A Chat with Rosabeth Moss Kanter

In Evolve!, the Harvard B-School professor instructs companies to embrace digital change, saying the Web's best is yet to come

Writer's block? Not Rosabeth Moss Kanter. The Harvard Business School professor has written or co-written more than 15 books, including When Giants Learn to Dance and The Change Masters, that explore important workplace issues such as innovation, change, and organizational management.

Her latest effort, published in February, is an attempt to shed light on the new digital culture. In Evolve!: Succeeding in the Digital Culture of Tomorrow, she explores how e-business is changing the way companies do business, and what it means for the future. She recently spoke with former BusinessWeek Online editor Karen Angel, who reviewed the book for BusinessWeek in June. Here are edited excerpts from their conversation:

Q: Is there a potential problem with the book's timing, given the dot-com crash? Why should people read this book now?


The Internet is not in the critical-care unit, it is in the nursery. Having a Web site is only the first step toward Web-enabling a business, and I predict that the best applications are yet to come -- especially as wireless technologies continue to develop. But the main reason that people should read this book now is because of its lessons about change: the nature of a culture for change, how to incorporate the next wave of technology, how to innovate effectively, personal leadership skills to lead change successfully.

Q: Does the dot-com crash sway your conclusions?


I feel that I predicted the dot-com crash. That's why I titled the introduction to Evolve! "The New Economy Lobotomy," suggesting that we had forgotten the lessons of history: We acted like we had lobotomies removing part of our brain, the memory. And that's why I titled Chapter 2 "Alice in Tomorrowland," suggesting that there was a big component of fantasy in the claims of the youthful dot-coms.

Q: Which audiences are you targeting? Which groups -- in your terms, "dot-coms," "dot-com-enablers," and "wannadots" -- will most likely be drawn to the book, and why?


My primary audience is people concerned with the effective leadership of dramatic organizational change. So I imagine that established organizations -- both brick-and-mortar companies and the technology companies themselves -- find valuable insights in Evolve!.

In addition to major businesses, I have heard that a wide variety of organizations are using the book, including some surprising ones. For example, the Richmond (Va.) police department, the New England Aquarium, the Food & Commercial Workers Union, the National Association of Realtors. All are concerned about their relevance and ability to innovate in the Internet Age.

The Internet happens to be the most significant opportunity or threat that most established organizations face at the moment -- despite the slowdown in technology spending, which I believe is temporary. But the lessons I draw about a culture for change and change-leadership skills apply to many big agendas, such as new ventures of any kind in established companies, or even effective merger integration.

Q: What distinguishes the digital "pacesetters" from the "laggards?"


The two broad groups of companies were really different in how they approached the Net -- in fact, how they approach change in general. Laggards moved from denial of change, through anger and blame (whining about "unfair competition" rather than examining their own practices), to superficial or cosmetic change -- spending a lot of money but not getting the benefits of change for the mainstream core business. Pacesetters began with curiosity instead of denial, moved to challenging their own beliefs and assumptions, and then implemented the new technology in more systemic ways that addressed needs of the core business and experimented with deeper changes.

The best examples of pacesetters are IBM, an early mover to the Web, and Williams-Sonoma, a later mover but fast to become a leader. IBM is perhaps the world's largest e-commerce company today, with more than $13 billion in sales over the Web, $42 billion in procurement, over 30% of employee training, etc. Williams-Sonoma came within $250,000 of breaking even in its first full year on the Web, made a profit the second year, and continues to grow the applications and value for its retail stores and mail-order catalogues.

Q: How can a company ensure its change isn't merely cosmetic -- or, in your words, a case of "putting lipstick on a bulldog?"


The biggest barriers to change are internal. They begin with lack of skills to address the change, as new technologies and new ways of doing things tend to require skills that haven't been cultivated inside the company in the past.... Other barriers are classic examples of how CEO biases can inhibit change, or, in the case of pacesetters like General Electric, propel change. We found numerous instances of CEO skepticism or lack of personal knowledge of computers holding back the people with ideas.

But perhaps the biggest barrier was the battle for turf and territory inside the company. Divisional rivalries, including conflicts between new Internet departments and traditional divisions, were the enemy of change. "Management fighting for its God-given territory" was how one leader described this barrier.

Q: You compare e-business to "improvisational theater." Why is mastering this medium so important?


Actually, I say that strategic planning must become more like improvisational theater, with its rapid incorporation of audience feedback as the actors try to improve the play with each performance, than like traditional theater, with fixed scripts, endings known in advance, and exactly the same action every time.... Companies cannot rely on ideal plans carefully crafted by top management. Instead, they must agree on a theme -- a goal, a direction -- and empower teams of innovators to work out the specifics in interaction with audiences. [This is] called "rapid prototyping" in the technology world.

Q: How does a sense of community -- both internal and externally, with respect to involvement in community service -- help build a strong e-business?


A sense of community builds strong businesses and organizations in general, as we have known for decades of watching enduring companies that engender high performance and commitment through values and culture. But pre-Net, companies could get away with excessive decentralization that created many fiefdoms, each battling for territory. Now, in the Internet Age, seamless connections among all parts of a business are critical because customers expect to be linked to everything a company has to offer, and quickly.

Q: But you also say that cyberspace generates "communities of opposition." Please explain.


The same technology that makes it easy for companies to communicate with employees and customers makes it possible for disgruntled employees or customers to find each other. E-organizing is an effective new tool in the hands of protestors, activists, or simply upset consumers.

Individual protestors can set up a Web site heralding their concerns, and within days attract thousands if not millions of other people who share those views or are simply curious -- but then get the bad news about a company. And a new wave of complaint sites, such as PlanetFeedback, offers a venue for people who want to send a message to a company about its practices. If companies do not respond quickly and resolve complaints, little protests can add up to big campaigns of opposition using the Internet.

Q: How does the Net give rise to partnerships between competitors, such as IBM and Cisco?


Customers want solutions, not components. And complex products or services require more than any one company can build or do by itself, because each has to be deeply specialized.... This has led the technology companies to become alliance-rich.

The IBM-Cisco alliance is the most dramatic -- which is why I chose to write about it -- because these are two of the strongest companies, the recent free-fall in Cisco's stock price because of overproduction notwithstanding. Cisco simply did a better job than IBM in some arenas, so for IBM to serve its customers with solutions, it needed Cisco. And IBM is very strategic for Cisco in terms of new kinds of customers.

Q: You write that the Net has completely transformed our lives. What's the next stage in that evolution? Are there still huge transformations to come?


The next stage in evolution will be the ways that computer-enabled, network-connected devices interact with biological processes to help lengthen our lives, improve our health, and allow us to be connected with the people we care about. Mobile devices will make it easier to empower workers to make decisions on the spot, saving time and increasing satisfaction at work. The Net in general will connect people in all parts of the world who share common interests, thus bringing us closer to a connected community worldwide. This could even -- dare I dream? -- increase empathy and shared understanding among culturally diverse people.

At the same time that we are increasingly united, we can also maintain and deepen the things that make us special or different, as the Net archives cultural documents and allows the few hundred speakers of an obscure language who are now scattered throughout the world to keep the language alive by e-mailing each other. Depending on political decisions, this could help unite people around the globe to improve education for children and help tackle poverty, pollution, and health problems.

Q: What are the risks of a Net-driven society?


The biggest risk is we become too obsessed with the technology and forget about the people. People make it all work -- and, paradoxically, human relationships become even more important in the Internet Age. In public schools, the most important use of the new technology is not computers in the classrooms replacing teachers, but mentoring networks for teachers that improve the way they teach their students.

Edited by Karin Pekarchik

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