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DIMETIC March 26, 2009 - Strasbourg, BETA
Stefano Brusoni
KITeS-CESPRI, Bocconi [email protected]
www.cespri.unibocconi.it/brusoni
Technological and Organizational Dynamics
(tinkering with firm theory)
Later, i.e. now
Issue 2How do new problem ‘frames’ come into being?
– ‘Technological’ frames – the case of radical process innovation � robotization
– ‘Organizational’ frames – the case of radical managerial innovation – Six Sigma
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FIRST QUESTION: the making of MIRS (B&P, OS 2006)
� Very mature� Major technological innovation in 1920s followed by shake out
(Klepper and Simons, 1996)� Radial revolution in the late 1960s and acquisition s of US
firms (Sull et al. 1996)� Very concentrated sector (top 10 firms have over 85 % of sales
in 2000)
� Very odd recent history. � Rapid increase in market segmentation� Revamping of innovative efforts
� Microelectronics as the fastest growing patent clas s (Acha and Brusoni (2005)
� Rapid diffusion of radical process innovations (Bru soni and Sgalari, 2005) ���� MIRS
Akron workers, about 1910.
Traditional Manufacturing Process
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MIRS, Milano Bicocca, about 2000
Innovative manufacturing process
From deposition of layers in flat From deposition of layers in flat ……
…… to deposition of small tapes on a rigid drumto deposition of small tapes on a rigid drum
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VulcanizationOne dayVulcanizeroperator
Vulcanization
Plant operator
Building, phase 2
Half a day
Plant operator
BuildingTwo/three days
Plant operator
Building, phase 1
Process engineer
Final design of components
One week
Process engineer
Definition of building process
Tire design: size, tread, etc.Definition of building process.Final design of components
Product engineer
Tire design: sizing, tread, etc.
Choice of materialsProduct engineer
Choice of materials
Product engineer
Initial design of components (e.g. sidewall)
One day
Tire designer (single point of responsibility)
+ specialists (e.g. mould designers)
Initial tire design
One day
Product engineer
Initial tire design
DurationResponsibleActivitiesDurationResponsibleActivities
Innovative ProcessTraditional process
Traditional tires manufacturing
‘Modular’ know-how and designprocess; ‘non-modular’production process
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Innovative tires manufacturing
Integrated know-how anddesign process; modularproduction process(and product)
SECOND QUESTION:the role of knowledge integration capabilities
• Pirelli was not the technological pioneer– It was actually far behind Michelin in 1997
• Yet, Pirelli won the technological race.– How did it happen?– Brusoni and Cassi (2009) Reinventing the Wheel
• Pirelli’s development effort relied on a network which was more integrated than Michelin’s.
• To operationalize integration � structural cohesion
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• Building blocks
– Knowledge transfer literature. From which we take the notion that both connections among people and the presence of key individuals which act as ‘reservoirs’ or repositories of knowledge embedded in organizations is key (Argote and Ingram, 2000)
– Complex adaptive systems literature. From which we take the notion problems (i.e.s strategies) are made up of many interconnected elements (Kauffman 1993, Rivkin 2000, Fleming and Sorenson 2001).
• ‘[T]he structure of the network of knowledge elements can guide the process of recombinatory search for new inventions, and thus directly affect the utility of such inventions’ (Yayavarmand Auja (2005, p. 4). – Collaborations among individuals involved in innovative activities
within two different firms – Successful knowledge integration requires the presence of focal
individuals that connect and integrate interdependent areas.
How do new ‘problem frames’ come into being?
Structural cohesion:
A group of individuals is cohesive if it is resilient to the removing of nodes.
• Moody & White, ASR 2003
Cohesive Blocking. The identification of cohesive groups can be applied recursively in order to identify subgroups nested in the original group
This recursive procedure permits to:
• see overlap between groups at the same hierarchy level, since individuals are allowed to be members of different groups (horizontal integration)
• identify cohesive groups and their position related to the others (vertical integration)
Cohesion corresponds to Harary’s node connectivity: the minimum number of actors (nodes) who, if removed, would disconnect the group (network).
