Forms of Incompetence

By Thomas DURAND

Professor, Ecole Centrale Paris, 92295 Châtenay Malabry, France Tel : +33 (0)1 47 12 53 06 – Thomas.durand@ecp.fr

Published as a chapter in: Sanchez, Ron, and Aimé Heene, editors (2000), Theory Development for Competence-Based

Management, Volume 6(A) in Advances in Applied Business Strategy, Lawrence Foster, series editor, Greenwich, CT: JAI Press.

I-Introduction This paper addresses the issue of documenting the concept of competence in organizations by adopting the perspective of incompetence. The rationale of the research project behind this paper stems from three preliminary comments serving as starting points for the analysis. a-The competence-based management literature has focused much attention on learning, i.e. knowledge and competence building, much less on the real nature of competence itself. Much has been described about the process of learning in organizations, i.e. about the flux, much less about the accumulated stock resulting from the flux, namely the competence base of the organization. The main reason for this may have to do with the difficulties encountered in grasping and describing the real essence of organizational competence. This actually leads to the issue of the epistemic status of the concept of competence. This is clearly the result of well-known characteristics of competence, e.g. tacit versus articulated knowledge, individual vs. organizational, etc. b-A corollary feature of the competence-based literature in management is the lack of empirical work. This point is quite striking. At this stage, too little has been done to document and illustrate the existing theoretical contributions around the concept of competence ; not to speak about empirically testing the validity of the whole theoretical constructs of the resource-based view or the competence-based theory. It seems to us that this has to do with the difficulties of operationalizing the concept, which again directly relates to the specific nature of the concepts at hand. To be of interest, a theory does not necessarily need to be operationalized nor even operationalizable. Yet, in management research, some form of empirical validation or at least some documentation is desirable. c-The whole argument behind the competence-based theory is designed to apply at the level of organizations. Yet, many contributions tend to implicitly or explicitly extrapolate what is known for individuals, extending this knowledge to the organizational level. This is actually one of the key elements of the epistemic challenge posed to management researchers by this still emerging concept of competence. A very promising line of research is currently being explored through the idea of interactionism (Durand, Mounoud, Ramanantsoa, 1996) or autopoeisis (Von Krogh & Roos, 1995). Yet, again, there is still a long way to go before a self sustained, documented and empirically tested theory of organizational competence is available.

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Although clearly debatable, these three comments tend to reinforce each other. In turn, they led to the idea behind this paper: "If you cannot tell them what they are good at, tell them what they are incompetent for". If it seems so difficult to describe competence, what about incompetence? If the literature lacks empirical work, why not attempting to empirically describe incompetence? If the individual level is significantly more documented than organizational competence, why not approaching and describing the incompetence of an organization? A research project was designed to explore this line of research further. A case study was organized in a large firm which over the years has become unable to innovate, especially when dealing with new products. In that sense this company is clearly ‘incompetent’ compared to its major competitors. The company is (still) highly profitable, efficient in its operations but, when it comes to designing developing and bringing new products to the market place, this company is evaluated as helpless, incapable, i.e. incompetent, by its own top management. The research project was designed and conducted as a way to analyze and document the reasons behind this inability to innovate. The methodology relied on in-depth interviews with key players within the organization. This led to a diagnosis of the situation and in turn to an empirical exploration of the innovation-related incompetence of this firm. The paper first presents the case study. It aims at showing what organizational incompetence may be. Some form of incompetence is thus illustrated and documented concretely. The paper then briefly presents a framework model of competence built around three dimensions (knowledge, know-how and attitudes), pointing out both the specificities and linkages of these three interdependent elements of competence. On that basis, the case study is revisited, analyzed and discussed in relation to the framework model presented. Incompetence is then discussed in light of the model. Some theoretical and applied implications are then drawn, including a development about the theme of unlearning. Suggestions are also made for further investigation. A brief conclusion ends the paper, advocating for more empirical work to help establish a self-sustained, documented theory of competence in management. II- The case of Antinnova Inc. The context Antinnova Inc is 2 b$ division of a major consumer goods, publicly owned, multinational corporation. The division operates essentially in Europe. Antinnova is a leader in its markets and owns widely recognized brands. Antinnova designs, mass-manufactures and sells its products through various distribution channels. Marketing and advertising is an essential component of the business. The whole industry is currently going through significant technological changes associated to a scientific revolution which occurred some years ago. Thus, in addition to its ‘development’ department, Antinnova has its own research center with scientists recognized as experts in their field. On a non-growing oligopolistic market, with a few smaller players focusing on niches, Antinnova has a long track record of high profitability. The company is well respected in its industry.

