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Editorial
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n organization’s success in creativity and innovation is ultimately decided in the market, and therefore dependent on market dynamics, but is definitively rooted in individuals within the organization; their qualifications, motivation and internal and external communicative capabilities. The market in a way serves as a mirror, reflecting the intentions and drivers of management and employees such as the designers, researchers, engineers and shop floor workers. Their efforts make the difference! However, the contribution of individuals is only one side of the coin, the other being the way the organization facilitates, stimulates and challenges its creative human potential. Many scholars have sought for and still try to grasp what it is exactly in the organizational characteristics that the ‘workers community’ brings alive. In several contributions in this issue of the journal the intangible assets that exert a major influence in this area are explored. To start with the first contribution, Michiel Schoemaker argues that modern organizations, characterized by flexibility and innovation, are struggling to find their identities. Identity and its construction need to be managed in order to motivate people and tie them to the organization. What is identity in a flexible organization, and to what extent is it possible to manage the construction of identity? What is the optimum solution, which combines flexibility with a degree of permanence and therefore a certain identity? Schoemaker addresses these questions using both conceptual analysis and empirical research in 20 Dutch organizations. In the second contribution Jon-Chao Hong, Ming-Yueh Hwang and Chan-Li Lin introduce the concept of ‘Chi’ in their attempt to understand the enhancement of knowledge sharing and organizational creativity in high tech organizations. The article illustrates the effectiveness of the knowledge-sharing practices of three Taiwanese computer firms from the perspective of working environment design and knowledge sharing mechanism. Next to the concepts of organizational ‘identity’ (Schoemaker) and ‘chi’ (Hong et al.), George Prince introduces the concept of ‘field’, which is more or less synonymous with emo© Blackwell Publishing Ltd, 2003. 9600 Garsington Road, Oxford OX4 2DQ and 350 Main St, Malden, MA 02148, USA.
tional climate or culture. All three concepts seem to express the attempts and eagerness to explore or even invent the essence of what makes the workers’ community a creative and innovative one. Prince’s contribution, the last one in this issue, is included as a ‘practitioner’s insight’. Issue 1 of this year’s volume saw Vincent Nolan address the question “Whatever happened to Synectics?”, followed by a reflection from Tudor Rickards. It seems very fitting to close this year with the observations of Prince, retired founder of Synectics ®P Inc. Prince explores and explains the effectiveness of positive fields and offers some suggestions from his own experience of what can be done to create them. He believes “that this should now be the focus of our efforts: to the extent that we are successful, we should get the creativity and innovation we need as a by-product.” Ursula Weisenfeld in the third contribution addresses the issue of engagement in innovation management. Starting from two practical examples from the biotechnology industries the author demonstrates how in their innovation processes firms are strongly affected by the expectations and aspirations of stakeholders. She argues that communication between a company and its stakeholders should emphasize on giving information and/or negotiation, depending on the nature of the perceptions and interests of the involved parties. Next, Railton Hill sets out to explore what the specific character of creativity as a service product in a business-to-business context may be. Such applied creative services are, for instance, professional writing, web page design and architectural design. The article raises a number of issues concerning the management of these services. In the fifth contribution, Clive Thacker and Bob Handscombe focus on innovation as one of the main strategic issues in SMEs. The overall aim of the reported research was to identify a tool that can help the senior officer or owner-manager to identify more clearly their company’s position in its markets and to provide pointers to strategies that would lead potentially to greater success. The research project, targeted on South Yorkshire (UK) SMEs, has resulted in the so-called Innovation Advisory Service Matrix, represent-
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ing the interaction between competitive position and industry attractiveness. We believe that this issue of in total six contributions offers a real challenge for organizations to innovate in an operational and strategic mode, in a context with many stakeholders, based on motivated and concerted ‘human resources’ where creativity plays an important role. In today’s dynamic markets there is no guarantee for commercial success. Innovation by definition and design, by coordination and control, is just as important as the need for processes of development addressing the intangible assets of organizations. Developing identity, creating a positive emotional climate and stimulating the ‘flow of chi’ are good examples of our search for drivers of innovativeness in creativity and innovation management. The journal’s ‘pipeline’ during the first year of our editorship has been filled with a continuous stream of manuscripts addressing relevant and interesting topics in the focal areas
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of creativity and innovation management. We will facilitate a limited number of ‘specials’ in the coming two years, ranging from minispecials of four contributions on specific topics, to full special issues such as one composed of the last EACI conference theme, ‘Cross Cultural Innovation’. Last but not least in this issue we would like to draw your attention to a Call for Papers for another full special issue; ‘Updating the Theory of Inventive Problem Solving’, from guest editor Martin Möhrle from the Institute for Project Management and Innovation, University of Bremen, Germany. We hope to continue to challenge readers to enjoy and contribute to the journal in the coming year and we wish you all lots of inspiration and success in 2004. Olaf Fisscher Petra de Weerd-Nederhof Enschede October 2003
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Identity in Flexible Organizations: Experiences in Dutch Organizations Michiel Schoemaker In the information economy, flexible organizations have evolved. Work and labour relations have become more flexible than in industrial organizations. This has consequences for the identity of organizations. Organizations tend to become opportunity coalitions when the identity is too fragmented or neglected. The key questions this article adresses is what is identity in a flexible organization and to what extent is it possible to ‘manage’ the construction of identity in flexible organizations? This key question was split up into three sub-questions. We were interested in how (1) organizations organize their talent management, (2) how organizations manage their labour relations and (3) how organizations manage identity. These three subjects come forward in recent publications in the field of organizational development and HRM as being critical of management of a flexible and innovative organization. In the article, the characteristics of flexible organizations are defined. These characteristics are translated into the relationship between these organization and individual: the way flexible organizations manage their work, labour relations and identity is studied in 20 Dutch organizations. Striving for an optimum in flexible work and flexible labour relations, combined with managing a specific organizational identity seems to be the HR-strategy Dutch organizations implement to reach flexibility and innovation.
Introduction
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n the period between 1980 and 2000, The Netherlands underwent a transition from an industrial economy to an information economy. This emerged in developments such as: • the increasing importance of organization around knowledge and information; • the transition from industrial work to work in the service industries for the majority of the working population; • the formation of new organizations in knowledge-intensive services (including customized services) such as consultancy companies, ICT-related services and ecommerce businesses. • the drive for continous innovation in organizations because of increasing competition.
These developments have led to new ways of organizing and new contractual relationships between organizations and individuals. Organizations have rapidly adopted the form of flexible organizations or even networks (Castells, 1996; Evans, 1993; Hastings, 1993; Jarillo, 1993) and are becoming increasingly © Blackwell Publishing Ltd, 2003. 9600 Garsington Road, Oxford OX4 2DQ and 350 Main St, Malden, MA 02148, USA.
complex and dynamic in the way they operate (Schoemaker, 1998). The flexible organization is becoming, according to the mainstream of writers on management, the universal organization form at both micro-level (the workplace) and macro-level (society). Flexible organizations are a looser co-operative association than classic hierarchical organizations. In classic organizations employees had a permanent place to work and a permanent job. In the organization of the information age both work and labour relations have become more flexible. The question that arises now is what do these looser work – and labour relations mean for people working in flexible organizations. What does it mean for the relationship between organization and individual? What does it mean for organizational identity? Several writers on this subject have pointed to the consequences of the emergence of the flexible organization on the identity of organizations and individuals’ identity construction (Castells, 1997; Sennett, 1998). Many of these writers, whose ideas will be examined at greater length later, describe in broad outline a trend in which stability and uniformity are making way for fragmentation
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and instability. The modern worker has to work in a situation in which organizations have increasingly fragmented and unstable identities. This article explores identity in flexible organizations, taking as its point of departure influential propositions from recent ‘management’ literature (see Cohen & Prusak, 2001; Putnam, 2000; Sennett, 1998). These are dual propositions. On the one hand they describe how the modern worker is coming adrift and has less and less security in the flexible organization. Modern organizations are struggling with their identities. On the other hand there are management techniques that should be deployed to tie ‘the new employer’ to the organization, to motivate him or her and give him or her a place in the flexible organization: ‘social capital’1 is the binding agent of the flexible organization (Cohen & Prusak, 2001). With regard to the first proposition, the question is whether people really are coming adrift, while with regard to the second proposition the question is how ‘management techniques’ that aim to bind people and help them make sense (possibly from a more philosophical perspective) of their working environment can be effective in flexible organizations. From this theoretical perspective it is interesting to explore real life experiences in organizations. The key question that this article addresses therefore is: what is identity in a flexible organization and to what extent is it possible to ‘manage’ the construction of identity in flexible organizations? The article is structured as follows. First, the characteristics of flexible organizations are identified, especially flexbility of work and flexbility of labour relations are described (Section 2). Then the consequences of the emergence of flexible organizations for the contractual relationships between individuals and organizations are examined (Section 3). After that, the phenomenon of identity in flexible organizations is put into a conceptual framework of changing work and labour relations (Section 4). This framework is used to explore this phenomenon in a number of Dutch organizations. Case studies in Dutch organizations are used as empirical data (Section 5). Conclusions are presented in Section 6.
Flexible Organizations The flexible organization is becoming the most prevalent form of organization in the information economy (Castells, 1996; Evans, 1993; Hastings, 1993; Jarillo, 1993; Nohria & Ghoshal, 1997; Schoemaker, 1998).2 Flexible organizations, in their most extreme form
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operating as a network, are ideal for the exchange of information and knowledge, increasing creativity within the organization and for providing standard or customized services to clients, at macro-, meso- and microlevel. This refers to the fact that the flexible network form is found at the level of the conglomerate, even on a global scale, (macro) as well as at the level of the organization (meso) and the individual workplace (micro). An individual part of a flexible organization (at macro-, meso- or micro-level) can only function in co-operation with other parts, whether or not the individual part is self-managed. This co-operation is based on ICT (hard networks) and personal relationships (soft networks) (Baker, 2000; Degenne & Forsé, 1999; Håkansson & Snehota, 1995; Schoemaker, 2002). Flexible organizations are continually in flux and are able to adapt in a flexible way to changing circumstances, at macro-, mesoand micro-level. For individuals this means increasingly working in temporary teams (for the duration of a project for instance), in which the nature of the work is determined less and less by their job or position and is increasingly based on short-term output or performance and their own specific talents that are used in the team. Individuals are asked to work flexibly and to be creative. On top of that, individuals are regularly confronted with changes and developments in the organization as it adapts to new circumstances as outlined above. For individuals all this means that: • traditional job descriptions, which were so typical of the industrial economy, give them less and less to hold on to; • they are required to adjust to new work content with increasing frequency or even to new workplaces, something which did not happen very often in the industrial economy. To sum up, the classic stable organization of the industrial economy has made way for a flexible organization in the information economy, an organization in which flexible working and flexible labour relations have become essential for success. Talents of employees are important building blocks, especially creativity becomes an important (collective) talent in order to survive as an organization. Sennett (1998) goes so far as to speak in terms of ‘the flexible person’, arguing that in modern society the individual has come adrift at work, having lost all the certainties of a stable workplace. Nor have organizations put anything new in place of the old certainties, or if they have, they are usually of a cosmetic nature. The flexible organization no
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longer offers employees anything to hold on to and we see that ‘the traditional form of work, based on full-time employment, clearcut occupational assignments, and a career pattern over the life cycle is being slowly but surely eroded away’ (Castells, 1996, p. 268). Sennett and Castells, however, do draw attention to what is sometimes referred to as the gold-collar work of highly educated professionals. Research by Nijmegen School of Management (Schoemaker, 1998) indicates that the picture is more differentiated, and that in white and silver-collar work (mass service industries and customized production work respectively) the ‘erosion’ that Castells talks about is less dramatic, and stability in the workplace does still exist. It is, however, true that the endurance of the workplace over time is still less than in traditional blue-collar work (production work as defined by Taylor) (Schoemaker, 1998, pp. 151–156). Based on these studies, the case can be made that the flexible organization gives the individual less to hold on to than the more classic organization of the industrial economy. The fact that individuals have to rely on their own talents and manage their own work to a greater extent in order to do worthwhile and creative work in a flexible organization (or simply in order to survive) is perceived as a challenge by some and as a threat by others. In either case it leads to a situation where the organization as a ‘body’ with a stable identity that gives meaning to individuals’ work is gradually disappearing and where individuals must construct their identities with respect to their work from other materials. However, this raises a number of new issues. While a flexible organization helps with providing services to clients, for the development of a long-lasting organization to which employees have a degree of commitment, in which they are motivated to
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develop their talents and which offers them a career, flexibilization can involve risks. Flexibilization can run out of control and the organization can become ‘anarchistic’, too volatile. This is because the identity of the organization is changing in the transition from the industrial to the information economy. The identity of the industrial organization was, like political parties and faith communities, something which gave its members an identity. It gave individuals significance. This identity was based on the stability that the organization offered in the form of secure work and long-term labour relations. This gave the organization an important role in the identity construction of the individual. The emergence of the flexible organization with its associated flexibilization of work and labour relations has put this role under pressure. The stability and permanence that the organization used to offer individuals has disappeared or come under severe pressure in many places. Consequently identity has become a ‘management issue’ all the more since it is not only the nature of the organization that has changed in recent years, employees have also changed.
