Business Psychology - Latest Findings
Article No. 121
Business Practice Findings, by James Larsen, Ph.D.
Managing Core Incompetencies
Simple rules and administrative habits display a destructive impact on the development of new projects.
Do you have an Edsel room filled to overflowing with artifacts of failed ventures, ruined projects, and ahead-of-their-time ideas? Maybe it's not actually a room; perhaps it's a cluttered corner of your mind that sounds a cautionary alarm when new ventures are discussed.
Deborah Dougherty, of McGill University, noticed something strange about all this: The companies producing these failures have extraordinary advantages one would suppose would insure their success. Why do companies most likely to succeed so often fail when trying new ventures? Dougherty used an unusual research technique to find out.
Dougherty selected 4 large, well established companies and identified 16 ventures the firms had launched. Some of these projects were outstanding successes, but others were failures, and the rest achieved mixed results. Dougherty interviewed 80 managers closely involved with these projects in 1-2 hour meetings. She asked for the whole story, and then looked for patterns that emerged from her copious notes. Here's what she learned:
Three forces tend to interfere with people's efforts to develop new ventures.
These pressures display a devastating impact on the fragile germs of new ideas. They produce simple rules and habitual practices that are appropriate for routine functions, but choke the process of creating new ventures. Dougherty retells the story of developers of a new telecommunications service being given a sales goal before any customers had yet tried the product. The company didn't even know their market for the product, but sales goals were routine, so they had to have them, even if they ruined the project.
Rules can't be eliminated, they're too useful. But they can be managed, especially when they effect product development. Dougherty offers these suggestions to executives:
Using your head while avoiding getting your hands dirty or talking to customers, and following rules whether they make sense or not is the doorway into your Edsel room. Go another way.
Reference: Dougherty, Deborah (1995). Managing Your Core Incompetencies for Corporate Venturing. Entrepreneurship Theory and Practice, Spring, 1995, 113-135. www.businesspsych.org
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