National Academies Press: OpenBook

People and Technology in the Workplace (1991)

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

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Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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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.

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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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

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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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.

  1. 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);

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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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).

  1. 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.

  2. 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.)

  3. 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

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×

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.

  1. 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).

  2. 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

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×

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-

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×

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

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×

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

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×

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.

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×

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.

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×

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-

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×

ing expenses down right now by letting the equipment age and letting the work force go untrained.

In leading companies, reward systems, including the determination of pay, are being reconstructed in order to focus people's attention on key success factors rather than on the preservation of tradition or territory. There is a quiet revolution in pay philosophy in the United States, as organizations move away from paying people for status or rank in the organization and toward paying people for contribution or performance (see Kanter, 1987, 1989a, chapter 9).

This shift in rewards has implications for whether or not people embrace change. When people are paid on the right performance basis—e.g., bonuses at higher levels or gain-sharing at lower levels—they have an incentive to seek productivity-enhancing technology because they share in the returns to the company's investment in that technology. Even nonmonetary recognition is important in this respect (see, e.g., Derra, 1989). Thus, I suggest also that researchers look at the focus that is being introduced through reward systems as one of the keys determining whether organizations adopt and use new technology.

A longer-term horizon encouraged by an innovation focus in rewards is important to counter the shorter-term bias reinforced by career systems that tie increases in rewards to promotion in a hierarchy. Promotion-based reward systems can have three negative consequences. First, in many companies, managers may get more credit for decisions than they do for implementation, and follow-through or follow-up is neglected when frequent mobility to "better" or "higher" jobs is the only way for people to increase their earnings in an organization. This tends to create instability in leadership, shorter-term views, and incentives to make bold strokes like equipment purchases without incentives to make sure the equipment is used effectively through the duller, less glamorous, and longer-term work of implementation. Second, a two-class system is reinforced; whereas managers move in and out frequently and may wish to make changes to demonstrate leadership, workers with limited mobility remain in place through the turnover of managers and may resist changes sought by ''temporary" managers. Finally, tying managerial rewards to promotion encourages a proliferation of hierarchical divisions, and hierarchy (as we shall see shortly) creates barriers to timely and speedy implementation of new technology.

In contrast, there is persuasive evidence that performance-based pay is associated with better organizational performance. A study

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×

of compensation survey data for the period between 1981 and 1985, including more than 16,000 top-and middle-level managers in over 219 business units and firms, examined differences in firm compensation strategy. The smallest organizational effects were at the level of base pay; the largest, on bonus levels and eligibility for long-term incentives. Overall, greater contingency of pay in the form of bonuses and long-term incentives was associated with better firm performance. An increase of 10 percent in the ratio of bonus to base pay was associated with 21 to 95 percent greater return on assets; an increase of 10 percent in the number of managers eligible for long-term incentives was associated with a 17 to 20 percent better return on assets (Gerhart and Milkovich, 1989).

A clear focus, then, supported by systems that drive behavior toward the focus, may be an important factor in the development and use of new technology.

FAST: TOWARD MULTIPLE, SPEEDY INNOVATIONS

My second "F" for success in the new environment is fast. U.S. organizations are beginning to realize that they have to move faster because of a comparative disadvantage with respect to some foreign competitors (Jaikumar, 1986). For example, studies show that in some areas of manufacturing Japanese firms implement new process technology about four times as fast as U.S. firms, thus gaining a temporal advantage in putting their investing addition to the value of the technology in terms of raising productivity. Similarly, Clark's study of 24 car projects (11 Japanese, 5 United States, 8 European) found that Japanese companies took about one-third as much time on average to engineer a new car during the mid-1980s as U.S. companies, so that Japanese cars could arrive on the market some two years faster, on average, than new U.S. models (Clark and Fujimoto, 1988).

Speed is a function of the capacity to innovate—to generate ideas and move them through the system. Organizational variables are key factors in nurturing innovation, beginning with the "first mover" advantage: translating ideas into innovations before others to master an environment that is constantly changing.

Willingness to Be First

Organizations often benefit from the first mover advantage. Otherwise the company is always trying to catch up rather than defining the terms of the game. Empirical research supports this

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×

proposition. For example, analysis of 119 new corporate ventures in the Strategic Planning Institute's STR4 data base found that early entrants achieved superior market shares and competitive advantages over later entrants (Miller, Gartner, and Wilson, 1989).

Success in a rapidly changing environment involves the willingness to take the risk of being the pioneer. Thus, companies that emphasize innovation work on being ahead of the competition and attempt to use all their skills from every functional area to provide a new source of strategic advantage. For example, American Airlines used information technology to get a clear first-mover advantage. It placed the American Sabre System in travel agencies to help them make reservations by computer; American flights appeared first. (Later, this advantage was reduced by legal action.) American has been first in a number of areas, including marketing innovations (frequent flyer programs) and human resource innovations (two-tier wage systems).