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Yet, the top management at Antinnova is well aware of the difficulties faced by the organization when it comes to developing new products. Most of the products launched in the last 5 years either have been failures or have generated limited sales, significantly below expectations. More recently, the rate of development of new products has even slowed down. This is a major problem for the management of Antinnova as the proclaimed strategy is precisely to try to innovate on this non growing market as a way to search for growth. ‘The only other option would indeed be to fight for market shares through a price war. Since we are the market leader, that would in fact hurt the profitability of Antinnova before anything else’ says the CEO. Innovation, and more specifically product innovation, is thus a strategic priority for the firm. The top management has some difficulties in grasping what goes wrong within the organization but clearly considers that Antinnova, while still being profitable and otherwise efficient, has developed some form of incompetence regarding product development. Our research project selected this context in order to conduct an exploration of what was identified ex ante as a case of organizational incompetence. 30 in depth interviews over a 3 month time span were conducted with managers in all major functional departments (marketing, research, development, manufacturing, human resources) as well as with top managers. Some of them were met several times. Major findings The interviews show that the representation of the concept of innovation is not shared among Antinnova staff. Some managers primarily advocate for process innovation to cut manufacturing costs. Others claim that ‘incremental adaptations of existing products is essential’ as the priority is to fit the continuously changing requirements of demand. Some others reject ‘me-too’ products as “non-innovative imitations” which cannot bring any significant competitive advantage; in turn, they advocate for radical innovation based upon “ real research projects”. In other words, right from the beginning, there is a clear misfit around the key word used by the top management when attempting to promote innovation. Antinnova’s research center is located on the division headquarters premises. The scientific revolution which took place upstream of the business led to hiring basic scientists in order to understand and transfer these new scientific developments into technological applications. These experts are thus connected to the international scientific community, worldwide. They tend to deny any real ability of the top management at Antinnova to understand and evaluate their work. They tend to think evaluation in terms of peer review. They have been accustomed to define their own research agenda, based on their own view of the ‘real’ research needs of the company. (The top management explicitly recognized in private with us how difficult it is to assess the relevance of the research projects which are submitted for approval). As a consequence, the monitoring of the ongoing research projects is limited and deadlines are uncertain and flexible. The interviews clearly show that the leading researchers have a tendency to look down upon the development engineers (the former have PhD’s while the latter hold engineering degrees) and do not give much credit to the requirements coming from marketing. In addition they are far away from the world of manufacturing. Paradoxically, despite these distant feelings for their colleagues from other departments, the researchers at Antinnova are nevertheless in bad need for recognition and respect from the rest of the organization. This should not be regarded as a contradiction but more as the same symptom of lack of trust and poor working relations between the research center and the other

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functions. It must be said clearly that no positive sign coming from the rest of the organization in direction of the research center could be observed during the course of our investigations. The marketing department at Antinnova is the leading player and behaves as such. Marketers at Antinnova are more concerned with advertising campaigns to sustain their brands than with new product developments. No or little strategic marketing is conducted. Most of the focus of Marketing has to do with sales and communication issues. They view product innovation as “difficult and costly in our [supposedly] mature market”. The marketing department claims that they have good working relations with the engineers of the development department. The truth of the matter is that the modus operandi between Marketing and Development reflects a situation of domination of the latter obeying the former. As such, the marketing department does not comply to its advocate position towards top management, as described by Freiling (this volume): it actually takes over top management responsibility in defining strategic objectives. Marketing views the research center as ‘operating on another planet, and happy to stay there’. There is simply no contact whatsoever between Research and Marketing. Strangely enough the ‘NIH’ syndrome known to strike usually in research units is obviously at work within the marketing department. ‘Any new idea submitted to Marketing from anyone else is immediately rejected’. In addition the normal career path of a marketer in the whole Group of Antinnova means that he / she should not spend more than 18 to 24 months in the same position in the same division. This thus generates a high turn-over within the corresponding marketing departments. This has a clear consequence on the types of innovation which marketers promote. Such a short time span means incremental, i.e. cosmetic, innovations dealing with minor functionalities and marginal but visible adaptations of the product, e.g. changes in packaging. Anything else goes beyond the normal scope of a normally ambitious product manager. We clearly made the point by reconstructing analytically the list of all product development briefs coming from Marketing over the last three years. ‘After five years of moving things around, we usually end up with a design of the product looping back to what it was before; the problem is that in the meantime, Marketing has forced us to reorganize our manufacturing lines several times to cope with their cosmetic adaptations’ as the manufacturing manager put it. Development does not understand why Marketing and Research would have to talk to one another. Development engineers feel that any marketing need should be expressed to them, thus leaving it up to Development to translate the marketing briefs into research needs, whenever they feel that it is necessary. Development insists that process innovation is key for manufacturing costs and thus as important as product innovation. The most striking point is that Development runs the Development Committee with an objective of efficiency. All major functions involved in product development indeed meet in this monthly committee but little discussion goes on during the meeting as the Development manager has arranged all decisions to be made ahead of time by the General Manager. The development committee is thus extremely efficient, essentially making decisions already made elsewhere, without any real confrontation of ideas, ‘hence saving a lot of lengthy, although really important discussion !’ as someone joked about it. While innovation requires creativity, interaction and iteration, Development views product development projects as processes to be managed and run efficiently. Development is thus short term and efficiency oriented. The competitive mode implicitly defended by Development is operational, as opposed to entrepreneurial or contractual (Haanes and Fjelstad, this volume). Nevertheless, Development engineers express anger and frustration because Marketing does not pay enough attention to the proposals and ideas coming from technicians.

