Have you ever thought of how easy things are for physics researchers? The laws of physics have stayed pretty much the same through the entire history of the discipline of physics. The only significant change is that researchers have gained better theory for understanding them and better tools for testing the theory. Lucky them.
In contrast, management scholars face constant change in the world of organizations, because what goes into organizations changes – technology, people, and laws – and what organizations try to influence in their environment changes as well – especially markets, but also technology, people, laws, and so on. As a result of all these inside and outside changes, organizations change, and the laws of organization (yes, they exist) change over time, too. We have known this for a while but have not known how. A new paperin Administrative Science Quarterly by Zlatko Bodrožić and Paul Adler looks at how they change.
They focus on technological revolutions, which may be the most decisive influence because other factors (like people and laws) often follow. Just compare the work of coal miners (whom the president sees as important for the future of the U.S.) with computer programmers (the present and future of India). Coal miners work in rigid hierarchies with clearly defined processes because of the safety concerns and communication difficulties they face, and they also face highly mechanized work that requires them mainly to serve their tools. They are an extreme case of the factory, which has its own set of theories that solved many problems 100 years ago but are now barely taught, though their insights survive in mines and factories. Computer programmers are organized in groups with clearly defined tasks but full freedom to design the solution and the process for arriving at the solution, and they face a knowledge-based, communication-heavy workplace in which people create and use intergroup networks to assemble and use knowledge. They work in network organizations, which have their own set of theories that are slightly more recent than the explosive growth of such workplaces.
Every time a technological revolution happens, existing theories begin to fail because they address the wrong kind of organization. The failures are recognized by scholars, who then start building new theories for the new reality. Often spurred by visible problems in organizations, they recognize that the new problems are different. They try to find theoretical solutions to these problems and test them, finding that many are wrong but some are right. As the research accumulates, science proceeds as usual and the best models are agreed on. Then these models are spread, first within the community of scholars and then to the practice of management. Because it takes a while to go through these steps, the period after any technological revolution is one in which few people know enough, though many – both scientists and managers – think they know a lot. The laws of organization have changed, and we need to find the new ones.
So, physics scholars really do have an easier job
than management scholars. That’s pretty obvious. What is less obvious is that when we hear some entrepreneurs leading major web-based businesses complain about the uselessness of business schools, they are half right and half wrong. The right part is that researchers are catching up, so the schools clearly know less about their business than about coal mines, or even software outsourcing firms. The half wrong part is that they don’t know, either – it is possible to be right about a decision without knowing why – and scholars will soon catch up and know this technology and its organizations well.
In La La Land, Sebastian is such a dedicated jazz pianist that he cannot bear playing other kinds of music – and after many trials and travails, he succeeds as an entrepreneur, starting the jazz club of his dreams. A wonderful story of entrepreneurship (the movie had a love story too, I think), but is it realistic? It depends on who you ask.
A recurring theme in entrepreneurship is the trust in generalists – people who can master a wide range of tasks. This trust comes from one big-picture and one small-picture consideration. The big-picture consideration is that successful entrepreneurship has a component of inspiration gained from combining ideas that others do not see as connected. You may be carrying the descendant of such a combination: the iPhone was put together by a company making compact MP3 players that had just exited an alliance with Motorola to make cellular phones. The small-picture consideration is that smaller entrepreneurs often end up being in charge of everything, first directly, then through having to find and recruit expertise in each function. Generalists are good at this.
But could Sebastian have become a capable founder of a jazz club if his interests and skills were all over the place? The argument against generalists is that they are superficial and don’t know enough about any specific topic to do well. A paper in the Administrative Science Quarterly by Olenka Kacperczyk and Peter Younkin has waded into this argument with important ideas and some evidence. Fittingly, the evidence is on music industry entrepreneurship: artists forming independent record labels.
The key idea emerging from their research is this: pure generalists have no particular advantage in entrepreneurship; what is needed is one area of specialization combined with general knowledge elsewhere. Specifically, specialization in the market pays off when combined with general knowledge on the tasks needed for production. This combination buys both credibility and the understanding of customers, which are more important to specialize in than the mechanics of making a product. The investigation showed big effects of market specialization, and effects that were complementary to functional breadth. Market specialists could double their odds of success by becoming more general in functional knowledge; market generalists had low odds to begin with and did not improve much when gaining more general functional knowledge.
So, Sebastian got lucky. Yes, he had market knowledge, but he knew little about different functions (I am not counting tap dancing as a useful function). A more typical case would be Justin Timberlake, whose specialization in R&B and popular music was combined with band membership, songwriting, performing as a backup singer, and music production. So, today’s practical advice: if you want to form a music label, follow Justin’s lead.
Kacperczyk, Aleksandra (Olenka) and Younkin, Peter Y. 2017. The Paradox of Breadth: The Tension between Experience and Legitimacy in the Transition to Entrepreneurship. Administrative Science Quarterly, forthcoming.