Bounded Innovation – the limitations of organisational reality 6

Guest blogger:

Fiona Beukes Fiona Beukes, The Open University MBA, UK Marketing specialist, BNY Mellon
 

Innovation in some respects is like the Holy Grail of business – How do you do it: disruptive or continuous? How do you foster it in your organisation: Incentives? Creative downtime? Hire the right talent? Although these are obviously worthy avenues to explore, they do take time to implement.

man with bulb head

Is your organisation agile enough to foster innovation?

I think many organisations are hampered by their internal environment which prevents a dynamic, agile response to market change. There is definitely a tension, in my view, between Grant’s internal resource perspective and Porter’s economic view of the workings of the external business environment.

From a practical perspective, I also think many companies find it hard to innovate through disruptive change. In my view, the larger and larger an organisation becomes the more bounded I feel it is to its BAU (Business as Usual) and the day-to-day constraints that just “getting things done” place on its internal environment.

The leaner, younger, more nimble upstart is likely to steal a larger company’s thunder and swiftly re-engineer the external environment. Think of Apple launching the iPod – a lower quality sound compared to compact discs so Sony engineers believed at the time – a product that rapidly caught the attention of a mass market interested in synching their PC to a portable, lighter device. In the end, a good quality product (CDs) lost out to unperceived customers’ needs and wants (iPods).

I think it is this disconnection from the customer which fosters continuous improvement in an organisation rather than disruptive market change. As a product or service exists already and a level of stakeholder engagement is in play – internally and externally – it becomes safer to adapt and improve a product or service rather than launch new ones. Why ruin a good thing?

It is also seems safer to improve the operational side of an organisation by being leaner and more cost-effective rather than radically altering the product or service and risk a customer backlash: something Coca-Cola experienced when they launched new coke in the 1980s. Why risk upsetting the apple cart, and more importantly, an organisation’s shareholders by changing the status quo?

There are certainly many barriers to innovation in organisations – people, culture, shareholders to name a few – and varying ways in which to be innovative. In my mind, how an organisation chooses to innovate is contingent on a range of external and internal factors. And also its strategic, longer-term vision of what the future holds.

To read more of Fiona’s articles, visit her blog.

The Middle East Could Be a Cradle of Innovation Reply

Guest blogger:

Christopher M. Schroeder
 Christopher M. Schroeder, Washington, D.C.- and New York-based entrepreneur, venture investor, and former CEO of the online content and social platform start-up healthcentral.com 

This article was first published on Harvard Business Review, 
October 16, 2012.

We in the West tend to think of innovation as the next, new, shiny, tech, globally-accepted thing. But in emerging growth markets, new access to even existing technologies (e.g., higher-speed broadband, mobile phones, smart devices), can lead to fresh and surprising thinking about local and regional problems, and one day these over-looked corners of the globe may produce world-class innovations as a result.

Man using iPhone during Kuwait election 2012

Smart phones become increasingly popular in the Middle East

Consider mobile devices in Africa. Throughout the continent — and this is true throughout other emerging markets too — millions of people are glued to their cell phones. Since Africans were never tethered to landlines, innovation has been astounding. Kenya’s M-Pesa, for example, allows customers to withdraw and deposit money via text message. The company is now one of the largest mobile cash-transaction companies in the world — roughly 20% of the country’s GDP passes through it. The growth doesn’t stop there. With hundreds of thousands of cell towers providing reception to the most rural corners of the world, mobile providers have been compelled to build their own power generators. As a result, they’ve spawned entire ecosystems of entrepreneurs who are using the excess electricity to power local towns and build community charging stations. And thanks to “social entrepreneurs,” people with little voice are using mobile technology to report crime and corruption to authorities while holding the “powers that be” accountable — which was impossible even a few years ago.

Long before the Arab uprising in 2010 — and uninhibited by uncertainty and instability today — Middle East entrepreneurs have used innovation to overcome challenges and to find new opportunities for growth. As I have suggested in a recent post here on HBR, the Arab world alone represents a large and hungry consumer market. So it’s no surprise that companies in the region are finding innovative ways to reach consumers. In the face of country-by-country regulatory complexity, Aramex, the region’s largest logistics company, created Shop and Ship, which allows customers to order products from nearly any e-tailer in the U.S. and China and eventually the Middle East. It’s a seamless process. Aramex receives the ordered goods at its facilities, takes care of all the bureaucratic headaches, and then delivers the goods right to the shopper.