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Manufacturing has been under heavy pressure to rationalize operations out of a decreasing number of plants where the productivity gains have been spectacular over the years. Their innovative thrust obviously goes for process improvement and productivity. From that perspective, they appreciate the support of Development. Manufacturing has tried to establish some linkages with Research as they wish to prepare actively for the implementation of new production technologies stemming from the scientific revolution affecting the industry. Their working relations with Marketing are minimum and rather difficult, given the continuous flow of marginal product adaptations pushed by marketers, thus significantly disturbing the organization of production “while in fact bringing little innovative value to the customers”. Human resources mobility across functions within Antinnova are minimum. The worst situation is found at the research center where no researcher has been in any other function at Antinnova or elsewhere before. Some exceptions may be noted in other departments: the head of Development spent some years in Manufacturing as the head of one of the largest plant; one marketer was previously a development engineer. Nevertheless these few cases do not seem to be sufficient to significantly improve the working relations across organizational borders at Antinnova. It should be stressed here that the quality and dedication of the staff of each of the functional departments which we interviewed are not to be questioned. These are really very good people, doing their best to contribute to Antinnova success. They are great individuals, active, dedicated and even positive thinkers, nice to deal with, but collectively unable to cooperate across organizational borders. It appears that collectively, the satff at Antinnova lacks many of the Agile people attributes described by Amos and Saetre (this volume). Stories of missed opportunities are many. ‘A few weeks after I arrived as the new marketing manager, I organized a meeting with researchers. I did not do it twice. These guys are strange’. On another occasion, Development carefully prepared proposals to be submitted at the yearly key strategic planning meeting. ‘We did not get any feed back on what we suggested, except a vague comment about keeping the focus on the core business’. 18 months before we conducted our own investigation, the CEO decided to organize a creativity program with various working groups across the organization to collect and assess ideas for new products. 32 interesting items were pre-selected, out of which 8 priority themes were chosen. This was put as a top priority on the agenda by the CEO. Nevertheless, none of the persons whom we then interviewed on the issue of innovation mentioned this process to us; except the CEO. We subsequently found out that no significant progress had been made on most of the 8 priority themes, every team “being too busy with other priorities”. Summary findings about Antinnova’s incompetence The major findings of our research at Antinnova show an organization dedicated to efficiency in all respects, including efficiency in product development regardless of the needs for informal interaction and creativity. All internal players are extremely busy (‘busy being busy’) with no or little time and interest to listen to anyone else from other departments. Each member of the organization is entrenched in his / her logic attached to his / her functional position. Each function is convinced and claims that they understand the underlying strategic dynamics of the business better than the others. Over the years, the degree of trust among staff and managers from the various departments has come down to a minimum. Antinnova is a rather rich company with significant resources. The organization is heavy with a tendency to follow competitors innovations (me-too products), accepting to bet significant amounts of resources for every product launch, especially for advertising campaigns despite the high risks involved. The organization is obsessed by large and costly projects, rejecting

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any smaller idea and thus becoming extremely conservative and perfectionist, precisely because of the risk attached to any product launch when so much is at stake. All this led to very little capacity to accept iteration and interaction in the product design. Antinnova’s competence to compete operationally has created an incompetence to compete entrepreneurially (Haanes and Fjelstad, this volume). In other words, this company has slowly built an internal culture, an organizational structure and routines which made it unable to launch new products successfully. This company has built a strong incompetence base for itself. One may call it "in-built incompetence". And this incompetence is built to last. At least until the company runs into difficulties. Let us now turn to a model of organizational competence which can serve as a theoretical basis to analyze and discuss the case of Antinnova.

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III-A model of competence We start by reviewing briefly the competence-based perspective as it stems from the economics and management literature before presenting a model of organizational competence integrating and articulating what we view as the main underlying dimensions of the concept. This model will then make it possible to revisit the case study presented and thus address the issue of incompetence. The resource-based view and its corollary, the competence-based perspective The Resource based theory of the firm arose after Penrose’s (1959) work and was developed by Wernerfelt (1984), Rumelt (1984), Barney (1986), Collis (1991), Amit and Schoemaker (1993), Grant (1996) and several other contributions. This perspective very rightly pointed out that the firm's performance is not just the result of the external environment in the competitive game (Porter's five forces, the external positioning, ...); the firm's performance also varies according to the way resources are tapped and leveraged by the organization to satisfy clients' needs on the market place. Interestingly enough, the resource based view of the firm did not really raise any interest among practitioners until Prahalad and Hamel (1990) published their core competence piece, as Wernefelt (1995) suggests. In Prahalad and Hamel's terminology, to be "core", the competencies have to meet three criteria, namely (1) offer real benefits to customers, (2) be difficult to imitate and (3) provide access to a variety of markets. The heart of the matter has precisely to do with the uniqueness of the various re-combinations of core competencies which the firm may achieve, to design, manufacture and distribute products and services to the customers on the market place. A higher level resource bundling process is thus at work to create an offer which may be attractive to and valued by the clients, Mc Gee (1995). This clearly stresses that a unique combinaison of core competencies can indeed generate a truly competitive advantage. In addition, Prahalad and Hamel suggested to re-think strategy in terms of competence rather than for organizational SBU's. In turn, the resource based view led to a knowledge-based perspective, Conner and Prahalad (1996), Kogut and Zander (1996). At the same time an attempt was made to build a theory of competence-based strategy. The term competence is meant here to enlarge the concept of resource while building up on the resource-based perspective. The Prahalad and Hamel (1990) core competencies lead to Hamel and Heene (1994) and Sanchez, Heene and Thomas (1996) as well as to the Heene and Sanchez (1997) and Sanchez and Heene (1997) volumes. As Durand (1998) puts it: ‘In medieval times, alchemists were seeking to turn base metals into gold. Today managers and firms seek to turn resources and assets into profit. A new form of alchemy is needed in the organization. Let's call it competence’. We follow Heene and Sanchez who advocate that the emerging competence theory has something more to offer than the resource based view, bringing into the picture this "organizational alchemy" which is necessary to properly leverage the resources and assets at hand. In any case, the line of reasoning behind the resource / competence based view of the firm remains essentially as follows: the firm taps sources of resources and assets and combines these into products and services for the clients through ad hoc management processes taking place within the organization. We choose to use the generic word competence to describe these capabilities to combine, bundle and integrate resources into products and services, what

