Creative Destruction and Creative Action: Path Dependence and Path Creation in Innovation and Change Simon Grand Donald MacLean University of St. Gallen University of Glasgow Institute of Management Gilbert Scott Bdg Dufourstrasse 48 University Avenue CH-9000 St. Gallen Glasgow G12 8QQ +41 79 639 38 07 +44 141 330 4649 [email protected][email protected]Second Draft, August 2003 Please do not quote without permission Presented at the INSEAD Conference Fontainebleau, August 25 th & 26 th , 2003 Abstract This paper combines two concepts, creative action and creative destruction, to produce a novel model of innovation and strategic change. It describes how micro-creative actions lead to macro creative destruction, and especially how local intentionality, embodiment and sociality create novel micro-level combinations, which enter into dialogue with the past – challenging, questioning and, under certain conditions, destroying some of it whilst experimentally engaging with the remnants. This leads to synthesis of new potentials, some of which will “align with” ”or “extend” past patterns - and thus crystallize into temporary new patterns of strategy that “hold-out” against the relentless drives for innovation and change for long enough to extract an economic return on the investments inherent in the pattern. This has an important bearing on issues of practice, design, control, emergence, micro and macro in relation to the practices of strategic change. In essence we are arguing that design and control are limited to acts of destruction, which are located on the macro-level by the intentional behavior of individuals in interaction with each one another. Destruction creates organizational slack, into which new forms of embodied behavior are expressed. Some of these new forms will stabilize into new patterns or order thus giving rise to a new strategic path, which although linked to (enabled and constrained by) the past, is qualitatively different from it and inherently surprising. In this view, the link between micro and macro is no more than the link between the past and the emerging future, effected through intentional acts of micro-expression/macro-destruction by embodied, interacting individuals in the living present.
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Creative Destruction and Creative Action: Path Dependence and Path Creation in Innovation and Change
Simon Grand Donald MacLean University of St. Gallen University of Glasgow Institute of Management Gilbert Scott Bdg Dufourstrasse 48 University Avenue CH-9000 St. Gallen Glasgow G12 8QQ +41 79 639 38 07 +44 141 330 4649 [email protected][email protected]
Second Draft, August 2003 Please do not quote without permission Presented at the INSEAD Conference
Fontainebleau, August 25th & 26th, 2003
Abstract
This paper combines two concepts, creative action and creative destruction, to produce a novel model of innovation and strategic change. It describes how micro-creative actions lead to macro creative destruction, and especially how local intentionality, embodiment and sociality create novel micro-level combinations, which enter into dialogue with the past – challenging, questioning and, under certain conditions, destroying some of it whilst experimentally engaging with the remnants. This leads to synthesis of new potentials, some of which will “align with” ”or “extend” past patterns - and thus crystallize into temporary new patterns of strategy that “hold-out” against the relentless drives for innovation and change for long enough to extract an economic return on the investments inherent in the pattern.
This has an important bearing on issues of practice, design, control, emergence, micro and macro in relation to the practices of strategic change. In essence we are arguing that design and control are limited to acts of destruction, which are located on the macro-level by the intentional behavior of individuals in interaction with each one another. Destruction creates organizational slack, into which new forms of embodied behavior are expressed. Some of these new forms will stabilize into new patterns or order thus giving rise to a new strategic path, which although linked to (enabled and constrained by) the past, is qualitatively different from it and inherently surprising. In this view, the link between micro and macro is no more than the link between the past and the emerging future, effected through intentional acts of micro-expression/macro-destruction by embodied, interacting individuals in the living present.
Research Questions and Argumentation Structure:
Recent Issues in Strategy Research
Management research is interested in describing and explaining the dynamic nature of firm
development (Porter, 1991), be it as organizational learning, strategic change, dynamic
The available means are somehow dependent on the established interconnections and
patterns at work - e.g. toolbox of the firm or the venture, including methods of how to
approach new challenges, concepts to structure new problems, or instruments to structure
the problem solution; (3) and the specific conditions are of course path-dependent by nature
(be it external or internal conditions).
It is due to this perspective that specific situational constellations can be seen as emerging
from the repeated interaction among individuals and artifacts (Latour, 1987), or as the duality
of structure and action (Giddens, 1984; Whittington, 1996), interpreting such structures (but
also norms) as resources which are reproduced, exploited and at the same time always also
transformed to some extent in mundane practices (see also Bourdieu, 1977). This is a
precondition for any structure or norm to remain adaptable to specific and to some extent
always also unique situations. Structures and norms can thus not be seen as completely pre-
determining mundane practice (this would lead to a much too mechanistic understanding of
how structures and norms apply in specific situations and contexts), but they shape mundane
practice as they are the resources and means supporting any actor in structuring specific
situations and in dealing with local challenges. As a consequence, intentionality in creative
action implies path dependence, in the sense that the structures and norms actualized and
reproduced in mundane practices are path dependent in nature. At the same time,
intentionality in creative action explicitly excludes any determinism by the past, while at the
same time also limiting rationality in the sense of realization of pre-defined aims.
