07 Jun 2004  What Do YOU Think?

How Important are Big Ideas?

A couple new books, including most controversially Does IT Matter? focus on sources of competitive advantage. Are management concepts on their own the best way to compete? And, does it matter that new concepts—and their guru practitioners—seem to come from the U.S.?

 

Summing Up

Judging from responses to the June column, big ideas rank high on a list including technology and intellectual property as sources of competitive advantage. But they are only a starting point, outweighed by methods and the state of the "managerial mind" necessary to execute them. This raises a new set of questions concerning the future of global competition.

As Winfried Schoepf put it, "The big idea is the only thing with the ability to attract enough people around a new concept when real change is needed in an organization." Rodrigo Borgia comments, "... big ideas guide us to put our brain to work." And Don Martin added, "Management concepts provide a benchmark against which the desired direction within a company both externally and internally can be measured."

Others suggested that the big idea is of little importance without effective implementation. Matt Crichton pointed out that "... you can have the biggest idea in the world but if you don’t make it personal in your employees’ lives ... the idea will go nowhere." In Kathryn Yates’ words, "Big ideas or new management concepts are a useless (though entertaining) exercise unless management approaches them with military discipline." Mike Kirkeberg goes even further in saying, "All new management philosophies and strategies work ... until they don’t. ... It seems very simple: Make a good product; treat people like people (employees, customers, shareholders) and treat them well; don’t worry about gurus ... ."

While big ideas may have originated, according to at least one study, primarily from the U.S. in recent decades, what does this mean for future competitive advantage on a global basis? Here the predominant thought was that the rapid dissemination of these ideas bodes well for companies able to execute them anywhere in the world. Tom Davenport, one of the authors of the study in question, commented, "... while most gurus come from the U.S., idea practitioners can be found all around the globe ... ideas are so broadly distributed today that it’s relatively easy to access them no matter where you’re located." In Thomas Kermorgant’s words, "Outstanding companies create the concepts that are then formalized and spread by gurus. Outstanding companies exist in all cultures and continents."

Anju Marempudi poses the question of the month in helping us sum up responses to issues surrounding big ideas. In his words, "It’s the right mix of management concepts, IT and IP—not just one of them—that probably defined the American century. Now all these ingredients are more transferable to the rest of the world in the emerging global context. This ... paves the way for an Asian century through the information highway." What do you think?

Original Article

Several recent books have focused on an examination of sources of competitive advantage. Nicholas Carr's Does IT Matter?—perhaps the most controversial—essentially argues that information technology is highly overrated in providing competitive advantage and should not be regarded as an important source going forward, at least at the level of an individual organization. Other writers fret about the continued importance of intellectual property in a world where patents can be practically replicated through careful innovation. On a third front, however, Thomas Davenport and Laurence Prusak argue in What's the Big Idea? that the successful implementation of management concepts can offer real opportunities for sustained competitive advantage. And judging from their sample of citations, one has to conclude that nearly all management concepts emanate from the U.S.

Davenport and Prusak lay out a roadmap tracing the development, adoption, and implementation of management concepts such as reengineering, balanced scorecards, Six Sigma Quality, benchmarking, core competence, and matrix management. The map includes a variety of players such as business gurus (the source of many of these concepts), top management sponsors (typically CEOs or other high-ranking executives), and "idea practitioners," those at lower levels of organizations who are the real foot soldiers in the battle to see that ideas come to fruition through effective implementation. They identify 200 "business gurus" based on the frequency with which their work is accessed or cited in the media. Only a handful, and none of those at the top of the list, practice outside the U.S. (For the curious, the top four they list are Michael Porter, Tom Peters, Robert Reich, and Peter Drucker.)

The authors point out that "although gurus vary in how they go about their work, all of them must do three things: interact with companies, think and write, and present their ideas at meetings and conferences." Similarly, most of those in their sample of adopters and implementers, including "idea practitioners," are associated with U.S. organizations. Idea practitioners, for their part, must distinguish more timeless management concepts from fads, time their moves carefully to meet the needs of their respective organizations, and enlist top management support. One might infer from this work that the real secret weapons that many U.S. firms possess in their competitive struggles may well be business gurus, idea practitioners, open-minded CEOs, and the concepts they develop and implement.

