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Innovation management

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• The book is the result of several years of work in the framework of several international projects (eg iMode project, iForest project, etc). In the book we introduced the basic concepts of innovation management, invention-innovation chain and the presentation of Innovation management in forestry sector in Slovenia. The main chapters of the book are logically supplemented by examples of good practices. • Knjiga je rezultat večletnega dela v okviru več mednarodnih projektov (npr. iModel, iForest…). V knjigi smo predstavili osnovne pojme upravljanja inoviranja, invencijsko-inovacijsko verigo, knjiga pa se zaključi s predstavitvijo upravljanja inoviranja v gozdnem sektorju v Sloveniji. Osnovna poglavja v knjigi so smiselno dopolnjena s primeri dobrih praks.
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K o r on a p l u s d . o . o . -
I n st i t u t e f o r I n n o v a t i o n an d Tec h n o lo g y
Innovation
Management
2 0 1 3
Innovation Management
Publisher: Korona plus d.o.o., Institute for Innovation and Technology, Slovenia, 1
st
edition, 2013
Copyright holder: Korona plus d.o.o., Institute for Innovation and Technology, Ljubljana, Slovenia, e-mail: korona@siol.net,
ASEMFO – Asociación Nacional de Empresas Forestales (ES), ASIMAG (ES), University of Primorska, Faculty of Management
(SI), Regional Development Agency With Business Support Centre for Small And Medium Sized Enterprises (BG), Telematika
GmbH (DE), Hellenic Management Association (GR)
E-book available at: http://www.inovativnost.net/
© Copyright. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted
in any form or by any means, without the prior written permission of the copyright holder. The publisher assumes
no responsibility with regard to the accuracy of the information contained in this book and cannot accept any legal
responsibility or liability for any errors or omissions that may be made.
This project has been funded with support of European Commission. This publication reflects the views only of the author,
and the Commission cannot be held responsible for any use which may be made of the information contained therein.
Authors of chapters
prof. dr. Borut Likar, MBA (SI)
MSc. Peter Fatur (SI)
Urška Mrgole (SI)
Ing. Cyril Chovan (SK)
Arne Kullbjer, Tekn. mag (SE)
Ing. Silvia Medova (SK)
MSc. Vassilis Tsaggaris (GR)
Arancha López de Sancho (ES)
Carmen Dominguez (ES)
Amaia San Cristobal Macho (ES)
Pablo Vidal Álvarez (ES)
Federico Martire (ES)
Yannis Kalivas (GR)
Fanianna Gkofa (GR)
Christos Rakovitis (GR)
Aleksander Tonkov (BG)
Velizar Petrov (BG)
Authors of case studies
prof. dr. Borut Likar, MBA (SI)
Miloš Ebner, univ. dipl. ing. arch., MBA (SI)
MSc. Peter Fatur (SI)
Eugenia Kanellakopoulou, Dipl. Psyc. (GR)
prof. dr. Janez Kopač (SI)
Arne Kullbjer, Tekn. mag (SE)
Bernard Likar, dipl. ing. (SI)
assist. prof. Nada Matičič (SI)
Editor:
prof. dr. Borut Likar, MBA (SI)
Co-editors:
MSc. Peter Fatur (SI)
Urška Mrgole (SI)
Text design:
Urška Mrgole (SI)
Editha Tegler (DE)
Translation:
Arslingue K. Žontar, TEFL, TBE (SI)
CIP - Kataložni zapis o publikaciji
Narodna in univerzitetna knjižnica, Ljubljana
001.895(082)
330.341.1(082)
INNOVATION management [Elektronski vir] / authors Borut Likar ... [et al.] ; editor Borut Likar, co-editors
Peter Fatur, Urška Mrgole ; translation Arslingue K. Žontar, TEFL, TBE. - 1st. ed. - El. knjiga. - Ljubljana :
Korona plus - Institute for Innovation and Technology, 2013
ISBN 978-961-90592-9-6 (pdf)
1. Likar, Borut, 1962-
270200576
Icons used in the text
Project partners: ASEMFO – Asociación Nacional de Empresas Forestales (ES), ASIMAG (ES), Korona plus d.o.o. - Institute for
Innovation and Technology (SI), University of Primorska, Faculty of Management (SI), Regional Development Agency With
Business Support Centre for Small And Medium Sized Enterprises (BG), Telematika GmbH (DE), Hellenic Management
Association (GR).
Important information
Example
Background information
Definition
Stop and think
Weblink
Case study
TABLE OF CONTENTS
1 BASIC ON INNOVATION …………………………………………………………………………………………... 13
1.1 Learning objectives 13
1.2 Introduction 13
1.2.1 What do we mean by innovation? 13
1.3 Importance of innovation 14
1.4 Definitions 15
1.5 Types of innovation 18
1.5.1 Recognising innovation in products and services 18
1.5.2 Recognising innovation in processes and procedures 20
1.5.3 Recognising innovation in management practices 21
1.5.4 Recognising innovation in marketing and distribution strategies and
techniques 22
1.6 Characteristics of innovation 23
1.7 Innovation and R+D Support System 25
1.8 Further Reading 25
2 KNOWLEDGE MANAGEMENT …………………………………………………………………………………. 27
2. 1 Learning Objective 27
2.2 Introduction 27
2.3 Managing knowledge 27
2.3.1 Data, information and knowledge 27
2.3.2 Knowledge markets 29
2.3.3 Internal knowledge generation 29
2.3.4 Codifying and distributing knowledge 31
2.4 Importing knowledge from outside 34
2.4.1 Absorbing knowledge from outside 34
2.4.2 Learning from the market 35
2.4.3 Learning through alliances 38
2.4.4 Protection of knowledge 39
2.5 Additional cases 40
2.6 Further reading 41
3 CREATIVITY AND INNOVATION ……………………………………………………………………………….. 42
3.1 Introduction 42
3.2 Measuring Creativity 42
3.3 Enhancing creativity 43
3.4 Creativity in organizations 45
3.5 Fostering creativity 46
3.6 Personality traits associated with creativity 46
3.6.1 Diligence 46
3.6.2 Stobborn 47
3.6.3 Gender and eccentric 47
3.7 Additional reading 47
3.7.1 How creative are you? 47
3.7.2 12 ways you can express your creativity more powerfully in any workplace 49
4 BUILDING THE FUNDAMENTALS OF A SUCCESSFUL INNOVATION MANAGEMENT50
4.1 Defining innovation strategy and goals 50
4.2 Building the appropriate organisational environment 51
4.2.1 Culture of innovation 51
4.2.2 Some other measures affecting the organizational environment 54
4.3 Management of ideas 56
4.3.1 The goal of innovation 56
4.3.2 Implementing the idea management 58
4.4 How to overcome resistance 60
4.4.1 Employees’ resistance 61
4.4.2 Techniques for overcoming resistance effectively 61
4.5 Assessing the innovation process 67
4.5.1 Measuring innovation 67
4.5.2 Scorecard to assess enterprise innovation capabilities 69
4.5.3 I-model – An innovation assessment tool 72
4.6 Further reading 73
5 INNOVATION MANAGEMENT PROCESS ………………………………………………………………….. 74
5.1 Learning objectives 74
5.2 Introduction 74
5.3 The innovation process 75
5.3.1 Stages of innovation 75
5.4 Managing innovation 77
5.4.1 Planning 77
5.4.2 Management of innovation projects 77
5.4.3 How to finance innovation 78
5.5 Managing the context 79
5.5.1 Environment 79
5.5.2 Organisation and innovation 80
5.6 Additional cases 81
5.7 Examples 81
6 NEEDS ANALYSES ……………………………………………………………………………………………………. 82
6.1 Learning objective 82
6.2 Introduction 82
6.3 Questionnaires 82
6.3.1 Type of questions 83
6.4 Online tools 84
6.5 SWOT analysis 85
6.5.1 SWOT analysis - steps 85
6.6 Focus groups 86
6.7 Desk research 87
6.8 Technology watch 87
6.8.1 The purpose of technology watch 87
6.8.2 Independently or with a help of an expert 89
6.8.3 Searching via internet-general use 90
6.8.4 Searching via internet patents databases 90
6.9 Summary 91
6.10 Further reading 92
7 IDEA CREATION ………………………………………………………………………………………………………. 93
7.1 Learning objective 93
7.2 Introduction 93
7.3 Brainstorming 95
7.3.1 The brainstorming process 96
7.3.2 The analysis of ideas 97
7.4 Brainwriting 98
7.4.1 Brainwriting pool 99
7.4.2 Brainwriting 6-3-5 99
7.4.3 Idea card method 99
7.4.4 Brainwriting game 99
7.4.5 Constrained brainwriting 100
7.5 Gordon´s technique 101
7.5.1 Key points of the method 101
7.6 Fishbone (Ishikawa) diagram 102
7.6.1 The process 103
7.7 Six thinking hats 104
7.7.1 How to use the tool 105
7.7.2 Example 106
7.8 Additional cases 107
7.9 Summary 108
8 IDEA SELECTION ………………………………………………………………………………………………………. 109
8.1 Learning objective 109
8.2 The need for invention assessment 109
8.2.1 The need for assessment 110
8.2.2 Categories of invention 110
8.2.3 Effects may not be financially defined 111
8.3 Numerical sensitivity analysis 112
8.3.1 Process simulation 112
8.3.2 Sensitivity analysis 113
8.4 Effectiveness assessment by introducing questions 114
8.4.1 Characteristics of the method 114
8.4.2 Main aspects of problem processing 115
8.5 Assessment of key success factors 116
8.6 Forecast techniques 117
8.6.1 Trend extrapolation 117
8.6.2 Delphi technique 118
8.7 Other methods 119
8.8 Final decision making 120
8.8.1 Influential data acquisition 120
8.8.2 Making final decision 120
8.9 Summary 121
8.10 Further reading 121
9 IDEA DEVELOPMENT ……………………………………………………………………………………………….. 122
9.1 Learning objective 122
9.2 Own research and development activities 122
9.2.1 Human resources and efficient management 123
9.3 External sources - technology transfer 124
9.3.1 National and European research programmes 124
9.3.2 Outsourcing 125
9.3.3 Selecting a business partner 125
9.4 Summary 127
9.5 Further reading 127
10 ENTREPRENEURSHIP AND BUSINESS PLANNING …………………………………………………... 129
10.1 Entrepreneurship, creativity and innovation 129
10.1.1 Implementation of ideas 129
10.1.2 Strategic management 129
10.1.3 Marketing, business and financial planning 130
10.1.4 The international entrepreneurship 130
10.2 Business plan development 132
10.2.1 General aspects 132
10.2.2 Business idea 133
10.2.3 Marketing plan 134
10.2.4 Business system 135
10.2.5 Organisation 135
10.2.6 Management 136
10.2.7 Implementation 136
10.2.8 Risks 137
10.2.9 Financing 137
10.3 Further reading 138
11 INTELLECTUAL PROPERTY RIGHTS …………………………………………………………………………. 139
11.1 Intellectual property rights 139
11.2 Patent 140
11.2.1 Preconditions for patenting 141
11.2.2 Applying for a patent 141
11.2.3 Patent protection abroad 142
11.3 Utility model 143
11.4 Trademark 144
11.5 Industrial design 144
11.6 Other forms of protection 145
11.7 Case study 145
11.8 Further reading 147
12 SUSTAINABLE INNOVATION ………………………………………………………………………………….. 148
12.1 Learning objective 148
12.2 Introduction 148
12.3 Sustainability 148
12.3.1 The sustainable enterprise 150
12.3.2 The Rio declaration 150
12.4 Innovation and sustainability 151
12.4.1 Goals and challenges for sustainable innovation 151
12.4.2 Sustainable value 152
12.5 Eco-innovation 153
12.5.1 Eco-innovative organisations 154
12.5.2 Typology of eco-innovations 155
12.5.3 Eco-innovation mechanisms 156
12.5.4 Eco-innovation benefits 157
12.5.5 Getting funds 158
12.6 Additional cases 158
12.7 Summary 159
12.8 Further reading 159
13 INNOVATION MANAGEMENT IN FORESTRY SECTOR IN SLOVENIA ……………………….. 161
13.1 Forest companies: Overview 161
13.2 National Innovation strategy: Policies and strategies for managing innovation 163
13.3 Innovation in target sector 166
13.4 Additional cases 169
13.5 Innovation management in the Slovenian forest companies participating in
the iForest project 173
13.5.1 Introduction 173
13.5.2 Analysis of the state 174
13.6 Literature 179
CASE STUDY INDEX
Wood Processing Industry in Sala-Heby – A Pathfinder project 40
Google – Creativity sans frontieres 52
Encouraging innovative career development at Svea 57
Trimo’s “complete solution” 63
Case study iPhone 81
Make it simple 94
Shut up and eat your M&M! 98
Kill the “Not invented here” syndrome 101
Idea creation on the basis of needs analysis 107
Nikas – winning market share by the new product development 118
Joinery manufacturing 124
Building new knowledge in the University-Industry cooperation 126
The Manna Culinary House 131
Intellectual property creates new market opportunities 145
“Wooden Beam” - Analysis of the technological invention 169
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1 BASIC ON INNOVATION
Yannis Kalivas, Fanianna Gkofa, Christos Rakovitis, Aleksander Tonkov, Velizar Petrov, Borut
Likar
1.1 Learning objectives
The aims and objectives of the module are as follows:
to build on the education and experience that each manager in the forest sector already
possesses
to enable managers to manage innovation processes with greater understanding in the
forest sector
to help managers to appreciate the breath and complexity of innovations
to develop managerial skills that will enable managers to achieve success in the field of
innovation management in the forest sector
to enable managers to evaluate and plan innovations in the forest sector
to allow individuals who are involved in innovations to contribute more fully to their
satisfactory outcomes
After reading this module, you should:
Have a better understanding pf the impact of the innovation on your company
Appreciate the complexity of defining innovation
Understand the different types of innovation and how to recognize them
Appreciate many of the characteristics of innovation
1.2 Introduction
This module seeks to introduce participants to the issues that affect managers and owners of
the enterprises in the Forest sector when they are attempting to undertake an innovation.
