Thursday, June 26, 2008

ISO9000 makes you reliable, myopic, efficient and dull – and unable to invent post-it notes

Sometimes, management practices, intended to improve the functioning of the organisation, have unanticipated consequences. Sometimes these consequences are negative, but also only apparent in the long-run, making firms adopt techniques which are really not very healthy for them (at least in the long-run).

Take ISO9000. ISO9000 certification constitutes a process management technique through which firms are expected to follow (and document) a number of procedures, aimed at creating consistent, efficient processes, in which best practices are standardised and deviations from the best practice are avoided. It leads to efficient, high-quality products with minimal digression from the standard.

This all sounds very logical, justified and desirable, right?! So what am I whining about?

Well, professors Mary Benner from the University of Pennsylvania and Mike Tushman from the Harvard Business School examined what happened to the innovation output of firms adopting ISO9000 techniques. They collected information on 98 firms in the photography industry and 17 firms in the paint industry, which they all followed from 1980 till 1999. They measured, among others, all their patents and documented whether these innovations were really “close to home” for the firm (representing minor variations on what they were already doing) or more exploratory discoveries (representing truly new potential avenues for growth). And they found a very clear pattern.

Firms that adopted ISO9000 norms started doing significantly more “close to home” inventions at the expense of truly new, exploratory innovation. The “more of the same” patents, induced by the ISO9000 processes, crowded out the discovery of truly new techniques and products.

How come? Well, by definition, ISO9000 minimises deviations from “the best way of doing things” in the firm. Yet, often, the best innovations are discovered by accident. Just like random genetic mutations can produce whole new species in nature, random deviations from the norm in organisations sometimes turn out to be “mistakes” which become the firm’s next big blockbuster product. Think of how the post-it note came into existence: A bloke named Spencer Silver was working in the 3M research laboratories in 1970 trying to find a super-strong adhesive. Spencer developed a new adhesive, but it was ridiculously weak. It was so weak that although it stuck to objects, it could easily be lifted off. It was a clear error. Yet, ultimately, this super-weak adhesive became 3M’s famous, money-spinning post-it note.

Although usually deviations from the norm merely produce plain, sheer mistakes, which should get corrected quickly, if you rule out all mistakes, you will never be fortunate enough to develop a “mistake” that turns out to be your post-it note. ISO9000 annuls all deviations from the norm. But, as a (unintended) result, you become a lousy inventor.