The Modern Worker as an Individual If the emergence of the flexible organization is one side of the coin, individualisation is the other. Over the past 25 years Dutch men and women have become more and more individualistic (see the Social and Cultural Report, 1998). From the perspective of identity, three developments, which tend to reinforce each other, are important. The first development is the emergence of the information economy, and is an important
Identity refers to the process by which meaning is assigned to the organization, the norms and values in the organization, the organizational culture and the relationship between the organization and its environment (Based on Weick, 2001, and Castells 1997). Identity (literally: ‘own character’) is, therefore, a rather intangible phenomenon. An organization has an identity, but that identity develops over time. Flexibilization of labour relations refers to the process by which the relationship between employer and employee is increasingly individualized. This can be seen in the contractual relationship between the individual and the organization, but also in the use of personnel management tools such as competence management, performance management and personal development plans. These tools increase individualization. Flexibilization of work refers to the process by which work becomes less routine, is less tied to a specific workplace, a permanent structure and specific jobs, but is increasingly tied to talents, and changing.
Figure 1. Some Definitions
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development in itself. Flexible organizations have a great need for individuals who are aware of their talents and use these talents to provide services to clients. There is also a need for employees to be deployed in a flexible way. This flexibility is achieved through part-time working and flexible working, through intermediate contract organizations (employment agencies, consultancies) and single contractors (freelancers or sole traders). A second important development in relation to individualization concerns developments around care and work. The division of care responsibilities within households as a consequence of emancipation and individualization has changed and led to a different balance between work and private life, both for individuals (working fewer hours) and within households. The work–care division between partners is more balanced, even though the division of caring responsibilities between men and women is still lopsided. Individuals are increasingly organizing their work around their own needs and are becoming more demanding with regard to content of work, working hours and career (van Hoof, Bruin, Schoemaker & Vroom, 2002). The unstable economic situation in the period 2001–2003 might have created the impression that there is a surplus of labour again, but long-term demographic trends give individuals an important negotiating position vis-à-vis employers, because of structural labour shortages in many sectors of the economy. A third important development is the boom in multimedia (and as an extension of that the ‘experience economy’). Multimedia like television, video, Internet, mobile phones (and the increasing interconnectedness between these media) have accelerated individualization. The boom in multimedia has resulted in a fragmentation of identities: each sub-culture or group has its own channel, site or other form of expression via multimedia. At the same time multimedia offer individuals the opportunity to construct their own identities. Multimedia has become an important vehicle and has acquired a significant role in the identity construction of individuals (Castells, 1997). Identity based on classic organizations and institutions (such as political parties and the church) is being fragmented. All in all, individuals are able to ‘design’ their own identities independent of ‘classic’ institutions (such as the church, state or the organization). The role of ‘classic’ institutions is being eroded more and more or disappearing altogether. Castells (1997) argues that the ‘legitimising identity’ (introduced by the dominant institutions of society) is making way for the ‘project identity’ (building a new identity that rede-
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fines the actor’s position in society) (Castells, 1997, p. 8). Project identity can take many forms and can also bring individuals into changing coalitions. The life of the individual is a cumulation of different projects and these projects together contribute to the construction of identity. The picture that emerges from this is of an individual (who has become an individual in the fragmented network society) with the aid of multimedia (in a world where information and knowledge are available 24 hours per day) who can distance him or herself from the legitimizing identity that organizations and institutions bring with them. The individual can design his/her own identity, at work and elsewhere, through project identity construction. Through this process the fragmentation and individualisation discussed above becomes a fact.
Identity in Flexible Organizations In the industrial economy the organization played an important role in the identity construction of individuals. This is because the meaning offered by the industrial organization in identity construction was guaranteed by the stability of the organization itself (hierarchical organization with a closed culture), the permanence of labour relations (highly institutionalized, collectivised and geared to life-time employment) and individuals’ perception of work (geared to the tie to an employer). In the information economy all these factors have disappeared or are under severe pressure. The stability of the organization itself is in decline because of the rise of fluid networks, while work is becoming more and more pluriform and is increasingly organized around individual preferences. Ties, whether due to the scope and type of employment or the ties of career, seem to be being weakened. This is putting the traditional ‘role of assigning meaning’ that working in an organization had in the identity construction of an individual under pressure. Does this mean that our future lies in the pure network organization, with its extreme flexibility of labour relations and work? Recent studies and debates in the field show that this would be over ‘wishful thinking’(Schoemaker, 2002). Questions are still being asked about the identity of the organization and the search is still on for the identity of the organization even in the information economy. After all, working in organizations does contribute to the individual’s assignment of meaning and the question arises as to what the organization actually still is in
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terms of identity (organizational identity) (Whetten & Godfrey, 1998). The identity of organizations in the information economy can be classified as follows. As work and labour relations become more flexible (see definitions in Figure 1) four possible types arise (compared with the classic organization): the contract organization, the secondment organization, the opportunity coalition and the clan organization; each with its own relationships between individual and organization. This is shown in the figure below. In the contract organization, work flexibility is low: there are many fixed and bilateral work relations. Labour relations are very flexible because of a high degree of individualization in the relationship between individual and organization. An example of this is provided by network organizations in which sole traders or small organizations operate, for example in the software sector and in the transport world. The identity of the organization is of limited significance, whereas the identity of individuals and its importance for the profile/image of the individuals is all the more important to bring people and work together. Consequently, the organization only has a limited role in assigning meaning to the individual. These are organizations of individuals who carry out set activities for (often regular) clients. The secondment organization is in fact the opposite of the contract organization. Work is flexible, often in projects or improvised, temporary or involving changing personnel. Labour relations are not very flexible, because people are often employed by the secondment organization. Examples are secondment agencies that operate under their own logos and project a strong image to their market (market of clients) but operate as employment agencies
Flexibility of work:
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for their employees. The identity of the organization is important in matching personnel and work. However, this type of organization only has a limited role in assigning meaning to the individual, as individuals are working in a triangular relationship between the client, the secondment organization and themselves, and they use the organization as an intermediary rather than a ‘home base’. The opportunity coalition is the most extreme form of a network organization. Both work and labour relations are highly flexible. Individuals form working associations around temporary contracts. The organization as a unifying whole has disappeared altogether (including its role in assigning significance to individuals). The identity of the organization is not an issue in the opportunity coalition. The clan organization occupies the middle ground between the forms outlined above, and tries to find a balance in the degree of flexibility of work and labour relations. The organization operates as a clan of individuals whose identity is constructed by membership of the clan. Admission and commitment to this network (which may be tight) are important steps in the process of identity construction, both for the organization and the individual. There is a balance between individuals seeking work and the organization seeking individuals to do work. Many organizations in the information economy aspire to become clan organizations. The degree of flexibility of work and labour relations seems ideal to tie employees to the organization, to give the flexible network organization its own identity, to increase the potential for innovation and creativity in the organization and to accommodate the general social trend of individualization. In terms of identity, the clan organization also seems to have found an alternative to the paternalistic
Low (fixed work relationships)
High (changing, temporary work relationships)
Flexibility of labour relations: High (individualized) Contract organization
Opportunity coalition
Clan organization
Low (collectivized)
Classic Organization
Secondment organization
Figure 2. Classification into Types of Organizations, based on the Flexibility of Work and Labour Relations
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Classic organization
Contract organization
Secondment organization
Opportunity coalition
Clan organization
Work
Labour relations
Identity
Job-based; in established work associations within structures or the organization In established work associations; individualised in (often permanent) networks In temporary and/or changing work associations; within the structure of an organisation
Collectivized; in established employer– employee relationships Individualized in (often long-term) contracts
Legitimising; organization has a role in the identity construction of the individual Highly individualized; the organization has no role in this or a very minor role
Collectivized; in triangular or network relationship between client, organization and individual In temporary and/or Individualized in changing work ‘hit- and run associations; as contracts’ loose network Talent-oriented; Individualized in in temporary and/or ‘commitments’ to changing work the group and the associations; with network membership of a group; as tight network
Strong focus on ‘logo’ identity from organization, especially targeted at client
Highly fragmented; the ‘empty’ organization
Balance in interests of individual-organization. Membership of group/ network constructs identity of individual
Figure 3. Types of Organizations and its Characteristics of Work, Labour Relations and Identity organization of the industrial age. In practice though, it turns out that many clan organizations find it difficult to achieve the balance described. In that case the alternatives are to fall back on paternalism (the classic organization), rush headlong into the informality of the opportunity coalition or to prioritize the interests of the individual above those of the organization (the contract organization) or vice versa (the secondment organization). The clan organization clearly offers the opportunity to combine flexibility and creativity with permanence in an organization, enabling the organization to maintain a specific identity, so the clan organization offers a good alternative to the classic organization. Furthermore the clan organization offers the individual a community. Identification with the organization is possible (Goia, 1998) and the clan organization offers a frame work for social identity of the individual (Hogg, 1996). The question that then arises is how to achieve the balance described above (what Evans and Doz, 1993, term ‘dynamic balance’) in the amount of flexibility in labour relations and work.
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In search for Best Practices in Dutch Organizations The last section found that flexibilization of work and labour relations is necessary in the information economy to allow an effective service to be provided to clients. Flexibilization produces several typical variants of organization forms. There is also evidence to suggest that the clan organization offers an optimum solution which does not allow flexibilization to go too far, and which gives an organization a degree of permanence and therefore a certain identity (see Figure 3, bottom row). This optimum can be found in striving for a certain configuration of flexible work and flexible labour relations. But this is not enough. The identity of the organization requires attention if the organization is to be effective in the information economy.
Exploratory Research The key question that this article addresses is: what is identity in a flexible organization and to what extent is it possible to ‘manage’ the
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construction of identity in flexible organizations? The research problems guiding the empirical research were the following. The starting point was the observation that creativity in and flexibilization of work and that flexibility in labour relations are necessary in the information economy. It brought us to the assumption, from a theoretical point of view, that the clan organization offers an optimum in balancing work and labour relations. We were interested in the question of how in this new type of organization the relationship between organization and individual is managed. This relationship between organization and individual is critical in striving for a certain configuration of flexible work and flexible labour relations, but also in acquiring a specific identity. The key question was therefore split up in three sub-questions: we were interested in (1) how organizations organize their talent management, (2) how organizations manage their labour relations and (3) how organizations manage identity. These three subjects come forward in recent publications in the field of organizational development and HRM as being critical to management of a flexible and innovative organizations (Cohen & Prusak, 2001; Ghosal & Bartlett, 1997; Gratton, 2000; Schoemaker, 2002; van Hoof, Bruin, Schoemaker & Vroom, 2002). We analysed these recent publications and draw the conclusion that four variables are critical for designing flexible and innovative organizations. These four variables are: • talent-based work (made operational in the research question ‘how are talents of individuals identified, used and developed in work?’); • individuals’ membership of a group/ network (made operational in the research question ‘how does an individual become a member of the group?’. This is the process of identification with the organization); • commitment of individuals to the group/network (made operational in the research question ‘how is commitment from the individual achieved?’); • identity construction through individuals’ membership of a group/network (made operational in the research question ‘how is identity constructed and managed?’).
Method These variables were used as the basis for a study of 20 Dutch organizations in the commercial services sector (banks, insurance companies, consultancy organizations, commercial R&D institutes). These sectors were selected because the are known as sectors
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designing organizations with more flexible work and labour relations over the past decade (Schoemaker, 1998). After a quick scan of 100 organizations (selected with the directory of heads of HR-departments of a large publisher), 20 organizations were selected as case studies. The variables mentioned above were used to construct an audit instrument and interview guide. The audit instrument was used to acquire data on the HRM of the selected organizations. The interview guide (questionaire) was used to interview directors and heads of HR departments. The unit of analysis was the organization (in three large organizations we limited the research to business-unit level). All the case studies have 500–3000 employees. With the audit and questionnaire we could decribe the organization and analyse how the organizations had designed flexibility into their businesses, and what best practices they had used in order to become more flexible organizations. Data collected contained HR policy (goals for the near future), HR instruments used (level of detail: formats and proceedures of instruments, use by management, level of ICT for all HR instruments), management style and culture (intentions versus practice on different levels of management: top-, middle and first-line management) and identity constructions (corporate versus organization identity: practice on different levels of management: top-, middle and first-line management). The four variables mentioned above (and the question put between brackets) were used to structure the data and results from the interviews.
