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Home arrow Management arrow Strategic Management in the 21st Century. The Operational Environment
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Tentative Framework

The tentative framework (Figure 8.2) offers a process that individuals appear to follow as they apply the ability to recognize, evaluate, and create value from unexpected information. The model has many steps, but we have clustered them into four broad stages, with subparts in some. The four stages include: (1) setting the stage or conditions that will increase the likelihood that unexpected information will be noticed (A, B, C, and G); (2) noticing unexpected information and beginning to connect it to other information (D); (3) evaluating the information—flash evaluation and, sometimes, more systematic evaluation—in terms of whether it could create unintended value (E); and (4) taking action upon the information to generate that value (F).

Figure 8.2. Tentative Framework of Serendipity Process

Tentative Framework of Serendipity Process

Setting the Stage (A, B, C, and ... G)

The model suggests that conditions at three levels may enhance the likelihood of unexpected information being noticed. First, the characteristics or conditions of an individual (A) that will make her more or less likely to notice anomalous information (e.g., openness, confidence, curiosity, alertness) are ones that many scholars have covered.95 Organizational culture (B), including an openness to new ideas, a cross-discipline mix of people, and an allowance for "sloppiness," are similarly ones that research has addressed.96

Finally, external conditions (C) have been less widely considered and yet could well be more important for different types of settings or indus-tries.97 In the case of the Mity-Lite executives, once they agreed to try and "track" unexpected information and analyze how they could deal with it, the openness in their culture and willingness to notice unexpected information was critical for them to generate potential future value. As they became assertively alert to unexpected information, they began to see or find information that they may have dismissed or not noticed before they began their tracking exercise.

For example, in one case, the executives were launching a new product and had market analysis in preparation. In the process, they uncovered unexpected information that suggested their pricing methodology was inaccurate. Because they had been alerted to the notion of unexpected information and were looking for ways to recognize and leverage whatever they might find, they did notice unexpected information about their pricing methodology, and evaluated and acted upon it. In the discussion about their experience, they claimed that because they had been alerted to the notion of unexpected information, they were more receptive to noticing and otherwise might have missed it without those "conditions" being favorable to noticing.

Interestingly, even when information is seen to be of "no value," the simple act of noticing and recognizing possibilities may in turn enhance the openness for setting the stage for future noticing (G). Thus, the act of noticing and considering and then doing a flash evaluation may heighten awareness and increase alertness for more unexpected information later.

Noticing and "Connecting" Unexpected Information (D)

The process of noticing or being alert to unexpected information98 and then beginning to connect or "bisociate"99 unexpected bits of information is one of the most critical steps in the serendipity process and framework. Gaglio and Katz100 call this the "What's going on?" step, which involves noticing an unusual piece of information and then beginning to wonder (and follow through) what it might mean. Critical in this phase, of course, is the willingness to pursue the anomaly.101

The Mity-Lite executive team offered several examples of unexpected information that they connected that led to new directions, some more strategic than others. One example involved a former employee who had left the firm to gain expertise in a very different area than his previous job. He joined another organization and realized he missed working at the manufacturing firm; so he contacted the head of operations saying that he would like to return to the firm, and was willing to go back to his former job. Simultaneously, the operations executive had been considering the question of how to help the firm develop and move into the very expertise arena that the former employee had developed while he was away from the firm. The executive had decided that he had no option but to develop an internal candidate since finding an external candidate was deemed likely to be too difficult and costly. Then, boom! Unexpected information (the former employee with the desired expertise) calls. His re-emergence thus solved a problem from an unexpected direction (Type I serendipity).

Evaluating—Flash and Systematic (E)

The evaluation stages comprise both flash evaluation and more systematic evaluation.

Flash Evaluation. Initially, and coupled with the early connecting of information bits is a flash evaluation, in which an individual does a quick, almost gut feel assessment of the unusual information. The manufacturing executives refer to this as using their "experienced eyes" to assess quickly some unexpected information. That initial gut feel then may lead the individual to become more alert to whether there are ways to connect the observed information to other already known information, both internal and external.

More Systematic Evaluation. A more systematic evaluation would include analytical assessment that leads toward a clearer confirmation of the information's possible value. That process of assessing unexpected information for potential value is affected by factors such as risk tolerance, level of uncertainty surrounding the information and evaluation, timing, and finding additional information that will help confirm or dispute the initial unexpected information. Depending upon how evaluators/decision makers take those factors into account when assessing unexpected information may lead to better or worse outcomes.

The systematic evaluation part of the model has three critical elements: (1) the distance between perceived or anticipated opportunity from the unexpected information and the reliability of the evaluation of the unexpected information (in the middle), (2) the general evaluation process from "gut feel" to a firmer belief about the evaluation, and (3) the factors that may influence the process of evaluation. Those elements also determine the extent to which the information used in making decisions is weighted internally or externally.

The result of evaluation could take on at least three outcomes or decisions of whether to pursue an opportunity. First, when the unexpected information is evaluated in the context of both internal and external factors, when the evaluator/decision makers are not "swayed" too strongly by any of those sources, the evaluation is "balanced" and the outcome may well be an opportunity that the decision maker leverages when competitors do not.

In the second situation, the decision maker notices unexpected information but mostly because others point it out and suggest that there is a way to leverage it. The decision maker then essentially follows the herd to try and take advantage of the unusual information, resulting in what might be called a "herd" outcome. In this case, there is no competitive advantage to the organization because a herd of organizations is trying to leverage the information.

Finally, internal decision makers may be pressured from sources, such as government policy makers (e.g., Vietnam's Ministry of Finance or the U.S. Treasury during the financial crisis) to act. In this case, the organization may act on unexpected information without thoroughly considering external factors or repercussions. During the 2008 financial crisis, for example, large U.S. banks were forced to take sell toxic assets to the U.S. government, which affected their leverage ratios; most ultimately and quickly repaid the money. Unexpected information, evaluated "for them," and the outcome was not necessarily in their favor. This "do it my way" approach is less common but does exist.

Creating Unintended Value (F)

The ability to recognize and evaluate unexpected information is not valuable in itself. To be a competitive advantage, the assessment must yield value and action: the unintended value is thus a critical part of the process. Whether it results in solving an existing or not-yet-tackled problem, finding an opportunity, or generating new ideas for future use, the use of serendipity (as an ability) must be that individuals and the organization as a whole can leverage it to create value. The manufacturing firm executives, for example, realized that by responding to a request for just one sample product, they ended up with an "unexpected customer" that could become major part of the firm's business. Since the orders (and revenue) were not anticipated in the current fiscal year plan, the firm has decided to incur premium labor (overtime) to fill the demand, with the expectation later of increasing the price point for the products. Unexpected information/request created an initial problem (finding a way to fill orders), but ultimately became an opportunity.

 
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