Many management theorists suggest that innovation equates to the everyday running of an
organization. The management of innovation should be seen as commonplace rather than a
special function and all organizations should be credited with a need to behave innovatively.
1.2.1 What do we mean by innovation?
Just reflect for a moment to identify the greatest innovations of the last century.
What is on your list of suggestions? What led you to put forward those particulars
innovations? What do you feel makes them particularly innovative?
Click on the link below to read a few quotes which might help us decide what we mean by
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innovation.
Innovation is both a necessary means and a desirable end for businesses in a fast
moving global economy. It is about managing a process that delivers either new products and
services to the customers, efficiently, effectively and faster than the competition, or about
enhancing the delivery of existing products and services by process improvement. Generally
innovation involves managing a complex mix of procedures in a context that often conditions
the way the end result will be achieved.
Download:
Statements about innovation
1.3 Importance of innovation
Innovation is important to organizations in the forest sector because of:
Competitive pressures and the need to survive
The management of a firm or enterprise. Managers have to implement change, new
processes and improvement in systems.
The impact of innovation on organizational life.
Competitive pressure and the need to survive
Gary Hamel (1998), writing in the Sloan Management Review, suggests that only those
companies that are capable of recreating themselves and their industries in a profound way
will be around a decade hence. The warning is simple, innovate or perish!
Research in the fields of organisational management and marketing suggests that companies
and organizations that use the innovation process to differentiate their own products and
services from their competitors are twice as likely to be successful both strategically and
financially.
Competitors often observe that innovative organisations represent a threat to them out of all
proportion to the size or financial performance of the innovative organization concerned.
The impact of innovation on the organisation
As with most complex relationships, innovation is more, ‘art than science’ and outcomes tend
to be both psychological and materialistic in nature. In any particular case, the ‘outcomes mix’
varies according to the nature of the innovation and the organisation undertaking it.
Outcomes from the innovation process
Tangible outcomes are outcomes which are observable and apparent. They include:
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Increased corporate success in measurable terms, such as the value of an organisation’s
shares, the general profitability and growth rate. The business tends to command a greater
market share by virtue of market penetration and the number of new products and services
that are made available to clients.
Greater efficiency. A more structured approach to product and service development, with
greater focus shown by both management and employees, increases the likelihood that the
organization will improve its practices and processes in a way that will deliver effective
changes and greater efficiency.
Happier, more flexible and more productive employees. Employees in innovative
organizations tend to feel more valued and to be more loyal to the organization, which tends
to result in more flexibility, higher productivity, less absenteeism and a lower employee
turnover rate.
A more modern, high-tech working environment. Innovative organizations tend to
modernize their employees’ working environment and employ new technology to enhance
the organisation’s effectiveness and efficiency. This has a positive impact on employee’s
morale.
Continuous improvement. When a product or service is innovative, the internal processes
and procedures, which support the delivery of the innovation, tend to be both innovative and
increasingly effective.
Intangible outcomes tend to be psychological in nature, at the level of beliefs and
attitudes. They often outweigh the tangible outcomes and can include the following:
Senior Managers tend to exhibit a high level of confidence in their own judgement. They
tend to be willing to take risks, to speculate and sometimes to think the unthinkable.
Employees tend to develop a profound interest in each other’s ideas and opinions. This
results from adopting an innovative attitude (i.e. one that is open, aware and questing for
new or novel solutions to both threats and opportunities).
An increase in team cohesion at project and organization level.
A change in leadership style. Innovative managers tend to exhibit a leadership style that
is founded on mentoring, encouraging and understanding.
Think about a recent innovation in your company. What to your knowledge were
the intangible outcomes?
1.4 Definitions
Many attempts have been made to define innovation but few of these definitions
capture the complexity and scope of the process of innovation. This section gives examples of
some recent definitions that have been put forward by leading authorities in the area,
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followed by our attempt at a comprehensive definition.
Dictionary definition
Innovation (Latin – innovare) : to make something new. (Oxford English Dictionary)
Opportunity exploitation
Innovation is a process that turns new ideas into opportunities and puts these into widely
used practices. (Tidd et al, 1997)
Industrial Innovation
The technical design, manufacturing, management and commercial activities involved in the
marketing of a new or improved product or the first commercial use of a new or improved
process; (Freedman, 1982)
Changes in technological know-how
Innovation does not only concern itself with major advances in technology or the
commercialization of ideas but it also concerns itself with the utilization of small scale
changes. (Rothwell and Gardiner, 1985)
The entrepreneurs tool Innovation is the way that companies gain competitive advantage by
approaching the way they do thing in the broadest sense and including new technology.
(Porter, 1990)
Short and sweet
Innovation is the successful exploitation of new ideas. (UK DTI Innovation Unit, 1994)
The European Commission definition
The European Commission Green Paper on Innovation (1995) indicates that the term
innovation is commonly used in two different ways:
To refer to the innovation process itself (i.e. the process of bringing any new, problem-
solving idea into use)
And
To refer to the result of the innovation process (i.e. a new product, process, service or
work practice). An innovation in this sense may be a radical innovation/breakthrough or a
product, process or service improvement or an adaptation.
Definitions emphasizing the input to the innovation process
Rogers (1983) defines innovation as an idea, practice or object that is perceived as new by an
individual or other unit of adaptation.
The ERSC Innovation Research Programme 1995-2000 had adopted this definition Innovation
– the successful exploitation of new ideas.
Tom Peters in the Seminar Brochure for “Implementing In Search of Excellence” says
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Innovation: simply a good new idea acted upon. It can come from skunk-works or champions,
from associates or customers, from assembly lines or loading docks, from reception desks or
boardrooms.
Kanter (1984) says simply that innovation refers to the process of bringing any new, problem-
solving idea into use.
Definitions emphasizing the output from the innovation process
Smith and Ainsworth (1989) say that, in the broadest sense, innovation includes the idea of
invention and discovery, but goes beyond it. It is anything that provides usable, unique novel
solutions to problems, opportunities or challenges whether small or large. Some examples
might be a new use for an old product; a new product from on-the-shelf technology; a novel
marketing strategy.
Rogers (1983) defines the innovation output as an idea, practice or object that is perceived as
new by an individual or other unit of adoption. This suggests than an innovation is a cognitive
interpretation with the user of the innovation being the judge as to whether the entity stands
as an innovation in its own right against the individuals past experience. This makes evolution
of an innovation subjective – innovation in the eye of the beholder.
Hard work not genius
Peter Drucker maintains that innovation is systematic and focused and requires new
knowledge and a change in perception. He goes on to state that Innovation takes (hard) work
rather than genius. (Drucker, 1991)
Our attempt at a comprehensive definition
The creation, development and introduction of new products/services or product/service
components, or a new procedure or process for doing things to benefit one or more of the
stakeholders in the organisation. The product/service procedure or process need not be
completely novel but it must be new to the organization itself.
Try to define what innovation is in your own company. Is this the same as your
own definition of innovation? If not, why not?
www.creativeadvantage.com/innovation-definition.aspx
http://innovationzen.com/blog/2006/11/17/the-definition-of-innovation/
http://www.providersedge.com/docs/km_articles/sample_definitions_of_innovation.pdf
http://www.businessdictionary.com/definition/innovation.html
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1.5 Types of innovation
Higgins (1996) suggests that there are four types of organisational innovation :
Product innovation (which results in new products or services or enhancements to old
products or services)
Process innovation (which results in improved processes within the organization – for
example business process re-engineering)
Management innovation (which improves the way the organization is managed)
Marketing innovation (including the functions of product promotion, pricing and
distribution).
The following notes have been prepared to explain more fully the four headings above.
1.5.1 Recognising innovation in products and services
How can the organizational observer recognize innovative behaviour, particularly
with reference to products and services?
Most companies give implicit indications of the fact that they are attempting to change and
improve the way that they conduct their business. They seek to keep waste to a minimum,
they attempt to keep a tight rein on their cash flow and they undertake training.
Whilst the above activities are essential, the organisation which is consciously involved in
innovation will have also a high degree of focus on innovation and a defined innovation
process. The process will be recognized by the majority of the staff and management as an
integral part of the corporate fabric.
The following features are characteristic of an organization that is involved in developing new
products and services.
Scanning for ideas
Ideas are the starting point for innovation. An innovative organization encourages its
employees to scan for ideas for new products and services, both inside and outside the
organization. Employees are ‘enabled’ to scan for novel ideas by acquainting themselves with
the organisation’s market place and changes in technology.
Strategy formulation
The innovative organization will be prepared to devote energy and time to formulating
strategy.
The innovation of new services and products is an interactive process which requires a
delicate balance of structure and flexibility.
Innovative organizations sacrifice the rigid command system to develop strategy which
contains features such as:
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The innovation framework is clear and well defined and closely follows on from the
overall business strategy
The organisation’s master strategy calls for innovation to be a strategic
concept. Innovations are allowed to emerge but they have to comply with the core business
thrust.
Strategy is informed and not imagined. Concepts are tested and alternatives are
investigated with different perspectives being considered during the decision making process
Suppliers of components and subsystems are invited to become part of the strategy
formulation process
Leading clients are identified and knowledge is shared
Effective resourcing
The innovative organization will involve itself in correctly resourcing changes to products and
services. Research and development is seen to be an important part of the future of the
organization. Employees involved in research and development work towards a common goal
and express a feeling of achievement, even if new products are not 100% successful in pre-
sales trials.
Resources are not always vested in the team or organization. Some resources may only be
available through external cooperation. This implies an ability to negotiate and innovate
through partnerships.
Managing product innovation
Managing product innovation involves managing the structure and culture of the organization
as well as managing external linkages and the innovation process itself.
New product development can be considered to be a funnel (Wheelwright and Clark
1992). The outline concept is squeezed into a detailed design that is further reduced through
testing into the product that is to be launched.
The process refines and reduces risk of failure.
The funnel is very effective when working in cross-functional teams, where a danger exists
that a project may become enhanced rather than refined.
Implementation
The implementation of a new service or product is accompanied by organizational acclaim in
an innovative company. The acclaim is underpinned with a mixture of confidence and
concern. Most employees will express confidence in their new product because their
diligence and effort has led to concept ownership but they also feel concerned because they
know that the innovation process is virtually endless.
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1.5.2 Recognising innovation in processes and procedures
The processes and procedures of an organization are the support systems that enable the
products and services to be developed, produced and delivered to the customer.
The recognition of innovation in processes and procedures is normally a matter of internal
knowledge and experience of the way that the organization supports its business endeavours.
The innovation of processes and procedures requires an astute knowledge of the factors that
affect product/service efficiency and effectiveness within the organization.
The following features are characteristics of an organization which is innovating its
processes and procedures.
Companies that are innovative have highly effective, non-invasive monitoring systems
which continually alert management to changing circumstances and alterations in standards
of delivery.
Processes act as a firm base on which to built project plans, interdepartmental co-
operation and the norming of behaviours.
Process innovation is quite common in most modern organizations because it is entirely
within the province of the staff and management to design, implement and monitor the
necessary changes without reference to external influences. On the other hand, an
organisation’s first response to an external influence is to reposition its internal functions to
meet the prevailing threat or opportunity.
Employees in organizations that continually up-grade their systems can suffer from a
surfeit of change. However, well-motivated and well informed staff not only readily adopt
innovations but they often enhance the innovation by expressing their own opinions and co-
operating fully both change and the implementation of new procedures.
Clearly, process changes should be focused on supporting the broader strategy of the
organization, developing competitiveness and giving sustainability.
Innovations which involve processes and procedures can have both tangible and
intangible outcomes and can be predominantly hard or soft in nature.
Hard process innovations normally use computers or machines and improvement can be
observed quite readily (or example, a larger amount of output is achieved for the same or
lower level of input).
Soft process innovations are more difficult to recognize as they involve people and their
behaviour and their approach to both daily work and moments of crisis. The flow of work
through a factory can be planned but employees can radically affect the success or failure of
the plan.