By being first, the organization gains both the opportunity to reach and secure the customer before the competition and the experience that permits improvement while others are still farther down the learning curve. It also gains control through shaping the innovation rather than responding to someone else's version. Thus, being the first mover is one way that small companies can sometimes steal the march on big companies, gaining an advantage in the use of new technology because of greater speed of action. Less red tape and better communication and collaboration may allow smaller firms to act more quickly. One of the most dramatic examples of this type of advantage involved Ocean Spray Cranberries, the first U.S. company to apply a new packaging technology, the paper bottle (aseptic packaging). This was a well-known technology in Europe but was not used in the United States. In the early 1980s, the European manufacturers approached large U.S. food companies about the technology; one of them was interested enough to set up a committee to study it! Ocean Spray heard the same presentation, committed the next day, signed a deal by the end of the week, and obtained an 18-month exclusive license. For 18 months, Ocean Spray had a de facto monopoly; market share shot up.

Channels for New Ideas

How was Ocean Spray able to move so quickly? Leaders had explicitly asked employees to be scouts for new technology. People at the middle level, including engineers, saw that part of their job

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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was to bring new technologies with potential applications to the attention of management. There was a forum for discussions between upper management and employees to discuss technological developments with implications for Ocean Spray products. At one of those forums, a middle-level engineer brought the new packaging to the attention of top management. Therefore, they were ready when the presentation was made.

That organizational style, asking all employees to seek new technology, may also make average employees more receptive to the thought of change than in organizations where change is simply imposed upon them. My recent research has documented various methods by which organizations encourage and fund what I call "newstreams." Intensive cases have been developed on eight types of new idea programs, some of which encourage people at middle and lower levels to develop ideas that become seeds for projects that may be implemented on a wider scale. The programs involving ideas bubbling up from the ranks tend to involve smaller-scale, more incremental innovations than those in which the corporation acts as a venture capitalist to invest in big new businesses; but the smaller-scale, up-from-the-ranks programs tend to be the most successful in terms of rapid return on investment, the fastest in implementation (often because of modest project scope), and the most enduring (Kanter, 1989a).

Thus, it is important to have a flow of new ideas to encourage every department and all employees to think about innovating in their own areas as well as in others. Special support and encouragement may be necessary to help fragile new ideas see the light of day (and sometimes even a special "greenhouse" or "incubator" in which to house the project). A portfolio of experimental concepts under development—all funded at relatively low levels until they prove themselves—ensures that the company can continue to be an innovator. Vehicles such as Ohio Bell's Enter-Prize Program can drive the search for innovations by encouraging employees to come forward with ideas, facilitating the formation of project teams, and protecting such "newstream" projects in their infancy. More than 60 employee projects have helped Ohio Bell make major product introductions and modest but useful improvements in productivity. At Teleflex, a midsize manufacturer, a New Venture Fund in operation for almost 20 years (funded with 1/2 percent of sales) has helped provide set-aside funds for experiments not yet ready to be funded by operating budgets; perhaps 80 percent of the company's current products have received benefits from one of those experiments.

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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AT&T's new venture program shows how much potential is there to be tapped in an organization. Several years ago, just before the 1984 divestiture of local telephone companies, AT&T quietly put in place a program by which they would seek employee ideas. They would screen the ideas and choose a few for which the employee suggesting the idea would receive considerable funding to run the projects and, in some cases, run new business ventures in the middle of AT&T. They expected to fund a dozen or so projects out of maybe 50 to 100 ideas that would be submitted. They did not publicize the program; they just wanted to try it. Consequently, without publicity and with the expectation of receiving fewer than 100 of these ideas for new businesses, extensions of existing technology, or other innovations, they began the program. More than 2,500 ideas were submitted in the first year.

Communication Links

The third aspect of moving fast is communication linkages. The diffusion and application of innovations involves the transfer of knowledge and information and thus is influenced by the type of connection between all the players involved at each point. Some Japanese firms implement some kinds of technology more quickly than their U.S. counterparts because they are more likely to use cross-functional teams, build overlapping relationships between functions and between stages of the process, and stress communication that bridges the gap between specialties or functions. For example, fast-cycle companies such as Toyota encourage people to think of themselves as part of one integrated system and to know how their own jobs relate to rest of organization. Work is organized around small, self-managing multifunctional teams; cycle times are tracked throughout the organization; and learning loops are built into the organization so that everyone is informed about customers, competitors, and internal operations (Bower and Hout, 1988).

Overall, as Clark's work shows, communication processes account for a major share of the difference between speedy and slow development systems in the auto industry. In slow systems there is a formal bureaucratic process with uncertain completion times; in rapid ones there is direct, informal communication. In rapid systems, orders for the next step are placed before the final release of the previous one; in slow systems, development is a sequential activity in which each step has to wait for completion of

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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the last. Speedy organizations also have projects of narrower scope than slower ones; therefore, mounting projects that are less complex to manage—preferring many smaller, more incremental projects to a few big ones (Clark and Fujimoto, 1988). In general, in faster development systems problem solving is quicker, and change is constant, but projects are divided into smaller, more manageable increments.

