Abstract

Innovation, long recognized as an important element in competitive advantage, is perhaps more significant than ever in today’s fast moving world. Existing ideas on how to facilitate innovation include, among other things, creative thinking techniques and support for “off the books” tinkering with ideas. In some ways, an organizational environment conducive to innovation is at odds with one tuned for execution and control. While organizational theory offers a number of ideas to meet the challenges of the modern world, comparatively fewer suggestions exist for associating organizational approach and innovation. Complexity theory suggests that, under certain conditions, social systems can exhibit self-organization as a part of a natural adaptation process. This article views this natural evolution as potentially innovative, and explores the possibility of facilitating the emergence of self-organization in a separate “underground” layer within existing organizations.

Introduction

The value of innovation would be hard to overstate. Academic and practitioner literature alike has recognized the importance of innovation and discussed the relevant factors and facilitating techniques (e.g., Berthon, Hulbert & Pitt, 1999; D’Aveni, 1998; Covin & Miles, 2000; Hamel, 2000; Nadler & Tushman, 1999). In today’s high-velocity and competitive markets, the pressure is even greater. Consumers have become more knowledgeable and more demanding. Information about who is doing what is more readily accessible than ever, facilitating competitive copying and one-upmanship. Technology is rapidly opening up new ways to compete and closing doors on old ways. Finally, the business press has reported an increasing number of truncated CEO tenures at companies that fail to grow (Colvin, 2000), providing evidence that boards of directors have become less patient and forgiving with performance difficulties. Innovation is a key aspect of success in this environment, providing the basis for business adaptation and differentiated advantage.

Complex adaptive systems theory describes a process of emergent self-organization, and with it, changes in capabilities of these systems. Intuitively, this process may hold lessons for supporting some aspects of innovation. In fact, researchers believe that free-market economic systems largely meet the defining characteristics of complex adaptive systems and thus share key behavior traits found to be associated with those systems (e.g., Beinhocker, 1997). In an abstract sense, innovation in free market economic systems can be viewed as parallel to evolution in nature. The interaction of diverse system agents, largely free of top down control while subject to the threat of death and the promise of growth, creates the stimulation and the environment for adaptation (Pascale, 1999). With provocation, complex adaptive systems tend to move toward the edge of chaos and experience self-organization, emerging into a more complex and often higher performing entity. Pascale goes on to note that, while one can disturb a living system, efforts to effect or direct innovation may have little effect, with the outcome being path-dependent, capable of infinite variety, and thus unpredictable.

Authors have recognized the challenges of today’s world and looked at what it means for prescriptions for higher performance and the role of organization and innovation. In many businesses, information intensity and task complexity are now prevailing elements, leading some authors to suggest network organization structures (e.g., Achrol & Kotler, 1999). While the reduction of hierarchal control is not without its drawbacks, it can free up team-level creativity and increase the number of relationships and connections, thereby improving information sharing and flexibility for addressing constantly changing challenges. Other literature emphasizes the importance of maintaining a portfolio of alternative options to pick and choose from as the unpredictable future unfolds (e.g., Luehrman, 1998; Williamson, 1999). A third line of theory speaks to the importance of ongoing maintenance of dynamic capabilities for rapid and effective action in business activities and decision-making (e.g., Ma, 2000).

The issue explored here is how to facilitate innovation in an existing firm without altering the fundamental organization structure and in a manner consistent with existing theory. Organizations have structures shaped by preferences and needs, not the least of which is the need for execution. If innovation can be encouraged with an approach that recognizes complex adaptive systems theory, and yet is independent of the basic organizational characteristics already in place, then the difficulty of improving performance through innovation may be lessened. The suggestion that stimulated interaction under loosened control opens the door to innovative adaptation raises various trade-off questions. If rigid processes are a block to natural adaptation, what balance can be achieved? If one organization structure is unlikely to excel at two widely divergent activities, can a hybrid two-level structure accomplish these tasks? Theory alone is unlikely to answer these questions. Taking cues from complex adaptive systems theory and from the economy overall, we can explore how to experiment with an “underground” organization layer, outside the bounds of some of the factors limiting adaptive behavior. This experimentation is intended to create an environment conducive to the growth of evolutionary adaptation.

