Thursday, October 9, 2008

Understanding innovation.

Innovation is finding a new way to do something. In a fast-changing world, the ability to continually renew, replenish and enrich our views, philosophies, values and competencies by looking outside the lines and out-of-the-box is increasingly important. In business, the goal of innovation is positive change, to make someone or something better.

Organizational innovation is creating or adopting an idea or behavior that’s new to the firm. You can look this at from the three different perspectives:

- how the organization’s structure influences innovation,

- how the organization learns and creates new knowledge,
- how the organization overcomes its inertia in radically changing business conditions.

Until the early 1990s, research on innovation focused mainly on knowledge production and learning caused by formal organizational arrangements. Since the 1990s, interest has increasingly shifted to examining informal and personal networks as effective ways for producing, storing, and disseminating knowledge. We will later describe how to use these ideas in building "communities of practice" as vehicles for interactive learning.

However, in most cases, innovation is best shaped and disseminated by the interplay of ideas among different people. Sharing and implementing new ideas is less about technology than about clarifying where information is and who knows about it, so those who want to can find it quickly. No amount of technology can force people to share ideas, electronically or otherwise, if they don't want to share them. It's up to the firm’s leadership to create the structures and the culture that encourages the movement of ideas.

What happens to defeat the spread of ideas in a typical company?

- Success often leads to arrogance and stagnation.

- Larger organizations often find it difficult to successfully make small investments. At one firm I know, it was impossible to invest $20K to automate a simple routine process although the manager could sign off herself on $20K overtime for a single weekend. Investments had to be a million dollars or more just to get heard.

- The firm's culture becomes inwardly focused, with elaborate, slow-moving procedures for resolving issues through consensus. There's a sense of entitlement on the part of some employees to guaranteed jobs without a quid pro quo. There's a preoccupation with internal procedures rather than an understanding of the changing marketplace.

Other ways that ideas are stopped from spreading include:
· People are afraid of losing credit for their ideas.
· They're afraid of not being indispensable any more if their unique knowledge and
talents are shared with others.
· They believe that sharing ideas will create jealousy or resentment.
· They don’t know how to find others with relevant ideas.
· They don't know that anyone else has the information they're looking for.
· They believe that only people in their own inner circle have ideas worth pursuing.
· Stove-piped organizations discourage contact with others outside their own business
units, departments or functions.
· Their assignments don’t put them in regular contact with other people.
· They can’t spare the time it takes to share ideas, especially if it appears there’s
no immediate need to do this.
· They dislike the leadership or the goals of the organization.
· Inertia is the first law of all organizations.

Next week, I’ll write about how to avoid these conditions in designing more innovative organizations. But first, tomorrow is poetry day!

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