Innovation, Standardization and Complexity

Illustration for the topic of bureacracy. The ...
Illustration for the topic of bureacracy. The form is fictional. (Photo credit: Wikipedia)

There is a common error that makes people think that innovation and standardization are related activities. This is absolutely false. In fact they are opposite activities. Innovation requires making things different instead of making them always in the same way.

Innovation can be seen as the search for novelty in order to get value; however, standardization has the contrary aim. The target of standardization is to provide common pieces or activities in order to simplify a process. The value got through the standardization of a productive process is related to the reduction of costs associated to a reduction of complexity. This reduction of complexity is due to a smaller uncertainty at any link of the production chain.

But innovation usually attacks other component of complexity, the structure. Through innovation we change the structure of the company as we change the product or the processes of the company. The value provided by innovation can be analyzed in terms of complexity too, innovation can increase or decrease the complexity of the company through that change of structure, and that change of structure can have associated a reduction of uncertainty too, as uncertainty depends on the product or process itself.

This fact can show why managing innovation is much harder than managing quality (standardization). The reduction of the uncertainty is a direct reduction of complexity and an improvement of resilience, however, a modification of the structure can provide higher or lower complexity and resilience. Namely, a quality manager of a productive facility can work without knowing how complexity is affecting their processes; however, an innovation manager should make decisions always thinking in the complexity of the business. Traditionally, innovation managers think only in the probable economic benefit, but, the effect of their actions on the health of the business is more important than the economic benefit.

Back again to the initial discussion, there is a reason why people think that innovation and standardization are similar activities. The error is provided when quality abandon production in order to enter management. If standardization can provide value at the productive processes, we can go further and think that standardization can provide value at the support processes. There is a great difference. The structure at the productive processes is mostly due to the physical processes themselves; however, the structure at the support process is due to the organizational design (that can change) and the quality procedures themselves. Then, quality introduces structure (organizational changes) at the support processes as innovation (physical changes) does at the productive ones. There is a thinner line between organizational innovation and quality management because organizational structure is created through quality procedures too, not only through the definition of responsibilities of the managing staff.

As quality managers are accustomed to act without considering the evolution of complexity, they usually think that every time that they create a procedure to standardize a support process, they are reducing costs, as if they were standardizing a productive one. But this is not true, because every time that they create a procedure they are introducing structure that does not exist previously.

In previous posts, I have shown how structure can provide more damage than the uncertainty. This is especially true when we are thinking in management processes. An excess of bureaucracy is the best way to reduce the manageability of a business, and one of the main functions of management is to cope with the changes of the environment.

I have seen how some quality managers wanted to measure the way as managers were doing their work instead of measuring the results of the processes and variables related to the processes themselves. This is a way to force managers to act following strict rules forgetting the final objectives and the current needs of the processes instead of letting them to make the proper decisions to get them. The work of a manager is to make decisions (with some degree of uncertainty), if it was not true, we should change every CEO by a computer. It is probably that computer programmed with AI will make better decisions that a human brain in a near future, but quality procedures are nearer a code written in assembler than an Artificial Intelligence system.

We can trust in standardization as a road to a complexity improvement at the productive processes, but we should not trust in the standardization of managers as a way to the complexity management.


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