Rationality, Foolishness and Adaptive Intelligence

Abstract

This article explores recent changes in thinking about innovation by considering the recent work of two key thinkers: James March and Gary Hamel. James March examines innovative product development: according to March, most decision-making within organisations is premised on the notion that humans behave rationally; yet the objections to a purely rational model of behaviour are numerous and compelling. An alternative approach to the rationalist model of decision-making is one that is feedback based; yet here too adaptive mechanisms can be conservative, myopic and torn between a logic of exploration and one of exploitation. For March the solution lies in trying to contain the risks of innovation. Gary Hamel underscores the importance of innovation in management approaches against a narrow view of innovation as related to products: organisations, he believes, routinely underestimate or even ignore the competitive advantage that management process innovation can confer.