Beruflich Dokumente
Kultur Dokumente
*Email: k.m.johnston@livjm.ac.uk
ISSN 0965-254X print/ISSN 1466-4488 online
q 2009 Taylor & Francis
DOI: 10.1080/09652540902879292
http://www.informaworld.com
140
K. Johnston
when the railroads went into decline in the 1950s because they assumed themselves to
be in the railroad business rather than the transportation business (1960, p. 5) and thus
overlooked the threat posed by alternative forms of transportation. A company should
therefore define itself in relation to the value it adds and the benefits it offers (i.e.
transportation rather than trains in the case of railroads). Such a perspective is now
axiomatic, companies carefully package their market offerings as solutions and
corporate branding de-emphasises product (for example, BT rather than British
Telecom, BPs Beyond Petroleum). Levitts marketing myopia provides a seminal
exploration of organisational cognitive failure but pre-dated by three decades the rise of
the highly influential resource-based school of strategy and thus could not consider a
further dimension: capabilities.
Capability myopia
The Resource-based View (RBV) school of strategy that came to prominence in the 1990s,
challenging the orthodox Industrial Organisation (IO) school (as exemplified by Porter,
1979), encouraged firms to take an inside out view that emphasised the capabilities of a
firm. Penrose (1959) argued that internal resource configurations both facilitate and
constrain the direction of expansion of the firm and that a firms expansion is influenced by
its own previously acquired or inherited resources and those it must obtain from the market
in order to carry out its production and expansion programmes. Prahalad and Hamel (1990)
developed the concept of core competences that link underlying competencies and end
products, provide the source of a firms competitive advantage and are the basis for new
products and entry to new markets (Ansoff, 1957). In an example made famous in a 2005
motion picture (Kinky Boots), a traditional shoe manufacturer was saved from bankruptcy
by reinventing itself as a manufacturer of boots for transvestites. The core competence of the
firm in high quality leather footwear was transposed to a new market and provided a crucial
competitive advantage (the strength to carry a mans weight in a female-style boot). Barney
(1991) developed the VRIN framework for assessing the potency of core competences,
positing that they should ideally be valuable, rare, inimitable and non-substitutable.
Leonard-Barton (1992) recognised that the core competencies that once formed the
basis of a firms competitive advantage can undermine that advantage if the environment
changes such that their potency is reduced. Miller (1990) described this phenomenon as the
Icarus paradox. Teece, Pisano and Shuen (1997, p. 517) define dynamic capabilities as
the ability to integrate, build, and reconfigure internal and external competencies to address
rapidly-changing environments. While the original RBV emphasised the selection of
appropriate resources, dynamic capabilities emphasise resource development and renewal.
In an approach that has parallels with architectural innovation (Henderson & Clark, 1990),
Kogut and Zander (1992, p. 371) proposed combinative capabilities as the capability of
the firm to exploit its knowledge and the unexplored potential of its technology. Galunic
and Rodan (1998) suggest that novel capabilities can arise from synthesis or reconfiguration
and explore the antecedents of each. A firm that does not perceive itself as a bundle of
competencies that can be reconfigured generatively (Gergen, 1978) is constrained in its
ability to create new value propositions. This paper proposes the term capability myopia to
describe this cognitive failure.
Boundary myopia
The linear, static value chain (Porter, 1980) is being blown to bits (Evans & Wurster,
1999) and replaced with value constellation partners (Normann & Ramirez, 1993).
141
142
K. Johnston
trust leading to insularity (Zhang, Macpherson, Taylor, & Jones, 2004). This is an
example of high bonding social capital (Putnam, 2000) but low bridging social capital
(Putnam, 2000) whereby the ties that bind can also be the ties that blind (Cohen &
Prusak, 2001, p. 56). This paper proposes the term boundary myopia to describe this
form of cognitive failure.
