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Values-Based Innovation Framework – Innovating by What We Care About

Authors:
  • University of Applied Sciences for Media, Communication and Management
  • ESCP Europe Berlin

Abstract and Figures

The values-based view on innovation focuses on the role of values and normative orientations in triggering and directing innovation within and beyond organisations. This paper presents a theoretical framework in which values, understood as subjective notions of the desirable and criteria for decisions and evaluations, provide heuristic and integrative functions for normative, strategic, and operational innovation management. A central feature of this framework is a new and values-based interpretation of open innovation relationships, for example with external stakeholders. Theoretical notions such as specific values types and their integrative functions within and beyond organisations are developed and discussed with the aid of the illustrative cases of Aravind Eye Care System and the retail company Otto Group. Defining values as a source, lever, and orientation mark for innovation activities brings notions of the desirable from the periphery to the core of organisational value creation and renewal.
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This paper was presented at The XXVI ISPIM Conference Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.
1
Values-Based Innovation Framework
Innovating by What We Care About
Henning Breuer*
University of Applied Sciences for Media, Communication and
Management & UXBerlinInnovation Consulting
Ackerstrasse 76, 13355 Berlin, Germany
E-mail: h.breuer@hmkw.de
Florian Lüdeke-Freund
University of Hamburg, Faculty of Economics and Social Sciences,
Von-Melle-Park 9, 20146 Hamburg, Germany / Research Fellow at
Centre for Sustainability Management (CSM), Leuphana University
E-mail: florian.luedeke-freund@wiso.uni-hamburg.de
* Corresponding author
Abstract: The values-based view on innovation focuses on the role of values
and normative orientations in triggering and directing innovation within and
beyond organisations. This paper presents a theoretical framework in which
values, understood as subjective notions of the desirable and criteria for
decisions and evaluations, provide heuristic and integrative functions for
normative, strategic, and operational innovation management. A central feature
of this framework is a new and values-based interpretation of open innovation
relationships, for example with external stakeholders. Theoretical notions such
as specific values types and their integrative functions within and beyond
organisations are developed and discussed with the aid of the illustrative cases
of Aravind Eye Care System and the retail company Otto Group. Defining
values as a source, lever, and orientation mark for innovation activities brings
notions of the desirable from the periphery to the core of organisational value
creation and renewal.
Keywords: innovation management, values-based innovation, integrated
management, open innovation, sustainability, conceptual framework
1 Introduction
Traditionally, innovation managers have been mainly concerned with the development
and marketing of new human-centred products and services and the creation of
competitive advantages based on strategic differentiation of their business models and
offerings. However, neither suffices to cater to the personal or corporate values
underpinning attitudes and behaviours, such as an orientation towards sustainability or
privacy; values that are both motivating and restricting managerial decisions while also
reaching beyond single organisations. In this paper, we build on an understanding of
values (plural) as the subjective notions of the desirable (Schwartz & Bilsky, 1987;
This paper was presented at The XXVI ISPIM Conference Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.
2
Schwartz, 2012). As such, they are fundamental criteria for individual and organisational
decisions and evaluations (Agle & Caldwell, 1999). Values are what is being considered
important, worth engaging, working or even fighting for by individuals or complex social
actors such as corporations. If values are codified and reinforced, e.g. through
management measures, they turn into obligatory normative orientations. Corporate
vision, mission and values statements are typical examples.
We argue that the role of values and normative orientations in triggering and directing
innovations within organisations and across value networks has been neglected. We see
at least three areas in which the integration of values and normative orientations into
innovation management leads to theoretically and practically relevant advancements:
First, traditional approaches to process, product, service, and business model
innovation are often missing direction. Values may provide not only a heuristic function
but also a sense of direction. Focussing on values and normative orientations in the
context of innovation management unlocks a source for ideation and turns ideas into
innovation throughout the decision gates and potential pivots of process stages.
Second, the reflection on, specification of, and dedication to values in the context of
innovation and a stronger alignment of innovation activities with organisational visions
and missions may increase chances for innovation success in the long run. The normative
orientations underlying business activities extend innovation managers’ perspectives
beyond day-to-day routines and enable an adequate consideration of long-term goals.
Finally, values-based innovation management can help to deal with or even overcome
innovation barriers, such as non-cooperative behaviour or seemingly insoluble “wicked
problems” (Rittel & Webber, 1973; Waddock, 2013). On a higher level of abstraction, the
integrative function of shared values may provide for a common ground among different
stakeholders and interests within and outside an organisation (Kotter & Heskett, 2011).