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Networks are structurally cohesive if they remain connected even when nodes are removed
Source: Moody and White (2003), fig.1 p.108
0 1 2 3
Structural Cohesionexamples of different connectivity level
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Patent Data: Pirelli and Michelin
702 (100)831 (100)552 (100)747 (100)Total
180 (25.6)137 (16.5)25 (4.5)20 (2.7)Not connected
68 (9.7)93 (11.2)--Indirectly connected
128 (18.2)186 (22.4)17 (3.6)27 (3.6)Directly connected
326 (46.4)415 (48.9)510 (92.4)700 (93.7)Technological Content(3 digit IPC class)
InventorsPatentInventorsPatent
PirelliMichelin
Selection criterion
Network of inventors capture the structure of knowledge!
Pirelli vs. Michelin – Number of patents
0
100
200
300
400
500
600
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
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Michelin vs. Pirelli – connectivity
0
0,1
0,2
0,3
0,4
0,5
0,6
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Pirelli Michelin
Michelin – Giant Component Formation
0
10
20
30
40
50
60
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
SECOND GIANT COMPONENT
FIRST GIANT COMPONENT
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Pirelli – Giant Component Formation
0
10
20
30
40
50
60
70
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
FIRST GIANT COMPONENT
SECONDGIANT
COMPONENT
Michelin – C3M inventors and GC
0
5
10
15
20
25
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
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Pirelli – MIRS inventors and GC
0
5
10
15
20
25
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Michelin: vertical integration
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Pirelli: vertical integration
Pirelli vs. Michelin: horizontal integration
PIRELLI Layer 7:
Stronger Overlap Among Groups
MICHELIN Layer 4:
Weaker Overlap Among Groups
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Pirelli vs. Michelin
• Pirelli succeeded in catching up with Michelin because it relied on a more integrated knowledge base.
• By ‘more integrated’, we mean three distinct characteristics of the network:
1. More connected, i.e. a larger number of node is reachable by theothers
2. A core-periphery structure ‘vertically’ centred around the MIRS development team, i.e. an increasingly cohesive groups nested inside each other, with the deepest group including MIRS’ project leader
3. An horizontal structure which also exhibit some extent of integration, i.e. many overlaps among cohesive blocks at the same hierarchical layer.
Pirelli vs. Michelin(an NK interpretation)
• Compared to Michelin, Pirelli bet on a higher K
• This higher K is reflected:– In the new way of organizing tire design and production– In the adaptation process (landscape is to some extent
endogenous)– In the organizational structure (networks of inventors)– In the strategy (new products, new processes, new niches, new
customers)
• At the same time, robotized processes decouples market evolution from manufacturing processes– Rugged landscape, but not coupled.
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THIRD QUESTION: how does ‘integration’ happen?
• Pirelli vs. Michelin– What knowledge integration ‘looks like’– Very top down
• But how does it happen really?– Longitudinal, qualitative study of the
implementation of a new managerial architecture
– Six Sigma
Do Organizations Dream of Electric Sheep?With Anna Canato , Imperial College Business School
It is the basic condition of life, to be required to violate your own identity’(Dick, P.K. ‘Do androids dream of electric sheep?’)
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Research theme
• How do established organizations reinvent themselves?– Loads about technological innovation– Little on managerial and organizational innovation
• Practical relevance: companies engage constantly in renewal initiatives, with mixed results.
• Theoretical relevance: micro-dynamics of organisational and institutional change are still under-explored.
Imperial College Business School ©
Empirical setting
Imperial College Business School ©
Adoption of new procedures
Adaptation phase
Organizational change (e.g. new CEO)
Departure of the change leader
Established procedures
Two key analytical building blocks:
• organisational routines
• organisational identity
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Organisational routines
• Routines are recurrent and repeated patterns of behaviour, learned over time, which capture the actual ways in which activities are carried out in organisations (Cohen & Bacdayan, 1994), embodying the solutions to problems solved in the past (Nelson and Winter,1982; Feldman, 2000)
• Routines set roles, rules and responsibilities (Nelson and Winter, 1982, Cohen & Bacdayan, 1994)
From a static to a dynamic view of routines
D’Adderio
Nelson & Winter
Simon
1958 2008
Static
DynamicFeldman
Cyert & March
Cohen & Bacdayan
Pentland
Cohen
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Building blocks of organisational routines
(Pentland & Feldman, 2003 and later)
Ostensive dimension
Rationale of the routine as perceived by individuals
Artefactual dimension
Procedures, documents, design tools that embed rules and specifications
Performative dimension
The actual performance when a specific actor applies a given routine
(1) Codified into
(2) Inform behaviour
Research questions
• Routines are related to both change and inertia• To understand when routines lead to change, and
when to inertia, we propose to look inside and acrossroutines
• Routines are a composite concept which include heterogeneous elements– How do the ostensive, performative and artefactual
elements of routines interact, during phases of cha nge?