Other e-commerce companies are overcoming obstacles in innovative ways as well. With only two million credit card users in the Middle East, and even fewer comfortable using their cards online, and with well over 60% of package deliveries paid COD, payment services create as much friction as regulatory concerns. But innovators such as CashU have created safe gateways (e.g., cash cards) for buyers who are weary about shopping online and on mobile devices.

The fact that new markets are using technology to solve local and regional problems is no longer surprising. But what’s provocative, for me, is at some point these efforts will yield globally-competitive innovation as well. As Dartmouth Professors Vijay Govindarajan and Chris Trimble argue in their new book on innovation in emerging markets, Reverse Innovation: “It is easy to understand why a poor man would want a rich man’s product. But why would a rich man ever want a poor man’s product? The answer is that under certain circumstances, it offers new, unexpected or long-overlooked value.”

This is why, when I travel throughout the Middle East, I look hard for situations and experiences that could foster innovation on a global scale. Simply put, the Middle East — despite its uncertainty — is rife with potential. This is a region that barely knew phone lines, yet mobile penetration regularly nears 200%. And when cheap smart phones (below $40) hit the market — as they have just started to in Africa — mass adoption of mobile computing will follow. What might this market have to teach the world about the future of mobile innovation?

There are other opportunities for innovation as well. The largest untapped resource of fresh water in the world lies beneath the Egyptian-Libyan desert but there isn’t an adequate, cost-efficient, and reliable way to deliver petroleum in order to pump it. What innovation in solar pumping and agriculture may lie here? And what about the millions of people who communicated and coordinated on mobile devices and Twitter and Facebook during the Arab uprisings? They told stories. They toppled regimes. Might the next great global social network rise from these experiences?

There was a day, in my lifetime, when no one could imagine that Japan, or Finland, or Korea would become leaders in hardware innovation or computer gaming. True, there hasn’t been a great, global software innovation outside of the United States in years, arguably ever. But as the region continues to use creativity to overcome its unique problems and as long as access to inexpensive technology continues to spread, “made in MENA” doesn’t seem that far off.

 

Engineering the future Reply

Why large scale infrastructure should not be too technologically innovative.

Evan Davis explains the reasons and shares  his views of the challenges to refreshing the UK infrastructure, reflecting on his research for Built in Britain, an OU/BBC co-production.

Evan Davis interview

To learn more about Built in Britain series and explore What Makes Britain? timeline, visit OpenLearn website.

Welcome to the world of innovation! Reply

Professor James Fleck

James Fleck, Professor of Innovation Dynamics

“Innovation has certainly moved to centre stage recently. It seems that almost everyone now has a view, and at times anything goes. But there is a very solid foundation of excellent theoretical and empirical analysis that often gets lost in the current fashionable buzz around the topic.

This goes back to Schumpeter (who popularised the term entrepreneur and gave it its modern meaning) and Solow, who both demonstrated the crucial contribution that innovation makes to economic growth. More recent contributors include Abernathy and Utterback, who identified the product-process innovation lifecycle; von Hippel, who has explored the sources of innovation; Freeman, who examined the policy aspects of innovation and created the standard definitions now used to measure innovation around the world; Pavitt, who examined the role of intellectual property rights such as patents in innovation, and Christensen, who has articulated the notion of  ‘disruptive innovation.’

Studies range from the careful empirical to the deeply theoretical and have moved our understanding on apace. However, the challenge remains of communicating these insights. This blog series seeks to do just that – bring researchers and practitioners together to discuss, share and debate this fascinating topic, which is crucially important for building a better world.”

Business Perspectives event: Innovation Masterclass Reply

“Organisational Innovation; a survival imperative?”

15 November 2012. Location: Cumberland Hotel, London W1.

The theme of this event is ‘Innovation’, a subject area identified as critical to ongoing professional development in recent research findings from the OUBS alumni. As a result we have developed a masterclass combining industry-leader and academic perspectives that will explore how innovation can be fostered at all levels within an organisation.

A separate but complementary evening event will be hosted by the Dean of the Business School, Professor Rebecca Taylor with guest speakers Evan Davis and Ken Keir, Executive VP, Honda Motor Europe.

For more information, click here.

“It’s the culture, stupid!” 3

Guest blogger:
David MayleDavid Mayle, Lecturer in Management and a member of  The Open University’s Centre for Human Resource and Change Management.