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Heene, Sanchez and Thomas (1996) call the integrated coordinated deployment of resources and assets. Some of these competencies are distinctive enough to be labeled core competencies, i.e. leveraging specific sets of capabilities and assets which give the firm a potentially significant and sustainable competitive advantage over its competitors. In contrast some inability to achieve part or all of this may be distinctive enough to be labeled incompetence. Let us now try to clarify what we mean behind the concept of competence. A model of organizational competence built round three generic forms of competence: Knowledge, Know-how and Attitudes From research on Education, we suggest (see Durand, 1998) to borrow the three key dimensions of individual learning : knowledge, know-how and attitudes, following Pestalozzi (1797) who referred to "head, hand and heart". Knowledge corresponds to the structured sets of assimilated information which make it possible to understand the world, obviously with partial and somewhat contradictory interpretations. Knowledge thus encompasses the access to data, the ability to recognize them as acceptable information and to integrate them into pre-existing schemes which obviously evolve along the way. Know-how relates to the ability to act in a concrete way according to predefined objectives or processes. Know-how does not exclude knowledge but does not necessitate a full understanding of why the skills and capabilities, when put to operations, actually work. Know-how thus in part relates to empirism and tacitness. Attitudes are too often neglected in the resource based view as well as in the competence based theory of the firm. This may be due to the traditional lack of interest of economists in behavioral and social aspects, although Barney (1986b), Fiol (1991) or Leonard-Barton (1992) have touched upon this aspect. We believe that behavior but even more so identity and will (determination) are essential part of the capability of an individual or an organization to achieve anything. This view is supported by Amos and Saetre (this volume), who emphasize the cultural dimension as key to organizational competence. This is a matter of choice in defining concepts. We argue that a dedicated organization, eager to succeed, is more competent than a demoralized, passive one with exactly the same knowledge and know-how.

These three dimensions are the generic axes of our competence referential. Figure 1 illustrates some sub-dimensions worth of interest around these three principal axes, including the distinction between techniques (essentially empirical) and technology (partly explained scientifically), or between know how, know what and know why (Sanchez, 1996).

Going one step further, one should recognize that management is not necessarily capable of acting upon these dimensions. Standard managerial levers are of a different nature: Strategizing (strategic thinking leading to a strategic vision, a strategic logic thus relating to the "know why", strategy deployment and strategic decision making). This relates to the knowledge (know-what and know why) dimension. Organizing (the organizational structure as well as management processes). This relates more to the "know how" dimension. Motivating (i.e. setting up incentives but also coaching, encouraging positive thinking and behavior, promoting dedication and will). This thus relates to the "attitudes" dimension. Figure 2 illustrates the respective positioning of each of these three main managerial levers for action with respect to the proposed key dimensions of competence in our model. This thus raises the issue of the interaction between managerial tasks and competence building and leveraging. The links are obviously not so direct. How can management operate on the same wavelength (according to the same dimensions) as the competence base in order to better

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build and leverage competence? This important issue will be discussed later in this paper for the case of Antinnova.

Knowledge

Attitudes

Will

Know how

...

...

Managerial action andthe Competence Base

Strategy

Organization Motivation

StrategicLogicStr

ategic

Vision

Strategic Deployment

Structure

The

informalorganization

Processesand

routines

Figure 2

Knowledge

AttitudesKnow how

Technologies

Skills

Determination

CultureBehaviourTechniques

Know what

......