The goal of this paper is to prepare the theoretical prerequisites for a values-based
view on innovation management. It focuses on the integration of organisational values
with those held by affiliated individuals as well as the wider business environment,
offering a new source, lever and orientation mark to drive innovation. This approach is
not to be confused with “value-basedmanagement, which refers to maximising a
company’s financial value as a consequence of the shareholder value paradigm (Koller et
al., 2010). Instead, the values-based view on innovation management proposed here
refers to values as notions of the desirable that are reflected in personal motivations and
evaluations, creative activity, and normative organisational orientations. So far, a direct
theoretical link between values theory and innovation management has been proposed
(Breuer & Lüdeke-Freund, 2014), but it has not been fully developed yet. Therefore this
paper extends our earlier elaboration of the values-based view in normative, strategic, and
instrumental innovation management to move towards a more complete and integrative
framework of values-based innovation.
The main research questions addressed are: How to substantiate values-based
innovation management and how to theoretically distinguish between different notions of
values? How can the innovation potentials of values and normative orientations be
unfolded in practice?
2 Values in Management and Innovation
Values abound in organisations, but often they do not inform or direct innovation in their
core businesses. Within several innovation and consulting projects we observed first hand
that strategic initiatives looking for the next big thingin the industry, but even more
humble innovation projects, are oftentimes missing direction in futures search and in the
generation, selection, and specification of ideas. While practitioners have disregarded
values and normative orientations as a source and lever to drive innovation, the
innovation management literature has neglected the normative management dimension
(Breuer & Lüdeke-Freund, 2014).
The proposed values-based view on innovation management addresses these gaps. It
offers a new perspective and heuristic to deal with phenomena ranging from product
development to value network formation. The elaboration of values in management in
this section describes the theoretical basis of our values-based view. The following
propositions were derived from values and management theories.
Every individual and complex social formation holds values. They occur on every
“level” of social life: individual, organisational, institutional, societal, and global
levels (Agle & Caldwell, 1999). Stakeholder interests may be articulated based on
more or less shared individual and organisational values.
Values are motivating and attractive. As notions of the desirable and something that
is worth engaging, working, or even fighting for, values are different from (short-
lived) attitudes and (restrictive) norms (Joas, 2000).
Multiple notions of values need to be distinguished. This includes implicit and
explicit values, non-financial and financial values, product-related customer values,
brand values, values expressed in vision and mission statements (Waddock &
Rasche, 2012), and stakeholder values being created, ignored, and destroyed
(Bocken et al., 2013). A selection of these is contained in the cloud in Figure 1.
Within organisations values demonstrate different functions. These can be described
as generative (heuristic), directive (orientation), and integrative (affiliation) qualities
(Breuer & Lüdeke-Freund, coming up 2015).
Values can be implicit, shaping individual or group behaviour (especially at the
lower management levels). Within the normative management dimension they tend
to be codified and expressed through dedicated statements (such as vision, mission,
purpose or values statements, corporate reports, and press releases). Kotter and
Heskett (2011) distinguish between rather invisible shared values and rather visible
group behaviour.
Values impact management on normative, strategic, and operational dimensions. Values
can provide a medium for vertical, horizontal, and meta-integration (building on the
Integrated Management Concept; Bleicher, 1994; Bleicher, 2011):
Values-based vertical integration aligns normative, strategic, and operational
management. For example, an orientation towards sustainability can be part of a
corporate vision and mission; it can then be pursued as a competitive strategy and
instantiated through services and customer communication.
This paper was presented at The XXVI ISPIM Conference Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.
4
Values-based horizontal integration takes place among collaborators. Shared values
facilitate collaboration and provide a potential basis for teaming up and pursuing a
common, values-based goal. For example, collaborators in an innovation project
share an understanding of minimum requirements for sustainability, or agree on and
work towards a defined value proposition.
Values-based meta-integration within and beyond organisations. Organisations need
to align with changing institutional, societal, and global values. For example, a shift
in governmental energy policy or increasing public awareness of privacy issues can
challenge established organisational values and may be included in the normative,
strategic, and operational management dimensions.
In the following, these propositions are transferred to innovation and its management. In
doing so, the values-based view relates values and integrated management to open
innovation. While each of these three concepts represents a complex field on its own, it is
the unique synthesis of values, management, and innovation that makes up the values-
based view on innovation management. It is an emerging field of research and discussion,
helping us to better understand how values and normative orientations do, may, and
should impact and direct innovation and its management, and how they do and may
facilitate the creation of new products, services, business models, and networks.