Talking of quotes, I’ve always been fond of Nick Negroponte (he of MIT Media Lab fame) and his

“The best way to guarantee a steady stream of new ideas is to make sure that each person in your organization is as different as possible from the others. Under these conditions, and only these conditions, will people maintain varied perspectives and demonstrate their knowledge in different ways.”

Trouble is, such diversity is a necessary but not sufficient pre-condition for innovation capability; that people are different is not enough – they’ve got to be allowed to think and behave differently too.

Which brings us to culture. I’m not going to dwell on definitions, at least in part because all too often we believe – erroneously – that if we can pin a label on something, it helps us to understand it. If only.[1] Culture is deep; culture is slippery; culture is unmanageable; all of the usual claims are true, partial, and largely unhelpful.

In very crude terms, culture may indeed be – at a quite deep level – the way the place ‘works’, but for the purpose of this discussion, I’m going to tweak that a little, into ‘… so what does one have to do to get on around here?’ My motives should become clear a little later.

If culture is such an elusive concept, how do cultures emerge in the first place? In the beginning, an organisation has purpose but generally few people; if the initial ideas prove successful, it usually grows. This means a balance between two processes: recruitment (= who comes on board) and retention (= who stays).

Let’s take recruitment first. I often tell my students that there are two rites of passage en route to becoming a good manager. The first is to stop recruiting in your own image[2]; most of us eventually achieve this. The second is to start recruiting people who disagree with you[3]. This is much more difficult and sadly many don’t get that far, notwithstanding its increased popularity after both Gordon Brown and Barack Obama started recycling some of Abraham Lincoln’s political philosophy. Given these two rules, it should be quite clear that recruitment, who does it and against what criteria (explicit or otherwise), is a crucial lever on culture.

Then there’s retention; if folk find the environment conducive they’ll probably stay, if not they’re more likely to leave (going back to the quote at the start, do they feel they’re allowed to be different or do they feel pressure to conform?). I will also argue that retention is intimately tied up with the reward system in place, which needs to be three things: it needs to be perceived as being fair, it needs to be congruent with the organisation’s aims[4], and it needs to at least allow (or even actively encourage) people to be different. People who are rewarded by the organisation are the role models, to be emulated by all those others who want to ‘get on’. And if only one sort of behaviour gets rewarded, bang goes your diversity.

Some of us believe passionately in the power of innovation; problem is, if culture is so vital, and recruitment and retention/reward are key, who’s got their hands on the levers?


[1]    OK, if you insist on definitions, the seminal article is probably Schein (1990) ‘Organizational Culture’, American Psychologist (February)

[2]    If you doubt it, go back to your Belbin, or maybe some Myers-Briggs, or maybe just look again at the Negroponte quote.

[3]    I cite John Cleese in a famous video where he quotes Sam Goldwyn: “I don’t want any Yes Men in this organisation, I want people to speak their mind. Even if it does cost them their job!”

[4]    The classic text is Steven Kerr (1975), ‘On the Folly of Rewarding A While Hoping for B’, Academy of Management Journal

Innovation in the UK: Good, but not enough? Reply

Guest blogger:
Dr Leslie Budd Dr Leslie Budd, Reader in Social Enterprise, Open University Business School

Is invention enough without commercialisation? Dr Leslie Budd from the OUBS talks to former 3M CEO Sir George Buckley about the UK’s approach to innovation after a recording of the OU/BBC co-production The Bottom Line.

George_Bottom_Line

Click here to learn more about The Bottom Line programme and make use of free learning materials.

Joined-up thinking Reply

Guest blogger: 
Terry O'Sullivan
 Terry O’Sullivan, Senior Lecturer in Management and Head of Centre for Strategy and Marketing, Open University Business School

Perhaps my brain is more receptive to ideas early in the day, but I’m still thinking about the role of partnership in innovation a fortnight on from our most recent OU Business Network breakfast briefing. Sharing the platform with our Chair in Innovation Dynamics James Fleck, Professor Steve Potter and Dr Clive Savory pointed to partnership as THE key success factor in getting new initiatives off the ground. Clive’s example, a stymied innovation in healthcare, showed how ideas can get scuppered through opposition born of habit. On a happier note, Steve demonstrated that involving interested parties from the outset not only improves an innovation but speeds its rapid acceptance.