Three dimensions ofcompetence

Know why

Figure 1•Data• Information•Knowledge

•Skills•Capabilities•Know how

•Behavior•Identity•Will

Coordinated Deployment

Knowledge

AttitudesKnow-how

Shared Vision

OrganizationalStructure

ManagementProcesses

and Routines

Identity

Figure 3

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The model also refines the heart of the concept of competence, the "organizational alchemy" as we call it, which has to do with the coordinated deployment of resources and assets. Indeed, while Sanchez, Heene and Thomas (1996) actually associate their coordinated deployment function to the management processes only, the model extends the concept of competence to integrate the cultural identity, the strategic vision and the organizational structure. The identity (the shared values, revealed by the rites, taboos and beliefs) operate as a cement holding the organizational pieces together at least as efficiently as any other coordinating and integrating mechanism. Similarly, a shared vision also contributes to the coordinated deployment of strategy, channeling people's energy, motivation and commitment. Finally, the organizational structure is also a key element of the same coordinated deployment of assets and capabilities. In other words, in our model, the content of the coordinated deployment concept is reviewed and enlarged to encompass four elements: the management processes, the identity, the strategic vision and the structure. This is shown on Figure 3. In so doing, our model clearly relates to Strategor's (1997) tetrahedron of strategic management. The model also includes the question of competence building. In a way, competence is a stock accumulated as a result of an ongoing flux of learnings, reinforcing and enlarging the competence base of the organization. Table 1 extends to know-how and attitudes what Durand (1992) described for knowledge building, suggesting a sequence of stages from data and information, to knowledge and expertise as shown below :

Data Information Knowledge Expertiseaccept assimilate transcend

Indeed, know-how is built through action which shapes skills and techniques. Similarly attitudes are shaped through interaction when individuals conform to group or organizational behavior, adopt the same cultural values and share the same basic commitments. Table 1 illustrates the parallelism which prevails in the way learning mechanisms operate for each dimensions of the referential of the model. In this sense, learning stems from information, action and interaction. Expertise actually requires to go one step further. Expertise needs some form of quantic jump in competence together with a merger of the three generic dimensions of competence. Figure 4 illustrates this idea graphically, detailing the learning processes at hand for each dimension of the referential of competence. At this stage, it is important to note that the pre-existing stock of competence (the knowledge base, existing skills and identity) significantly affects the learning capabilities. It may operate as a booster to build up competence fast. It may also transform itself into a source of bias and inertia, hindering any real new learning. History indeed matters. The "installed base" counts. This is also shown graphically on Figure 4. For each axis, the dotted arrows loop back on the pre-existing competence base which in turn influences new learnings. The result of learning is not just a function of the learning process. It also depends upon the pre-existing base of competence. This holds particularly true when the installed base of competence aims at cost reduction and efficiency, whereas the new competence required emphasize creativity and innovativity (Haanes and Fjelstad, this volume). One final feature of our model of competence has to do with the idea that learning takes place for the three generic dimensions of the model in a simultaneous and interdependent way. See Figure 5. If knowledge building stems from exposure to and reception of external data which has to be accepted as information and integrated into frameworks, if know-how is built through action while attitudes are shaped through interaction in companionship, nevertheless,

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the three parallel modes of building up competence operate in an interrelated, simultaneous way. This extends what Senge (1990) advocates, following Piaget : learning needs action. A more detailed discussion of the model can be found in Durand (1998). The intent and focus of the present paper require to turn now to the issue of incompetence, revisiting the story of Antinnova.

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Knowledge Know-how Att itudes

Data Reception

Information

Knowledge

Action

Skills and capabili ties

Know-how

Interaction

Behavior, culture, w il l

A tti tudes

Expertise Expertise Expertise

Pa ralle l le arn ing p roc esses and stagesTable 1

The dynam ics

of c ompe te nc e b uild ing

Transcend

Exper tise

Know le dge

Know -How A tt itude s

Info rm a tion

• Formal training

• Exis ting knowledge ba se• Learn ing by lea rning

Dat a

enact

assimilate

• Companionsh ip

• Exis ting sk il ls

• Learn ing by do ing

A ction

• Companionsh ip

• Identity

• L earn ing by sharing

Interaction

Ski lls

c apab i lit ie sBeh avio r /

Ide ntity / W ill

integrate adopt

Figure 4

conformpractice

• No rea l learning (know ledge

building) without action

• Know-how is v ulnerab le wi thoutknowle dge

• Knowle dge is steri le without being

em bodied in a tti tudes

• Attitude s useless w ithout a m eaning

• W eak co llective know-how wi thout the abil ity toope rate as a group (a tti tudes)