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Does your company exhibit any or all of the innovation factors that have been
mentioned in this session?
Download:
Four distinct stages to process innovation
1.5.3 Recognising innovation in management practices
Cooper (1994) has put forward a six stage model representing an overview of the
process which assists new product development. This process involves a link between the
stages which Cooper calls “stage gates”. These gates are controlled by Product Managers and
Project Leaders. In all cases the role of the manager is to make decisions relating to the
suitability of the product to move onto the next stage. The model illustrates the importance
of the manager within the innovation process. This importance is over and above any skills or
abilities that the manager has to promote or contribute directly to the innovation. Equal
importance has to be given to the ability of the manager, external to the innovation process,
to manage the resources and support systems that impinge on the process. The manager
within an innovation environment has to undertake the following functions and activities.
They have to assist and facilitate the change that is happening within the innovation
process. This is done by giving both managerial and logistical support as the situation
demands.
Each manager has to understand and appreciate the strategy that is being followed. They
have to disseminate the strategy to the work force and communicate changes, improvements
and variations to the appropriate departments.
Managers have to encourage early involvement and commitment to projects. The
manager has to establish that their department has “ownership” of the innovation as a whole
as well as the section that concerns them directly.
Managers have to create and maintain an environment that is both open and
motivational. In an organisation which gains a competitive advantage through the use of
innovation management behaviours can be recognised that tend towards mentoring, and
away from the dictation of orders.
With closer working relationships comes a need for target clarity and performance
indicators that give measures against which progress can be measured. Rewards are often
dealt with by linking a proportion of the amount that is paid to the progress of the project.
Managers take time to develop their subordinates and they also seek opportunities for
personal development. Training is seen as an investment and not as a cost and learning is a
habit rather than an infrequent event.
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Management careers within innovative organisations tend to show a marked difference
from standard ladder climbing. The career manager may actually move between
organisations in order to gain promotion. He or she may find that departmental changes suit
them and they may move between disciplines.
Successful managers of innovation are good leaders with a persistent nature and a
willingness to take risks.
1.5.4 Recognising innovation in marketing and distribution strategies and techniques
In its simplest terms marketing and distribution concerns bringing the product or service to
the attention of the buyer. This involves much more than just creating product awareness, it
involves the creation of desire and ease of purchase and need satisfaction. The marketing and
distribution process is becoming more sophisticated with the employment of greater levels of
technology to assist with the analysis of primary data as well as the development of new
delivery channels and in the right form.
Innovations in marketing and distribution break the normal pattern, but not in a
way which offends existing and potential customers. We can recognise innovations because
we realise the outcome has been to change the relationship with customers. Intel ran its “Red
X” campaign to attract the attention of consumers, rather than their traditional approach of
selling to PC manufacturers. The company Ben and Jerry's gives a free scoop of ice cream to
mothers and expectant women on Mother's Day. The successful advertising slogan “Heineken
reaches the parts other beers cannot reach” is said to have resulted from the visit of an
executive to one of the breweries in some out of the way place. Other examples are:
Tupperware, who developed the “party plan” method of selling, Direct Line Insurance
Services (based on telephone sales) and Amazon Books who sell to customers exclusively via
the Internet rather than face-to-face selling. These and other innovations have resulted from
“thinking outside the box”.
Innovation strategy in marketing, distribution and products can be divided into four
categories, as described below:
Technological (New and novel products in an un-novel market)
Known customer needs are satisfied with novel products and services. An example of this is
the use of film optics replacing copper wires in telephone systems. The result is an
improvement in services and call clarity. The main marketing thrust would be express higher
levels of performance. The innovation in this case is driven by the developer.
Differentiated (Existing products in an existing market)
In this instance the product and the market are relatively well known and the only way to
differentiate between products is to use prices, packaging or product support.
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Architectural (Existing products in a novel market)
The innovative marketer will attempt to encourage a new designation of customers to accept
an established product or service by adoption on recombination. The marketing required to
stimulate this change of perception is derived from knowledge of collaborations and product
reformation-thinking sideways.
Complex (Novel products and services being introduced into novel markets)
The development of the multi-media machine or the IT integrated office has evolved by
linking similar technologies to gain greater efficiency and variability. Marketing these
products requires a high degree of imagination and intuition. Innovative marketing can be
observed in the representation of a product or service or the degree of novelty that is
employed in the way that a product is designed to attract the buyer's attention.
Think of a recent innovation in your organisation with which you personally have
been involved. What type of innovation was it? Was it recognised as an innovation
(a) inside
(b) outside your company?
If not, why not?
http://scpd.stanford.edu/dtu/pdf_courses/Dealing%20With%20Darwin/
CHAPTER4.pdf
1.6 Characteristics of innovation
Significant characteristics of an innovation include:
Timing
Radicalness
Speed
Timing
The most novel idea may, by its very nature, sound the most ridiculous. Timing can affect both
the contribution and the relevance of an innovation. For example, Galileo was forced to
withdraw his belief that the earth moved round the sun, which was based on careful
observation of sunspots and planetary orbits, because he had had the idea too soon.
All companies have a graveyard full of good products with poor timing. This may be the result
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of the development process being convoluted. It may be a product “ahead of its time”.
Sometimes luck plays a big part in innovation. The fax is a classic example of a product which
“took off” due to the UK's postal strike – it needed mass adoption to be useful and had the PC
and the Internet been available earlier, it may well never have been a commercial success. A
whole range of factors lead to the failure of many good ideas because of the impact of those
factors on “time to market”.
Degree of radicalness
Innovations can be classified as radical or incremental. Radical innovations tend to come
about through a rationalist approach and aim to create large scale change (for example, the
introduction of the National Curriculum in state schools). Incremental innovations emerge in a
more organic fashion and create gradual, bit-by-bit change (for example, a programme of
continuous improvement in customer service).
The radicalness of an innovation is not absolute but is a matter of perception. For
example, research carried out by Andreau, Ricart and Valor (1997) in three Spanish
organisations indicates that depth or radicalness (i.e. how we innovate) is one of the highly
significant dimensions of process innovation – the other being scope (i.e. what we innovate).
The researchers found that whilst the scope of a process innovation is relatively “absolute”
and can be fairly easily classified as one of three categories (business processes, sub-process
or task), the depth or radicalness of a process innovation is not absolute is a matter of
perception i.e. an innovation is termed “radical” if it breaks the implicit hypothesis on which
the old way of doing things is founded.
Radical solutions may well be an outcome of fundamental research. For example, biomedical
products, replacement limbs and designer materials are areas where radical innovation is
resulting from research. Often the theory has been known for a considerable time before
applications are developed. Foresight initiatives in many countries are attempting to predict
technology development, so as to help companies to spot new opportunities (for example the
UK's Department of trade and Industry's Innovation Unit). Technology Networks are also
being encouraged in many regions, bringing together universities, company research and
development, small and medium sized enterprises and inventors.
Speed of innovation
Speed of innovation can be critical. Speed affects the cost, quality and timing of the
innovation and ultimately its “competitiveness” and its success. Many organisations are not
fast innovators, and those that have established innovation speed as a competitive advantage
have had to overcome time-consuming policies and practices (Prahalad and Hamel, 1990).
However, speeding up innovation is a complex process. The worst way to speed up a company
('s innovation process) is trying to make it do things just as it does, only faster. The machinery,
and certainly the workers, will simply burn out (Dumaine, 1989). Kessler and Chakrabarti
(1996) have developed a model of innovation speed that highlights the need to consider the
following questions in conjunction with one another “When should we speed up
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innovation?”, “How can we speed up innovation?” and “What happens when we speed up
innovation?”.
Think again about a recent innovation in your copany with which you have been
involved. How do you rate it in terms of:
Timing?
Radicalness?
Speed?
In retrospect, could you have affected any of these characteristics of the innovation?
http://www.management.wharton.upenn.edu/klein/documents/
Tornatzky_Klein_1982.pdf
1.7 Innovation and R+D Support System
The following will introduce some basic support mechanisms offered by the
European Union:
CORDIS Technology marketplace
IPR-Helpdesk
Gate2Growth
Business Innovation Centre network
Enterprise Europe network
Competitiveness and Innovation Framework Programme (CIP)
Trans-European support to rapidly growing companies
1.8 Further Reading
Cooper, R. 1994. Third – Generation New Product Processes. Journal of Product Innovation
Management.
Drucker, P.F. 1985. Innovation and Entrepreneurship (1994. 2
nd
revised ed.
Oxford:Butterworth-Heinemann Ltd). London : Heinemann.
European Commission 1995. Green paper on Innovation (December)
Hamel, G. 1998. Strategy Innovation and the Quest for Value. Sloan Management Review
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(Winter 1998).
Kessler & Chakrabarti, A.K. 1996. Innovation Speed: A Conceptual Model of Context,
Antecedents and Outcomes. The Academy of Management Review – October
Rogers, E.M. 1983. Diffusion of Innovation. 3
rd
edition, New York: Free Press.
Smith, N. & Ainsworth, M. 1989. Managing for Innovation. London: Mercury.
More links and websites from different countries:
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2 KNOWLEDGE MANAGEMENT
Yannis Kalivas, Fanianna Gkofa, Christos Rakovitis
2. 1 Learning Objective
In this module, you will get familiar with the notion of managing knowledge:
You will learn what knowledge is and how it can be differentiated from data and information,
how knowledge can be managed and how it can be effectively managed within an
organisation and how the organisation can generate, codify and distribute its internal
knowledge. Also covered will be how an organisation can overcome the barriers to improving
its knowledge management capabilities and how it can improve that knowledge management
capability.
After reading this module, you will be also familiar with importing knowledge from outside
the organisation. You will learn how to absorb knowledge from outside, how to learn from
the market and how to learn through alliances. Knowledge protection will also be introduced.
2.2 Introduction
In the following chapters we will analyse in depth the basic characteristics of
Knowledge Management. The chapter will be divided in two main parts that will deal with the
main elements that best describe what is meant by the term Knowledge Management,
namely, you will learn about Managing Knowledge that includes the basic notions of data,
information and knowledge, knowledge markets, internal knowledge generation and
codifying and distributing knowledge and about Importing Knowledge from Outside that
includes notions of knowledge absorption, learning from the market and learning through
alliances.
2.3 Managing knowledge
2.3.1 Data, information and knowledge
Data
Data is a set of objective facts about events or activities, and within an organisation is
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normally structured in some form or another. When a customer goes to a supermarket to
purchase food, his purchases can be stored as data; what was bought, how much was paid,
the time of purchase and the method of payment. The data says nothing about why the
purchases were made on that day or that time of day, what (if anything) was going to be
made from the purchases and when they are going to be eaten. If the purchases are made by
credit card, data gathered by the act of purchasing by credit card can be combined with other
data linked to that credit card to give a comprehensive statement of other purchases by the
card holder, movements of the card holder and likes of the card holder. As well as being
quantitative, data can be qualitative. Some believe that if enough data is gathered then
decisions based on data will be easier to make. This is a false assumption as too much data
can make it harder to identify the meaningful data from unnecessary data. Furthermore there
is no meaning in data – it is simply a collection of facts.
Information
Information can be considered a message (Davenport and Prusak, 1998), usually in the form
of an audible or written statement. It has a sender and a receiver and is meant to change the
way that the receiver perceives something. Either hard or soft networks can disseminate
information. A hard network has a solid infrastructure such as delivery vans, post offices and
e-mail. A soft network is informal and can consist of a message left on a voice mail system or
a note pinned to a wall. Information has meaning and data can be transferred into
information in a number of ways. To convert data to information it can be:
Contextualised – we know the purpose of the data being captured.
Categorized – we know the units of analysis or key components of the data.
Calculated – the data may have been formally analysed.
Condensed – the data might have been reduced to a more concise form.
It is normally the receiver of the information who decides whether the information is useful
information, or whether it is still simply data. It is of course possible that the receiver of the
sender's knowledge might consider that knowledge to be just information.
Knowledge
Knowledge can be seen as having a broader, deeper and richer meaning than data of
information. It comes about as a result of people's experiences, values, insight and contexts.
It can be stored in formal systems such as libraries, documents and electronic media. It is
stored also in the routines and process practices and norms of an organisation. Most
importantly it is stored in the heads of the individuals who work for the organisation.
Knowledge is not a concrete asset of the organisation of the firm. To convert information to
knowledge it needs to be transformed through:
Comparison – how does the information we have about this situation compare to other
situations that we have known?
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Consequences – what implications does the information have for decisions and actions?
Connections – how does this bit of information relate to others?
Conversation – what do other people think about this information?
Two-thirds of knowledge is gained by face to face contact between people and the value of
knowledge can increase with use as more connections are made during conversations.
2.3.2 Knowledge markets
Knowledge moves through organisations in the same way as currency circulates
and organisations place a value on knowledge in the same way that they place a value on
other resources. There are three players in the Knowledge Market: buyers, sellers and
brokers.
