December 9, 2009 (@2:06 pm)

How Dissonance Creates the Conditions for Innovation

Following my exploration of “systematic creativity,” I was pleased to take up sociologist David Stark’s new book, The Sense of Dissonance: Accounts of Worth in Economic Life (2009). You might not get it from the title, but this book is about the conditions that lead to creativity, innovation, and entrepreneurship in organizations. According to Stark, the presence of competing notions of value within an organization, or what he calls “dissonance,” is one such fundamental condition.

A sociologist, Stark marshals the methodological and interpretive tools of his discipline to make his case. The book is a series of three “ethnographies” of modern creative companies, and Stark’s analytical framework draws on figures in the tradition from John Dewey to Bruno Latour. But Stark also self-consciously expands his approach into what he calls “economic sociology.” Whereas sociologists are often said to study values while economists study value, for Stark, value and values are part of the same complex, the same conversation, the same negotiation that results in companies creating new things.

Entrepreneurship Is Sustained Ambivalence

So, how does this work? There are a few principles to tease out, but consider first Stark’s definition of entrepreneurship:

“Not the property of an individual personality but, instead, the function of an organizational form, entrepreneurship is the ability to keep multiple principles of evaluation in play and benefit from that productive friction.”

At first blush, this definition already offers a meaningful distinction between entrepreneurial and other business activity. For example, you can start a profitable small business like a bagel shop without being an entrepreneur, but if your bagel shop morphs into a T-shirt brand or a licensing franchise or a fine dining establishment, chances are that Stark’s “multiple principles of evaluation” were at work in your business decisions, spurring the business and its offerings to grow entrepreneurially in new directions. Stark’s definition might also explain why venture capitalists these days aren’t even looking at business plans to make their investment decisions: No entrepreneur worth her salt is going to know what her business looks like 3 to 5 years out.

Thinking visually for a moment, Stark offers a diagram of where entrepreneurship happens among economic actors. That is, entrepreneurship as opposed to mere brokerage:

Brokerage vs. Entrepreneurship

Whereas a broker sits between two economic “worlds” and taxes the flow between them (e.g. between the world of investors and the world of the firms who create securities for investors to buy), the entrepreneur is a participant in both worlds. To return to our simplistic bagel shop example, an entrepreneurial shop owner might occupy a place in the world of convenience food service and, say, that of apparel through new product offerings that create new value both for the shop and the community it serves. That’s entrepreneurship.

Creativity Is Searching For That Which You’ll Recognize When You Find It

Here, we see why Stark insists on a definition of “innovation” as something that “integrates knowledge across heterogeneous domains”: Doing innovation is, says Stark, an “exploration” where the goal is to recognize, not just expose, some terra incognita that exists outside (and between) existing categories. It is a search wherein “you do not know what you are looking for but will recognize it when you find it.” As Richard K. Lester and Michael J. Piore say in their Innovation: The Missing Dimension (2004) regarding product innovation, “the product developer frequently starts out without really knowing what she is trying to create.”

And here is the connection to the creativity templates approach and systematic creativity: Processes of creativity and innovation are often the mirror-image of problem-solving processes. Rather than defining a problem, breaking it down analytically, and resolving it point by point, systematic creativity generates the solutions first, then asks what problems the solutions solve. Function follows form.

What Stark gives us is not just an understanding of why this might be so (e.g. because diverse principles of evaluation are brought to bear the generated ideas, because the process operates outside establish categories, etc.), but also how else we might bring this kind of creativity about.

Takeaways For Organizations

The old consensus on top-down management — e.g. chain of command, “running a tight ship,” etc. — is disappearing. Hierarchies don’t innovate, but heterarchies do. And, of course, “innovation” and “survival” are increasingly synonymous.

Volatility and uncertainty are only increasing in our digital age, with accelerating rates of innovation in industries from media to high technology, medicine to energy, and attendant accelerating rates of what Joseph Schumpeter called “creative destruction,” or the regular undermining of old businesses by the new. Uncertainty is a key part of the equation for Stark, and it’s distinct from risk. Whereas risk can be calculated in probabilistic terms, uncertainty cannot. Risk derives from what we do not know; uncertainty from what we cannot know. In both there’s potential for gain, but only in uncertainty lies the potential to discover — or, he might say, recognize — new sources of value.

The heart of Stark’s argument, which I intend to explore deeper in the coming weeks, is that organizations are better innovators who allow and encourage their members to use and express diverse ideas about the worth of their work, products, services, what have you, and allowing each of those ideas about worth to compete in business decisions. Stark writes,

“The coexistence of multiple, principled standpoints means that no standopint can be taken for granted as the natural order of things. Creative friction yields and organizational reflexivity.”

So, in a for-profit company making widgets, perhaps the marketing person looks for PR potential, the programmer for technical sophistication, the designer for beauty, the accountant for costs. Obvious, right? But the key to spurring innovation is to empower each of these points of view in a governance structure Stark calls heterarchy.

“Heterarchy represents an organizational form of distributed intelligence in which units are laterally accountable according to diverse principles of evaluation.”

In today’s fast-changing economic climate, the old consensus on top-down management — e.g. chain of command, “running a tight ship,” etc. — is disappearing. Hierarchies are not responsive enough to innovate and change directions quickly. Stark’s heterarchies might be. And, of course, “innovation” and “survival” are increasingly synonymous.

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