Innovation Corner # 2 - Environments Conducive to Innovation

By Dr Walter Dolan, Director Strategic Management

In my first article, I considered the concept of Innovation. In this article, I explore the environments which are conducive to Innovation.

Profit centres, not cost centres
Japanese business, with the intention of encouraging entrepreneurship within the firm, see advantages in creating profit centres that vary in size from large to small.

A benefit of this approach is that employees in a profit centre can feel motivated more easily to increase its value adding potential, perhaps rewarded by even a nominal profit on its output, whereas employees in a cost centre may see their main objective as keeping within a cost budget. 

Staff 
                                 
I imagine that all organisations see a benefit in having a low staff turnover.  Consider, however, that staff turnover may contribute fresh ideas in an area such as marketing. 

The literature on innovation recommends setting up of cross-functional teams to run projects. It also recommends the recruitment of innovators.  If you put an advertisement in the newspaper for an innovator, and you called six people to attend for an interview, how would you assess innovativeness in the interviewees?  Assume that the company is not highly technical in the sense of being in the electronics or biotechnological industries, but manufactures and markets non-alcoholic beverages.  Would you look for personal achievements in a candidate such as one or more of:

• Has patented an invention
• Has worked in several countries
• Has written a book or a play
• Speaks several languages
• Has a track record of introducing change in companies
• Scores highly in an I.Q. test
• Responds well to a personality test that you believe highlights entrepreneurs
• Full of confidence at the interview
• Fairly young and vigorous
• Seems to be a problem solver
• Anything else?

With a view to encouraging staff to undertake initiatives and develop expertise of value to the organisation, how about an innovative environment that would produce a leader only when someone or something needs to be led.  That sort of leader would make sure that the staff solves problems on their own.  This would encourage a can do motivation amongst staff as opposed to their being dependent on leadership from above.  All of this is reminiscent of an environment where the Chief Executive Officer (CEO) operates as first among equals. 

Studies on work / life balance have showed direct links between work/personal life balance on one hand and employee satisfaction/commitment on the other. Why do most people work anyway?  For a start they have to work to have any sort of life outside of work. After that, most people look to work to provide the society of other people and an interest arising out of doing the job. 

Short term saving or long term gain

Those companies that would be innovative may have to choose between short-term efficiency and long-term effectiveness.  There is an argument here against having too much emphasis on cost cutting instead of permitting some degree of organisational slack.  Under a vigorous program of cost cutting, room for flexibility, innovation and learning is eliminated.  In addition, for an innovative environment to evolve, organisations must avoid inconsistency.  They cannot claim to value knowledge whilst at the same time discouraging company time spent on matters that are apparently not strictly related to the job on hand.  In other words, slack time for learning and thinking must be made available. 

Some innovative organisations encourage their staff to go beyond their job descriptions and explore other areas that might benefit the company.  They believe that pursuing efficiency through eliminating unproductive time can be at the expense of being innovative.  This can happen in organisations where innovative thinking is considered to be part of corporate strategy. 

Now consider this.  How does an employee who is working 60 hours a week or more find slack time?  The not quite acceptable answer is only at the weekend?  It follows that the question of overworking has to be addressed.