Can Alignment hamper innovation?

26 Nov

Firms often cite research and development as the primary resource of the business. Innovation is of course a vital element of this however aligning your technology with that of the company is not always advantageous to the firm. The most recent example if this is Kodak, it developed digital camera technology in the 70’s however discarded it due to fears it would cannibalize its film and photograph development chains. Today Kodak has been overtaken by many of its rivals and now on the verge of bankruptcy.

Back in the I.T. field, Intel allows employees time each day, the use of company resources to spin out ideas, work with colleagues and generally invest time in their projects. These projects may not necessarily be aligned with firms goals and certainly counts as a misallocation of resources but is used as a key source of innovation, leveraging the knowledge of employees in a way that may not be aligned to company goals but may be of strategic benefit in the future. This use of I.T. has been adopted by other multinational companies like Google and Amazon. The downsides of one size fits all mentioned by d112221671 certainly applies here, employees are encouraged to think individually go in their own direction the antithesis of what alignment represents.

In many ways the relationship between IT and business can be viewed as a dysfunctional marriage. The couple are still married but they are sleeping in separate beds. Alignment seeks to push those beds together and rekindle the lost spark. However for firms (as opposed to relationships) this is not always a good thing after all most disruptive innovation occurs in decades old industries that feature the same old players (think the Dyson vacuum cleaner, the Apple i-pod irreversibly changing there industries). This blog refers not to technology but to the users who manipulate it, having employees focus on one singular aim can be dangerous and leaves firms open to be blind-sided by more progressive rivals. After all sometimes cultures, like relationships are best left broken.

For all things strategic and relationship advice follow Thestrategicblogger on twitter.

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15 Responses to “Can Alignment hamper innovation?”

  1. 1rguru November 26, 2012 at 6:33 pm #

    Great read, you made some interesting points that strategic alignment can indeed hamper innovation. I would agree that focusing mainly on one goal throughout the organisation may lead to missed opportunities else where. i.e. Kodak and also blockbuster comes to mind who felt that online rentals would cannibalize their bricks and mortar business model so they did not pursue this business when competitors such as Netflix have and are reaping the rewards.

    • 1rguru November 26, 2012 at 6:35 pm #

      Would you have any recommendations to a company to make sure this doesnt happen to them?

  2. thestrategicblogger November 26, 2012 at 11:51 pm #

    Thanks for the feedback 1rguru. The main recommendation I can make is for firms to adopt a culture of continuous innovation, in the Intel example this is achieved through not focusing on one goal but a multi-pronged approach that may not be aligned to company goals but then disruptive innovation very rarely is. I hope this answers your question.

  3. gashe2k12 November 27, 2012 at 6:15 pm #

    Good work again, I liked your alternative take on how sometime culture should be left “broken” if firms want to maintain intrapreneurship

  4. agblogail November 29, 2012 at 8:41 pm #

    Excellent work as always. Just a quick question, would you feel that it would better to have a stategy that is orientated around innovation such as Dell or Apple as opposed to having company resources on something that is not in line with the rest of the company? Or would you recommend this type of activity to all firms?

    • thestrategicblogger November 29, 2012 at 11:43 pm #

      Thanks for the kind words agblogail well it would depend on the type of innovation the firm is planning. To use the Apple example you cite they use a combination of both incremental and disruptive innovation, in answer to your question I think a CULTURE of innovation is more effective than any innovation strategy.
      One thing about your comment it is possible to be innovation orientated and be in line with the rest of the company.
      As the in class presentation stated last week you need to have a contrarian (A position I’m sure your well accustomed to AgBlogail) in the room to make sure everyone isn t being led blindly. The same apples to innovation

      • 011000100110100101101110011000010111001001111001x November 30, 2012 at 2:37 am #

        I hate to sound sour but the only defining strategic alignment I associate with Apple is financial obtuseness and gross tax evasion:

        How to Look Poor http://www.spiegel.de/international/business/effort-to-close-multinationaltax-loopholes-gaining-steam-a-866989.html

        According to data compiled by independent tax experts, US technology giant Apple paid a paltry $130 million (€102 million) in taxes on foreign earnings of about $13 billion in 2010. Microsoft paid only $1.7 billion on $15 billion in foreign earnings, while software giant Cisco paid a tax bill of $400 million on foreign earnings of more than $8 billion.

        The operations corporations launch to optimize their tax bill go by various names, including “Double Irish” and “Dutch Sandwich,” but the principle is always the same. In a confusing network of parent companies and subsidiaries, foreign branches and holding companies, sales, earnings and costs are shifted back and forth so many times that the companies end up looking poor wherever tax rates are high. The remaining earnings are generated primarily in low-tax countries.

        Years ago, the Organization for Economic Cooperation and Development (OECD) estimated that 60 percent of all international trade happens within multi-national corporations. Following the letter of the law, they do business with themselves, taking advantage of tax laws in different countries to minimize their burdens.

        The only culture I see at Apple is iNANCE http://www.spiegel.de/international/business/bild-866989-425268.html

  5. thestrategicblogger November 30, 2012 at 11:20 am #

    You can be sour all you want but your comment is unrelated to this category of IT-Business alignment. This is a conversation about how innovation impacts (or lack of) said alignment.

    What your discussing is an ethical issue and belongs here: http://www.guardian.co.uk/commentisfree/uk-edition.

