Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges

ROSABETH MOSS KANTER

Implementation of technological innovation rests largely on readiness for change, and change is not always received positively.

One view of change was satirized by comedian Woody Allen. In an ''all-purpose commencement speech,'' he wrote that at this point in history, humanity faces a crossroads. "One path leads to despair and utter hopelessness; the other to total extinction. Let us pray that we have the wisdom to choose the right one." Allen was expressing the way that many people view change in organizations: Whichever path we take is going to be equally dreadful.

The other view of change is exemplified by a true American hero, Seymour Cray, founder of Cray Research, and an inventor largely responsible for America's lead in supercomputers. Cray, an avid sailor, would build a new wooden sailboat every year. At the end of the season, he would destroy it so that he could build a better one the following year without being limited by his previous mistakes. Cray offers a very different perspective on change—that change means continuous improvement, opportunities to keep mastering new skills using new ideas and new tools.

How do we build environments in which change is not only accepted but embraced, Seymour Cray-style, rather than rejected, Woody Allen-style? To find answers, I argue that we must look

Copyright © 1989, by Rosabeth Moss Kanter. All rights reserved. Used by permission.



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People and Technology in the Workplace Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges ROSABETH MOSS KANTER Implementation of technological innovation rests largely on readiness for change, and change is not always received positively. One view of change was satirized by comedian Woody Allen. In an ''all-purpose commencement speech,'' he wrote that at this point in history, humanity faces a crossroads. "One path leads to despair and utter hopelessness; the other to total extinction. Let us pray that we have the wisdom to choose the right one." Allen was expressing the way that many people view change in organizations: Whichever path we take is going to be equally dreadful. The other view of change is exemplified by a true American hero, Seymour Cray, founder of Cray Research, and an inventor largely responsible for America's lead in supercomputers. Cray, an avid sailor, would build a new wooden sailboat every year. At the end of the season, he would destroy it so that he could build a better one the following year without being limited by his previous mistakes. Cray offers a very different perspective on change—that change means continuous improvement, opportunities to keep mastering new skills using new ideas and new tools. How do we build environments in which change is not only accepted but embraced, Seymour Cray-style, rather than rejected, Woody Allen-style? To find answers, I argue that we must look Copyright © 1989, by Rosabeth Moss Kanter. All rights reserved. Used by permission.

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People and Technology in the Workplace to macro as well as micro factors—to the organization itself and to the relationships between organizations. The human factors in change, I submit, are only part of the equation; the other part is the relationships between organizational actors that are encouraged or constrained by the organizational context. THE NATURE OF INNOVATION: WHAT IS KNOWN There is already a great deal of knowledge about how to make change work effectively at the work unit or project level, knowledge available for decades, including pioneering research at the University of Michigan after World War II. For the acceptance of change it is important that there is a shared vision or shared goals to which people are committed; there is participation of the users in the process of implementing change; there is ample training so that people acquire the skills; there are transition periods to ease people in where the new and the old exist side by side; and there is ample communication and humane redeployment if the implementation of new technology costs jobs or creates displacement. This knowledge has been accumulated and supported by decades of thoughtful research at the micro level. So, why is it that America sometimes lags in the implementation of technology, including technology invented here? Perhaps the answer lies beyond the project level, beyond the work unit, and beyond the micro process. Instead, we need to look at the relationships between work units, at total organizational relationships and systems, and at interorganizational relationships if we are truly going to understand the context for the implementation of new technology. Such macro-level system variables augment process models of innovation development and adoption. There is also a great deal of research evidence about the broad kinds of organizational circumstances in which different types of innovations flourish. Product innovations are more likely in new entrant organizations, and process innovations in established ones. Product innovations are more common in earlier stages of a product's history; process innovations in later stages (Abernathy and Utterback, 1978). Technological innovations are more frequent when resources are scarce (Kimberly, 1981). Evolutionary innovations (modest, incremental changes) are more likely in organizations that are more formalized and "centralized"; more revolutionary innovations in organizations that are more complex and "decentralized" (Cohn and Turyn, 1984). A great deal is also known about the ways in which innovating

