DEMYTHIFYING CORPORATE INNOVATIVENESS

Madhukar Shukla

(NOTE: A modified version of this article was published in Business India, 1986, June 30)

Innovation, probably, is the most used, and least practiced, term in the present-day management jargon. The term has gained a wide currency during recent years (often replacing the conventional keywords like efficiency and productivity), which is a happy indication of the acceptance of change as a popular corporate strategy. Within the corporate reality, however, innovation is still largely treated as an ideal to strive for than a practice to execute. This gap between the conceptual acceptance and the operational negligence is largely due to the ambiguity which surrounds the term.

The common understanding of the process of innovation in organizational context is shrouded by various myths and misconceptions of the scope of corporate innovativeness, and generally work to resist the process of change. The efforts to tap the innovative potentials in the organization can succeed only by gaining a realistic understanding of the latitudes and limitations of innovation in the corporate context. In this article, we will identify these various misplaced assumptions and myths about the corporate innovativeness, and will examine them in the context of the present day realities.

Myth 1: Organizations Can Survive Without Any Innovative Efforts; Innovation Is Essential Only for Organization Growth, Not for its Survival.

This might be a valid assumptions to hold in a relatively stable techno-economic and socio-political environment. In such an environment, the environmental changes are predictable and the routine organizational systems and procedures are adequate for dealing with them. The quantum of change also being minimal, the internal organizational environment is not unduly affected by the external changes.

In the present day context, however, such an assumption is dissonantly out of place and obsolete. The present era has witnessed many dramatic changes in the scenario of the business environment in India. Along with the growing inflation, the past few years are marked by significant changes in the market demand patterns, growth of a competitive small-scale sector, increasing governmental influence in determining the business policies, varying liberalisation of and constraints on the import/export of material, and such other alterations in the forces affecting the enterprise. In the context of such a dynamically changing environment, the future can no longer be conceived as a simple linear extrapolation of the past trends, but is a complex resultant of a multitude of tangible and intangible factors.

The forces of change in the Indian business environment have been so incessant and demanding that many of the market leaders of the past have altogether disappeared from the scene. Apparently, the demands for innovative adaptation and change were too great for their limited coping resources. In contrast to these, the new successful enterprises, which have

emerged during the recent years, are unconventionally different in their strategies for managing the environment. They, almost universally, show a greater sensitivity to the environmental changes and a remarkable ability in responding to them. Rather than building a monopolistic market base, they show a greater tendency toward diversification and expansion. The survivors of the old lot also could remain in the field only at the expense of renewing their corporate identity through diversifying their product market base and through redesigning their internal organizational structure to suit the environmental demands. The experiences of ITC, DCM, Allwyn, HMT, etc., are among the notable examples of this adaptation process. It is obvious, therefore, that innovation, far from being the luxury of ensured survival, is the basic precondition for enterprise's existence. In today's environment apparently, like Alice in the Looking-Glass world, one must run twice as fast to remain at the same place.

Myth 2: Innovations Are Primarily Technological in Nature.

When people talk about innovations, they normally limit their conceptions to technological breakthroughs, product development and product improvement. Rarely is innovation conceived as a new organizational procedure, or a new system of organizing work. People engaged in non-technical departments, such as personnel, finance, banking, and services, etc., often view their functions as "purely administrative" and devoid of any scope for innovation (worse still, often their organizations also thinks so).

As a matter of fact, for organizational growth and effectiveness, a commercially viable new product is of as much importance as is a new and effective system of material transportation or of grievance redressal. After all, Quality Circles, Zero-Based Budgeting, Matrix Organizational Design, etc., are also innovations, even though they are non-technological in nature.

An interesting example of such an innovative effort is that of an engineering industry based in Central India. This company employed a unique system for procuring rotis for its workers' canteen. The company offered to engage the part-time services of the workers' wives for making rotis on a per-piece payment system. Each of the workers' colonies was provided with a community kitchen with all facilities and material. The wives could come at any time according to their convenience, cook, and collect their payment. The company vehicle would collect the rotis and deliver them at the Canteen. In this way, in addition to helping the workers' facilities increase their earnings, the company could also ensure good quality of rotis for the workers.

Similarly, a public sector heavy engineering industry developed a creative system for facilitating the information-flow and decision-making process in the organization. It devised and implemented a plan of open fortnightly meetings between the workers and the top management, including the chief executive. In these meetings, the workers could air their views, ask questions, express their grievances, offer suggestions or whatever they felt like saying. The system was extremely successful, in that, not only did it increase the workers'' faith in the openness of the management, but is also resulted in a number of cost-saving suggestions coming from the workers.

It is worth noting here that the value of an innovation cannot be, and need not be, always assessed in terms of its direct savings or profits. Very often the gains of an innovation may be indirect and too varied to be assessed in financial terms. A non-technological innovation which facilitates greater labour- management cooperation, for example may produce indirect and long-terms gain, which may not be apparent immediately. If an innovation helps in providing skill and opportunity to people for contributing to organisational problem-solving, it may not be saving money, but it is creating a base for further innovations. As Professor Rosebeth Moss Kanter of Yale University noted : "Improved organization designs and human-resource practices can be a company's innovation - producing innovations". As we will see later in this article, in non-innovative enterprises, these non-technological "innovation-producing innovation" are often an essential pre-requisite for releasing the creative potential of the organization.

