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The Evolution of Innovation
By: Stephen M. Shapiro
production for all time. To some, these events appeared
Due to space limitations, this piece never made it into the
ominous, as a dark spot in history, an uprooting of the
finished book, 24/7 Innovation. If you feel well informed
happy peasant from his rural idyll, the half-timbered
about Taylor and his disciples, this section (which was
cottage with the rose-covered trellis, and a move to some
intended to be an appendix) may not be for you as it
vile urban tenement shrouded in smog. But most
covers a largely historical territory. However, if you are
observers and participants saw the Industrial Revolution
either less familiar with the evolution of business
as an opportunity, as liberation from the animal squalor of
management, or you are interested in a concise history of
penniless country life, an event that turned
management with some commentary, please read on. It
disenfranchised peasants into empowered consumers.
provides some interesting insights into modern
th
management principles. It was not until the 19 century that discipline began to
creep into the management of those machines. Early
From time immemorial, mankind has sought to improve
records of 19th century show factories in many cases as
the world of work -- how it's done, the effort it requires, and
pretty chaotic places with very obvious potential for
the output that results from it. The primary goal has been
improvement in efficiency. They crudely transplanted the
efficiency and productivity. No doubt Eve was able to pick
individualistic methods of the cottage craftsmen into the
apples faster and faster during her lifetime, and Noah
broader community of the factory. They left individuals
surely became a better sailor the closer he got to Mount
with specific skills in almost total charge of their
Ararat. But the methodical search for improvement in work
operations. There was rarely anyone with overall
only dates from the Industrial Revolution. Before then,
responsibility for "managing" the process as a whole.
craftsmen were always looking for better ways to carry out
their chosen specialty but they did so in an unstructured Taylorism
way. They sometimes showed flashes of innovation but
there was nothing scientific about their quest. Their A few scattered experimenters had tried to put method into
knowledge and skills frequently died with them or were the mechanical madness, but their work had not amounted
th
passed on in an oral and hence imperfect tradition. to much. One of the pioneers was a 19 century
gunsmith, Samuel Colt, who applied methods of mass
The Industrial Revolution saw a surge of scientific
production at his factory in Hartford, Connecticut, in the
discovery, and that led to respect for science and scientific
production of pistols and other firearms. As a result, the
methods. Innovation exploded. The Revolution gave birth
handmade flintlock rifle became a thing of the past. At
to new machines and made people conscious of the way
around the same time, Robert Owen was introducing
men and women worked with them.
innovative methods of managing a workforce at his cotton
mills in the Scottish Lowlands. But his motives were
But the Industrial Revolution did not happen overnight. It
primarily social -- aimed at improving the lot of the
was, in many ways, more evolutionary than revolutionary.
workingman -- rather than as a means of boosting
In truth, it took shape through a spate of inventions in
productivity.
mechanical engineering that transformed the processes of

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The man who changed all this, the father of management It was assumed, of course, that this cerebral activity could
as we know it, was an American Quaker named Frederick only be carried out by high-level minds. In other words, it
Winslow Taylor, who, among other things, won the men's could only be done by managers: the people who had the
doubles at the 1881 U.S. national tennis championships. intelligence to stand back and measure. It could not, it was
He was also an engineer. presumed, be done by workers, who had neither the
intelligence nor the time. So the workers were told to get
Taylor's working life began at the Midvale Steel Works in
on with doing what they were told to do. Don't get me
Philadelphia. He joined the company somewhere near the wrong, Taylorism was quite innovative. And his treatment
bottom of the career ladder in about 1878 and was rapidly of worked was appropriate at that time in history. It's just
promoted so that he was soon put in charge of the that this style of management is antithetical to individual
machine shops. In that post he began his lifelong attempt
innovation that is needed today.
