Contraria

In Praise of Resource Constraints

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IBM discovered decades ago that adding programmers to a software project that was late did not help. Indeed, progress slowed even more. The "resource-driven mindset," sometimes known as "throw more money at the problem," is limited, the authors argue. Yet this mindset has so dominated the research agenda that it has clouded our consideration of many situations in which scarce resources (precisely because they are scarce) are desirable, potentially leading to breakthrough performance. Resource constraints fuel innovation in two ways: through entrepreneurial, social-network approaches to securing the missing funds or the required personnel, and because teams often produce better results as a direct result of the constraints. The human mind is most productive when restricted, the authors maintain. Limited — or better focused — by specific rules and constraints, we are more likely to recognize an unexpected idea. Witness the outcome of a Cold War-era race between General Electric and BMW teams to design adequately cooled jet engines. The U.S. team had a virtual blank check, used the most advanced materials and spent nearly twice as much as the Manhattan Project did. The German team, which had significantly less funding at its disposal, came up with a simple yet elegant design principle that remains in use to this day.

Michael Gibbert is an assistant professor of management at Bocconi University (Milan, Italy). Martin Hoegl is a professor of leadership and human resource management at WHU — Otto Beisheim School of Management (Koblenz, Germany). Liisa Välikangas is a professor of innovation management at the Helsinki School of Economics (Finland) and a director of the California-based Woodside Institute. Comment on this article or contact the authors through smrfeedback@mit.edu.

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