Self-concept specificity
Asset specificity (Williamson, 1983) refers to the relative lack of transferability of assets
intended for one use to other uses. Highly specific assets represent sunk costs that have
relatively little value beyond their use in the context of a specific function. High asset
specificity creates high exit barriers (Porter, 1979) that cause a firm to remain in an
industry, even when the venture is not profitable. Asset specificity is thus a huge strategic
drag and constraint on agility. Deep pockets buy time to overcome the threats of paradigm
shifts (e.g. IBM missing the personal computer, Microsoft missing the Internet) but for
many firms high asset specificity is a mortal danger (for example old cotton mills useless
for any other purpose, Ollerenshaw, 2006).
This paper proposes to use the specificity concept but apply it to the firms selfconcept and thus its cognitive schema (Fiske & Taylor, 1991). An unnecessarily
restrictive self-concept (in terms of the marketing, capability and boundary myopias
described above) may be termed self-concept specificity and prove a similar drag
on strategic flexibility. This is an example of Vickers (1970, p. 15) dictum that
a trap is a function of the nature of the trapped. This proposed construct is
composed of the three forms of cognitive myopia discussed above: marketing,
capability and boundary.
Xerox provides a classic example of cognitive specificity (Smith & Alexander, 1988).
Though Xeroxs Palo Alto Research Centre (PARC) is famous as the birthplace of many
ground-breaking innovations such as the windows and mouse user environment, Xerox
only commercialised innovations that fitted its copier and printer business model. Tripsas
and Gavetti (2000) illustrate how the cognitive frameworks of managers in Polaroid
effectively precluded the company from taking advantage of its technological knowledge
in the digital imaging market. Apple, on the other hand, thought outside the box and has
very successfully transferred its core competences in digital technology, design and
marketing from the personal computer domain to music with the iPod. The low specificity
of these competences and of its corporate brand were not crushed by cognitive specificity
in strategy formulation.
143
is understanding the market. These dominant firms pick and choose subcontractors
ruthlessly and will seek to employ the best firm from the niche (the best of breed) that
most precisely fits their requirements at that time (Hagel & Seely-Brown, 2005).
The downside of being best of breed is the risk of high asset specificity due to
specialisation (e.g. in a certain technology or process). When that contracted requirement
has ceased the dominant firm moves on to the next opportunity with no need to concern
itself within the on-going viability of the subcontractor. This is in conflict with the need
of the subcontractor to ensure its own future viability (potentially imperilled by high
asset specificity).
There is thus a tension between the two imperatives, namely, to be as specialised
as possible (e.g. Iansiti & Levien, 2004; Miles & Snow, 1978; Porter, 1980) and to be as
agile as possible (e.g. DAveni, 1994; Schumpeter, 1934; Teece et al., 1997). These
antagonistic imperatives were recognised by the philosopher Archilochus (seventhcentury BCE) who noted that the fox knows many things, but the hedgehog knows
one big thing in a fragment of verse made famous by Isaiah Berlin (1953). Collins
(2001, p. 91) rehearsed Porters focus generic strategy by arguing for the clarifying
advantage of a Hedgehog Concept. However, hedgehogs are cognitively limited
they are so focused that they see the world through their limited and limiting cognitive
lens and may miss very significant external changes. Levinthal and March (1993)
recognised the dangers of becoming over-focused, leading to temporal learning
myopia.
Given Ashbys (1965) law of requisite variety (that the internal regulatory
mechanism of an open system must possess at least the variety of possible states of its
environment), there is thus a paradox: firms that adapt perfectly to their environment
imperil their future by being unable to adapt to further change (analogous to the
over-specialisation of species in ecological niches and their resultant vulnerability to
environmental shock e.g. the Giant Panda). The network organisation (the supersystem) sees any constituent firm as a tightly focused black box component
(the system) providing a capability required to fulfil a specific requirement at the time
(i.e. low variety). However, for its own survival, it is imperative that such a firm sees its
capabilities as reconfigurable sub-systems that support its on-going viability and
autopoietic identity (Seidl, 2005) (i.e. high variety).
144
K. Johnston
model. Mauborgne and Kim (2005) propose a framework and tools to support value
innovation in which industry recipes are challenged.