This raises a number of questions. Do the development and application of management concepts represent a significant source of competitive advantage? Is it more important than that represented by either information technology or intellectual property? If so, is the U.S. management community fortunate to be close, both geographically and to some degree culturally, to so many of the business gurus? Is this the product of coincidence or of some real shift in the intellectual center of management from Europe and the days of Henri Fayol and his successors to the U.S. and Peter Drucker and his disciples, with a brief detour through Japan during the 1980s? And what does all of this portend for the future of competitive advantage, particularly in an increasingly global context? What do you think?

To learn more:

Thomas H. Davenport and Laurence Prusak with H. James Wilson, What's the Big Idea? Creating and Capitalizing on the Best Management Thinking (Boston: HBS Press, 2003).

Nicholas G. Carr, Does IT Matter?: Information Technology and the Corrosion of Competitive Advantage (Boston: HBS Press, 2004).

Comments

    • Winfried Schoepf
    • Architect, Unisys Austria

    I have seen how big ideas can fail and as a consequence create a cynical mood when the "next big thing" is announced.

    But I have also seen how important and effective they can be when carefully planned, introduced, communicated, and then executed with enthusiasm and credibility. This takes energy and money.

    The big idea is the only thing with the ability to attract enough people around a new concept when real change is needed in an organization. The "tactics" of gradual improvement and change are just as important, but they will hardly trigger the enthusiasm to make people leave their comfort zone.

     
     
     
    • Deepak Alse
    • System Design Engineer, VNGN PLM, Wipro Technologies

    Big ideas never become big until someone has sold them to the audience and labored to meet expectations of value and emotion. Big ideas are built on execution excellence and perseverance.

    In future, innovative management concepts are less likely to come from a single cluster of locations or nations. The challenge is therefore twofold: first to be in constant search of the Big Idea regardless of where in the world it is, and the second to execute the Big Idea with precision while always remaining focused on the benefits that need to accrue to the customer.

     
     
     
    • Tom Davenport
    • Professor, Babson College

    Jim Heskett raises an interesting issue in discussing whether management ideas are heavily U.S.-based. I would argue that while most gurus come from the U.S., idea practitioners can be found all around the globe. I've come across lots of them in Europe, Asia, and even (South) Africa. Management ideas are so broadly distributed today that it's relatively easy to access them no matter where you're located.

     
     
     
    • Kathryn Yates
    • Global Practice Director, Communication and Change, WatsonWyatt Worldwide

    Big ideas or new management concepts are a useless (though entertaining) exercise unless management approaches them with military discipline. Unless companies choose those one or two new concepts, services, or products that will drive future growth—then demand hurdle rates, timelines, and other change processes that will bring results—they are setting out to wallow in the "now" rather than design the future.

     
     
     
    • Rodrigo Borgia
    • Call Center Manager, Nuevo Banco de Santa Fe

    I'm an Argentinean MBA student. I think that most of the time, big ideas guide us to put our brain to work. Since the beginning of the capitalism, the story has always been the same: You have to sell at a higher price than the price at which you buy. Most of the time big ideas help us develop more sophisticated mental models and see reality through other eyes. So, I think that no one has "the" truth, but a lot of big ideas come really close.

     
     
     
    • Mike Kirkeberg
    • choicepoint! etc.

    All new management philosophies and strategies work ... until they don't.

    They work and then:
    —they age and the novelty wears off;
    —they are much too complicated to implement and maintain;
    —they involve people, and often the people who are involved are the ones who are affected first, through downsizing, rightsizing, etc.;
    —often folks begin to realize that this is another new way to take advantage of them.

    It seems very simple: Make a good product; treat people like people (employees, customers, shareholders) and treat them well; don't worry about gurus; look for the middle way.

     
     
     
    • Sharika Kaul
    • Manager Communications

    The phrase "competitive advantage" is not a noun, it's a verb. When we say that xyz produces the best product, it is able to do so only because it has built in the competitive processes to get the best product. And that includes getting ideas, people, and processes working in sync with each other. No one element is sufficient. Even though one may have a great idea and makes money on it, somebody else may not be able to do so even if he or she is told everything about that idea.

    And that's why I agree with Nicholas Carr. I mean, does IT really matter when the people who it is supposed to connect to and extract knowledge from live in a more competitive and frightening environment than ever before—one of low purchasing power, rising pricing, and lack of job security. ERP, KM, Enterprise Security—they are just enablers. It's the mindset and the thought process that are critical. CEOs taking $100 million in pay compared to ground-level executives living a hand-to-mouth existence will not encourage that executive to come forth with any form of innovation and loyalty. The only thing that matters is the login time.