• Organisations are complex systems of interconnected routines– Does change proceed evenly across routines? How do w e
explain changes within and across routines?
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Methods
• Theory elaboration study (Lee, 1999)
• Inductive research design, based on the analysis of organisational members’understandings and use of specific artefacts and procedures
• Three year field study on the implementation of Six Sigma at Nexus, global developer and marketer of industrial and consumer products, currently part of Fortune 100
Data sources
Objective for the analysisData sources
Gain knowledge about the history of the company and the overall organisational context
Internal and external documents• Corporate biographies (5)• Books and reports about the company
• Archive of internal magazines
• Business press coverage
Build trust and deepen understanding of company’s features
Non participant observation• 26 weeks of non participant observation
Elicit understandings of
• current company’s features
• introduction of new procedures
• change outcome
Interviews• 59 in UE
• 17 in US headquarters
• Conducted in 2005, 2006, 2008
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Sampling (and a note on qualitative sampling)
• Sampling and causality (not generalization)
• Nested strategy– Why this company? � big, old, successful and ‘insular’– Why this division? � typical example of large divisions– Why Six Sigma? � the new process-based architecture– Why these routines within it? � typical examples (no production
though)– Which individuals? � pre- and post-Six Sigma experience
(On causalities)(M&H, chapter 6)
• Why do we have graffiti on subway cars?– Because kids want to
express their identity
• Why do they want to express their identity?– Because they are alienated
• Why are they alienated?– Because they have no jobs
• Why do they have no jobs?– Because they are unskilled.
• Why do we have graffiti on subway cars?– Because cars are not
protected in their yards at night
• Why are they not protected?– Because the transit budget
does not permit it.
• Why … ?
Sampling and causalities
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Timeline of the study
Six Sigma implementation in Nexus (2001-2005)
Adaptation phase (2005-2008)
Nexus
New external CEO bring initiative for renewal
Departure of the CEO
Data collection and analysis
DEFINE
Identify the problem area
Scoping: When starting a project it is necessary to detail its boundaries and objectives
Deepening: Decision making shall be backed by accurate data gathering
Norming: Every project must respect predefined terminology and phases, the same in the entire organization, globally
MEASURE
Collect data
ANALYZE
Compare results with benchmarks
IMPROVE
Find, plan and implement solutions
CONTROL
Monitor and maintain the gains Structuring: Best young talents enter the Black Belt division
Six sigma methodology Routines we observed in Nexus
SIX
SIG
MA
DIV
ISIO
N
Mon
itors
and
con
sults
Six
Sig
ma
impl
emen
tatio
n
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Findings
• Focus on four specific routines, based on analysis of interviews
1. Scoping2. Deepening3. Norming4. Structuring
• NOTE: all observed routines present substantial differences from the way Nexus worked before Six Sigma and all were subjects of intensive training(‘indoctrination’) programs
The organization relied on tenure and experience as the main drivers for promotions. There was not a company level high talents’ program.
The way it was in Nexus before, each person had a highly multitude of experiences, lot of different jobs, you walked your way and experience was the ultimately the driver for leadership
Structuring : Best young talents enter the Black Belt division, which monitors and consult on Six Sigma (and improves their careers
The organization relied on a much decentralized model, where divisions and geography had a high level of autonomy. At individual level, a person was required to be innovative and entrepreneurial, and conformity to rules was never emphasized.
This company never really told me what do to. It gave me freedom and trust, and I have used it. Many successful projects I managed were result of me disobeying to my managers
Norming : Every business process must respect predefined terminology and phases, the same to the entire organization, globally.
People were used to rely on a ‘belly’ driven approach, informed by everyone mix of experience and creativity.
The difference is that now, for every activity, we want to know what the result would be, and we want a measurable item, a number. We have never done this before, to go for numbers
Deepening : Decision making shall be backed by accurate data gathering
Project’s scoping was quite vague and was adjusted over time
In the old Nexus it was normal to have a statement like: ‘We are starting this campaign to increase sales’. Now we are far more specific than that, we write: ‘This campaign aims to increase sales of x % in the next three years using online advertisements’
Scoping : Before starting a project it is necessary to detail its boundaries and quantifiable objectives
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The organization relied on tenure and experience as the main drivers for promotions. There was not a company level high talents’ program.