Recent literature discusses various forms of values-oriented innovation, such as
responsible (Owen et al., 2013) or sustainability innovation (Hansen et al., 2009).
Sustainability innovation is about reducing or avoiding negative effects on the natural
environment and society and about the creation of positive effects, such as ecological
restoration or the provision of education and health care services. Methods to support
these are e.g. collaborative business modelling (Rohrbeck et al., 2013), the design of
“flourishing enterprises” (Jones & Upward, 2014), or explorations of stakeholder values
(Bocken et al., 2013).
However, while responsible and sustainability innovation are traditionally based on
prescribed and restrictive norms, such as avoiding risks to society (do not create risks) or
preserving our natural and social heritage and capital (do not harm nature and society),
values-based innovation as proposed here is about exploring and elaborating upon values
as motivating and attractive starting points for innovation projects (create environmental
and social value; extend the range of your network; involve new stakeholder groups).
3 Values-Based Innovation
Values are not only a given or retarding factor of organisational change, they are also a
dynamic element enteringand leavingorganisations. New values may enter on each
management level or dimension (Figure 1).
Top down, a new board member or CEO may trigger a revision of corporate visions
and missions based on her or his individual values. Bottom up, product-related customer
values can be taken up by employees to adapt the product portfolio, which might also
lead to changes in strategy. A corporate culture project can systematically gather and
aggregate values of the workforce to renew or extend an organisation’s normative
statements. In a more strategic perspective initiatives of competitors can set new values-
based benchmarkssuch as supply chains aligned to the principles of fair trade. Values
leave and transcend an organisation through dedicated communication channels and
dialogues with stakeholders, but also through the “ask” of products and services, i.e. what
a company’s products and services ask its customers to become (Schrage, 2012).
We argue that the exploration and exploitation of values and normative orientations
become an integral part of future innovation management. Different kinds of values, on
different management levels, lead to different forms of values-based innovation. Figure 1
shows the relations between values, management levels, and corresponding innovation
levels and levers.
3.1 Values in Normative, Strategic, and Operational Management
On all three management dimensions (according to Bleicher’s Integrated Management
Concept, see above), and with respect to different stakeholders and entities, different
types of values come into play and constitute different levers for innovation.
Figure 1 Values (examples on the left, in the cloud) impact normative, strategic, and
instrumental management and inform innovation activities (right)
On the operational or instrumental management level product and service-related
customer values are addressed by value propositions (and their underlying offerings) and
related marketing instruments. Changing customer values and new value propositions
addressing them can be a basis for innovation in process, product, or service offerings as
well as further marketing instruments and business model components.
The strategic management level deals with the development the potential (resources
and capabilities) a company needs to engage with its environment and differentiate itself
from its competitors. The business model, describing how companies create and capture
value, allows for competitive differentiation and mid-term corporate renewal. Whereas
environmental and social engagement, for example, may be constitutive parts of a
business model, systematically using it as a basis for innovation (Breuer, 2013) requires
consistent values-based decisions, thorough elaboration, and normative dedication each
to be facilitated by suitable collaboration methods and activities. Relevant values on the
This paper was presented at The XXVI ISPIM Conference Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.
6
strategic level include rather implicitly grown orientations like the ones identified by
Jones (2002). He describes how product innovation can be (de-)prioritised depending on
earlier product innovation success (which might devalue innovation and its associated
risks in comparison to market skimming and differentiation strategies), leading to an
emphasis on process rather than product innovation. Reflections to increase awareness of
such strategic orientations and leadership commitment to innovation are prerequisites
also for values-based innovation.
While strategy is primarily concerned about competitive advantages, normative
management exceeds purely economic concerns and explicitly articulates values that are
often implicit in the operational and strategic dimensions. On the normative management
level corporate visions, missions and other overarching goals are to be considered, also
ethical guidelines for interaction with stakeholders within and outside the company.
Corporate mission and vision statements reach beyond the economic goals and values
that dominate the strategic management level. Where such explicit statements (or implicit
assumptions) and their directives become obligatory and capable to constrain behaviour
they become normative orientations and a matter of normative management.
