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Why U. S. Business Schools Avoid Innovation

G. David Hughes - February 6, 1999

Innovation has been credited with being the spark that makes companies great and the power that has changed our lives in the last century. Yet the topic is not central to courses in U. S. business schools, while it can be found frequently in engineering schools and academic environments around the world. We will briefly examine the possible causes for innovation’s exclusion from core business courses and three conditions that may bring innovation into the mainstream of business education.

Innovation can be defined as using creativity to add value. Creativity is going beyond the current boundaries of technology, social and political norms, practices, and knowledge. But if creativity does not add perceived value, then it is just a curiosity.

Creativity requires a mental process that is unfettered by past dogma and deductive reasoning, but it is not anti-scientific. It is a critical part of the scientific process because it generates hypotheses that are later tested with experimental data and deductive thinking. The unfettered nature of creative people makes them unpopular with institutions such as churches, businesses, and governments that attempt to control people with dogma, rules, deductive analysis, and the control of information. Now we begin to see why business schools do not encourage creativity that leads to innovation. Most business schools have a heavy investment in teaching deductive analysis and related control mechanisms. But as knowledge becomes the driving force in companies, it breaks down functional areas, and hierarchical organizations because no one person at the top can keep track of the rapid growth of knowledge. U. S. business schools have yet to adapt to this flatter organizational structure. In brief, they have not made the paradigm shift from the science of matter to the science of knowledge.

The science of matter began 400 years ago with Copernicus opposing the Ptolemaic theory that the earth was in the center of the universe. Newton’s theories of motion, gravitation, and light as well as his invention of calculus demonstrated that modeling could provide powerful explanations of how systems of matter worked. Adam Smith, Karl Marx, and Sigmund Freud used concepts from physical models to describe how their systems functioned. This stream of thinking has created a material science organizational design that inhibits creativity and therefore innovation. Wheatley notes,

At the end of the twentieth century, our seventeenth-century organizations are crumbling. We have prided ourselves, in all these centuries since Newton and Descartes, on the triumphs of reason, on the absence of magic. Yet we, like the best magicians of old, have been hooked on prediction. For three centuries, we’ve been planning, predicting, and analyzing the world. We’ve held onto the intense belief in cause and effect. We’ve raised planing to the highest of priestcrafts and imbued numbers with absolute power. We look to numbers to describe our economic health, our productivity, and our physical well-being. We’ve developed graphs and charts and maps to take us into the future, revering them as ancient mariners did their chart books. Without them, we’d be lost, adrift among the dragons. We have been, after all, no more than sorcerers, the master magicians of the late twentieth century.

We made organizations fit Newtonian mechanical models by putting responsibilities into functions and people into roles with boundaries and a secure sense of control. When we studied organizations, we thought we confirmed these models because we used research designs that assumed cause and effect relationships. We assumed also that these relationships move toward equilibrium, when, in fact, they move away from equilibrium as they learn and renew in response to an ever-changing environment. Stacey challenges the present organizational models by noting that stability, harmony, predictability, discipline, and consensus, which are central to most Western management practices, are all wrong. Instead of equilibrium, he argues, we need bounded instability, which is the framework in which nature innovates.

Western business organizational designs can be traced to Western thought that is dominated by deductive reasoning. Eastern philosophies, in contrast, could greatly impact organizational designs. 'In Buddhism reason is seen as limited, and the knowledge derived from it is transient and unreliable. Reason is therefore not considered a trustworthy source of knowledge of the absolute reality underlying a change. The Buddha taught that intuition, not reason, is the source of ultimate truth and wisdom. In Zen meditation, the discriminating conscious mind is quieted, and the intuitive mind is liberated. As businesses become global, will Eastern thinking influence organizational designs by demonstrating that rationality and reason are not the only sources of knowledge? Perhaps these new designs will become a new source of global competition. But will future business leaders be ready to include intuition in their organizational paradigms? Intuition is even rarer than innovation in the typical business school curriculum.

Innovation will play an important role in the curriculum of U. S. business schools when one or more of the following events takes place: First, when businesses demand that students be trained in innovation and creativity to prepare future leaders to participate in the new environment of heightened competition, the shift from material to knowledge economies, shorter product life cycles, diminished returns from present methods, and the recognition that management fashions-of-the-month are just not working; second, when a few business schools see innovation as a means for taking a leadership role in business education, thereby attracting students, company recruiters, and financial resources; and third, when global competition brings nonWestern philosophies into organizational designs.

©Copyright. G. David Hughes 1999. All Rights Reserved.

Editorial Note: These observations were written at the request of Professor Emeritus Morris I. Stein, Psychology, New York University, who edits Creativity's Global Correspondents. This is an annual publication that is 'Dedicated to the strengthening of bonds between creativity teachers, researchers, and trainers around the world through the dissemination of information rapidly and inexpensively'. Reading the observations and short reports from persons around the world shows the impact that creativity is having in developing countries.

Global Correspondent: G. David Hughes, BS, MBA, Ph. D.,President, Decision Labs Ltd.

Burlington Industries Professor of Business Administration, University of North Carolina, Chapel Hill (Emeritus). Formerly on the faculties of Cornell University; University of California, Berkeley; Louvain University (Belgium); and Harvard; and a visiting lecturer at universities in England, Austria, and Argentina.


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Helping organizations develop out-of-the box strategies using creative problem solving techniques with an emphasis on marketing, government, and health-care organizations. Sailing is used as a metaphor for leading an organization through creative transformation.


Sales Management: A Career Path Approach (with Daryl McKee and Charles H. Singler), South-Western, 1999.
Six additional books on the topics of market strategy, demand analysis, and attitude measurement.
More than 75 articles that have appeared in the Journals of Marketing, Marketing Research, Business, Product Innovation and Management, The Executive, the Harvard Business Review, and proceedings of the American Marketing Association and the Association for Consumer Research.

Current articles may be found in the website: www.unc.edu/~gdhughes/. Click on 'Articles' for 'Add creativity to your decision process' and 'A comparison of CPS and TRIZ'.

Fortune, March 3, 1997.
Newsweek, Winter, 1998.
Margaret J. Wheatley, Leadership and the New Science (San Francisco: Berrett-Koehler Publishers, Inc., 1994), 26.
Ibid., 27-28.
Ralph D. Stacey, Complexity and Creativity in Organizations (San Francisco: Berrett-Koehler, 1996).
Frances E. Vaughan, Awakening Intuition (Garden City, NY: Anchor Books, 1979) 50.

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