The way it was in Nexus before, each person had a highly multitude of experiences, lot of different jobs, you walked your way and experience was the ultimately the driver for leadership
Structuring : Best young talents enter the Black Belt division, which monitors and consult on Six Sigma (and improves their careers
The organization relied on a much decentralized model, where divisions and geography had a high level of autonomy. At individual level, a person was required to be innovative and entrepreneurial, and conformity to rules was never emphasized.
This company never really told me what do to. It gave me freedom and trust, and I have used it. Many successful projects I managed were result of me disobeying to my managers
Norming : Every business process must respect predefined terminology and phases, the same to the entire organization, globally.
People were used to rely on a ‘belly’ driven approach, informed by everyone mix of experience and creativity.
The difference is that now, for every activity, we want to know what the result would be, and we want a measurable item, a number. We have never done this before, to go for numbers
Deepening : Decision making shall be backed by accurate data gathering
Project’s scoping was quite vague and was adjusted over time
In the old Nexus it was normal to have a statement like: ‘We are starting this campaign to increase sales’. Now we are far more specific than that, we write: ‘This campaign aims to increase sales of x % in the next three years using online advertisements’
Scoping : Before starting a project it is necessary to detail its boundaries and quantifiable objectives
The organization relied on tenure and experience as the main drivers for promotions. There was not a company level high talents’ program.
The way it was in Nexus before, each person had a highly multitude of experiences, lot of different jobs, you walked your way and experience was the ultimately the driver for leadership
Structuring : Best young talents enter the Black Belt division, which monitors and consult on Six Sigma (and improves their careers
The organization relied on a much decentralized model, where divisions and geography had a high level of autonomy. At individual level, a person was required to be innovative and entrepreneurial, and conformity to rules was never emphasized.
This company never really told me what do to. It gave me freedom and trust, and I have used it. Many successful projects I managed were result of me disobeying to my managers
Norming : Every business process must respect predefined terminology and phases, the same to the entire organization, globally.
People were used to rely on a ‘belly’ driven approach, informed by everyone mix of experience and creativity.
The difference is that now, for every activity, we want to know what the result would be, and we want a measurable item, a number. We have never done this before, to go for numbers
Deepening : Decision making shall be backed by accurate data gathering
Project’s scoping was quite vague and was adjusted over time
In the old Nexus it was normal to have a statement like: ‘We are starting this campaign to increase sales’. Now we are far more specific than that, we write: ‘This campaign aims to increase sales of x % in the next three years using online advertisements’
Scoping : Before starting a project it is necessary to detail its boundaries and quantifiable objectives
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The organization relied on tenure and experience as the main drivers for promotions. There was not a company level high talents’ program.
The way it was in Nexus before, each person had a highly multitude of experiences, lot of different jobs, you walked your way and experience was the ultimately the driver for leadership
Structuring : Best young talents enter the Black Belt division, which monitors and consult on Six Sigma (and improves their careers
The organization relied on a much decentralized model, where divisions and geography had a high level of autonomy. At individual level, a person was required to be innovative and entrepreneurial, and conformity to rules was never emphasized.
This company never really told me what do to. It gave me freedom and trust, and I have used it. Many successful projects I managed were result of me disobeying to my managers
Norming : Every business process must respect predefined terminology and phases, the same to the entire organization, globally.
People were used to rely on a ‘belly’ driven approach, informed by everyone mix of experience and creativity.
