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Lecture 7 -Creating an innovation culture

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on 27 September 2014

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Transcript of Lecture 7 -Creating an innovation culture

Creating an Innovative Culture
Lecture 7
Organizational culture and innovation
The set of values, understandings, and ways of thinking that is shared by the majority of members of an organization
Innovation strategy
Creating an innovation culture
Lecture 2
Lecture 4
Lecture 5
Lecture 6
Leadership and vision
Change management
Risk taking
Project teams
Cross-functional teams
Project-to-project learning
Elements of organizational culture
and rituals
Determine the current state of the culture
Identify a 'desired' state
Determine the necessary steps to shift the culture
Elements of culture
Team types
Diversity, psychological safety, learning, leadership
Innovative culture at Pixar
Organizational culture and innovation
Creating an innovative culture:
Creating an incubating and inter-connected space where ideas could develop, mingle, interact and re-create.
Figure 8.3: The Current Cultural Web for BuildCo
1. Organizational Structures
Head of Business
Process Managers
Project leaders
3 Symbols
Gate Review Board
Stage-Gate Manual
4 Stories
Board level discussions
Management consultants
Operational problems
7. Paradigm
Cost cutting
Wavering focus
Must look busy
Any progress is progress
2. Power Structures
Parent calls shots
Business units
6. Control Systems
Time sheets
Stretch revenue targets
5. Routines and Rituals
Monthly/quarterly reports
Project planning workshops
Gate Review meetings
Figure 8.4: The Desired Cultural Web for BuildCo
2. Power Structures
Power vested in a market focus
Balance between business unit and parent
3. Symbols
Seamless business development horizons
New recruits
Active labs
4. Stories
Successes with major new applications
Managers’ courageous to challenge the status quo
1. Organizational Structures
Managing by projects
Cross-functional teams
6. Control Systems
Non-revenue measures
Rewards based on performance
Transparent performance
5. Routines and Rituals
Optimum amount of easy reporting
Regular project meetings
Idea generation sessions
7. Paradigm
Externally focused
Aggressively goal oriented
Consider the firms that you have worked

Was the firm innovative?
What were the key attributes of the organizational culture?
Characteristics of an innovative culture
accepting failure
challenging status quo
risk taking
positive management attitude
authority and initiative taking
open communication
reputation for innovativeness
inter-group alignment
customer focus
Table 8.1: Best Practices for Achieving a ‘Culture of Innovation’
1. Organizational structure
Best practices:

Market-oriented structures
Frequent re-organizations
‘Innovation managers’

Market-oriented organizations engender focus and urgency.
Large organizations can stay more adaptable through re-organizations (Motorola; Hewlett-Packard).
Creating autonomous teams for new ventures (for example, IBM, DuPont, and Rank-Xerox).
Formally appointing an innovation manager gives focus to performance improvements (GlaxoSmithKline; AXA; Bank of America); To tap outside resources more effectively, Proctor and Gamble recently created the post of ‘Director of External Innovation’
2. Power structures
Best practices:

Cross-functional rotation

ShinEtsu promote excellent R&D and manufacturing relationships through their ‘freshman’s program’. 3M trained their top manager’s to ‘let go’ and delegate authority more effectively.
Sony managers place particular emphasis on managing cross-functional boundaries.
3. Symbols
Best practices:

Displays of innovation successes and other artefacts
Symbolic recognition and awards

Company logos and slogans are a symbol and some companies update them regularly to ensure the typeface and style is modern. AXA have developed the ‘Innovation Quadrant’, which has become both an internal symbol of innovation (for example, as a screen-saver) and a tool for communicating the meaning of innovation.
The workplace and the reception area should celebrate innovation by displaying relevant product and process innovations: ‘artefacts’. Unilever has interesting displays of not only their product innovations but also their process improvements. Axa has an ‘innovation corridor’ (outside the staff canteen).
Plaques, certificates and other recognition for innovative employees can become symbols.
4. Stories

3M ‘mavericks’; Sony Corporation’s Walkman. Managers can compare their style to Zien and Buckler’s typology, in order to learn how to use stories more effectively.
5. Routines and rituals

‘Fresh Eyes’ Joie de Vivre; ‘tinker time’ at 3M; NIH at Texas Instruments. Giving a sufficient challenge to employees is essential (Hamilton Acorn)
Internal venture management: making finance available for funding entrepreneurial ideas and opportunities.
‘Failure is our most important product’ Johnson and Johnson; Dupont ‘good try’ language.
Best practices:

Promoting new ideas for products and process improvements
Tolerating mistakes
6. Control systems
Best practices:

Reward and recognition

Most companies have introduced Stage-Gate or other formal NPD processes. Leading organizations have moved more to having a flexible process for the whole of innovation. Systems and processes to promote entrepreneurial thinking.
Company goals and metrics are ‘cascaded to all levels’ (Schefenacker is particularly good at this). Canon set notoriously tough NPD goals.
Rewards and recognition are linked to innovation closely, including employee performance appraisals
Making project teams work
1. Diversity
Differences between individuals on any attribute that may lead to the perception that another person is different from self (van Knippenberg & Schippers, 2007)

Gender, ethnicity, age (Social category)
Education, background, values (Functional)
1. Diversity
Separation (e.g. values), variety (e.g. function), disparity e.g. power, income)
Divergent findings:
Diversity leads to multiple perspectives, diverse information, and more contacts
Diversity leads to communication problems and conflict
2. Psychological safety
“a shared belief that the team is safe for interpersonal risk taking” (Edmondson, 1999: 354)
Feeling safe to speak up
Safety leads to
interaction and exchange of information and knowledge
resistance to powerful members non-justified influence
initiative taking and experimentation

3. Learning

The extent to which teams reflect upon and modify their functioning
"The methods we use to get the job done are often discussed"


Exchange of information and perspectives
"Often talk about our ideas about the task."

4. Transformational leadership
Inspirational motivation
Individualized consideration
Intellectual stimulation
Idealized influence

Making project teams work
Making project teams work
Making project teams work
Making project teams work
Team Structures
1. Functional team structure:
No cross-functional integration; employees remain within functional departments
Employees remain within functional departments but project manager provides cross-functional integration.
2. Light-weight cross-functional team structure:
4. Autonomous team structure:
Project manager provides cross-functional integration; but team members still report to functional managers as well.
Employees remain within functional departments but project manager provides cross-functional integration.
3. Heavy-weight cross-functional team structure:

Simple to organize. Do not monopolise management time.
Ideal for ‘tactical’ improvements to the day-to-day processes within a function.

Team may miss opportunities, as they have a narrow perspective.
Team learning is not applicable to cross-functional projects.

Kaizen projects in all functions.
Developing a process orientation within the functions.
Team Structures

Bring together knowledge and responsibilities of all functions.
Work well for projects where something similar has already been successfully completed.
Require relatively low management commitment.

Project manager has little formal power and so may not be able to control cross-functional differences.
In competition for resources are likely to lose out to heavyweight teams.

Incremental innovation projects.
More complex kaizen projects, where a cross-functional view may add a better understanding.
Team Structures

Due to an experienced manager taking responsibility for the heavyweight team, it has more influence.
Can use existing processes and resources.

Require a very experienced manager to lead the project.
May require significant amounts of management time.
May not work well for new ventures, as they are too closely tied to the parent organization.

Next-generation or radical innovation projects (not recommended for low complexity projects).
Heavyweight teams offer a good training ground for managers with top potential.
Team Structures

Autonomous teams are freed of the bureaucracy and overheads of the parent organization.
Separate location reinforces the independence of the team.
The team spirit will quickly encourage entrepreneurship.

Radical approaches will test the capacity of the parent organization to accept change.
Entrepreneurial management talent is hard to find.

New ventures, new products in new markets.
Dealing with

5. Virtual team structure:
Members are selected from other organizations, but projected management remains in the focal organization.
Team Structures

Brings together levels of expertise not available in a single organization.
Can be much faster moving than projects resourced internally.
Such teams are entrepreneurial in nature.

Are not co-located.
Need good communication and a simple, effective innovation process.
Sourcing outside expertise can be very expensive.
Intellectual property rights (IPR) need to be carefully managed.

Fast-track’ projects.
Development of new technology, where the internal competence does not exist.
What are the main barriers to creating a ‘culture of innovation’?
Main take away
Team structure depends on type of innovation
Team structure and process should be aligned
What type of team structure and culture should be in place for teams seeking disruptive innovations?
Source: Christensen (1997: 121)
Describe the elements of innovation culture at Pixar
What are the existing controls in the seemingly autonomous team structures in this company?
Do (should) innovation culture differ across industries and/or organizational layers?
How could you overcome them?
4. Transformational leadership
Making project teams work
Our research
Full transcript