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People and Technology in the Workplace organizations come to resist change as they move through their life cycles. Many of America's most successful companies have gone through a life cycle similar to the product life cycle, getting locked into a "mature product" mode of operation. They began as innovators, then grew to be giants in their markets. They need new products to continue to grow, but their organizational structure has become inappropriate. Innovation tends to center on incremental nonproduct features; groups feel proprietary about their products and suboptimize; and financial measures emphasize short-term bottom-line and sunk costs. But in a dynamic environment, assets quickly become liabilities (e.g., banks thinking of their branches as assets, and, therefore, buying more bricks and mortar instead of electronic banking with remote service centers; or tire manufacturers in the early 1970s investing in plants to manufacture cross-ply tires, and, therefore, slow to recognize the shift to radial tires) (Bennett and Cooper, 1984). Of course, sometimes it is wise to wait, since new technology is often inferior in quality to the old and initially finds a limited use in a handful of specialty niches or segments. While newer firms can more easily afford to absorb the risk of untried technologies and have fewer sunk costs or established interest groups to contend with, older organizations may become more cautious. While these broad relationships between type of innovation and the organizational life cycle are interesting, they are too general to guide research and practice on the implementation of innovation, and they do not account for the reasons some organizations—even older ones—implement new technology better than others. Thus, we need a new model that links implementation of new technology to organizational variables. Six characteristics of innovation must be taken into account. The innovation process is uncertain. The source of innovation or the occurrence of opportunity to innovate may be unpredictable. The innovation goal may involve little or no precedent or experience base to use to make forecasts about results. Hoped-for timetables may prove unrealistic, and schedules may not match the true pace of progress. "Progress on a new innovation," Quinn (1979) wrote, "comes in spurts among unforeseen delays and setbacks. . . in the essential chaos of development." Furthermore, anticipated costs may be overrun, and ultimate results are highly uncertain. Indeed, analysts have variously estimated that it takes an average of 10 to 12 years before the return on investment of new ventures equals that of mature businesses (Biggadike, 1979);

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People and Technology in the Workplace 7 to 15 years from invention to financial success (Quinn, 1979); and 3 to 25 years between invention and commercial production (Quinn, 1985). These data make clear the importance of appropriate top management commitment and support. At the same time, it is equally important that top management not kill "experiments" or fledgling new activities with overattention—e.g., too much reporting—or let them flourish without criticism or opposition because of premature publicity (see Mason, 1986, on the latter point). The innovation process is knowledge-intensive. The innovation process generates new knowledge intensively, relying on individual human intelligence and creativity and involving "interactive learning" (Quinn, 1985). New experiences are accumulated at a fast pace; the learning curve is steep. The knowledge that resides in the participants in the innovation effort is not yet codified or codifiable for transfer to others. Efforts are very vulnerable to turnover because of the loss of this knowledge and experience. There need to be close linkages and fast communication between all those involved, at every point in the process, or the knowledge erodes. The innovation process is controversial. Innovations always involve competition with alternative courses of action. The pursuit of the air-cooled engine at Honda Motor, for example, drew time and resources away from improving the water-cooled engine. Furthermore, sometimes the very existence of a potential innovation poses a threat to vested interests—whether the interest is that of a salesperson receiving high commissions on current products, or of the advocates of a competing direction. (Fast, 1979, for example, argues that "political" problems are the primary cause for the failure of corporate new venture departments.) The innovation process crosses boundaries. The creation and use of innovations are rarely, if ever, contained solely within one unit. First, there is evidence that many of the best ideas are interdisciplinary or interfunctional in origin—as connoted by the root meaning of entrepreneurship as the development of "new combinations"—or they benefit from broader perspective and information from outside of the area primarily responsible for the innovation (Kanter, 1983a; 1988). Second, regardless of the origin of innovations, they inevitably send out ripples and reverberations to other organizational units, whose behavior may be required to change in light of the needs of innovations, or whose cooperation is necessary if an innovation is to be fully developed or exploited. Or there may be the need to generate unexpected

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People and Technology in the Workplace innovations in another domain in order to support the primary product, like the need to design a new motor to make the first Apple computer viable. The innovation process often changes work relationships and hierarchical arrangements. This shows up, for example, in the resistance of supervisors to change. Klein (1984) identified five groups of resisters in a study of the implementation of employee involvement in eight manufacturing plants: unbelievers (who reject the concept itself); status seekers (who fear losing prestige); skeptics (who doubt the sincerity and support of upper management); equality seekers (who feel bypassed); and deal makers (who had developed a base of power under the old system). The conditions for origination and invention are different from the conditions for adoption and diffusion. Successful invention may occur in isolation; successful diffusion depends on the quality of linkages to other activities. Whereas creation and development—production of the innovation model—can occur with few resources, little visibility, modest coalitions, and the isolated activity or relatively small teams, use of the innovation is a different matter. If creation is an intensive process, diffusion is an extensive process. use requires many other people, activities, patterns, and structures to change to incorporate the innovation. It is not surprising, then, that innovations are more successfully transferred, commercialized, or diffused where the organization or market is already receptive to the idea and prepared for its use. (See Kanter, 1988, and Leonard-Barton, 1988, for more evidence and analysis.) This is almost tautological. Where there is stronger organizational commitment in the development process, signified by funding, visibility, coalition support, and so forth, there are more "side bets" placed on the idea (i.e., staking of reputations on the outcome) as well as greater sunk costs. Thus, there will be more pressures to use the innovation in more ways and make it more central to the organization's strategy. Organizational arrangements will already have begun to bend in anticipation of the successful development, often through negotiations among departments—the "logical incrementalism" by which new strategies are adopted (Quinn, 1980). Perhaps this is why evidence indicates that successful new ventures in large corporations are more likely to be the ones sponsored by operating line executives rather than by corporate executives (Hobson and Morrison, 1983); the line-sponsored ventures are already closely connected with implementors. Thus, if innovation is uncertain, fragile, political, and imperi

