Innovative Business Cultures

Bob Lefsetz points to a great quote from Universal Music CEO Doug Morris on why the music industry couldn’t develop a new business model as technology started to shift to digital delivery:

There’s no one in the record industry that’s a technologist,” Morris explains. “[It’s] a misconception … that the record industry missed this. They didn’t. They just didn’t know what to do. …

… “We didn’t know who to hire,” … anyone with a good bullshit story would have gotten past me.”

Sure it’s easy to say that we’d do better but the sad truth is that lots of companies and industries struggle when presented with business models or technologies they don’t understand.

The problem you need a frame of reference to evaluate options and many companies don’t have a broad enough one because they haven’t built the connections outside their immediate company and industry as a hedge to track and understand real or potential scenarios. That’s compounded by the fact that most companies have cultures that arbores failure so if problems emerge it’s more sensible (on an individual level) to do nothing than to do something wrong. 

The antidote as John Hegal argues is institutional innovation which produces long term value because it aligns with global and macro trends and encompasses process and product innovation.  Institutional innovation is at its core a cultural process built on diverse trust relationship within and outside the company and organizational structures with enough modularity to allow process experimentation but enough cohesion to facilitate decision making.

It’s also a process that builds on the extended networks that emerge with a region and between companies, their suppliers and customers. It’s developing these into trusted relationships that allow the flow of information that lets industries identify the expertise needed to develop strategic approaches to changes in their marketplace.

One of the reasons I’m interested regional economic development is that I believe that Institutional Innovation can be encouraged and could become a competitive advantage for the regions that adopt it.

That’s also the reason I’m interested in connecting BarCamps as we did with Leads. There already is a common cultural framework, and an easy means of identifying influencers in each region. And for many of the small companies extending their network reach both conceptually (which is why they participate) and geographically would be a competitive advantage.

These are going to be exciting times – from restructuring in the media/social media and open source, to globalization new models and opportunities are emerging for companies and regions that structure themselves to take advantage of them.