In soft systems methodology (Checkland & Scholes, 1990) there can exist a plurality
of views as each observer sees the system from their own subjective perspective, a
phenomenon recognised in the appreciative systems approach of Vickers (1965). This
perception derives from the observers weltanschauung or world view. Corporate
self-identity establishes such a weltanschauung. As upper-echelons theory (Finkelstein &
Hambrick, 1996; Hambrick & Mason, 1984) revealed, after early commercial success and
initial learning, managers may commit psychologically to comfort zone strategies that
are congruent with their world view (temporal learning myopia, Levinthal & March,
1993). High levels of shared experience among managers may foster a group think
phenomenon (Allinson & Hayes, 1996; Janis, 1972). These senior managers may lack the
agility of mind to formulate adaptive (or pre-emptive) changes other than incremental
changes or imitative responses (Wiersema & Bantel, 1992).
Guth and Ginsberg (1990, p. 5) define strategic renewal as the transformation of
organisations through renewal of the key ideas on which they are built. This paper promotes
the view that a key element of strategic renewal is the re-framing of the self-concept of an
organisation. Interpretists see identity as an aspect (Fiol, Hatch, & Golden-Biddle, 1998) or a
product (Salzer-Morling, 1998) of sensemaking (Weick, 1995) that is self-focused.
To Pankow (1976, p. 20) self transcendence meant the ability to jump over ones shadow.
For Jantsch and Waddington (1976, p. 9) those capable of self-transcendence were capable of
representing themselves and therefore also of transforming themselves. Scharmer (2001,
p. 137) describes self-transcending knowledge as the ability to sense the emerging
opportunities, to see the coming-into-being of the new and emphasises the need for
generative dialogue. Strategic renewal literature recognises the significance of the socialcognitive theory of learning perspective, the importance of cognitive diversity and the
parallels with double-loop learning (Argyris & Schon, 1978). For example, Govindarajan and
Trimble (2005) propose that a key challenge is forgetting some key assumptions that made
the current business. Mitroff and Linstone (1993) propose assumption surfacing
techniques. Crossan and Berdrow (2003) suggested that four processes (intuiting, interpreting,
integrating and institutionalising) are important for strategic renewal. Barr, Stimpert and Huff
(1992) have modified Lewins (1951) unfreezechangerefreeze framework for the
renewal context.
Conclusion
New schools of strategic thought and new organisational forms have the potential to
increase greatly an organisations degrees of freedom for strategy formulation in
comparison to the rigidities and determinism of vertical integration and the Industrial
Organisation school. In an ecosystem of network organisations the capability set of a firm
is potentially broadened through access to external competences and new ideas for
value creation may be more readily generated. That potential may never be realised if a
highly bounded concept of a firm is held by its senior management that results in
cognitive myopia. Through insights provided by systems thinking and organisational
learning, senior management may be made aware of their current organisational selfconcept and its constraints, to challenge its assumptions, to reframe it and so generate
more innovative strategic options. This paper proposes a conceptual framework to
support discussion. The framework may provide the basis for the development of metrics
145
and the creation of an empirical tool for auditing the specificity of an organisations
self-concept.
References
Ackoff, R.L. (1999). Recreating the corporation. Oxford: Oxford University Press.
Allinson, C.W., & Hayes, J. (1996). The Cognitive Style Index: A measure of intuition-analysis for
organizational research. Journal of Management Studies, 33(1), 119 135.
Ansoff, I.A. (1957). Strategies for diversification. Harvard Business Review, 35(5), 113 124.
Argyris, C., & Schon, D.A. (1978). Organizational learning: A theory of action perspective.
Reading, MA: Addison-Wesley.
Ashby, W.R. (1965). An introduction to cybernetics. London: Methuen.
Ashkenas, R., Ulrich, D., Jick, T., & Kerr, S. (1995). The boundaryless organization: Breaking the
chains of organizational structure. San Francisco, CA: Jossey Bass.
Baden-Fuller, C., & Stopford, J.M. (1994). Rejuvenating the mature business. Boston, MA: Harvard
Business School Press.
