:: By Lydialyle Gibson

:: Photography by Dan Dry

Investigations ::

What happened at the Xerox Corporation during the 1970s has become a computer-industry legend: at the dawn of the personal-computing revolution, Xerox missed its chance to become the sun. At Xerox’s Palo Alto Research Center (PARC), established in 1970—back when researchers were still sharing machines that filled entire rooms—scientists pioneered technologies that years later would lay the foundation of modern computing: word processing, cut-and-paste editing, laser printing, Ethernet, the mouse, hypertext, bitmap display, integrated user interface, clickable icons, overlapping windows, and even the term “personal computer.” In 1973 PARC scientists built the Xerox Alto, a computer small enough to fit under a desk.

But having funded the research, Xerox failed to put resources behind commercializing the technology, and one by one PARC’s innovations were brought to market by other companies: IBM, Microsoft, Apple, 3Com. “And Xerox,” says GSB associate professor Tanya Menon, “remained a copy-machine company.”

A behavioral scientist who studies organizational culture and decision-making patterns, Menon has spent more than a decade analyzing how businesses and businesspeople assess new ideas and why they often fail to grasp the value of innovations developed within their own ranks. Xerox’s experience provides a striking example—in fact, it sparked Menon’s research—but it’s hardly unique. In the 1980s General Motors had trouble absorbing the lessons from company division Saturn’s successful teamwork and comity with its union. That same decade, GM executives cost the company billions of dollars by plowing ahead with a less-efficient manufacturing system than the one in place at a California auto plant the company comanaged with Toyota.

On a much smaller scale, countless similar encounters take place between individuals every day: colleagues denigrate each other’s creations, they don’t seek advice from fellow employees who could give it, and they often don’t realize when a coworker has a worthy idea. “In our everyday relationships with family and friends, our identities matter,” Menon says. Individuals compare themselves to others. Sometimes their self-esteem is threatened and they feel envy. “These same processes systematically affect how we value ideas in organizations,” adds Menon, who came to Chicago in 2000 with a PhD in organization behavior from Stanford and a Harvard bachelor’s degree in sociology.

Simple envy isn’t the whole explanation. Internal ideas are more easily scrutinized and picked apart than those seen from a distance. But personal motivation can be potent, Menon says. “In a business era that venerates creativity, novelty, and thought leadership, ‘borrowing’ knowledge from colleagues is not a career-enhancing strategy,” she wrote in a 2006 Management Science article. Bosses shower awards, bonuses, and promotions on innovators. Employees who learn from another’s idea may be perceived as followers, Menon says, and “managers reward the leader, not the follower. That gives me an incentive to cut down your idea and put my resources into promoting my own.”

Emotion also plays a role. People worry about losing social standing, looking like a thief, giving public deference to office rivals, and appearing weak or dependent. Corporate incentives and policies, Menon says, should ameliorate, not intensify, these reactions. In the Management Science article she and coauthors Leigh Thompson of Northwestern University and Hoon-Seok Choi of South Korea’s Sungkyunkwan University found that a simple “self-affirming” exercise, in which people listed some of their accomplishments—“even just ‘I’m good at art’ or ‘I’m a good tennis player’”—or described values they cherished, helped ease their sense of being threatened. “Afterward, they did not derogate an internal person’s ideas,” Menon says. “They felt more comfortable saying, ‘This is a good idea worth pursuing.’”

Even while managers and coworkers sometimes reject or ignore their peers’ ideas, they often pursue those of rival companies, Menon says. They hire outside consultants, who may repeat what internal voices have already said; they study their competitors’ moves, sometimes trying to appropriate ideas that are difficult to translate, or to which they may not have legal rights. In a 2003 article, also in Management Science, Menon and coauthor Jeffrey Pfeffer, a Stanford organizational behaviorist, offered two case studies. The first one concerned a West Coast salad-buffet chain called Fresh Choice, whose management coveted the inventive menus, lively décor, and engaging atmosphere of competitor chain Zoopa—until Fresh Choice acquired Zoopa in 1997. Then, instead of describing Zoopa’s employees as “bright,” “creative,” and “energetic,” Fresh Choice executives began calling them “burnt out” and neglected to capitalize on the very ideas they had once admired. 

Menon and Pfeffer’s other case study took them back to Xerox, where in 1994 PARC scientists began work on Documents.com, a Web-based project that provided Internet-based document services such as printing and translation. Xerox’s executives remained uninterested in the idea—even severing its funding—until a few years later, when outside competitors began working on the same concept. Xerox sent managers to investigate rival company Impresse’s product, while PARC scientists worked unfunded. “Organizations have a difficult task in finding out what’s a good idea or a bad idea, and they use all kinds of shortcuts,” Menon says. “But outsiders’ opinions are the shortcuts you use to identify what’s a good idea, you lose your ability to internally generate innovation. You lose your ability to be a thought leader.”

Even though employees have long griped about issues like the unquestioning trust managers invest in outside consultants, Menon’s research sounds paradoxical in a business world accustomed to hearing about the “not-invented-here syndrome,” the notion that internally generated ideas are the only ones to gain traction within a company. “Social psychology” she says, “has historically, emphasized in-group preferences and biases against out-groups—stereotyping, prejudice, and discrimination.” Those cliquish dynamics also hold true in business, she notes, but the behavior of organizations is rife with crosscurrents and complexities. For example, coworkers may harbor simultaneous feelings of insecurity and vanity. A 2006 Organizational Behavior and Human Decision Processes paper Menon cowrote with Northwestern’s Thompson described employees’ tendency to overestimate the threat their credentials and accomplishments posed to colleagues. Under the influence of such amplified self-perceptions, people may silence their own ideas for fear of shattering others’ self-esteem. “This self-enhancing belief reflects paranoia,” Menon says. “We can misperceive envy where none actually exists. Then we try to protect other people, but this leads to all sorts of condescending notions that our talents must certainly intimidate them.”

Menon’s newest line of research focuses on “rivalry and contamination.” When despised and distrusted coworkers begin complimenting people on their work or striking up friendly conversations, it causes great alarm. Without “simple schematics” to predict their behavior, Menon says, “we can gravitate to superstitious explanations to understand them. We see them as capable of jinxing or controlling our outcomes.” People shun these unpredictable rivals more intensely, and they blame them for their failures. “People try to avoid talking to the person, touching them, or even using mundane objects associated with them.” Individuals recoil, for instance, from a pen loaned to them by a rival. But Menon’s experiments show that hand-washing seems to erase the effect. “Literal cleansing symbolically erases the rival’s contact with the self,” Menon says, adding, “We’re just beginning to understand all these processes.”