in an iPod world

Unbounded Innovation - ET column

I was asked to write a weekly column for Electronic Times, a daily newspaper specialized on information technology and IT industry. The title of the column is "Unbounded Innovation" and I will be focusing on various issues related to digital innovation and its consequences. This week, using the evolution of e-book as an example, I discussed three different stages of digital innovation. The first stage is a material digitalization where firms introduce new products by integrating digital components into a product that was previously non-digital. In the second stage, firms begin to develop new business models by developing an architecture of information that are derivatives from the use of digitalized products. In the third stage, firms create novel products and services by creating new combinations of existing digitalized products and digital data stream.

Can Design Save Management?

I wrote a short provocation for Convergence: Managing + Designing, which will take place in June 17-18, 2010. Here it is.

Youngjin Yoo

Temple University

Design, or design thinking, is becoming increasingly popular among management practitioners and scholars. Leading popular magazines like BusinessWeek and Fast Company regularly feature design as an important topic. Many leading business schools around the world incorporate some elements of design as a part of their curriculum. At the same time, leading design schools around world are challenging business schools by providing plausible alternatives to students and recruiters alike. A recent ranking by BusinesWeek shows a mixture of business schools and design schools. Design consulting firms like IDEO and Design Continuum are frequently called into do strategic and management consulting projects that used to be the exclusive tasks asked to management consulting firms. And, a quick scan of the shelves at the business section at local bookstores show titles like, Managing as Designing, Change by Design, Design-driven Innovation and Design of Business. Indeed, the first decade of the 21^st century seems to be the decade of design. It is as if management found a panacea. And, that is design.

But, can design save management? In my presentation, I will explore this question from a historical perspective. It is undeniable that design and design thinking is having a positive impact on management practice and education. However, it is not clear if the current wave of design thinking will address the fundamental crisis that contemporary management is facing in this post-industrial economy.

The post World-War II economy saw the emergence two powerful economic forces. First, large multi-national firms have emerged as powerful economic actors that transcend the national boundaries. They control the direct access to the market and consumers, defined mostly based on physical products, acting either as final assemblers of parts or marketing and distribution channels. These firms grew in size and scope by exploiting the rapid developments in production, transportation and communication technologies (Chandler et al. 1999; Chandler Jr 1984). Their size and complexity are unparalleled. In order to manage the growing complexity, the paradigm of scientific management was developed (Teece 1993). A new class of economic actors, professional managers, who are equipped with the tools of scientific management has emerged during this era. Contrary to the original form of capitalism that emerged as a consequence of industrial revolution and brought the separation of production and consumption, this managerial capitalism, brought the separation of management and production (Zuboff and Maxmin 2002).

Second, financial firms, often represented as “Wall Street”, emerged as important economic and social actors. Initially, they act as aggregators of financial resources to help firms on the “main street” finance their capital investments. Over time, these financial firms developed increasingly elaborate and often exotic financial engineering tools to help firms gain access to financial resources. As a result, firms’ performance was solely measured by the financial metrics, and financial firms started to buy and sell firms, as if they were products, using these financial metrics. After leading the barrage of corporate M&A that we witnessed in the last decade of the past century, many of which were funded by the historically low interest rate, these financial firms invented new financial products that are solely designed to finance other financial activities. Thus, we have witnessed the emergence of financial capitalism that brought the separation of finance and production.

The evolution of capitalism thus can be seen as continuing pursuit of higher return on capital through a series of separations: production, management and finance. Each of these separations brought a new form of “leverage” that amplifies the potential return on investment. Yet, at the same time, they brought greater degree of complexity, unforeseen systemic risks, and alienation of labor and consumers alike.

Design thinking, as it is currently popularized with the emphasis on human-centered product and service design, deals only with the problems from the separation of production and consumption, leaving other and possibly far more serious challenges that today’s management is facing. Many of these challenges arose as a result of separations of management and finance from production. For example, design thinking has little to say about the recent financial crisis that raised many fundamental questions about the continuing viability of the current form of capitalism and the role of management schools. The demise of the Big Three is the result of institutionalized “scientific” management and toxic financial products as much as the lack of human-centered design in their products.