• A tt itude s are usele ss w ithout know-how for action

Knowledge

A ttitudesKnow-How

The th ree dim ension s

of c ompe te nce a re

inte r-dependen t

Figure 5

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IV- Revisiting the Case study : from Competence to Incompetence The model presented above aimed at describing competence using an integrated set of three generic and interdependent dimensions. Yet, the model may also be helpful in describing what incompetence is about, thus in turn helping grasp the concept of competence from the opposite perspective, as a mirror image. Incompetence at Antinnova One of the most striking aspects of the Antinnova case is probably the contrast between (a) the quality and dedication of the company staff members and (b) the lack of trust and cooperation among managers from different functional departments. The knowledge of the organization regarding markets, client needs, competition, technologies, etc., is actually remarkable (although it may surely be improved). Similarly, the available skills within the organization at Antinnova are without any doubt at the fore front of the best demonstrated skills in the industry (advertizing campaigns, lean manufacturing operations, etc.). But when it comes to collective practices on new product development, Antinnova is just not capable. In that sense, the knowledge and functional know-how at Antinnova are most probably not the problem. The problem comes from the “know how to work together” on non routine tasks. We would argue that attitudes constitute the basis of the incompetence of the Antinnova organization for product development. In this instance, attitudes annihilate the knowledge and skills of the company. It is not a matter of rare resources or assets which could be (or not be) acquired on the market from suppliers. It is not a question of a piece of equipment or a technological process for which the blue print would be missing. Instead, it is indeed a question of coordinated deployment of resources and assets but going beyond management processes. The management processes are not the problem per se. The trouble comes from the way the members of the organization play against the management processes. We argue that the past and current cultural behavior of this company has grown into an organization fit for productivity and efficiency but unfit for creativity and innovation. Haanes and Fjelstad (this volume) argue in the same direction. Distinguishing three modes of competition, they show that the competence required for efficiency are very different than those required for creativity. Teams are under pressure and work hard but antagonism and lack of trust result in a streamlined but sterile product development process. How can innovation projects be treated under similar time pressure as operations ? The development committee and the way it is run is just the tip of the iceberg. It reflects the real nature of the culture prevailing at Antinnova. This culture is at least twofold. On one hand the dominant values have to do with productivity and efficiency, not creativity and trial and error. On the other hand, historical fights and oppositions have generate a culture of suspicion and unopenness to others’ ideas and suggestions. It sounds like a cats and dogs story. If cats and dogs have been known to hate and fight each other for ages, it does not mean that dogs are unable to live peacefully with other dogs or with other animals. The same holds for cats. Some cats and some dogs can actually get along pretty well. It is just a question of starting life on a different basis. But when a baby dog first meets a cat, the dog usually learns the lesson once and for all. (Obviously, the same holds for cats the other way around). Reforming these early training is known to be difficult.

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In such instances, trying to convince, explaining what the common goals are, deploying the strategy, arguing, may not prove sufficient nor even relevant. A cognitive response to this type of incompetence is just not adequate. This would focus on a wrong dimension of the competence base, the knowledge axis of the referential. Conversely, the “soon-to-be classical” literature on competence would suggest to reengineer the management processes, typically adapting the structure and reengineering the product development process. Yet, we argue that, in this instance, implementing new management processes may not do the job either. The incompetence which we identify in this instance at Antinnova is embedded in the heart (not in the hand) of the organization. It is a matter of identity and culture which are rooted deep down in the collective behavior of the organization. The disease may actually be even more difficult to treat. Indeed our model suggests that the pre-existing competence base for each of the principal axes of the competence referential acts as a filter, shaping and limiting any new learning. This holds especially true for the identity of an organization which is known to constitute a major source of inertia. In that sense, the model presented suggests that the incompetence encountered in the Antinnova case is of a different nature than what conventional managerial wisdom would indicate. This in turn would lead to recommend a different kind of managerial action. We shall come back to this point. All in all, the case of Antinnova thus illustrates how one single missing link among the three generic element of competence (knowledge, know-how and attitudes) may affect the whole performance of the organization. A major deficiency on one key dimension, namely attitudes, and the whole ability to innovate of an otherwise efficient company turns out to be destroyed. In addition, the classical managerial levers of figure 2, (a) strategizing (formulation and communication of strategy which in this instance means explaining the importance of product innovation) and (b) organizing (both the structure and the management processes) are most probably ineffective, as they have proven to be so far for the top management of Antinnova. Even (c) the ‘motivating’ part is not enough as it may sound as rhetoric to the staff. Instead, what the model presented suggests in the case of Antinnova would be a different tack, namely some attempt to transform the culture of the organization in order to generate new attitudes more compatible with the specific needs of innovation. However, transforming the identity in turn means unlearning part of the existing cutural base. This raises the issue of unlearning which is most probably the core issue of the Antinnova case.

This discussion of the case study of Antinnova thus suggests to proceed in two distinct but complementary directions. First, we may use the model of competence presented above to extend the theoretical analysis of incompetence to other situations than just the one discussed empirically here. Second, we may use the same model to discuss unlearning. Forms of incompetence By analogy to the case study presented, our model of competence may help envision and describe three generic forms of incompetence.

The first generic form of incompetence which we identify has to do with the lack of capability of an organization for one or more of the three principal dimensions of competence. We have just seen the case of a knowledgeable and skilled organization, nevertheless unable to perform innovation tasks adequately due to the attitudes prevailing in the company. Other situations may lead to similar dysfonctionning. A nice and smooth collective behavior of

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dedicated and skilled team members may be useless if no common strategic objective, no shared vision, no knowledge of market needs and competitors’ position are available. Think of a skilled orchestra without music to play or a football team without a tactics. Similarly, a well defined strategy shared among a dedicated team of well behaved members may prove useless if no technical and practical skill is available. Think of a well trained football team provided with musical instruments and invited to perform a fine piece of music. In other words a deficient and unbalanced portfolio of competence may be inadequate in many instances.

