HBR On Strategy: How to Push for Change in a Large Organization

Episode Release Date: March 12, 2025
Host: Brian Kenny
Guests: Professor Maria Roche (Harvard Business School) and Major Victor Salsa Lopez (U.S. Air Force)

Introduction

In this insightful episode of HBR On Strategy, host Brian Kenny engages in a compelling dialogue with Harvard Business School Professor Maria Roche and U.S. Air Force Major Victor Salsa Lopez. The conversation centers around fostering innovation within large, bureaucratic organizations, using the U.S. Air Force’s AI Accelerator as a case study. This initiative exemplifies the challenges and triumphs of implementing advanced technologies like Artificial Intelligence (AI) in a highly structured environment.

Understanding Innovation in Large Organizations

Professor Maria Roche introduces the central theme: the complexities of driving digital transformation within entrenched bureaucracies. She highlights a common misconception that only startups can innovate, emphasizing that significant advancements often emerge from large organizations.

Victor Salsa Lopez elaborates on this by discussing the case study of Major Victor Salsa Lopez, who spearheaded an AI program aimed at enhancing U.S. Defense capabilities. He underscores the necessity of adapting innovation strategies to fit the unique dynamics of large institutions, which differ markedly from agile startups.

Victor Lopez [01:18]: “Often we think it's only small organizations that can innovate startups, but a lot of innovation actually comes out of these big organizations.”

The Department of Defense's Commitment to Innovation

The conversation delves into the historical and ongoing commitment of the Department of Defense (DoD) to innovation. Victor Lopez provides a rich tapestry of DoD-backed innovations, ranging from the creation of the first weather satellites to foundational technologies like the computer mouse and early AI-driven robots.

Victor Lopez [02:57]: “Without that we wouldn't have the Internet, the personal assistant that learns, the personal assistant that learns Siri GPS Sematech, which was fundamental in creating the semiconductor industry the way we have it now.”

Maria Roche emphasizes that despite public perceptions, the DoD plays a pivotal role in advancing technological frontiers, often in collaboration with academic institutions like MIT.

AI Initiatives within the Air Force

Victor Lopez discusses the inception of the AI Accelerator (AXL) under the American AI Initiative of 2019. The initiative prioritizes AI ethics, safety, and development, operating in an open, unclassified environment in partnership with MIT’s Lincoln Laboratory.

He elaborates on specific AI projects, such as optimizing pilot training schedules and developing GPS alternatives using machine learning to navigate via the Earth's magnetic field. These projects highlight AI's practical applications in improving operational efficiency and overcoming logistical challenges.

Victor Lopez [06:13]: “How do we spend the money better? So at the AI accelerator... it's about finding a way to better optimize for a pilot training schedule.”

Legacy Companies vs. Digital Natives

A critical distinction is made between legacy organizations and digital-native companies. Victor Lopez explains that digital-native companies, born into the digital age, have inherent advantages in adopting new technologies seamlessly. In contrast, legacy firms face hurdles due to their patchwork systems and entrenched processes.

Victor Lopez [09:42]: “Digital first or digital native companies are organizations that were born to be digital... whereas you have more established organizations, older organizations... they have to kind of catch up.”

Maria Roche relates this to large institutions like Harvard Business School, drawing parallels to the Air Force’s similar struggles with integrating innovative technologies.

Overcoming Bureaucratic Inertia

The discussion shifts to the inherent challenges of introducing change within large organizations, collectively referred to as inertia. Victor Lopez categorizes inertia into three types:

1. Cultural Inertia: Deep-seated processes and tacit knowledge that resist change.
2. Administrative Inertia: Rigid formal processes and hierarchies that hinder flexibility.
3. Technical Inertia: Existing technical debt and outdated infrastructures that complicate integration of new technologies.

Victor Lopez [15:36]: “How do you even do that? And so there are different ways of how you can organize for this kind of innovation.”

Strategies for Effective Innovation

Victor Lopez outlines strategic approaches to mitigate these inertias:

• Autonomy: Granting innovation units significant decision-making power to bypass traditional hierarchies.

  Victor Lopez [17:33]: “Quite a bit. So normally, as any good large organization has almost every role in the DoD has what's called an Air Force instruction attached to it... we had to operate without these constraints.”

• Rewiring the Workplace: Structuring the organization around four key components—People, Process, Product, and Place—to align with innovation goals.

  Victor Lopez [18:47]: “...thinking about the four components, people, process, product, and place... really thinking about how everything aligns is incredibly important.”

• Collaborative Partnerships: Leveraging relationships with academic institutions and fostering an open environment conducive to knowledge sharing and peer review.

Challenges and Lessons Learned

Implementing such transformative initiatives is not without hurdles. Victor Lopez candidly shares the difficulties of “selling” ideas within the military framework, where tangible benefits are essential for securing funding and support.

Victor Lopez [20:50]: “I needed to explain the good and the bad that was going to come with adopting this new technology and the technical debt that was associated with it.”

The importance of an educational component is emphasized, highlighting the need to train and inform stakeholders about the benefits and risks associated with new technologies.

Victor Lopez [21:44]: “There's a great cartoon that we always went back to... they have no idea [about round wheels].”

Key Takeaways and Conclusions

Major Victor Salsa Lopez distills the essence of their experience into several actionable lessons:

1. Small, Focused Teams: Empowering small units with clear, focused missions enhances innovation within large organizations.

   Victor Lopez [24:16]: “Having these very small, focused teams... getting directly from your senior leadership, your C suite, the intent, so that your innovators can go and make that change.”

2. Alignment of Components: Ensuring harmony between People, Process, Product, and Place is crucial for the success of innovation initiatives.

   Victor Lopez [25:18]: “...there's not just one way of organizing innovation... thinking through these trade-offs.”

3. Government's Role in Innovation: The government can play a pivotal role in coordinating large-scale technological advancements, especially in areas with high uncertainty and significant fixed costs.

Maria Roche concludes by reinforcing the importance of strategic alignment and the multifaceted nature of successful innovation within large organizations.

Maria Roche [26:06]: “The four P's Maria Salsa, thank you for joining me.”

Final Thoughts

This episode of HBR On Strategy offers a profound exploration of the intricate dynamics involved in driving innovation within large, bureaucratic institutions. Through the lens of the U.S. Air Force’s AI Accelerator, listeners gain valuable insights into overcoming organizational inertia, fostering collaboration, and strategically aligning various components to unlock groundbreaking advancements. The conversation underscores that with the right framework and support, even the most expansive organizations can become hotbeds of innovation.

Notable Quotes:

• Victor Lopez [01:18]: “Often we think it's only small organizations that can innovate startups, but a lot of innovation actually comes out of these big organizations.”

• Victor Lopez [02:57]: “Without that we wouldn't have the Internet, the personal assistant that learns Siri GPS Sematech...”

• Victor Lopez [09:42]: “Digital first or digital native companies are organizations that were born to be digital...”

• Victor Lopez [15:36]: “How do you even do that? And so there are different ways of how you can organize for this kind of innovation.”

• Victor Lopez [25:18]: “There's not just one way of organizing innovation... thinking through these trade-offs.”

For more insights and detailed case studies on business strategy and innovation, visit hbr.org.