Myth 3: Innovating Functions in the Organization Are Separate from Other Organizational Functions.

In most organizations, the responsibility of innovation and change is confined to a few selected departments, such as R&D Corporate Planning, Product Development and Value Engineering etc. Such separation of the responsibility and accountability for innovation from rest of the organization creates a peculiar state of affairs. The inherent absurdity of the situation was accurately described by a R&D executive, "It seems as if we are working against a concerted opposition from the rest of the organization. While our task is to bring about change, every one else seems to be working conscientiously to maintain the status quo."

It is, of course, true that the separation of the innovating functions from the operating functions is based on sound logic and has certain obvious advantages. Organizations do need unvarying routines and schedules to run smoothly. Indiscriminately clubbing the routine operational activities with the experimentations of innovative process would only disrupt the operations and decrease the effectiveness. However, it is also equally true that the schism between the two functions, as exists in most organizations invariably ends up in unproductive conflicts, and thereby, in the dissipation of creative energies into futile activities of interdepartmental politics and gamesmanship.

Actually, the origins of such conflicts lie not so much in the inherent anomalies between the routine operational activities and the somewhat disorderly innovative activities.

More often, the conflicts emerge from the manner in which the two activities are perceived and organized in the organization. In highly segmented organizations, where every function is the solitary responsibility and monopoly of a particular department, such interdepartmental conflicts (not only between the innovating and operating departments, but among all departments) are most prevalent. Since in such organizations, the role and objectives of each department are rigidly demarcated into non-overlapping units, the operating departments perceive no common stakes in the innovating activities. In the innovative organisations, on the other hand, these functions are somewhat loosely structured, allowing for the possibility of overlaps. Even if a formal demarcation exists between the innovating and operating departments, there is also a conscious recognition that innovation is possible in any functional area, at any level. One may say that in the innovative organizations, innovation is treated less as a formal function assigned to selected departments and more like a dominant element in the overall organizational culture. Correspondingly, such organizations are more often equipped with these mechanisms, which tap the organizations' innovative potential at the grassroots level, e.g. an effective suggestion-scheme, problem-solving task forces, participative forums, information-sharing systems, etc.

One of the major implications of the organizational acceptance of innovation as "everybody's concern" is in terms of its strategy and resource allocation for the innovative efforts. In those organizations which segregate the innovating functions from rest of the organizational activities, the tendency is to invest all funds and allocate resources in one or two major projects. They place all their stakes on making a few major break-throughs, while ignoring the opportunities for smaller innovative improvements in the operating conditions. This results in a peculiarly lop-sided organizational strategy of taking larger risks, while shrinking away from the smaller one.

The innovative organizations, on the other hand, aim at creating a wider base for innovative activities at all levels and across the functional boundaries. Their strategy is to encourage as many small scale creative efforts in the organization as possible. The support and resources for these efforts are allocated in such a way that they are easily available to anyone who wants to experiment with an idea, particularly at the initial phase of refining the idea. Many organizations, for example, provide for discretionary funds which are available with selected individuals in the organization. The potential innovator has to merely ask for it to get it. Such funds may not be very substantial, but they provide enough support to the innovator for testing the initial validity of his ideas and for substantiating his claim for greater organizational support. Similarly, many of the successful American companies have, what they describe as a "Quick Reaction Fund". This fund is available to any person with an idea for asking. The screening of the ideas at this stage is nominal.

Such practices, however, are neither vagrantly indiscriminate, nor do they involve high risks. The studies, in fact, show that the resources utilised in the meticulous screening of ideas are often much more than the average risk involved in funding all ideas (or at least most of them) in their initial phase. In any case, the failure of ninety ideas is generally offset by the ten successful ideas which, under conditions of lack of initial support, might not even have seen the light of the day.

The aim of developing such practices and simplified support systems is to encourage the "intrapreneurial" activities within the organization. It is a fairly valid assumption that people engaged in organizational activities would, over time, think up ideas for improving these activities. These ideas would often be fairly useful and accurate because they are based on first-hand experiences. The differences between the innovative and the non- innovative organizations lies in their sensitivity to these ideas and in their willingness in trying them out.

Myth 4: The Process of Innovation Can Be Formalised Within the Corporate Setting.

The formalisation of the innovative activities is, in a way, the reasons for the dichotomisation of the organisation into the innovating and operating functions. It is apparently the hope of all corporate designers and functionaries that by circumscribing the innovative activities into a formal corporate function, innovations can be made more amenable to control. This would increase their predictability and would, thus, minimize the risks which accompany the innovative activity.