Knowledge buyers can be seen as people who are trying to resolve complex issues that
require complex answers. Knowledge sellers are people in an organisation who have a
reputation for possessing substantial knowledge about process or subjects that others are
interested in. knowledge brokers (gatekeepers, boundary spanners) make connections
between knowledge buyers and sellers. They find out who does what and who knows what
and they like to understand where to go for knowledge especially if it takes them outside of
their own area of responsibility. Librarians can be seen as knowledge brokers as their role
requires them to help people find the knowledge that they require in both a people-to-people
context - “Have a chat with John Smith, he has been doing work in that area” and a people-to-
text context - “You will find it in the Oracle Database”. Knowledge brokers can also have an
important role in translating the language of the Knowledge supplier to the language of the
Knowledge user.
If the culture of an organisation inhibits the sharing or even acknowledgement of problems or
of success, or inhibits trust, then it will be difficult to pass knowledge around the organisation.
Knowledge can be passed on for a number or reasons. The Knowledge Supplier might wish to
be thought of as a knowledgeable person, he or she might be expecting knowledge in return
or they might just be doing it out of a sense of altruism. Although formal Knowledge
Networks can help the Knowledge Market operate, the informal Knowledge Market can be
vastly more efficient. In the informal network, people ask who knows what, who knows who
and how useful is the knowledge that they have. This informal network grows as a result of
chance meetings, discussions at the coffee machine or water dispenser. Some organisations
have managed to encourage the informal network by setting places aside for staff to meet
informally.
2.3.3 Internal knowledge generation
Dedicated resources
Organisations frequently set up groups or departments to generate specific knowledge. The
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Library can be seen as one of these departments, the other being the R&D department. Some
recent research (Coombes, 1998) appears to show that R&D departments are more effective
when set up separately from the business unit. The rational behind this is that by separating
the R&D function from other parts of the organisation it gives researchers the freedom to
explore new ideas away from the constraints of profits and deadlines. Researchers can work
on long-term issues rather than the short-term issues that they are required when dealing
with customer driven requests. The problem that can arise though from a centralised R&D
function is that it may be difficult to transfer the results of the R&D function to the wider
organisation. To ensure that knowledge is transferred from the R&D function, explicit steps
such as the transferring of researchers to the business units should take place. There should
also be regular high level meetings that deal with evaluating and integrating new knowledge.
Fusion
Whereas the R&D approach relies on reducing the pressure and distractions that can stifle
productive research, the generation of knowledge by fusion deliberately introduces
complexity and conflict into the process to help generate more knowledge. Dorothy Leonard-
Barton (Wellsprings of Knowledge) calls this “creative abrasion” and says that “innovation
occurs at the boundaries between mind sets, not within the provincial territory of any one
knowledge and skill base. Creative abrasion occurs when diverse groups of people are bought
together to solve problems”. Nonaka and Takeuchi (The Knowledge Creating Company) say
that it is necessary to bring another people of different knowledge and experience to
generate new knowledge. They refer to Ashby's Law of Requisite Variety and describe the
productive conflict of creative abrasion that produces creative chaos. The complexity and
diversity that is brought to bear on a problem should match or be at least proportional to the
complexity and diversity of the problem under consideration.
Adaption
By instilling a sense of crisis into an organisation as an environmental act, it can be possible to
instil a sense of “Adapt or Die” into the organisation. When an organisation is successful it is
difficult to get it to see and understand the changes in its external environment. “Without the
spur of a crisis or a period of great stress, most organisations – like people – are incapable of
changing the habits and attitudes of a lifetime” (John McDonnell of McDonnell Douglas
Corporation). Wellsprings of Knowledge talks about the core competencies that become the
core rigidities that keep companies on the “well-worn and successful paths” that ultimately
lead to an organisation's failure.
Networks
Knowledge is also generated by the self-organising networks that over time might become
more formalised. Although it can be difficult to codify the knowledge that is generated within
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these networks, these networks nonetheless produce new knowledge for the organisation.
Common factors
All efforts that produce new knowledge need adequate time and space to devote to
knowledge acquisition and development. Space means libraries, laboratories, formal meeting
areas and informal meeting areas such as the coffee machine. Much of the space might be
electronic, but meeting places are required as two thirds of all knowledge is passed in a face-
to-face environment. It must also be realised that knowledge generation and gathering is an
important activity for business success and the process can be nurtured. Although knowledge
generation is difficult to measure, the destruction of the knowledge generation infrastructure,
by downsizing, re-engineering or redundancy (some say they all mean the same thing) can
severely limit the capability of the organisation to generate and exchange knowledge and to
build on the experience of the past.
2.3.4 Codifying and distributing knowledge
The aim of codification is to put the tacit knowledge that resides within the organisation into
a form that makes it accessible to those who need it.
The Four Principles of Knowledge Codification are:
Decide the business goals that the codified knowledge will serve.
Identify the knowledge that exists in whatever form that will help achieve those goals.
Evaluate the knowledge for usefulness and appropriateness for codification.
Identify a suitable medium for codification and distribution.
Tacit knowledge
Tacit knowledge, that which is held by an individual, and includes that individual's hunches,
feelings and experiences is almost impossible to codify – try explaining in detail how you play
tennis. A manual skill cannot be written down but it can be videoed and the knowledge can
also be passed on in person sometimes over a period of time, much like a master craftsman
with an apprentice.
Mapping knowledge
A properly designed database or “map” can be drawn up to show who has what knowledge
and where people can go to obtain that knowledge. This map can be pictorial or textual and
effective use can be made of hypertext prompts to make the map effective. Organisations
that carry out this method of mapping usually start off by asking employees what knowledge
they have and where they get it. They then stitch together a “map” that shows where
knowledge resides. Unfortunately a central “map” cannot deal with a situation where an
individual may not know about a subject, but might know someone who does.
Mapping technology
Computer technology can help make knowledge maps work. The availability of Lotus Notes
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and Web browser/intranet systems and the capability of hypertext languages have made the
generation of effective knowledge maps relatively straightforward. Although computer
technology can enable a knowledge management project it is recommended that resource
expenditure on the hardware and software be kept at less than 30% of the cost of the budget
or the project will turn into an IT project and not a knowledge management project. As well
as mapping text through the use of tools such as Groupware and Hypertext, it is possible to
model knowledge and experience through the use of dynamic and static models.
Politics
Everybody would like to think that their knowledge is the most important and those who
claim to have the most important areas of the map. If knowledge is important to an
organisation, then the position of a knowledge holder on the map will signify status. Though,
in a knowledge-sharing organisation, the high status goes to those who both hold and are
willing to share their knowledge.
Knowledge transfer
The best way to transfer knowledge is to hire clever people and let them talk to each other.
Give people time to think and allow them to have conversations. Everyday knowledge
transfers come about as a result of discussions, the brief chat in the corridor or a few words
over lunch. These everyday knowledge transfers are part of organisational life but are local
and fragmented. To successfully transfer knowledge is a difficult process and requires a
number of different strategies. One of the most effective being the transferring of people
between the R&D function and the other business functions. Secondments to other parts of
the organisation or to suppliers and customers are also methods of transferring knowledge.
Japanese companies frequently transfer managers into different functions so that managers
gain an understanding of the entire development and production process.
Knowledge fairs
Some companies set up Knowledge Fairs for their employees where different parts of the
organisation set up booths where they can discuss with other employees the work they are
doing. The whole idea of the events is that they are unstructured forums for participants to
ask questions and discuss issues. These events seem to work better than the events that are
packed with formal meetings and seminars as they give people time to talk.
Culture of knowledge transfer
Organisations that seem to be able to transfer knowledge easily have suitable cultures. They
encourage the building of personal relationships through face-to-face meetings and they
provide the time to allow these events to happen. They ensure that status and rewards go to
those who are willing to share their knowledge, not just hoard it. They make it explicit that
ideas are there to be learned from whatever the status of the source – “the not invented
here” syndrome does not exist. Knowledge sharing organisations also ensure that the
vocabulary that is used by the departments is a common one, jargon is kept to a minimum,
and where it is necessary to learn the language of another discipline then that training is
given.
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Technologies for knowledge management
Technologies for knowledge management
With the advent of technology such as Lotus Notes, and organisation-wide
intranets, it is becoming easier for organisations to store vast amounts of knowledge
electronically. Retrieval of knowledge in this technological network is made easier by the use
of search engines, thesauri and language translation software.
Implementing knowledge technologies
The goal of these technologies is to take the knowledge that is held inside people's heads and
make it available to the wider organisation. Implementing a Knowledge Management
Technology is more a cultural change issue than a technology implementation issue and
Prusak (Working Knowledge) states that if the technology implementation takes more than
30% of the budget then it is an IT project and not a Knowledge Management project. The
cultural issues that must be addressed include those of trust within an organisation, the
structures that reward knowledge sharers rather than knowledge hoarders, the willingness to
take on new ideas and allowing time and space for conversation among others.
Types of technology
Broad Knowledge Repositories consist of depositories of structured explicit knowledge that
can be accessed by the use of relatively unskilled people making use of search engine
technology, the Internet being a prime example. The drawbacks of this type of system include
that it is difficult to judge the quality of knowledge that is provided and hence the users tend
to have a low level of trust in the system. As well as having search and retrieval capabilities,
an on-line thesaurus is a necessity. The aim of the thesaurus is to connect the terms by which
the knowledge is structured with the terms employed by the searcher.
Focused Knowledge Environments are set up to allow the knowledge of a few experts to be
tapped by a much larger group of workers. An ideal example being the insurance sales force
who can do the financial planning that their customers need, without knowing much about
financial planning. The user needs to engage in some sort of dialogue with the system,
entering information and waiting for an answer. Real Time Knowledge Systems are used by
well trained users when knowledge has to be transferred quickly such as in customer support
or “help desk” applications. The users can be the experts, or the system can make use of case-
based reasoning where the customer or individual requiring help can give an idea of the
symptoms that their problem is exhibiting. Long-Term Analysis Systems such as neural
networks can be used when time is available and the user is well educated or trained. They
are heavily statistically based and have the capability of learning from previous solutions.
Despite the ease with which the technological aspects of these systems can be set up, it is the
behavioural and cultural aspects of the organisation that will make the system succeed or fail.
By getting these aspects right then the implementation of an effective knowledge managing
organisation will be made easier. Identify the knowledge element that helps solve the
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problem and implement the solution, and then show the business value of solving the
problem.
Knowledge of customers is an important area for any organisation and a project that aims to
improve this area should show quick results. Once you get these results, start telling people
how good the results are. Other knowledge management initiatives should then follow. In a
nutshell, the following recommendations make sense:
The place to start is with high value knowledge.
Start with a focused pilot project and let demand drive additional initiatives.
Work along multiple fronts at once (technical, organisational, and cultural).
Don't put off the main trouble areas until too late.
Get help through the organisation as quickly as possible.
2.4 Importing knowledge from outside
2.4.1 Absorbing knowledge from outside
Dorothy Leonard-Barton (Wellsprings of Knowledge) highlights a number of areas
where organisations must be efficient if they are to successfully absorb knowledge from
outside the organisation and transfer it across internal boundaries. She refers to the need for
managers to expose their organisations to a bombardment of new ideas and transfer those
ideas through the setting up of “porous boundaries”. Organisations need to be able to Scan
Broadly, provide for Continuous Interaction, Nurture Technological Gatekeepers, Nurture
Boundary Spanners and Fight “Not Invented Here” syndrome.
Scanning broadly
Organisations can gather a wide range of information from a wide range of areas, and
because the quantity of information is so huge there is a higher chance of gaining the more
valuable information. Many organisations consider technology scanning second only to R&D
as the most important technology-acquisition strategy. The most successful organisations
send delegates to any (even slightly) relevant seminar or conference, they use sales offices to
pass on information on technological advances. They also post researchers abroad into
research institutes and set up corporate research laboratories alongside Universities.
Provide for continuous interaction
Companies that successfully import knowledge continually go back to the source to ensure
that they have understood the new technology and also have kept abreast of new
developments.
Fight “not-invented-here”
The natural reaction of any organisation to new knowledge from outside is to reject it for a
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number of reasons. There is often a belief that as the knowledge has come from outside it
cannot be useful, or it is flawed for some (usually unspecified) reason. There is also a distaste
at adopting someone else's idea rather than using a home-grown one. Resistance to new
ideas can show up in a number of ways from the subtle one of re-testing components that
have already passed the necessary tests and been certificated, through to unsubtle ones such
as explicitly stating that an outsider's ideas are inferior. The Spanish have a saying “Well
stolen is half done”.
Evaluating technology
Knowledge and technology gained from outside is frequently incomplete from the point of
view of the recipient and must be completed by the source, the receiver or both together. An
organisation needs to be able to understand the technology it is looking to use and it is
important that organisations can both assess technology potential, evaluate the expertise of
the source and pin-point the location of the knowledge.
Assess technology potential
Organisations that are looking to absorb new knowledge should be capable of assessing that
knowledge properly and it appears that the most successful technical joint ventures occurred
when both sides had done considerable work on the area in question prior to collaboration.