The difference is that now, for every activity, we want to know what the result would be, and we want a measurable item, a number. We have never done this before, to go for numbers
Deepening : Decision making shall be backed by accurate data gathering
Project’s scoping was quite vague and was adjusted over time
In the old Nexus it was normal to have a statement like: ‘We are starting this campaign to increase sales’. Now we are far more specific than that, we write: ‘This campaign aims to increase sales of x % in the next three years using online advertisements’
Scoping : Before starting a project it is necessary to detail its boundaries and quantifiable objectives
New artefacts initiate process of routine change
• Routines are forcefully changed in Nexus through the implementation of Six Sigma procedures
Ostensive aspect
Artefacts Performative aspect
Six Sigma
(1) Codified into (2) Inform
behaviour
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Use of new artefacts: emerging problems
• Problems are not related to ‘efficiency’ issues (e.g. lack of utility, lack of training, lack of clarity or similar issues) – Very disappointing given our original expectations– NOTE: this is a consistently successful company
• Rather, informants made constant reference to the consistency ofthe new procedures vs. ‘what we are’
“To apply the entire methodology is not feasible. It simply does not fit the way we are and we are used to work”
“We don’t need efficiency because we are based on continuous innovation. If one brings rationalization to this company, then he kills our way of being “
“Now we need to build a dress by our own, a dress that fits us “
Organisational identity
• Organisational identity considers the features perceived by organisational members to be central, enduring and distinctive of their organization (Albert and Whetten, 1985)
• By providing sense of coherence and continuity organizational identity supports decision making during moments of profound change (Albert & Whetten, 1985, Dutton and Dukerich, 2001, Corley and Gioia, 2004, Ravasi and Schultz, 2006)
• Cognitive perspective. Few recent contributions introduce the need to consider identity and practices (Nag, Corley and Gioia, 2007, Birnholtz, Cohen and Hoch, 2008)
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Nexus’s identity traits
FairnessNexus treats all people equally
Nexus is a mom to its employee
Nexus maintains a positive organizational climate
FlexibilityThere is not a best way to do things
Different units do different things
Autonomous contributionIt is better to ask for forgiveness than for permission
Personal bootleg projects are encouraged
…challenged by Structuring
…challenged by Norming and Structuring
…challenged by Deepening, Norming and Structuring
© Imperial College Business School
The outcome of change
Structuring
Norming
Deepening
Scoping
OutcomeFairnessFlexibilityAutonomy
Organisational identity traits
Rou
tines
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© Imperial College Business School
The outcome of change
Structuring
Norming
Deepening
AcceptedNo clashWeak clash
No clashScoping
OutcomeFairnessFlexibilityAutonomy
Organisational identity traits
Rou
tines
© Imperial College Business School
The outcome of change
Structuring
Norming
ModifiedNo clashWeak clash
Strong clash
Deepening
AcceptedNo clashWeak clash
No clashScoping
OutcomeFairnessFlexibilityAutonomy
Organisational identity traits
Rou
tines
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© Imperial College Business School
The outcome of change
Structuring
Partially rejected
No clashStrong clash
Strong clash
Norming
ModifiedNo clashWeak clash
Strong clash
Deepening
AcceptedNo clashWeak clash
No clashScoping
OutcomeFairnessFlexibilityAutonomy
Organisational identity traits
Rou
tines
© Imperial College Business School
The outcome of change
RejectedStrong clash
Strong clash
Strong clash
Structuring
Partially rejected
No clashStrong clash
Strong clash
Norming
ModifiedNo clashWeak clash
Strong clash
Deepening
AcceptedNo clashWeak clash
No clashScoping
OutcomeFairnessFlexibilityAutonomy
Organisational identity traits
Rou
tines
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© Imperial College Business School
A model of routine change through identity adaptati on
Ostensive dimension
(1) Codified into
Performative dimension
(3) Refuse/ Modify/Accept
(2a) Inform
Six Sigma
Organizational Identity
Artefactual dimension
Organisational identity
(4) Adaptation(5) Inform
(2b) Inform
Discussion
• We have analysed a case of conflict between a set of new artefacts and established identity traits– The latter were embodied in the ostensive aspect of old
routines
• The tension between the old –established- and new –proposed- ostensive aspects is revealed observing which artefacts are accepted, which modified and which rejected � performative aspect of routines
• In turn, the process of acceptance of new artefacts lead to integrate changes in the established organisational identity
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Conclusions (on third question)
• Link the literature of routines with organisational identity to explain how –and which- routines change– Corporate renewal, their pains and sorrows– Role of consultants, and what they leave behind
• A framework of routine change that exploits organisational identity to understand source of change and inertia– Conceptualise organisational identity as a
pragmatic concept– Look at firms as systems of interconnected routines– Conflicts in goals, interest (future: routine as
truces)
Conclusions
• Problems– And frames
• Search– Local and heuristic
• Modularity– Technologies and organizations
• Together, these three elements allow for the rapid development of an empirically grounded, theory-driven understan ding of the joint dynamics of technologies and organizations.
• Open issues– Operationalization of ‘NK’ categories
• Interplay of qualitative research and simulation models– Organizations as evolving ‘role structures’
• Interplay of qualitative research and social network analysis
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Thanks!
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