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From Push to Pull: The Next Frontier of Innovation

An article, in the latest issue of The McKinsey Quarterly, shows how “smart”, modular, decentralized systems that connect an array of suppliers and other external stakeholders are providing a competitive advantage and changing the face of the efficient corporation. According to the authors, organizational success depends upon effective mobilization of resources. Getting the right resources to the right place at the right time can make the difference between desired impact and catastrophe.

The article describes a fundamental shift in models for mobilizing resources. Most companies now mobilize resources by deploying push systems, in the mistaken belief that they promote efficiency. Push systems –characterized by top-down, centralized, and rigid programs of previously specified tasks and behavior– hinder participation in the distributed networks that are now indispensable to competitive advantage. More versatile and far-reaching pull systems –characterized by modularly designed, decentralized platforms connecting a diverse array of participants– are now starting to emerge in a variety of arenas. As pull systems reach center stage, executives will have to reassess almost all aspects of the corporation.

According to the article’s authors, John Seely Brown and John Hagel III, five broad forces are shaping the emergence and evolution of pull platforms:

* Increasing uncertainty
* Growing abundance
* Intensifying competition
* Growing power of customers
* Greater emphasis on learning and improvisation

In environments shaped by these forces, push models are breaking under the strain and pull models are beginning to fill in the gaps.

“It is easy to become overwhelmed by the magnitude of change ahead”, said John Hagel. “In our article and working paper, we conclude by focusing on the bottom line for business executives, suggesting tangible and pragmatic actions they can take now. These actions will help to ensure that they are well-positioned for the transition ahead. By mastering the techniques required to make this new model work, companies will be able to create substantial economic value. Those who adhere rigidly to the old model will likely destroy significant economic value.”