The area of collaboration chosen though should not be one of the core competencies of the
receiving organisation.
Evaluate the expertise of the source
One of the critical issues regarding collaboration between two organisations is the
degree of expertise that the organisations have in the area in which they are collaborating. A
joint venture is normally set up to create a set of complimentary capabilities with each
organisation providing essential but different capabilities. If either organisation is actually
deficient in the capability that they bring to the arrangement then it is likely that the venture
will fail. Although the match between GEP and Polymer Solutions appeared to be a good one,
there was very little investigation into the required skills that each party wanted from the
other.
Pin-point the location of knowledge
Where does the required knowledge reside? Does it reside in the equipment? Software?
Hardware? Procedures? Or in the heads of the workforce? Too often the “due diligence” work
necessary during a take-over or merger is done by the lawyers and accountants who look for
the physical worth of a company and very little “due diligence” is done on the knowledge
assets.
2.4.2 Learning from the market
Market research
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Traditional market research, which is quantitative and qualitative in nature, is the
preferred way for many organisations to consider new products. A different form of Market
Research, one that Dorothy Leonard-Barton (Wellsprings of Knowledge) has called Empathic
Design, has three characteristics that distinguish it from other qualitative methods. A design
can be based on actual observed customer behaviour, is usually conducted through deep
interaction between those who have a deep understanding of the firm's capabilities and
potential users, and it draws upon existing technological capabilities that can be redirected or
re-deployed to new products or markets.
Empathic design
Actual observed customer behaviour
Because the user is observed in situ, the whole user system is directly observable and the
interaction between the user, the equipment and others can be seen.
Direct intervention
This occurs between those who have a deep understanding of the firm's capabilities, such as
designers and engineers and the product users. Those with the deep understanding see first
hand how the equipment is used and do not receive information from a market research
function.
Technological capabilities
Observers of users might see potential uses for the firm's current capabilities that can be used
elsewhere.
Other market research techniques
Other market research techniques include inquiry and the creation of new markets.
Inquiry
This occurs when the existing customer or customer set is targeted for an extension of a well-
established product line. This is the province of traditional market research techniques.
Creating a new market
When neither technologies nor customers are certain, information must be
gathered by extrapolating trends, imaging a possible future through scenario-planning or trial
and error. The extrapolation of various trends can help developers attempt to foresee what
customers will require in the future when those trends mature. Scenario-planning
extrapolates trends in different directions to give different but possible futures and is
designed to stimulate out-of-the-box thinking and to divert thought from a straight line. Peter
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Schwarz (The Art of the Long View) talks about thinking the unthinkable and asking a series of
“what if” questions to stimulate thinking. The final method of trial and error is used by many
organisations that have products that have short lead times.
Other forms of learning from the market
Dorothy Leonard-Barton (Wellsprings of Knowledge) states that there can be said
to be five generic situations for new-product developments: (1) user-driven enhancement; (2)
developer-driven enhancement; (3) development inspired by the user context or
environment; (4) new applications or combinations of technologies; (5) technology and
market co-evolution or market creation.
User-driven enhancement
An improved solution to a known need – Explicit customer demands can drive technological
improvements and new product development along known performance parameters for
current products. Lower costs, more features or better quality are the parameters usually
required.
Developer-driven development
A new solution to a known need – This requires potential users to translate their felt needs
into a request for a particular solution. They may have a need, but they cannot imagine a
solution because they don't know about the particular technology advance that could satisfy
that need. A developer could see a current need in the market place and a developer might
decide to delight customers with large leaps in performance that no competitor has
attempted and no user requested.
User-context development
A new solution to an unexpressed need - Needs may exist for years before technical solutions
can be made available but users will not be able to communicate that need in a manner that
could guide product development to produce the technology.
New applications or combinations of technologies
A novel solution to an identified need – Developers take an existing technology that is well
known in one area and transfer it to another area. An example being the adaption of Sonar
technology used for hunting submarines and applying it to provide technology that can carry
out ultra-sonic scanning of the foetus in the womb. Another example being taking the pump
technology used to pump super cooled liquids through the cooling system of a nuclear reactor
and adapting it to freeze food more efficiently.
Technology/market co-evolution
An evolving solution to an uncertain need – Technology has at times run far ahead of
consumers and has resulted in the development of an application for a wrongly targeted
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market. An example being the use of DNA sampling to establish paternity through blood
samples, this not being the most obvious application.
2.4.3 Learning through alliances
Organisations can obtain knowledge from outside themselves by forming alliances of various
degrees of formality with other organisations. More informal ways of obtaining knowledge
can occur simply by talking to customers and suppliers and attending seminars in issues of
interest. Collaboration between organisations occur for a number of reasons:
to reduce the cost of technological development;
to reduce the risk of development or market entry;
to achieve economies of scale in production;
to reduce the time taken to develop and sell new products;
to increase the knowledge the organisation has in certain areas.
There is an increasing realisation that one organisation's peripheral technology is another
organisation's core technology and the collaboration necessary to gain knowledge in certain
areas is the area that this section will concentrate on. Collaboration can occur with
universities, non-competitor and competitor companies, customers, supplies and consultants.
When the decision to “make or buy” knowledge is being considered organisations need to
consider two issues. Transaction costs which focus on the organisation's efficiency, and
strategic implications which will include consideration of the organisation's future
exploitation of the knowledge.
Forms of collaboration
These can include subcontracting, technology licensing, research consortia, joint ventures,
innovation networks.
Subcontracting
This occurs when the supplying organisation can normally supply its own technology at a
lower cost than it will take the receiving organisation to provide it itself. In the West these
relationships tend to be of short term duration, contractually driven and with very little input
by the supplier into the design process. In Japan, in contrast, the relationships tend to be long
term with suppliers making a significant contribution to product development.
Technology licensing
This offers an organisation the opportunity to exploit the intellectual property of another
organisation, normally in return for a fee and royalty based on sales. When a licence is sold,
the licenser will normally lay down conditions under which the technology is licensed and will
often require the buyer to give the seller access to any improvements in the technology.
Benefits include lower development costs, less risk and faster product development times.
Drawbacks include restrictive clauses imposed by the licenser, loss of control of issues such as
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pricing, volumes and quality, and the potential costs of search, negotiation and adaption.
Research consortia
These normally consist of a number of organisations working together on a well specified
project. The reason for this is to share the cost and risk of research into common areas.
Competitor companies frequently collaborate in the development of pre-competitive
technology, especially when state funding supports this type of research. Non-competitor
companies frequently collaborate to learn from each others organisations' skills.
Joint ventures
These can be in one of two basic forms, a new company with ownership based on stock
owned, or a contractual relationship.
Innovation networks
These tend to be informal groupings of organisations that evolve over a period of time with
no contractual responsibility to each other. It is within the innovation network that the
technology gatekeeper is especially important in the formal and informal role. The formal role
being the one where he (or she) keeps his organisation aware of “what is happening out
there”, and the informal role being the organisation contact within the network.
Universities
An increasing form of collaboration occurs between the organisation and universities, where
the university acts as an external source of technology. These relationships range from
providing support for Ph.D. Students and finance for research, through to formal contractual
research relationships.
2.4.4 Protection of knowledge
As well as obtaining knowledge from various sources, organisations need to protect their own
intellectual property, and patents are the process by which this protection occurs. Patents are
legal rights to concepts and ideas; they must be applied for in every country individual. They
must also be new ideas and technically should not have been discussed by anyone other then
the developers. While patent protection is a major way in which knowledge can be protected,
it is worth remembering that a patent is codified knowledge. Codified knowledge is easy to
locate; the easier it is to locate the easier it is to transfer. Tacit technology that is held within
people’s heads is the easiest to protect from copying and can be preferable to explicit patent
protection especially where the technology has been developed in-house.
2.5 Additional cases
Mobil
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The Oil Company Mobil has a culture that discourages behaviour that can be seen as bragging
or broasting. This results in an efficient Knowledge Market as problem solvers do not feel able
to advertise details of the problems they have solved.
Dai-Ichi
The Japanese pharmaceutical company Dai-Ichi has set up attractive rooms with refreshments
where the research staff are encouraged to spend 30 or so minutes a day just talking
Matsushita
The consumer electronics company Matsushita combined teams from three different product
divisions to develop a successful home bread-king machine. The machine required the
knowledge of computer control held by the rice cooker group, the induction heating
knowledge of the toaster from the coffee makers group and the knowledge of rotating motors
from the food processors group
British Petroleum
British Petroleum has developed a very advanced Intranet and all personnel are recommended
to put their personal expertise and as much knowledge as they can on their web pages on the
Intranet. Sophisticated search engines are used that can allow searchers to find the knowledge
or knowledge holder that can help with their problem.
Wood Processing Industry in Sala-Heby – A Pathfinder project
Arne Kullbjer
A group of 30 SMEs employing altogether about 400 people, located in a small region in
central Sweden, joined with a purpose to establish a business association in order to respond
more efficiently to their customers’ – predominantly large companies and governmental
institutions – needs. The business association would have good knowledge about the
companies, how to make them competitive and how to use new technologies.
However, in order to further extend the association’s performance, they decided to raise its
ICT capabilities. The business opportunity was seen in Internet commerce and administration
costs reduction through EDI (Electronic Data Interchange) solutions. Besides, the big
companies and organisations should start regarding the SMEs as business partners and not
only as suppliers of a product, which often is the situation. The SMEs can be flexible and can
through quick interaction also adjust and change their delivery according to customer’s needs.
EDI is here an important technology.
The project was organised in right time as the big companies were in the process of
implementing new purchasing methods, sending digital drawings etc. The association even
managed to receive about 60.000 Euro from NUTEK, the Swedish Business Development
Agency fond aiming to increase branch specific knowledge and IT-use through skill
enhancement in the purchasing process and e-commerce.
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The project was an example on how the competitiveness in small companies can be increased
through involvement of quite simple but effective ICT tools. The administrative costs in the
companies have substantially decreased with the EDI solutions implemented. The project has
created more and better business opportunities and better competitiveness. No one of the
SMEs can show any figures on how many more contracts being established or similar results,
but they all agreed upon that without this project their competitiveness should have been on a
much lower level.
2.6 Further reading
An investment in knowledge pays the best interest.” By Benjamin Franklin
Bibliography:
Davenport, D.H. and Prusak, L., Working Knowlede: how organizations manage what they
know. Boston, Mass: Harvard Business Scholl Press
Leonard-Barton, D., Wellsprings of Knowledge: Building and sustaining the sources of
innovation. Boston, Mass.: Harvard Business School Press
Nonaka, I And Takeuchi, H. The knowledge-Creating Company: How Japanese companies
create the dynamics of innovation. New York, Oxford University Press
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3 CREATIVITY AND INNOVATION
Aleksander Tonkov, Velizar Petrov
3.1 Introduction
In an attempt to gain a competitive advantage, organizations are now focusing on enhancing
their employees’ creativity, and not merely developing their technical competencies and
skills. In a changing world and economy, the role of creativity in the workplace is becoming
ever more prominent. However not enough firms are fully exploiting the business ideas of
their employees and are not making the most of their skills. Whilst firms may be encouraging
creativity, the implementation and management of the ideas generated is lacking.
Consequently, many companies are deemed to be falling short of their potential, creating an
“innovation gap“.
Organizations are finding that, as markets become saturated and competition gets stronger, it
is increasingly necessary to find novel or innovative approaches to business problems and
issues. They may look for this creativity in their staff or may even recruit new, more creative
employees. This can help both the marketing of the organization by being seen to be creative
and 'cutting edge', and it can improve productivity and efficiency by solving current problems
or business obstacles.
Of course, the concept of creativity is an illusive one. How can one hope to enhance creativity
if it is not first defined and measured? This article will provide an overview of the concept and
ways in which it may be measured and enhanced in the workplace.
3.2 Measuring Creativity
The concept of creativity may be delineated into three dimensions; the person, the product
and the process.
Person-based - there are many ways to measure or infer creativeness directly from an
individual.
Personality Measures - Looking at certain personality traits or characteristics associated with a
creative mind, e.g. intelligence, confidence, wit, originality, informality and tolerance to
Creativity refers to the phenomenon whereby a person creates some-
thing new (a product, a solution, a work of art, a novel, a joke, etc.) that
has some kind of value. What counts as "new" may be in reference to
the individual creator, or to the society or domain within which the nov-
elty occurs. What counts as "valuable" is similarly defined in a variety of
ways.
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ambiguity. However, psychologists have been trying to find the 'one' personality profile of the
creative person for many years without any real solid evidence.
Biographical Inventories - The use of biographical data. For example, linking family and
educational history to determine the potential sources of an individual's creativity, personal
interests or hobbies that may indicate a creative mind, or even personal relationships.
Creative Ability - The direct measurement of creativeness by testing an individual with various
established tests (for example, the “unusual uses” test, and other exercises in creative
thinking or elaboration).