Results The study looked at how organizations that want to become more flexible work on talent management (organizing work around the talents of individuals) and how they go about uniting individuals in groups/networks in order to create more lasting membership of the groups/networks. The study also evaluated work on identity and identity construction. The best practices were then assessed and organized under the three topics of ‘work’, ‘labour relations’ and ‘identity’. The results of this assessment and organization are shown in Figure 4. Figure 4 gives a summary of the best practices that emerged from the 20 organizations studied. Practices were labelled as ‘best practices’ when organization had experienced effectiviness in performance of the organization or motivation of personnel. The results of the case studies showed us that talent management is often organized in a more ‘instrumental’ way, using a broad scope of HR
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Work: talent-oriented and flexible with membership of a group • • • • • • • • • • • • • •
recruitment and selection in the organization is based on a competence profile talent scouts in the organization look for talent on the external labour market job interviews in the organization deal at length with potential careers employees in the organization are mainly given work that uses their talents the organization works with teams, groups of employees whose talents complement each other competence profiles are used for appraisal purposes in the organization competence profiles are used for staff development in the organization competence profiles are used for performance-related pay in the organization a form of performance contract is used in the organization explicit agreements on talent development are made in staff appraisals in the organization explicit agreements are made on how the manager will coach the employee in staff appraisals in the organization career development interviews are held in the organization every 1–2 years the career of an employee in the organization is based on his/her skills, aptitudes and motivation profile the organization regularly takes stock of its employees’ talents
Labour relations: individualised but with commitment to the group • • • • • • • • • • •
individuals are aware of their talents individuals see themselves as full members of a group the group/network has written or unwritten rules for admissions and resignations the group/network has a clear ‘employer brand’ (image of the work culture, type of organization etc.) the organization communicates with the labour market in a focused way management in the organization is assessed for its qualities in personnel management an employee-satisfaction survey is conducted in the organization annually the organization pursues an alumni policy through, for instance, reunions or focused networks with alumni detailed information on the costs of personnel, investment in talent development and employment conditions (total compensation) is gathered in the organization the organization works with a customized, à-la-carte collective bargaining agreement exit interviews are held when employees leave the organization
Identity: balance in interests of individual-organization; membership of the group constructs identity of individual • • • • •
• •
individuals are involved in drawing up the mission, aims and strategy of the organization there are shared norms and values in the organization the ambitions of the organization are known, shared and supported internal communication is open and there is mutual trust the management style is geared to: • confidence-building (transparency, openness, justice) • promoting internal communication • shared ambitions • shared norms and values • collective identity management leads employees (vision) and coaches them (shared responsibility) there is a culture of learning, it is a learning organization
Figure 4. Summary of Best Practices in 20 Dutch Organizations, used in Flexible Organizations/ Introduction of Flexible Organization Forms
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instruments. Labour relations are managed by written, but also unwritten rules, by which individuals become member of a group. Employer branding is used to give the organization a specific profile in the labour market. Identity is managed by involving individuals in strategy development and by creating a management style based on trust and commitment to the group. Organizational identity is seen as a very important issue for the near future. Especially organizations in service industry, striving for more added value for customers by means of talented employees and use of social capital, experience organizational identity as a way to achieve competitive advantage. Most organizations see organizational identity as a core issue in achieving more flexibility and creativity on the one hand, while staying a ‘enduring’ organization (as a community of employees) on the other hand. The results of the case studies showed us that some organizations use a more ‘instrumental’ way (HR instruments) to achieve a more flexible organization and to manage the relationship between organization and individual (the upper hand of best-practices mentioned in Figure 4). While other organizations are more focussed on management style and commitment to the group to achieve a more flexible organization and to manage the relationship between organization and individual. The pattern of organizations using first or the second way was diffuse; no sector-specific pattern was discovered.
Conclusions The summary of best practices in the last section shows that organizations that are striving to achieve flexible work and labour relations, combined with a lasting organization and a specific identity, have put a number of issues on the management agenda. First, talent management seems to have become a key issue for human resources management. Organizations in the information economy are aware that the talents of their employees determine their competitive advantage. Talents of individuals give advantage in a lot of core competence of the organization, especially flexibility and creativity. ‘Managing’ these talents requires the use of a specific range of tools. These organizations also recognize that these instruments should be used as one element of a dialogue between the organization and the individual. Onesided management of the personnel by the organization is not possible. Dialogue is crucial to talent management, the identifica-
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tion, use and development of talents, as it makes clear what an individual can get out of an organization and what he or she can contribute. The results of our case studies confirm the actual debate in HRM. Authors like Cohen and Prusak (2001) and Gratton (2000) stress the fact that dialogue between members of the organization, managing social capital and more balanced labour relations are important to be successful as an organization. This is confirmed in our case studies. Although the authors in this field promote dialogue and giving purpose, we saw that the traditional way of working with HR instruments has not disappeared. It seems as if dialogue and giving purpose can go together with working with instruments. Second, the system of memberships is important. Focusing on how to get individuals to commit to a group/network is an essential condition for making an organization flexible (without flexibilization running away with itself to end up in an ‘empty organization’, see Figure 3). Organization development and personnel management have not given sufficient attention to the notion of treating the presence of an individual in an organization as a membership of that organization. Membership, especially an individual’s commitment to a group, admission and resignation, the identity of a group, is becoming an important management theme in the organization of the information economy. This is expressed especially in the profile of modern labour relations. The recent focus on subjects such as social capital and employer branding provide evidence of this. But we saw that a lot of organizations have neglected the issue of identification and membership in organizations. Sennett (1998) warned us for the downside of organizations in the information age. Goia (1998) and Weick (1995) show us the importance of identification and membership. This study confirmed this ‘call’ for attention for these subject in day-to-day management. Lastly, working on identity is important. No matter how problematic the phenomenon of organizational identity is, it is clear that the rise of flexible organizations has created a kind of identity crisis for many organizations. Flexibilization and innovation have taken place so fast in some places that the legitimizing identity that the organization had for its employees has been lost. The danger of ‘the empty organization’ lies in wait (Baudrillard, 1998; Bradley, 1996; Putnam, 2000; Sennett, 1998). A lot of organizations in our study share this thought. These organizations see organizational identity as an important issue for the coming years.
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However, when a flexible organization is seen as a ‘clan’ it will develop a recognizable identity. The summary of best practices indicates first that sharing norms and values in a culture and management style of mutual trust can help to create fertile conditions for a successful clan organization. This confirms the view of authors in the field of social capital (Cohen & Prusak, 2000) and networking (Baker, 2000; Handy, 1995). Second, modern labour relations, especially the focus on dialogue between the individual and organization and attention for the social contract, allow the ‘construction’ of a recognizable identity.
Notes 1 ‘Social capital consists of the stock of active connections among people: the trust, mutual understanding, and shared values and behaviours that bind the members of human networks and communities and make cooperative action possible’ (Cohen & Prusak, 2001, p. 4). 2 The term ‘information economy’ refers to an economy in which the majority of organizations (and therefore the majority of employment) is geared to the provision of services that are based on information and knowledge, in contrast with the industrial economy in which the majority of organizations are involved in the processing of raw materials to produce tangible products. Many writers use the term ‘knowledge economy’ instead of information economy.
References Albert, S. and Whetten, D.A. (1985) Organizational identity. In: Cummings, L.L. and Staw, B.M. (eds.), Research in organizational behaviour, (Vol 7), 263–295. JAI Press, Greenwich CT. Baker, W. (2000) Achieving succes through social capital. Jossey-Bass, San Francisco. Barker, C. (1999) Television, globalization and cultural identities. Open University Press, Buckingham. Baudrillard, J. (1998) The consumer society. Myths and structures. Sage, London. Bradley, H. (1996) Fractured identities. Changing patterns of inequality. Blackwell, Oxford. Castells, M. (1996) The rise of the network society; The information age: Economy, society and culture. Blackwell, Malden MA. Castells, M. (1997) The power of identity; The information age: Economy, society and culture. Blackwell, Malden MA. Cohen and Prusak (2001) In good company. How social capital makes organizations work. Harvard Business School Press, Boston, MA. Degenne, V. A. and Forsé, M. (1999) Introducing social networks. Sage, London. Duindam, V. (1997) De zorgverdeling tussen vrouwen en mannen nu en in de toekomst. In:
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Kooistra, J. and Mourik, I. van, Leefvormen, identity en socialisatie, van klassiek gezin tot postmodern samenleven. Lemma, Utrecht. Evans, P.A.L. and Doz, Y. (1993) Dualities, a paradigm for human resource and organizational development in complex multinationals. In: Pucik, V., Tichy, N.M. and Barnett, C.K. (eds.), Globalizing management. Wiley, New York. Ghosal, S. and Bartlett, C.A. (1997) The individualized corporation, a fundamentally new approach to management. Harper Business, New York. Giddens, A. (1991) Modernity and self identity. Polity Press, Cambridge. Goia, D.A. (1998) From individual to organizational identity. In: Whetten, D.A. and Godfrey, P.C. (eds.), Identity in organizations. Building theory through conversations. Sage, Thousand Oaks. Gratton, L. (2000) Living strategy, putting people at the heart of corporate purpose. Pearson Education, Harlow. Handy, C. (1995) Trust and the virtual organization. Harvard Business Review, May–June, 40–50. Hastings, C. (1993) The new organization. McGraw Hill, New York. Hogg, M. (1996) Social identity, self-categorization and the small group. In: Davis, J. and Witte, E. (eds.), Understanding group behaviour. Volume 2: Small group processes and interpersonal relations. Hillsdale, NJ: Lawrence Erlbaum, Hillsdale NJ, pp. 227–54. Hoover, K.R. (1997) The power of identity: politics in a new key. Chatam House, New Jersey. Håkansson, H. and Snehota, I. (eds.) (1995) Developing relationships in business networks. Thomson Business Press, London. Jarillo, J.C. (1993) Strategic networks; creating the borderless organization. Butterworth Heinemann, Oxford. Nohria, N. and Ghoshal, S. (1997) The differentiated network. Organizing multinational corporations for value creation. Josey Bass, San Fransisco. Pine II, B.J. and Gilmore, J.H. (1999) The Experience economy. Harvard Business School Press, Boston, MA. Putnam, R.D. (2000) Bowling alone, the collapse and revival of the American community. Simon & Schuster, New York. Sarup, M. (1996) Identity, culture and the postmodern world. Edinburgh University Press, Edinburgh. Schoemaker, M. (1998) Organizeren van werk en contractrelaties; tussen slavernij en anarchie. Kluwer, Deventer. Schoemaker, M. (2001) Identiteit in Netwerkorganizaties. Tijdschrift voor HRM, 3, 77–94. Schoemaker, M. (ed.) (2002) Jaarboek Personeelsmanagement 2003. Kluwer, Alphen aan den Rijn. Schoemaker, M. (2003) De metamorfose van werkgemeenschappen. oratie University of Nijmegen, Nijmegen. Sennett, R. (1998) The corrossion of character. The personal consequences of work in the new capitalism. Norton, New York/London. Sociaal en Cultureel Planbureau (1998) Sociaal en Cultureel rapport 1998. 25 jaar sociale verandering. SCP, Rijswijk. van Hoof, J.J., Bruin, E., Schoemaker, M.J.R. and Vroom, A. (2002) Werk(en) moet wel leuk zijn, arbei-
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dswensen van Nederlanders. van Gorcum/Stichting Management Studies. Weick, K. (1995) Sensemaking in organizations. Sage, Thousand Oaks, CA. Weick, K. (2001) Making sense of the organization. Blackwell, Malden, MA. Wenger, E. (1998) Communities of practice. Cambridge University Press, New York. Whetten, D.A. and Godfrey, P.C. (eds.) (1998) Identity in organizations. Building theory through conversations. Thousand Oaks: Sage, Thousand Oaks CA.
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Michiel Schoemaker (m.schoemaker@nsm. kun.nl) is Professor in “Talent and identity in network organizations” at the Nijmegen School of Management. He takes special interest in Organisation Theory, especially network organisations, talent management and identity in the information age. His main research activities concern research on new forms of contractual (labour) relations and organisational renewal.
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Chi and Organizational Creativity: A Case Study of Three Taiwanese Computer Firms Jon-Chao Hong, Ming-Yueh Hwang and Chan-Li Lin The mechanisms of knowledge management include knowledge sharing, knowledge transformation and knowledge accumulation. In the corporate context, knowledge creation is of utmost importance for the promotion of competition within an organization. Knowledge creation in business corporations is most frequently done through sharing knowledge between members of a team. Therefore, how to promote the flow of ‘Chi’ in an organization to ensure the effectiveness of knowledge sharing becomes the key to successful knowledge creation. Moreover, to create and maintain ‘Chi’, a holonic working environment has to be created so that the result of knowledge sharing can be enhanced. This paper illustrates the effectiveness of the knowledge-sharing practices of three computer-manufacturing companies from the perspective of working environment design and knowledge-sharing mechanism. Through comparison, this paper will identify some good practices for the enhancement of organizational creativity.