My concern is that the current obsession with the design thinking can have unintended harmful consequences on the future of management in the long run. As it is currently being applied, design is seen as a quick fix of profitability problems, new product developments, and consumer satisfactions, rather than dealing with more systemic and serious issues. Indeed, it might lead us to the emergence of new form of capitalism, design capitalism, where creativity is separated from production and consumption. Just as management was for the sake of management during the managerial capitalism, and finance was for the sake of finance during the financial capitalism, we may see the creativity for the sake of creativity in this new form of design capitalism. If that happens, instead of finding its panacea, management might have discovered the most powerful painkiller it has ever found. And, alas, that is design.

Chandler, A.D., Hagstrom, P., and Sölvell, Ö. The Dynamic Firm: The Role of Technology, Strategy, Organization, and Regions Oxford University Press, New York, NY, 1999.

Chandler Jr, A. "The emergence of managerial capitalism," The Business History Review), Jan 1 1984.

Teece, D. "The dynamics of industrial capitalism: perspectives on Alfred Chandler's scale and scope," Journal of Economic Literature), Jan 1 1993.

Zuboff, S., and Maxmin, J. The Support Economy Viking, New York, 2002.

Evolution of Digital Camera and Unbounded Innovation

With Kalle Lyytinen, Veeresh Thummandi, and Aaron Weiss, I wrote a paper that analyzes the unbounded nature of digital innovation, drawing on the history of digital camera. It was a fun paper to write and I am glad that it was accepted for a presentation at the Academy of Management this summer.

AOM2010 Digital Camera.pdf

reactionary science

Yesterday I twitted that the current discussion on healthcare IT seem to ignore 30+ years of research by the IS community. For example, Nicholas Carr wrote:

"There is a widespread faith, beginning at the very top of our government, that pouring money into computerization will lead to big improvements in both the cost and quality of health care. As this study shows, those assumptions need to be questioned - or a whole lot of taxpayer money may go to waste. Information technology has great promise for health care, but simply dumping cash into traditional commercial systems and applications is unlikely to achieve that promise - and may backfire by increasing costs further."

There is nothing really new in his comments. What he is observing is probably one of the most well researched topics in our field. I felt that people who work on healthcare IT should pick up some of the classic works in our field to avoid many of the mistakes that many firms that tried to implement IT in the past made. As Brian Butler commented,

"The simple reality is that healthcare is 10-20 years behind with regard to IT and IS management. While there are differences - much of what we teach undergraduates and MS students is significant insight to them....

In response to my posting, however, couple of my colleagues commented that the problem is really the journals of the field. For example, Kevin Desouza wrote:

"it is a shame when a field that is supposed to study IS has a 2 year backlog on average in terms of publishing information. We do not practice what we preach"

While I do agree with Kevin that it takes too long to get anything published in our journals and that some of the delay can be removed by using information technology more effectively, I am not sure if the time lag in the publication process is indeed the source of the problem. I doubt the current problem will go away even if we have real-time publication mechanism for scholarly works. I wonder perhaps it has to do with the way we think about the role of social science in general. The issue of relevance is not particularly constrained to the field of information systems; instead, it permeates in most social science fields as Flyvbjerg makes abundantly clear in his book, "Making Social Science Matter".

Much of the social science in its current form is reactionary in its nature. As Dick Boland has said many times, social scientists became "historians of the recent past and gear students up to reproduce it". Instead of creating new and better realities, we are busy reacting to what has already happened. Whether it happened two months ago or two years ago, we will be still busy documenting the recent past as long as we follow this reactionary mode of science. What is necessary, then, is not just eliminating the lag time. Instead, we need to shift our attention from documenting the recent past to imagining new future. When rocket scientists built rockets to go to Moon, they did not document how someone else went to Moon. They made it happen. They built new rockets. They designed the new lunar lander. They built new organization structures to support their work. They invented the relational database. They were not reacting. They were acting and pro-acting. The world can tolerate two years of time lag, if what we produce are theoretical, empirical, and instrumental tools that can indeed make this world a better place. What we need is scholarly works that lead to new human actions.

Of course, this is not a new idea. Late Herbert A. Simon has argued for the sciences of the artificial. More recently, Law and Urry (2004), in their article, "Enacting the social" (Economy ad Society, 33:3, 390-410), so eloquently argued that "social inquiry and its methods are productive: they (help to) make social realities and social worlds. They do not simply describe the world as it is, but also enact it." They further suggest that social scientists need to re-imagine themselves and their methods in order to better deal with the fleeting, the distributed, the multiple, the sensory, the emotional, and the kinaesthetic. With these, and many other efforts underway, I hope we will be able to make our scholarly work matter more.