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People and Technology in the Workplace alistic (reaching out to embrace other territories), then it is most likely to flourish where conditions allow flexibility, feedback, quick action and intensive care, coalition formation, and connectedness. Innovation proceeds through a set of cycles of adaptation (Leonard-Barton, 1988). It is most likely to grow in organizations that have integrative structures and cultures emphasizing diversity, multiple structural linkages both inside and outside the organization, intersecting territories, collective pride and faith in people's talents, collaboration, and teamwork. The organizations producing more innovation have denser networks that link people in multiple ways and encourage them to "do what needs to be done" within strategically guided limits, rather than confining themselves to the letter of their job. Such organizations are also better connected with key external resources, including other organizations as collaborators, and operate in a favorable institutional environment. Recent field research in over 80 companies has examined the emergence of an organizational and managerial paradigm that embraces these characteristics (Kanter, 1989a; 1989b). In general, the conditions favoring implementation of new technology can be summarized under the rubric of four "Fs." Organizations that are successful users of new ideas are more focused, fast, flexible, and friendly. Each of these "Fs" suggests hypotheses or research questions that might shed light on ways to improve the application and acceptance of new technology. FOCUS: STRATEGY, RESOURCES, REWARDS My first major proposition is that greater organizational focus in the mix of an organization's businesses and activities, backed by appropriate rewards, supports investment in and effective implementation of new technology. The Business Mix There has been a great deal of discussion recently, among analysts of corporate strategy, about the relative merits of diversified versus focused organizations. An emerging conclusion is that organizations in fewer lines of business with those lines more closely related are much more successful than organizations that are highly diversified. Mainstream economic literature has long produced mixed results, showing some benefits to unrelated diversification, but recent work tends to support the new proposi-

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People and Technology in the Workplace tion (Montgomery, 1985; Montgomery and Thomas, 1988). The reasoning is similar to that for individuals: It is very difficult to be on top of all the things you need to do if you're distracted by too many demands, too many requirements, too many unrelated things. Thus, the idea of focus in corporate strategy is coming back into vogue. Twenty years ago, the conventional wisdom urged companies to diversify—keep many eggs in many baskets, have a large portfolio of many different businesses or activities, as a hedge against change. The "portfolio" or "holding company" approach—in which each part stands alone and needs to be different in order to compensate for the weakness of other parts—has been increasingly discredited. Sometimes the delegitimation of the diversified conglomerate has occurred for defensive reasons: avoiding the administrative costs of managing diversity or the vulnerability to takeovers engendered by the ease with which the business units can be unbundled and sold at a premium. However, the quest for focus and synergies also comes from growth goals, especially in global technology companies, which face brutal, fast-paced competition, and thus must transfer intelligence and innovation across the boundaries of business units and countries. Focus permits the attainment of critical mass and sustained competence. Porter, for example, examined the track record of 33 Fortune 500 conglomerates with respect to their acquiring businesses that were unrelated to their core business (Porter, 1987). Over a 30-year period, those conglomerates divested a high proportion of all the things they bought: about 60 percent of all their unrelated acquisitions. It was interesting to look at who was high and who was low on that list. Lowest on the list were Johnson & Johnson and Procter & Gamble, companies that have a clear focus in their businesses. They bought the fewest unrelated businesses, and they tended to sell the fewest—under 15 percent of what they bought. Indeed, P&G is known today for some of the world's most advanced manufacturing plants in terms of social as well as technological systems; its experimentation was aided by a strong and integrated manufacturing function. At the high end were CBS and RCA, which bought many different businesses and sold close to 90 percent of them. Did this effort weaken the companies? Consider subsequent events: RCA has disappeared into GE, and CBS has become part of the Tisch empire. In terms of the mix of businesses involved in the corporation, then, having a clear focus can provide a strategic advantage in a rapidly changing environment in which strength may come from a concentration of resources in building and enhancing a critical