Bangle, C. (2001). The ultimate creativity machine: How BMW turns art into profit. Harvard
Business Review, 79(1), 47 55.
Barney, J.B. (1991). Firm resources and sustained competitive advantage. Journal of Management,
17(1), 99 120.
Barr, P.S., Stimpert, J.L., & Huff, A.S. (1992). Cognitive change, strategic action, and organizational
renewal. Strategic Management Journal, 13(Special issue), 15 36.
Benjamin, R.I., & Wigand, R.T. (1995). Electronic markets and virtual value chains on the
information superhighway. Sloan Management Review, 36(2), 62 72.
Berlin, I. (1953). The hedgehog and the fox. New York: Simon & Schuster.
Boynton, A.C., & Victor, B. (1991). Beyond flexibility: Building and managing the dynamically
stable organisation. California Management Review, 34(1), 53 66.
Brandenburger, A.M., & Nalebuff, B.J. (1996). Co-opetition. New York: Doubleday.
Burgelman, R.A. (1991). Intra-organizational ecology of strategy making and organizational
adaptation: Theory and field research. Organization Science, 2(3), 239 262.
Checkland, P.B., & Scholes, J. (1990). Soft systems methodology in practice. Chichester:
Wiley.
Chesbrough, H. (2003). Open innovation: The new imperative for creating and profiting from
technology. Boston, MA: Harvard Business School Press.
Chircu, A.M., & Kauffman, R.J. (2000). Reintermediation strategies in business-to-business
electronic commerce. International Journal of Electronic Commerce, 4(4), 7 42.
Cohen, D., & Prusak, L. (2001). In good company: How social capital makes organizations work.
Boston, MA: Harvard Business School Press.
Collins, J. (2001). Good to great: Why some companies make the leap and others dont. New York:
HarperCollins.
Cravens, D.W., Piercy, N.F., & Shipp, S.H. (1996). New organisational forms for competing in
highly dynamic environments: The network paradigm. British Academy of Management, 7(3),
203 218.
Crossan, M.M., & Berdrow, I. (2003). Organizational learning and strategic renewal. Strategic
Management Journal, 22(11), 10871105.
DAveni, R. (1994). Hypercompetition. New York: Free Press.
Davidow, W.H., & Malone, M.S. (1992). The virtual corporation: Structuring and revitalizing the
corporation for the 21st century. New York: HarperCollins.
Eisenhardt, K.M. (1989). Making fast strategic decisions in high velocity environments. Academy of
Management Journal, 32(3), 543 576.
Epstein, J. (2001). Book business: Printing past, present and future. New York: Norton.
Evans, P.B., & Wurster, T.S. (1999). Blown to bits: How the economics of information transforms
strategy. Boston, MA: Harvard Business School Press.
Finkelstein, S., & Hambrick, D. (1996). Strategic leadership: Top executives and their effects on
organizations. Minneapolis, MN: West Publishing Company.
Fiol, C.M., Hatch, M.J., & Golden-Biddle, K. (1998). Organizational culture and identity: Whats the
difference anyway? In D.A. Whetten & P.C. Godfrey (Eds.), Identity in organizations: Building
theory through conversations (pp. 56 59). Thousand Oaks, CA: Sage.
146
K. Johnston
Fiske, S.T., & Taylor, S.E. (1991). Social cognition. New York: McGraw-Hill.
Flood, R.L., & Jackson, M.C. (1991). Creative problem solving: Total systems intervention.
Chichester: Wiley.
Floyd, P.J., & Lane, S.W. (2000). Strategising throughout the organisation: Managing role conflict in
strategic renewal. Academy of Management Review, 25(1), 154 177.
Fulk, J., & deSanctis, G. (1995). Electronic communication and organisational forms. Organisation
Science, 6(4), 337 349.
Galunic, C., & Rodan, S. (1998). Resource recombination in the firm: Knowledge, structures
and the potential for schumpeterian innovation. Strategic Management Journal, 19(12),
1193 1201.
Gergen, K.J. (1978). Toward generative theory. Journal of Personality and Social Psychology,
36(11), 1344 1360.