In Praise of Wobbly - Ted Gup

Ted Gup had an NRP "This I believe" article, called, In Praise of Wobbly. Over the weekend, I wanted to hear it again. I also recalled that he once gave a convocation speech at Case. The original link to the full text is here. But, since it gives you a warning that it is getting old, I decided to copy the whole text here as a back-up so that I can find it later when I want to show it to other people.

Three categories of social science -- by Scott Stossel

"For those of us not actively toiling in a university, most modern writing in the social sciences can be placed into one of three categories. The first category, which is vast, consists of the arcane and the incremental — those studies so obscure, or which advance scholarship so infinitesimally, that they can be safely ignored by the general reader. (Not that this work isn’t important; it keeps academic publishing in business, and significant knowledge accretes in tiny drips on the way to tenure.) The second category consists of statistical proof of the obvious. (Some actual study findings published recently: “the parent-child relationship . . . commonly includes feelings of irritation, tension and ambivalence”; women are more likely to engage in casual sex with “an exceptionally attractive man”; and driving while text-messaging leads to “a substantial increase in the risk of being involved in a safety-critical event such as a crash.” Thank you, social science!) And in the third category, which is surely the smallest, are works of brilliant originality that stimulate and enlighten and can sometimes even change the way we under­stand the world."

via www.nytimes.com

free from judgement

We spend an enormous amount of energy making up our minds about other people. Not a day goes by without somebody doing or saying something that evokes in us the need to form an opinion about him or her. We hear a lot, see a lot, and know a lot. The feeling that we have to sort it all out in our minds and make judgments about it can be quite oppressive.

The desert fathers said that judging others is a heavy burden, while being judged by others is a light one. Once we can let go of our need to judge others, we will experience an immense inner freedom. Once we are free from judging, we will be also free for mercy. Let’s remember Jesus’ words: “Do not judge, and you will not be judged” (Matthew 7:1).

Henri Nouwen

Twitting and Blogging

As I use more twitting, I find it increasingly more difficult to write a long blog posting.

the emergence of post-professional society.

On January 16, 2009, world-renowned cellist Yo-Yo Ma has announced the grand prize winners of "Celebrate and Collaborate with Yo-Yo Ma" competition that he ran in collaboration with Indaba Music. Ma invited musicians of all kinds to join him in performing Dona Nobis Pacem (Give Us Peace). He made the cello track of his recording of the song available to the members of Indaba Music community, a social networking music site that allows members to virtually collaborate to record music. Out of about 250 entries made by some professional, semi-professional and amateur musicians, two musicians - Toshi O. from Canada (although originally from Japan) and Kevin McChesney from Colorado Springs, CO, won the first place prize. They will be performing with Yo-Yo Ma for his next album. The movement of open innovation that started software has found its way to classic music industry.

In his book Remix, Lawrence Lassig has the following quote from American Composer John Philip Sousa.

"When I was a boy ... in front of every house in the summer evening you would find young people together singing the songs of the day or the old songs. Today you hear these infernal machines going night and day. We will not have a vocal cord left. The vocal cords will be eliminated by a process of evolution, as was the tail of man when he came from the ape."

A common thread that connects these two stories, separated more than 100 years in history, is the concern about the dominance of professionalism in the society at the expense of richness of everyday life experiences. This is the same concern that was expressed in the writings of John Dewey on art. In Art as Experience, he wrote:

"The collective life that was manifested in war, worship, the forum, knew no division between what was characteristics of these places and operations, and the arts that brought color, grace and dignity, into them. Painting and sculpture were organically one with architecture, as that was one with the social purpose that building served. Music and song were intimate parts of the rites and ceremonies in which the meaning of group life was consummated. Drama was a vital reenactment of the legends and history of the group life."

But he further notes, the arts that were so intimately integrated into everyday life experiences in neighborhood were slowly removed from the realm of everyday life and transformed into "fine arts" to be stored away in museums. Arts are taken away from common folks and safely guarded and sanctioned by professional curators and artists. In this case, the vocal cord was not devolved. It was emasculated. Dewey notes imperialism and capitalism as two driving forces behind this professionalization of arts.