In parallel, intentionality in creative action implicitly implies the potential for path creation.
Since structures and norms are never deterministically applied to specific situations and
challenges, but can rather be seen as resources which allow to structure such situations and
challenges (see also Wittgenstein, 1952), they are constantly adapted, interpreted, changed
and transformed in mundane practices in order to become productive (see also Ortmann,
2003). As a consequence, it is the situative character of intentionality that implies part of the
potentially creative nature of creative action. Any situational activity is thus creative to some
extent, the important question rather is whether local creativity leads to the emergence and
establishment of relevant and recognizable paths and structures which are different from the
overall predominant path in the past (this is actually compatible with Schumpeter arguing that
individuals are constantly creative (invention), but that only entrepreneurs are able to turn
this creativity into sustainable structures (innovation)). As a consequence, management and
entrepreneurship is about mobilizing the necessary resources to further explore and develop
the potential of intentional local creativity into a new path.
Embodiment as Path Dependent and Path Creating
In parallel to intentionality, the theory of creative action introduces embodiment as the other
important dimension of creative action. In its discussion of embodiment, it emphasizes that
creative expression is as much rooted in pre-reflective urges and embodied unconscious
impulses as in intellectual activity, and calls for acknowledgement of the body as a source of
creative action rather than as an instrument to which our minds dictate actions. This idea
resonates with recent insights from a knowledge-based theory of strategy and innovation,
which argues that embodied past experiences are an essential source for new knowledge
(von Krogh & Grand, 2002a; 2002b).
One important dimension of the knowledge creation process is the mechanisms by which
specific local experiences are transformed into explicated and justified knowledge (Nonaka,
1994; Nonaka & Takeuchi, 1995). It is the process of explication and justification that makes
local experiences accessible and at the same time convincing for people who do not share
the same experiences, but might have to rely on these experiences in order to fulfill their own
tasks. At the same time however, all the experiences that are not entering these explication
and justification loops are often not disappearing, but the people directly involved in these
experiences embody them.
This means that individuals are characterized by large repositories of highly tacit or even
unconscious experiences, which, due to specific situational contexts, were not further
explored and exploited at a particular point in time. However, they are at the same time
important resources for these individuals to deal with new situations and challenges. It is
these past experiences that explain the highly path dependent nature of embodiment, they
somehow are the repositories of past events. While they are essentially tacit or unconscious,
any rational approach to action oversees their importance. At the same time, there is no
deterministic impact of past experiences on present activities, which is often neglected in
structural and normative explanations of individual action.
In parallel, the (highly tacit and unconscious) embodiment of these past experiences implies
that all individuals rely on an enormous creative potential. Creative action emphasizes this by
showing how such embodied experiences are actualized and exploited in specific situations
in order to solve new problems and to make sense of specific circumstances. At the same
time, it is these circumstances that trigger the memory of individuals in the sense that they
influence which specific experiences are remembered and actualized in a specific situation
(see recent insights in the new cognitive sciences on memory). Furthermore, the perspective
of creative action allows to further deepen our understanding of how embodied experiences
guide sensemaking (Weick, 1995) and meaning making (Bruner, 1991) as well as
experiential learning processes.
Sociality and Path Dependence
Finally, sociality refers to the fact that based on the above developed observations about
intentionality and embodiment, it is important to understand any individual strategic or
entrepreneurial initiative as being embedded in and path-dependent on the past and present
historical, organizational, social and cultural contexts which shape individual activities in
terms of identity formation. At the same time, it is obvious that successful and robust path
creation fundamentally implies the establishment of new organizational, social and cultural
contexts, which become the historical context for the successfully established innovations
and changes, and thus underlie the formation of a new identity.
Creative Action and Creative Destruction: Framework and Conclusion
The paper discussed two major research questions: Where and how do new strategies
originate? [research question 1]. The paper demonstrates that only a theory of creative
action is able to explore the first research question appropriately, describing the central role
of intentionality, embodiment and sociality for understanding entrepreneurial and strategic
action in the context of innovation and change. What forms do new strategies take and how
can they be distinguished against a background of ongoing micro-activities? [research
question 2]. The paper shows to what extent creative action relates to path-dependence and
path-creation as the macro-level patterns that characterize creative destruction. At the same
time, it is the path-dependent and path-creating nature of entrepreneurial and strategic action
that makes it possible to evaluate the strategic importance and impact of micro-activities
appropriately.
________________________
Insert figure 2 about here
________________________
In sum, we can see how micro-creative actions lead to macro creative destruction, especially
how internationality, embodiment and sociality create novel micro-level combinations, which
enter into dialogue with the past – challenging, questioning and under certain conditions
destroying some of it and experimentally engaging with the remnants, thus contributing to a
better understanding of both, path dependence and path creation. This dialogue potentially
synthesizes new options, some of which will “align” or “resonate with” or “extend” past
patterns - and will thus crystallize into temporary new patterns of strategy that “hold-out”
against the relentless drives for innovation and change for long enough to extract an
economic return on investment in the pattern.