The Problem

The importance of marketing innovation has been understood for many years, and yet it remains elusive for many firms. Schumpter was one of the first in recognizing competitors’ relentless race to get ahead through innovation with his 1934 work discussing the “perennial gale of creative destruction.” Current authors such as Lumpkin & Dess, (1996) and Covin & Miles (1999) suggest that innovation is a fundamental element of entrepreneurship, a trait that they observe has been linked empirically to higher performance. Nadler &Tushman (1999) note that it is widely accepted that innovation in products, processes, distribution and organization is a source of competitive advantage. Although often the case, innovation is not necessarily technology-based. Despite a widespread emphasis on innovation, the breadth and depth of literature speaks to the lack of easy prescriptions for success.

Authors such as D’Aveni (1998) have noted that, for many organizations, competitive pressure and customer demands are higher than ever, driving a quest for even higher levels of innovation. D’Aveni suggests that this era of hypercompetition arises from the combination of heightened customer expectations, powerful technology, falling entry barriers, and deep financial resources. This author goes on to describe the need for a competitive firm to innovate rapidly and continuously, and to create multiple initiatives to create or serve markets in new and innovative ways. Day & Montgomery (1999) point out that consumers today have more choice, less time and greater sophistication, and as a result are exercising more power. Moreover, developed markets are increasingly fragmented and in oversupply, making innovation in the value of products and services offered essential (Berthon et al., 1999).

Adding to the competitive dynamics is the rapid pace of activity across much of business today. In looking at high-velocity industries, Brown & Eisenhardt (1997) describe a strategy of “competing on the edge,” based on temporary and shifting advantages flowing continuously and facilitated by organization characteristics and timing. D’Aveni (1998) characterized strategic efforts as “shoveling sand against the tide.” The rapid pace of change in much of the economy forces firms to press for continuing innovation to keep the series of disappearing advantages flowing. This accelerated innovation applies to all business operations where improvements in customer satisfaction or reduction of cost can be found. Incremental innovation is often constant, with radical innovation and creative new applications of technology less common. The many innovative uses of Internet technology have led some to describe the enabling aspects of globally networked communications and e-commerce as a business “revolution.” The urgent rush to exploit the latest technologies is fueled by the desire for first-mover advantages and, in the case of proprietary technologies, the desire for supply-side increasing returns to scale and the associated “winner take most” returns.

Emergence and Evolution in Business Organizations

Research has recognized the evolutionary nature of business and the persuasive evidence that organizations and economic systems are complex adaptive systems. Among others, Beinhocker (1999, 1997) and Pascale (1999) have summarized relevant principles from this theory. Complex adaptive systems exhibit emergence and self-organization; meaning that structure and sophistication arise naturally out of the dynamic interactions of the individual agents without a governing force, and with patterns continuing as individual agents come and go in the system. The organization that emerges is changed in some way, often with a new ability to do something that it could not do prior to being disturbed and allowed to emerge. Pascale notes that a distinguishing characteristic of adaptive systems over other complex systems is the capacity to recognize patterns and employ this to anticipate the future and adapt. Thus, adaptations are essentially innovations – changes inspired by learning in search of higher performance levels.

While this specific terminology is not always used, the world has many examples of internal and external sources “disturbing” organizations, provoking them out of an ordered state and toward the edge of chaos. Complexity theory holds this movement to be important for success. Stewart (1993, p. 3) summarized this point well.

A central tenet of complexity theory is that selection or learning drives systems towards this edge of chaos. Systems that are too simple do not survive in a competitive environment because more sophisticated systems can outwit them by exploiting their irregularities. But systems that are too random do not survive either. It pays in survival terms to be as complicated as possible, without becoming totally structureless.

Thus, systems that remain relatively unprovoked have fewer stimuli to adapt and are therefore at greater risk over time of being at a disadvantage in the natural selection processes. Organizations having processes and incentives that encourage employees to do fundamentally the same things in the same way on a daily basis, create an artificial internal equilibrium that thwarts disturbance and emergence. Organizations that encourage alternative viewpoints and constructive conflict may find better ways of doing things; without stimulation from the interaction of diverse elements, the variations on emergence are necessarily limited. Consistent with this, Beinhocker (1999) sees diversity as a necessary investment to prevent inbreeding.