to improve the efficiency of the workingman for the benefit
of the company. At Midvale he claimed that workers only In his book Principles of Scientific Managemen©, Taylor
produced one-third of their potential. Gradually he wrote: "Managers assume the burden of gathering
developed what he called "the differentiated piece rate," a together all of the traditional knowledge which in the past
system of paying workers according to the quantity, speed has been possessed by the workmen, and then of
and quality of their output, as measured against some classifying, tabulating, and reducing this knowledge to
benchmark. rules, laws, and formulae which are immensely helpful to
the workmen in doing their daily work." Among other
In his most famous publication, The Principles of Scientific
things, this helped to lay the foundation for the separation
Management, Taylor described a situation that he had of managers and workers, of blue-collar and white-collar
observed in a number of different factories: "In an employees.
industrial establishment that employs say from 500 to
1,000 workers, there will be found in many cases at least Scientific management was based on what was known as
20 to 30 different trades. The workmen in each of these "the task system". Each job was assessed for what was
trades have had their knowledge handed down to them by considered to be "a proper day's work". In one instance,
word of mouth through the many years in which their trade which Taylor described at some length, he found that men
has been developed.... In hardly any element of any trade were loading steel at a rate of 12 to 13 tons a day. When
is there uniformity in the methods which are used. Instead he calculated the "proper" rate for the job, he decided that
of having only one way which is generally accepted as a it should be 47.5 tons a day. Significantly, he did not
standard, there are in daily use, say 50 or 100 different actually describe how he made this calculation. Because
ways of doing each element of the work." the basis of this approach is around tasks, it is an example
of "boxed" thinking, in which work is broken down into
Taylor set out to impose greater method and uniformity on small pieces without worrying how the pieces fit together
this randomness and he did it in what he considered to be to make a finished puzzle.
the scientific way. He began by observing the way workers
performed their jobs, then by measuring that performance, This "factual" basis was then used as the grounds for
and finally by deducing ways it could be improved. He was calculating pay systems and for devising management
the first to practice what Peter Drucker later enunciated so sticks and carrots. The real gains in productivity came not
memorably, "You cannot manage what you cannot from greater exertion on the part of workers but from the
measure." Indeed, Taylor set out to measure and then to elimination of waste -- waste of workers' time and machine
use those measurements to manage. time through delays of misapplied effort and of failure in
efficient planning for quantities of units to be produced.

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Indeed, the elimination of waste is a recurring theme in the and the business world change. It is, in fact, much more
history of business straight through to re-engineering in like a bunch of musicians playing jazz. On no two
the 1990s. consecutive days do they give the same performance, but
good musicians consistently deliver quality music. The
Before Taylor's scientific management, organizations had
focus is on outcome. The improvisational nature of jazz is
relied for the most part on the workers' initiative to come
a model that businesses need to adopt in this age of rapid
up with better methods. But this way of doing things was
change and unpredictability.
flawed in several respects. For one, it failed to systematize
the improvements. There was no organizational learning. Taylor©s influence on management thinking did not die with
Taylor himself maintained that it was flawed because in 19 him. His disciples Frank and Lilian Gilbreth pushed it
out of 20 factories "the workmen believe it to be directly further and developed the idea of "time and motion"
against their interests to give their employers their best studies while they ran a construction business and then
initiative". The real problem, though, was that no one was subsequently an international consultancy. It is also
addressing either the boxes or the lines. The easy interesting to note they raised a family of twelve children,
conclusion was to focus on the tasks rather than the two of who later wrote a best seller called Cheaper by the
interdependencies. Dozen, which described the efforts of the couple in the
emerging industrial world.
And this leads to the fatal flaws of Taylorism. In general,
this system was built for a "solid state" business world, Gilbreth used photography to examine the movements
one in which things were fixed more or less for all time. It that his workers made in carrying out their tasks.
was time-consuming to perform the task analysis, and so "Eliminating unnecessary distances that workers© hands
things could not be easily changed. And so, prescriptive and arms must travel will eliminate miles of motions per
compositions were created for businesses that were like a man in a working day," he wrote. "Each motion should be
Beethoven symphony designed to last for centuries, made so as to be most economically combined with the
unchanged. And Taylorism was built on the fundamental next motion, like the billiard player who plays for position."
assumption that there was a single "best way" of doing Gilbreth claimed that the methods of scientific
things, a way that all companies could achieve if only tried management enabled him to increase the work rate of his
hard enough. bricklayers from 1,000 bricks per day to 2,700.