    A great idea is not a great idea if it is not executed well for the world to see that it is great idea. Talent without opportunity to use it is useless. There is no doubt that creativity is going to be the next phase in the cycle of the business. But, without execution, that is all it will remain: an idea somebody had thought of.

     
     
     
    • Mohit Garg
    • IT Analyst, TATA Consultancy Services

    The main theme behind developing and sustaining ideas and concepts is being able to support and sustain innovation.

    I agree that creating an environment where "big ideas" (as Davenport and Prusak term it) are not only generated but also adopted and successfully implemented is a necessity for competitive advantage at the global scale. I agree also, that the U.S.-based management communities have been more successful at this recently.

    I would like to differ with Carr's angle on this. It is true that IT is moving towards a stage where it can be treated as a utility. Based on my experience with a global top-three bank and the premier bank in India, to discount IT completely as a part of strategy would be a mistake.

    If we look at IT as an enabler of innovation and a facilitator of a concrete implementation of the big idea, IT does make a difference at the level of an individual organization. It is here that IT provides competitive advantage. This holds even if we discount being first off the block with innovation driven heavily by technology.

     
     
     
    • Anonymous

    I have seen a number of business gurus' ideas, from books like The One Minute Manager to Six Sigma. Unless an operation is willing to support a program both financially and managerially and stick to it for some time, you will have continually changing, disgruntled employees. They will lose trust in your management style and consider this the next passing fancy. Find an adaptive process, stick with it, and listen and reward the trench workers. You will be surprised at the outcome.

     
     
     
    • Thomas Kermorgant
    • CEO, Saint Jacques Group

    Outstanding companies create the concepts that are then formalized and spread by gurus. Outstanding companies exist in all cultures and continents. But gurus, as you pointed out, are mainly U.S.-based.

    At least two factors explain the prevalence of U.S. gurus: 1) the business of Americans is business, and 2) the U.S. has developed a strong cultural ability to communicate clearly between people of diverse origins.

    U.S. economic strength is partly explained by the coexistence of both outstanding companies and a social mechanism which help the rest of the pack to close the gap (gurus/ consultants). In short, following gurus is less a way to create a competitive advantage than a way to avoid creating a competitive disadvantage in one specific area.

    Of course, a company is never outstanding in all regards (otherwise the company has made no strategic choice) and can always use guru advice in one area or outsource the activity. Finally, one might consider that "closing the gap" is as strategic an activity as "innovating ahead of the pack" because a system is as strong as its weakest element.

     
     
     
    • Gaspar
    • Head of Services Marketing & Sales, Ericsson Indonesia

    A big idea is important since it will drive and motivate a person and his or her organization toward something that it believes is even better than what it has or does today. But it is just a start .... The overall importance of an idea is when it is executable and the result can give a contextual meaning. Time will tell.

     
     
     
    • Tery Tennant
    • President, SHP

    There is a big advantage to having the edge on managerial theory. Since the U.S. is the leader in bringing free market economic principles to the world, we should also have the know-how to effectively implement those strategies. And while it seems there was a detour through Japan in respect to leading-edge management practices, I see that as a laboratory of things many of our manufacturers first tried out in World War II. So rather than thinking of management and leadership practices as being somehow a separate item from the rest of the business, we should view them like any other innovation by doing our best to nurture them and putting them into practice!

     
     
     
    • Richard Leatherman
    • Marketing, Write on the Edge, Inc.

    It's always a great idea to make people rethink processes, to move people out of their comfort zones, and to tweak the system. Nonetheless, I view the "gurus" as businessmen who swim in the business milieu but are primarily concerned with selling books and conference dates. And while they do add value in the aforementioned ways, they have found and are succeeding in a lucrative business niche all their own.

     
     
     
    • Anonymous

    Prusak and Davenport's book mentioned in your column makes some excellent, provocative points regarding the role of leading edge thinking and competitive advantage in U.S. business. It is hoped large enterprises will recognize how important this type of thinking (or, more to the point, this type of thinker) is to their continued success, and more deliberately cultivate these people from within, giving them room and affirmation. In the past there has been much lip service paid to the notion of valuing creativity, but little room afforded to those who are truly creative—at least within the management and leadership hierarchies of large enterprises.

