Mastering the Dynamics of Innovation

by James Utterback

I have certain requirements of the business books I finish: that they instruct (ideally with concrete examples), that they offer an innovative way of looking at business issues, and that they give me ideas that I can apply. But I seldom, if ever, expect business books to be entertaining. It's a little like expecting a Harvard professor to lecture in a clown suit. Yet I found James Utterback's Mastering the Dynamics of Innovation (Boston: Harvard Business School Press, 1994) both very instructive and very entertaining.

Utterback is interested in the larger patterns and stages of innovations - s-curve leaps in technology, for example. In describing these stages of innovations and how they impact industries, though, he tells great stories about business people. For example, Utterback notes that "in 1879, [Thomas] Edison was a bold and courageous innovator. In 1889, he was a cautious and conservative defender of the status quo." Utterback states that Edison's entire electrical system was based on direct current, even though alternating current was being pushed by his competitors, particularly by George Westinghouse and his then-small firm. Utterback says that, to fight those advocating alternating current, "Edison was not above throwing up legal impediments and using a number of dirty tricks, including the macabre executions of stray dogs and cats by alternating current, all for the purpose of showing newspaper reporters the rival technology's danger to the public." Edison even "convinced the state of New York in 1888 to switch from hanging to electrocution by alternating current as its official form of execution; the great wizard himself testified to its lethal effectiveness before the legislature." All this to position alternating current (which is now our standard) in the public's mind as a deadly way to distribute power.

Stories such as these are interesting in themselves but also reinforce Utterback's arguments. First among these is that no industry is immune to radical innovation (there are detailed and fascinating studies of industries ranging from typewriters to rayon to photography to plate glass). Second, radical innovation-at least in assembled products-tends to come from outside the industry (when he started, Edison had no status in either the electricity or lighting industries). Third, after the radical innovators start to succeed, they and their organizations become conservative and defensive, fighting desperately to protect their vision and, more critically, their investment.

One of Utterback's most interesting arguments is how the nature of organizations changes as an innovation's "dominant design" is adopted. He distinguishes between the organic and the mechanistic organization. "For a group to be successful in an uncertain environment [where there are many products, many competitors, and no clear winners], individuals in the organization must act together. This type of structure is called organic and emphasizes, among other things, frequent adjustment and redefinition of tasks, limited hierarchy and high lateral communication.... The relative power of individuals in the organic firm is related to their assumption of entrepreneurial roles.... As a product becomes more standardized and is produced in a more systematic process, interdependence among organizational subunits gradually increases, making it more difficult and costly to incorporate radical innovation.... It is seen as necessary to provide more rigid coordination that establishes consistent routines and rules to minimize inefficiency and costs in operations. This type of structure is known as mechanistic.... The power and influence of individuals who show administrative ability increases in mechanistic organizations.... Ideas that threaten to disrupt the stability of the existing process will be discouraged, and ideas that extend the life of existing products and technology will be encouraged and rewarded, probably in a highly structured manner."

Utterback's primary focus is on the stages of innovation, and he does a masterful job delineating them. Less well delineated is what organizations should do to prevent their becoming mechanistic and unable to respond to new product platforms. In his concluding chapter, Utterback states that "management ... must find the right balance between support for incremental improvements and commitments to new and unproven innovations. Understanding and managing this tension perceptively may well separate the ultimate winners from the losers." It's hard not to agree, but there is not a great deal of how to maintain this balance. In this chapter, Utterback cites Gary Hamel's and C.K. Prahalad's research, which culminated in the publication of Competing for the Future. It struck me that Mastering the Dynamics of Innovation is an excellent prequel to Hamel's and Prahalad's Competing for the Future, a book already reviewed here. Utterback points out what happens if a firm concentrates its energies protecting today's markets and technologies; Hamel and Prahalad provide an approach to creating the markets and technologies of the future.

While I thought this book very worthwhile, particularly for manufacturers, I have one small complaint about Utterback's title. The book was cited in another work, and I immediately thought it was about how to master the process of creating new offerings. In fact, and I hope I have made it clear here, Mastering the Dynamics of Innovation covers the larger patterns in innovation - the s-curve leaps in technology in assembled and non-assembled products - and their impact on existing industries. This doesn't make the book any less valuable, but I think Utterback could have given his work a less ambiguous title.

Reviewed by S4 Consulting

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