If you are a manager, you need to understand the ideas of W. Edwards Deming. Deming wrote several books about management, in which he chastised American business schools and American corporate management for perpetuating a failed philosophy and failed management techniques.

Deming proposed a new philosophy of management motivated by quality and grounded in systems theory. The Deming philosophy is too deep, too broad, and too rich to be explained in a mere blog post. Volumes have been written about it, and as I read those volumes I am sharing my thoughts through this venue (with apologies to Mr. Deming if I misrepresent anything, I am still learning.)

How does a large company create an environment that encourages and leverages internal innovation? Here is my checklist of prerequisites for "enterprise" innovation:

The science of management in the industrial age was all about efficiency. It had to be. The whole concept of capitalism is based on efficiency. An entrepreneur acquires capital at a cost, and that capital must be made to produce profit at a rate higher than the cost of capital. If you borrowed money at 10% to start your business, you had to make it earn 11% at least. That meant controlling costs ruthlessly and milking every bit of productivity from every penny's worth of capital.

But talk to a systems administrator about efficiency. She'll tell you that, in terms of percentage of server utilization, there are two numbers you never want to approach, numbers that will cause midnight pages and pale-faced panic. The first number, of course, is 0%. Everything is down! The second, more surprising but equally frightening number is: 100%! At 100% utilization, everything breaks, because you have no more capacity for work.