Introduction
I
n the post-Fordist era, economic attention has turned to intensive exploitation of knowledge and creative forms of work, which have led the management to seek out ways to reproduce, instill and inspire knowledge and to actively develop creativity (Prichard, 2002). Therefore, the input factors of organizational creativity have become an essential subject worthy of investigation for the enhancement of competitiveness within a company. Our environment is sustained by an invisible, yet tangible, energy called ‘Chi’. Chi can be considered as energy flows freely in the body; it activates body work (Lao-tse, BC 300–400). Chi is a highly abstract, general concept. Unlike mechanical materialism, it does not need to see to believe or to touch to acknowledge. ‘Chi’ permeates almost all aspects of traditional Chinese technology and culture. Hence, the Chinese culture can be considered as a culture of Chi. The Chinese attribute the creation of all creatures of the universe to the activities of Chi and have, through thousands of years of practice, developed a practical theory for surveys according to the nature
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and pattern of Chi, i.e. the appearances and principles of its existence. In ancient China, the decisions of a residence location, environment selection and eco-landscape design all depended on the aggregation and movement of Chi. This is the Chinese geomancy derived from the philosophy of change. The so-called Chinese geomancy in essence is a study about how the principles of the motion of Chi can be materialized in architecture. Such principles of Chi may be applied geo-physically to working environment. Based on the concept of Chi, the working environment should be properly designed in order to receive the most beneficial energy. Chi involves light, sound, colour and movement. In terms of movement, both the lack of or excess of movement can result in lowered Chi levels, which may stifle the work spirit within the organization. In their discussions on Chi, the Chinese philosophers refer to a ‘Chi-full’, or active organization as having ‘spirited’ members and ‘free exchange of energy’ between individuals. An organization has to have a living source of energy, and to keep that vital source alive,
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individual members have to be vigorous and the energy flow across departments have to be free of obstruction. As the organization gains greater responsibility and its tasks become more complex, organizational structure will inevitably grow in size in order to better handle the increasingly complicated work climate of the organization (Litwin, Humphrey & Wilson, 1978). An enormous organization without a corresponding level of Chi will find itself in a difficult position where there are not always enough employees to handle the work that needs to be done, and that the employees are always occupied by something when there appears to be no particular work that needs to be done. This is often referred to as the grand theory of organization change (Prigogine & Stengers, 1984). When an organization runs into a situation like this, organization change becomes necessary. However, it requires the use of the ‘holonic’ concept in order to bring effects to such as administrative reforms. In recent years, holonic concepts have been widely used in the Holonic Manufacturing System (HMS) (Hayashi, 1993). Holon is a term first used in Arthur Koestler’s ‘Holon Revolution’. It represents the methodology to harmonize individual parts with the whole. It means that while systems have individual functions that make up the system, they are still related to and harmonized with the whole. ‘Holon’ is a word coined by combining ‘holos’ (the whole) and ‘on’ (a particle) (Koestler, 1967). Two observations impelled Koestler to propose the concept of holon: (1)complex systems will evolve from simple systems much more rapidly if there are stable intermediate forms than if there are not; (2)although it is easy to identify sub-wholes or parts, ‘wholes’ and ‘parts’ in an absolute sense do not exist anywhere. Another important concept is the ‘holarchy’ which is defines as ‘a system of holons which can cooperate to achieve a goal or objective’(Christensen, 1994). A holon can be part of another holon (Shen & Norrie, 1999). Hence the Japanese have translated the term ‘holon’ as ‘a part of the whole’, which can be applied to many areas from the molecular biology in biological genetics to the philosophical meaning of organizational development theories. Generally speaking, the constructs and linkages are two major elements in organization development (Burke, 2002). Then holon has the following assumptions (Mathews, 1994): 1. Harmonization of the whole and its parts. 2. Accessibility (free and independent interaction).
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3. Self-regenesis (high levels of self-discipline, and capability of self-constructing a new work order). 4. Complementarity (mutual substitution between individuals in an organic pyramid structure). 5. Diffusiveness (diffusive operations of individuals in different spatial and temporal slots). 6. Integration ability (capability to integrate or consolidate partial regular movements into new rules of movement). In other words, to successfully apply the concept of holon to organizational development, it requires an operation characteristics analysis to find out if the operation contains vertical or horizontal tasks that possess complementarity, diffusiveness and integration characteristics in the movement patterns. The availability of these assumptions greatly facilitates the process of an operational or administrative reform. To give an example, recent advances in information technology have made it possible for post offices to carry out a holonic organizational development for their routine operations including mailing, remittance, stamp selling, demand deposit and time-deposit services according to their specific socioeconomic conditions. For instance, a post office located in a business district may find the lunch hour the busiest time of the day since it is when all the office workers nearby will have time to run their errands. Therefore, all the businesses of the post office should be conducted in a diffusive mode prior to the lunch hour. In other words, each task, say time deposit, should have its own designated window, so that several windows are open at the same time. If there are only a few customers, the post office may close down some windows or leaving just one window for combined processing of all of above businesses (time deposit, demand deposit and remittance etc.), so that the workplace can be reallocated to non-window operations. According to the holon theory, members of an organization are capable of carrying out diffusive and complementary tasks. In the post-office example, holonic organizational design will help employees to increase accessibility, and with increased accessibility, employee interaction will also increase, which then naturally leads to promoting clarity, confidence and commitment (LaFasto & Larson, 2001) and increased opportunity for creation (Hitters & Richards, 2002). In other words, human movement results in energy flow and the Chi thus created will naturally induce regenesis and integration ability of the organi-
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zation, to which creativity and innovation is requisite. The holonic development helps members to develop an appropriate Chi and to build a positive environment which will in turn stimulates thinking for problem solving. To help organization members to develop a mindset that facilitates the sharing of member differences, there should be more inquisitive dialogues among team members, so that they will understand others’ viewpoints and explanations (LaFasto & Larson, 2001). In the meantime, the members of the team have to be willing to rise up to the challenges posed by others and accept the fact that irrelevant events do occur from time to time. This is what makes Chi alive and how team interaction gains momentum. The idea of knowledge sharing is to promote change and to improve the flow of Chi, which will then increase efficiency of the team (Jerone, 1997). According to Jerone’s classification, there are five types of team dynamics in relation to Chi in team knowledge sharing, as described below Table 1. Among these five types of team dynamics, Type E possesses the highest levels of Chi because it operates according to the principles of holonic management. Type A, on the other hand, is most likely to lose Chi because of a lack of good team interaction. In other words, Type E team interaction can best facilitate knowledge sharing because the holonic Table 1. The Five Types of Team Dynamics in Knowledge Sharing Type
Description
A
The leader collects ideas and completes the project all by himself while the team members only follow orders. The leader collects ideas from team members and then accomplishes the mission on his own. The team members provide ideas in order to support the leader to accomplish the mission. The team members collect ideas and develop different proposals for the leader to choose from. The team members interact with the leader for ideas and evaluate various proposals together.
B
C
D
E
(Adapted from Jerone, 1997.)
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concept has helped transform the organization from a highly hierarchical structure to a much flattened structure. In terms of the form of interaction, Type E team members can conduct discussion either through seminar (formal) or chatting (informal) to solve problems. The following section describes how formal and informal team dialogues can be practised in order to generate a flow of Chi to facilitate knowledge sharing, which is again conducive to the generation of Chi. In others words, a holonic working environment helps stimulate formal and informal interaction during knowledge sharing. The purpose of this study is to examine the impact of Chi on the organizational creativity from the perspective of working environment design and knowledge-sharing mechanism.
Research Design Research Method This study adopts the case-study method, with the samples and research process discussed below. Case Sampling In order to further understand the operations of knowledge-sharing teams in different organizations, this study approached ten Taiwanese firms in the computer industry to see if they were willing to take part in the study. This study selected three firms from manufacturers of industrial computers, commercial computers and personal computers respectively, with at least 50 R&D employees as the study cases. Research Processes The instrument of this study is composed of two parts: first, the background information of the firm, and second, the practices conducive to organizational creativity, particularly the effectiveness between working-environment design and knowledge-sharing mechanism. Then, the background information of the three firms were collected from their company bulletins and reconfirmed by interviewing their R&D manager. Since the focus of the study is on case analysis, the researchers conducted on-site interviews with the R&D personnel of each of the three selected firms to examine their respective knowledge-sharing mechanisms. In order to enhance reliability and validality, two indepth interviews were conducted with three companies and nine R&D managers, three
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from each firm. The first interview was designed to gain a rough idea about the knowledge-sharing mechanism, particularly about the elements needed for further investigation; the second interview with these nine managers was to gain an insight into the actual knowledge-sharing mechanism of the organization under survey.
Case Profiles The case analysis of the three companies shows that the three subjects each has a different organizational management style, as described below. 1. Company A (Industrial Computer Manufacturer) Company A was established in September 1981. The company started its industrial PC (IPC) production in 1989, and in 1991 it successfully developed an industrial CPU card and a CPU chassis on its own, which enabled it to provide completely integrated industrial computers. The company has since become the leading domestic supplier for the most comprehensive PC automation solutions. For the past 19 years, the company has been focusing on developing industrial automation (IA) solutions and industrial computers (IC) based on PC architecture. This development helps distinguish the company from other domestic electronics manufacturers, who were rushing into the PC market. After years of hard work, Company A has secured a strong foothold in its own niche markets, and has started to establish its international reputation. For the new millennium, the company intends to enter the emerging market of building/ residence network automation. At present, Company A is in the world top ten in the industry and accounts for 6 per cent of the world market. Domestically, Company A has become the largest designer and manufacturer of professional industrial automation products, accounting for over 50 per cent of the market share in Taiwan in 2000. 2. Company B (Personal Computer Manufacturer) Company B is the largest PC manufacturer in the domestic market and ranks in the world top ten. Currently, Company B focuses its production on desktop and notebook computers, of which 60–70 per cent were OEM orders in 2000. In recent years, Company B has been very active in establishing overseas manufacturing bases, including one in the Subic Bay area of the Philippines and another in the Chungshan region of Mainland China. It is
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expected that within the next two to five years, when the company’s organization reengineering has been completed, the Internet and the software branches of the company will take over from the original hardware production as the mainstay of the company’s operation. 3. Company C (Commercial Computer Manufacturer) Company C was established in 1982 and it has been focusing on the design and manufacturing of LCD computers, LCD monitors, commercial computers and servers. With its aim to employ ‘global resources’ to provide ‘Just in Time services’, this company not only has become a well-known publicly traded enterprise in the domestic market, but under its successful distribution strategy, it sold its quality products in over 70 countries throughout the world in 2000.
Research Findings According to the research objectives of this study, the findings are divided into two separate sessions, namely working-environment design and knowledge-sharing mechanism, as discussed below.
Working-Environment Design and Chi Effects on Organizational Creativity As mentioned earlier, to apply the holonic concept in boosting the flow of Chi in the working environment, several elements including complementarity, accessibility, and integration ability must all be taken into consideration. The following discussion thus will focus on the use of the holonic concept in the workplace. 1. Company A The company sets up a combined work zone and discussion zone inside the R&D working area. In other words, hardware R&D personnel, marketing personnel and software R&D personnel can work and meet together in the same place (see Figure 1). This workplace design allows workers of different domains to simply turn around and discuss with each other. In other words, the employees can solve many problems without even leaving their seat. This arrangement can meet the holonic requirements on personnel complementarity, discussion accessibility and activation of Chi in the workplace. This workplace design is the best example of Chi application and can best
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Workspace & Meeting space
Figure 1. Working Environment Design of Company A
Workspace
Meeting space Workspace
Figure 2. Working Environment Design of Company B ensure problem-solving effects. Jeffcutt & Pratt (2002) also pointed out that these types of working-environment design help form dynamic interfaces between different layers of knowledge and can contribute to knowledge creation. 2. Company B The company sets up separate work zones and discussion zones in the same workplace (see Figure 2). In principle, personnel from different domains such as appearance design R&D,
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structure design R&D and marketing R&D, belong to different departments and work in different places. With this workplace arrangement, when encountering a problem, workers need to meet in the meeting room, usually located in the centre of the workplace, and return to their seats after discussion to work out the problems. This type of working environment is designed partially to prevent possible interruptions to the meeting or discussion. Based on the concept of Chi and holonic management, this workplace design is conducive
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to complementarity, while accessibility is somehow restricted because of the lack of spontaneous interaction and freedom to discuss from all perspectives. In this case, the flow of Chi can sometimes be obtained. 3. Company C The work zone and the discussion zone are quite far away from each other. In other words, the employees have to move a long way for discussion (see Figure 3). Basically, the personnel with the same background work in the same room, which is similar to the arrangement for Company B. This type of working environment is designed to provide an isolated room for discussion in order to prevent undesired interruption. The workplace arrangement draws a clear line between work and meeting. From the holonic standpoint, this working environment design focuses on diffusiveness rather than complementarity. In other words, member interaction is not encouraged and the Chi in the environment is thus stagnated. 4. Comparison of Chi between Companies In terms of facilitating creativity through working-environment design, Company A performs the best among the three. The working environment of Company A is designed to allow more real-time interaction. In other words, it helps generate more Chi in terms of accessibility and complementarity, rather than diffusiveness. As a result, the Chi in the environment flows more freely, which in
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turn promotes organizational creativity in problem solving. The working environment of Company B is designed to facilitate complementarity as well as some accessibility. However, the diffusiveness element is also emphasized, hence restricting the Chi and preventing members from interacting with each other instantaneously. The working environment of Company C is designed to prevent members from excessive mutual interaction in order to boost their work efficiency. In other words, the diffusiveness is emphasized while complementarity and accessibility are neglected. The Chi in such an environment can be rather stagnant and has no contribution whatsoever to organizational creativity. The differences in the holonic design between the companies under survey are summarized in Table 2 below.
