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Approaches to Strategic Management

Serendipity as a Strategic Advantage?

Nancy K. Napier and Quan Hoang Vuong

Who, over the age of 20, hasn't experienced a serendipitous event: unexpected information that yields some unintended but potential value later on? Sitting next to a stranger on a plane who becomes a business partner? Stumbling onto an article in a journal or newspaper that helps tackle a nagging problem? Creating a new drug by accident?

Serendipity, defined as the ability to recognize and leverage or create value from unexpected information, appears in all parts of life,1 and especially in professional fields, including science and technology,2 politics and economics,3 education administration,4 library and information science,5 career choice and development,6 and entrepreneurship and management.7 Interestingly, although scientists have moved from reluctant to open acknowledgement that serendipity is behind many an invention or discovery, few business scholars or managers have systematically studied or applied serendipity in any direct fashion. The topic, though, may be gaining more visibility and attention: a new book on luck, for example, looks at how individuals and organizations have turned good or bad luck into something of value ("return on luck").8

Thus, in this chapter, we seek to understand serendipity in a business context, examine what it could mean for management and strategy, and how it could be used in business. We divided the chapter into three sections. First, we examine the concept of serendipity and its importance and then review literature about it, in terms of definitions, conditions that encourage or hinder serendipity at different levels (the level of the individual, the level of an organization, and external conditions), and the process of serendipity. Next, we propose a tentative framework that seeks to incorporate the literature and existing models, and which draws upon discussions with executives who have begun to track and analyze how they might use serendipity in their ongoing management practices. Finally, we close with suggestions for how to develop the notion of serendipity as a competitive advantage, both in practice and in research.

SERENDIPITY—WHY WORRY ABOUT IT?

In the early 1950s, two eminent medical researchers—Drs. Lewis Thomas from New York University and Aaron Kellner from Cornell University— separately noticed an unusual anomaly in their research labs: the ears of rabbits "flopped" when the animals received injections of the enzyme papain.9 Each researcher considered the phenomenon to be abnormal and dramatic, but for each of them at the time, not worth spending much energy on. They were both pursuing other research and this unexpected event did not peak their interests (or fit into their budgets) enough to follow up. The same phenomenon consistently occurred on subsequent occasions whenever they injected papain; again both researchers noticed it, but they did not pursue it.

But some years later, in 1955, when Lewis was showing the phenomenon to a group of medical students, he finally decided to follow up on why the rabbits' ears flopped. At that time, he was able (more interest, time, and money) to pursue what had caused the odd result. When he at last studied what was happening, the pursuit resulted in research that was revolutionary, more significant than the research he had been pursuing when he initially noticed the "floppy ears." The floppy-eared-rabbit research eventually led to a Nobel award. In contrast, the other researcher, Professor Kellner, never pursued the floppy-ears anomaly, as it did not fit into his research interest. Barber and Fox10 described what happened as "serendipity gained" (Thomas's decision to look into the phenomenon) and "serendipity lost" (Kellner's decision not to pursue it). The example offered a striking illustration of the potential benefit of investigating some unexpected information or discovery, as Thomas (finally) did.11

More famous examples abound of unexpected scientific discoveries that have become lifesaving or revenue-generating products (e.g., penicillin, Velcro). Interestingly, and perhaps because the results are easier to measure, scientists have unabashedly accepted the value of looking for the unexpected or anomaly that may be more interesting than the expected findings.12 In contrast, whereas most management scholars generally ignore, at best, or scoff, at worst, the notion of serendipity as an ability to cultivate and use to organizational advantage, some management literature has begun to examine the concept. For instance, Brown13 argues that it could play a role in entrepreneurs' actions. Dew14 draws upon Saras-vathy15 to argue that "surprises are usually relegated to error terms in formal models. Instead . . . they may be the source of opportunity for value creation, but only if someone seizes upon them in an instrumental fashion and imaginatively combines them with . . . inputs to create new possibilities" (italics added). Interestingly, when questioned, many managers will say "it happens all the time," but are reluctant to admit basing major decisions or directions upon serendipity.

Yet, some business strategic moves may depend more on serendipity than managers or scholars have acknowledged in the past. Meyer and Skak16 studied the decisions of small- and medium-sized enterprises that were considering and/or moving into Eastern Europe. The networks that managers had developed sometimes offered "unanticipated opportunities by providing complementary resources, knowledge, or contacts." Given that the networks were outside of the firm's control, an important aspect was that the managers were open and ready to consider and then take advantage of the unexpected opportunities that arose. In particular, Meyer and Skak17 found that for small firms, such "elements of chance" could affect a firm's growth path and direction because of the networks, contacts, and opportunities that the managers could pursue as a result of those serendipitous events. When the small firms responded quickly, they could in some ways leverage such unexpected information better and faster than competitors.

Finally, Collins and Hansen,18 in describing the idea of "return on luck," note that events—good and bad—happen in any organization. The ability to take advantage of them, to execute an action that generates good value, has benefited some firms in major ways.19,20

As the management literature increasingly begins to open to the possibility that serendipity may have value in business, perhaps the way Taleb21 and others have discussed it in relation to scientists could be applied to management: "successful scientists search for something they know but generally find something unexpected."22

 
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