Dedicated pursuit of a vision or mission defining overarching goals, such as
sustainability, may require engagement beyond the boundaries of an organisation to
establish inter-organisational networks. Inter-organisational networks such as cross-
industry or regional initiatives may be constituted by a successful introduction of new
values into a business ecosystem. For instance, the vision to become a renewable energy
region may attract diverse stakeholders, including companies in the region (Breuer &
Lüdeke-Freund, 2014); or a carbon footprint initiative (e.g. the “Carbon Performance
Improvement Initiative” initiated by Otto Group; Brock & Streubig, 2014) may motivate
actors to participate throughout supply chains and across industries, even including
competitors. Accordingly, normative innovation may result from the introduction of new
values into an organisation or the network of actors within a business ecosystem (e.g. a
region or an industry).
3.2 Values-Based Innovation
Levers and intended results of innovation are derived for the three management
dimensions, i.e. operational or instrumental innovation (including innovation in product
and service offerings and marketing instruments), strategic business model innovation,
and normative innovation to develop new identities and create new values-based inter-
organisational networks.
Normative values-based innovation: New values introduced to the normative
dimension e.g. initiated by a new CEO, a change of mind of the board of directors, or
changing societal expectations and regulations touching the identity of a company are
expressed as values-based innovations such as new corporate visions and missions, new
codes of conduct and policies. Beyond the focal firm new values-based networks may
emerge, e.g. among heterogeneous and even competing organisations dedicated to the
vision of a renewable energy region (case study in Breuer & Lüdeke-Freund, 2014).
Innovation on a normative management level can also be motivated by changing values
on the strategic and operational dimensions.
Strategic values-based innovation: Strategic innovations refer to changes in the
preconditions of a company’s competitive advantage and its associated strategic goals
due to the introduction of new values on the strategic dimension. In recent years, business
model innovation has been discussed as a silver bullet to innovation in a strategic
management dimension. Strategic values-based innovation and goals (e.g. from we want
to outperform competitors based on price to competitive differentiation and
outperformance in terms of sustainability contributions) may be triggered by new sets of
values established on a normative level. However, strategic innovations can also be
motivated by changing values on the operational dimension.
Operational or instrumental values-based innovation: Operational innovations refer
to changes in operational processes and the associated way of doing business; operational
innovations can be motivated by changing values on the normative and strategic
dimensions. Each marketing instrument on the operational level can introduce new values
adapted from customers, e.g. the LOHAS driving demand for sustainable forms of
production and healthy offerings. If increasing numbers of customers value lifestyles of
health and sustainability (about 10 percent in 2009 in Germany; Bröring & Bornkessel,
2015) and these values impact their consumer behaviour, companies will adapt their
marketing instruments or even spearhead the quest for instantiations of such values.
Potential results on the operational level include innovation in individual business model
components (e.g. customer segments, partnering, or cost structure) and marketing
instruments (e.g. product, service, price, distribution, or communication).
3.3 Values Based Integration and Open Innovation
The integrative function predisposes values to not only facilitate horizontal, vertical, and
meta-integration internally, but also externally, pushing an open innovation paradigm
(Chesbrough, 2003) that builds on a rich exchange of internal resources of the firm with
external actors and diverse sources of knowledge. Open innovation is “a paradigm that
assumes that firms can and should use external ideas as well as internal ideas, and
internal and external paths to market (ibid., p. xxiv). Instead of focussing on an
exchange of individual ideas, perspectives, or pieces of knowledge, the values-based
view on innovation takes values as a basis and medium for joint projects, involving
internal and external actors in search for solutions to urgent problems or new ways to
realise their ideals.
With respect to their integrative function values form ordered systems of priorities
and relative importance (Schwartz, 2012). This hierarchical feature allows the inclusion
of diverse subordinate values in the joint pursuit of overarching values. Appealing to
overarching values that different counterparts share is also a method of resolving values-
based dispute (Susskind & Rose, 2010). Values are not gluethat connects otherwise
unrelated things. Instead, they run right through the hearts of the actors sharing them,
pervading human beings and even things. If we needed a metaphor we would compare
them with stringscapable of weaving new meshes rather than gluing together strangers.
Values achieve integration more than distinction values of individuals or groups are
either shared or can be related through overarching values; in the worst case of unshared
values, they lead us to reflecting them and acknowledging those of others.
Figure 2 illustrates lines of potential integration and also potential dispute between
organisational instances in different (normative, strategic, and operational) management
dimensions and surrounding actors and values systems. Establishing a unique perspective
on open innovation management, the values-based view grounds new approaches to
dealing with some of its challenges. Taking the integrative function of values and the
three innovation management dimensions into account, the values-based view allows for
This paper was presented at The XXVI ISPIM Conference Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.