Knowledge-Sharing Mechanism and Chi Effects on Organizational Creativity Knowledge-sharing mechanisms can take place either in a formal or informal way, and can be categorized into five types of team dynamics. The differences in knowledge sharing mechanisms and their effects on Chi between the three case-study subjects are discussed below. 1. Company A The formal knowledge-sharing mechanism in Company A. The R&D personnel hold a regular weekly meeting to discuss new technical or practical problems. Because the working team
Meeting space
Meeting space
Workspace
Figure 3. Working Environment Design of Company C
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Table 2. The Effects of Working-Environment Design on Organizational Creativity Company A
Company B
Company C
✕
✕ ✕ ✕
Accessibility Complementarity Diffusiveness Flow of Chi Notes: (best) (in between) ✕(worst)
is composed of members of different knowledge backgrounds, the meetings are not always chaired by any particular person. The members elect between themselves a chairperson at each meeting to take charge, which is good for the promotion of a sense of equity within the organization and for members to interact with the leader as well as colleagues and to evaluate the meeting result together in a formal way. In terms of the flow of Chi, this type of knowledge sharing can generate most interaction and create an appropriate level of Chi. The informal knowledge-sharing mechanism in Company A. In addition to the design of work and discussion zones, the company also arranges a specific area for all employees from different departments to take some time off from work and to chat with co-workers during the coffee break. This type of free chatting takes place every day between 15:00 and 15:15, which promotes interaction between members of different knowledge fields and stimulates knowledge creation (Konno & Nonaka, 1995). The employees may carry their problems to the free-chatting room to discuss with others from different fields. While interacting with people with different viewpoints and positions, employees may come up with fresh new ideas. Such informal interaction helps promote the flow of Chi in the workplace as well as in the lounge. The change in the flow of Chi can help employees break through their existing mode of thinking and find ideas to solve their problems. 2. Company B The formal knowledge-sharing mechanism in Company B. The company uses regular weekly meetings for problem discussion and idea exchange. Members are encouraged to express their different opinions and ideas. To help generate the flow of Chi and for the leader to make decisions, members and leader discuss the various ideas and viewpoints in a demo-
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cratic atmosphere. This type of interaction allows the team members to collect and exchange ideas in order to generate different proposals for the leader to choose from. Such a knowledge-sharing mode facilitates the diffusion of Chi and thus is classified as Type D team dynamics under Jerone’s classification. The informal knowledge-sharing mechanism in Company B. The company sets up a work zone, a discussion zone and a separate area (room) for members to relax themselves and chat freely with each other without making any particular arrangements such as tea breaks. Members can chat at any time. Yet, only a few actually make use of the facility for relaxation and chatting. That is partly because of the heavy workload with personal computer design, and partly as a result of the myth that hard work alone can better solve problems. This type of informal knowledge sharing is also conducive to the flow of Chi. 3. Company C The formal knowledge-sharing mechanism in Company C. Company C also holds regular meetings on a weekly basis to solve problems. These meetings often consist all members of a team (4–6 persons), and do not necessarily include personnel from different fields. The meetings are always chaired by a supervisor (usually the division heads). Members can raise their ideas in the meeting, but the decision is always made by the leader. This type of meeting can generate ideas very fast. However, it is more of a vertical communication rather than a horizontal one. In terms of the flow of Chi, this type of knowledge sharing mechanism can be categorized as Type C team dynamics in Jerone’s classification. The informal knowledge-sharing mechanism in Company C. With the exception of a work zone and a discussion zone, the company does not set up any special zone or room for informal knowledge sharing, and does not allow employees to have time off for relaxation or
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efforts. She pointed out that team creativity can be most effectively induced through borderless interactions and free chatting among members. Hapgood (1993) also mentioned that the reason why MIT is able to turn out many technological innovations is that its campus is designed to allow people from different fields to talk freely through the ‘Infinite Corridor’. This is because effective knowledge sharing relies on the differences between members, and innovative ideas often come out of free chatting. The information flow in the realm of technology is often more rapid than any other fields, and ideas are usually shortlived. In other words, finding ways to effectively generate new ideas has become a pressing need. Therefore, a preliminary conclusion of this study may be that for technology-oriented companies, it requires both formal forums and informal free chatting to effectively share knowledge and to keep Chi alive. In the case analysis of the three computer companies, Company A is most concerned with the promotion of the flow of Chi and hence the most effective in generating ideas. Therefore, the working environment design and knowledgesharing mechanism of Company A may be of high referential value to companies in similar industries aiming for sustainable development. Basically, Chi is most active flowing in the first stage of organizational life cycle, and creativity frequently springs out through the organization. Consequently, the Chi will getting stagnant when the organization moves into next period, correspondingly the creativity will decrease. Therefore, in order to enhance organizational creativity, free knowledge sharing should be promoted time by time, and place by place at the beginning of organization development, to ensure the Chi always flows in other organization life cycles.
chatting. Therefore, interdepartment interactions are rare and the informal knowledge sharing is often limited to the neighbouring colleagues. This phenomenon may be caused by the fact that competition is more between individuals than between teams, and may result in the loss of Chi. Comparison of Knowledge-Sharing Mechanisms between Companies Based on idea-generating theories (Herceg & Flatbry, 2000; Michalko, 2001), the more freedom one has, the more willing he is to share knowledge and the more opportunities one has to share knowledge, the more ideas he will gain (Biggs, 2000). According to the above analysis, Company A helps the flow of Chi through both formal and informal knowledge sharing, and strengthens intra- and interdepartmental interaction, which means that Chi has not only been generated and filled in the environment but is flowing within and across departments. Company B is also considered to have a sound mechanism for knowledge sharing in terms of the flow of Chi. The company encourages employees to discuss problems both between department members and outside work and regular meeting places. This can help Chi to flow steadily and thoroughly throughout the organization. Company C generates negative effects on knowledge sharing among employees, not only in formal meetings but also in casual chatting. Therefore, the Chi is stagnant in almost all departments. The different types of knowledge sharing between the companies are summarized in Table 3 below.
Discussion Kanter (1997) used the cases of GE, Dupont and 3M to explain corporate innovation
Table 3. Comparison of Knowledge-Sharing Mechanism Between Companies Company A
Company B
Company C
Formal
Jerone’s Type E
Active Chi flow
Jerone’s Type D
Diffusive Chi flow
Jerone’s Type C
Stagnant Chi flow
Informal
Encouraged, with time and space provided
High levels of Chi are generated
Not strongly encouraged, time and space are provided
Medium levels of Chi are generated
Not encouraged, no time or space provided
Hardly any Chi is generated
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References Biggs, J. (2000). Teaching for quality learning at university Open University Press, Buckingham. Burke, W.W. (2002). Organization change: Theory and practice. Sage, London. Christensen, J.H. (1994). Holonic manufacturing system: initial architecture and standards directions. In First European Conference of Holonic Manufacturing System, Hanover, Germany. (www.automation.rockwell.com/) Hapgood, F. (1993). Up the infinite corridor: MIT and the technical imagination. Addision-Wesley, New York. Hayashi, H. (1993). The IMS International Collaborative Program. In proceedings of 24th ISIR. Japan Industrial Robot Association. (http://www.ims.org/) Herceg, R. and Flatbry, T. (2000). Idea generation. New Holland, Sydney. Hitters, E. and Richards, G. (2002). The creation and management of cultural clusters. Creativity and Innovation Management, 11(4), 234–47. Jeffcutt, P. and Pratt, A.C. (2002). Managing creativity in the cultural industry. Creativity and Innovation Management, 11(4), 225–33. Jerone, P.J. (1997). Evaluating employee performance. Kogan Page, London. Kanter, R.M. (1997). Innovation: Breakthrough thinking at 3M, Dupont, GE, Pfizer, and Rubbermaid. Workwords, London. Koestler, A. (1967). The ghost in the machine. Arkana Books, London. Konno, N. and Nonaka, I. (1995). Intellectualizing capability. Japan Economic News, Tokyo. LaFasto, F. and Larson, C. (2001). When teams work best. Sage, London. Lao-Tse (BC 300–400). Dao De Jing.
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Litwin, G.H., Humphery, J.W. and Wilson, T.B. (1978). Organizational climate: A proven tool for improving performance. In W.W. Burke (ed.), The cutting edge: Current theory and practice in organization development. University Associates, La Jolla. Mathews, J. (1994). Catching the wave: Workplace reform in Australia. Allen & Unwin, Sydney. Michalko, M. (2001). Cracking creativity: The secrets of creative genius. Ten Speed Press, Berkeley. Prichard, C. (2002). Creative selves? critically reading creativity in management discourse. Creativity and Innovation Management, 11(4), 265–76. Prigogine, I. and Stengers, I. (1984). Order out of chaos: Man’s new dialogue with nature. Bantam Press, New York. Shen, W. and Norrie, D.H. (1999). Agent-based systems for intelligent manufacturing: A stateof-art survey. Knowledge and Information Systems, 1(2), 129–56.
Jon-Chao Hong holds a PhD from the Univerisy of Illinois. He is now Professor and Supervisor of the institute of Toy and Game Design, National Taipei Teachers College. Since 1998 he has been the Secretary General of the Chinese Creativity Development Association. Ming-Yueth Hwang holds a PhD from the University of Texas at Austin. She is now Professor of the Department of Adult and Continuing Education, National Taiwan Normal University. Chan-Li Lin is a member of the Department of Industry Education, National Taiwan Normal University.
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Engagement in Innovation Management: Perceptions and Interests in the GM Debate1 Ursula Weisenfeld The development of a technology and the innovations based on that technology usually affect stakeholders who have different perceptions and interests. Key issues in the company’s engagement with these stakeholders are information and negotiation. Engagement is an ongoing process during which perceptions as well as interests may change. In this article it is argued that knowing the nature of interests and perceptions of the involved parties at a certain critical point leads to possible ways of engagement which in turn may help creating a satisfying outcome of the innovation process. First, information is necessary to change perceptions, and second, negotiation is necessary to accommodate interests. Two examples from the biotechnology industries (genetically modified (GM) crops) are used to demonstrate that perceptions and interests are the key factors in driving the engagement process between a company and its stakeholders, and communication in the engagement process should emphasize giving information and/or negotiation, depending on the nature of perceptions and interests.
Introduction
T
echnologies evolve in an economical, social, cultural and political space. They influence – and are influenced by – the dimensions of this space: Technologies co-evolve with society. Co-evolution calls for technology assessment to be constructive: describing, understanding and forecasting developments regarding technology and society is complemented by intentional modulation, and constructive technology assessment supports reflection and strategy articulation (Rip, 2002, p. 35). When several parties try to assess, evaluate and influence technological development and innovations as manifestations of technologies, the respective debates often are characterized by asymmetry of information, differences in perceptions and a variety of interests. Increasingly, innovation processes are not only discussed in the public but are influenced by the engagement of various parties. The organization and its managers drive the innovation process, but firms are affected strongly by the expectations and aspirations of stakeholders. The diffusion of an innovation is a social process and includes the negotiation of interests: innovations are not just adopted, but are adapted to every day life © Blackwell Publishing Ltd, 2003. 9600 Garsington Road, Oxford OX4 2DQ and 350 Main St, Malden, MA 02148, USA.
(Gristock, 2000). Both managers and stakeholders differ with regard to their understanding of the science and technology underlying the innovation, as well as in their perceptions of risks and benefits and their priorities. This is apparent for example in the biotechnology industries: While some see genetic engineering as a ‘Faustian technology’ (Rosenbaum, 1999) for which traditional policy-making styles are not suitable, it has also been said that new regulatory schemes are ‘based on fundamental risk assumptions that are more grounded in philosophical “any possible world” scenario than in the rigor of scientific probability’ (Huttner, 1995, p. 487). The article is organized as follows: two examples from genetic engineering applied to the agricultural sector illustrate the importance of perceptions and interests for the outcome of the debate. A framework for analysing a case in terms of stakeholder involvement is then developed, followed by implications for an appropriate engagement.
Methodology As a result of the rich debate in the scientific community and in the public, there is an abundance of data on genetic engineering and
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innovations thereof. The data used in this article stems from scientific articles, websites of and about various stakeholders and discussions found on the Internet.
Two examples from the Biotechnology Industries Modern biotechnology covers a set of new technologies such as genetic engineering and cell fusion, whose combination has a powerful impact on many markets and on society as a whole. It plays a key role in many industries, and governments, research organizations and companies have enhanced their activities to support its developments. At the same time, worldwide, albeit to a different degree, it has been subjected to extensive regulations. The debate on genetic engineering covers economical, ethical, health and social issues. Stakeholders from the agricultural industry, the scientific community, various nongovernmental organizations (NGO) and state representatives take on an active role in the discussion, and the arguments range from genetically modified (GM) food being essential for the developing countries, to GM being a threat to health, environment and social structures. This complex debate involves many stakeholders and actors who do not necessarily share perceptions and interests associated with the technology. Genetic engineering as a technology, and particularly its application to the agro-food sector and the health sector, is an outstanding example of the importance and complexity of the company-stakeholder relationship. In the case of biotechnology companies, NGOs and the general public increasingly question actions of companies and launch campaigns against global companies and against certain technologies. The development and introduction of products based on genetic engineering have raised questions about its impacts on individuals, environments and societies, and NGOs have voiced their interests and concerns. The debate also is loaded with political issues. For example, while Shiva (1999) describes as ‘rotten’ Monsanto’s attempt to mobilize ‘third-world people’ to speak out in favour of GM technology, Potrykus (2000) concludes that GM opposition has a hidden agenda. The positions of proponents and opponents of the technology often are far apart, which makes dialogue difficult. However, communication and collaboration in the innovation system is urgent, especially when innovative products and processes entail risks unprecedented in terms of scale and the knowledge needed to deal with these
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(Beck, 1992). The following two examples give an impression of the debates in the area of biotechnology. While ‘Golden Rice’ exemplifies an ongoing discussion about a product still in development, the example ‘Terminator Technology’ is history (for the time being), because the company has agreed to not using the technology for commercial purposes.