So successful and so influential was Taylor that his The Assembly Line
"science" of management won universal acceptance -- and
th
we spent much of the 20 century trying to escape from It is not surprising that in the fixed and measured world of
the false sense of permanence it preached. It is only now scientific management it should have been an overriding
that we are coming to terms with the fact that aim of the work of both Taylor and Gilbreth to strip out
management is much more a "seat-of-the-pants" affair, innovation and personal initiative, to design processes and
much more like something that has to be improvised to techniques that could be repeated identically and
some extent as it rolls along. It is not a "science" that can indefinitely. Management was left "free" to get on with
be mined for eternal truths. improving other processes, leaving the ones that they had
redesigned to be executed unquestioningly by their
Perhaps the only truth is that the effective management of
workers.
human enterprise is a very complex undertaking with
many parameters -- economic, political, scientific, personal This was a "dumbing down" process for workers on the
and industrial skills whose relevance changes as society shop floor that took little advantage of human sensibilities

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and creative potential. In Taylor's system, workers were Operations Research
generally needed only for their physical attributes - mostly
their eyes, their legs and their hands. The idea was to The use of quantitative, or scientific, methods in
reduce to an absolute minimum all thinking and management moved yet again after World War II. The
unnecessary movement. Brainwork was for management; influence of military engineers returning to civilian life
brawn work was for the rest. But this was perhaps an brought business measurement and precision back into
appropriate method for a time when education was not as fashion. With the invention and spread of mainframe
universal as it is today. Many early factory workers came computers came enthusiasm for Operations Research
straight off the land from an agricultural upbringing that (OR), the use of computer models. OR showed managers
trained them for little other than sowing and reaping how to apply scientific methods to decision-making. It
harvests. The idea of training workers for factory life was a combined engineering, management, mathematics and
mere side effect of the work of the pioneers of psychology to reach strategic decisions on critical issues.
management thinking. Productivity was their real Operations Research grew with the capability of the
objective. mainframe computer and had its heyday in the 1950s and
1960s. It was a time when, as Russell Ackoff, a leading
The apogee of this objective was the invention of the
OR academic from the Wharton School, once put it, the
assembly line. The opening of the Ford Motor Company's
"use of quantitative methods became an 'idea in good
assembly line at Highland Park, Michigan, came in 1913, currency'".
just two years after the publication of Taylor's work and at
a time when enthusiasm for Taylorism was at its greatest. During that time, no self-respecting corporation of any
substance could be without an OR department. But OR
It has been suggested that Henry Ford's genius lay in specialists were highly trained and expensive. Most firms
marketing rather than in revolutionizing production could not afford to hire their own experts, so OR helped
processes. The argument says that by doubling his
speed the acceptance of the then-youthful management
workers' wages (thereby enabling them to buy his Model T
consultancy business.
cars), Ford created the demand that justified the setting up
of the assembly line. The Ford Motor Company's own Years later, however, Ackoff had radically revised his
official history differs. The official version suggests that the ideas. OR, he said, had by then been relegated to "the
demand was already there, and at a level sufficient to bowels of the organization, not the head". "When it could
justify the revolutionary new manufacturing system. no longer be pushed down, it was pushed out." He
suggested that this had happened because OR had been
Ford's official history relates that, "By the end of 1913,
"equated by managers to mathematical masturbation and
Ford Motor Company was producing half of all the
to the absence of any substantive knowledge or
automobiles in the United States. In order to keep ahead understanding of organizations, institutions or their
of the demand, Ford initiated mass production in the management". Ackoff claimed to have found a basic flaw
factory. Mr. Ford reasoned that with each worker in OR. It was, he said, designed to "prepare perfectly for
remaining in one assigned place, with one specific task to
an imperfectly predicted future", and it "helps us little and
do, the automobile would take shape more quickly as it
may harm us much". That echoes my criticism of
moved from section to section, and countless man-hours Taylorism, a system that was also designed to prepare
would be saved. To test this theory, a chassis was perfectly for an imperfectly predicted future.
