Michael Lissack
do not challenge, do not raise the flag of a potentially competing priority." JR East makes money from its waste water, and did so from the beginning. IBM gave up a 19-year head start on barcode technology. Who could cal- culate how much money it didn't make? Both the JR East and IBM contexts were consistent, but when viewed in hindsight, one was obviously more functional than the other. Your ob- jective as a manager is to avoid creating a dysfunctional context. While the lessons of history are interesting—and we will continue with a few more—your object is the here and now. In today's environment, dysfunctional contexts have become even more costly. The accelerating pace of technological and market change means that missed opportunities compound more quickly, while organi- zational rigidity becomes a liability faster than ever before. Companies like Blockbuster, Kodak, and Nokia didn't just miss single innovations; they created contexts where recombination was systematically discour- aged, leading to cascading failures to adapt. The point to pay attention to is that context matters . The right context can be very enabling and the process of combining building blocks will flourish. The wrong context will be dysfunctional. In it, building blocks will be cast adrift, materials needed for construction will go begging and be hunted for, and, in the end, what might have been created will not be built. (This is what happens to Lego building kids on a bad day or when the wrong person makes a few discouraging comments.) Richard Pascale illustrates the power of a dysfunctional context with a revealing quote by a middle-level GM executive from an earlier era:
"When you look at GM as an outsider, it seems that some of the things we're doing are crazy. But if you look closely you discover that everyone here is in a lifeboat, and no one is courageous enough to jump out. You have to re- alize that the system we've got today has been good to everybody. It rewards managers very, very well. In addi- tion, all of our inefficiency means that during boom times
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