When all those involved in designing and implementing new technology work in parallel, the approach has been described as resembling a rugby match more than a relay race. A multidisciplinary team stays with the project from start to finish, and later steps are begun while earlier ones are still being finished. Japanese researchers Takeuchi and Nonaka credit this method for the speed at which Japanese companies such as Honda, Canon, NEC, and Fuji Xerox bring new products to market (Uttal, 1987). On the other hand, bottlenecks are likely to develop when the group responsible for one phase hands off to another group with whom communication is indirect or poor.

The importance of the quality of connections shows up again and again. A survey of 158 products in the electronics industry, half successes and half failures, made clear that conventional "external factor" explanations (state of the economy, foreign competition, and lack of funding) were not major contributors to product failure. But one of the most important differentiators was coordination of the "create, make, and market" functions (Maidique and Zirger, 1985). Successes were also more likely to be better matched with user needs, developed by teams that fully understood user needs, and accepted more fully by users, perhaps as a function of more active marketing, including efforts to educate users. The successes were technically superior and introduced to the market earlier than the competition (Maidique and Zirger, 1985).

If communication across functions is fundamental, then perhaps we should not even use the term "R&D" anymore, but instead "R&D and M&M&S"—one phrase to connect research, development, manufacturing, marketing, and sales. Bringing together autonomous teams that comprise all of those functions and have total project responsibility can improve both the speed of implementation and the receptivity of the organization to change. A Honeywell division, for example, had been notoriously late and over budget with new products until it formed "Tiger Teams" of everyone from engineering to marketing, housed in their own building, with the instruction simply to ''get the job done"; speed went up,

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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and cost came down. Similarly, Hillerich and Bradsby, manufacturer of Louisville Slugger baseball bats, typically took three weeks to complete a bat until the company reorganized the factory, moving from highly specialized batch work (such as sanding) to teams that manufactured complete bats. Both machines and people "retooled" so that they could turn quickly from one job to another. Baseball bats could then move through the factory in about a day. Case after case shows the superiority of cross-functional teams for speed. At the Xerox East Rochester Skunk Works, an independent cross-functional team developed and commercialized the first new copiers in years to immediately gain a high share of the Japanese market. The team took about half the time of the usual product development process at Xerox because of the Skunk Works system; the group was in business almost as though they were independent entrepreneurs. After the project had succeeded, however, the team was broken up and put back in their functional departments; now the development of enhancements to the original product has slowed to the usual product development pace—twice the time of the "independent" cross-functional team. To capitalize on such lessons, Corning Glass views innovation as a total organizational problem that requires the cooperation and interaction of many different people, both inside and outside the company, at many different levels (Intrapreneurial Excellence, 1986). Technical personnel are sent on sales calls or occasionally assigned to areas other than their own, dealing with problems of a completely different nature than the ones they usually confront, to stimulate their thinking and to build relationships that improve cross-functional communication.

Communication may be influenced by physical space as well as by organizational and technical matters. Collocation is one important part of developing the cross-functional teamwork necessary for rapid development and application of innovation. For this reason, significant projects may get quasi-independent status, with a team separated out from the rest of the organization in its own place (such as a "greenhouse" or "incubator"), so that all functions are represented, and all communicate as part of one large team. For example, Honda develops cars in a self-contained subsidiary that conducts all R&D, including field tests, in one large room without partitions; meetings are convened in the center.

Similarly, Steelcase, which had been lagging behind competition in innovation, built a new Corporate Development Center for designers and engineers in an attempt to stimulate and nur-

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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ture creativity. Opened in 1989, the new facility was conceived as a prototype facility promoting an "integrative workplace" (Kanter, 1983a). Features included areas allowing unplanned, spontaneous contacts and information exchange between disciplines; looser layouts promoting tinkering with both the physical environment and the administrative and social features of work groups; and spaces encouraging use of a collaborative and overlapping product development process instead of a linear one. Spaces are designated as "caves" for privacy, neighborhoods for related activities, and town squares for the whole community. There are marker boards at coffee-break stations so that people can sketch ideas to see what passersby think. Perhaps more practically, the facility brings together everyone involved in product development (designers, engineers, marketers) under one roof.

Dismantling Territorial Rivalries and Status Barriers

One barrier to more collaboration and communication across functions and across business units is cultural. A management style that I call "cowboy management" (Kanter, 1989a) has been hurting U.S. industry by stressing competition, rivalry, and contention over cooperation (e.g., the popular idea that R&D is improved by "performance shoot-outs" between competing teams). This is the essence of high noon at the O.K. Corral, making heroes out of leaders who "shoot from the hip" and "fire before aiming." In some U.S. companies the communication gap caused by "cowboy'' attitudes was traditionally so great that colorful metaphors were used to describe it: the array of ''smokestacks" at Ford or the "elevator mentality" at Westinghouse. Both described the independence of each specialty and the need to send messages up to the very top of each tower rather than building direct links between the people at lower levels with a common goal. Speed is reduced by communication blocks, then, but also by "hostility" to "foreign" ideas or outputs from another group. Furthermore, incentives and rewards have discouraged cooperation by stressing success in one's own discipline alone or within one's own department; career success meant a ride up the elevator or a rise through the chimney.

