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Accept the Uncertainty Surrounding Innovation

ビジネスモデル イノベーション English

As I touched upon in the last entry, creating a business model requires a review of the business from three different perspectives. However, this alone is not enough. If you are going to wake the innovation, a stance that makes difference is required here. That is the attitude to accept the uncertainty. 

Within the context of high uncertainty, top management is expected to provide critical decision. It will be a separate matter if all information is complete and future is predictable, but in many cases, it is not that clear. 

For instance, let's consider a case where you have to determine whether to proceed with the business partnership with a company. Even if business synergies are born and tie-up looks good from an objective viewpoint, you cannot deny the possibility of failure depending on differences in corporate culture and how to proceed business after alliance. Predicting what will happen in the future 100% accurately is impossible. Making a decision in an unpredictable world is a management decision. 

Middle management on the other hand, operates in the predictable world based on past performance. The determination that "It is likely to extend the schedule with a probability of 20%, as this project's degree of difficulty is high" is backed by past experience. Therefore it's a highly reliable prediction and highly reproducible. 

What is required in middle management is the high probability of these reproducibility. It's meaningless if it blurs each time like "This time's yield rate of manufacturing site was 70% but next time it happened to be 90%". It has to be reproducible. 

However, management decision is not a decision that occurs over and over again. It's a one-time decision depending on social, economic and market trends on each occasion. There is no reproducibility as "Always succeed this way" in the result of that decision. Even if it's successful at one point, next success is not guaranteed. 

In other words, what is required in top management is an artistic thinking and a scientific thinking for middle management. There is an expression managers often use; "Management is a fusion of art and science." I think this accurately expresses the requirement of the management. 

In art, reproducibility which simply repeats the past is seen as the enemy, but in science, it is not evaluated at all without reproducibility. And innovation, in addition to science which desires for the high reproducibility, must have artistic thinking that creates something new. 

In the business model innovation, top management thinking which creates a decision in uncertainty is required.