While complexity theory speaks to the development of increasingly sophisticated systems, it does not include a selection process. As Mathews (1999, p. 85) states “It is the interaction between external selection mechanisms and internally generated self-organization that is important in explaining system evolution and development.” Thus the concept of survival of the fittest remains important in the evolutionary process for business. A part of this evolution is a need for the generation and real world testing of a mix of small and large mutations in a continuing search for higher performing fitness levels (Beinhocker 1999). Using these thoughts, one can see that a multiple innovation strategy provides the ability to support adaptation through the creation and maintenance of a portfolio of options for the unknown future. With strategic windows of opportunity shorter than ever, this portfolio becomes an even more valuable asset. Leslie & Michaels (1997), Williamson (1999), and Luehrman (1998) speak to the importance of having strategic options and the methods for determining their real value as a future alternative.

Organization vs. Innovation

Supporting multiple business needs with one organization structure is a challenge that often results in some needs being more strongly supported than others. While one would expect the initial organizational approach and processes to be designed to meet the goals of the whole business from research and development through operations, one might assume that, over time, actual practices and organizational characteristics would evolve in response to the most pressing influences, perhaps moderated by the natural avoidance of change. The immediate needs of execution create a natural incentive for defined organizational control elements and communication processes, whereas innovation is not as tangible and may even appear less immediate. The risk is that innovation may become a goal without an effective supporting approach. In considering the environment for self-organizing adaptive behavior in business organizations, Pascale (1999) even noted that social systems often have an existing order that compromises the requisite interaction and creates an environment that can neutralize diverse ideas and the “threat” (promise) of change. It is not the focus of this paper to examine the impact of specific organization structures and processes on innovation, however it is important to briefly recognize the inherent conflict in supporting diverse needs.

The difficulty that organizations have in comprehending and innovating outside of their current world of products, markets and competencies was noted long ago in the article Marketing Myopia (Levitt, 1960). Authors such as Bennet & Cooper (1981) have noted the failure of innovation as led by customer-centered marketing processes. These authors suggest that because of factors such as limitations in the customer’s perceptions and knowledge, innovation will rarely arise from existing customers. Commenting on innovation from an internal process perspective, Woodman (1999) observes that restrictions to adaptation are often a part of locked-in organizational patterns intended to facilitate connectivity and coordination through the formation of structure and standards. Consistent with this, Beinhocker (1997) notes the difficulty of achieving balance between creative ideas, as are often overflowing in a new company, and the necessary control processes for scale, as are typically well-developed in an established company. Similarly, Snull (1999) notes that as firms become successful, the elements of their winning system are refined and extended in the processes, and the patterns become strategic frames of reference. Snull further notes that although this focuses the organization and raises effectiveness and efficiency during periods of stability, the repetitive focus on previously important things often blinds the organization to the needs of the future. Finally, in an article capturing the thoughts of Warren Bennis, Stewart (2000), discusses the notion that organizational hierarchy reinforces or acts as a substitute for personal trust in ensuring that things happen according to expectations. The article goes on to note that, given the importance of trust in management, network organizations need to utilize other methods to provide the dependability and implicit understanding necessary for effective operations. This simply illustrates, again, the challenge of simultaneously achieving stimulating horizontal interaction and efficient operational execution.

Network organization structures are sometimes suggested as a way to deal with complexity, information intensity, and rapid change. Some successful professional services firms have utilized a network structure or matrix organization, allowing them greater flexibility in dealing with change and knowledge. Achrol & Kotler (1999) point out a rapid evolution in number, form and complexity of network organizations in business and see an advantage to those that leverage networks for advantage in the increasingly knowledge-driven society. In addition, they suggest that in the global and changing world, hierarchal organizations have not been proficient at predicting, spotting or responding to change. Finally, these authors go on to suggest that organizations will evolve into a network structure with greater “connections” and knowledge-intensity. In another network-oriented perspective, Beinhocker (1997) sees increased use of the power of a dynamic web of communicative relationships. From Beinhocker’s complexity theory viewpoint, the old Sun Microsystems’ advertising slogan, “the network is the computer” is a notion that has value. This simple slogan captures the importance of the connections and interactions between similar and diverse entities in extracting value from an organization.

In an effort to avoid the trap of organizational structure and routine, and to fight the tendency to avoid change right up until the threat of death is clear, some managers create disturbances to stimulate creative action. In a look at renewal, Pascale (1999) describes how Royal Dutch Shell was re-energized, tapping into latent innovative abilities with a process that disturbed the status quo, provided purpose, boundaries and rewards, and produced hundreds of informal relationship connections up and down the organization. This new network of relationships was described as resembling parallel networks of the nervous system to the brain. Dumaine (1993) even discussed how several large companies each created a crisis in their potentially complacent businesses to incite change before a real competitive crisis occurred.