     
     
     
    • Nishant Miglani
    • Student, University of Waterloo

    In the long run, the value provided by the management gurus' business issue analysis and recommendations far exceeds that provided by any technology or intellectual property. In fact, IT and IP advantages may very well be successfully implemented results of the management concepts laid out by these "big idea" thinkers.

    For example, in his writings marketing great Philip Kotler emphasizes the "lifetime" value of a customer as opposed to "single-transaction" value. Today's booming CRM technology appears to be a direct technological application of such a perspective.

    Therefore, I think that big ideas are of extreme importance in economic wealth creation, and we can't thank these Brahmins of business enough.

     
     
     
    • Don Martin
    • Business Development, Toops Wholesales

    Yes, a competitive advantage can exist where the application of management concepts is applied where they have not been utilized by competitors. Management concepts provide a benchmark against which the desired direction within a company both externally and internally can be measured. These resources can be applied both more effectively and efficiently as a result providing a competitive advantage.

    The challenge for U.S. gurus and those who provide leaders and managers these ideas is to avoid a homogeneous pool of concepts which, over time, are practiced by everyone and provide no clear point of differentiation as a result within the U.S. domestic market. External to the U.S., these concepts would still provide a competitive advantage unless those practiced by others were superior. A question remains: Where do the next big ideas come from after the U.S.? Back to Europe? Asia?

     
     
     
    • Michael Pettengill
    • Student/computer system engineer

    I've spent thirty-five years in the computer industry, most of it participating in some of the most dramatic changes. I've read but mostly heard quite a few explanations for why things were going well or badly. Worse, I've seen strategies implemented from on high that made no sense for the company I worked for. Over time, I developed a sense for what would work and what wouldn't. I never got the timing right, but nearly every company that I thought was a bad idea is gone or struggling to recover from bankruptcy.

    The only book that explains it is The Innovator's Dilemma by Clayton Christensen. As I read The Innovator's Solution, the thing that I'm impressed by is the emphasis on the "solution" only being a theory. A few years ago [at my company], we were told that management was encouraging everyone to read Spencer Johnson's Who Moved My Cheese? Fifteen minutes with that book and I knew the company was doomed.

    What worries me is that companies outside the U.S. seem to be much more open to American management theory and processes. The best example is of Americans ignoring W. Edwards Deming, to the benefit of Japan who embraced his methods. Christensen's analysis explains why Demings' methods were so powerful.

     
     
     
    • John
    • System analyst, Hospital of Saint Raphael

    How important are big ideas? Historically speaking, big ideas did not have an immediate impact on our lives. Television is a good example because it took more than twenty years until became commercially available. The automatic teller machine (ATM) struggled more than ten years before becoming a daily and easy-to-use service.

    Let's take another and more recent example, the Internet. It has had a life of over twenty years, it caused great disappointment after the bubble, and even today it is technically a best-effort service but not a guarantee.

    The view from 10,000 feet up is that we all have computers and we like to say this is the Information Age. The question is, "To be or not to be in the matured Information Age?" Let's look around and notice the annual loss of tens or even hundreds of billions of dollars in IT spending due to failed, late, or off-budget projects. It is not all spent on big ideas, but in a way they are new ideas since an IT project has its intrinsic originality.

    Big ideas are important to move humankind forward.

    How fast can you do it? Is it economically feasible? Are big ideas technologically, economically, and politically mature enough to allow them to become practice?

     
     
     
    • Kumu Gupta
    • Consultant, KUMU Consulting

    Being a marketing and management consultant and having been a professional for the past twelve years, mostly in Silicon Valley, I definitely support "Big Ideas" because, if not for them, there would be no innovation. Creativity, which lies at the crux of big ideas, is the cause for the forward motion of mankind.

     
     
     
    • Matt Crichton
    • Developer, YMCA

    I am currently doing training for a "big idea," and what I am finding is that you can have the biggest idea in the world but if you don't make it personal in your employees' lives—so they can really understand it and see how it relates to their work—the idea will go nowhere.

     
     
     
    • Anju Marempudi
    • President, IntelliBusiness, Inc.

    I think Professor Heskett has just disclosed the recipe for the competitive advantage of U.S. businesses. It's the right mix of management concepts, IT and IP—not just one of them—that probably defined the American century. Now all these ingredients are more transferable to the rest of the world in the emerging global context. This obviously helps the regions and countries with more untapped potential (read China and India) and paves the way for an Asian century through the information highway.