The Theories Of Innovation

Published Date: 02 Nov 2017

Abstract 

New technologies, opportunities and threats force organizations to acquire adaptive capacities in order to remain relevant, competitive and survive in an increasingly complex business environment. Organizations and individuals have to embrace change initiative programmes in order to ensure organisational long-term success. In this paper, we look at the main theories of innovation and change, whilst maintaining a general view on how an organization goes about its change management decisions. We will describe one successful, one less successful change initiative and the impact of these two on the organizational culture. We also come to the conclusion that for a successful implementation of change, a company must be more transparent and listen to every employee’s opinions.

Then, an integrated approach to my own personal performance as a leader and what is still lagging to acquire the skills necessary change development will be covered.

Introduction

Change, innovation, and even creativity are not new concepts in the framework of organizational development. The past few decades have witnessed the development of several theoretical models aiming to improve the way organizations function. Social scientists have focused on the analysis of innovation and its consequences on society. Many believe that the beginning of the 21st century marks a transitional period with particularly dramatic changes in how commerce and work life are organized. Concepts such as a "knowledge society" (Senge, 1990) have been used to described this period of transition.

In order to respond to the increasing market demands and face new competitors, many companies have been forced to introduce new organizational concepts involving a whole set of changes. Hughes states that managing change is one of the major challenges that face not only the organizations, but also the individuals who should accompany the organizations in their processes of change (Hughes, 2006). Organizational change is related to organizational strategy, which will guide organizational direction and activities (Thornhill, Lewis, Millmore and Saunders, 2000).

As individual change is pivotal part of organization change, change management need to be adopted at individual level in order to initiate the change and consequently obtain successful organization change (Hughes, 2006).

Beer and Noria (2000) explain that due to, heightened competition, globalisation, advancements in communications and information technologies, inter-alia, change initiatives have interested the majority of leading organisations. Organizational change initiatives can maximize shareholder value (i.e. economic value theory) and develop organizational capabilities (i.e. organizational capability theory). This paper explores the theories behind innovation and change, evaluating one successful and one less successful innovation/change initiative related to the relevant theories. It also offers a reflection on Graan Jaff’s own performance as a leader of innovation and change, including the development of an action plan for further practicing the relevant skills in innovation and change.

Theories of Innovation

According to the OECD, innovation is the development of a product or service that provides new or improved consumer experience (Oslo manual, 2005).Innovation is therefore described as a product or a service that is characterized by its innovative dimension.

Mulgan and Albruy (2003) define innovation as "the creation and implementation of new processes, products, services and methods of delivery which result in significant improvements in outcomes efficiency, effectiveness or quality". They further elaborate this concept by linking the idea of creation to a source of value both for the individual consumer and companies.

According to Joseph Schumpeter (1912), innovation is different from invention insofar as the latter covers only aspects related to technical progress while innovation relies on acceptance and marketing. In addition he highlights the importance of innovation for growth and economic development. For example, a technical discovery without a valid product or a service cannot be regarded as an innovation.

Van de Ven (1986) adopts a broader definition of innovation by setting it as the development and implementation of new ideas by individuals who, over time, engage with others in a defined institutional context.

Through these different definitions, innovation could be summarized as a creation, whose application would generate business opportunities meeting existing needs or addressing new needs.

Through Schumpeter (1912), we discover the five major types of innovations: (i) the introduction of a new product; (ii) the introduction of a new method of production, (iii) the opening of new markets; (iv) the conquest of a new source of supply of raw materials; (v) the conception of new organizations.

Also, a great deal of research has been conducted to try to identify what factors affect the rate and extent of adoption of innovation by the markets. A number of characteristics of innovation have been found to affect diffusion (Rogers, 2003):

Relative advantage, (ii) Compatibility, (iii) Complexity, (iv) Trialability, (v) Observability

Innovations may also be classified by their degree of intensity. When an innovation brings an improvement to the processes, it is described as incremental innovation. Christensen (1997) states that "incremental innovation does not change the nature of the product or service but allows the company to strengthen its offer without upsetting its value chains". Conversely, when an innovation is accompanied by a major technological breakthrough that improves the product or service, it is called disruptive innovation (Christensen, 1997).