Such aims, unfortunately, are far from realistic. By their very nature, the processes of innovation and creativity, both within individuals and organizations, thrive on certain amount of disorder and unpredictability. The value of innovations lies in their accomplishment of what is currently unknown. Like the explorers of the unknown territories, innovative efforts proceed by vague hunches and random experimentations. Since the innovator himself may not know as to what he is looking for, or how and when he is going to achieve it, building a formal system for harnessing innovativeness is, at best, a self-contradictory objective. To quote a somewhat extreme but significant example of an industrial innovation, the discovery of Teflon was made by Du Pont researcher when the pressure in a reaction vessel dropped to zero unexpectedly. Curious to find out what had happened to the product inside, he sawed it open, destroying the expensive equipment, to discover the substance that became Teflon. It is difficult to conceive of any system which can formalize such a trial-and-error method of discovery.

This however does not mean that organisations can do absolutely nothing to facilitate the process of innovation, and that innovations are entirely chance occurrences, subject only to one's luck. Even though, it is not possible to formalize the innovative process, and make it predictable, organizations can increase the chances for innovations to occur, by developing appropriate culture and managerial practices. The Du Pont researcher, for example, would have never discovered Teflon, had not the company had a culture of encouraging experimentation and for tolerating mistakes.

One of the primary characteristics of a pro-innovative organization is the large amount of information which the organization makes available to its members. This information may cover extensive data on company's progress and failures, the various issues and concerns facing the organization, the problems, opportunities and threats which the organization is endeavoring to tackle etc. Such information-sharing helps in developing a common vision of the company and in focusing the problem-solving energies of the members on organizationally relevant issues. For example, in a paper mill situation in Central India, the management adapted a unique system for sharing its concern for low production. Every morning the production figure of the previous day was displayed at various points in the factory campus in large letters. Very soon, the day's production became a serious concern for the workers also, and a number of fruitful suggestions started pouring forth.

The mechanisms and sources for the dissemination of information can be many and varied. Many innovative organizations use the medium of house-journal, circulars or management-workers meeting for creating awareness about the corporate problems and issues. It is also useful in many cases to create the wide information base by directly exposing the employees to the variety of organizational situations. This can be done through designing jobs which require cross-departmental interactions, through lateral transfers of the members, and through forming inter- disciplinary problem-solving groups, etc. It is necessary to keep in mind while dividing mechanisms and systems that they should cut across the intra-organizational boundaries.

While information-sharing provides an organizational focus to the individuals' innovative capacities, the actual innovations require more than just distribution of information. The individuals must also feel that they have freedom to experiment with ideas, and that the organization is interested in their experimentations. What this amounts to is the legitimization and acceptance of individuals' mistakes by the organization. Original innovations, after all, can only come out of original mistakes. Such an attitude of tolerance for mistakes was voiced by the top executive of a highly successful company, "If one of our people commits a costly blunder, we certainly do not throw him out. After all, he has learned something valuable at the cost of the organization. Organization should get a chance for gaining from his learning. In our company, everyone has a right to commit a mistake once."

Related to such a positive attitude for mistakes is the organization's own commitment for taking risk. It is natural for the decision-makers to invest only on those ventures which are either directly related to the organization's main objectives or which have a proven feasibility. It must, however, also be noted that most of the time, the highly original solutions to a problem come from a totally unrelated field experimentations in horticulture have given a solution for controlling pollution; some US companies are using micro-bacterial culture for refining copper ores; it was the chemical technology which revolutionized the textile industry; the use of ceramics in manufacturing motors may soon become common, etc. Similarly, the anticipated non-feasibility of an idea may often be proved wrong, when it is put to practice. One is well aware, for example, of the recent success of Maggi Noodles, although the traditional wisdom doubted the marketability of such fast-food items. Similarly, for years people in the reproduction business neglected Carlson's invention of Xerography, until an outsider in the field, Haloid Corporation, used it for developing Xerox and made a fortune out of it.

Lastly, an environment conducive for innovation would need to be tolerant of certain amount of disorder and slack. We discussed earlier the propensity of the innovative process to, often, contradict the set routines and procedures of the organization. Very often executives, who have given patronage to organizational innovators, mention their role dilemma in deliberately turning a blind eye to the various unauthorized activities, which almost inevitably accompany the creative efforts. The innovators mostly pursue their interests with a marked indifference for established procedures, norms and systems. They may resort to over-indenting of materials, crossing their role-boundaries, manipulating cross-function relationships, diverting the resources, etc., for the sake of their venture. Since such goings-on are inevitable, only a conscious stance of "corporate slack" can meet the requirements for pro-innovative environment.

Innovative organization, in fact, are generally fully aware of such underground economies, cross-functional syndicates, and unauthorized resources consumptions, etc., but they deliberately choose to ignore it. More often than not, they even perpetuate and encourage such activities. Many innovative American companies like IBM, Du Pont, 3M etc., for example, are known to permit their employees to spend about 10 per cent of their time exploring ideas that interest them. Such and other corporate acts of informally legitimizing the illegitimate need to be recognized as the essential features of the organizational endeavors for stimulating and nourishing the innovative activities.

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