Example 1: Golden Rice Iron and vitamin-A deficiency is a serious problem, especially in those developing countries where rice is the staple food. In 1991, the scientists Ingo Potrykus, Peter Beyer and collegues started working on developing rice with high pro-vitamin A content to address this problem (for motivation and scientific problems see Potrykus, 2000). Public funding was provided from the Rockefeller Foundation, the Swiss Federal Institute of Technology and the European Commission. Zeneca and other companies owning key intellectual property rights (IPRs) regarding the development of golden rice agreed to the use of IPRs for humanitarian use, leaving their commercial interests untouched. Although the ‘vitamin A rice project was considered a scientific breakthrough because it was the first case of pathway engineering, and it was representing also a considerable technical advancement’ (Potrykus, 2000, p. 7), it needs further research to introduce rice with a sufficient amount of pro-vitamin A. It is expected that this research as well as complying with legal requirements and studying nutritional impacts will take until 2005 (Syngenta). The International Rice Research Institute (IRRI) is working on the use of local varieties of Asian rice. ‘Golden Rice’ has been called the ‘poster plant of the biological revolution’ (Herring, 2002, p. 1) and there is hope that once the necessary tests have been performed it will be given free of charge to poor farmers in countries where rice is the major staple food (Convey, 1999). Opponents are concerned that ‘genetically engineered vitamin-A rice is now being used as a Trojan Horse to push genetically engineered crops and foods’ (Shiva, 2000) and point out that the vitamin A content is not sufficient: ‘Greenpeace calculations show however, that an adult would have to eat at least 3.7 kilos of dry weight rice, i.e. around 9 kilos of cooked rice, to satisfy his/her daily need of vitamin A from “Golden Rice”. In other words, a normal daily intake of 300 gram of rice would, at best, provide 8% percent of the vitamin A needed daily’ (Greenpeace, 1999). Proponents view vitamin-A rice as an application of genetic engineering ‘to solve an
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urgent need and to provide a clear benefit to the consumer, and especially to the poor and disadvantaged’ and Potrykus (2000) concludes: ‘GMO opposition has a hidden, political agenda. It is not so much the concern about the environment, or the health of the consumer, or the help for the poor and disadvantaged. It is a radical fight against a technology and for political success’. ‘Golden Rice’ is an ongoing project. Further research will show whether from a technical point of view the product will reach the goals that have been set. Whether and to what extent it will succeed in the market place will depend to a great extent on the actions and interactions of various parties involved.
Example 2: Terminator Technology The terminator technology leads to the seeds of GM plants being sterile. The US Department of Agriculture and Delta and Pine Land Co jointly developed the technology and its patent was approved in 1998. Monsanto bought the company, thereby gaining access to the technology. Using the technology would mean that farmers would be forced to make annual seed purchases, because saving seeds to use in the following season would not make sense. The technology was faced with a wave of criticism. Scientists, farmers, and a variety of NGOs and movements voiced their concerns: • Greenpeace challenged Monsanto to sell it the patent for £1 (Vidal, 1999). • CGIAR, the world’s largest international agricultural research network, announced a boycott of terminator technology (Vidal, 1999). • Neth Danos of the South-east Asian Regional Institute for Community Education disapproved of the technology: ‘Farmers here know about the terminator and are telling their governments to reject the patent. The terminator could be the greatest threat to the well-being of poor farmers we have ever faced’ (Vidal, 1999). • Gordon Convey, Rockefeller Foundation, pointed out: ‘Storing harvested seed for sowing lay behind the success of the Green Revolution, which increased crop output throughout the Third World. Terminator technology would have threatened our attempts to feed the world in the next century’ (Convey, 1999). Faced with such opposition, Monsanto announced that it would not pursue the commercial development of the technology. Monsanto’s then chairman Robert Shapiro wrote a letter to the Rockefeller Foundation, saying the
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company refrained from developing the gene after consultations with experts and customers. Pete Riley of Friends of the Earth said the move was an attempt by the food giant to win favour in the press. ‘It is only a gesture and it will cost them nothing. There is nothing to stop them introducing it at a later date’ (BBC, 1999). The commercial use of ‘Terminator Technology’ has been cancelled. Even though from a technical point of view the technology works, the actions and interactions of various parties led Monsanto to withdraw it from commercial use.
Innovation Processes as Engagement Processes Over the past century there has been a shift from the concept of innovation as the act of a creative and forceful individual (Schumpeter, 1912) to the emphasis that an innovation is a process of interaction between individuals and groups. Companies not only affect stakeholders and are affected (Freeman, 1984), they also derive their legitimacy from stakeholder approval and acceptance (Massey, 2001). The extent to which stakeholders are relevant to a firm depends on their power to influence the firm, the legitimacy of their relationship with the firm and the urgency of their claim (Mitchell, Agle & Wood, 1997). These characteristics are helpful for identifying the key stakeholders. However, they do not assist in applying a form of engagement. It is argued that the nature of interests and the degree of similarity of perceptions are key factors in creating an appropriate form of engagement with the key stakeholders. Thus, viewing innovation processes as collaborative projects, it is suitable to identify the key actors and their interactions (Faber, 2001), for interaction is to be seen as ‘the critical element’ of the innovation process (Tidd, Bessant & Pavitt, 1997). The processes of forming perceptions and interests are interrelated in that interests shape perceptions and perceptions may give rise to certain interests. However, in a given situation differentiating between perceptions and interests may help in developing an appropriate form of engagement with stakeholders.
Innovations and Interests The development, introduction and diffusion of new products and processes are associated with a variety of interests: the innovation process is based on interests (of the innovating
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firm), it affects other people’s (‘stakeholders’) interests and it may give rise to new interests. Naturally, not all these interests are complementary or neutral to each other. While all activities of a firm affect some interests, it is the novelty of an innovation that makes it particularly difficult to foresee which interests may arise and which stakeholders may voice concerns. Interests may lead to actions of the affected parties or to interactions amongst parties. Discussing civil society and business engagement, Covey and Brown (2001) described four different patterns of interaction based on the nature of interests, as shown in Table 1, below. This can be applied to the engagement of a company and its stakeholders regarding innovation processes. Here, non-engagement means that stakes are not high, and co-operation means that benefits outweigh disadvantages of the innovation. The two types worth discussing are conflict and critical co-operation: in both cases stakeholders engage because they perceive conflicting interests to be high, but they may or may not be willing to co-operate, depending on whether they perceive the innovation to offer any advantage. This will be discussed later, taking examples from genetic engineering. In differentiating between converging and conflicting interests, Covey and Brown acknowledge the complexity of the parties’ relationships. However, even in the absence of conflicting interests and the presence of high converging interests (II), the parties still may have to solve conflicts owing to differences in perceptions.
Perceptions of Innovations Perception shall be defined as the process by which information is received and interpreted by an individual. The perception of incoming information involves information processing on the basis
of one’s frame of reference. Perception is subjective: not only opinions but also facts are perceived differently by various people. The following factors play a key role for the outcome of this process: • asymmetry of information between sender and receiver of information: by selecting and presenting information, the moreinformed party has an influence on the lessinformed party’s process of perceiving; • selective attention: only a small part of the available information will be processed. ‘Most of the time we are bombarded with so many stimuli that we are unable to recognise all of them. Although a few objects intrude our consciousness no matter what we do, within limits we select what we perceive . . . The process by which we select is called selective attention’ (Atkinson et al., 1993, p. 183); • cognitive dissonance (Festinger, 1957): information may challenge a person’s believes and perceptions, thereby introducing cognitive dissonance. In attempting to reduce this dissonance individuals may either discard and re-interpret information or may change their believes; • credibility of the source of information (Schiffman & Kanuk, 1997, p. 283): the significance one attributes to received information is influenced by the credibility of the source. With regard to innovations, the differences between perceptions are likely to be significant: innovations are associated with uncertainty regarding the underlying technology and regarding the acceptance, usage and diffusion in markets. Scientists and developers will be better informed about the technology, but they will be less well-informed with regard to user needs and usage patterns. Perceptions of the relevant situation (social, political-economic structures in which the new product or process is being introduced) as well as the innovation itself (benefits, problems, chances, risks) will vary. However,
Table 1. Conflicting and Converging Interests Converging interests low
Converging interests high
III Conflict I Non-engagement
IV Critical co-operation II Co-operation
Conflicting interests high Conflicting interests low
Source: Covey and Brown, 2001, p. 3.
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perceptions can be more or less similar (Table 2). A fully shared view means that parties can focus on discussing interests. The more dissimilar the perceptions, the more it is necessary to exchange information, before being able to negotiate interest. This information may be about the situation (for example, making aware of a certain problem in a population) or it may be about the innovation (innovation characteristics that address this problem).
Analysis of Position The discussion above has shown that it is the balance of converging and conflicting interests, and the similarity of perceptions regarding the situation and the innovation that provide a starting point for categorizing positions. Figure 1 lists four different positions based on interests and perceptions. The more converging (and less conflicting) interests, and the more similar the perceptions of the situation and the innovation, the less have the relevant parties (the innovating company and its key stakeholders) to confront and the more harmonious is the relationship (IV).
Balance of interests converging
III frame discussion
IV harmony
I confrontation conflicting dissimilar
II goal discussion Perceptions of similar situation and innovation
Figure 1. Types of Positions Based on Interests and Perceptions
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Dissimilar perceptions, coupled with conflicting interests (I) lead to confrontation, while dissimilar perceptions and converging interests (III) imply that parties need to discuss the appropriateness of the innovation for the given situation to accomplish the converging (or even common) interests. Here, information exchange is of paramount importance to achieve an approximation of perceptions and a similar ‘frame’ of judgement. If perceptions are similar but interests are mainly conflicting (II), the goals of the innovation may have to be put at disposal, the abandonment of the innovation being one possible outcome.
Ways of Engagement Figure 1 displays a continuum from confrontation to harmony, with one end characterized by dissimilar perceptions and conflicting interests and the other by similar perceptions and converging interests. Being confronted with opposition of key stakeholders, the innovating company could assess whether perceptions and/or interests of the opponents are different from the firm’s. Dissimilar perceptions require a dialogue about the innovation’s chances and risks for a particular environment. Thus, it entails learning about each other’s views and exchanging information to reach an approximation of views (III). Similar perceptions, but conflicting interests require the negotiation of the features and goals of the innovation (II) and involve compromising. This may lead to a revision of the innovation or even to the decision not to develop and introduce the product or process. If neither perceptions nor interests are harmonious (I) the resulting conflict may be dissolved in two steps: (1) Approximate perceptions to achieve a basis for discussion, (2) Discuss goals. But positions may be too far apart to reach an agreement. Lastly, positions characterized by harmony (IV) may require an engagement best described as ‘playing devil’s advocate’: shared
Table 2. Similar and Dissimilar Perceptions Perception of situation similar Perception of innovation dissimilar Perception of innovation similar
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Perception of situation dissimilar
Dissent about innovation
No sharing of view
Full sharing of view
dissent about situation
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Table 3. Types of Positions and Engagement Interests
Converging Conflicting
Perceptions Dissimilar
Similar
III Frame discussion: learning I Confrontation: Step 1: approximate perceptions Step 2: discuss goals
IV Harmony: Devil’s advocate II Goals discussion: Compromising
Phase 3... Phase 2 Similar perceptions, Conflicting interests Phase 1 Dissimilar perceptions Engagement: information
Engagement: negotiation
Exit
Exit
Figure 2. Phases of the Innovation process: an example views and interests bear the danger of group think (Janis, 1982), that is, the parties do not question strategies any more, and ward off challenging information. Acertain kind of engagement in a phase of the innovation process may lead to the next ‘round’ of engagement or may lead to exit the process (Figure 2). For a successful outcome of the innovation process, engagement needs to take into account the perceptions and interests present in the respective phase. If perceptions are dissimilar, engagement needs to focus on providing information. If perceptions are similar but interests are mainly conflicting, appropriate engagement implies compromising. Information does not change interests directly, but may do so through changing perceptions.
Application to the Examples The framework will be applied as follows: identification of key stakeholders, characterization of the stakeholders’ interests and perceptions, and evaluation of the outcome.