Govindarajan, V., & Trimble, C. (2005). Ten rules for strategic innovators: From idea to execution.
Boston, MA: Harvard Business School Press.
Guth, W.D., & Ginsberg, A. (1990). Guest editors introduction: Corporate entrepreneurship.
Strategic Management Journal, 11(Special issue), 5 15.
Hagel, J., & Seely-Brown, J. (2005). The only sustainable edge: Why business strategy depends
on productive friction and dynamic specialization. Boston, MA: Harvard Business School
Press.
Hagel, J., & Singer, M. (1999). Unbundling the corporation. Harvard Business Review, 77(2),
133 141.
Hambrick, D.C., & Mason, P.A. (1984). Upper echelons: The organization as a reflection of its top
managers. Academy of Management Review, 9(2), 421 458.
Hannah, L. (1999). Marshalls trees and the global forest: Were Giant Redwoods different?
In N.R. Lamoreaux, D.M.G. Raff & P. Temin (Eds.), Learning by doing in markets, firms and
countries (National Bureau of Economic Research Report) (pp. 253294). Chicago: University
of Chicago Press.
Hargadon, A., & Sutton, R. (2000). Building an innovation factory. Harvard Business Review, 78(3),
157 166.
Henderson, R.M., & Clark, K.B. (1990). Architectural innovation: The reconfiguration of existing
product technology and the future of established firms. Administrative Science Quarterly, 35(1),
9 30.
Iansiti, M., & Levien, R. (2004). The keystone advantage: What the new dynamics of business
ecosystems mean for strategy, innovation, and sustainability. Boston, MA: Harvard Business
School Press.
Janis, I.L. (1972). Victims of groupthink: A psychological study of foreign policy decisions and
fiascoes. Boston, MA: Houghton Mifflin.
Jantsch, E., & Waddington, C.H. (1976). Evolution and consciousness: Human systems in transition.
Reading, MA: Addison-Wesley.
Jonas, N. (1986, March 3). The hollow corporation. Business Week, pp. 56 62.
Kast, F., & Rosenweig, Z. (1986). General systems theory: Application for organization and
management. Academy of Management Journal, 15(4), 322 337.
Katz, R., & Allen, T.J. (1982). Investigating the Not Invented Here (NIH) syndrome: A look at the
performance, tenure, and communication patterns of 50 R&D project groups. R&D
Management, 12(1), 7 19.
Kogut, B., & Zander, U. (1992). Knowledge of the firm, combinative capabilities and the replication
of technology. Organisation Science, 3(3), 383 397.
Leonard-Barton, D.A. (1992). Core capabilities and core rigidities: A paradox in managing new
product development. Strategic Management Journal, 13(Special issue), 111 125.
Levinthal, D.A., & March, J.G. (1993). The myopia of learning. Strategic Management Journal, 14,
95 112.
Levitt, T. (1960). Marketing myopia. Harvard Business Review, 38(4), 24 47.
Lewin, K. (1951). Field theory in social science. New York: Harper & Row.
Malone, T.W., Yates, J., & Benjamin, R.L. (1987). Electronic market and electronic hierarchies.
Communications of the ACM, 30(6), 484497.
Mauborgne, R., & Kim, C. (2005). Blue ocean strategy: How to create uncontested market space
and make the competition irrelevant. Boston, MA: Harvard Business School Press.
147
Miles, R.E., & Snow, C.C. (1978). Organizational strategy, structure, and process. New York:
McGraw-Hill.
Miller, D. (1990). The Icarus paradox. New York: HarperBusiness.
Mitroff, I.I., & Linstone, H.A. (1993). The unbounded mind. Oxford: Oxford University Press.
Moore, J.F. (1996). The death of competition: Leadership and strategy in the age of business
ecosystems. New York: HarperBusiness.
Negroponte, N. (1995). Being digital. New York: Knopf.
Normann, R. (2001). Reframing business: When the map changes the landscape. Chichester:
Wiley.
Normann, R., & Ramirez, R. (1993). From value chain to value constellation: Designing interactive
strategy. Harvard Business Review, 71(4), 65 77.
