MANAGING CHANGE: CREATIVE DESTRUCTION AS THE ENGINE OF CONTINUOUS INNOVATION.

If we want our schools to improve they must be organized for constant change.

“For a hospital—or a school or any other community organization—to discharge its social function we must be able to close it down, no matter how deeply rooted in the local community it is and how much beloved, if changes in demographics, technology, or knowledge set new prerequisites for performance. Society, community, and family are all conserving institutions. They try to maintain stability and to prevent, or at least to slow, change. But the modern organization is a destabilizer. It must be organized for innovation and innovation, as the great Austro-American economist Joseph Schumpeter said, is “creative destruction.” And it must be organized for the systematic abandonment of whatever is established, customary, familiar, and comfortable, whether that is a product, service, or process; a set of skills; human and social relationships; or the organization itself. In short, it must be organized for constant change. The organization’s function is to put knowledge to work—on tools, products, and processes; on the design of work; on knowledge itself. It is the nature of knowledge that it changes fast and that today’s certainties always become tomorrow’s absurdities.

Every few hundred years throughout Western history, a sharp transformation has occurred. In a matter of decades, society altogether rearranges itself—its world view, its basic values, its social and political structures, its arts, its key institutions. Fifty years later a new world exists. And the people born into that world cannot even imagine the world in which their grandparents lived and into which their own parents were born.

It is a safe prediction that in the next 50 years, schools and universities will change more and more drastically than they have since they assumed their present form more than 300 years ago when they reorganized themselves around the printed book. What will force these changes is, in part, new technology, such as computers, videos, and telecasts via satellite; in part the demands of a knowledge-based society in which organized learning must become a lifelong process for knowledge workers; and in part new theory about how human beings learn. Every organization has to build the management of change into its very structure.

This means every organization has to prepare for the abandonment of everything it does. Managers have to learn to ask every few years of every process, every product, every procedure and every policy: “If we did not do this already, would we go into it now knowing what we now know?” If the answer is no, the organization has to ask, “So what do we do now?” And it has to do something, and not say, “Let’s make another study.” Indeed, organizations increasingly will have to plan abandonment rather than try to prolong the life of a successful product, policy, or practice. Finally, every organization will have to learn to innovate—and innovation can now be organized and must be organized—as a systematic process. And then, of course, one comes back to abandonment, and the process starts all over. Unless this is done, the knowledge-based organization will very soon find itself obsolescent, losing performance capacity and with it the ability to attract and hold the skilled and knowledgeable people on whom its performance depends.

The need to organize for change also requires a high degree of decentralization. That is because the organization must be structured to make decisions quickly. And those decisions must be based on closeness—to performance, to the market, to technology, and to all the many changes in society, the environment, demographics, and knowledge that provide opportunities for innovation if they are seen and utilized.

Every organization must devote itself to creating the new. Specifically, every management has to draw on three systematic practices. The first is continuing improvement of everything the organization does, the process. Second, every organization will have to learn to exploit its knowledge, that is, to develop the next generation of applications from its own successes organized around continuous self-improvement. And third a modern organization cannot be an organization of boss and subordinate. It must be organized as a team.

Peter Drucker. 1992. Harvard Business Review.

“In the world of management gurus, there is no debate. Peter Drucker is the guru to whom other gurus kowtow.” The McKinsey Quarterly 1997.

Joseph Schumpeter is known as the” Prophet of Innovation.”

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