dragged by rope and windlass along the floor of the
Highland Park, Michigan plant in the summer of 1913. In the late 1950's, we saw the emergence of four critical
Modern mass production was born!" business TLAs (three letter acronyms): TQM (Total Quality

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Management), JIT (Just-in-Time), BPR (Business Process applications of the Pareto Principle (that 80 percent of the
Reengineering), and ERP (Enterprise Resource Planning). benefit comes from 20 percent of the effort). Japanese
These became the major drivers of business over the past industrialists went so far as to establish a Deming Prize,
50 years. an award that was bestowed annually on the company
that made the most improvement in quality management.
TQM
And they expanded their ideas about quality into
Immediately after World War II, in addition to OR, we saw something that could only be described as a "movement,"
the emergence of Total Quality Management (TQM), led a movement that came to be known as Total Quality
by W. Edwards Deming. As its name implies, its focus Management.
was on improving quality. Deming was an electrical
Central to TQM was one idea in particular that struck a
engineer by training but he had worked during the war as
chord with the Japanese, the idea of continuous and
a statistician for the U.S. government. His TQM ideas did
incremental improvement, of making small but significant
not attract a great deal of attention at first, but Japan
steps forward every day, and all the time. The Japanese
saved him. After the war, he was invited to Japan to talk
even had a word for this, kaizen, a term that was being
about the use of statistical concepts in the control of
used long before the arrival of W. Edwards Deming.
production processes. The Japanese, concerned to shed
their reputation for producing shoddy goods, aggressively
Kaizen has also been translated as "refinement," the
adopted his message. For Deming held out the promise
process by which a rough diamond gets polished very
that if manufacturers could only manage the levels of
gradually until it is turned into a top class gemstone. In
variation -- measured statistically -- in various processes,
Japanese culture, the idea of refinement has a particular
they could significantly improve the quality of their goods.
significance. It is not, for example, considered to be the
As he once put it: "I think I was the only man in Japan in
act of a copycat to take someone else's idea and to refine
1950 who believed my prediction: that within five years
it for yourself. That is considered to be no less than a
manufacturers the world over would be screaming for
celebration of your environment and talents.
protection. It took four years." Deming's methodology
helped to improve Japanese companies' quality and th
By the end of the 20 century, the concept of kaizen had
productivity and to take the country to the top of the
become central to manufacturing improvement. Once
industrial ladder.
engineers escaped from the feeling that process design
was all about coming up with one "perfect for all time"
Deming©s ideas were not entirely original. They had been
solution, they were soon converted to the idea that it was
largely developed in the United States by other
really about improving and adapting. They then set about
statisticians, including Walter Andrew Shewhart, author of
trying to come up with little changes, lots of them and
the pioneering work Economic Control of Quality of
often, changes that were to be largely wrought by the
Manufactured Product, published in 1931. But American
people who were actually carrying out the processes. A
industrialists were slow to take these ideas to heart, and
step in the right direction, for sure, leading to the approach
only came to adopt them once the success of the methods
I am advocating in this book, continuous innovation. And
in Japan became apparent.
General Electric took this concept and institutionalized it
as part of their Work-Out team problem solving process in
By then, the Japanese had adopted Deming as their own,
1988. This decision-making and empowerment approach
as they had another American, J.M. Juran. It was Juran
is designed to resolve issues and improve processes by
who introduced Japan to yet more ideas about quality,
using a team of experienced, knowledgeable people with a
particularly about methods of quality control based on

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stake in the issue at hand. The team is chartered with machine set-ups, and lots of discipline to maintain the
developing solutions and action plans, and they are then other elements. Just-in-Time is both a philosophy and an
empowered to proceed with implementation. integrated system for production management that
evolved slowly through a trial-and-error process over a
JIT span of more than 15 years. There was no master plan or
blueprint for JIT."