Ollerenshaw, P. (2006, 21 25 August). Innovation and corporate failure: Cyril Lloyd in UK
textiles 19451968. Paper presented at the XIV International Economic History Conference,
Helsinki.
Ormerod, P. (2005). Why most things fail: Evolution, extinction and economics. New York:
Pantheon.
Pankow, W. (1976). Openness as self-transcendence. In E. Jantsch & C.H. Waddington (Eds.),
Evolution and consciousness (pp. 16 36). Reading, MA: Addison-Wesley.
Penrose, E. (1959). The theory of growth of the firm. Oxford: Blackwell.
Porter, M.E. (1979). How competitive forces shape strategy. Harvard Business Review,
57(March/April), 137 145.
Porter, M.E. (1980). Competitive advantage. New York: Free Press.
Prahalad, C.K., & Hamel, G. (1990). The core competence of the corporation. Harvard Business
Review, 68(May June), 79 91.
Putnam, R.D. (2000). Bowling alone: The collapse and revival of American Community. New York:
Simon & Schuster.
Salzer-Morling, M. (1998). As God created the Earth . . . a sage that makes sense?
In D. Grant, T. Keenoy & C. Oswick (Eds.), Discourse and organization (pp. 114 118).
London: Sage.
Sanchez, R., & Mahoney, J.T. (1996). Modularity, flexibility and knowledge management in
product and organizational design. Strategic Management Journal, 17(Winter special issue),
63 76.
Scharmer, C.O. (2001). Self-transcending knowledge: Sensing and organizing around emerging
opportunities. Journal of Knowledge Management, 5(2), 137 150.
Schumpeter, J.A. (1934). The theory of economic development. Cambridge, MA: Harvard University
Press.
Seidl, D. (2005). Organisational identity and self-transformation: An autopoietic perspective.
Aldershot: Ashgate.
Sharma, P., & Chrisman, J.J. (1999). Toward a reconciliation of the definitional issues in the field of
corporate entrepreneurship. Entrepreneurship Theory and Practice, 23(3), 11 27.
Smith, D.K., & Alexander, R.C. (1988). Fumbling the future: How Xerox invented, then ignored, the
first personal computer. New York: William Morrow.
Teece, D.J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management.
Strategic Management Journal, 18(7), 509 533.
Tripsas, M., & Gavetti, G. (2000). Capabilities, cognition, and inertia: Evidence from digital
imaging. Strategic Management Journal, 21(10 11), 1147 1161.
Tushman, M.L., & Anderson, P. (1986). Technological discontinuities and organisational
environments. Administrative Science Quarterly, 31(3), 439 465.
Vickers, G. (1965). The art of judgement: A study of policy making. London: Chapman & Hall.
Vickers, G. (1970). Freedom in a rocking boat. London: Penguin Books.
Voldbera, H.W. (1996). Towards the flexible form: How to remain vital in hypercompetitive
environments. Organisational Science, 7(4), 359 374.
Von Bertalanffy, L. (1968). General system theory. New York: George Braziller.
Von Hippel, E. (2005). Democratizing innovation. Cambridge, MA: MIT Press.
Weick, K.E. (1995). Sensemaking in organisations. Thousand Oaks, CA: Sage.
Wiersema, M., & Bantel, K. (1992). Top management team demography and corporate strategic
change. Academy of Management Journal, 35(1), 91 121.
148
K. Johnston
Wigand, R.T., Picot, A., & Reichwald, R. (1997). Information, organisation and management:
Expanding markets and corporate boundaries. Chichester: Wiley.
Williamson, O.E. (1983). Credible commitments: Using hostages to support exchange. American
Economic Review, 73(4), 519 540.
Zhang, M., Macpherson, A., Taylor, D., & Jones, O. (2004). Networks of learning: SME managerial
approaches and learning. Project Report, Centre for Enterprise. Manchester Metropolitan
University Business School. Retrieved February 1, 2007, from www.business.mmu.ac.uk/
centreforenterprise/networksoflearning_report.pdf