The second generic form of incompetence which our model helps identify is the case of a strong competence base unfit to new competitive conditions and operating as a source of inertia, preventing the organization to adapt through new learning. The stock of existing knowledge may impede new information acceptance. The psychology literature suggests that individuals tend to reject data which do not fit their previous knowledge while they overemphasize data which reinforce their existing understanding and beliefs, Hogarth (1980), Schwenck (1984, 1988), Barnes (1984), Stubbart (1989). The existing skills may impede new empirical action which would otherwise help build new skills. The typist would find it difficult to adjust to a non standard key board and thus does not even try. Routines entrench organizational skills in specific forms and, in so doing, hinder the building of new skills. The existing culture, the collective behavior of an organization may impede new forms of interactions, thus making it difficult to adopt new behaviors. When the baby cat learnt the lesson from the big dog, it was once and for all. Since suspicion arose years ago at Antinnova among Marketing, Development, Research, Manufacturing, it is now difficult to generate situations of positive interaction between functional departments, where new forms of trust and confidence could be rebuilt. In other words, too much inadequate competence (knowledge, know how, attitudes) may impede learning and adaptation.

The third form of generic incompetence which our model helps identify corresponds to the case of a managerial misfit. When management priorities and actions mismatch the competence base, the conflicting dynamics most probably ends up in chaos. In such cases, the organization is likely to be unable to achieve what the management desires while being prevented from doing what it is good at. The organization is bound to behave as an incompetent body. A law firm or an hospital may not necessarily perform best when managed as a military unit. In other words, incompetence may also stem from the misuse of managerial levers of an otherwise competent organization. See Table 2.

In a way the first of the generic forms of incompetence identified here relates to the lack of one or several components of competence in an organization, as described in our referential of competence. This first form of incompetence is a matter of deficiency (or unbalance) in the competence base. The second form relates to the existence of a sizeable base of inadequate competence which impedes other learning and thus renewal. This second form of incompetence is a matter of too much inadequate competence. The third form relates to a mismatch between management priorities and competence. In such instances, managerial action is not on the same wavelength as the competence base. This third incompetence is in fact a matter of misuse of competence.

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The three generic forms of incompetence can in turn be linked to each one of the key dimensions of our referential (knowledge, know how and attitudes), as a way to identify the source of incompetence more precisely.

In light of these three categories of incompetence, the Antinnova case may in a way be summarized as follows (See Table 3): - the attitudes in the organization are not collaborative enough to permit product development processes to operate smoothly. (first form of incompetence: deficient organizational behavior).

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Dia gnosis o f the Inno vation -re lated In competence at An tinnovaTable 3

Competence Deficiency Competence Inadequacy Manager ial M isfit

No collaborative attitudesamong functionnal

departments at Antinnova

Knowledge

Know How

AttitudesAttitudes and culture shaped

by a permanent search forproductivity and efficiency

Strategic shift from focuson productivity and

efficiency to creativ ity andinnovation, thus asking

Antinnova's organizationwhat it cannot deliver

Thre e Form s of Inc ompe te nc eTable 2

Competence Deficiency Competence Inadequacy Manager ial M isfit

Partial or g lobal lack ofcapability for one or several

dimensions of theCompetence Base

Not enough or unbalancedCompetence Base

Overs ized inadequateCompetence Base impeding new

learning

Too much inadequateCompetence

Managerial priorities and actionsin contradiction to the

Competence Base

Misuse of the existingCompetence Base

Dim ension s of the D iag nosis and Re le van t leve rs for

manage rial a ction Figure 6

StrategyOrganisation

Structure and ProcessesCulture / Att itudes

(-) (+)

Difficulty of achieving change (increasing inertia)

If : Diagnosis

Then : Target

Thus : RelevantAction

Suggested sequence of action in tim e (interrelated but sequential actions)X X X

Divergence in strategicobjectives

Strategic convergence

CommunicationStrategic deployment

Incentives / Constraints

Organisation is notperform ing well

New structure, newprocesses

ReorganizeReengineer

Cultural Gapamong functions

ReconciliationCooperation

Unframing, Teamrebuilding, Reframing

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- the culture prevailing at Antinnova makes it extremely difficult for the organization to reform itself. Productivity in operations, efficiency in project management and antagonism among functional departments are dominant values (second form of incompetence: too strong an inadequate culture, unfit to the requirements of innovation) - the strategy adopted by the top management at Antinnova represents a U turn for the organization which has been under heavy stress for productivity over the previous years, thus becoming good at running lean operations, much less at innovating (third form of incompetence: asking the organization what it cannot deliver) One may thus go back to the initial aim of this paper and review the concept of competence from the perspective of incompetence: One may indeed think of ways to promote and enrich the competence of an organization just by looking at the mirror image of our three generic forms of incompetence: (1) building a balanced, homogeneous competence base with all three dimensions of our referential covered at the same time in an interrelated way (2) maintaining the competence base open in order to keep new information, new action, new interaction and thus new learning possible (3) adopting a strategy, an organization, a motivating scheme (communication policy and incentives) in fit with the competence base in order to leverage the potential of the firm instead of opposing it. On innovation matters, this is obviously not the type of management of competence which took place at Antinnova. In turn the diagnosis formulated on the Antinnova case leads to the issue of overcoming incompetence. When it is just a matter of deficiency, learning mechanisms through information, action and interaction may be activated. However, when it is a matter of incompetence of the second or third form, the question of unlearning arises as well. Unlearning From an empirical study of 20 projects of product and process developments, Leonard-Barton (1992) points out how much core competence may end up operate as core rigidities when change affects the competence base now required. Interestingly enough, in such instances, learning first means unlearning. Hedberg (1981), Nystrom and Starbuck (1984), Durand (1992), McGill et Slocum (1993), Rumelt (1995), Montgomery (1995), Bettis et Prahalad (1995) have all addressed the same issue of obsolete competence and unlearning. When past experience and accumulated competence are obsolete and constitute inertia, before any new learning can take place, it is essential to unlearn. Yet, unlearning is not a natural nor an easy move for an organization. This is actually one of the most difficult task of management. Seen from the perspective of our model of competence, this may be achieved in two complementary ways. On one hand it is a matter of making sure that the existing competence base fades away, e.g. through human resources mobility, retraining, deploying strategy, reorganizing the structure, reengineering the management processes, etc. On the other hand, it is also a matter of promoting new learning, escaping from the bias generated by the pre-existing competence base as illustrated by the dotted, loop-back arrows of figure 4. New information, new action and renewed interaction are the best ways to overcome the inertia of obsolete competence. The organization has to move from single-loop to double-loop learning.