Just-in-Time (JIT) inventory management marked the next
major innovative step in the streamlining of industrial BPR
processes. As its name implies, its objective was to
reduce time (and offload costs) by only keeping enough Dr. Michael Hammer is the father of Business Process Re-
inventory on hand to meet immediate requirements. First engineering (BPR). Re-engineering was the first time that
adopted in the early 1970s by Taiichi Ohno of the Toyota customers came to the forefront of business thinking. And
car company, the JIT system was soon being used by it was also the first time that radical thinking was
businesses around the world. Its main claim was that it espoused. His concept was launched in an article in the
reduced the need for each stage in the production process Harvard Business Review in the summer of 1990. Entitled
to hold buffer stocks. In that, it marked a quantum leap in "Re-engineering Work: Don't Automate, Obliterate", written
the elimination of waste and costs. What it did was create by Dr. Hammer, who at the time was a professor of
the discipline to order parts only when they were needed. computer science at the Massachusetts Institute of
At the heart of the system lay the kanban, the Japanese Technology (MIT). The article was followed by a book in
word for 'card', but a very particular sort of card. A kanban 1993 written by Hammer and James Champy, then head
JIT card is the notification that is sent to reorder a of the CSC Index consulting firm. Called Re-engineering
standard quantity of parts that have been used up in a the Corporation, it popularized the idea of BPR and put it
production process. on virtually every corporate agenda in Europe and
America. Described by the authors as a fundamental
JIT was central to the "lean production" system developed
rethinking and radical redesign of business processes to
by Toyota, a production system that made the Japanese achieve "dramatic improvements in critical measures of
car company the most efficient automobile manufacturer in performance such as cost, quality, service and speed",
the world. Despite the fact that it was unable to reap BPR held out the promise of a novel approach to
economies of scale on the same magnitude as the giant
corporate change.
European and American car manufacturers, Toyota was
able to bring its costs per unit well below those of its rivals The technique called for analysis of a company's central
- thanks to JIT and the innovative excellence of its processes and reassembling them in a more innovative
processes. This was a revolutionary achievement. and efficient fashion. Invariably that meant riding
roughshod over long-established (though increasingly
Over time, JIT came to encompass much more than a irrelevant) functional distinctions between areas such as
simple reshuffling of kanbans. In 'Operations marketing, production and distribution.
Management', a 1997 book by Roberta Russell and
Bernard Taylor, the authors describe its fuller Vertically structured functional "silos" were too often
manifestation: "If you produce only what you need when protective of information, and of their own position in the
you need it, then there is no room for error. For JIT to scheme of things. At best, this was inefficient. Slicing the
work, many fundamental elements must be in place - silos into their different processes and reassembling them
steady production, flexible resources, extremely high in a less vertical fashion exposed excess fat and forced
quality, no machine breakdowns, reliable suppliers, quick

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corporations to look at new ways to make themselves ERP
more efficient.
The biggest step in process management since the
One of the faults of the idea that the creators themselves appearance of BPR in the early 1990s has been the
acknowledged was that process re-engineering became widespread introduction of ERP, enterprise resource
something that managers were only too happy to impose
planning systems. These computer applications enable
on others but not on themselves. Champy's follow-up book
the sharing of information across the entire company and
was pointedly called Re-engineering Management. "If their provide box-standard functionality that can be tailored to
jobs and styles are left largely intact, managers will meet specific needs. The short history of ERP is
eventually undermine the very structure of their rebuilt dominated by SAP (System Analyse und
enterprises," he wrote in 1994.
Programmentwicklung), the German software firm that
carved out for itself an extraordinary share of the market.