Barriers to cross-function and cross-level communication still exist even in organizations that would like to learn to break them down. I recently visited a facility of a large manufacturer that had acquired an information systems company a few years earlier, in part to learn something about a faster-moving, more entrepre-

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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neurial style so that the giant, too, could implement change more quickly. Once the two companies were merged and operating in the same site, parent company managers were restricting some of the open communication that supported the information systems company's entrepreneurial capability. The younger, vibrant company had been accustomed to frequent informal gatherings across levels and department functions at the end of the work day. There would be casual talk about what is going on, or a group would go out to have a beer together, as is common in Silicon Valley. Parent company managers stopped this practice. Why? I was told that "They are afraid that we will go to a bar together after work, and we might say something proprietary that a competitor will overhear." Given the isolated location of the facility, this was highly unlikely. Strikingly, in Silicon Valley, where, in fact, competitors do sit in bars and listen to conversations at other tables, the practice of informal gathering continues. So something else underlay this. My observations showed that the "something else" was the threat to the hierarchy. The information monopoly of managers, one of their signs of status and importance, was undermined by a free flow of information at lower levels. Rank and status in an organization are thus among the biggest barriers to change.

The reluctance of managers to give up traditional hierarchical status and power became clear in observations of a leading heavy-equipment manufacturing company that is moving aggressively against foreign competition (Kanter, 1989b). With the concurrence and help of top management and consultants, the product development process was reorganized to increase speed, quality, and cost-effectiveness; this required much closer collaboration between engineering, manufacturing, and other functions as well as with external suppliers. The company moved from a highly segmented process to one involving integrated project teams drawn from component divisions, functional departments, and external suppliers. Among the significant implications were overlap between areas of responsibility, collocation of some technical and manufacturing people, assignment of full-time liaisons from the functional areas to the larger development teams, and direct team contact with higher levels of the company.

For the engineering managers at higher ranks, these changes were experienced as loss of power. They felt they were losing control over their people because they did not always know what their people were doing, and yet they still thought they would be expected by upper echelons to know. They no longer had sole

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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input into performance appraisals; there were other voices from other functions—some more knowledgeable about the people's project performance. New career paths were opening that reduced the importance of pleasing these managers in order to move up the functional line; technical people were taking a turn in the factories. Moreover, the engineering managers were often bypassed as their people interacted directly with decision makers in the company and in the suppliers' organizations. Their people sometimes had contact with powerful people the managers did not, including division executives and senior corporate staff, and some of those so-called subordinates sat in on high-level strategy meetings to which their managers were not invited.

At first the vice president and chief engineer shepherding the changes thought the resistance of his managers to the new process was just the normal noise associated with any change. Then he began to realize that something more profound was happening. The traditional hierarchy was being shaken at its foundations; traditional notions about the role and power of managers were being challenged; and it was not clear what was taking their place.

Status barriers influence the acceptance of new technology as well as the ability of groups to communicate. A 1983 survey on the use of office automation was revealing in this regard. Almost 1,000 matched pairs of managers and secretaries in information-intensive businesses were included in the study; despite positive views about the idea of office computers, their use was still limited. What accounted for the limited use? As I scrutinized the data, I found social considerations rather than technical considerations influencing the amount and direction of use (Kanter, 1983b; 1986). Patterns of use could be understood in terms of traditional office relationships. While technology itself may be a neutral tool, its users are people who are arrayed in social space in particular ways and bring to their organizations particular conceptions of their roles and relationships.

In the early stages of new technology, it is possible to pretend that social roles don't need to change; one simply uses the tool and imposes upon it existing organizational structures. But eventually it becomes clear that new technology often changes social relations—and, indeed, often requires these changes to be fully implemented. The secretaries studied wanted to change their role, to become a part of the team, to take on more challenging and responsible assignments. The managers wanted to maintain current roles and, in some cases, even increase the distance by using automation to eliminate rather than increase communica-

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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tion with office workers. In addition, managers did not necessarily want to use the equipment themselves.

Whenever a traditional culture that respects the wisdom of age encounters a new way of life, it is generally the young that learn it faster. Whenever a group exists in a state of constant and continuous change, the knowledge of the most recently educated is the freshest and most valid, and that means the young. So in a reversal of status, the young teach the old—just as the children of immigrants taught English to their parents, and today 13-year-old computer programmers are starting businesses to teach their elders. Until the new knowledge is stabilized or widespread, a group faces this threatening situation: "lower status" members who are superior in knowledge to "higher status" ones. In most workplaces, the people closest to office automation and the ones most likely to learn it first are the secretaries. But the secretaries, according to the survey, are likely to be younger than their managers, female, and newer to their organizations. Thus, it may seem like status reversal to some managers to learn about office automation.

