Blog Feature

Obstacles to Innovation
Move Beyond the “Rule of Thumb”

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Professor of Management Nicole Biggart studies organizational theory, management of innovation, and economic and organizational sociology. In this blog, she discusses obstacles to innovation in Network Production Organizations.

Why is it so difficult for some industries to apply innovations that will save money, produce more business, and are better for society? In many cases, innovations and new technology exist, but are extremely slow in being adopted. In our recent study, “The Role of Social Heuristics in Project-centered Production Networks,” Thomas Beamish and I examine why some industries struggle to innovate their processes and adapt more efficient technologies.

We focused on the commercial construction industry, exploring why green technology and processes are often bypassed even though they are available and well-priced. We noticed that in this industry buildings were being built using outdated technology, technology that wastes energy. It’s an interesting public policy question because buildings have become the largest users of energy, even surpassing the energy used by vehicles. Making energy efficient buildings is critical to national security, and our climate.  Why aren’t the most efficient, cost-effective technologies being adopted?

My coauthor and I came to understand that an obstacle that hinders innovations in the commercial construction industry is something called “social heuristics” or the conventions and rules of thumb that guide the construction process.  There are conventions that shape financing, the selection of participants, the designs that are considered possible, and the range of “acceptable” technologies.  In essence, all aspects of constructing a building are imbued with rules, methods, and taken for granted assumptions that thwart innovation.

For example, the notion of building skyscrapers, hospitals, or “big box” retail outlets are preconceived with particular elements in mind.  If many of these elements or assumptions are altered the project is deemed too risky and vulnerable to financial loss.  It becomes much more difficult to finance a “green building” than a traditional, inefficient building that fits conventional ideas of a “normal” building.

An added complication with green buildings, even if financing is approved, is that the actual building process itself becomes more difficult.  Subcontractors who have little experience with novel technologies have to learn something new. It is always easier to do what you know.

Buildings are constructed once by a group of subcontractors who may be coming together for the first time to build a structure and they may never work together again. This unique undertaking is possible because the architect, plumbers, electricians, and carpenters have preconceived notions of how they will fit into a project.   They rely on their past knowledge of how things come together and have assumptions about everyone’s role in constructing a “typical building”. They install plumbing, construct framing, and add electrical wiring, according to assumptions of best past practices that everyone can plug into without having to communicate directly with one another. Because they’ve never built together before, they’re going to be as risk averse as possible and resistant to the introduction new technologies and methods that add elements of novelty.

When you start to add something new to the already complex building process, you raise the risk level. Asking to add new and better technology, say, in a heating and ventilating system is intimidating because financiers and subcontractors prefer to work within project parameters that are familiar. It’s a conservative and formulaic way of completing a project, and relies heavily on conventions in order to succeed.

The commercial construction industry is not the only industry that operates this way— many industries including fashion design, manufacturing, and movie making use this model, which is called a Network Production Organization (NPO). An NPO is a group of subcontractors who come together at any given time to produce a product. It could be a film, it could be a bridge, or it could be an advertisement. They’re independent but connected through industry networks, conventions (social heuristics), and the project itself.

Social heuristics hold these networks of subcontractors together. Heuristics are shortcuts or conventions—they’re rules of thumb for how to get things accomplished without the need to explain each step. When you come together to produce a movie or a building, you don’t start from scratch. You start with the understanding that you’re going to build a three-story, 30,000 square foot parking garage similar to the one you did last time, or you’re going to produce a romantic comedy where boy meets girl and they live happily ever after—it’s a formula that is easy to understand and enables coordination of multiple actors and technology. From the beginning all parties have a good sense of what needs to be done to complete the project, because there’s an existing model or template that doesn’t have to be negotiated. People collectively understand: “Oh yes, that’s the movie we’re making.” Or, “That’s the building we’re creating.” All of a sudden, you’ve drastically limited all other possibilities. It’s very efficient, but ultimately it doesn’t make the best possible movies or the most energy efficient and innovative buildings.

Do you work in an industry that’s slow in adopting new technologies? Do you find that you or your team make decisions based on social heuristics—existing templates that determine the way you make decisions? What are some methods you’ve used to speed up the process of innovation?

Share your comments with us below.

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