This brought home the point that process orientation was Founded in 1972, SAP had a share of the market for ERP
not something that could be imposed on certain sections
systems by the late 1990s that was greater than that of its
of a corporation while others were left untouched. It was
five nearest rivals added together. At the time, its systems
something that had to be embraced by the whole
were reckoned to be running in at least half of the world's
organization - from the chief executive to the most humble
500 largest companies.
warehouse worker. It involved the most radical change
that a company's employees were likely to see in their
Unfortunately, many (or most) companies used ERP
working lives. But, most importantly, it involved all of them.
systems as a way of slamming in automated best
And it involved them every day. practices from a functional viewpoint. But this is certainly
not the power of ERP, for these software packages can
But even during this period of radical thinking, processes
enable companies to integrate their information systems
had still not shed the straitjacket imposed on them by
across the board. It can give them a view of their
Frederick Winslow Taylor. They still raised the specter of
organization as a whole that they had never previously
mile-high binders detailing the minutiae of process flows. experienced. This was an opportunity to start looking at
And the aim of all process design was still to come up with
the lines connecting the various groups together. It was a
the best possible process that could be repeated in exactly
bit like seeing the early color photographs of earth taken
the same way every time.
from outer space. It enabled, for example, the sales force
And BPR has had no shortage of critics. Some saw it as a to have access to the same data as the production
function and to find out exactly what was available to sell.
backward step, a return to scientific management,
A useful thing for them to know, most people would agree.
inevitably involving a drastic reduction in the scope for
But up until this point, even companies that wanted to
human initiative. Others saw it as a shallow intellectual
justification for reducing headcount. And indeed it became encourage cross-functional communication had been
closely associated in the public's mind with the large-scale unable to do so because of the way that their databases
had been built up over time.
lay-offs, first described as downsizing, then as it become
endemic in 1990s management, "dumbsizing". This took
Tom Davenport, the Visiting Professor at Tuck School of
place at more or less the same time, largely as a result of Business, Dartmouth College, and the current director of
the recession that hit Europe and the United States in the
Accenture's Institute for Strategic Change, once cited the
early 1990s. Both were, in my opinion, unfair
example of Owens-Corning, an Ohio-based manufacturer
assessments of reengineering.
of building materials. Owens-Corning made a large

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number of changes when it introduced its SAP system, founders and directors of Accenture's Global Process
changes that went beyond reconfiguring its information Excellence practice. And he was one of the leaders of the
systems. For example, it identified certain key processes firm's reengineering practice from its inception in 1992.
that it was able to re-engineer in the light of the new Shapiro has advised many of the world's leading
information available to it. And the company also "re- organizations, from BMW WilliamsF1, ABB and UPS to
engineered" its headquarters building so that managers Lucent and Xerox. He has also collaborated with other
from different functions were better able to communicate thought leaders including Michael Hammer and Peter
with each other. Keen, and is recognized as one of today's most influential
consultants in the area of process and innovation. Articles
An early pioneer in this area is a company called Adaptec, by Shapiro have appeared in over two-dozen newspapers
an American hardware and software firm that realized that
and magazines, and he was recently quoted in The New
its SAP system would be far more effective if the
York Times. For more information, go to
information systems it was putting into place could be www.24-7Innovation.com.
extended to embrace those manufacturers in Asia to
whom Adaptec outsources almost all of its production. So
the company set up an extended system that sent orders
that were keyed into its own SAP network flowing directly
into its partner companies' systems via the Internet. The
effect was to cut several days out of the company's supply
chain. This cross-enterprise integration is now becoming
the norm, and is the first time companies are truly
beginning to focus on the inter-dependencies (the lines)
rather than the boxes (individual departments or
companies).
As you know by know, this is not the end of the story. In
fact, for this book, this is only the beginning. Innovation is
not something new. It has been around for centuries. But
often it has been limited to upper management or the back
room. It is only in recent years where companies can
honestly say there is a move toward a more organic,
pervasive innovation. Innovation that takes place every
day, everywhere, by everyone. 24/7 Innovation.
About the author
Stephen Shapiro is the author of 24/7 Innovation: A
Blueprint for Surviving and Thriving in an Age of Change
(McGraw-Hill, 2002, ISBN: 0-07-137626-7, $29.95) and
founder of The 24/7 Innovation Group. Previously, he
spent 15 years at Accenture. During his last three years,
he was based in London and led the firm's European
Process Excellence practice. In 1996, he was one of the

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