Facilitating Innovation

With an appreciation of the difficulty of change and the dichotomy between control and innovation, it is useful to review a sample of existing and suggested techniques for practitioners. First, companies have available to them any of a number of straightforward approaches for individual and team creativity. Group idea generation, individual thinking skills, removing blocks to creativity, out-of-the box or breakthrough thinking, and creative team building techniques are a few of the names given to approaches available for adoption. Brown (1999) reported that customer demand for creativity skills led one design firm to go into the business of holding innovation workshops to teach brainstorming and rapid prototyping. Another not uncommon tactic is to formally or informally allow a certain amount of “off-the-books” research activity. Some companies such as 3M formally allow a percentage of time to be spent tinkering with technologies and new ideas, while other companies informally permit investigation and testing of some of the ideas that arise outside the formal development track. Oftentimes a reward or gainsharing incentive will be offered for innovative ideas that contribute to performance. A variety of general organizational guidelines for innovation have been discussed in theoretical and practitioner literature. In a particularly all-embracing practitioner article, Hamel (2000) looks at several innovative firms and illustrates rules for designing a culture that inspires innovation to emerge in the world of complex adaptive businesses. Hamel (2000) identifies 10 rules:

1) set unreasonable expectations, 2) stretch your business definition, 3) create a cause, not a business, 4) listen to new voices, 5) design an open market for ideas, 6) offer an open market for capital, 7) open up the market for talent, lower the risks of experimentation, 9) make like a cell – divide and divide, 10) pay your inventors well – really well (p. 100-118).

In a particularly relevant study, Brown & Eisenhardt (1997) looked at product innovation, focusing on the question of how do companies allow freedom to innovate as complex adaptive systems, without losing control and experiencing chaos. The authors begin by noting that there is little known about the organizational environment underlying the continuous innovation that is often cited in theory as a necessary element for superior performance. They suggest that the crucial element of survival in high-velocity industries – the ability to change continuously and rapidly – is often played out through product innovation. While research on innovation under complex adaptive systems theory often focuses on “punctuated equilibrium,” these authors note that dramatic change is a less common experience for most firms. The authors study six firms in high technology businesses for evidence of common factors underlying successful and unsuccessful innovation. Although the innovation being sought was not radical, it was more than incremental in that it was relentless and significant, pushing the limits of technology in a competitive market. Three defining areas were found to describe the successful firms. First was an organizational structure for innovative development that the authors term “semistructures.” This structure is described as in between rigid and chaotic, with loose structure and processes that allow for iteration and tinkering, but also with clear responsibilities, clear priorities, and extensive communication. Second, the successful companies used a variety of inexpensive experimental probes to test the future and keep their options open, partially avoiding reactivity to changing conditions. Third, rather than being event based, there existed an organizational time pacing termed “links in time.” This time pacing brought the organization together in sensing the urgency of moving forward, in coordinating the different business activities, and in maintaining rhythmic and relentless product transitions.

These approaches suggest eliciting innovation out of an organization by creating the conditions and incentives for stretched thinking and by allowing space and support for ideas to grow and be tested. In this kind of approach, some of the activity is outside the formal processes of the organization; the innovative spirit is cultivated within boundaries without changing the fundamental organization structure. This line of thinking suggests that the right conditions and supporting mechanisms may help grow innovative organizational cultures and improvisational approaches.

Following these thoughts and practices, it is possible to envision a company with a vibrant living underground organization, having loose bounds and incentives for positive wanderings, yet with freedom for employees to choose their own way. This suggestion is in many ways similar to existing activities at some companies – a combination of time to work on unauthorized projects with some level of resource support and prototype testing. It also has similarities with communities of practice and informal organizations. Finally, the concept embraces the general concept of empowerment, albeit with only loose controls over the various outcomes that will emerge over time. In concept the idea merely extends the range of options to be considered for innovation in business. If one end of the range of options is simply periodic facilitation of brainstorming activity by an existing product or functional team, the other end of the spectrum is creating a separate and somewhat chaotic self-organized system largely free of top down control. While this extreme may not be appropriate for many situations, it does provide a useful viewpoint for stretching innovative practices and experimenting with the balance between control and innovation.