The most status-conscious organizations are the most likely to resist new technology, losing productivity potential in the process. Organizational life is not fully "rational," then, not fully subject to the logic of efficiency. Social roles must be redesigned in order for the potential of new technology to be realized. But this poses grave challenges to hierarchical organizations.

Kiesler (1986) observed the hierarchy-disrupting effects of electronic communication. Wherever computers are available, she argued, people tend to use them as general-purpose tools to gather and distribute information and talk with others—whether or not that was the principal reason for their installation. For example, the Defense Department's large computer network allowed research computers at many locations to share computing resources located at only a few sites. Soon most of the traffic was not computer to computer but researcher to researcher. It helped them form communities of people who exchanged reports, ideas, computer programs, gossip, and travel plans without reference to hierarchical standing. The result of these systems, Kiesler says, is remarkable freedom to communicate free of status barriers because (a) no tangible artifacts (like paper) are necessary, (b) any format is possible, and (c) people are less bound by convention or the need to create a good appearance. An information system's "distribution lists" are also democratizing, since anyone can easily get more information to more people, thereby creating new

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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groups in the organization with new forms of social interaction. One product developer used an electronic mail message to ask for suggestions about adding a feature to a product and sent the request to a distribution list reaching hundreds of people in his organization. Within two weeks he got back more than 150 messages that cut across geographical, departmental, divisional, and hierarchical boundaries—including messages explaining why the assignment was a crummy idea in the first place.

Many traditional status-derived buffers disappear under the new information/communication technology, permitting greater person-to-person access, again regardless of organizational position. One of my research assistants was having trouble getting by the secretary of the president of a software company. When she got a busy signal on the secretary's phone one day and was routed to the electronic message center, she punched in the numbers of his direct line, leaving him a voice-mail message. He returned her call immediately.

Unless the organizational hierarchy is changed, and status relationships reconceived, it will be difficult to develop and implement new technology quickly. For this reason, some progressive organizations are not only removing communication barriers as they build and collocate cross-functional teams but also striving to remove status barriers. At least two leading U.S. banks—traditionally very status-conscious institutions with very tall hierarchies—are trying to eliminate officer titles (e.g., the many kinds and levels of vice presidents) in favor of broad descriptions of work activities.

Commitment

The final factor enabling organizations to move fast is high levels of employee commitment that produces sheer hard work. Change always requires above-and-beyond effort; companies that implement innovation quickly count on employee goodwill.

For example, Magaziner and Patinkin documented how the Korean company Samsung came from obscurity in the late 1970s (selling only 1,460 microwave ovens in a 5,000,000-unit oven market) to being the world's largest manufacturer of microwave ovens in 1989. Samsung's advantages included investment in "better minds," not just better technology; low-wage workers; willingness to wait for payback; dedicated employees at every level; and unity of purpose and goal. But the most crucial factor in Samsung's success was the employee dedication. When the company got its first

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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order from J.C. Penney, the authors relate, I. J. Jang, the senior production manager for microwave ovens, "started with an empty factory and a delivery date only months away. His senior people often began at dawn, worked until 10:30 p.m., took a brief nap, and went to work for the rest of the night. Even Jang's boss, Park—one of the highest executives at Samsung—kept the same hours. There was only one sign of privilege—a few cots scattered around the factory. The executives got those; the others grabbed their naps in chairs" (Magaziner and Patinkin, 1989, p. 87). The common motivating factor was their desire to help their country move from being a third world nation to a modern productive power. Samsung's employees felt personally responsible for "planting seeds for the country and the company" and were willing to settle for low wages because they knew that in the long run their entire nation would benefit from their hard work.

Overall, being fast results from cross-functional collaboration and communication, a flow of ideas (and idea entrepreneurs who are willing to bring them forward), and a base of commitment to the organization because speed is also a function of people's willingness to overcome inertia and resistance.

FLEXIBILITY: THE USE OF RESOURCES

The third "F" for success in the new environment is flexibility in the use of resources. Three kinds of flexibility are relevant to the change process: at the work unit level, across work units, and in the innovation project itself.

Work Systems

Rapid change and intense competition mean that people at every level of the company need to be more flexible, drawing from a broader range of skills, with more open-ended assignments that permit them to solve problems rather than be concerned about jurisdictions. Thus, they are more easily redeployed in the service of another task or project as circumstances change—and they manifest less resistance. People who are more skilled can perform a variety of tasks and be directed by fewer managers in a flatter structure; together with their team, they can take more responsibility for improvements in job performance; and because of their greater responsibility, they feel more "ownership" of innovation.

