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A multi-level analysis of the not-invented-here syndrome

The tendency for people and organizations to avoid things that they did not create themselves may lead to a fundemental rejection of external knowledge.

How often have we seen new ideas and innovations taking a long time until they are adopted? Even in the digital age, organisations slowly adopt new technologie that could benefit them if they adoped them early. In a recent article, I described the example of Zoom that was created in 2011. It took an outbreak of a pandemic to integrate solutions like Zoom in daily business. In fact, remote work and home office have become unavoidable due to isolation and quarantine measures imposed by governments. To understand why many companies have always been reluctant in introducing digital processes and establishing a home office culture, let’s have a look at the not-invented-here (NIH) syndrome.

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It was in 2014 during my studies at the University of Strasbourg when I first heard about a disease, known as the NIH syndrome, that seems to often affect successful companies or entrepreneurs who pride themselves with their success. The not-invented-here (NIH) syndrome is to be understood as a company’s rejection against externally developed knowledge. This article is based on a research work that I have done in 2014 as part of my Master’s degree in Economics and Innovation Management at the University of Strasbourg.

“No matter who you are, most of the smartest people work for someone else.” — Bill Joy

In management science, Joy’s law is the principle that no matter who you are, most of the smartest people work for someone else. This principle is attributed to Sun Microsystems co-founder Bill Joy. The idea behind Joy’s law is to emphasize the fact that a company can never have all the best employees, because there are always others with better employees. Consequently, collaboration and a company culture that accepts ideas from outside its boundaries become essential. In fact, an innovative company is sometimes not the best placed to value its invention, because other companies may have ways of optimizing the market value of the invention.

“If you want something done right, you’ve got to do it yourself.” — Charles-Guillaume Etienne

Although knowledge externalities are widely accepted as valuable, there are some companies that attach less importance to the latter and believe firmly that they would always be ahead. In other words, knowledge or ideas outside the company would never be as good their own because the competitors are expected to be lagging behind in any case. “If you want something done right, do it yourself”, as the 19th-century French writer, politician and member of the Académie française Charles-Guillaume Etienne once said, perfectly describes such an attitude. This is where the phenomenon known as the NIH syndrome strikes in. Unfortunately, there is not much literature on this subject and the one that does exist is based on the article published in 1982 by Ralph Katz and Thomas Allen. The latter defined the NIH syndrome as “the tendency of a project group of stable composition to believe that it has a monopoly of knowledge in its field”, which is tantamount to saying that one resists knowledge developed beyond the company’s borders (Hussinger & Wastyn, 2011).

Since few authors have taken an interest in the NIH syndrome, there is also little explanation for the sources of this phenomenon. Obviously, success may be followed by pride, presumptuousness and overconfidence. Such a high level of self-awareness can result in a haughty attitude. This can lead to the appearance of what is called the NIH syndrome, which I will discuss in this article on three levels, firstly the organizational level, secondly the level of external knowledge sources and finally in terms of the company’s success.

NIH syndrome at the organizational level

Knowledge creation is a complex process involving a large number of different tasks and individuals with a diversity of skills. The way in which information or knowledge is treated differs from one company to another. Within this framework, evolutionary economic theorists speak of routines, which are defined by Wesley M. Cohen as “the ability that is executable in specific contexts, learned by an organization in response to selection pressures from an environment”. Furthermore, they are characterized by heritability and selectability and are incorporated into the knowledge base of organizations. They constitute, in a way, the company’s organizational memory and are the result of experience. Consequently, they link changes in the company’s environment to the company’s response. What is important to know is that they are difficult to change because they are subject to a phenomenon of “path dependence”. This phenomenon can give rise to a problem of containment. The latter may be a good explanation for the NIH syndrome. One can imagine that a company refuses to internalize knowledge externalities because it considers external knowledge as a threat to its organizational structure, strategies, routines, etc… Hence, an incompatibility between internal and external knowledge.

NIH syndrome at the level of external knowledge sources

The NIH syndrome can be justified by a perceived incompatibility between internal and external knowledge. A company develops not only its own routines, but also its own identity with which its employees identify, thus creating a sense of belonging. Generally, a sense of belonging may exclude those who do not belong to the same group. As a result, we talk about “us” and “the others”. Furthermore, a very human behaviour is to make social comparisons. In this case, what matters is status, reputation or success. As an example, a large multinational company would refuse to cooperate with an SME that only operates on a national scale. It can be concluded that the nature of the sources of knowledge is determined first of all by social and competitive comparisons. These comparisons are decisive for the appearance or or not of the NIH syndrome.

NIH syndrome as a result of the company’s success

The effects of social and competitive comparisons may be reinforced by the company’s success over the years (Hussinger and Wastyn, 2011, p.12). As a result, employers and employees develop a behaviour in such a way that they refuse to do things differently than they used to. Never change a running system is something I used to hear very often during the years I worked in the IT sector. Success leads people to believe that they cannot do better and that they have succeeded in doing what the competition would never be able to do. So there is this haughty attitude that leads directly to the NIH syndrome. The risks involved are quite obvious, but if we look at the success of a large multinational firm like Apple, we would tend to question the dangers associated with the NIH syndrome and therefore the limits of a so-called closed innovation model. In fact, the main advantage of this model lies in the protection against imitation of an innovative product already developed by the competition. The company’s culture is therefore characterized by uniqueness and the pursuit of developing products that no one has developed. Internal R&D efforts would make possible a maximum of innovation capacity.

The contemporary role of the NIH syndrome

It’s a pity that there has not yet been much attention paid to the NIH syndrome. Even if its disadvantages predominate, there are nevertheless some advantages such as a particular interest in developing one’s own innovations without the will to imitate.

“For an organization, to stay ahead of competition and to innovate consistently, it is mandate to absorb outside knowledge.” — GV Balaji

According to a 2017 study by TomTom Telematics, one third of UK businesses admit that they are slow in adopting new technologies. Achieving higher levels of efficiency, productivity and growth becomes nearly impossible in such a case. How often do see we companies still using paper to store sensitive information? Very often in fact! The study by TomTom Telematics also found that that more than 50% still use spreadsheets. It is in times of a crisis that every single weakness comes to light and we realize that it is a matter of company culture that makes employers and employees incapable of coping with a world that is changing and rotating more quickly every year.

“The bull market in stocks of the last decade hasn’t been without its headline grabbing downfalls of once formidable corporate titans.” — Brian Sozzi and Emily McCormick (yahoo! finance, December 6, 2019)

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What I am surprized by is the astonishing high degree of indifference and persuasion of some entrepreneurs that their company has been running successfully over the last decades and that it will always be the case. Leadership surely also plays a crucial role in making the company fit for the future. Change and adoption of new technologies is not a matter of choice, it is a vital necessity. Leaders must get off their high horse, include knowledge externalities in their processes, give employees a voice, adopt a decentralized decision making process and strop resting on their laurels. A warning to all companies is the list of twenty popular companies that disappeared from the market in 2010. Hundreds of years of success did not save them from bankrupcy!

 

Originally published in Scientya.com

 

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Yahya Mohamed Mao

Yahya Mohamed Mao

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MiSANTO AG

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