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People and Technology in the Workplace business competence. The focus hypothesis may hold true inside a corporation as well; successful departments may be the ones with clear strategy and awareness of their critical competence. If focused organizations are better able to concentrate on their key skills, they may be more likely to want to make the investments in the kind of technology that will augment those key skills. Thus, implementation of critical technology may occur more effectively in more focused entities. Companies in many different businesses may face many different success factors and, therefore, fragmentation in technology as well as in resource allocation, so that development and use of any particular innovation does not gain sufficient support. Research supports this hypothesis. For example, as one study showed, successful new products in the electronics industry were likely to be close to the firm's areas of expertise, close to the main business area of the firm, and influenced by corporate reputation. It made no difference whether basic research was in-house or outside or whether the firm needed to establish new marketing channels (Maidique and Zirger, 1985). Relatedness to the focus was more important than the origin of the ideas. Thus, corporate strategy is clearly a key to whether or not organizations are good at adopting and using new technology. Technology will be acceptable if it is seen as part of the competitive advantage of the firm and, therefore, will get resources and attention. Effective adoption and use of technological innovation require a strategic decision that this innovation should get resources allocated to it, resources necessary to exploit its potential. For product and technical process innovations, and even for some organizational innovations, the greatest financial requirements begin after the model has been developed. Thus, the nature of the strategic decision process and how top management is linked to the innovation project is another critical structural element in an innovation's success or failure (Burgelman, 1984). At the transfer point, when resources to exploit an innovation are allocated, visible and well-connected projects already aligned with the organization's strategic objectives are likely to fare better. In turn, the degree of investment the project gets as it is moved into commercialization, routine production, or institutionalization affects its prospects for success as an ongoing product or practice. "Thinking small" and not providing adequate investment are often identified as a reason for new venture failures (Drucker, 1985). Research on the first four years of operation of 117 corporate ventures in established markets in manufacturing found that the "winning" ventures initially set higher market

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People and Technology in the Workplace share objectives, had R&D spending levels twice those of the other ventures in the first two years, and had marketing expenditures about 1.5 those of the other ventures in the same period (Hobson and Morrison, 1983). The Activity Mix The business portfolio is one area in which focus plays an increasingly important role; another is the mix of services. Many companies are rethinking the management of ancillary services—support services that help in the production of the company's goods or services but that are very different in the skills required. There is beginning to be a displacement of support activities from internal departments staffed by employees to marketlike arrangements with outside contractors and specialist organizations. In one interesting case in a midsize, high-tech company, the corporate librarian set up the library as a profit center and then an entrepreneurial venture, moving from employee to entrepreneur while doing the same work. As employee she was buried in an administrative hierarchy; as entrepreneur, she is on contract to her former employer and active as a resource to other companies as well. On a larger scale, Eastman Kodak recently contracted with IBM to run its management information systems department so that Kodak could tap IBM's expertise while focusing its own management attention on Kodak's core businesses. Some firms are demonstrating that it is possible to operate effectively even with most activities performed by independent contractors, if computer linkages permit coordination, as a cluster of British examples show. About two-thirds of the work of the F.I. Group, one of the U.K.'s largest software systems houses, is performed at the homes of part-time free-lancers; about 400 clients at a time are served from about 800 sites. Furthermore, F.I.'s work itself increasingly replaces the entire in-house programming department for client companies (Collins, 1986). Rank-Xerox tried a similar organization of work, turning employees into independent contractors (Judkins, West, and Drew, 1985). Handy (1989) asked a multibillion-pound British company's managers to determine what work could not be subcontracted; the answer was only "the chief executive and his car phone." Indeed, "producer services" (e.g., accounting, recordkeeping, or janitorial work performed for organizations on a contract basis) is one of the fastest-growing occupational categories in America, and many small companies have emerged to supply such services.