    Also this assignment has finished I suggest you move on

    • 011000100110100101101110011000010111001001111001x November 30, 2012 at 2:12 pm #

      Im intrigued by your referencing of the Guardian given my citing of De Spiegel. Is it because of its guiding editor from the pqst, Sctott’s motto that “Comment is Free but Facts are Sacred”?

      Justifying my position further, businesses guide their approaches to maximise their profitability. Being limited by times and financial restraint they have to prioritise one area over another. Given as I have suggested that the sheer scale of profit to be made through obscuring profit (rather than increasing revenue) I would posit that Apple is prioritising finance over the discipline of information systems. In any case you could have suggested that this apect of their business approach would necessitate the use of financial systems (often a significant focus of IS strategy) but you seem to be arguing the opposite. As a minimum I hope you recognise the benefits of finding an alternative example in the future given what I have suggested.

      • thestrategicblogger November 30, 2012 at 2:42 pm #

        Your jumping to your own conclusions. You re assuming that Apple are prioritising profits over I.S.

        You provide no suggestions or justifications thereby rendering your argument redundant. Apple undoubtedly do operate financial systems but there is no evidence of this ‘prioritisation’ you talk about. How they operate is up to them and the tax man.

        If you have any questions regarding business-it alignment I ll be happy to answer, otherwise I suggest using the home of left thinking idealogy I’ve linked above.

  6. 011000100110100101101110011000010111001001111001x November 30, 2012 at 2:53 pm #

    TSB,

    What a strange comment to make.

    I have not been taking a partisan issue, merely highlighting a particular trend which enables one organisation to have uncompetitive advantage over other other rivals in their industry to earn in effect abnormal profit (a micro economics concern, as opposed to a political one). Do you know who the OECD is (hardly left wing at all, grounded in very mainstream business and international trade issues).

    In any case, I have emphasized the priority of profit and how this guiding approach would limit the importance of IS. My reference to taxation and the concern of an organisation as highly regarded as the OECD is merely showing the limitations of your example (as opposed to the notion itself (which would infact be prioritised higher if there was a more level playing field). However, its clear that constructive dialogue regarding business models or strategies in a wider context is unproductive. Thanks for your time.

  7. thestrategicblogger November 30, 2012 at 3:04 pm #

    As pointed out I shall answer any questions regarding my category. I am simply suggesting an appropriate forum (The Guardian) for the topics which you discuss. My Apple example must be taken in context. The context of the relationships between innovation, IT and culture and how these elements interwine. Your refusal to operate within the boundaries of this context make your comments irrevelant to the discussion and post.

    Thanks

    • 011000100110100101101110011000010111001001111001x November 30, 2012 at 4:26 pm #

      Your introduction of politics makes me feel your suggestion is not friendly, its a shame but I will try once more however:

      Returning to the Spiegel article:
      http://www.spiegel.de/international/business/effort-to-close-multinationaltax-loopholes-gaining-steam-a-866989.html

      “The new designation will allow E.on to move its headquarters abroad, making it easier for the company to circumvent national and international fiscal authorities. In the jargon of tax experts, E.on is providing itself with new “options for fiscal optimization.” It’s completely legal, but it comes at the expense of the treasury.

      The switch to SE will also allow the corporation, intentionally or unintentionally, the opportunity to catch up in a discipline where German competitors have lagged behind an elite league of multinational corporations: that of raking in billions while paying almost no taxes at all.”

      E.on irresective of vertical is not only one of Germany’s most important companies, if not Europes. Their changing of headquarters to a low tax base is a highly significant development. It goes against Germany’s ethos of domestic industrial strategy, either at a national or an organisational level.

      More worryingly it points a concession to the moral hazard of no longer focusing on innovation (which creates win-win gains) as a key priority, rather the moral hazards of financial tax avoidance (which is a zero sum gain) instead. Given that the article is laying the blame not on E.on being the first but the fact that it had to in order to maintain competitive advantage against often less efficient rivals. This is a race to the bottom scenario for German industry, the energy industry, (yes, the tax base) and any rival companies who are not exploiting these gaping fiscal holes that only super large businesses can exploit.

      This is a significant aspect which you hive off in your silo. I take your shock to match what the (Liberal!) economist Keynes wrote in 1926 in the text, The end of Laissez-Faire:
      http://www.panarchy.org/keynes/laissezfaire.1926.html
      “These many elements have contributed to the current intellectual bias, the mental make-up, the orthodoxy of the day. The compelling force of many of the original reasons has disappeared but, as usual, the vitality of the conclusions outlasts them. To suggest social action for the public good to the City of London is like discussing the Origin of Species with a bishop sixty years ago. The first reaction is not intellectual, but moral. An orthodoxy is in question, and the more persuasive the arguments the graver the offence. Nevertheless, venturing into the den of the lethargic monster, at any rate I have traced his claims and pedigree so as to show that he has ruled over us rather by hereditary right than by personal merit.”

      Perhaps you would benefit from taking a wider perspective on matters. It will create relative value of the important innovation and IT areas you mention (which advocate well in other postings of yours) in order to discover how it is being neglected, under appreciated and not used enough. This would be in terms of business culture as well as distortions in terms of economic outcomes. To show no hard feelings I will even recommend a posting on this blog which can help you on this road to more productive and joined up thinking:

      https://sopinion8ed.wordpress.com/2012/11/29/nobody-will-notice-the-slow-death-of-dissemination-they-will-be-too-busy-listening/

  8. d112221671 November 30, 2012 at 4:59 pm #

    Great post I am glad you found my previous post about some of the possible downsides useful!

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