Innovative Organization Components

Innovative Organisation

• Learning outcomes encompass understanding leadership and the organization of innovation.
• It also involves developing a nuanced understanding of leadership and creative styles at the individual level.
• Additional outcomes include understanding how teams, groups, and processes contribute to successful innovation at the collective level.
• Grasping how organizational factors either foster or impede innovation at the organizational/climate level is also an aim.

Components of an Innovative Organisation

• Leadership can be either visionary or participative.
• Appropriate organizational structures can be mechanistic (functional) or organic (project-based or matrix).
• Key individuals are technical champions, market or business champions, innovation sponsors, and gatekeepers.
• Effective teams should include a mix of creative and detail-oriented people, or cross-functional teams with diverse educational backgrounds.
• For example, at Pixar, each team consists of a director, a writer, artists, and storyboard people, reflecting this diversity.
• High involvement innovation requires engaging people from outside the R&D department, such as marketing and accounting.
• A creative climate should prioritize generating, experimenting, and integrating both similar and opposing ideas.
• Focusing externally involves collaborating with others.

Climate Factors

• Climate is tangible and measurable, while culture is intangible and more qualitative.
• Trust and openness are essential for emotional/psychological safety, enabling individuals to undertake initiatives without fear of reprisal.
• Challenge and involvement reflect the degree to which individuals participate in daily operations and long-term goals.
• Support and space for ideas involves providing support and time for influencing innovation.
• Conflict and debate entail fostering tensions and dialogue.
• Risk-taking is the tolerance for uncertainty and ambiguity.
• Freedom is the autonomy to define one's own work.
• Optimal innovation levels relate to factors like risk-taking in an inverted U-shape; too much risk-taking leads to unexecuted ideas.

Cultural Web

• This is a tool for understanding organizational culture by examining behavioral, physical, and symbolic manifestations that inform and are informed by the paradigm (taken-for-granted assumptions).
• The paradigm is at the core of the cultural web, representing the organization's underlying assumptions.
• Pixar's paradigm has three tenets: freedom to communicate, psychological safety in communicating ideas, and close partnership with the academic community.
• Its overarching assumption is that good people are more important than good ideas.

Paradigm

• The paradigm, located at the heart of the cultural web, consists of the taken-for-granted assumptions of an organization.
• Pixar’s paradigm, for instance, rests on freedom to communicate, psychological safety when sharing ideas, close academic partnerships, and the belief that talented people are more valuable than great ideas.
• The paradigm both shapes and is shaped by the cultural web’s elements, like organizational routines.
• The paradigm serves as both an enabler and a constraint to innovation.

Exploration vs. Exploitation

• Adaptive processes that excessively refine exploitation may be initially effective but can become self-destructive in the long run.
• Key studies focus on balancing exploration of new opportunities and exploitation of existing certainties.
• Exploration includes activities like searching, experimenting, and innovating.
• Exploitation involves refinement, production, and efficient execution.
• Systems that exclusively explore new ideas may suffer from a lack of implementation and distinctive competence.
• Systems that exclusively exploit existing processes risk being trapped in suboptimal equilibria.
• Balancing exploration and exploitation is essential for system survival and prosperity.

Competence Traps

• Competence traps occur when organizations over-rely on tried-and-tested routines, making them vulnerable to changes.
• Polaroid, Blockbuster, and Kodak failed to innovate by resting on existing business models without recognizing the need for change.
• Successful firms should avoid competence traps that reinforce existing competencies at the expense of exploring new ones, hindering the development of dynamic capabilities.

Recent Studies

• A 2015 study by Wang et al. found that competence traps have a negative effect on dynamic capabilities which has a positive effect on firm performance.
• A study of 113 UK high-tech firms reveals that developing dynamic capabilities relates more to internal factors (organizational culture and routines) than external factors (market dynamism).

Hard Truths about Innovative Climates

• Managing innovating paradoxes involves critical balances.
• There should be a tolerance for failure, but not for incompetence.
• There needs to be a willingness to experiment, with rigorous discipline.
• A psychologically safe environment with brutally candid feedback is needed.
• Collaboration with individual accountability is a must for team members.
• Flat organizations demand stronger leadership than hierarchical ones.

Leadership

• Effectiveness of leadership styles depends on the situation.
• Visionary leadership involves creating a vision from the top-down and building buy-in through inspirational communication.
• Transactional leadership is based on exchange, with followers rewarded for achieving goals, resulting in compliance.
• Participative leadership involves the active engagement of employees, yielding internalization.

Elon Musk's Leadership Style

• Elon Musk acquired Twitter and implemented new features, open-sourced algorithms, combatted spambot accounts, and promoted free speech.
• The acquisition was not without controversy, including laying off employees and demanding extra work hours.
• Musk's leadership is top-down and inspires employees for buy-in.

Willingness to Innovate

• Willingness to innovate relies on nurturing a sense of community.
• Within this community there exist shared values, that indicate what is considered important.
• Rules of engagement dictate how individuals interact and approach problems within the community.
• Community members shared purpose defines the community's reason for existence.

Ability to Innovate

• Organizational willingness to innovate is supplemented by creative abrasion, the ability to generate diverse ideas.
• Creative resolution enables integrative decisions that combine even opposing ideas.
• Finally there is creative agility, the ability to test the application of new ideas with reflective and adjusted decisions.