At the work-unit level, the evidence is compelling: Flexible

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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work systems in which the definition of people's jobs is broader tend to be much more conducive to embracing change. For years, the prototypical U.S. production job was very narrow and specialized and valued efficiencies of repetition over problem solving; in effect, thinking was considered a form of error. Today, the imperatives of industry and the growth of the service sector have led to a revaluing of problem solving. Increasingly, we want people to think; we want them to make decisions about quality; and we want them to understand the purpose and results of their labor. It was not always necessary for workers to understand more than the mechanics of the immediate task at hand. Charles Brown, the former chairman of AT&T, once told me about a visit to a Western Electric telephone equipment plant; he spoke to an immigrant woman on the line who thought she was making irons—she thought she worked for General Electric. That epitomizes the human results of a narrow, specialized division of labor. Narrowly defined jobs with clear distinctions between territories create an incentive to guard the territory rather than to learn and change. Consider this quote from a blue-collar worker in a traditional, bureaucratic company: "I know what innovation means. Innovation means I am going to lose my job." He went on to say that the design of his job gave him little chance to learn skills for a new one.

In contrast, when General Motors started the New United Motor Manufacturing, Inc. (NUMMI) plant in Fremont, California, with Toyota as joint venture partner, one of the concessions sought from the United Auto Workers union involved the number of job classifications. Under GM management, there had been more than 30 separate classifications for one major production area; in a similar Toyota plant, there were just 3. Similarly, Procter & Gamble has some of the most advanced manufacturing technology in the world, especially on the social system level. In one state-of-the-art plant, for example, there was one job classification: technician. Everyone was called a technician, assigned to a team that has responsibility for that part of the factory. Pay was determined on a skill basis in a pay-for-knowledge system. For each new job learned, pay increased. Recently, about 75 percent of the people in the plant were at the highest pay level. In addition, there was profit sharing, providing workers a "piece of the action" for what they helped produce, the ultimate in pay-for-contribution. This type of work system has been impressively cost effective. Costs are about half of what they are in the traditional P&G factories; productivity is much higher; and quality is

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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also much higher. Perhaps most striking, however, is flexibility—the ability to learn and use new technology—which is so high that when the company was changing the manufacturing system worldwide for an important product, hundreds of technicians from the new work system plants served as consultants to help other plants learn how to develop the work system that allowed them to adapt quickly to new technology. Procter & Gamble has not only created a one-time acceptance of technology through this flexible work system, they have also created a learning organization that knows how to embrace change.

At the work-unit level, then, job design can help or hinder flexibility. For the effective adoption of innovation, organizations need people attuned to results and to learning more skills rather than guarding narrow territories against change.

"Desperately Seeking Synergies"

Innovation is aided also by collaboration across work units in the pursuit of new ways to combine their resources to produce mutual benefits. One of the key findings from research about innovations is that innovation generally requires teamwork from more than one area. Unless it is very narrowly focused on the concerns of only one function, innovation cuts across areas and requires more people to cooperate (Kanter, 1983a). Thus, organization structure, especially the interface between and among work units, plays a crucial role in determining the use of new technology.

Collaboration is one of the most challenging kinds of flexibility for corporations but has the highest potential payoffs: for example, joint marketing between divisions A and B, or a product package joining components from units that traditionally sold their wares separately, or the procurement staff for one business unit helping another business unit find a supply source for a new venture. Corporations are realizing that internal competition, which set divisions or departments against one another in hostile rivalries, must be replaced by collaboration if the corporation is going to maximize the value of having all those units under one roof. In-house competition undermines goal achievement, which leads groups to emphasize defeating their rivals instead of strong task performance. It can drive out innovation and lower performance standards, a counter-intuitive finding (Kanter, 1989a).

Thus, many companies are now—to parody a popular film title—"desperately seeking synergies" (Kanter, 1989a, chapter 3). Synergies are not attained in theory because there is a theoretical fit on

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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paper between parts of a business, but in practice—through active collaboration and the capacity to move resources around the company, to combine them in new ways to tackle new opportunities. The new quest in U.S. business is to seek ways to make the whole worth more than the sum of the parts, and to find the greater value by combining resources. Why, for example, should each unit decide to have its own unique computer system? What is the justification for independent decisions on the part of independent business units when a collaborative effort could reduce costs for the whole organization and perhaps even produce a better system?

At American Express the search for synergies was part of chairman James Robinson's "One Enterprise" campaign, an effort to balance the autonomy and results consciousness of entrepreneurial business units with the willingness to share information, staff, systems, or programs across units. In that way, the "whole" is indeed worth more than the sum of the parts. Project teams drawn from diverse divisions might tackle corporationwide issues, such as quality or the contract for telephone services; one business might use the services of another, such as data processing; referrals of marketing leads may flow across division boundaries; or the experts in one unit might be temporarily deployed to another to help solve new problems. Thus, some companies actively encourage organizing to find synergies. They champion the cause from the top, provide forums to help managers identify opportunities outside their own areas, offer incentives and rewards for teamwork, make resources available for joint projects, and promote relationships and communication to help people know each other across diverse areas. All of this helps people to perceive that their fate is shared and they can help one another. Jack Welch, CEO of General Electric, considers GE's ability to transfer "best practices" across the company one of its key strategic capabilities.

