[music] I'd like to start this week with the story of Xerox PARC. Xerox PARC, p, a, r, c, PARC stands for the Palo Alto Research Center. So, we've probably all heard of Xerox even in, in, you know, in English to Xerox something means to copy something. They were a, it was a company that sort of invented the copier and built a real business out of the copy. And so, the story I want to tell you has to do with the headquarters, what was going on between headquarters, which was in New York, and the park, which is the Palo Alto Research Center of Xerox that was going on in California. And so, sometime around in the 70s, mid late 70s Xerox had a problem, they had a business problem. The problem was that a lot of the patents expired. So, they invented a lot of things around copying in the 50s. And so, what happens 20 years later is those patents expire. And so, when those patents expire, you get other people coming into your markets. In this case, foreign entrants, you have Japanese companies, Asian companies coming in, saying, here's a lucrative market here, it's not patent protected anymore. And so, we should be able to be in that, in that market. Indeed, you should. So, what happened? Well, the business people said, wow, you know we, we had this trouble, we're going to, we need, we need some new ideas. We need some innovation. We need some new things. I got it, let's call PARC, the people at xerox park. That they know they'll have the ideas that we need. So, that's a great thing, let's go ahead and do that. And so, what they did is they called California and they said, hey guys do you have any great ideas for us? We need some new ideas because, you know, the copier business and these foreign entrants and we really need to protect this business, like what have you got for us? So, back at XEROX, they're ecstatic. They love this idea because these guys had been working out there. They'd seen the future. And the future they'd seen had to do with computing, had to do with graphic user interface, had to do with all these things that were happening in California around computers and computer science. Remember, this is the time of the, the first PC of the, a lot of hobbyists were doing things in California. So, the workers, the, the researchers at XEROX PARC thought, this is great. Like our day is here. All the kind of things they had, they had some really awesome things. They had the graphic user interface. So, that is where you could actually move things with the mouse. They invented the mouse. The mouse, you know, it looks like a little mouse with a little thing that you move around. You know, if I move this, then that moves. Cut and paste. You know, cut that out and paste it over here. That had to be invented and someone did that. Because up to that point, consider that the, a lot of the computers were like DOS or MS DOS where you had the C colon slash and you had to type in everything. And so, here they were really inventing a new way to interact with computers. Ethernet was another thing. You know, putting all these computers together. Wysiwyg, what you see is what you get. And that was when you could print something and you construct a document on the screen and press print, it looked exactly the same way when it came out as it did on the screen. And this was a huge breakthrough. So, what happened was the guys at PARC said, hey we've got it. Let's go to New York, we're going to show them all this awesome stuff because, you know, we're really, we got it all together and we're going to save the company. So, what do they do, they fly to New York. They show up in New York and they say, hey, guys, we've got it, we've got this great stuff. And so, they start explaining, oh, we've got this idea of the mouse, and the, and the, and the ethernet, and, and, and so what do the New York people say? Well can I use that on a copier? You know, does that work with a copier? It doesn't work with a copier? Well, then, I'm sort of not interested. Wait, wait, wait, we've got another one with WYSIWYG, what you see is what you get. You know, it prints out exactly the way it looks. No, not interested in that either. Huh. And again, and again, and again. Not interested, not interested , not interested. These things, we could not use on a copier, I mean, extensively. So, what happened next? Well, the guys from PARC, you know, could imagine this, they go back to California, they're all depressed and they're sitting there going, oh, god. You know, we see the future and those knuckleheads in New York, they don't get it because we like, we have all this great stuff and why aren't we doing something with it. Like we, we, we've seen a future. And so, they're working away. And so, inside the organization, you know, the, in the little part of Xerox that's off in California, maybe they're a little depressed, maybe they're a little bummed out. And so, one day, a guy comes in and he had worked a, a little deal where he basically had decided to buy access into PARC and to sort of seeing what they were up to inside of there. It was like kind of a, an interesting deal. Here's some research on it, if you want to look, look, I have some in my book and I've done a lot of research on this. But basically, what happened was Steve Jobs paid for some access to go inside of Xerox PARC and look at what they were working on. And so, when he went inside, what do you think he saw? Well, he saw the mouse. He saw what you see is what you get. He saw ethernet. He saw all these things that were embodied in a computer they called the Xerox Star, but they were not being pushed. They were not being it was not a commercially viable product, at least, not the way Xerox was doing it. So, in his time inside of Xerox, what would Steve Jobs do? Well, what would you do? Maybe you'd walk around inside, say, hey, what are you working on? Oh, I'm working on this mouse and those people in New York, they don't get it. Like, I've seen the future. The future is like these mice and, and my people in New York, they don't get it. And so what, Steve Job, hey, come work for me, you know, bring all that stuff, come work for me. And again, he collected and collected and collected and pretty soon, he's got enough ideas and enough in actual property together to produce this thing called the Lisa. And the Lisa was sort of the first Macintosh or the Macintosh Lisa that was produced. It had all the features that we come to expect in a modern computer, it had a mouse, it had graphic user interface, it had networking, it had a where you could see what you printed out, and on and on and on and on. All of those things came from Xerox. And so, the question is we want to ask, why is it a Macintosh, Apple and not a Xerox product? Well, that's what we're going to look into. And so, the way we're going to ask this question is, do the word innovation and the word organization, do they really belong in the same sentence? Because organization really is about these routine outputs. An organization is something that we do. We put it together, we organize it in order to achieve the same output every time. That's what we like. That's what we like for machines and organizations are a form of machines, human machines. On the other hand if we can, if we, you know, we innovators, if we could understand how organizations work, then maybe we could mitigate the effects of that on innovation. Let me say that differently. If we understand how organizations work, we can overcome the constraints that organization causes. And so, that's what we're going to set out to do, is just to understand, how do we overcome the constraints of organization? Now, of course, we want to make sure that we know that innovation's required, because sometimes you don't want innovation. You know, sometimes, you know, I, I work with an organization, Tennessee Valley Authority. They're running a bunch of nuclear power plants and for them, what we want is light on, light off. You know, I walk into a room, I want a light on, I want it on. Light off, I want it off. I do not want innovation. I just want that thing to work. And so, sometimes we want that. And we would not want to mess with the organizational structure then. But sometimes we want innovation. So, we have to know what it is we can do in order to get to a different place. The way we're going to organize this, the way we're going to organize our think about these constraints, we're going to start with strategy. Strategy has to do with really understanding the organization's mission and how people understand, how it is we are to do what we're to do. So, we know some organizations that are fast followers, we know there are organizations that are super innovative, we know other organizations are efficient, we know other organizations are high quality. And so, these strategies, actually create some obligations on people inside, and how it is that they think about innovations and how they think about change and how they think about moving the organization forward. The second thing we're going to talk about is structure, is the organizational structure. So, structure is the mechanism that we use for coordination, for controling the organization, right. Because we have a lot of people and we have to coordinate their behaviors at the very least, even for innovation we have to coordinate the behaviors, and so how do we do that? What are the mechanisms we can use and what's the effect of that structure on innovation? And the third constraint we're going to look out are resources. So, what happens from a resource perspective? What are the kinds of resources we have? What are the amounts of resources we have? How are resources allocated inside an organization? What does it take to get resources? Are, are resources allocated in advance or, or after the fact in organizations? All of those things would effect innovation and how we go about innovation. So, let's go ahead and look into these. We're going to start with strategy, and then, we're going to work our way through looking at the other forms of organizational constraints.
