Steven J Spear, Senior Lecturer
CAMBRIDGE, Mass., August 12, 2010 — In the last few years, we’ve seen major financial and regulatory system failures. More recently, we’ve seen technological and corporate failures such as the sweeping recalls by Toyota and the BP oil spill. While many attribute these failures to an inherent inability to manage the complex systems on which we depend or on greed that blinds those responsible to concerns about their effective management, MIT Sloan School of Management Senior Lecturer Steven Spear contends that instead they illustrate the need for a new approach to management and leadership—one that depends less on analysis and decision making and more on constant discovery and innovation.
In his new book based on decades of research, The High-Velocity Edge: How Market Leaders Leverage Operational Excellence to Beat the Competition, Spear shows how a discovery orientation leads some companies to consistent success while an analysis and decision orientation at others has led to massive failure. He says, “The big problem is that systems on which we depend and for which we are responsible have gotten so complex. On the one hand, this is a good thing because the complexity arises from our ability to pull together ever more advanced sciences, technologies and disciplines into solving the problems we face. On the other hand, it presents a challenge because we’re well past a tipping point.”
Spear explains, “No longer can we just think our way to good outcomes. Great results are possible, but getting them depends on generating and sustaining high-speed, broad-based, absolutely relentless improvement and innovation. It’s all about discovery, which is actually based on skills that can be taught, practiced, mastered and applied with great effect.”
He points to autos as an example of complex systems in which discovery is the key to success. While cars used to be mechanical devices made largely of iron and steel and designed by a small number of engineers in a “think tank” type of environment, they are now rolling, computerized networks. “We can’t just ‘think’ our way through to great designs for these complex systems—and the supply chains that produce and deliver them—and expect that they will properly work. We need a fundamentally different way to manage systems of this complexity,” says Spear.
In The High Velocity Edge, he writes that there are four “disciplines of innovation or core capabilities” necessary for this new type of management. They involve creating a system of “dynamic discovery” that reveals operational problems and weaknesses as they arise. “When something goes wrong,” he says, “it must be immediately clear when and where new knowledge is needed, and then the problem has to be swarmed while still ‘hot’ so its genesis can be understood and new, useful knowledge can be created.”
Spear cites public accounts of the BP oil spill as a case where leaders failed at this. “At the Transocean rig, the alarms apparently were turned off at night because of so many false alarms. That’s an example of ‘normalizing deviance,’ which prevents you from detecting problems and discovering solutions.”
He adds, “The crying shame behind all these major system failures is that if the little problems had been seen and solved, managers might have multiplied the impact of local discoveries and broadcast them so the entire organization could have benefited from their discovery. The calamity might have been avoided.”
The linchpin behaviors, according to Spear, involve those of the most senior leaders. Not only must they ensure that great discoverers are constantly developed, but they also must create an environment in which discovery happens all the time.
He maintains that organizations which build the capabilities detailed in the book can achieve great success. “We just went through a national debate over healthcare reform, but if all medical institutions were practicing these high-velocity skills then we wouldn’t have needed that debate because we would be providing twice the care at half the cost,” says Spear. “All managers should be concerned in a meaningful and tangible way how they can generate twice the output at half the effort every day.”
The High-Velocity Edge, the reissued edition of Spear’s Chasing the Rabbit, was published in April, 2010 by McGraw-Hill.