"The growth of capitalism has been a powerful influence in the development of the museum as the proper home for works of art, and in the promotion of the idea that they are apart from the common life. The nouveaux riches, who are important byproduct of the capitalist system, have felt especially bound to surround themselves with works of fine art which, being rare, are also costly. Generally speaking, the typical collector is the typical capitalist."

Last century was the period that was marked with the scientific rationalism and the industrialization of economic activities in the society. The development of industrial technology and later information technology were the engines that carried out these two forces, which led to the emergence of large and complex organizations such as multinational corporations and mega churches. These large organizations as represented by General Motors and Wal-Mart require a large number of professionals who are specialized in a particular task. The emergence of professional class inevitably led to the separation of production function and consumption within the society. In a traditional society, producers and consumers were typically members of the same local community. A farmer buys meats from a butcher, who in turn buys furniture from a local carpenter, who relies on the supply of bread from a baker, who gets his eggs from the farmer. This is the time where Sousa saw young people singing together in the corner of streets.

With the emergence of a modern industrial society, all of this changed. Consumers only consume products and services that were produced by these large organizations managed by professionals. Consumers consume products that were produced tens of thousands of miles away. At work, their roles were radically reduced in scope and skill in the name of specialization. Their vocal cords were emasculated.
Now as we move deeper into the 21st century, we are experiencing yet another fundamental change in the society. We are seeing a profound reconfiguration of the production functions and consumption activities in the economy. The development of information and communication technology fundamentally altered the production cost so that virtually anyone with an idea and will can participate in the production functions. As we see in YouTube, Wikipedia and Linux, consumers are no longer satisfied with mere consumption of products and services. They want to actively engage in the production process. An individual now can easily learn a basic knowledge necessary to design a product through Google, use SketchUp to design the product and send the design to a Chinese firm that can quickly produce a product prototype and ship it back to him. In addition, the proliferation of “higher education” for everyone in the developed countries produced over-educated population who cannot be satisfied traditional jobs and mere consumptions of products and services. They want to be a part of value creation. So has the post-professional society emerged.

What is interesting here is the changing role of technology. At the dawn of industrial revolution, the invention of steam engine and the development of modern communication technology led to the emergence of professionalism. Now, the Internet and mobile technology is turning the tide the other way, empowering non-professionals. One technology brought in the era of professionalism, and the other its demise.

Now, the question we must ask is what is the role of professionals in this post-professional society. The work of professionals -- whether they are doctors, lawyers, MBAs, or professional musicians -- will not wither away in the post-professional society. Certainly, we will not go back to pre-industrial age. But, as the knowledge and tools once available to those with professional educations increasingly available to everyone, we will certainly see the changes in the role of professionals. The significance of the work by Yo-Yo Ma, therefore, is that it might be a foreshadow of a professionals might work in the post-profession society. What he did was architecting innovations by others. He produced intentionally incomplete track and put it out there. He, then, invited others to complete his work. This incomplete architecture of innovation led to the multiplicity of innovations. And, the incompleteness invites the dynamic changes in the innovation.

managing in a clumsy world, designing a better one

This is a summary of the lecture that I gave to my class last night.

Management is a noble profession. At least, that is what I believe it should strive to be. But, the reality is that we don't think of it that way. Instead, nowadays, it is easy to think of arrogant, self-centered, merciless, greedy, and overly compensated corporate executives who pay little or no regard to the environments and the well-being of labor and consumers when we think of management. Or, management often implies incompetent and bureaucratic paper-pushers who get in the way of getting things done. Indeed, management has a really bad name in our society. Therefore, it is almost scandalous to think that management is and should be a noble profession in the same way we think of educators, doctors and firefighters. But, I think it should be. In fact, I would argue that management is perhaps the most important profession in the 21st century. Why?

It has to do with the world in which we live. Increasingly, we are living in an artificial world. I use the word artificial in the same way Herbert Simon uses in his book, The Science of Artificial and Bo Dahlbom uses in his book, Artifacts and Artificial Science. The world in which we breath, eat, talk, see, touch, smell, and sleep is no longer shaped by natural environments only. It is populated and filled with the stuffs that we have created -- artifacts. These artifacts, particularly technology and organizations, play essential role in shaping our way of life in the contemporary socio-technical world.