8
theoretical explanations and empirical investigations of diverse phenomena at the
intersections of values, innovation, and management; for example:
How shifting values at the board level motivate new business processes through
vertical integration from the normative to the strategic and onto the operational level.
How customer values experienced at the very front (e.g. sales and services) can lead
to new strategies and maybe even corporate policies through vertical integration.
How a board of directors shares the same belief of what the company shall achieve,
or how an innovation team deals with sustainability through horizontal integration.
How the competitive spirit of a particular industry can motivate CEOs as well as
process engineers through meta-integration.
Figure 2 Values-based integration and open innovation organisational values and
interaction with external actors and their values.
4 Applying the Values-Based Innovation Framework to Real Cases
In the following, the values-based view on innovation is applied to two real cases:
Aravind Eye Care System, an Indian group of ophthalmic (eye care) clinics, and Otto
Group, one of the world’s largest e-commerce retailers, headquartered in Hamburg,
Germany. We use the framework to analyse the roles different kinds of values and
normative orientations play in these companies’ approaches to innovation. With their
respective emphases on environmental and social issues both can be said to show general
characteristics of corporate social responsibility and sustainable entrepreneurship (cf.
Schaltegger & Wagner, 2011).
This method builds on a re-examination of publicly available secondary data obtained
from corporate and scientific publications. The illustrative case studies are a first attempt
to apply our theoretical framework to real cases and explore its usefulness in
understanding organisations’ values-based innovation activities. In particular, the aim is
to learn whether and how values and their integrative function can be shown on different
management levels normative, strategic, and instrumental.
4.1 The Case of Aravind
Few companies not only formulate and communicate a dedicated normative vision or
mission, but apply its investigation, differentiation, and constitutive values continuously
to innovation. As an example, the Indian company Aravind Eye Care System, one of the
world’s largest eye care facilities, is not only dedicated to “compassionate service for
sight” (AECS, 2014) and offering high-quality and reliable eye care to its customers, but
to a greater degree to the “mission of eliminating needless blindness” (AECS, 2015a).
Eye diseases are a severe problem in India. In general, blindness rates are much
higher in developing (about 1.5%) than in developed countries (0.15-0.25%). The major
cause are cataracts, a form of blindness that can be cured by replacing the natural lens
with an artificial one. About 3.8 million new cases of cataracts are estimated to occur in
India every year. Beyond cataracts, an estimated 20% of India’s population are in need of
some form of eye care; however, half of the Indian population cannot afford treatments at
private eye clinics.
In the early 1970ies, when Aravind’s founder Dr. Govindappa Venkataswamy started
to experiment with alternative health care processes and financial models (extra charges
for regular customers, subsidising free cure to the poor), his entrepreneurial activities
were driven by his personal values to serve humanity which over time turned into a
normative orientation for the whole company. The following quote sheds some light on
the founder’s values related to his endeavour: “We can serve humanity in our normal
professional lives by being more generous and less selfish in what we do.” (AECS,
2015b) Generosity, humanity, and the belief that professional work can serve both are
values that describe an ideal type social entrepreneur (e.g. Yunus et al., 2010), looking
for any opportunity to follow his vision and mission by innovative means: “My goal is to
spread the Aravind model to every nook and corner … Tell me, what is this concept of
franchising? Can’t we do what McDonald’s and Burger King have done?” (from an
interview given in 1993; Metha & Shenoy, 2011, p. 9).
His personal conviction is mirrored by Aravind’s overall strategic approach. The
company has developed the capability to offer high-quality eye care at costs unmet by
any competitor worldwide. But this competitive position is not exploited in order to skim
the vast Indian ophthalmic market, but passed on to the company’s patients. Neither
strategic concerns for profit margins and competitive differentiation, nor a deliberately
“lean” trial and error search for viable business models led Dr. Venkataswamy’s efforts
and learning journey, but his passion for reducing the burden of needless eye diseases
millions of Indians suffer from. Competition is thus not a concern, but rather a strategic
lever to extend the reach of Aravind’s business model innovations by means of growth
and deliberate multiplication (cf. Metha & Shenoy, 2011). Aurolab’s David Green,
Aravinds lens manufacturing partner, claims that they are free from fear of competition:
This paper was presented at The XXVI ISPIM Conference Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.