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People and Technology in the Workplace This trend could have great implications for determining which companies are more likely to adopt and accept new technology. For example, focused small firms that sell services to giant corporations may be more likely to invest in new technology to improve that service than the giant corporation for which the service is peripheral. The focused firm, furthermore, is more likely to create a sense of pride in their people so that their people embrace new technology that will help them do their job better. Consider the case of ServiceMaster, a highly profitable company that provides cleaning and related support services to hospitals, school systems, and other institutions, exporting services to Japan as well as other countries (Heskett, 1987). ServiceMaster has an R&D budget for the application of new technology. Because of the organization's single-minded emphasis on providing the most cost-effective janitorial services, it is constantly investigating the use of new tools. As a consequence, technology is seen by employees not as a threat to be resisted, but as a force to be embraced because it allows them to do their work more effectively and, therefore, gain more of those service contracts that keep the company in business. Thus, more focused organizations engaged in a less diverse mix of activities may be more likely to allocate resources for new technology that augments core strengths. At the same time, focus means a clear set of priorities that guide the actions of everyone at every level. Perhaps the most important task of leaders is to convey these priorities throughout the ranks in a meaningful and inspiring way. Komatsu, a Japanese company that came from behind to challenge Caterpillar's world dominance in earth-moving equipment, set a series of yearly improvement goals that were transmitted to everyone. These "themes of the year" made it possible for the power of the entire corporate team to be concentrated on just those factors that would help the company succeed; energy was not wasted on unproductive projects. Such focus provides the discipline to march in the same direction while enabling people to operate autonomously. Rewards Focus is also important at another level, at the level of behavior. Here, reward systems of an organization play an important role. Reward systems direct attention to particular activities, thus helping determine responses to change.

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People and Technology in the Workplace Some observers argue that many American companies are not providing sufficient rewards and recognition for innovation. Innovation requires risk, and risk requires reward. In Foster's (1986) study of companies (2/3 of which were under $100 million in annual revenue), those weak in idea development also had a very weak innovation incentive program. The companies fell into three groups: innovation realists, innovation dreamers, and innovation ignorants. Innovation realists had financially significant incentives, specific and measurable innovation goals for performance, and the incentives were doled out on a relatively objective basis. The financial incentives were created in novel ways in these companies, and they were significant enough to get managers away from their daily routines and interested in innovation. But token incentives got token results. Leonard-Barton (1988) also demonstrated the impact of reward system misalignments in reducing incentives for users to accept technology innovations. In general, the greatest disparity between what managers value and what they find in their workplace lies in the area of rewards. In a 1988 survey of 171 top managers and 212 middle managers by the American Productivity and Quality Center, 91 percent rated as important ''recognition when I've done a job well,'' 89 percent "pay clearly tied to my performance," and 85 percent "good, fair performance measures"; but these factors existed for only 55 percent, 50 percent, and 39 percent of the managers, respectively. At the same time, job security was considered much less important, and more managers (68 percent) had generous benefit programs than valued them (54 percent). Executives themselves are increasingly concerned that traditional reward systems direct attention away from innovation. It is a common critique of large U.S. corporations that reward systems lead managers to focus on measures of profitability such as ROI (return on investment), thereby creating an incentive to keep investment low, or on such measures of "responsibility" as the size of their staff. In a recent discussion with a large group of executives from some 75 companies about the problems of U.S. competitiveness, the consensus was that traditional pay systems bear a major share of the responsibility for the "decline" of U.S. industry. The typical job grading system assigns more points, and, therefore, more base pay, to jobs with more responsibility for more people and more assets—in effect, the size of the empire people have managed to construct. At the same time, measuring performance on the basis of return on investment tends to focus people away from long-term capital investment and toward keep-

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People and Technology in the Workplace R&D in the last 20 years. But if alliances are viewed merely as costand risk-reducing ventures, then they may become "little more than sophisticated outsourcing arrangements" (Hamel et al., 1989). Organization-Spanning Technology Third, the use of some technology, not only by its nature but also by its origin, does not rest on issues within work units but on relationships between organizations. Some technology is difficult to use without redefining cross-organizational relationships to become closer, more "friendly." For example, just-in-time inventory systems cannot be used effectively without friendly relationships with suppliers and without interlinked systems. Clearly, this involves a more complex issue than getting a single work unit to accept change. Redefining the nature of the relationship between organizations is one of the major frontiers for understanding how to encourage the implementation and spread of new technology. Significant involvement of suppliers in product development is among the reasons Japanese automakers have shorter lead times for product development than their U.S. counterparts (Clark and Fujimoto, 1988). In addition, sometimes the conditions necessary to support innovation lie outside of the control of a single organization and therefore require interorganizational collaboration for use of new technology. Labor-management partnerships can facilitate the acceptance of new technology. Pacific Bell created what its leaders call a "business partnership" with its major union, the Communication Workers of America, to support the implementation of new technology in the workplace (Kanter, 1989a). The partnership was designed to develop collaborative forums for discussing how both parties are going to deal with the technological change they foresaw and the implications of such change for jobs and job displacement. The partnership forums led to a version of pay for performance through profit sharing, substituting for an automatic cost-of-living increase. More important, they developed the social infrastructure—a system of retraining and career counseling—that would allow the company to deploy their human resources much more flexibly. This would in turn allow them to implement new technology much more quickly, with active collaboration from local union presidents because of their involvement in the decision and the planning. Similarly, the implementation of computer-integrated manufacturing (CIM) in a unionized plant at Allen-Bradley required