Accepting the fact that deterministic cause and effect processes and predictable outcomes are fundamentally inconsistent with what is known about complex adaptive systems, we can still observe that several elements appear to be of particular importance in order to create an environment conducive to self-organization and innovation.

o       An emphasis on broad and diverse participation and interaction.

By definition, self-organization in complex adaptive systems occurs out of the interaction between individual agents (people in social organizations). In practice this can be supported with technology (e.g., intranet-based content, communication and collaborative tools), facilities (e.g., centrally-located meeting spaces equipped with technology tools), and events (e.g., sharing programs designed to stimulate interest and involvement from people from throughout the company).

Diversity can provide stimulation, alternate perspectives and constructive conflict in the adaptive process. From an external perspective, diversity is often thought of as coming from different life experiences, socio-economic groups, and cultures. From an internal organization perspective, Beinhocker (1999) suggests deliberate hiring of individuals with diverse professional experiences and moving people in the organization through experiences in different geographies, business units and functions to enhance diversity. Logically, employees are not the only possible source of diverse input and stimulation; it may also be helpful to capture diverse input from stakeholders, professional groups, news services, and academic sources.

o       A learning function to drive adaptation.

Learning is recognized in the literature as a way to help organizations adapt to change and avoid myopia (e.g., Fulmer, Gibbs, & Keys, 1998). In complex adaptive systems, Stewart (1993) sees learning as one of the stimuli that can provoke a system toward chaos (where adaptive emergence is more likely to occur), and away from the risk of artificial stability. Intuitively, learning can add to the diversity of viewpoints and to the total knowledge, and as a result, may spur greater creative adaptations. Moreover, leaving much of the choice of learning paths and topics to the individuals may permit a parallel evolution with self-organizing activity, and, in some cases, may help energize the system through greater personal accomplishment and satisfaction.

o       A selection process providing urgency and pressure away from equilibrium.

Stewart (1993) also sees selection as one of the pressures that can provoke a system away from the risk of remaining in a temporary equilibrium. External pressures (including the threat of failure) and incentives (including the rewards of success) can stimulate people and business units into action. As a part of this, plugging team members directly into the pulse of competitive rivalry through information sharing can provide positive and negative feedback. Incentives that provide significant rewards proportional to the contribution are often another part of provoking action.

o       An avoidance of control and procedure, substituting instead simple boundaries.

Pascale (1999) notes that in order for an entity to qualify as a complex adaptive system, it must not be hierarchically controlled; instead being comprised of many agents acting in parallel. Also, Brown & Eisenhardt (1997) found that development organizations following strict procedures were less likely to succeed than those allowing for improvisation within a framework termed semi-structure. In an underground organization, defined bounds to activity might consist mainly of confidentiality rules, ethical and legal guidelines, company vision and mission, and a broad suggestion of acceptable activity.

Other factors can also act as controls in an indirect manner. The presence and relative magnitude of incentives and disincentives is a loose control. Also, similar to open records laws in government, open visibility of individuals and their work can act as a control to the nature of activities undertaken. This fact makes it important that the organization support experimentation with different ideas and allow mistakes and failing efforts to occur with constructive support. Finally, with any time pacing that is used (e.g., prescheduled opportunities to promote personal projects to others), the periodic events will act as a timing boundary.

Viewing this environment as a separate and distinct sub-level in an organization, one might deem acceptable activity to include almost any kind of learning or tinkering that provokes the system away from complacency, energizes the system with learning and job enhancement, and helps create the ideas and paths that potentially lead to innovative options for the future. An employee may even choose to work with a technology that competes with a current product or has little connection to current business. One example of the potential unseen benefits of this would be engineers that worked with the Linux operating system in the years before it became recognized for its commercial potential. What was once ignored as a personal activity unrelated to work, became the unexpected source of a valuable skill. Relatively obvious examples of beneficial personal activities are participation in a professional organization and membership in a Toastmasters club. Less obvious examples would be taking part in education or activities in areas with no apparent link to the present business or any of its stakeholders. While this activity would not replace formal activities, this underground level of the organization should be formally supported with access to corporate and external resources as their activities unfold and grow.