Golden Rice Stakeholders In the case of ‘Golden Rice’, scientists started with the development, and Syngenta is the
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leading company involved in the further development of golden rice. They face opposition from several NGO such as Greenpeace and the Research Foundation for Science, Technology and Ecology (RFSTE, founded by Vandana Shiva). They are ‘rejectionists’ (Osgood, 2001; p. 96), calling for a GMO-free world and are key stakeholders in that their protest influences regulators and court decisions.2 ‘Reformists’ (Osgood, 2001, p. 96) such as the Rockefeller Foundation call for a new system to ensure that plant biotechnology helps the poor. In funding projects addressing issues such as inequality and especially funding the golden rice project, the Rockefeller Foundation is a key stakeholder. Interests Syngenta, as a for-profit company, is aiming at making profit, but with regard to ‘Golden Rice’ this will be limited to rich countries. Farmers in developing countries will receive it for free. Helping developing countries may support Syngenta in building a good reputation. Furthermore, successful introduction of ‘Golden Rice’ may further the acceptance of the technology in the market place. Vandana Shiva and her organization, RFSTE, are against the introduction of any GMO and against the development and use of the tech-
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nology. They aim at preventing GMO. The key interest of the Rockefeller Foundation with regard to ‘Golden Rice’ is to make sure that it will help developing countries. Perceptions Both Syngenta and the Rockefeller Foundation see developing countries as being in need of better GM crops. Their perceptions regarding the situation are similar. Furthermore, Syngenta may see some profit opportunities in rich countries. Vandana Shiva, however, sees GM crops not only as unneccessary, but
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as being a threat to farmers in developing countries. Regarding the innovation ‘Golden Rice’ both Syngenta and the Rockefeller Foundation see the need for further research. Vandana Shiva criticizes the innovation on account of it not providing sufficient vitamin A, and describes the innovation as a Trojan horse to achieve acceptance of the technology. Evaluation of Outcome Syngenta and its stakeholder, RFSTE, are in a position of confrontation. Interests are con-
Table 4. Golden Rice: Interests and Perceptions Party
Interests re Golden rice
Syngenta
• Profit: restricted to rich countries • Reputation: help for developing countries • Political: furthering GM technology
RFSTE (Vandana Shiva)
Rockefeller Foundation (Gordon Convey)
No GMO
Help for developing countries
Conflicing
Converging
No need for GM crops
developing countries: in need for better GM crops
dissimilar
similar
• Trojan horse • Does not provide the recommended daily intake
Need for further research
Nature of perceptions
dissimilar
similar
Position
Confrontation, coupled with rejection of dialogue, positions too far apart
Harmony, need for devil’s advocate to develop golden rice as a ‘truly social’ crop
Nature of interests Perceptions re situation
• developing countries: innovation offers advantages for the poor. • developed countries: may yield profit
Nature of perceptions Perceptions re innovation
Need for further research
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Table 5. Terminator Technology: Interests and Perceptions Party
Interests re terminator technology
Monsanto
Profit: farmers would buy every season
RFSTE
No GMO
Protecting farmers from the use of the technology
Conflicting
Conflicting
Will force farmers to buy seed annually
Will force farmers to buy seed annually
Similar
Similar
Part of Monsanto’s portfolio
Part of Monsanto’s portfolio
Nature of perceptions
Similar
Similar
Position
Goals discussion, coupled with rejection of dialogue
Goals discussion, coupled with search for dialogue, result: abandonment of innovation
Nature of interests Perceptions re situation
Will force farmers to buy seed annually
Nature of perceptions Perceptions re innovation
Supplements Monsanto’s technology portfolio
flicting and perceptions are dissimilar. RFSTE rejects dialogue, thus mutual information to achieve a common perceptual basis is unlikely to be successful. Syngenta and its stakeholder, Rockefeller Foundation, are in a position of harmony: both parties agree that ‘Golden Rice’ has the potential to be the appropriate means to help farmers in developing countries. Table 4 lists interests and perceptions of Syngenta representing the innovating company, the RFSTE as key stakeholder 1 and the Rockefeller Foundation as key stakeholder 2.
Terminator Technology Stakeholders In the case of ‘Terminator Technology’, Monsanto got access to the technology through buying the company involved. From a technical point of view, the technology was ready to be applied. Monsanto faced opposition not only from the rejectionists (GMOfree world) but also from reformists, scientists and farmers. Again, especially the RFSTE (Vandana Shiva) and the Rockefeller Founda-
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tion took an active role in the discussion; this time, however, they both argued against the use of the technology. Interests Monsanto, as a for-profit company aimed at using the technology to make profit. Farmers, as Monsanto’s customers, would not be able to store parts of the harvest for sowing but would have to buy seed every season. Vandana Shiva, and her organization RFSTE, are against the introduction of any GMO and against the development and use of any GM technology. The Rockefeller Foundation wants to ensure that plant biotechnology helps the poor. Thus, they want to protect farmers from the use of ‘Terminator Technology’, because the technology would deprive farmers of traditional practices. Perceptions Monsanto, the Rockefeller Foundation and the RFSTE realize that ‘Terminator Technology’ would force farmers to buy seed annually if they are Monsanto’s customers. Also, they
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acknowledge that the ‘Terminator Technology’ is part of Monsanto’s technology portfolio. Evaluation of Outcome Monsanto and its stakeholder RFSTE are in a position of similar perceptions, but conflicting interests. RFSTE rejects dialogue, thus negotiation regarding interests did not take place. Monsanto and its stakeholder ‘Rockefeller Foundation’ are in the same position (similar perceptions but conflicting interests) but dialogue took place: Gordon Convey (Rockefeller Foundation) and Bob Shapiro (Monsanto) discussed the associated problems with the result that Monsanto abandoned the innovation. Table 5 lists interests and perceptions of Monsanto as the innovating company, the RFSTE as key stakeholder 1 and the Rockefeller Foundation as key stakeholder 2. The innovation ‘Golden Rice’ provides an example for the extreme positions of confrontation (I) with one stakeholder and harmony (IV) with another. The innovation ‘Terminator Technology’ shows that negotiating interests (II) may lead to abandonment of the innovation. While ‘Golden Rice’ still has teething problems, and R&D investments are necessary, it does offer prospects that are attractive to a variety of stakeholders and thus, market acceptance may be achieved. ‘Terminator Technology’ was ready to be used, but achieving market acceptance seemed impossible. This example also shows that dialogue may be successful for the stakeholders aiming at preventing an innovation. In the GM debate the two examples indicate that a simple ban of or adoption of the technology does not justice to the complexity of the issue.
Conclusion Innovation processes are processes of cooperation. These co-operations take place within the company and across its boundaries. With regard to innovations, the relationship between the company and its relevant stakeholders will be affected by the perceptions and interests associated with the innovation. It is argued that analysing the nature of interests and perceptions helps in creating appropriate ways of engagement, thereby helping to achieve a satisfying outcome of the innovation process. Such an outcome need not be the introduction of a product or a process into an environment: the example of the ‘Terminator Technology’ shows that conflicting interests may not be settled through adapting an innovation and that a company may be better
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off in refraining from the introduction. That presupposes that the company shares at least partly the view of its stakeholders – otherwise the parties may be stuck in confrontation. The example of ‘Golden Rice’ demonstrates that such a confrontation, if rooted in fundamentally conflicting interests and an incompatibility of views, may lead to a rejection of dialogue. However, harmony as the other extreme may not be an ideal relationship as it could lead to complacency, narrow information search and a limited view. Whereas differences in perceptions require information exchange and the willingness to learn from each other, differences in interests imply negotiation and require the willingness to compromise. The ubiquity of information asymmetry requires informing each other to be able to develop perceptions. The next step would be to rethink interests based on (new) perceptions. Analysing the nature of differences between parties creates awareness of the necessary steps to achieve a mutually acceptable outcome of the innovation process, even though of course this may not be sufficient. When debates are stagnant and minds are closed, new information may not change perceptions but may be reinterpreted to reinforce positions. The recent outcome of the largest GM field trial so far3 shows mixed results, and both sides draw support for their arguments (The Guardian 2003, The Economist 2003). A case-by-case analysis seems appropriate.
Notes 1 Some ideas developed in this article were presented at the IAMOT conference 2003 in Nancy. 2 ‘Vandana Shiva secured a temporary victory for the anti-GMO forces when she moved the Supreme Court in 1999 to stay approval of new tests of Bt cotton. The court ruled that trials should be suspended until concerns of biodiversity and safety were adequately addressed’ (Herring, 2002, p. 12). 3 The UK field trials (oil seed rape, beet and maize) were commissioned in 1999 to compare the weed control associated with GM and conventional farming and its impact on wild life. While the results for GM oil-seed rape and GM beet indicate a reduction of wildlife compared to conventional methods, the results for GM maize were the other way round.
References Atkinson, R.L., Atkinson, R.G., Smith, E.E. and Bem, D.J. (1993) Introduction to Psychology, 11th Edition, Fort Worth et al.
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BBC (1999) http://news.bbc.co.uk/1/hi/sci/tech/ 465222.stm), 5.10.1999. Beck, U. (1992) Risk society: Toward a new modernity. Sage, London. Convey, J. (1999) Rockefeller Foundation, http://www.rockfound.org, 13.10.99. Covey, J. and Brown, L.D. (2001) Critical Cooperation: An Alternative Form of Civil SocietyBusiness Engagement, IDR Report, 17(1). Faber, E.C.C. (2001) Managing Collaborative New Product Development. Twente University Press, Enschede. Festinger, L. (1957) A Theory of Cognitive Dissonance. Stanford University Press, Faber, Stanford CA. Freeman, R. (1984) Strategic Management: A Stakeholder Approach. Ballinger, Boston. Greenpeace (1999) http://archive.greenpeace. org/majordomo/index-press-releases/1999/ msg00259.html Gristock, J. (2000) Systems of Innovation are Systems of Mediation: A discussion of the critical role of science communication in innovation and knowledge-based development, Working Paper, SPRU Science and Technology Policy Research, University of Sussex, August. Herring, R.J. (2002) Promothean Science, Pandora’s Jug: Conflicts Around Genetically Engineered Organisms in India, The 2001 Mary Keatinge Das Lecture, Columbia University. Huttner, S.L. (1995) Government, Researchers, and Activists: The Critical Public Policy Interface. In Brauer, E. (ed.), Biotechnology, Vol. 12, Legal, Economic & Ethical Dimension, 2nd Edn, VCH, Weinheim. Janis, I.L. (1982) Groupthink. Boston, Houghton Mifflin Company. Massey, J.E. (2001) Managing Organizational Legitimacy: Communication Strategies for Organizations in Crisis, Journal of Business Communication, 38(2), 153–82. Mitchell, R.K., Agle, B.R. and Wood, D.J. (1997) Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts, Academy of Management Review, 22(4), 853–86. Osgood, D. (2001) Dig It Up: Global Civil Society’s Responses to Plant Biotechnology. In Global Civil Society Yearbook 2001. London School of Economics London Chapter 4, 79–107.
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Potrykus, I. (2000) The ‘Golden Rice’ Tale, posted at: AgBioView, October 23, 2000, http://www. biotech-info.net/GR_tale.html Rip, A. (2002) Co-Evolution of Science, Technology and Society. An Expert Review for the Bundesministerium Bildung und Forschung’s Förderinitiative Politik, Wissenschaft und Gesellschaft (Science Policy Studies), as managed by the Berlin-Brandenburgische Akademie der Wissenschaften. Rosenbaum, W. (1999) The Good Lesson of Bad Experience. Rethinking the Future of Commercial Nuclear Power, American Behavioral Scientist, 43(1), 74–92. Schiffman, L.G. and Kanuk, L.L. (1997) Consumer Behavior, 6th edn. Prentice Hall, Upper Saddle River. Schumpeter, J. (1912) Theorie der wirtschaftlichen Entwicklung. Duncker Humblot, Leipzig. Shiva, V. (1999) The Plunder of Nature, Synthesis/Regeneration 19 (Spring 1999), http://www.greens.org/s-r/19/19-02.html Shiva, V. (2000) GE Vitamin ‘A’ rice: A blind approach to blindness prevention, briefing paper, Research Foundation for Science, Technology and Natural Resource Policy, New Delhi Syngenta (nd) http://www.syngenta.com/en/ about_syngenta/biotech.asp The Economist (2003) GM crops, Harvest Time, 18 October 2003, 30. The Guardian (2003) Outright ban, caution or green light?, 17 October 2003, 5. Tidd J., Bessant, J. and Pavitt, K. (1997) Managing Innovation: Integrating Technological, Market and Organisational Change John Wiley & Sons, Chichester UK. Vidal (1999) The Guardian, 06.10.1999.
Ursula Weisenfeld is professor of Marketing and Technology Management at the University of Lueneburg, Germany, and Senior Associate at the Judge Institute of Management, University of Cambridge, UK. Marketing and Technology Management, University of Lueneburg, 21332 Lueneburg, Germany, Email:
[email protected]
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When Creativity is a Must: Professional ‘Applied Creative’ Services Railton Hill and Lester W. Johnson The paper argues for greater recognition of the business-to-business service process through which much applied creativity is generated. Such services are described as highly intangible, high-risk professional services, whose core is applied creativity. Advertising creative services and architectural design services are proposed as exemplars. Empirical survey evidence is presented that business consumers recognize applied creative services as being qualitatively different from other types of professional service. Through an analysis of client personal interviews and published practitioner descriptions, these exemplar services are found to exhibit great similarity in terms of delivery process. This raises a number of issues concerning the management of these services.