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People and Technology in the Workplace union collaboration. Management went to the union leadership and explained the situation, the fact that the plant was going to be automated and that their own engineers were going to design and build the plant. They needed the union's permission, which they received, and then asked for volunteers to train to be operators of the plant. The volunteers were given an aptitude test, and the four top scorers were chosen to be the operators. The maintenance people, the machinery-building people, and the several operators were all part of the same bargaining unit, getting full union support. The hardware and software designers were from different divisions, and at first it was hard to get them to work together and to work under tight controls. But eventually, with union help, the collaborative approach eased the tensions (Avishai, 1989). Government is another institutional force affecting the development and use of new technology. Because of cooperative relationships with government officials, Merck was able to get FDA approval for a new drug in less than half the time it normally takes, through an informal process of working closely with the regulators on every step of the process. More formal public-private or business-government partnerships also help the effectiveness of innovation. For example, Massachusetts has had many important programs for technology transfer and diffusion of innovation across organizations. The Machine Action Project was a partnership between the state and a network of machine tool companies, all vulnerable to foreign competition; one result was a collaborative training program to spread skills in the uses of new technology, allowing the companies to move into profitable, specialized market niches as low-cost commodity production moved offshore. Similarly, a Massachusetts Center of Excellence on applied technology involves business leaders, union leaders, and educators in the state to plan how new technologies can best be disseminated so that people are educated about them in advance, gain needed skills, and therefore, greet them with minimum resistance. The government's role as a "partner" is to remove barriers to use of new technology and to set conditions fostering innovation. "Fertile fields" include the following kinds of features, associated with entrepreneurship in the form of start-ups as well as innovation in established organizations: Close proximity and ample communication between innovators and users A more highly skilled, professionalized, cosmopolitan work force

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People and Technology in the Workplace A flow of new technical ideas from R&D centers A more complex, heterogeneous environment that encourages innovation as an uncertainty-reduction strategy (Kimberly, 1981) Channels of communication for exchange of innovation ideas Competition from entrepreneurial new companies, in turn benefiting from the availability of venture capital More interorganizational interdependence and integration (Pierce and Delbecq, 1977) Public encouragement of new ideas as social goods Certainly the more direct role played by governments in other countries has to be noted. Although most attention has focused on Japan, Korea also deserves mention. In the success of companies like Samsung, the Korean government played an important role; it gave tax rebates, subsidized utilities, built industrial parks, and gave low-interest loans, all as incentives to produce. Samsung managers met often with government officials to discuss strategy and projects (Magaziner and Patinkin, 1989). "Bridging" Organizations: Mechanisms for Technology Transfer Finally, diffusion or transfer of technology may require the development of new organizations to bridge the gap. Even if the technology exists, there must be organizational arrangements that convey it from developers to users—in short, interorganizational linking arrangements. Even where the United States leads in invention, it may lag in technology transfer. For example, a 1979 study showed that universities employed 13 percent of R&D scientists and engineers, spent 16 percent of R&D funds, but held only 2 percent of all patents (Udell et al., 1979). There was thus a gap between idea development and transmission of basic research into useful, commercializable, or transferable products or services. But new models are emerging. In the medical field, Nichols Institute has developed a collaborative model for technology transfer that has helped bridge the gap between academic laboratory research developments and widespread applicability to the patient population. The company was founded in 1971 as a specialized endocrine laboratory, later adding specialized testing procedures in genetics, toxicology, oncology, and immunology. Technology transfer is managed through the Academic Associate program, involving leading academic researchers in direct supervision on the use of their developments at the Nichols laboratory. A relationship is established between the Associate, his parent institution,