Tidd (2006) recognizes that shocks trigger innovations and changes occur when a threshold is reached (be it opportunity or threat). Similarly, Schumpeter (1912) identifies the resistance to change when "the resistance manifests itself in the groups threatened by the innovation, then in the difficulty finding the necessary cooperation, finally in the difficulty in winning over consumer."

Change and change models

Human nature is prone to resistance to change. Since the end of 19th century, and more specifically during the 1980’s, a revolution in the principles of modern management began. An analysis of some of the works of authors considered "masters" of leadership explains this (Drucker, 1999, Porter, 1999 and Peters, 1998). The reasons for change resistance are essentially within the individuals of the organization and the environment in which they operate. Some changes occur because of the opportunities that arise, while others are planned as in mergers/acquisitions. The onus is then placed on effective change management, which allows people to reorient the organization, achieve its goals, maximize their performance and ensure the continuous improvement in an ever-changing business environment.

Change occurs efficiently only if there is a complete commitment from within the organization. Change happens through people therefore, as part of the process of change it is necessary to know and stimulate their values, their beliefs, their behaviors and their emotions. Kim (1993 p. 37) argues that "organizations learn via their individual members. Therefore, understanding individual learning theories are important for understanding organizational learning."

One often criticized model for change is Levin’s model of change, which consists of unfreezing, transforming, and freezing. Unfreezing refers to conditioning individuals’ readiness for change, and establishing ownership. It encourages them to unlearn the old and prepare for the changes. Momentum builds when stakeholders introduce change and plan its implementation and transformation happens when individuals accept the change initiatives. In the final phase, refreezing, individuals recognize the change and reestablish the equilibrium, both personally and within the organization. New behaviors take shape and wide acceptance leads to progress. (Gilley 2005, pp. 34-36).

Lewin’s "Force field analysis" (Lewin 2000) considers that "an issue is held in balance by the interaction of two opposing sets of forces - those seeking to promote change (driving forces) and those attempting to maintain the status quo (restraining forces)". Lewin considers a number of positive forces that support this state together with a set of restrictive forces that oppose and counterbalance it. In short, force field analysis is a technique used to manage change using a set of positive and negative forces in a particular situation. Lewin describes five essential steps to managing change:

Define the change you want to see by creating a diagram or table of the future desired state.

Brainstorm and analyze the restraining forces - those that oppose change.

Evaluate the driving and restraining forces and focus on the impact of each on the change initiative.

Impose a strategy that addresses the driving forces or weaken the restraining forces, or both. The result should be an action plan that will achieve the greatest impact.

Lewin’s model has limitations in that it fails to address the human side of change and doesn’t address the emotional state of people during the change process.

Kotter’s (1995) eight steps of change is another linear model for change. It’s eight steps are: establishing a sense of urgency, forming a powerful guiding coalition, creating and communicating a vision, empowering others to act on the vision, planning for and creating short-term wins, consolidating improvements and producing still more change, and finally institutionalizing new approaches. However, knowing the required change is the critical question to ask. Those changes with wide-reaching impacts requiring significant unlearning by an individual are the ones that will generate the more resistance to change.

Another model of change is Beer and Noria’s theory E and O’s approach to change (2000). Theory E focuses on creating value to the shareholder, and uses structures and systems to achieve change. This approach often resorts consulting firms as a way to entice the organizational changes at the lower level. Theory O’s goal is to change a company’s ways from the bottom to the top, that is from the front line workers to the CEO. Management, employees, culture and behavior are addressed through the involvement of all the employees through a transparent communication scheme. Organizations abiding by theory O create systems which make employees emotionally committed to increasing their performance within the organization. Under theory O, employees are requested to become involved in identifying and solving work-related problems whereas managers believe that creating value is the essence of this approach.

 Leadership and Leading change

The most common definition of leadership refers to the ability to get others to do what you want.

According to Bolman and Deal (1995), the word "leader" was introduced more than a thousand years ago. It derives from the Anglo-Saxon laedare, which has undergone a few changes. In old English it meant conducting travelers on the road.