10
“I am waiting for companies to compete with me or to put me out of business for the
benefit of the poor.” (Seelos, 2014, p. 18) This quote also speaks to the importance of
compatible partner values on the operational management level (Figure 2).
Through integration, Dr. Venkataswamy’s values became Aravind’s normative
orientation which led to particular business model innovations (e.g. cross-subsidisation),
a particular way of doing business and how partners are selected and co-developed.
Looking at the complex organisational structure of the Aravind Group, including eye care
services, education and training, research, consultancy, capacity building, and ophthalmic
supplies, there might be a point in saying that the founders personal conviction and the
organisations normative orientation provide for impressive meta-integrative forces.
4.2 The Case of Otto
Strong value commitments do not necessarily translate into values-based innovation (as
with Aravind). The case of Otto Group reveals several challenges associated with values-
based innovation: first, the necessity to reach beyond a single company into values-based
networks when trying to expedite sustainability values; second, the challenge to move
from a top-down to a bottom-up approach to vertical integration within a family-owned
business group, or at least to a more interactive form; and third, the potentially weak
connections between normative values (and associated sustainability management) and
actual innovation management.
Otto Group is one of the world’s biggest retail e-commerce companies (after
Amazon, it is the second biggest online retailer) and the largest mall operator and
developer in Europe. It is still a family business, now operating in more than 20
countries, with headquarters in Hamburg, Germany. It was founded in 1950 by Werner
Otto and became the world’s largest mail order company and major shareholder of
international e-commerce services. Former German chancellor Helmut Schmidt describes
the founder as a “textbook example of a successful businessman, who at the same time
felt his share of responsibility for the common good and was fair about this
responsibility” (DW, 2009). In 1969, he started the Otto foundation to compensate for
missing governmental care, e.g. funding research on medical treatment for children with
cancer. According to his son Alexander, he wanted to give back to society some of the
luck he had (DW, 2009). Werner Otto’s son, Michael Otto, joined the company in 1971.
He is now chairman of the supervisory board of the Otto Group, the family still holding
the majority of the company. As chairman of the executive board and CEO between 1981
and 2007, Michael Otto succeeded to establish sustainability as a key normative
orientation throughout the Group. In addition to philanthropic engagement,
environmental protection was introduced as a corporate goal in 1986. Ever since,
environmental and social aspects extend the company’s market-oriented leadership,
bringing societal concerns to “the initial stages of the value chain” (Otto Group, 2015a).
The 2011 corporate responsibility report is entitled “Our Responsibility: Sustainability in
Business”. It declares the vision: “We are a globally active corporate group of retailers
and retail-related service providers with successful business concepts that acts
responsibly for people and nature” (Otto Group, 2011, p. 24).
Otto Group acknowledges that corporate responsibility does not end with offering
sustainable goods and services or the sustainability-oriented design of its own business
model (Brock & Streubig 2014, 352). Instead, without naming it innovation (or
horizontal integration with its environment), Otto successfully introduced new values of
sustainability into existing business ecosystems. Its Carbon Performance Improvement
Initiativeis part of its supplier development and a good example. Providing assessment,
information, recommendations, and tools for implementation support it is aimed to
reduce carbon emissions in factories and across complex, multi-party supply chains.
Several retailers and textile and footwear manufacturers are participating and managed to
reduce energy use. In a similar vein, the company supports the “Sustainable Apparel
Coalition” in order to measure environmental impacts and to evaluate sustainability-
oriented measures being used.
The vertical integration of values, such as an orientation towards sustainability, is a
challenging task that requires mid to long term dedication. Michael Otto was aware of the
challenge to extend the issue of sustainability from an owner-centric organisation with
sustainability driven by its former head to an integrated group structure. The question of
how to motivate more than fifty thousand employees in 20 countries to not only recognise
the need to consider sustainability, but to engage for it with enthusiasm, is a persisting
challenge for Otto (cf. Brock & Streubig, 2014, p. 345).
However, the 2013 report (Otto Group, 2013) lists under its mission “The Power of
Responsibility” the four core elements for the corporate set of values: profitability,
innovation, diversity, and sustainability. The same values served as directives when the
group’s 50,000 employees were motivated to realise 4,000 personal commitments
through concrete projects (following Michael Otto’s belief that “each of us can make
some contribution towards helping things in our society take a turn for the better”; Otto
Group, 2015b).
While innovation is addressed in general statements in the 2013 report, clear links to
sustainability are missing. Sustainability and innovation seem to exist in different worlds.