While one might think that meeting these tangible conditions would increase the chances of positive adaptation and self-organization, the outcome is not assured. Intangible factors such as culture are also thought to be important for a program such as this. Companies that have extensive innovation often speak to the culture that is an integral part of the environment. Hamel (2000) cites the revolutionary fervor of Charles Schwab and others have described the entrepreneurial risk-taking culture at 3M (Stewart, 1996). While culture will be unique to the situation, one can imagine wanting individuals to feel free, equal and empowered, and to have everyone welcome the rich rewards and responsibilities associated with an understanding that “the organization is what the members make it.” Although it may be that the energy in this system may be rooted in different driving forces within each person (e.g., competitive spirit, personal pride and values, skills and resume building), the culture should nonetheless appreciate the mutuality of possible benefits as the organization and its people, groups and ideas evolve. Finally, given the inherently experimental nature of nurturing an underground organization, one might think that educating organization members in the complexity principles underlying that which is being attempted, could help build shared values and a realization that multiple new paths may be a part of accomplishing personal and business goals.

Conclusion

A range of ways to spur innovation exists, from simple group facilitation to actively supported cultures and support mechanisms grown into the organization. Despite widespread focus, innovation beyond incremental extensions of existing products and services remains a challenge for many companies. In recent years, advancements in technology and communications markets have been particularly rapid, creating the necessity and the opportunity for firms to innovate rapidly. Cisco is an example of a successful company with significant innovations to its credit that still finds it important to acquire several companies every month in order to capture innovations vital to their fast-moving market.

Complexity theory describes behavior that may hold important lessons for innovation. The notion that sophisticated approaches can and do emerge spontaneously from the dynamic interaction of agents in a complex adaptive system leads one to consider experimenting with the creation of an environment where this is more likely happen. This environmental space for this activity is termed an underground organization to capture the feel of a separate layer with non-standard freedoms and self-created mechanisms driven by connected people under real-world incentives. The conditions for this appear to be only a step beyond some of the ideas in use today to spur innovation. With the culture, resources and time provided for innovation, an emphasis on diversity and interaction, and the freedom to act, organize and improvise within bounds, the foundation is formed. Learning and selection incentives provide the drive to adapt, a process that theory says happens best when agents are provoked to the edge of chaos. In this view, the emergent organization arises from the bottom rather than the result of top down efforts. A distinctive characteristic of this approach is that rather than asking organization groups to engage in defined practices necessary for creating discrete innovations on-demand, the underground organization encourages a new layer of unofficial organization to grow from the dynamic interaction of diverse elements over time. Under the right conditions, this emergent organization would then become capable of thinking in new ways and doing things that were not previously possible. With continued provocation and freedom the complex adaptive system would change and adapt over time, selecting things that work and discarding thing that don’t.

The concept of an underground organization is at once a small step and yet a potentially risky one. The fundamental premise requires a certain amount of freedom to tread on anyone’s turf – in concept a desirable disturbance. In practice, situational factors such as frequency, approach, and severity may make a large difference in potential conflict. Naturally, conditions for positive rather than negative conflict should be encouraged. The threat posed to some individuals is not dissimilar to the disturbance experienced at Royal Dutch Shell, an experience described by Pascale (1999) as a positive force in renewal. While complexity theory holds that equilibrium is a risky position and that disturbances are necessary, people often seek the superficial comfort of real or artificial equilibrium conditions. This is where the admittedly experimental nature of an underground organization warrants the most attention. How free can an underground organization be and not damage the need to execute today’s operations and tactics? How controlled can an underground organization be and still innovate and adapt? Finally, the issues of funding and time availability, if poorly handled, can block innovation under this or any arrangement.

With the importance of innovation to performance, some organizations may choose not to wait for additional theory and empirical evidence. New forms of hybrid organizations, combining an innovative space with a traditional model, will likely emerge as valid ways to deal with the dichotomy of evolutionary adaptation and effective ongoing operations. Some predict that network organizational structures will grow in use as a way to cope with the characteristics of the modern world (e.g., Achrol & Kotler, 1999), however no conclusive link has been established between any structural approach and innovation. A great deal of work remains to be done in relating successful practices to concepts in complexity theory. Mathews (1999) notes that the science of complexity is not defined adequately for organizational science research efforts. The good news is that an underground organization could be founded on many of the techniques in use today – beginning with education in innovation techniques and associated incentives for success. Progress can continue with an eye toward facilitating various recognized elements of success – individual effort, collective progress, constructive conflict, etc. Modern innovation is more likely to be a collective process (Ma, 2000). A logical path for experimentation is to take additional steps in the direction of more freedom for an organized system to emerge and result in something new and more complex, all without a master plan for how to get there, or even what “there” looks like. Setting a vision for an underground organization may provide the image that spurs the growth of an evolutionary culture.