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People and Technology in the Workplace and Nichols Institute. The institute is a potential source of support for basic research by returning a percentage of revenues from the applications to the university's basic research and development fund. Academic Associates keeps a foot in both worlds, directing the transfer process at Nichols Institute while maintaining their responsibilities at the university level. Closely linked with the academic world, Nichols Institute Academic Associates have been quick to respond to new technology when it arises. In 1988, Nichols Institute provided diagnostic testing for more than 3.5 million patients, using 1,350 assays (tests), and returned more than $1.75 million to universities to support basic research. The transfer or diffusion issue should be conceptualized as a continuum. At one extreme, there is perfect identity between the developers and the ultimate users, so the innovators are essentially producing the innovation for themselves, to their own specifications, with foreknowledge that they will be using whatever it is that they make. Organizations can come close to replicating this condition in customized development work for specific clients already internally committed to use, in which client representatives actually sit on the development team. In this case, transfer or diffusion is nonproblematic; it is an inevitable part of successful development. At the other extreme, there is little or no connection between developers and those to whom the innovation could potentially be transferred, nor is there an established transfer process. There is high uncertainty (an information issue) and controversy (a political issue) about what the next step is to get anyone to use the innovation, who should take this step, whether there are customers for the idea, and whether anyone does or should want the innovation. A variety of interface or bridging structures can reduce both the uncertainty and the controversy, thus making it more likely that successful transfer will occur. One method for diffusing new ideas is to establish a group whose formal responsibility is to move new ideas into active use (Engel et al., 1981). Members serve as active agents of diffusion, managing the process by which the realized idea is transferred to those who can use it. Part of their mandate is to gather the information to make systematic the process of getting the innovation to users. Inside organizations, such bridging structures might take the form of product managers, whose job is to manage the successful entry of a new product into the marketplace. In this role they draw on every function in the organization that might contribute,

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People and Technology in the Workplace from continuing work on the design, to the manufacturing process, to the sales effort. In the case of organizational or work innovations, the bridging structure might be a transition team or "parallel organization" (Stein and Kanter, 1980) that concentrates on the change process as a management task in and of itself. Agents of diffusion may also exist outside the organization. Indeed, it can be argued that external agents are even more important in diffusion than champions inside the organization, for they add real or imagined legitimacy to the idea. This is why Rogers and Shoemaker (1971) found contact with consultants such an important part of the diffusion of innovation. What is important is not only the cloak of respectability in which the external party clothes the innovation but also the communication service provided. Thus, Walton (1987) found that the diffusion of work innovations in shipping was aided in eight countries by formal organizations set up to study and write about those innovations. They served as a necessary communication channel to transfer innovations to other users. How well organized the environment is for the transfer of ideas can account for how rapidly a particular innovation is diffused. By "organized" I mean the ease with which those with common interests can find each other, and therefore how easily connections can be made between innovations and users. Thus, the existence of conferences, meetings, and special interest associations should all be valuable in diffusing innovations, even product innovations, which have to be brought to the attention of specific groups. Again, this can occur within as well as outside a particular organization. 3M and Honeywell both organize a large number of internal conferences and "idea fairs" to connect ideas with those who can use them or help take them the next step. Trade associations, professional organizations and societies, and specialist consulting organizations are among those groups serving this purpose more broadly. The Food Marketing Institute, trade association for grocers and supermarkets, was largely responsible for facilitating the spread of universal price codes on packages from manufacturers and hence the spread of scanners in stores. Complexities of Collaboration The difficulties of interorganizational collaboration should also be noted, because they require change inside the organizations entering into them (see Kanter, 1989a, chapter 6). The role of

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People and Technology in the Workplace partnerships varies, but they may necessitate profound accommodations from the organizations entering into them. A major contract IBM recently won with Ford for office automation required that IBM and Ford engineers work together on a single team to design the system. (One can ask why Ford's secretaries were not also on the team!) Having the user and the supplier on the same team, not simply to adapt technology but to design it and develop it for the needs of the organization, involves dramatic changes. IBM, formerly known as a very closed company, had to learn to share proprietary technical information with a customer in order to win the contract. Similarly, many computer companies now have a management consulting arm or an organizational consulting arm because they realize that unless they get inside their customers' organizations to promote change, they are not going to sell any more equipment. One way organizations cope with the risks inherent in sharing ideas is by creating an ownership structure that safeguards investments and aligns incentives for cooperative behavior. A study of 195 collaborative arrangements in biotechnology (comparing collaborative arrangements for R&D with those involving technology transfer, supply, marketing, manufacturing agreements) shows that equity is more likely when R&D is involved, because of its inherent uncertainty. That is, because it is difficult to transfer knowledge across boundaries, difficult to specify in a contract all contingencies in advance, and possible that valuable unanticipated side benefits will ensue, then some financial ownership helps bind parties to one another. Equity is also more likely when collaboration encompasses multiple projects and less likely when there are more potential collaborators. Because of higher hazards, equity is more likely when collaboration crosses national boundaries (Pisano, 1989). But reaching outside does not have to dilute the strength of bonds inside the organization. Take the case of Banc One, one of the most profitable and innovative bank holding companies in the United States. Feelings of commitment and pride, of belonging to a strong community, are engendered by such elements of Banc One culture as the company song ("18,000 People Who Care"), Banc One College for managers, a video magazine, and a large travel budget that keeps managers in frequent contact. Yet Banc One does not hesitate to go outside to form partnerships with other companies—with Merrill Lynch for a banking and brokerage product and with EDS for a financial data processing venture, balancing internal teamwork with external teamwork. Indeed,