Is this because companies like Otto are cautious in their external communication about
innovation? But why should this hinder them to describe their sustainability innovation
approaches in general, e.g. as a strategic consideration? Or is sustainability rather seen as
an issue of compliance, and not as a potential foundation for innovation activities?
5 Findings and Practical Implications
Values run through organisations and their environment, providing a priori connections
between these systems. As shown in the cases of Aravind and Otto values can serve as a
lever to drive innovation. Based on a review of cases documented in the literature and
interviews with corporate innovation professionals, we see companies working with
values in at least three distinct ways.
First, some companies start from particular values and visions as the original purpose
of their entrepreneurial endeavour. Aravind developed its business and revenue model
driven by the company’s founder’s vision to eliminate unnecessary blindness. Corporate
performance and innovation are not only oriented towards articulated market demand, but
also towards its underlying values. Working towards a double, triple or multiple (values)
bottom line becomes an inherent momentum of organisational development. Changing
the original values system or losing a champion nurturing it can pose critical challenges.
Second, some companies have shifted early on towards including non-financial goals
and idealist visions. For instance, carpet floor maker Interface (2014) motivated
innovation in its products, processes, supply chains, and its financial model, pursuing a
mission zero” to eliminate any impact on the natural environment. In this case and the
This paper was presented at The XXVI ISPIM Conference Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.
12
case of Otto, engagement of a powerful leader managed to establish these values (top-
down) and according goals within the organisation. Again, loss of the “values champion
and the necessity to move from personification to making values a core of corporate
identity is critical. In some companies internal leadership promoted and reinforced
fundamental values and established new normative orientations for the company, now
spearheading the development of new networks based on these values.
Third, some start-ups and established firms have become used to doing what it takes
to make profits. Facing changing societal values (e.g. a shift towards post-materialist
values or lifestyles of health and sustainability) and public institutions (e.g. the German
Energiewende”), they integrate non-financial values into their goals. In these cases,
external pressure motivates normative innovations which are driven, for instance, by
stakeholder groups such as NGOs (Rainforest Alliance versus The Home Depot in the
US; Dziedziech, 2013) or governments (German energy policy after Fukushima). Usually
it takes time until new values diffuse from the periphery into the core of business and
innovation, leading to corporate renewal. One critical task for innovation management is
to support this diffusion from the peripheries into the core of an organisation.
In both internally or externally motivated cases of organisations that follow or
spearhead changing values systems, establishing new normative orientations bears the
potential to direct and foster innovation beyond competitive advantages and strategic
market differentiation that individual business models are concerned with.
However, in many cases the interaction between the operational and strategic level
works detached from the normative orientations cast in vision and mission statements.
Several companies engage in, by itself honourable and important, philanthropic projects
to bring forward their values but refrain from taking such engagement and orientation
into their core business by means of values-based process, product, service, business
model, or network innovations. For example, telecommunication companies that work on
connecting societies and show dedication to sustainability in far-reaching communication
campaigns might still refrain from bringing values of universal access and social
empowerment into their networks.
For now, the values-based view and the theoretical framework sketched out in this
paper raise more questions than they provide definitive answers. They offer a new
theoretical perspective on innovation, its management, and inherent values and hints to
some toeholds for practitioners becoming aware of the “importance of what we care for”
(Frankfurt, 1988). However, a rich collection of empirical action research cases studies is
needed to further differentiate the approach and to explore its full potential and limits.
How do, may, and should values impact innovation in processes, in products and
services, in business models and values-based networks? Which patterns can be
identified, how can vertical, horizontal, and meta-integration, within the company and
beyond be facilitated and promoted, and how is it sometimes precluded? What is the full
scope of potential and impact, and what are the limits of the approach in corporate
practise and long-term renewal? How to proceed from the values of a visionary and
sometimes patronizing leader to value commitments relying on the distributed desires of
the workforce?
With the help of the values-based view engaged and reflective practitioners should
find appropriate theoretical means and a rich collection of cases and patterns to analyse
their own practice in new contexts and to identify innovation potentials based on the
proposed “normative turn” in innovation management. Based on a clarification of the
underlying values, corporate vision and mission statements may be elaborated upon, may
be translated into business models and implemented through marketing instruments.
