and how this can be misleading and fallacious. For example, you see a white cow eating grass, and conclude that all white animals eat grass. Till you bump into a snow leopard. The problem in the argument you used (before the leopard got the better of you) was that while there was a correlation between the color of the animal and its eating habits, it was not a causal correlation. The cow did not eat grass because it was white, but rather because of the way it was constituted.

This is a classical problem in science. Physics noble prize winner Richard Feynman called the technique for avoiding this problem "bending over backwards". The point is that when you formulate a theory using certain facts and observations, you must not only give the conditions in which the theory works, but also the conditions and circumstances in which the theory does not.

In fact, I would like to generalize the statement and point out similar "analytical engineering" techniques being used by a lot of consultants, market research firms, management "gurus", and the likes. They would develop some interesting-sounding theory and then "go looking" for evidence. What ends up happenning is that they retro-fit the evidence they find, sometimes bending it out of shape to make sure it fits.

They do this because it works for them. Collins earned millions out of royalty. One set of people for whom it doesn't work are the actual entrepreneurs and innovators on the ground. If they build a product based on a faulty theory of innovation, the results will be evident within 6 months. So the only people who can really talk about innovation are those who have built innovative products and made them a success in the marketplace. The problem there is that these people are often not very good at theory-building, at generalizing from their experiences and the experiences of others.

Incidentally, W. Chan Kim's Blue Ocean Strategy points out that most of the companies which Good to Great called great acually lost their market leadership within 5 years. Did they lose their greatness in the short duration (short considering the scale of analysis that Jim Collins - the author- and his team used)?

The Randomness of Corporate Innovation.

The Randomness of Corporate Innovation.

This businesseweek article by Bruce Nussbaum talks about how corporate Innovation is inherently unpredictable, and how over 50% of game-changing innovations arise from initiatives outside companies' formal structures and processes for Innovation.

Let me ask this in return: how will you fare if you were let loose in the pacific ocean with no knowledge of swimming?

I think that there is another way to look at the whole problem, which is that given our lack of clear understanding of Innovation as a discipline, as a business process and as a practice, it is amazing that even 40% of the companies achieve success through their innovation structures. We do not know how to swim, yet we are managing to stay afloat in the pacific.