Passionate and cynical are two adjectives that most readily convey the timbre of Stuart Macdonald’s book. The book reads as a collection of thoughts that originate from, and are illustrated by, observations of how organisations and governments go about orchestrating the process of innovation. The first part of the book sets out ideas about the nature of information and the complex relationship that this has with the process of innovation. The second part uses a number of diverse case‐based examples to illustrate the concepts introduced in the first part. The passion and cynicism are evident in the language used in the discourse throughout the book and in interpreting the case‐based material in the second half. The reflections and interpretations of the behaviours of individuals, organisations and the government are couched in a curiously pragmatic mix of referenced works and personal opinion. The deductive logic of the commentary is occasionally flawed, and the persona of the author intrudes on any claims to objectivity, suggesting a degree of indifference to some of the niceties of academic endeavour.
That he does not even attempt an academic justification of what he says will probably offend many academics. However, to focus on this aspect would be to throw out the baby with the bath water. In fact the fundamental ideas that Macdonald is purveying are very powerful. They make compellingly good sense at a practical level. Moreover, although he does not trouble himself to spell them out, the links to extant literature in knowledge management and business transformation are clear to see. It could be argued that his agenda is to simply present his thoughts, leaving the reader to evaluate their intrinsic value and utility.
The substance of the book is concerned with deployment of the information perspective of innovation. It offers some valuable insights for those engaged in the management of innovation and it also relates very neatly with some of the central issues of knowledge management and transformation in the information economy.
At the centre of the book is the accusation that whilst governments, businesses and consultants all concur about the importance of information in the socio‐economic context, they fail to take on board the idiosyncratic nature of the information good itself. The idiosyncratic nature of information (e.g. its ubiquity, its replicability, the peculiarity that it can be transferred to a buyer whilst persisting with the seller) poses significant problems for those attempting to sell or to acquire information goods using conventional market mechanisms. Valuation of the good is problematic – the intrinsic value of the good itself cannot be determined by inspection before purchase, and its utility value is sensitive to the process by which it is transferred, internalised and exploited by individuals and organisations.
Macdonald points out that the transfer of information from one party to another does not necessarily equate to the acquisition of that information by the recipient. This is because to be of any use the new information must be mixed with the recipient’s existing information repertoire. In his view new information that is relatively easy to accommodate because of its similarity to existing information will lead to relatively small changes. Equally information that is radically different from that which already exists will be harder to accommodate but will result in bigger changes. Consequently an information transaction is required to incorporate the new information into the internal pattern. This is akin to the notion of internalisation or absorption highlighted in the knowledge management literature. At the personal level, conversation between two individuals provides a very effective mechanism for both information transfer and the requisite information transaction. By picking upon the types of things that the other person is interested in, it is possible for each individual to evaluate the type and calibre of information the other is likely to possess. Subsequent transactions achieved through conversation can be viewed as a bartering exercise. To overcome the limited scope of this bilateral mode individuals participate in networks. As with bilateral conversations, participation in the network is predicated on reciprocity – individuals contribute information to the network that will over time match the value of information they receive from the network. Failure to do so results in exclusion, as the network will not tolerate free riders. The power of informal networks in information exchange is well documented. In world of information ubiquity, given the difficulty of evaluating unseen information goods, the network mechanism serves to filter and distribute relevant information to individuals. The informal relationships are important because it is the mutual understanding of each other’s needs and likely information endowments that enables the recipient to ask for appropriate information and the supplier to offer appropriate information together with the know‐how to leverage it. The network is effective because it allows information to be private property, not because it demands information to become a public good. Individuals do not broadcast information across the network, they barter explicit and tacit information and know‐how with specific others on the basis of personal need and reciprocity. Personal exchange of information overcomes the difficulties of market transactions, sidesteps the problem of pricing and reduces uncertainty, as common interest of participants ensures relevance without codification.
In Macdonald’s view, it is the failure to engage with these aspects of information that has led to governments and organisations floundering in their attempts to deal with the complexity of the innovation process which is predicated on the utilisation of existing information to develop new information. Their thinking, he suggests, is driven by the linear model of technological change, which neatly lays out the path from research through invention and development to innovation. The model is a closed system representation, with the entire process contained within the organisational boundary from beginning to end, making it subject to organisational control mechanisms. However it has been shown that in reality, innovation results from complex interactions, with much contribution to change coming from outside the organisation and entailing multi‐directional information flows, suggesting that innovation is as likely to inspire research as research is to generate innovation. Information for innovation does not come neatly packaged from a single source. Innovations come about through the piecing together of multiple fragments of information from diverse sources, and the process is incremental in nature.
The importance of this theme is illustrated by the history of science/technology parks in the UK, attempting to emulate the Silicon Valley success with carefully landscaped environments close to university departments. The success of Silicon Valley, it is argued, derives from the openness of the culture and the existence of very active networks that link individuals in different businesses who are willing to exchange non‐confidential information. Macdonald argues that the hi‐tech business units that populate the UK parks are relatively insular and have an information‐hoarding mindset, and so it is hardly surprising that they have failed to deliver to initial expectations of innovative flair. As he puts it “Greenary and ducks are no substitute for information exchange networks”.
Over the rest of the book Macdonald uses examples of innovations ranging from eighteenth‐century threshing machines to semiconductor electronics to illustrate the folly of well‐intentioned but inappropriate management interventions to control or channel information flows and intellectual capital. The examples make interesting reading because they describe ventures that are fantastic in their lack of appreciation of the information perspective. Often the reader will be stung by Macdonald’s breezy generalisations, and will think of alternative interpretations and explanations to compete with those offered in the text. However in every case the proffered interpretation lends itself to serious consideration and upholds the value of the information perspective.
The book makes easy reading, and the ideas about information and information transactions and processes are important in the context of innovation, knowledge management and business transformation.
