Efficiency vs. Exploration

FYI, I enjoyed reading the article:

Wellsprings of Creation: Perturbation and the Paradox of the Highly Disciplined Organization — HBS Working Knowledge

Executive Summary:

Many organizations struggle to balance the conflicting demands of efficiency and innovation. Organizations can become more efficient in the short run by replacing costly, unpredictable problem solving activity with consistent, streamlined routines. However, this efficiency often comes at the cost of long-run adaptability. The more organizational activity is dominated by stable routines, the less the organization learns, and the more rigid and inflexible it becomes. To escape this fate, the authors of this working paper theorize that highly disciplined organizations must actively engage in strategic and selective perturbation of established routines. A perturbation interrupts an established routine and creates an opportunity to innovate and learn. Using illustrations from Toyota, the authors investigate the conditions under which perturbations can sustain exploration in highly disciplined organizations. Key concepts include:

• To sustain adaptability in the long term, perturbations must occur throughout the organization.
• In highly disciplined organizations, adaptability depends on the active participation of organization members in inducing and interpreting perturbations.
• Management must trust employees to perturb processes, teach them to detect and interpret perturbations, and motivate them to do so.
• In the long term, business success depends as much on the commitment and knowledge of frontline employees as on strategic decision-making by senior management.

Wellsprings of Creation: Perturbation and the Paradox of the Highly Disciplined Organization — HBS Working Knowledge

Comments

[Virginia Yonkers]

This is very exciting as it supports what I am finding in my own research. This looks more at the long term effects rather than the short term. Another article that might be of interest is Yakhlef, Ali (2002). Towards a discursive approach to organisational knowledge formation. Scandinavian Journal of Management, 18, 319-339. He looked at the impact that contracting out services had on the organization. He found that the contracting moved the "location" of the knowledge. It is a nice complement to this article.