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... Higher customer loyalty or lower-cost operation is essential in today's increasingly competitive integrated markets (Maletič, et al., 2017). In terms of enforcement habits, conformity values anticipated them, but there was no proof of moderation by organizational formalization (Alexander & Van Knippenberg, 2014;Breuer & Lüdeke-Freund, 2015). Similarly, asset performance assessment is a complex problem involving several inputs and outputs and various stakeholders' dynamic requirements (Parida, 2012). ...
... Performance depends on higher customer loyalty or lower-cost behavior in today's highly competitive, integrated markets (Maletič et al., 2017). While conformity values relatively expected compliance practices, but no proof of moderation by a formalization of organizations (Alexander & Van Knippenberg, 2014;Breuer & Lüdeke-Freund, 2015). As seen in the study by Badii et al. (2014), it can include fixed assets, such as specific sites or buildings, and temporary events that increase a specific facility's criticality. ...
... The corporate culture or organizational culture is thought to affect policy enforcement culture (Tang et al., 2016). Similarly, conformity values predicted compliance behaviors, but there was no evidence of organizational formalization moderating these behaviors (Alexander & Van Knippenberg, 2014;Breuer & Lüdeke-Freund, 2015). Undoubtedly, the study of Tubil et al. (2021) indicated that it is more critical for enterprises to identify the skills and level of knowledge required from staff to do the organization's critical activities. ...
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... Chapter 2, describes the relationship between values and innovation and the recent and novelty models as the value-based innovation management model (Breuer, H. and Lüdeke-Freund (2015), and its relationship with the open innovation model (Mejía-Trejo, 2017 b) Chapter 3, describes the general conceptual model proposal, based on the models mentioned above, and describing the process of eva protocol to be applied. The model proposal includes a broad scope to define specific values into specific areas, interchangeables along horizontal or vertical structure of the firm or corporate organization, with certain characteristics such as: normative, strategic and/or instrumental/operational as management views. ...
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... Schwartz 2012). Furthermore, we should even consider their potential of driving innovation • Administrative and legal burdens remained the biggest concern • Access to finance remained difficult despite the measures taken • Further effort is needed with respect to accessing markets, in particular improving links between existing EU programmes Adapted from EUR-Lex (2016) (Breuer and Lüdeke-Freund 2015), hence potentially inspiring start-ups and eventually incumbents feeling the pressure to innovate in insecure times and volatile market environments to remain competitive or to stay afloat. Largely, values-based businesses foster a culture shaped by a clear set of ground rules establishing a foundation and guiding principles for decision-making, actions and a sense of community. ...
Chapter
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Chapter
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Das übergreifende Ziel ist es, das Kaufverhalten des Konsumenten zu verstehen, um darauf aufbauend Marktsegmente zu identifizieren und gezielt anzusprechen.
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Science and innovation have the power to transform our lives and the world we live in - for better or worse - in ways that often transcend borders and generations: from the innovation of complex financial products that played such an important role in the recent financial crisis to current proposals to intentionally engineer our Earth's climate. The promise of science and innovation brings with it ethical dilemmas and impacts which are often uncertain and unpredictable: it is often only once these have emerged that we feel able to control them. How do we undertake science and innovation responsibly under such conditions, towards not only socially acceptable, but socially desirable goals and in a way that is democratic, equitable and sustainable? Responsible innovation challenges us all to think about our responsibilities for the future, as scientists, innovators and citizens, and to act upon these. This book begins with a description of the current landscape of innovation and in subsequent chapters offers perspectives on the emerging concept of responsible innovation and its historical foundations, including key elements of a responsible innovation approach and examples of practical implementation. Written in a constructive and accessible way, Responsible Innovation includes chapters on: Innovation and its management in the 21st century. A vision and framework for responsible innovation. Concepts of future-oriented responsibility as an underpinning philosophy. Values - sensitive design. Key themes of anticipation, reflection, deliberation and responsiveness. Multi - level governance and regulation. Perspectives on responsible innovation in finance, ICT, geoengineering and nanotechnology. Essentially multidisciplinary in nature, this landmark text combines research from the fields of science and technology studies, philosophy, innovation governance, business studies and beyond to address the question, "How do we ensure the responsible emergence of science and innovation in society?".
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This 1988 volume is a collection of thirteen seminal essays on ethics, free will, and the philosophy of mind. The essays deal with such central topics as freedom of the will, moral responsibility, the concept of a person, the structure of the will, the nature of action, the constitution of the self, and the theory of personal ideals. By focusing on the distinctive nature of human freedom, Professor Frankfurt is able to explore fundamental problems of what it is to be a person and of what one should care about in life.