Product-based - a more objective measure involving the assessment of an individuals
previous work for creativity and innovation.
Process-based - an examination of the creative processes employed by an individual to come
up with solutions to problems or design novel products (e.g. feelings experienced before/
during/after the innovation).
3.3 Enhancing creativity
All people have the potential to be creative but those who are recognised as being creative
have a certain awareness or insight that others don't. Without the abilities needed to be
creative, it is highly unlikely that someone will solve a creative problem. However, just
because an individual has an ability to do something does not necessarily mean that they will
do it. It is for this reason that employers resort to various techniques to enhance their
employees' creativity.
DO IT, that was devised by Robert W Olsen in his book “The Art of Creative
Thinking”, is a structured process for creativity. Using DO IT ensures that you carry out the
essential groundwork that helps you to get the most out of creativity tools. DO IT is an
acronym that stands for:
D – Define problem
O – Open mind and apply creative techniques
I – Identify best solution
T – Transform
These steps are:
Problem Definition:
During this stage you apply a number of techniques to ensure that you are asking the right
question. This step concentrates on analyzing the problem to ensure that the correct question
is being asked. How you can do this:
Check that you are tackling the problem, not the symptoms of the problem. To do this, ask
yourself why the problem exists repeatedly until you get to the root of it.
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Lay out the bounds of the problem. Work out the objectives that you must achieve and
the constraints that you are operating under.
Where a problem appears to be very large, break it down into smaller parts. Keep on
going until each part is achievable in its own right, or needs a precisely defined area of
research to be carried out. See Drill Down for a detailed description of this process.
Summarize the problem in as concise a form as possible. Robert W Olsen suggests that the
best way to do this is to write down several of two-word problem statements and choose the
best one.
Open Mind:
Here you apply creativity techniques to generate as many answers as possible to the question
you are asking. At this stage you are not evaluating the answers.
Once you know the problem that you want to solve, you are ready to start generating
possible solutions. It is very tempting just to accept the first good idea that you come across.
If you do this, you will miss many even better solutions.
At this stage of DO IT we are not interested in evaluating ideas. Instead, we are trying to
generate as many different ideas as possible. Even bad ideas may be the seeds of good ones.
While you are generating solutions, remember that other people will have different
perspectives on the problem, and it will almost certainly be worth asking for the opinions of
your colleagues as part of this process.
Identify the best solution:
Only at this stage do you select the best of the ideas you have generated. It may be that the
best idea is obvious. Alternatively, it may be worth examining and developing a number of
ideas in detail before you select one.
The Decision Making Techniques section of Mind Tools explains a range of excellent decision
making techniques. Decision Tree Analysis and Force Field Analysis are particularly useful.
These will help you to choose between the solutions available to you. When you are selecting
a solution, keep in mind your own or your organization's goals. Often Decision Making
becomes easy once you know these.
Transform:
The final stage is to make an Action Plan for the implementation of the solution, and to carry
it out. Without implementation, your creativity is sterile.
Having identified the problem and created a solution to it, the final stage is to implement this
solution. This involves not only development of a reliable product from your idea, but all the
marketing and business side as well. This may take a great deal of time and energy.
Many very creative people fail at this stage. They will have fun creating new products and
services that may be years ahead of what is available on the market. They will then fail to
develop them, and watch someone else make a fortune out of the idea several years later.
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The first stage in transforming an idea is to develop an Action Plan for the transformation.
This may lead to creation of a Business or Marketing Plan. Once you have done this, the work
of implementation begins!
3.4 Creativity in organizations
It has been the topic of various research studies to establish that organizational effectiveness
depends on the creativity of the workforce to a large extent. For any given organization,
measures of effectiveness vary, depending upon its mission, environmental context, nature of
work, the product or service it produces, and customer demands. Thus, the first step in
evaluating organizational effectiveness is to understand the organization itself - how it
functions, how it is structured, and what it emphasizes.
Amabile (Amabile, 1998; Sullivan and Harper, 2009) argued that to enhance creativity in
business, three components were needed:
Expertise (technical, procedural and intellectual knowledge),
Creative thinking skills (how flexibly and imaginatively people approach problems),
and Motivation (especially intrinsic motivation).
There are two types of motivation:
extrinsic motivation – external factors, for example threats of being fired or money as a
reward,
intrinsic motivation – comes from inside an individual, satisfaction, enjoyment of work
etc.
Six managerial practices to encourage motivation are:
Challenge – matching people with the right assignments;
Freedom – giving people autonomy choosing means to achieve goals;
Resources – such as time, money, space etc. There must be balance fit among resources
and people;
Work group features – diverse, supportive teams, where members share the excitement,
willingness to help and recognize each other's talents;
Supervisory encouragement – recognitions, cheering, praising;
Organizational support – value emphasis, information sharing, collaboration.
Nonaka (Nonaka, 1991), who examined several successful Japanese companies, similarly saw
creativity and knowledge creation as being important to the success of organizations. In
particular, he emphasized the role that tacit knowledge has to play in the creative process.
In business, originality is not enough. The idea must also be appropriate - useful and
actionable (Amabile, T. M. (1998). "How to kill creativity". Harvard Business Review). Creative
competitive intelligence is a new solution to solve this problem. It links creativity to
innovation process and competitive intelligence to creative workers.
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3.5 Fostering creativity
Creativity techniques are methods that encourage creative actions, whether in the arts or
sciences. They focus on a variety of aspects of creativity, including techniques for idea
generation and divergent thinking, methods of re-framing problems, changes in the affective
environment and so on. They can be used as part of problem solving, artistic expression, or
therapy. Some techniques require groups of two or more people while other techniques can
be accomplished alone. These methods include word games, written exercises and different
types of improvisation, or algorithms for approaching problems. Aleatory techniques
exploiting randomness are also common. We will discuss this topic in the Idea creation
techniques section.
3.6 Personality traits associated with creativity
3.6.1 Diligence
Many people who are famous for their creative output are highly diligent, often bordering on
the obsessive. Creative people have an inner need to express their creativity. They can not
keep their new idea inside their head forever, the idea needs to be born. In fact, many
creative people would be creative, even if they were not paid for their effort or output, a
situation that has lead society and managers to a frankly shameful exploitation of many of the
greatest innovators in the history of mankind.
Not all creative people work long hours. In discussing the amount of time a creative person
spends on work, it is important to reward productivity, not number of hours worked. Many
times, a creative person will work a few hours and encounter an obstacle. Continuing to stare
at the work is unlikely to produce a breakthrough. Experience shows that novel insights often
come at unexpected times (e.g., while doing some mundane task, such as walking or in the
shower).
In industry, it is common to see creative engineers working in their spare time, or working
during evenings and weekends, on their "secret" project. If they asked their manager for
authorization, the manager would likely say "No!", so the creative people keep their project
secret until it is completed or it becomes clear that their concept will not work. Creative
people need to express themselves through creative projects.
However, one should distinguish between a workaholic who puts in 80 hours/week doing
routine work and a creative person who works long hours doing new things, often things that
no one else thought could be accomplished.
Many people with unusually great creativity are ambitious, concerned with their reputation,
and apparently need to prove themselves worthy. Their need to prove themselves worthy
may come from experiences early in life in which other children, other students, etc. ridiculed
or taunted them.
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3.6.2 Stobborn
Being creative is extraordinarily difficult work that is essential to progress! And society seems
to delight in making it more difficult by denying resources to creative people who need them.
The way to succeed in spite of these artificially created burdens is to have some combination
of the following character traits:
persistent
tenacious
uncompromising
Stubborn
arrogant
3.6.3 Gender and eccentric
Gender:
It is well known that, as a general rule, men are more aggressive than women, owing to
testosterone. For example, nearly all violent criminals are male. It may be that testosterone
gives men an advantage over women in persisting, despite the disappointments and
frustrations that are inherent in research. The subject of gender differences is complex.
Eccentric:
From reading biographies of famous scientists and musical composers, one common
personality trait becomes clear: many of them are eccentric. Being eccentric does not imply
that one is creative. Conversely, not all creative people are eccentric: some creative people
have normal family lives and conventional values.
3.7 Additional reading
3.7.1 How creative are you?
This test helps you to think about how creative you are right now. Take it, and then use the
tools and discussions that follow to bring intense creativity to your everyday work.
Instructions: For each statement, click the button in the column that best describes you. Please
answer questions as you actually are (rather than how you think you should be), and don't
worry if some questions seem to score in the 'wrong direction'.
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Table1: How creative are you?
Statement Not
at all
Rarel
y
Some
times
Of-
ten
Very
Often
1 Creative people should specialize in coming up with
lots of ideas. Other people should then implement
these.
2 If I have a problem, I allow myself to back off active
problem solving, and I create some mental distance
between myself and the issue.
3 When I'm coming up with ideas, I find myself using
phrases like "we can't" or "we don't."
4 I'm busy. As soon as I have a good idea, I move for-
ward with implementation.
5 I gather information from a wide variety of sources
to stay current with what's happening in my field of
work.
6 I see problems, complaints, and bottlenecks as op-
portunities rather than as issues.
7 When solving a problem, I try to rethink my current
understanding of an issue to develop a deeper in-
sight into it.
8 I often ignore good ideas because I don't have the
resources to implement them.
9 I find problems and issues distracting. They cause me
to lose focus on my real work.
10 I'm confident that I can develop creative ideas to
solve problems, and I'm motivated to implement
solutions.
11 I take time to investigate how things are working,
even when there are no current problems.
12 I always look for the causes of problems, so that I
can understand what's really going on.
13 I look for things in my environment to inspire me to
find new interpretations of problems.
14 I focus on issues that are important right now, pre-
ferring to worry about future problems as they arise.
15 When gathering information about an issue, I ex-
plore solutions that have worked elsewhere in the
past.
16 When I generate ideas, I evaluate them and I quickly
discard ideas that I don't like.
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You can find more info on:
http://www.mindtools.com/pages/article/creativity-quiz.htm
3.7.2 12 ways you can express your creativity more powerfully in any workplace
Use your values, interests, skills and aptitudes to express your unique perspectives,
opinions and contributions.
Take full advantage of the unique features of your personality to express your creativity in
ways that are natural for you.
Dress your body and your work space in ways that reflect your passion and energy.
In what you say – either verbally or in writing – and how you say it, make sure you use
word choice, vocabulary and communication style to showcase your uniqueness.
Everybody works differently. Use your work habits, decision making and problem solving
style to express who you really are.
Everybody lives their lives differently. Use your personal habits, time management and
outside interests to positively impact who you are at work.
What are you passionate about? What kinds of things do you channel your energy into?
What are you committed to? Take all three to work with you and put them to work for you.
Every creative act begins with a conception. Make sure you capture your workplace
brainstorms in concrete ways.
Every creative act develops through an incubation phase. Make sure you put safe
boundaries around your own creative work time so it doesn’t get overwhelmed with other
responsibilities.
Every creative act ends with a birth. Make sure you help each project grow to its next
level.
Celebrate your beginnings and your endings. Mark the big moments and look for reasons
to play.
Know when it’s time to move on? From ideas, projects and jobs? Then do it.
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4 BUILDING THE FUNDAMENTALS OF A SUCCESSFUL INNOVATION
MANAGEMENT
Vassilis Tsaggaris, Peter Fatur, Borut Likar
4.1 Defining innovation strategy and goals
According to the words of management guru Peter Drucker each organisation needs
one key competence: innovation. Innovation is the process by which businesses improve their
competitiveness and profitability by creating and/or adopting relevant new products and
ideas. Innovations result in the development of new products and services, new features in
existing products and services, and new ways to produce or sell them or a different approach
to any other process within the company (Beerens et al., 2004, Vemuri et al., 2003, Gellatly
and Peters, 1999).
Innovation management begins with defining the strategy and setting innovation
objectives. Innovation strategy is a strategy of efficient answer to competition.
Production strategy may focus on improving production flexibility, reducing lead times,
improving working conditions, or reducing labour costs.
Product strategy may centre on improving product quality, replacing products that are
being phased out, or extending the product range.
Market strategy may focus on opening new domestic or foreign markets, or simply on
maintaining current market share. Developing successful innovation strategies is often
difficult, which explains why many firms choose not to do so, even though the benefits of
innovating are widely understood.
The scope of innovation can be quite varied. Activities ranging from automation of order
taking to developing hydrogen-powered automobiles are broadly considered innovations.
Specifically, the most important innovations goals are the following:
Increase added value for customers
Reduce product/ service cost
Increase innovation hit rate
Improve product/ service quality
Increase development efficiency
Increase rate of product/ service introductions
Shorten time to market
Develop new product/ service categories
Create new business models
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4.2 Building the appropriate organisational environment
A vital step in the development of an innovative organisation is building an appropriate
organisational environment (Ideachampions, 2006, Beerens et al., 2004, IPENZ, 2002, IWP,
2003, Flynn et al., 2003, Baker, 2002). The term organisational environment is closely related
to the organisational culture.
