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March 2014

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Dr. Gallagher Explains Implications of Innovation in Publication

Scott GallagherHow can complex organizations innovate while remaining reliable?

Many organizations, such as nuclear public utilities like Dominion Power, confront the need to change while having to maintain perfect reliability or face catastrophe.  Given the high stakes and the risks that changes in one part of an organization’s system will affect others, how can such organizations make better decisions regarding innovation?

Dr. Scott Gallagher, Management department head and professor, recently published his co-authored research article “Innovation Decision Making in High-Risk Organizations: A Comparison of the US and Soviet Attack Submarine Programs” in Industrial and Corporate Change. The article discusses the potentially catastrophic implications of employing innovative change in high-risk organizations, using the case of the United States and Soviet attack submarine programs as an exemplar.

Given that they have at their core a nuclear reactor, navy submarines are clearly high risk organizations that need to innovate yet must maintain 100% reliability.  The article discusses the U.S. Navy’s approach, greatly impacted by the loss of the USS Thresher in 1958 with the Soviet approach, using them both to

offer a better understanding of the decision-making processes that surround implementing innovative techniques in high-risk organizations. Though risky, the authors argue that even high-risk organizations must utilize innovative products and processes to remain viable, much less thrive. 

The paper applies actor network theory (ANT) to illustrate the various levels of network interactions and dependences that are inherent to innovative decision-making processes in high-risk organizations.  The theory also draws on the ways in which innovative decisions can affect reliability of the organization.

According to the authors, under ANT decision-making is a complex interaction among individuals that includes a constructed shared set of meanings, a central problem, and possible solutions; an identified group of actors, the individual goals of each actor, and the shared goals among those actors; and finally, negotiation and coercion among the group of actors based on individual objectives.

“It sounds way more complicated than it really is,” explained Gallagher. “The key issue is that the U.S. Navy and the Soviet Navy and their associated stakeholders never directly communicated, so how do you incorporate needs and risk taking when actions are interdependent yet they never actually interact.”

To develop their theory, authors trace, analyze, and compare the development and decision-making strategies of the US and the Soviet Union in each country’s respective submarine attack program from 1970 to 1996.

A comparison of the two country’s submarine attack programs using the ANT framework led the authors to four propositions concerning innovative decision-making in high-risk organizations:

First, the authors proposed that open communication among knowledgeable actors results in greater commitment to innovation decision-making, better utilization of new technologies, and higher reliability.

Second, the authors proposed that power dispersions in high-risk networks leads to an increase in negotiation, a decrease in radical innovations, a higher use of platforms, and an increase in reliability.

Third, the authors propose that dominate coalitions are more likely to develop when actors are a part of more than one of the groups working within the network, resulting in a heavier influence on decision-making.

Finally, the authors propose that without strong safety advocates, cost and performance goals will dominate reliability and safety goals in high-risk organizations, especially involving cases in which the organization is technology inferior to its competitors.

“Basically, share information, share power, make sure you know what you are doing and have someone powerful who is an advocate for safety is the summary,” explained Gallagher.  “Like so much in management it sounds like common sense if you explain it well, but in reality it is very hard to do, as the Soviets discovered. 

Employing each of these four ideas the U.S. Navy maintained a flawless safety record.  However, in contrast, the Soviets improved the war fighting capability of their submarines but at huge costs in reliability losing several subs due to simple malfunctions.  “For example, the Soviets had a very advanced attack submarine called the Alfa that appeared very formidable,” explained Gallagher, “an Alfa was immortalized in the movie “The Hunt for Red October.”  However, essentially all six Soviet Alfas were lost or scrapped due to being impossible to maintain and operate safely.”

Concluding the article, the authors emphasize that innovative decision-making in high-risk organizations is a perilous albeit necessary demand of organizations wishing to remain operable and prosperous in today’s corporate landscapes.

The paper was co-authored by the late Paul Bierly III of JMU and J.C.