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 / Winter 2010 / Issue 61(originally published by Booz & Company)


Best Business Books 2010: Innovation

The pull approach stands in sharp contrast to the old-fashioned mind-set of “push,” in which organizations try to anticipate demand and push their ideas, in the form of products and services, out to their customers. In this paradigm, bigger is better, resources are scarce and centrally allocated, elites do the deciding, and all negotiations are zero-sum games. The authors offer compelling and frightening evidence that this widely used approach is outmoded and has led to great instability and diminishing returns for today’s corporations: Competition is intensifying on a global scale, customer loyalty is declining, corporate returns on assets have dropped to less than a quarter of what they were a few decades ago, stock prices are much more volatile, and churn in the S&P 500 is accelerating. By all measures, the authors conclude, corporations are ailing, no matter how hard they push.

In the push world, knowledge is an asset to be closely guarded. But in the pull world, knowledge goes out of date much too rapidly to hoard. Modern hunter-gatherers share knowledge because they know they can create more value by harnessing the flow of new knowledge than they can by capturing and stockpiling it. The authors illustrate this point with examples from the software and apparel industries, in which companies have leveraged customers, suppliers, and stakeholders in their search for innovation.

Take, for example, the experience of SAP AG, one of the world’s largest software companies, during its transition to a service-oriented architecture. Company leaders were convinced they had a great product on their hands. The value of their technology was not the issue. Their concern was customer adoption, and they faced a chicken-and-egg scenario in which customers would not be able to see the benefits of the new product until they had worked with it. In light of this conundrum, the company launched a series of forums, blogs, wikis, and videos called the SAP Developer Network, which encouraged peer-to-peer interactions. With 1.2 million people now participating in these online communities and helping one another, the program has been very successful at both accelerating product adoption and building and sharing knowledge.

At first, The Power of Pull may sound like a reprise of Henry W. Chesbrough’s book, Open Innovation: The New Imperative for Creating and Profiting from Technology (Harvard Business School Press, 2003). But the authors of The Power of Pull are talking about much more than a short-term transactional approach to finding and exploiting ideas; they advocate developing longer-term relationships based on trust.

Relying on such trust-based relationships to accelerate one’s business lies outside the comfort zone of most corporations, but it can lead to incredible results. I saw this firsthand in 2009 when the USC Stevens Institute for Innovation worked with the prestigious TED conferences to conceive and host the first independently organized TED event, TEDxUSC. Given TED’s valuable brand and high standard for quality, I was pleasantly surprised that TED leaders agreed to explore the idea when it was still in its conceptual stage, instead of trying to maintain full control and pursue expansion opportunities solely by growing their own organization. The latter action would have followed the traditional push model. But TED’s leaders took a chance, and once we helped work out the kinks, they established the TEDx licensing program, which enables nonprofit organizations to host independently organized, TED-like events. Within a year, nearly 1,000 TEDx events were scheduled in 60 languages all around the globe.

The Power of Pull should prompt executives to reconsider how knowledge, intellectual property, and collaboration are managed within their companies and how key functions, such as HR, IT, and customer support, should be changed to take advantage of this new paradigm. It should also prompt such questions as: How can power and influence be channeled to the company’s edges and into its networks? How can pull enable the company to learn faster and better? What would the company be like if developing talent were its first priority? And most importantly, how can the business attract and access the intellectual energy of people outside its borders for maximum scale and success?

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