Project Flexibility

In addition, flexibility is also a requirement for the success of technological change. Innovations often fail to proceed as planned, but instead to encounter unexpected roadblocks or obstacles that require replanning and redirection if the innovation is ever to be produced. Cost overruns and missed deadlines are common because of the inherent high uncertainty of the development process. For example, in one pharmaceutical company the ratio of

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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actual to expected cost of new products was 2.11; the ratio of actual to expected time was 2.95 (Mansfield et al., 1981).

Numerous cases in numerous fields illustrate the unpredictable nature of innovation and, therefore, the need for flexibility in order to persist with a project. Projects cannot be launched and ignored—as though the resources could be doled out and that's that; change of any kind, development of the new, and implementation of innovation require constant management vigilance. Because of the likelihood that pitfalls and problems will arise between idea or strategy and results, a truth of management (if not of life) is that "everything looks like a failure in the middle." In nearly every innovation project, doubt is cast on the original vision because problems are mounting and the end is nowhere in sight. Resources have been expended without the ability to demonstrate when there might be a return.

There are four main sources of this "vulnerability of the midstages," well illustrated by numerous small-scale innovations (Kanter, 1983a) as well as large efforts such as the IBM 360 development (Bower, 1988):

  • Forecasting problems. The project runs out of time or resources because of overoptimistic forecasts ("it's costing $40 million—now $50 million—now $60 million . . ."), themselves a function of the enormous uncertainties inherent in innovation and change.

  • Unexpected obstacles. The project hits bottlenecks, technological roadblocks or "unscheduled developments"—which mostly could not have been foreseen because there is no experience base to know they might be there.

  • Critics surface. Although there may be resistance at all stages, resistance is likelier once the project is well under way and looks as if it might succeed, because then the threat changes from an intellectual matter to a tangible matter—hey, this might actually happen.

  • Working teams lose momentum. Change is, after all, hard work, and results are not instantaneous or guaranteed. After the euphoria of beginnings, when awareness of a special mission is highly motivating, middles can seem like an endless series of disappointments and thankless tasks.

To overcome such vulnerabilities, it is helpful to have good leadership, including top management champions and project managers that remain dedicated to the project and willing to commit extra resources, deal with critics by continuing to sell the vision, and support shifts of tactics. It is not enough to deal with set-

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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backs by providing additional time and resources—a ''grace'' period in which the project team can try to complete the assignment; there should be an active attempt to discover what went wrong, to ask what has changed, and to learn from mistakes (see, e.g., the studies in Van de Ven, Angle, and Poole, 1989). Flexibility is the most important issue: to allocate new resources, to mount secondary projects to remove the unexpected roadblocks, to renew the spirit of the working team, and to rethink the approach in light of the learning that emerges. Thus, as Quinn (1985) found across three countries, multiple approaches, flexibility, and quickness are required for innovation because of the advance of new ideas through random and often highly intuitive insights and because of the discovery of unanticipated problems. Project teams need to work unencumbered by formal plans, committees, board approvals, and other "bureaucratic delays" that might act as constraint against the change of direction.

Furthermore, innovations often engender secondary innovations, a number of other changes made in order to support the central change (Kanter, 1983a). As necessary, new arrangements might be introduced in conjunction with the core tasks. Methods and structure might be reviewed, and when it seems that a project is bogging down because everything possible has been done and no more results are on the horizon, then a change of structure or approach, or a subsidiary project to remove roadblocks, can result in a redoubling of efforts and a renewed attack on the problem. This is why Van de Ven (1986), among others, argued that distinctions between technical and organizational innovations lack utility; in practice, one often entails the other. Indeed, restructuring of the organization often occurs during the innovation process, including joint ventures, changes in organizational responsibilities, use of new teams, and altered control systems (Schroeder et al., 1986). Of course, there is a danger that intervention to save a project might actually hurt it. New projects, especially those involving high technology, are prone to cost overruns—but desperation measures to stop a hemorrhage of funds can so cripple a project that it can't succeed (Davis, 1985).

Flexibility is an organizational rather than a purely individual variable. Those organizations that permit replanning, give the working team sufficient operating autonomy, and measure success or allocate rewards for results rather than adherence to plan are likely to have higher rates of innovation production than those that do not. Because of the inherent uncertainty of innovation, advance forecasts about time or resource requirements are likely

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×

to be inaccurate; it is difficult to budget or to forecast when lacking an experience base, and this situation exists by definition in the case of a new idea. The GTE telemessenger, an electronic mailbox, was almost aborted when the project manager's first market test failed because he had not brought in the results he promised. He then went through several rounds of argument to get an original "15 days to fix it" extended to two months (Powell, 1985). Replanning ultimately led to a highly profitable revenue stream. Requiring commitment to a predetermined course of action interferes with the flexibility needed for innovation.

