How to discourage innovation: measure everything

Do total quality management, six sigma and ISO 9000 programs discourage innovation? If you believe that a key to business and organizational success is developing new ideas, that discovery is critically important, then what the Wharton School says may be of interest.

The answer could be yes.

Using research into the photography and paint industries, the authors compare the number of ISO 9000 quality program certifications and the number of patents filed by the paint and photography industries from 1980 to 1999. During the time period, they were able to document that the number of patents based on previous knowledge (exploitation) increased while the number of patents based on entirely new knowledge (exploration) decreased. But more to the point:

In photography, increased ISO certifications were associated with "a significant decline in the number of patents that were based entirely on knowledge new to the firm."

Moreover:

And even exploitation is hamstrung. In the photogra­phy industry, Benner and Tushman found that patents that relied up to nearly 40% on previously acquired knowledge were squeezed out in favor of patents based 80% or more on existing firm knowledge.

The authors don't argue against quality management. Rather, they suggest making distinctions, according to the Wharton summary.

Benner doesn't suggest that companies abandon the process management principles, but rather that they apply them where most appropriate. In their study, she and co-author Tushman recommend 'a more nuanced approach to creating organizations that can celebrate both variance reduction in the service of exploitation and variance creation in the service of exploration.' (emphasis supplied).

One of the key attributes of modern economies is information saturation. Because information about what you do and how you do it is so widespread, competitors can use what you know to catch up. Innovation can't be measured directly, but perhaps it can be encouraged. More later.

Wayne

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