In this guest blog Willy Shih, the Robert and Jane Cizik Professor of Management Practice at Harvard Business School, speaks about disruption in the marketplace and how managers can benefit from getting out of their silos to stimulate innovative thinking.
I teach MBA students about product and process innovation, and the opportunity to share a perspective recently with health care executives at Cerner’s invitation was a good reminder to me that some of the best ideas come about when you venture outside your area of expertise — when you cross the boundaries that typically define your work, and when you interact with people who are working in completely different fields who have wholly different perspectives.
I was invited to talk about Netflix, a company that has changed the face of entertainment media consumption, both in the United States and now globally. I wrote a popular Harvard Business School case study on the company, and was asked to discuss how this company had disrupted its competitor, Blockbuster, in DVD rentals and went on to become the largest deliverer of movie and TV content over the internet in the world. We use this case in the MBA curriculum at the Harvard Business School, and it is very popular with executive education audiences at our school as well as MBA programs at many others.
I launched into the discussion with a flashback to what the home video rental market looked like in the 1990s, when Blockbuster was king of the hill. We talked about the company’s value proposition and how Netflix experimented with many recipes, including a DVD-by-mail rental model that looked very much like Blockbuster’s, late fees and all. But then as we delved into a deeper analysis and others around the room started drawing parallels and firing questions, it started to feel quite different from the many other times I’ve taught this case. Certainly the health care leaders from around the world brought a very different experience base and points of view, and I could hear it in the tone of the discussion and the direction of probing. It was more than the parallels people drew, though; it was the mindset and the lenses they looked through. Whether they were from the U.S., Canada, Australia, the U.K., or Qatar, the diversity of experiences and voices was really striking to me; it was refreshing.
On the plane back to Boston, I thought about the words a great inventor and scientist who used to work for me (when I was in industry) once shared with me. “When you stay in your silo every day, everything looks the same,” he said. “But when you go into somebody else’s silo, everything looks different.” Indeed, those of us who study innovation frequently remind people that crossing boundaries and mixing ideas and perspectives is one of the really important sources of great ideas. Many new ideas come from looking in unfamiliar areas or remixing and adding a little something new. Henry Ford, talking about the pioneering innovations behind the moving assembly line and mass production, described his team's work as a kind of cumulative innovation: “I invented nothing new. I simply assembled the discoveries of other men behind whom were centuries of work.” Of course most of the sciences are that way. New discoveries are built on a pyramid of cumulative innovation from those who came before.
The real challenge is to expand one's field of view. If you look at some of the key ideas in the innovation literature, we quickly come to Herbert Simon's notion of "bounded rationality." In a complex world where we are deluged with too much information, managers simplify by picking out and isolating only what is important. “The human being striving for rationality and restricted within the limits of his knowledge has developed some working procedures that partially overcome these difficulties. These procedures consist in assuming that he can isolate from the rest of the world a closed system containing a limited number of variables and a limited range of consequences."; In other words, we eliminate seemingly irrelevant information and "bound" our thinking.
Not surprisingly, people from different fields operate on different sets of information. And they have different points of view, which often limit their ability to see beyond the routine. That’s why I always find it so interesting to talk to practitioners in diverse areas, to hear what they have to say, and push myself into looking into areas that are completely different from the everyday routine. The most interesting idea I have encountered so far this year arose from the juxtaposition of two visits I made: one to a German manufacturer of automation equipment, followed six weeks later by a visit to a Chinese men’s suit manufacturer. Both of them were trying to get a leg up on competition by moving to a custom make-to-order model. These were completely different industries, but the structure of the problems they were working on was the same: each required major shifts in their production systems, but each came up with radically different approaches. The differences helped me identify core implementation issues that will be broadly applicable in other industries.
That’s also why Cerner’s recent invitation was so interesting to me. I don’t get to interact with prominent health care leaders very often, and the fresh perspectives offered were thought-provoking. For others, I suspect it was recognizing the need to push beyond the boundaries of their everyday routine. Perhaps that’s why people found it so valuable.