Our bodily experience is no longer shaped by the natural forces alone. Although we are still subject to the force of gravity, we now fly with the help of an airplane. We paved high ways, built bridges and tunnels, and constructed cities. The air that we breath in is mixed with pollutants coming from cars and factories, and filtered through air purifiers with added scent of our choice. The water we drink is contained in bottles that we made, mixed with vitamins and "natural" flavors. We eat meats from poultry that were raised with artificial feed mixed with antibiotics and growth hormones.

Our social experience is not any different either. It is no longer confined with the biological connections or geographical constraints. We are enmeshed with nested set of relationships with organizations that were created specific purpose. These "artificial" organizations now define our relationship more than ever. Proliferation of social networking sites such as Facebook and MySpace takes this phenomenon to another level. Our social relationship is constantly shaped by Facebook status change and the last Twittering friend.

The reason that management is the most critical profession in the 21st century is, then, simply because at the junction of these two important artifacts, technology and organization, we find management. Through management practice, we constantly tinker with technology and organizations. Management constantly invent new technology, new products, and seek better ways of organizing. Through management, we re-invent the (artificial) world that we inherit. The question is, do we make it a better place than we found it?

Here comes the crux of the management challenge in the 21st challenge. The artificial world is a clumsy place. It is never a neat place. Unlike natural world that runs like a clockwork, the artificial world is a heap of accidents. In the artificial world, there has never been a big enough intelligence to centrally plan and organize. As Beatles once said, "life is what happens while you are busy planning." The artificial world happens and evolves that way too. It is messy, ripe with tensions and contradictions. It ruptures and breaks down; yet, it goes on with fixes and patches sent from Microsoft.

As Karl Weick once writes, then, managers always find themselves thrown into this clumsy world. It is the articial world that needs more tinkering. The world needs some fixing, which will cause them to do more tinkering down the road. But, then they will never know which plumping pipe will burst next. But, as managers struggle to keep things in order and strive to make things better, they can turn this place a better place to live. Management thus is based on "unhappy consciousness" as Bo Dahlbom says. Management is an antidote to the clumsy artificial world.

This brings us to the key essential aspect of management that is critically missing in today's management education. That is, management is about seeing what is not there. Following the natural science model which follows the logic of discovery, we teach our MBA students to see what is out there. Through statistical analysis and focus group, our students are trained to collect data and analyze them to discover what is there. Yet, it is not enough. It is not enough just to see what is out there in this clumsy artificial world and analyze it. What we need is manager's ability to see what is not in this clumsy world and turn it into a better place to live. Managers need to be able to conceive and construct a plausible future through technology and organization -- the two most important artifacts at their disposal.

Information technology is advancing at a remarkably predictable pace. Moore's law has been proven to be very useful in forecasting the incredible developments in the computing power. If this trend continues, an average computer that costs $1000 today will only cost $10 by year 2020. Today, my colleague showed me a perfectly fine sub-laptop computer that costs only $250. He calls it a "disposable computing." At the price of $250, we are not there yet, but in ten years, we will be there. Digital technology is being embedded in our cloths, cars, buildings and streets, turning them into a part of a larger computer network, so to speak. This new technology in turn enables us to conceive new form of organizations. Open source, collective intelligence, crowd source, and many other new forms that we have not even thought about to mobilize and harness human creativity and power.

The question is, then, what can we do about all these possibilities. Who will make sure that we indeed create a better and more desirable artificial world using these new artifacts? Which profession and discipline is best positioned to provide the answer to this call? Can management be a part, in fact an essential part of this important challenge? I believe we can. Indeed, management is responsible to respond to this challenge in a meaningful way. But in order to do that, we must address two fundamental deficiencies in management thinking.

First, we must teach managers how to think what is possible. As I argued earlier, management should not be just about the past. Managers cannot be just geographers who are discovering the landscape of the nature. The geography of the artificial world that they want to discover hasn't been yet created. They need to be created. Thus, managers need to able to imagine what is possible.

Second, we must teach managers how to think what is desirable. Not everything that is possible is desirable. What is desirable is not always the most efficient or the most effective. What is desirable may not be even possible currently. That should touch deeply the unhappy consciousness of the managers.

If we can begin to train future managers to see what is possible in the future and help them not to be afraid of asking "what is desirable?", we can turn management as a noble profession. It can be a profession that can turn this clumsy artificial world into a better place to live. At least, that is what we all should try to aim for.