References

Achrol, R. S. & Kotler, P. (1999). Marketing in the network economy. Journal of Marketing, 63, 146-163.

Beinhocker, E. D. (1999). Robust adaptive strategies. Sloan Management Review, 40(3), p95.

Beinhocker, E. D. (1997, Winter). Strategy at the edge of chaos. The McKinsey Quarterly, 1, p24.

Bennet, R. C. & Cooper, R. G. (1981). The misuse of marketing: an American tragedy. Business Horizons, Nov.-Dec., 51-60.

Berthon, P., Hulbert, J. M., & Pitt, L. F. (1999). To serve or create? Strategic orientations toward customers and innovation. California Management Review, 42(1), 37-58.

Brown, E. (1999, April 12). A day at innovation U. Fortune, 133(7), 163-166.

Brown, S. L. & Eisenhardt, K.M. (1997). The art of continuous change: linking complexity theory and time-paced evolution in relentlessly shifting organizations. Administrative Science Quarterly, 42(1), p1.

Colvin, G. (2000). Boards to CEOs: One strike and your out. Fortune, 142(1), p50.

Covin, J. G. & Miles, M. P. (1999). Corporate entrepreneurship and competitive advantage. Entrepreneurship: Theory and Practice, 23(3), p47.

Day, G. S. & Montgomery, D. B. (1999). Charting new directions for marketing. Journal of Marketing, 63(special issue 1999), 3-13.

D’Aveni, R. A. (1998). Waking up to the new era of hypercompetition. Washington Quarterly, 21(1), 183-195.

Dumaine, B. (1993, June 28). Times are good? Create a crisis. Fortune, 127(13), 123-130.

Eisenhardt, K. M. (1999). Strategy as decision making. Sloan Management Review, 40(3), p65.

Eisenhardt, K.M. & Brown, S. L. (1998). Time pacing: Competing in markets that won’t stand still. Harvard Business Review, 76(2), 59-69.

Fulmer, R. M., Gibbs, P. & Keys, J. B. (1998). The second generation learning organizations: new tools for sustaining competitive advantage. Organizational Dynamics, 27(2), 6-20.

Hamel, G. (2000). Reinvent your company. Fortune, 141(12), 100-118.

Leslie, K. J. & Michaels, M. P. (1997, Summer). The real power of real options. The McKinsey Quarterly, 3, p4.

Levitt, T. (1960) Marketing Myopia. Harvard Business Review, 38(7), 24-47.

Luehrman, T. A. (1998). Strategy as a portfolio of real options. Harvard Business Review, 76(5), 89-99.

Lumpkin, G. T. & Dess, G. G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. The Academy of Management Review 21(1), p135.

Ma, H. (2000). Of Competitive Advantage: Kinetic and Positional. Business Horizons, 43(1), p53.

Mathews, K. M. (1999). Organizational dynamics: Issues and implications from the complexity sciences. Unpublished doctoral dissertation, Louisiana Tech University.

Morris, M. H., Davis, D. L. & Allen, J. W. (1994). Fostering corporate entrepreneurship: cross cultural compari. Journal of International Business Studies, 25(1), p65.

Nadler, D. A. & Tushman, M. L. (1999). The organization of the future: strategic imperatives and core competencies for the 21^st century. Organizational Dynamics, 28(1), 45-60.

Pascale, R. T. (1999). Surfing the Edge of Chaos. Sloan Management Review, 40(3), p83.

Snull, D. N. (1999). Why good companies go bad. Harvard Business Review, 77(4), 42-52.

Stewart, I. (1993). A new order. (complexity theory). New Scientist, 137(1859) 2-3.

Stewart, T. (2000, June 12). Whom can you trust? It’s not so easy to tell. Fortune, 141(12), 331-334.

Stewart, T. (1996, Feb. 5). 3M fights back. Fortune, 133(2) 94-99.

Williamson, P. J. (1999). Strategy as options on the future. Sloan Management Review, 40(3), p117.

Woodman, L. A. (1999). The Phenomenon of lock-in in business in light of complexity theory. Unpublished doctoral dissertation, The Union Institute.

by

Charles Englehardt, Doctoral Student and Calvin Berkey, DBA

University of Sarasota
College of Business Administration

Articles, Marketing, Research
Beinhocker’s complexity theory, business adaptation, Complex adaptive systems theory, marketing innovation