4.2.1 Culture of innovation
Culture is the sum total of values, norms, assumptions, beliefs and ways of living
built up by a group of people and transmitted from one generation to another. The culture of
innovation can therefore be defined as an organisational culture that values innovation,
where there is implicit encouragement for staff to think differently, take calculated risks and
challenge the status quo. What are its main characteristics?
Leadership by visionary, enthusiastic champions of change
Top management support and encouragement of creativity, both financial and
psychological
An effective communication system. Leaders share the business vision with their staff and
empower them to optimise their potential in achieving the business goals
Flexibility towards new thinking and new behaviour patterns. The creative organisation
readily adapts to change and proactively searches for new opportunities
Customer focus
A creative culture is outwardly focused, looking for ideas among customers, competitors,
academe, suppliers, and even industries with a different focus.
The culture of innovation can be developed by:
Selecting innovative employees,
Training for creativity and innovation,
Developing a learning culture,
Empowering the employees,
Setting up idea capture schemes,
Developing managers to support the innovation of others,
Making creativity a requirement of the job,
Improving employee participation in decision-making,
Having appropriate reward systems for innovation,
Allowing risk-taking as an acceptable mode of practice,
Encouraging investment in research and development,
Benchmarking (actively undertaking systematic approaches to locate and assess good
practice elsewhere in attempts to improve your own performance).
Obstacles that will need to be addressed if you expect to establish a sustainable culture of
innovation:
Lack of a shared vision and/or strategy,
Innovation not articulated as a company-wide commitment,
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Lack of ownership by Senior Leaders,
Constantly shifting priorities,
Short-term thinking,
Internal process focus rather than external customer focus,
Focus on successes of the past rather than the challenges of the future,
Unwillingness to change in the absence of a burning platform,
Politics – efforts to sustain the status quo to support entrenched interests,
Rewarding crisis management rather than crisis prevention,
Hierarchy – over-management and review of new ideas,
Under-funding of new ideas in the name of sustaining current efforts,
Workforce workloads (i.e. too much to do, not enough time),
Risk aversion (i.e. punishment for “failure”),
Inelegant systems and processes,
Analytical thinking (“data is God”),
Absence of user-friendly idea management processes,
Unwillingness to acknowledge and learn from past “failures”,
Inadequate understanding of customers,
Innovation not part of the performance review process,
Lack of skilful brainstorm facilitation,
Lack of “spec time” to develop new ideas and opportunities,
Inadequate “innovation coaching”,
No creative thinking training,
No reward and recognition programs,
“Innovation” relegated to R&D.
Google – Creativity sans frontieres
Borut Likar
Google is undoubtedly one of the fastest growing international companies of the past few
years. An extremely simple logic lies behind a record 10 billion dollars in annual sales
making global knowledge accessible to anyone. With the latter Google has surpassed the
fundamental philosophy of other Internet providers since its user is able to reach over 12
billion web sites simply by using Google. The support offered to such a possibility is a vastly
spread network of over 200,000 high-capacity computers which constantly buzz all over the
world. Google reaches into the areas of electronic mail, magazines, books, films, music and
plenty more. Moreover, Google allows you to communicate, purchase, market, perform
financial transactions and similar. Internet media advertising is one of the fastest growing
activities given that it is likely to record 30 billion dollars in two years time – the largest
portion of which goes to Google which has developed the most price-effective advertising. A
reasonable question pops up, i.e. what drives this giant to always walk one step in front of
the competition?
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Beside the two founders – who with their vision and concrete ideas gave the company its
basic orientation one of the key tasks of the senior managers is an everlasting search of
new ideas. The latter becomes evident once you enter the
Company’s main building Googleplex, which also hosts the
headquarters of the company. Creative and hassle-free
atmosphere, excellent wages, free of charge meals, technical
and medical services for employees are only a few of the perks.
Yet one of the most important “perks” proves to be the fact that
the employees are allowed to use one fifth of their entire
working time for their own projects. In doing so, the superiors present no obstacle since in
such a way the Company expects fresh and unusual ideas which shall open new market
prospects. Google managed to realised quite a few of such ideas in the past years. Allow us
to mention just a few: the Internet services for blind and weak-sighted, a possibility to
observe the earth from the air – as though as you had your own spy satellite.
The Company is well aware of the fact that the employees are the company's main “asset”.
The Company has thus created the following strategy:
"We hire great people and encourage them to make their dreams a reality. We believe in
hard work, a fun atmosphere, and the sort of creativity that only comes about when talented
people from diverse backgrounds approach problems from varying perspectives. Googlers
have been Olympic athletes and Jeopardy champions; professional chefs and independent
filmmakers. And whether you work at our headquarters in Mountain View, California, or in
any of our locations around the world, we think you'll find Google a place where you can
aspire to outsized accomplishments" (Google, 2006a).
Working environment which encourages innovativeness is closely intertwined with the
corporate culture. An example of such connection is unquestionably the Googleplex, Google's
world headquarters building. While not all Google offices around
the globe are equally well-stocked, these are some of the essential
elements that define a Google workspace (Google, 2006b):
Lobby Décor - Piano, lava lamps, and live projection of current
search queries from around the world.
Hallway Décor - Bicycles and large rubber exercise balls on the
floors, press clippings from around the world posted on bulletin
boards everywhere. Many Googlers standing around discussing arcane IP addressing issues
and how to build a better Spam filter.
Googler Offices - Googlers work in high-density clusters remarkably reflective of our server
set-up, with three or four staffers sharing spaces with couches and dogs. This improves
information flow and saves on heating bills.
Equipment - Most Googlers have high-powered Linux OS workstations on their desktops. In
Google's earliest days, desks were wooden doors mounted on two sawhorses. Some of these
are still in use within the engineering group.
Recreation Facilities - Workout room with weights and rowing machine, locker rooms,
washers and dryers, massage room, assorted video games, Foosball, baby grand piano, pool
table, ping pong, roller hockey twice a week in the parking lot.
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Google Café - Healthy lunches and dinners for all staff. Stations
include "Charlie’s Grill," "Back to Albuquerque," "East Meets West"
and "Vegheads." Outdoor seating for sunshine daydreaming.
Snack Rooms - Bins packed with various cereals, gummy bears,
M&Ms, toffee, liquorice, cashew nuts, yoghurt, carrots, fresh fruit
and other snacks. Dozens of different drinks including fresh juice, soda and make-your-own
cappuccino.
Coolest stop on the tour A three-dimensional rotating image of the world on permanent
display on a large flat panel monitor in the office of the engineer who created it. What makes
it special is the toggle switch that allows you to view points of light representing real time
searches rising from the surface of the globe toward space, colour coded by language. Toggle
and you can see traffic patterns for the entire Internet. Worth a trip to the second floor.
4.2.2 Some other measures affecting the organizational environment
Responsibility of innovation placed on all staff: while some roles will be more directly involved
in innovation (e.g. research and development, product development) all staff should have a
mandate to act innovatively within their roles.
Human resource system that develops and encourages staff to be innovative. This requires a
dedication to training, education, mentoring and the rewarding of staff for innovative
behaviours. Staff also needs time and resource allocations to stop and think about new ideas,
which will not happen while they are giving 100% of their time to the daily routine.
Performance measurement system that measures the innovative pulse of a company. Simple
measures that are often used include spending on innovation (often labelled R&D
expenditure), new product percentage (number of new/changed products introduced this
period as a proportion of total product numbers) and number of patents held.
Linkages with the marketing function: Understanding the customers, their needs, and the
competition is critical for targeting resources to the innovation systems. The most successful
innovators understand the customers needs better than the customers themselves. They are
often able to identify and solve problems before the customer has realised that perhaps there
is a problem, let alone thought about buying a solution.
Knowledge acquisition and management processes that constantly bring into the organisation
new ideas, information, concepts and knowledge. This can range from simple things such as
receiving trade, scientific, engineering and professional magazines, attendance at conferences
and participation in industry networking forums right through to having a comprehensive
research capability. Where knowledge is not readily available, polytechnics, universities and
research institutes have the capabilities for developing it for you.
Intellectual property management systems that identify, protect, value, manage and audit the
organisation’s intellectual property (IP). This intellectual property is the new knowledge that
arises out of the innovation process e.g. it may be a unique understanding of a production
process that facilitates superior efficiency or design in a new product. Some organisations
have difficulty in identifying their IP. One way of doing so is answer the question: what do we
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know that our competitors don’t and that we don’t want them to know? Once identified, it
needs to be protected or the competitors will find out! Protecting your IP can range from
simply keeping it confidential, not only physically but also electronically (Trček, 2006) through
to the more formal means such as trademark protection, patents and plant variety
protection.
Collaboration with other organisations who can contribute to innovation processes. Most
organisations cannot achieve best-practice innovation working in isolation. They need to work
with research providers, tertiary education institutes, associated and support industries and
even their own competitors. Clustering of similar organisations and their support industries is
a proven tool for ensuring collective growth by sharing those parts of the innovation process
where their interests overlap. This may require collective ownership of the IP that arises from
that sharing.
Flexible, organic structure, which encourages team work and also acts as a stimulant to
people to be more creative. Having an elastic business definition helps to ward against
protectionist instincts and the organisation thus avoids subconscious defence against
necessary changes. Management of the organisation should be directed to spend a significant
amount of their time looking for opportunities outside the boundaries of the business they
are managing.
Employees’ motivation: motivating an employee means that he should feel his personal
success at work, feel that he positively contributes to the company's goal, to feel
responsibility corresponding to abilities, receive acknowledgement for his or her
performance, feel that he acquiring new experience and develops his abilities.
Participative leadership style: managers focus both on the task and the subordinates and
enable them to participate in the planning and decision-making process.
Have a fluid notion of organizational boundaries: It is not necessary to create all innovations
internally. Partnerships can be a useful strategy to promote innovation. Also, in addition to
development, acquisition can be an effective innovation strategy.
Manage the risk: Strategy should not be monolithic; it should be sufficiently varied to allow
for organizational agility and flexibility. Remember that most innovation ideas will not pan
out, so don’t think big in terms of funding any one innovative idea. The strategy should be to
fund a number of ideas. Low-risk experimentation is of key importance – invest in many
ventures but start out small. Although most new ventures will fail, important learning can be
acquired from each. Project risk must be distinguished from portfolio risk – the risk of any
new project will be high but if there are enough innovation projects, the portfolio risk will be
manageable.
Transform organizational strategy: Typical strategic planning is often antithetical to
promoting radically innovative business models and strategies. Innovation cannot be held to a
scheduled strategic planning timeline; it should be on-going. Also, strategy should not be
restricted to the same set of top level decision-makers. Innovative strategy does not
necessarily come from the top but too often not a word about contributing strategically
appears in the performance criteria for anyone below the level of senior executive.
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Other factors, as a systematic collection of all impulses that could lead to innovation, good
team work, continued education of employees, the ability to finance the innovation activities.
4.3 Management of ideas
4.3.1 The goal of innovation
The goal of innovation is to create business value by developing ideas from mind to market.
And it is, for most companies, tremendously difficult to achieve. Innovation isn’t difficult
because employees don’t have good ideas. The world is awash with creativity and
technological breakthroughs. Rather, myriad obstacles in the idea-to-cash process limit a
company’s ability to innovate. Rigour and training are required to overcome these obstacles.
Seen as the creator of new value, innovation isn’t hit-or-miss, trial-and-error lateral thinking,
but a repeatable process (CSC 2005).
Idea management (hereinafter also IM) is a formalized mechanism for encouraging
employees to contribute constructive ideas in order to improve organizations in which they
are employed (Milner et al., 1995). Idea management encompasses planning, organizing,
managing and control of the process of invention creation and their transformation into
potential innovations and further into innovations in the widest range of employees –
unprofessional innovators (Fatur, 2005). Idea management does not cause a rapid progress of
the company yet it may importantly influence its competitiveness providing it is appropriately
organized. It may also indicate the starting point of successful professional innovativeness, i.e.
the innovativeness that assures the company the basis for survival and its competitive
advantage.
Idea management focuses the creativity of employees on critical business problems and
increases their participation in solving both line-of-business and “big picture”, market and
revenue related issues. Marsha McArthur, innovation manager at Bristol-Myers Squibb, one
of America’s largest pharmaceutical companies, used an idea management solution to help
the company through a period of industry consolidation and widespread patent expiration on
many “blockbuster” drugs. When a patent expires and an alternative generic drug enters the
market, it is possible to lose 80 per cent of revenue in the patented drug line within six
months.
In the past, innovation was defined largely by creativity and the development of new ideas.
Today the term encompasses coordinated projects directed toward honing these ideas and
converting them into developments that boost the bottom line. A new event, fact or idea
emerges, and is sent for evaluation by those able to make the appropriate judgements, and
guide the development of the idea. Does the idea embody the possibility for a new dominant
design, service or platform? Can a project be constituted to manage the development of this
initial “seed”?