Yet, we argue that the three key dimensions of our referential of competence do not present the same ability to resist change. More specifically, we argue that unlearning the culture of the organization is more difficult than expelling an obsolete know how, which in turn is more

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difficult than getting rid of a useless piece of knowledge. In that sense, our referential of competence is clearly asymmetrical. In the case of Antinnova, this actually leads to suggesting that the sequence of managerial action should be to treat the problem of inadequate culture first before trying to reorganize the product development process and deploy the strategy. This is illustrated on figure 6. Obviously these three elements of action have to take place in a coordinated way, but it would most probably be irrelevant to continue what the top management of Antinnova has been doing for years unsuccessfully, namely trying to convince the staff about the relevance of the new strategy, i.e. the importance of innovation. Just reorganizing would not seem more appropriate at this stage either. The urgent task is most probably to help the managers and staff of each of the functional departments to unlearn their antagonism in order to be able to work together again on a basis of trust and confidence. In as much as the problem is essentially cultural, and thus embedded deeply in the heart of the organization, one probably needs to aim at unfreezing the situation, unframing the players and attempting to have them rebuild their modes of interaction on a different basis. It is a matter of team rebuilding. Before this is done, no significant change should be expected at Antinnova regarding innovation. In other words, once the diagnosis is available, one can think of a variety of solutions to address the issue, which appears here to be a matter of reconciliating managers across organizational borders. Understanding incompetence better may thus lead to more relevant managerial action, concentrating first on the most important task of unlearning and then turning to relearning. V. Summary We have started with three preliminary comments about the management literature on competence, (a) pointing out to the focus of past research on learning while relatively less attention has been paid to describing the stock of competence itself, (b) regretting the overall lack of empirical contribution on competence and (c) suggesting that the concept of organizational competence is more than a simple extension of individual competence. On that basis, we have indicated that the objective of this chapter is an attempt to document empirically the concept of organizational incompetence, as just another way of trying to grasp the concept of organizational competence. We have then started by presenting the case study of the Antinnova company. This highly profitable firm, leader in its markets, has been unable to develop new products successfully in the last years, thus showing a clear incompetence on innovation-related matters. We have described the main findings of our field investigations showing how the firm has built for itself an internal culture and organizational routines fit for productivity and efficiency but unfit for creativity and innovation. We have then turned to a model of competence as a way to analyze the incompetence of the Antinnova company. We have first briefly reviewed the literature dealing with the resource-based view and the competence-based perspective. We have then presented our model of competence built around three key dimensions (knowledge, know-how and attitudes). We have enlarged the content of the concept of coordinated deployment of assets and resources, what we call the "organizational alchemy", to include not only management processes but also the identity, a shared vision and the organizational structure. We have also shown how managerial levers (strategizing, organizing, motivating) relate to the three generic dimensions of our referential before introducing the dynamics of competence building into the model, discussing the importance of the pre-existing competence base

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influencing the flow of new learning. We have finally suggested that the three generic dimensions of competence in our model are interdependent, reinforcing each other as learning takes place simultaneously in all directions through information, action and interaction. On the basis of the model, we have then revisited the case study. Since the core problem of the Antinnova organization is not an issue of a missing piece of knowledge or know-how but has to do with attitudes and behavior, we have suggested that it thus requires more than strategy deployment or process reengineering to treat the problem. On that basis we have then described the three forms of incompetence which the model helped us identify, namely (a) competence deficiency or unbalance, (b) competence inadequacy, and (c) managerial misfit. We have further argued some form of asymmetry among the three key dimensions of our referential as it appears to be more difficult to unlearn attitudes than to unlearn obsolete know-how or even more so obsolete knowledge. Analyzing the various forms of incompetence described by table 3 is indeed a way to grasp what competence is about. As an illustration, we have seen in more details the nature of the incompetence of Antinnova when it comes to product development and have discussed the implications of this diagnosis for potential managerial action. All in all, this discussion is a typical example of a research aimed at helping build and document a self-sustained competence based theory of the firm, recognizing that indeed more work need to be conducted on the concept of organizational competence, especially with an empirical intent.

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