Experience teaches us what works and what does not work. This is true for individuals and it is true for institutions. However, these “lessons learned” guide us well only so long as conditions do not change. Of course, conditions do change. And therein lies the rub.

The lessons learned – the processes honed – may help us manufacture the best portable cassette players on the planet, but those lessons don’t do us much good when people are streaming music through Spotify on their phone. Even the best manufacturers aren’t selling many walkman’s today.

So how do we strike the appropriate balance? How do we learn from our experiences, without being blinded by them? How do we distinguish the writing on the wall from the noise?

Though often attributed to Yogi Berra, it may have been Neils Bohr that said: “Prediction is very difficult — especially about the future.”

The simple answer is this – learn from experience, but maintain the humility which will allow you to admit when your experiences may have led you astray.

For individuals, this tends to be fairly straightforward. Sometimes emotion gets in the way, but often, when it becomes obvious that change has come, humans tend to adapt. Larger organizations have a less impressive track record on that front. The people on the front lines, the sales reps, the service staff etc… can see when things are changing. However, their ability to communicate that up – or across – the chain of command, in ways that will actually change management’s strategic direction is often lacking.

This is no new insight. We’ve been aware of the failings of bureaucracies for a very long time. And it should come as no surprise that this is true of corporations as well as of governments.

At the moment, there is a new wave of organizational management research and guidance that is attempting to improve upon the nimbleness of large institutions, and it is doing so by pushing power away from the institution. The lean startup and open innovation movements are two approaches that are together helping counter the centralized decision making of traditional corporate hierarchies.

Lean Startup advocates, rallying behind such taglines as “fail fast” and “rapid iteration,” focus on the fact that continuous trial and error will keep companies in touch with the environment around them and that minimizing the risk as well as the expense of experimentation requires focusing on small, affordable experiments that can provide the company with navigational guidance.

The basic truths that they focus on are these:
you cannot innovate without trying new stuff
you cannot try out new stuff without failing
therefore innovation requires failure on a regular basis
to be willing to face failure on a consistent basis, we need to structure our tests as small experiments where the goal is feedback and the failure is interpreted as simply the cost of obtaining the feedback.
Build, test, learn, iterate.

On the other hand, he people in the Open Innovation movement focus on a different set of truths:
Your organization has not been able to hire all of the best people and does not have access to all of the resources to fully exploit the opportunities available to you.
As a result, there can be a significant advantage to be gained by finding ways to leverage people and resources outside of your organization to help inform and guide decision making within your organization. This goes beyond just pushing power down the chain of command. It means pushing power outside of the chain of command.
Obviously, this “delegating” the steering to people outside of the company is a radical concept and in order to prevent it from being destructive of value, the company needs to exercise caution with regard to how they structure such a handoff of power.

This Open Innovation movement can be seen as simply an application of traditional liberal philosophy – the concept that large communities navigate circumstances best by empowering individuals to the greatest extent practicable – to the business enterprise.

Traditional liberal political theory has primarily been directed toward application on a society wide level. The open innovation movement can be viewed as a practical way of taking that same theory and applying it to the management and direction of a firm. Taking that approach, the traditional command-and-control style corporation can be thought of as an organization that is structured in a top-down style similar to the Soviet Union. On the other hand, a firm that is structuring decision making in ways that give greater autonomy and control to both lower level staff as well as vendors, partners and customers more closely resembles the freedom, chaos, and emergence of working solutions that occurs in “free societies.” That is not to say that there is no control going on in those “free societies” and it is not to say that there would be no guidance or direction within a firm that relies upon open innovation methods. There are decisions to be made on an ongoing basis regarding how open we are willing to be, what sorts of norms we want to adopt and enforce and which methods – i.e. protocols – will we use to relate with one another, make decisions, consume resources and produce value.

In both the Lean Startup and the Open Innovation concepts, we can see a simple pattern at play:

Groups gain advantages through experience. Companies can make it easier for their people to gain experience (lean startup) and can leverage the experience and the resources of others (open innovation) to help them better navigate threats and opportunities. By taking steps to constrain the size of risks – and thus minimize the pain of failure — they are able to loosen their control, unlock experimentation and thrive in a changing landscape.

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Related topics:
-Flow States, Intrinsic Motivation and the relationship between Autonomy and Clarity in the Workplace.
-Delegated safety, risk taking and the building of experience.
-Experience and the Emergence.