Finally, flexibility also means the willingness to take and use good ideas from any source, rather than looking only to one's own experts. A survey of Fortune 500 companies found that firms with the largest number of successful new ventures tended to have an external, market-driven focus and were more acquisition oriented than they were R&D oriented. They sought a variety of ways to grow and did not demand that ideas come only from within (Klavans et al., 1985).

FRIENDLY: INTERORGANIZATIONAL COLLABORATION

The fourth "F" for success in the new environment is friendly. What I mean by "friendly" is the ability to build collaborative rather than adversarial relationships with all the other organizations with which the company deals—in effect, partnerships. Interorganizational relationships play a role in the spread and use of new technology. Joint ventures and strategic alliances are sometimes considered a fad of the 1980s, but behind any fad is genuine substance. Although a long-established form, joint ventures are now forming with increasing frequency; there is more diversity in the age, industry, and nationality of the corporations involved; there is an increasing frequency of joint ventures between big and small firms and an increasing variety of functions performed (Pisano et al., 1988). Such alliances and partnerships are means for organizations to stretch their capacity while sharing the risks, to gain new competence or a window on new technology, and to improve quality or implementation speed. Therefore, partnerships play an ever-larger role in the introduction and use of new technology.

Stimulating New Uses for Technology

The desire to bridge the gap between organizations can be the stimulus for identifying new uses of technology. Consider these

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×

examples involving the use of information systems. I have already mentioned American Airlines' Sabre System for travel agents. In an even closer collaboration, Security Pacific Bank put terminals in the hands of car dealers to help sell more car loans along with more cars. The shared system permits the dealer to check on a loan and financing package immediately, evaluate the customer's credit rating, put together a deal on the spot, and have the necessary paperwork delivered seconds later. Then information and packages for ancillary services, such as insurance, can also be provided. For the dealers, the advantage is a faster, more efficient process; for the bank, the advantage is that it gains information as well as customers. In another realm, Nichols Institute, a California-based medical testing company, has developed systems to link hospitals to their testing laboratories to provide information helpful in the interpretation of test results.

Capability Expansion

Second, partnerships can be useful in the implementation of new technology when they expand the capabilities of the companies involved in the alliance. A good example of this is the venture between Hercules and Montedison, two chemical firms. Montedison was Italy's largest chemical company and had come up with a fantastic new polypropelene plastic process that saved 30 percent on electricity use and 90 percent on steam use during manufacture. Montedison, however, had a very weak position in the global market—it had only 17 percent of European market share and none of the U.S. market. Hercules, on the other hand, was the dominant U.S. polypropelene producer and had the largest share of the global plastics market, but was very weak in process technology. These two companies were ideal partners for a joint venture in this field. Himont, a joint venture with 50-50 ownership, was the result of their collaboration, and it quickly became the world market leader in polypropelene plastics, combining Montedison's technological prowess with Hercules' marketing expertise (Gomes-Casseres, 1989).

The companies that have received the greatest benefits from alliances are those whose main commitment has been to learning (Hamel et al., 1989). For example, NEC invests less in R&D as a percentage of revenues than any of its major competitors, yet NEC is the only company in the world with one of the top positions in three separate industries: telecommunications, computers, and semiconductors. NEC has used alliances to leverage its internal

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×

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

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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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

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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  • 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,

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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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,

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×

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

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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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,

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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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

Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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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.

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Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 19
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 20
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 21
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 22
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 23
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 24
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 25
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 26
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 27
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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Page 28
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 29
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 30
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 31
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 32
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 33
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 34
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 35
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 36
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 37
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 38
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 39
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 40
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 41
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 42
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 43
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 44
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 45
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 46
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 47
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 48
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 49
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 50
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 51
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 52
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 53
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
×
Page 54
Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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Suggested Citation:"Improving the Development, Acceptance, and Use of New Technology: Organizational and Interorganizational Challenges." National Academy of Engineering and National Research Council. 1991. People and Technology in the Workplace. Washington, DC: The National Academies Press. doi: 10.17226/1860.
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Quick introduction of new technology is essential to America's competitiveness. But the success of new systems depends on their acceptance by the people who will use them. This new volume presents practical information for managers trying to meld the best in human and technological resources.

The volume identifies factors that are critical to successful technology introduction and examines why America lags behind many other countries in this effort. Case studies document successful transitions to new systems and procedures in manufacturing, medical technology, and office automation—ranging from the Boeing Company's program to involve employees in decision making and process design, to the introduction of alternative work schedules for Mayo Clinic nurses.

This volume will be a practical resource for managers, researchers, faculty, and students in the fields of industry, engineering design, human resources, labor relations, sociology, and organizational behavior.

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