Companies seeking new wealth need to look towards intelligence, and intangibles; and of
course, people. Innovation and competence are locked in an inseparable embrace. According
to Ridderstråle and Nordström, “This is the age of time and talent, where we are selling time
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and talent, exploiting time and talent, organizing time and talent, hiring time and talent and
packaging time and talent. The most critical resource wears shoes and walks out the door
around five o’clock every day”. They mean innovative people.
Encouraging innovative career development at Svea
Bernard Likar
The employees of a company are still its largest unexploited source for their further
development and growth. This is particularly important in the wood processing industry
which proves to be one of the most traditional and work intensive branches. Encouraging the
development of competences as well as innovativeness of employees is probably one of the
main tasks of development-oriented companies. The fact remains that companies may not be
built exclusively on employees who have developed within the company, however, they are
extremely important for the company’s growth. The company needs to be able to detect the
said potential at the very beginning of their employment, possibly even before the very
employment, i.e. identify the talented individuals and actively support the development of
their careers.
The possibilities of planned encouragement of employees’ development may be presented
with the example of the Slovenian furniture company Svea d.d.
The company decided to support a young technically talented student at an early stage of his
education, and granted him a scholarship when he was still a secondary-school student. The
said student, Mr. Srečko Baloh got familiar with the craft very early since his grandfather was
a self-learned master of handicraft. He was able to work with and process the wooden and
metal parts of buckets, barrels, carts as well as grain mills. The grandson was thus close to
the both basic materials. He was deciding between the hot iron and natural wood and chose
education at the wood technology vocational college which he combined with the practical
training with a master cabinetmaker.
After the concluded apprenticeship, the company offered him employment. As a young
technician he was faced with the work of a quality-control officer and standardiser as well as
with the tendency that the things may go their own way unless we channel them onto the
right track.
When facing a string of current problems that the individual positions within the company
entailed, he managed to find a lot of possibilities to find solutions, to find a path to a better
quality work and working atmosphere, with less effort and faster. He was following the idea
that the effectiveness of a worker cannot be measured in the amount of his sweat but rather
in the number of high-quality products.
After a decade of improving his skills on various positions and challenges within the
company, the company offered him the position of a technologist. In that new creative
environment he was able to do his utmost and was so promoted to the position of the
development technologist and later to the head technologist. He was so able to upgrade his
rich technical-operational knowledge by complementing it with his affinity to construct and
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design and so brought his company a string of innovative and designer solutions for products
which are now successfully placed in the market and bring the company awards at various
innovation competitions.
With deliberate recruitment policy as well human resources management and training in the
technical field and other fields, the company managed to make a leap forward as regards
technology and innovation despite the difficulties which were a consequence of inadequate
technological equipment, a heritage of past difficulties and adverse economic situation. The
company has become the leader in its branch of industry.
4.3.2 Implementing the idea management
The organization of IM in the companies may be divided into three systems, namely the
classical system, the supervisors-managed system and a combination of both. The classical
system provides for the entire process to be managed in a centralized manner. The
employees submit their ideas on improvements (i.e. “suggestions”) in a written form to the
central department or an individual who is responsible for processing employee suggestions
within the company. The role of a line manager in this system is only partial or does not even
exist (he/she may be receiving the suggestions and forwarding them to the central
department or may only be informed that the suggestion was generated within his/her
department – at times not even that).
On the other hand, the supervisors-managed system proves to be completely decentralized
since the predominant responsibility for implementing IM is entrusted to line managers. The
IM goals on the company level are delayered down to the level of particular department and
the line manager remains responsible for their achievement. The employee submits a
suggestion directly to his/her superior (verbally or in writing) who then decides upon its
acceptance. Furthermore, he/she may upgrade the suggestion together with the author and
his/her colleagues and delegates the person responsible for its implementation (providing the
said does not exceed his/her competences), defines the amount of the award and also grants
it. Very often the formal department operates as a working group and expresses its
innovativeness pursuant to the group/team problem-solving principles. The central
department (IM department) acts only as a coordinator, trainer, animator and motivator.
Modern trends in IM are abandoning the centrally-driven system and are beginning to
introduce the supervisors-managed system (Fatur and Likar, 2006).
What are the main issues to be dealt with when introducing the idea management
programme into an organization?
First of all, IM is a matter of the top management decision. But its decision and its declarative
support offered to innovativeness are not enough – they must be followed by a strong
commitment shown not only by words but also by concrete management’s acts. Usually, the
strategic role of IM is well-defined yet the problems occur at the implementation phase.
Innovativeness needs to be a declared value and has to be made a part of the companies’
strategic plans. Then, the strategy needs to be turned into IM objectives which are defined
not only at the company level, but also at the level of every individual department
(organisational unit, work group). Objectives have to be defined as per contents and value
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and set with consensus of all the organizational levels. This means that the responsibility for
reaching them at the company level has to be devolved upon middle and lower management.
Namely, the objectives in IM may only be reached on the base levels, i.e. among employees
working at the lower organisational levels. The results at the company level can only be a sum
of results recorded by individual department. In the event the latter fails to have any
objectives set, its results may not be expected and accordingly also the results of the
company as a whole. Of course, if the set objectives fail to be reached, the management has
to demand appropriate measures to be imposed.
Low level of top management’s awareness as regards the importance of innovativeness leads
to a low level of awareness at the subordinate organisational levels. Unlike other aspects, the
aspect of goal setting remains the top management function. Communication system,
organisation, employee development and similar may be established and developed by the
IM department regardless of the level of interest demonstrated by the top management. Yet
the same does not hold true for the aspect of goal setting. Setting goals and objectives and
providing means for reaching them remain a direct responsibility and concern of the top
management.
A company should appoint a person responsible for IM – an idea manager. Reputation and
power of the personality are particularly significant as to the position held by the idea
manager. In principal, innovation is voluntary activity of the employees. Therefore, the idea
manager should use not only his formal authorisations but also his informal power if he wants
to encourage the employees to be innovative. In the companies with supervisors-managed
system or combined system, idea manager proves to be a reputable person who not only
implements formal processing of submitted suggestions but also holds a role of leader,
mentor and consultant. In the classical system idea manager is merely engaged in formal
processing of suggestions, looks after their implementation and calculates the amount of
award granted to the innovator – which are tasks that do not require a large amount of
personal power and reputation.
Both the management and employees as well as evaluators have to be appropriately trained;
the subject of training is not only the procedures (IM process execution, evaluation of ideas)
but also the contents (creativity techniques, team work). Attention should be paid to the
creativity techniques. Formal frames, which encourage ideas submission and enable their
processing and implementation, are only a part of the story. These frames enable a certain
level of creativity and consequently innovativeness within the company. Employees are
offered a possibility to be creative. Nevertheless, the creativity of each individual is limited. In
order to surpass its fundamental level, creativity needs to be “pulled” out from the individuals
as well as teams. This means that management should no longer be passive and awaiting for
the ideas to be generated yet use various tools and techniques which shall help employees to
be more creative.
Companies must be aware of the high importance of suggestion implementation. Idea which
remains unrealised is worthless. In order to avoid comments given by the workers, i.e. “he
received an award, we got work”, companies may transfer most of the implementation work
onto inventors that are personally interested into implementation of their ideas, thus willing
to contribute their efforts in this field. Throughput time (time elapsed from suggestion
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submission to its implementation) as one of the key elements of efficient IM system still holds
great reserves. Successful companies are able to implement the process from invention (idea
submission) to innovation (idea implementation) fivefold faster than average ones.
Communication between the author of suggestion and IM department proves to be a very
delicate field since it involves personal interests of the individual. Satisfaction of the individual
innovator and his interest in future cooperation depends on the form of communication
which the idea manager was able to establish. In case the suggestion is unfoundedly rejected
or, even worse, if the suggestion is lost somewhere in the procedures and without any
feedback given to the author, the author shall most definitely decide to discontinue any
further cooperation. Unsatisfied individuals shall suppress the innovation climate more
effectively than the most efficient information system may create it. However, the most
favourable answer given to the author is definitely the fastest possible implementation of his
suggestion providing it proves to be justified.
The company should strive to integrate the awards granted to innovations into the salary and
wages system. Connection of the IM with other systems introduced by the company is of
extreme importance for its vitality. Only when the IM becomes an integral part of company’s
life, it shall grow to be self-evident. And when it becomes self-evident, it shall operate
spontaneously without any consideration that huge amount of energy needs to be invested
into its safeguarding.
According to most of criteria the supervisors-managed system proves to be more successful
than classical system. A recent study (Fatur, 2005) shows that the proportion of inventors (i.e.
employees who submitted at least one suggestion in the period of one year) in the entire
structure of employees is threefold higher in the supervisors-managed system than in the
classical one. Suggestion throughput time (time elapsing from the submission to
implementation) is twofold longer in the classical system than in supervisors-managed
system. Supervisors-managed system prioritises mass engagement before the quality which
brings suggestions with smaller economic savings yet these deficiencies disappear due to a
much higher number of suggestions submitted. In comparison to the combined system, the
supervisors-managed system brings almost twofold higher economic savings per employee
and almost fourfold when compared to classical system. Therefore, restructuring of existing
classical centrally-driven systems proves to be the next logical step to be made by the
companies which have failed to implement it so far.
4.4 How to overcome resistance
A manager or company owner trying to implement a change, no matter how small, should expect
to encounter some resistance from within the organization. Resistance to change is a normal
reaction from people who have become accustomed to a certain way of doing things. A critical
component of any successful project is to overcome resistance to change deriving either from
employees or senior staff. Without the acceptance of user, any process improvement is doomed
to fail. Therefore, proper anticipation and understanding the approaches to various resistance
tactics is essential to success.
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Generally speaking, a comprehensive change strategy is comprised of three critical areas:
Content (what is changing for example the structure, the systems, the technology)
Process (how the change will be planned, designed and implemented)
People (those impacted by or participating in the change)
Employee resistance can be generated by each of these three areas, either from negative
reactions to the content of the change, how the change is being handled (process), or from
intra-personal dynamics that occur naturally in all people. Which of these areas is causing the
resistance is very important, because how you might resolve the resistance will depend on
what is activating it.
4.4.1 Employees’ resistance
The employees resist change when they perceive the direction of the innovation change is
wrong. They do not accept the change because they feel it is bad for either them personally
or the business. But this kind of resistance is healthy, and it could be a good thing. There is
always the possibility the change to be wrong. Perhaps the employees know something the
leaders of the company do not know. Employees are often closer to the customer or the
operations and very well could have information the managers can't possibly possess without
talking to the employees.
Employees usually resist the process of change when they:
don't feel included in it or don't have their needs or interests represented,
don't feel informed or adequately communicated to about it,
perceive the decision-making process driving it as unfair,
feel overwhelmed by the number of change activities taking up time and resources
necessary to do their “real” work, or
feel they can’t succeed in it because of inadequate expertise or training.
Managers who lead innovation change using a command and control style often provoke this
type of resistance due to misunderstanding the impact their change process plans have on
the people who must carry them out. These managers often create change efforts that are
full of inadequate communications, low participation, minimal local control and insufficient
training.
This type of resistance often occurs when senior managers rely on external consulting firms to
design their innovation change solution, the content of what needs to change. This relies on
the fact that these firms, who are very competent at the content of change, usually don't
understand the people and process dynamics of change. Therefore, many of their practices
cause resistance without them even understanding this.
Resistance occurs in all employees’ levels, from the CEO to the line worker. In fact, the initial
stages of transformation efforts often include weeks or months of meetings where senior
executives work through their own resistance. These meetings are often discussions about
what needs to change in the organization, why it needs to change, and how it will change.
These debates often include significant political posturing as executives try to maximize their
own organization's individual gain from the change. Once all this gets resolved, senior
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management announces the change effort to the organization, as if they have always been
aligned. Unfortunately, when employees do not automatically accept the announced change,
the senior managers immediately label their behaviour as resistance and are dismayed that it
exists. All humans resist change, it is natural and it should be expected. And it must be
accounted for in how company plans, designs and implements its innovation change efforts.
4.4.2 Techniques for overcoming resistance effectively
One efficient method for overcoming resistance of company’s human resources through
innovation change is education and communication. Employees can be informed about both
the nature of the change and the logic behind it before it takes place through reports,
memos, group presentations, or individual discussions.
Another important component of overcoming resistance is inviting employee participation
and involvement in both the design and implementation phases of the change effort. People
who are involved in decisions understand them better and are more committed to them. This
was already discovered by Eisenhower. Instead of giving simple orders to his generals, he
used to seek different ways of performing important tasks. He tried talking to them,
convincing them and tried to get their approval for his idea. He knew that the generals would
carry out the task which they believed in much better than simply complying with his orders.
During these kind of persuading Eisenhower sometimes discovered that he had been wrong.
As a consequence many of his ideas were rejected or amended to make them better than the
original one – which would have been implemented without reservations.
Another possible approach to managing resistance to change is through facilitation and
support. Managers should be sure to provide employees with the resources they need to
make the change, be supportive of their efforts, listen to their problems with empathy, and
accept that their performance level may drop initially.
Some companies manage to overcome resistance to change through negotiation and