Congestion charge signHis example, oddly enough, was the congestion charge. Not the first, or most attractive, thing that comes to mind when you hear the word ‘innovation’, but something new and useful nevertheless. And not, in this case, the one that’s been deterring Londoners from clogging up their city since 2003, but a scheme launched a year earlier, over 200 miles north of the capital, to cut traffic in the centre of historic Durham.

The scheme followed a number of failed initiatives involving parking restrictions and pedestrianisation in the quaint but narrow streets around the magnificence of Durham cathedral. Reviled by local business and residents, largely ignored by drivers, and half-heartedly enforced, they did little to address the problem. Traffic and safety problems continued, resulting in a number of injuries to pedestrians and inconvenience to all.

Radical innovation in search of a solution arrived at the turn of the century with the formation of a group of stakeholders working with the local authority. Together they introduced peak-time charging, with stiff fines for defaulters spotted on CCTV. This bold step, far from alienating citizens and shopkeepers, proved a popular alternative to a mooted total ban on traffic. The secret of its success (an 85% reduction in traffic) was the careful negotiation of the elements of the scheme from the outset to balance the interests of the relevant parties. In other words, partnership working.

Advocates of competition (i.e. the opposite of people working together in partnership) often point to its role in spurring innovation. The argument goes that, rather than losing business to a rival, an organisation will come up with something new that’s better, cheaper or more convenient. But Durham’s congestion charge story suggests that this way of thinking about innovation (led by individual rather than collective interests) is becoming outmoded in an increasingly interconnected world. If this is right, the first step in managing innovation may well involve changing mindsets rather than machinery.

Click here to read Terry’s blog Marketing Talk

Outside of the Box 1

How might Shakespeare have benefited from a bit of creative coaching? Does the inspiration that drove Picasso towards Cubism have anything in common with Steve Jobs’s decision to launch the iPod? A panel of Open University academics got together to give their take on creativity.

Chaired by writer Sophie Radice

1. What is creativity?

FD: Creativity has to do with thinking laterally, making connections that haven’t been made before, and bringing together aspects of areas that might not naturally fit together so the juxtaposition of ideas or images can produce something new, something different.

DN: Creativity is about play as much as anything else, allowing yourself to perceive anew, so it is about perceptions. It is allowing yourself to dream during the day, to be ostensibly unproductive and to live in uncertainty and mystery. It’s also to do with images and with handling the traffic of those images. If you dream or entertain daydreams then you get a lot of those images and you have to decide which are the ones that you want to stick with. These can often go on to become much bigger than the original thought.

JH: Creativity is about something new but also something apt. The newness doesn’t have to be original but it could be new to that person. In fact, most of what we think of as new builds heavily on what has gone on before. It does include something that is appropriate to the situation and not just any old idea – aptness implies quality in creativity.

DM: Creativity is often about synthesis, so the juxtaposition of seemingly disparate ideas is a rich vein, and the involvement of a range of folk with diverse backgrounds will also help. It is about richness of experience and recognition of emergent patterns. Creativity is also about having a ‘yes, and…’ mentality.

2.  Describe the process of creativity 

JH: The process of creativity can be to do with mental flexibility, because that offers one way of coming up with new ideas. It can be play, but there are some people who are creative through very logical routes, so there are different ways of getting there. Motivation is important too, in terms of the process, as it is much easier to be creative with things you care about, because that gives you the persistence to stand against the norm.

FD: I do think that material conditions are important. Virginia Woolf described it as ‘a room of one’s own’ and I think the material conditions quite often get forgotten when we think of genius, imagination and inspiration. We forget about all those years that people spend in the wilderness pursuing their idée fixe. The compulsion to create is important, but so is having the material resources such as access to libraries, the leisure to visit art galleries, time to write, a dedicated space and being able to create a creative rhythm for yourself.

DN: You look at the psychological models of creativity and process and all of them have common features. There is a research and preparation period, there is a period of cognition prior to consciousness when you can’t articulate the idea – you can’t express it to the world yet – and then there is an incubation period, which is a period of deeper gestation. This is typified by the cliché of the scientist who wakes up with the answer the next morning.

DM: I’d like to emphasise the collective, even serendipitous, nature of creativity. Bouncing ideas around with others… misconstruing them… combining them… polishing them… refining them… always in pursuit of something better. Think about rock ’n’ roll – many bands break up citing ‘creative differences’, yet very few ever achieve the same level of creative success in their subsequent solo careers.