This has an important bearing on issues of practice, design, control, emergence, micro and
macro in relation to the practice of strategic change. In essence we are arguing that design
and control are limited to acts of destruction, which are located on the macro-level by the
intentional behavior of individuals in interaction with each one another. For example,
interacting individuals agree to “outlaw” or suspend particular routines or norms – or they
physically alter macro-level configurations. In so doing, they create organizational slack, into
which new forms of embodied behavior are expressed. Some of these new forms will
stabilize into new patterns or order (described as norms or rules) – depending on the extent
to which they “align with” the remnants of the pre-destruction macro-order – thus giving rise
to a new strategic path which although linked to (enabled and constrained by) the past, is
qualitatively different from it and inherently surprising. In this view, the link between micro
and macro is no more than the link between the past and the emerging future, effected
through intentional acts of micro-expression/macro-destruction by embodied, interacting
individuals in the living present.
Continuing the Dialogue: Creative Action/Destruction and Practice/Process Research
Finally, we would like to consider the above in relation to the broader context of strategy
process research. A detailed treatment of the issues raised here may be of considerable
value, but is beyond the scope of a concluding section such as this – points should thus be
taken as starting “suggestions”, “insights” or “invitations to respond” in the ongoing dialogue
around which this gathering has been organized.
[1] Given the variety of theoretical perspectives in the strategy process literature, we would
invite colleagues, first, to assess our claim that our shared concern with activities and
practices might be fruitfully explored from an explicitly action-theoretic orientation and,
second, that researchers might benefit from locating their own work in relation to existing
theories of action. Given that we are increasingly concerned with what people actually DO,
making explicit the theories that underpin our views of why and how people do things seems
like a sensible if not obvious step. While a rational theory of action overemphasizes the
autonomy and self-sufficiency of the isolated individual, institutionalist theories of action
neglect the importance of action and practice in interpreting and experiencing, as well as
shaping and creating organizational development, especially innovation and change. A
creative theory of action is a promising extension of the axiomatic core of the rationalist
action theory underlying and dominating strategy research sofar.
[2] We have aimed to show in our paper how our position is located on the other side of the
problematic line vis-à-vis normative and rational theories of action. One of the hallmarks of
the modern era is the way in which Descartes’ famous dictum is expressed in a multitude of
bifurcations such as thinking-acting, individual-collective, inside-outside. In strategy process
research these are most obviously manifest in two or three dominant forms - the separation
of experience into thinking and acting; the focus on the individual (often as “the firm”) or the
collective (as the “routine”, “script”, “culture”, “organization”); the notion of context as an
external set of situational “givens”; and the dominance of rationality both in research content,
but more significantly, expressed as the notion of “method” in research process. Perhaps
THE fundamental idea in strategy, uniting both rational and normative view, is the implicit
subscription to an INSTRUMENTAL view of change to affect either progress (rational) or
survival (normative) and the concomitant bifurcation of experience into stasis and change.
Again, we would invite participants to locate their own research (content and method) on the
philosophical landscape in these terms.
In line with these considerations, the present paper challenges the epistemologies in which
strategy research and management research try to advance the field, by either developing
theory in line with theory extension or as an external critique. In line with an internal critique,
we have rather depicted an alternative view in which the dynamic of experience is constantly
forming and reforming itself in acts of expression by interacting individuals. In this sense the
dynamic is not about “change” as an instrument but as an ongoing stream of gesture and
response, creation and destruction, in which stability and change are seen simply and
concurrently as we compare our views of the past with our experience in the present.
Meaningful enquiry requires participation in this dynamic. The somewhat radical implications
here include a move towards the pragmatists view of “experience” as the basis for reflective
enquiry and away from the notion of research method as an instrument of scientific research.
“Research” becomes a creative process in which many familiar distinctions such as process-
content, researcher-practitioner, creation-transfer collapse – and our engagement in an
emergent interactive dynamic with practice delivers experience of micro-practice/activity
networks that yield “research” and “practical” outcomes from an interactive process of
enquiry and knowledge production.
[3] From the above, it should be clear that our focus is neither on the isolated individual nor
on the collective; our focus is on the individual embedded in “interaction”. Key dimensions of
this are the individual, emotionally expressive biographies that constitute, and are constituted
by, any given set of interaction and the emergent intentions that form and are formed by such
interactions. Patterns of interaction – macro-order, or strategy - and changes in such
patterns, quantitative and qualititative, are creative expressions about the future enabled by
destructive acts in the present whilst looking at the past through the rear-view mirror of
memory. We would advocate a concern not just with interaction, but also with observed acts
of destruction (and the remnants of destruction) in patterns of interaction. As such enquiry
should be concerned with the individual biographies at play; what they intend / express /
gesture; how such intentions interact to creatively destroy things/processes; how the space
created by such acts of destruction are filled by novel and transient patterns of interaction. Somehow, we are thus proposing “interaction” as the basic focus (and mode) of enquiry for
research - as the fundamental “constituent” of the patterns that we recognize as strategy
(and research).
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Figure 1: Bridging Path Dependence and Path Creation
path
dep
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path creation
creative destruction
Figure 2: Creative Action and Creative Destruction