Why People are at the center of innovation!
Insights - 01.06.2021
Why people must be at the centre of organizational innovation, and why that’s not as simple as it sounds?
Throughout our ongoing deep dive into the wide variety and the specific types of innovation, we must never lose sight of the fact that the driving force behind innovation is first and foremost people. But therein also lies the challenge, given the complex nature of innovation and innovation management in today’s organizational environments.
Within organizations, there are two distinct and fundamentally different kinds of innovation. On the one hand, we have exploitation, which comes down to refinement, efficiency, selection, and implementation (i.e., optimizing the existing business). On the other hand, we have exploration, referring to notions such as search, variation, experimentation, and discovery (i.e., covering new grounds and markets).
Depending on the focus, this requires fundamentally different organizational strategies, structures, processes, and contexts. This does not mean however that organizations are forced to choose between exploitation and exploration. On the contrary, they will need to balance these two types, a skill which is referred to as organizational ambidexterity.
This all boils down to the fact that innovation first and foremost comes down to people and their ability to not only absorb new input but also to be able to think and act cross-departmentally and cross-organizational. Proper knowledge management is a must if this is to be a success, but it requires a cross-departmental approach and the search for an equilibrium between internal and external knowledge. On top of that, there are four potential roadblocks standing in the way of successful knowledge sharing and accumulation. Luckily, there are also four solutions for it.
1: ALLOCATING DEDICATED TIME
Human problem of managing attention: how do you get and keep your people interested in innovation, when they are busy with their day-to-day operations? How do you translate organizational ambidexterity to a personal level? The answer here comes down to allocating dedicated time for innovation. Don’t let it be something that can be done ‘on the side’ or ‘after hours’.
2: CREATE CROSS-DEPARTMENTAL INNOVATION TEAMS
Process Problem: how exactly does an organization manage ideas and knowledge into good currency? The answer is in the creation of cross-departmental coalitions of the willing (or innovation dream teams if you will). Innovation has become so complex that it cannot be an individual effort. It requires a collective achievement to ideate, implement and champion new and innovative ideas. Granted, large companies like Samsung and Google can afford their own creative sandboxes in which basic research is fostered and funded much easier. But that doesn’t mean that smaller organizations shouldn’t try to facilitate it. Organizational ambidexterity is not exclusively for big corporations.
3: NEED FOR A COMMON FRAME
Structural problem: innovation management requires the management of the whole, not of units. One cannot afford to lose sight on the big pictures of innovation. Easier said than done because of the multiple functions, resources, disciplines, departments, etcetera. This requires the embedding of cross-functional interfacing mechanisms. They enable formal and informal knowledge exchange, which in turn enhances information exchange, collaborative behavior and joint decision-making. In short, there is a need for a common frame of reference to build understanding and agreement.
4: SMOOTH MEMBER CONNECTIVITY
Strategic problem of institutional leadership: the broader challenge of creating an infrastructure that is conductive to innovation. The organization has to instigate and cultivate a culture of innovation throughout every department. Not an easy challenge: the bonus system alone is by definition focused on short term and sustainability. The answer to this strategic problem? Cooperation, information sharing, team spirit, open communication and smooth member connectivity without department barriers or power. This is the fertile soil on which exploratory and exploitative innovations can blossom.
In short, exploitative vs explorative innovation is in a way the story of internal versus external knowledge. Therefore, the apparent paradox is solved by setting up a cross-organizational structure to process both internal as external knowledge streams. In doing this, it is important to not only pay attention to structural ambidexterity (innovation pushed by central management), but also to contextual ambidexterity (ideas from the workplace, fueled by internal dynamics and external input). Most organizations that excel in explorative innovations are organizations that let everybody think along about innovation.
TO BE CONTINUED
Our research-based but hopefully digestible voyage into innovation types and the human aspect of innovation has only just set sail. Stay tuned for more well-informed dives into workplace, employee driven innovation, team, culture, etcetera. All of them which will be based on our extensive study and data mining of renowned research papers and statistics.
- Effects of Exploratory and Exploitative Innovation Strategies and the Moderating Role of External Innovation Partners, Schamberger et al., 2013
- Building an Integrative Model for Managing Exploratory Innovation, Zarmeen et al., 2014
- Central Problems in the Management of Innovation, Van de Ven et al., 1986
- Organizing for Radical Innovation: An Exploratory Study of the Structural Aspects RI Management Systems in Large Established Firms, O’Connor et al., 2006
- Integrating Exploitative and Exploratory Innovation: A Knowledge Management Perspective, Xiang-Yu Kong et al., 2007
- Knowledge Integration in Product Development Projects: A Contingency Framework, Lindkvist et al., 2011
- Organizational Ambidexterity: Balancing Exploitation and Exploration for Sustained Performance, Raisch et al., 2009
- Strengthening organizational ambidexterity with top management team mechanisms and processes, Venugopal et al., 2017
- The Learning Organization: Sequences of learning types for organizational ambidexterity, Seidle et al., 2019
- Top management team diversity, ambidextrous innovation and the mediating effect of top team decision-making processes, Ci-Rong Li et al., 2016
- Organizational ambidexterity: Herding the cash cow while exploring unknown hunting grounds, Creax, 2021