3.  Is creativity the same in every discipline?

JH: I think there are parallels that show up when you look at the work on creativity in different fields. People associate the creative process with the new idea, the dramatic breakthrough.

Yet when we look at studies where people have nominated creative individuals in their field – be it science, business or arts – these people don’t suddenly come up with a bright idea. They spend more time asking the important questions. Fleming looked at thousands of Petri dishes in order to recognise the one that was so significant. He had a sophisticated map of this area in his brain. For exceptional creativity, experience in the area is very important.

DN: There is a danger in talking about creativity as a process, because if you talk about it in this way then it automatically feels repeatable. The more writers you look at, the more you find that their process is not repeatable from writer to writer, or repeatable even by the same writer.

DM: Interestingly, each discipline will likely have its own conventional wisdom regarding the creative process, and yet creativity is often about breaking the rules. Many writers distinguish between ideas within the dominant paradigm and paradigm-disrupting innovation. Pressure is another interesting factor – too much can be unhelpful, but too little is also problematic.

4.   Creativity can come out of suppression and oppression though, can’t it?

FD: There are always people who create under pressure and people who look for outlets – we think of Solzhenitsyn. There is a creative backwards and forwards between freedom and constraints, but if those constraints are too much then that diminishes people’s potential for creativity. You also need a certain flexibility, freedom, licence and permission in playful terms to exercise the creative capacity. For each individual it is not going to be on the same point on that spectrum.

DN: The thing about oppressive regimes is that if individuals are to survive as individuals then they must be creative. Think about Les Enfants du Paradis – a three-hour fi lm made in the middle of the war in occupied Paris. In that film, there’s a silent theatre where speech is not allowed and it is a highly symbolic reference to the German occupation of Paris at the time. And yet they managed, even in those extremely oppressive circumstances, to make the film.

5.   Is there a creative personality type?

JH: Steve Jobs with iPadTraditionally, people thought that only a few people were creative and so companies would try and assess creative ability. The personality type normally associated with creativity is an open non-conformist. They are often interested in the big picture so they spend a lot of time gathering different ideas and that is why they are able to reframe and see things differently. These people may be less good with detail.

Nowadays though, incremental creativity that builds on others’ work is recognised as well.

DM: The idea of the lone creative, surrounded by acolytes, is passé. It takes all sorts, with the big-picture ideas person great at the outset, but tending to lose interest in the later stages. Learning to think outside the box is an asset, but so is exploring the inside of the box; both can lead to creativity.

6.  Can you teach creativity?

DN: Within writing there is a commonly made distinction between art and craft. Art is perhaps that aspect of creativity that comes from a personal sensibility and consciousness, and the craft is to do with moulding the work. It is generally believed that craft can be taught, but can art? Some would say those starting points are impossible to teach. But you can create the conditions that allow a person to reach for them.

FD: I wouldn’t be able to teach creative writing if I didn’t think that what I had to offer in the class would at least facilitate the student’s acquisition of writing skills. If we think about other types of writing – for instance, academic writing or journalistic writing – we are not born knowing how to write like this or how to write a novel.

JH: I don’t think you can teach creativity per se, but you can facilitate different aspects of it. You can help people find their creative direction and dare to follow it. You can teach creative thinking and problem solving, which helps people find their creativity and work with others. An environment where they can actually do that helps, as do processes where you encourage people to look at things different.

WANT TO KNOW MORE?

This is an edited extract from the creativity roundtable discussion held at the OU with additional input from David Mayle. See OpenMinds for more information

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Business Management

Ford’s production lines have marked a turning point in human history. Business had to change and whoever did not understand the need for automation and series production was to be crushed by industrialization itself. After nearly 100 years, Skandia marked the official beginning of “the knowledge era”: Leif Edvinson was hired in the early 90’s as a CKO (Chief Knowledge Officer) in order to capitalize intangible assets of the organization. At Skandia’s size, it was obvious that there were a lot of resources wasted and they spent a lot of time “reinventing the wheel” rather than facilitating transfer of expertise, innovation, lessons learned – in a word, knowledge.

Two years ago I began to work on “capitalizing” knowledge in a territory stretching from northern countries to South Africa and from UK to India which made me look with great interest on this topic. I found that knowledge management is perceived…

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