Bolman and Deal (1995) refine the term leader into "those individuals that are helpful, make us feel secure and alleviate fears; those that see possibilities and discover hidden resources". Power is key to leadership.

Robbins and Coulter (1996) differentiate between a manager and a leader, in that managers are chosen by the board or by shareholders of the company based on academic and work experience while leaders emerges from a group, and are able to influence employees’ performances.

Koontz (1995) defines leadership "as an art that influences people to work voluntarily and enthusiastically to achieve collective goals (Koontz, p. 490). In this sense, the leader faces the challenge of developing skills that drive change and guiding direction and vision.

However, before being able to exercise effective leadership, individuals must continually seek self-learning and self-advancement. That is why, as a fundamental aspect, the leader of any group or organization must be committed to the challenge of increasing the value or the importance of his own organization. Robbins and Coulter (1996) mention qualities that characterize the leader such as: "intelligence, charisma, decision, enthusiasm, strength, value, integrity and confidence in it" (p.573).

Another common view is that leaders provide organizations and individuals with a clear vision capable of generating a compelling image of the future. In this regard, Kotter’s works have been oriented to establish a clear difference between management and leadership:

"Management is a set of processes whereby complicated systems of individuals and technology run smoothly." The most important aspects of management are planning, budgeting, organizing, human resources and problem solving. On the other hand, leadership is a set of processes that prioritize organizations and adapt them to significantly changing circumstances. "The leadership defines the future by aligning people with a vision and inspires them to make it reality despite the obstacles". This assessment refers to the ability of these individuals to assist a group of people in circumstances of uncertainty through a practical, achievable vision within a certain period and whose development is both an exercise of the intellect and heart. The vision is an image of the future, with an increasingly favorable individual and collective change with respect to the present.

Leaders think in the longer term; look beyond your unit of work or department towards a greater scope. Their intuition of the environment is used to exhort influence. They possess vision, and have the political skills to deal with the challenging and changing environments and groups of followers (Bolman and Deal).

Successful change

Regarding models/theories for bringing about change, and the tools/strategies for winning support for change, we look at the experience in creating organizational learning and change relates to Bolman’s and Deal’s (1997) four frames of organizational structure:

I work for the largest humanitarian agency in the world and operate in changing environments. Unpredictability is embedded in our organizational culture and we are resilient to change giving us a comparative advantage over other organizations. Staffs in the field are expected to be mobile and work in the most challenging circumstances and deliver results. The importance of a field presence close to the beneficiaries we serve is of vital importance. We strive to increase our expertise in finding and providing efficient and effective food assistance solutions to hunger and malnutrition.

Structural frame:

"The structural frame emphasizes goals, specialized role, and formal relationships, commonly depicted by organizational charts" (Bolman and Deal, 1997, p. 13)

It highlights the structural aspects of organizations and assumes the following:

organizations exist to achieve goals and objectives;

things work best when rationality prevails over human needs;

it is most effective and efficient to assign roles using specialization and division of labor;

effective coordination and control is needed for individuals to work together to meet the organization’s goals;

problems are a result of poor structure (1997)

Given the current state of global economic, social and political affairs , combined with our thirst to remain "relevant", we are expected "to do more with less" and continue to be as efficient (and more creative in reaching our goals). This meant that we had to change our approach starting with a rapid organizational assessment that was immediately undertaken to facilitate a process of reflection, review and analysis. The results of this assessment were reviewed by a team of diverse leaders within the organization. With a goal of enabling us to better fulfill our mandate of feeding the worlds most vulnerable and hungry people, a wide range of going-forward organizational design and operating recommendations were made to the executive director and developed into a framework for action.