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People and Technology in the Workplace one can argue that organizations with stronger internal identity and cohesion may make more effective collaborators with other organizations. Union-management partnerships have been found to work better, for example, when both the union and the company have clear goals and strong leadership (Kanter, 1983a, chapter 9). Overall, then, a "friendly" stance on the part of organizations is the final factor contributing to effective development and diffusion of new technology. Partnerships among organizations can stimulate new uses for technology as well as extend the capabilities of each of the organizations entering into the relationship. Furthermore, collaborations among organizations may be necessary to enable the use of new technology by a single organization because many others (e.g., stakeholders such as suppliers, unions, or government regulatory agencies) may control some of the conditions necessary for making the changes the new technology requires. And technology transfer may be enhanced by the formation of bridging organizations that help connect developers of technology to its users. CONCLUSION The case studies in this volume will help augment knowledge about innovation at the level of the work unit and project-level implementation of change. But I have suggested here that it is important to enlarge our understanding of the circumstances favoring the development and use of new technology by exploring a research frontier, at the macroorganizational level. The domains roughly circumscribed by my four "Fs"—strategy and goals, organizational design and corporate form, hierarchical and cross-work-unit relationships, and interorganizational relationships—may be the most critical areas to examine, as they define the context for the use of new technology. "Perfect" management of innovation projects may not be enough unless organizations are designed to facilitate technology development, use, and transfer. Organizations that are focused, fast, flexible, and friendly may be necessary conditions for more effective technological changes. I have suggested a large number of hypotheses, based on my own field research and findings from the research literature, about the strategic and organizational factors favoring technological innovation. In light of the rapid changes and faster pace of the global economy, such organizational factors are matters not only of academic interest but of urgent practical significance. America's

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People and Technology in the Workplace technological leadership is diminishing at the same time that American organizations require the improvements in productivity or quality that new technology may bring. Thus, awareness of the strategic and organizational issues I have raised can help us begin to awaken the sleeping giants of industry and even teach them to dance. REFERENCES Abernathy, W. J., and J. M. Utterback. 1978. Patterns of industrial innovation. Technology Review 80(June/July):41–47. Avishai, B. 1989. A CEO's common sense of CIM: An interview with J. Tracy O'Rourke. Harvard Business Review 67(January–February): 100–117. Bennett, R. C., and R. G. Cooper. 1984. The product-life cycle trap. Business Horizons 27(September/October):7–16. Biggadike, E. R. 1979. Corporate Diversification: Entry, Strategy and Performance. Boston, Mass.: Harvard University Press. Bower, J. L. 1988. IBM 360: Giant as Entrepreneur. Harvard Business School Case #989003. Bower, J. L., and T. M. Hout. 1988. Fast-cycle capability for competitive power. Harvard Business Review 66(November/December):69–76. Burgelman, R. A. 1984. Managing the internal corporate venturing process. Sloan Management Review 25(Winter):33–48. Clark, K. B., and T. Fujimoto. 1988. Lead time in automobile product development: Explaining the Japanese advantage. Harvard Business School Working Paper #89-033. Cohn, S. F., and R. M. Turyn. 1984. Organizational structure, decision-making procedures, and the adoption of innovations. IEEE Transactions on Engineering Management EM31(November): 154–161. Collins, E. 1986. A company without walls: an interview with Steve Shirley. Harvard Business Review 64(January–February):127–137. Davis, D. 1985. New projects: Beware of false economies. Harvard Business Review 63(March/April):95–101. Derra, S. 1989. Honoring the stars of research. Research and Development 31(August):49–52. Drucker, P. F. 1985. Innovation and Entrepreneurship—Practice and Principles. New York: Harper & Row. Engel, J. F., D. T. Kollat, and R. D. Blackwell. 1981. Diffusion of Innovations. Pp. 472–481 in Corporate Strategy and Product Innovation, R. R. Rothberg, ed. New York: Free Press. Fast, N. D. 1979. The future of industrial new venture departments. Industrial Marketing Management 8(November):264–273. Foster, W. 1986. Innovation success quality #4: Innovation incentives. Intrapreneurial Excellence 1(November):9. Gerhart, B., and G. T. Milkovich. 1989. Organizational differences in

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