Tuesday, July 11, 2006

Improvise or perish

Organizations cannot stay at the same level of skills and competencies. They need to ceaselessly learn, create knowledge, and innovate processes, products, and services to stay ahead of competitors. This is true much more now than ever before, with firms competing with local and global players. Hammonds (2003) has profiled the changing structure of global competition through a case study of Wipro Ltd., an Indian IT services firm.

Wipro, till recently, was primarily in the business of “writing software, integrating back-office solutions, designing semiconductors, debugging applications, taking orders, and fielding help calls”, for companies around the world. Since last few years, it has been facing stiff competition from companies in Banglore, where Wipro is based, and around the globe which can do low-value IT services for a pittance, i.e. compete on cost and provide equally good services. Wipro has no choice but to move up the service chain. It is aspiring to move to the “high-value services such as consulting, integration, and architecture” and poses threat to the business of established IT consultants like Accenture or EDS in the US.

As we see in the above example, global competition restructures the industry. New, mean, and hungry companies are born every day and incumbents cannot maintain their growth and profitability competing on cost alone. Organizations which fail to innovate and improvise, scale up their processes, products, or services go out of business, as newly born companies take over their businesses. Same fate will befall these new organizations if they fail to learn from their predecessors mistakes. Organizational improvisation is the mantra to break out of this loop of birth and death of organizations. One must not be mistaken, this loop was always there, however, the cycle of the loop has shortened due to globalization.

Cunha et. Al. (1999) define organizational improvisation as the “conception of action as it unfolds, drawing on available material, cognitive, affective and social resources”. The authors stress that improvisation is deliberate and result of a action(s), employing the resources available to the firm. The definitions of resources are as below:

Material resources: General category encompassing outside the individual and the organizational social system. E.g. information systems, financial resources.
Cognitive Resources: Set of mental models held by the individual members in the organization.
Affective Resources: improvisers emotional state
Social Resources: Social structures present among members performing improvisation.

In sum, organizations need to improvise in the wake of increasingly intense competition. They need to employ all resources, especially their employees, business partners, and customers, in their continual quest for organizational improvisation. Remember, organizational improvisation is deliberate and does not happen by chance.

Cunha, M. P., Cunha, J. V., and Kamoche, K. (1999). Organizational Improvisation: What, When, How, and Why. International Journal of Management Review. September, 1999

Hammonds, K. H. (2003). The New Face of Global Competition. Fast Company, Feb, 67, 90-97.

1 comment:

Joe said...

I'm reminded of the saying "a rising tide lifts all boats" ... and I suppose the proviso here would be, as long as their anchor chains aren't too short.

Doug Rushkoff has an excellent book on organizational improvisation, Get Back in the Box: Innovation from the Outside In, in which he argues that the best way for an organization to innovate is to focus on its core competencies ... to do better at what it does best.

I like your insight into the importance of engaging all resources in the process of continuous improvisation. On a certain level, everyone's a customer.