In order to be more efficient, we determined that we had to streamline the decision making process, eliminate redundant positions, and improve communication. The result was a process driven by function rather than focused on current personnel. Immediately, a new structure was designed harmonizing the executive functions, and eliminating redundant director jobs, and ultimately streamlining decision making closer to where the operations are. The result is an organization with one executive director, one deputy executive director and four assistant executive directors (effectively two functions of deputy executive director were eliminated). The assistant executive directors moved from supervising thrust areas in HQ to managing functional areas across the entire organization. Regional directors, responsible for managing vast operations areas, are given more powers to support the country directors without having to resort to HQ’s approval. Country directors empowered as the "centre of gravity" with increased decision making authority. In turn this meant that all key managers’ position across the spectrum in HQ, regional offices and country offices had to face the reality that their jobs were evolving to meet the new longer-term goals. A comprehensive review of job description would take place in the near future.

Human Resource Frame:

The human resources frame "depicts organizations like an extended family, inhabited by individuals who have needs, feelings, prejudices, skills, and limitations with the key challenge of finding a way for individuals to get the job done while feeling good about what they are doing" Bolman and Deal, 1997, p. 14).

It assumes the following things:

organizations exist to serve human needs, rather than humans existing to serve the organization’s needs;

people and organizations need each other: organizations need ideas, talent, and energy and people need jobs, salaries, and opportunities;

when the fit between the individual and the organization is poor, both suffer and become victims; and a good fit benefits both. Individuals are able to find meaning and contentedness, and organizations succeed and progress (1997).

The impetus for us was to ensure that all staff felt valued during the change process. For this, a compelling communication strategy was put in place seeking regular inputs from staff using different communication means, such as weekly open forum with executive staff and staff unions, the use intranet blogs to diffuse individual views and opinions, the establishment of dedicated page to direct questions at the executive director, the use video conferencing and peer support, etc. This reinforced the "conversation" and sought wider participation in the change process. These "conversations" were helpful in addressing the human side and make staff feel valued. More importantly, the message relates to changes we were making instead of changes dictated from the executive management, and having committed and passionate staff performing their "ideal" job. Honestly, this process is not easy as there are adjustments ongoing whilst staffs settle and accept the changes.

Symbolic Frame:

The Symbolic Frame "treats organizations as tribes, theaters, or carnivals, propelled more by rituals, ceremonies, stories, heroes, and myths than by rules, policies, and managerial authority (p.14). It seeks to interpret and illuminate basic issues of meaning and belief that make symbols so powerful (p. 216) and sees life as being fluid rather than linear in fashion. It is based on the following assumptions:

what is most important about any event is not what happened, but what it means;

events have multiple meaning because everyone interprets experiences differently;

most of life is ambiguous or uncertain and high levels of uncertainty undercut rational analysis, problem solving, and decision making;

in the face of uncertainty, people create symbols to resolve confusion and provide direction and anchor hope and faith;

many events are more important for what is expressed than what is produced (rituals, myths, or ceremonies that help people find meaning, purpose, and passion) (1997).

Many staffs are asking why we change again. What is our objective and how does it differ from business as usual? Could the new structure of the executive management address all these and many other questions? We already have a mission statement and a strategic plan. It was time for replacing the 5 year strategic plan but continuing in the same direction as set in the previous plan making targeted adjustments and fine tuning where necessary. This will help staff better measure progress and results against clear indicators and giving us all a common reference point when looking at priorities, resources, outcomes and many other things.

The Political Frame

The Political Frame views organizations "as alive and screaming political arenas that host a complex web of individual and group interests" (p. 163). It assumes the following perspectives:

organizations are coalitions of individuals and interest groups;

there are lasting differences among coalition members‟ values, beliefs, information, interests and perceptions of reality;

important decisions involve the allocation of scare resources; scarce resources make conflict a central role in the organization, power then becoming the most important and coveted resource;

goals and decisions emerge from bargaining, negotiation, and jockeying for position among different stakeholders(1997).

We recognized the importance to communicate our direction to external stakeholders in order to continue justifying relevance. Scarce resources create competition between the HQ, regional offices and the country offices. It has also reinforced interdependence amongst the various offices as the need for support increases. This frame is probably the most complex and risky as it may have the devastating effect of hampering creativity and innovation. Self-interest of leaders can have negative effects on our image and accountabilities. Most probably this is where our attention will be in the next few months.

Change failure

Graan Jaff’s development as a leader of change and action plan.

Conclusion