Introduction
A
round the world, governments are coming to recognize the importance in sheer economic terms of a range of services that can be said to exhibit applied creativity. For example, governments in the UK (Department for Culture, Media and Sprit, 2003), Australia (Create Australia, 2003), and New Zealand (Industry New Zealand, 2003) all have specialized programmes or even dedicated government organizations working to gain recognition and support for services such as music, film, craft, software, publishing, advertising and design. DCMS data from the UK has ‘creative industries’ contributing 7.9 per cent of UK GDP in 2000, employing 1.95 million Britons, and growing at an average rate of 9 per cent per annum between 1997 and 2001. This article presents empirical evidence for the recognition of two distinctive characteristics of such services amongst a key stakeholder – business customers. These characteristics are ‘centrality of creativity’ as a core benefit of the professional service and ‘perception of risk’. We argue that such recognition is no mere academic distinction. Rather, management of such creative endeavour may be enhanced by a better understanding of the service process through which such creative work is delivered. Hence we also report qualitative research which offers an analysis of the process through which applied creativity © Blackwell Publishing Ltd, 2003. 9600 Garsington Road, Oxford OX4 2DQ and 350 Main St, Malden, MA 02148, USA.
is delivered with regard to two exemplars: advertising creative services and architectural design services. Very little research attention has been given to understanding of creativity as a service product. Swartz, Bowen and Brown (1992) noted that ‘Efforts to differentially describe the characteristics of different types of services have not gone much further than contrasting professional service organizations with consumer service organizations. Certainly finer distinctions can be drawn’ (p. 17). We propose ‘applied creative services’ as highly intangible, high-risk professional services, whose core is applied creativity. This creativity is not employed for its own sake, but rather, towards the achievement of some other (usually commercial) purpose. Other examples include various forms of professional writing, and a range of design tasks, from web-page design to architectural design. Such services will usually be present in a business-to-business context, such as advertising creative services or architectural design. However, applied creativity is also evident in consumer settings such as portrait photography, domestic architectural design and even in the activities of the local tattoo artist. In searching for business-to-business services of this type, many types of professional management services would appear to exhibit some kind of ‘creativity’. The element of applied creativity – an element of artistic
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(visual, language) or craft inventiveness, employed for a specific practical (and probably commercial) purpose other than its own sake – would seem to be a differentiat-ing factor. Such applied creativity could be expected in services such as architectural design, the generation of advertising creative ideas, other design fields, corporate video production, or web-site design, in a form much more explicit and central to the service offering than in say, management consulting or accounting. This would seem to be so despite the likelihood that a measure of creativity of approach may be highly valued in the resolution of many types of management problems.
application of Lovelock’s typology is largely made in relation to advertising creative services, but we suggest it applies equally well with regard to architectural design. These services are:
Exemplar Applied Creative Services: Advertising Creative Service and Architectural Design
• the immediate recipient of the service is a specific person or buying group, but it is the advertiser’s brief, encompassing positioning and other product and target information – basically, various types of intellectual property, a highly intangible asset – which is acted upon, rather than the client’s physical person; • there is typically a formal relationship via contract, often very long lived, and; • a relatively continuous delivery of the service in the case of major advertisers (probably less so with architects); • there are ideally high levels of customization of service by the service provider, with a large amount of judgement available to agency/architect contact staff; • advertising creative and architectural design services are certainly people-(rather than equipment-) based.
Advertising creative product, while having features in common with other business-tobusiness professional service products, is distinguishable by its core benefit of applied creativity. The creativity employed is not incidental to the generation of business solutions, but is itself the desired outcome, keyed to strategic communication aims. One definition of the output component of advertising creativity is the ‘big idea’ that underpins a campaign. Rossiter and Percy offer an informal definition of the creative idea as ‘the choice of an interesting way to express the brand position in an advertising format’ (Rossiter & Percy, 1997). They also offer a formal definition – ‘an attention-getting and catalytically relevant representation of the brand position, generated in a form detailed enough to be executed and tested, and amenable to multiple executions’. Specific ‘executions’ involve particular expressions of the creative idea, which serves as a ‘generic script’ for a variety of executions. The concept of ‘Just Do It’ executed by the Nike company in so many and various ways, and across various media, provides a ready example. Service products can be classified according to a variety of methods. Shostack (1977) offered the intangibility of the product as a defining characteristic, proposing a continuum that placed goods at one end, pure services at the other, with most products falling in between. The implication is that some ‘service’ products, the creative services under discussion being one example, are more intangible than others. Drawing on Lovelock’s (1983) typology of services, the applied creative services delivered by advertising agencies or architects can be classified as follows. The
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• predominantly intangible. Despite the production of visible or audible materials for use in a client presentation, and ultimately (at a much later stage) for exposure to end consumers, such materials are the end product, the output, of an extensive interactive service process. Such materials are simply representations of ideas, product positioning, and ‘creative ideas’ as discussed above, that may or may not go forward to later detailed production/building;
These services present as high involvement, high cost, business-to-business purchases, of enormous importance to both organizations involved, and to the careers of all the stakeholders. While the service provider (agency/architectural firm) choice can be the subject of search attributes such as performance on previous assignments and industry reputation, the actual service product is very high in credence attributes. That is, as demand for service is derived from its ultimate effectiveness in communication later with end consumers, or from the ultimate utility of a building not yet in existence, it will be very difficult to evaluate the service confidently even immediately after receipt of the service (e.g. via a series of storyboards or a draft building plan). Experience attributes, especially those that can be evaluated during the service process, may therefore assume enormous importance to the advertiser in its accept/reject decisions on work presented (Bateson, 1989).
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The high credence and experience attributes, and low search attributes concerning the creative product/design lend a strong perception of high risk to clients in the purchase of this product. Of Kaplan, Szybilo and Jacoby’s (1974) seven types of purchase risk, risk associated with consequence and uncertainty, as well as financial, performance, social and psychological risk all seem to be present.
Methodology: Overview A combination of qualitative and quantitative methodologies are used in this study. An empirical survey examines the perceptions of senior advertising managers in client companies concerning their perceptions of the ‘riskiness’ and ‘centrality of creativity’ with regard advertising creative and architectural design services, relative to other professional services, in a business-to-business context. The process of advertising creativity delivery is also examined via a series of in-depth interviews with senior advertising client practitioners. Architectural design services delivery is examined via analysis of a detailed discussion of such services published by a relevant professional association. More methodological detail is provided below.
Empirical Study: Risk Perception and Centrality of Creativity for Professional Services – the Client View A useful starting point towards empirical testing of any merit in the delineation of a ‘professional applied creative’ category of services was undertaken as part of a major study within the Australian advertising industry (Hill & Johnson, forthcoming). The assumption here is that no theoretical difference between service categories is likely to be of much practical importance if clients do not perceive it as real and significant. Hence, it was decided to test for differences in client perceptions between the two exemplar services discussed above and other professional business services. First, a direct measure of the (client) perceived centrality of creativity to the service was taken. Second, a measure was taken of ‘riskiness’ in purchase of the various professional services.
Operationalization of Constructs Respondents were asked ‘how important is the ability to generate original creative ideas in the
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service of client needs in each of the following professional services’ (management consulting, architectural design, legal, advertising creative services, accounting, IT and multimedia services) using a seven-point Likert scale anchored at 1 = ‘very important’ and 7 = ‘irrelevant’. They were also asked to rate the purchase of each of the same professional services on the level of risk involved in the purchase, with a similar scale anchored at 1 = ‘a very low risk purchase’ and 2 = a ‘very high risk purchase’.
Sample and Survey Method The study utilized a database of Australian advertising managers dealing with annual advertising spends amounts of $1m or more. The database was developed using commercially available data, and qualified by a laborious process of actually checking via telephone with personnel in each company identified concerning the correct person to whom the survey should be addressed. Advertising managers worked with a variety of titles. They moved between such titles and also between these and other marketing roles. We have considerable confidence that the survey represents the views of usually senior executives who have primary responsibility for the creative work developed for approximately the 510 top-spending organizations in Australia – major consumers of this applied creative service. In general the ‘total survey method’ of Dillman (1978) was followed. Precedents for the appropriateness of the general approach of surveying of key informants in the study of a business-to-business professional service are provided by Deshpande and Zaltman (1982, 1984, 1987) in their research on the use of marketing research by managers in consumer and industrial firms. There are similarities to the current study in both the business-to-business and profes-sional nature of the service consumed, and in the identity of the respondents whose co-operation was sought. Deshpande and Zaltman (1982, p. 16) used a key-informant approach identical to the current study, simply stating that these respondents ‘worked most closely with the researchers contracted for a particular project’. The measures were taken via a questionnaire at the time of sign-off between the client advertiser and the agency of the initial creative brief. Potential participants were given full assurance of anonymity, in terms of nonidentification of individual respondents and of their organizations in subsequent reportage. Following Jobber and Reilly’s (1998) recom-
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mendations, feedback was offered on the overall (aggregated) findings, and extensive phone follow-up was made.
Survey Findings Extensive profiling data collected on both the respondent managers and on their companies is important in that it suggests the survey successfully tapped into the views of a total of 202 experienced, relatively senior advertising managers within the larger (in Australian terms) advertisers. Taken together, • these findings concerning the respondent and company profiles; • the satisfactory response rates reported (52 per cent) and; • very small incidence of missing data achieved (less than one per cent), suggest that the subsequent survey responses obtained provide a valid basis for assessment of senior management perceptions of the relative levels of risk and centrality of creativity perceived by them regarding the various professional services named. Respondents strongly support the description of advertising creative services as being high in perceived risk, more risky than any other professional business service examined (Table 1). T-tests (Table 2) show that the respondents perceive advertising creative services to be significantly more risky than all other services, except for multimedia services and information technology services. In the cases of multimedia and info technology services, there is a difference, but not at a level >0.05). Advertising creative services are even perceived as more risky than architectural design services, which are seen as more risky than legal or accounting services. In addition, respondents affirm the importance of applied creativity, defined specifically
as ‘the ability to generate original creative ideas in the service of client needs’, as being of particular importance to advertising creative services. Tables 3 and 4 indicate that applied creativity, so defined, is judged as more important to the service of advertising creativity, as closer to its core, even than a number of other services obviously concerned with creativity such as multimedia. It is much more central to the service than is the case in management consulting, information technology, legal or accounting services. Architectural design services, the second exemplar offered here, are also seen as having applied creativity at their core to a greater extent than other professional services such as legal or accounting services, significant at <0.05. These findings provide empirical support, for the first time, for our contention that applied creative services are perceived by clients as distinctive relative to other professional business-to-business services in terms of both riskiness and centrality of creativity to product core. Table 1. Perceived Risk: Categories of Businessto-Business Professional Services Perceived Risk: services Advertising creative services Multimedia services Information technology services Management consultation services Architectural design services Legal services Accounting services
Mean
SD
4.90 4.71 4.70
1.41 1.41 1.53
4.64
1.34
4.43 4.12 3.41
1.44 1.68 1.59
(n = 202; Scale minimum = 1 maximum = 7.)
Table 2. Risk Perceptions in Professional Services: Paired Samples (t-tests) Paired differences
Pair 1 Pair 2 Pair 3 Pair 4 Pair 5 Pair 6
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Multimedia services Information technology services Management consulting services Architectural design services Legal services Accounting services
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Mean
SD
0.20 0.20 0.26 0.47 0.78 1.50
1.67 1.91 1.74 1.77 2.02 2.06
t
df
Sig. (two-tailed)
1.670 1.522 2.139 3.807 5.491 10.324
201 201 201 201 201 201
0.096 0.130 0.034 0.000 0.000 0.000
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Qualitative Studies Advertising Creative Services A qualitative study (Hill & Johnson, forthcoming) involving transcription and content analysis of eleven extended on-the-job indepth interviews with the responsible executives in major Australian advertisers has provided a detailed picture of how this professional applied creative service is commissioned and delivered. It is clear that in the major campaigns that were the focus of the study, a complex interactive process occurs between advertising clients and agency staff. With some variations, this process followed a definite, but also flexible, series of stages. These began with a process of role definition between the client and agency and the recognition of a commu-
Table 3. Perceived Importance of Creativity and Type of Business-to-Business Professional Service Importance of applied creativity: services Advertising creative services Multimedia services Architectural design services Management consulting services Information technology services Legal services Accounting services
Mean
SD
6.02 5.46 4.97 4.63
1.77 1.73 1.69 1.72
4.35
1.63
3.81 3.58
1.74 1.70
(n = 202; Scale minimum = 1 maximum = 7.)
nication need, problem or opportunity within the client organization. Research occurs at an early stage, before the development and signoff within the client (advertiser) organization of a written brief. While tendering was sometimes called for this brief, it was typically presented to one or a small number of agencies with whom the client had previously defined interactive relationships. Following presentation of this brief, usually face-to-face, the agency translated the brief for its internal needs. Rather than a one-off presentation, a process of interactive brief refinement was the pattern, with much ‘too-ing and fro-ing’ between the agency and client within a sub-process of ‘structured information transfer’ (Hill & Phelan, 1999). Two to eight weeks after initial presentation of the brief – the mean time was 3–4 weeks – a formal presentation of creative ideas results. This triggers a period of client consultation with internal stakeholders and (rarely) concept testing research. There may be reiteration of the later stages of this process if the client rejects the creative idea(s) presented, leading to further presentations. Ultimately however, the realities of major campaign deadlines and the original communication need identified will ensure acceptance of a selected creative idea. This is a critical decision on which both campaign success and typically very major financial commitments will depend. The interviews performed specifically attempted to probe the criteria which advertising managers are bringing to bear in this decision. Overall, the message seemed to be twofold. First, is this creative ‘on brief, on time, on budget, and within my “comfort zone” ’? That is, there is a specific outcome sought, as one criterion. Second, the managers interviewed seemed very concerned with the process that has taken place.
Table 4. Importance of Creativity Perceptions in Professional Services: Paired Samples (t-tests) Paired differences
Pair 1 Pair 2 Pair 3 Pair 4 Pair 5 Pair 6
Multimedia services Architectural design services Management consulting services Information technology services Legal services Accounting services
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Mean
SD
0.56 -1.05 -1.39 1.67 -2.21 2.44
1.24 1.81 2.07 2.12 2.55 2.62
t
6.429 -8.224 -9.535 11.228 -12.334 13.244
df
Sig. (two-tailed)
201 201 201 201 201 201
0.000 0.000 0.000 0.000 0.000 0.000
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It can be observed how the above delivery sequence of advertising creative services seems to embody many aspects of what we know about the creative process. For example, it included stages closely paralleling those of problem finding, emersion, idea generation, and idea validation/application, as researchers have suggested characterises the process of creativity itself (Amabile, 1988; Ausebel, 1978; Golann, 1963; Guilford, 1962; Staw, 1990). This issue is taken up in the discussion section below. The question remains as to whether such characteristics as described above in relation to advertising creative services are unique, or whether they can be generalized to other applied creative services. As a preliminary step towards broader research on this question, content analysis was performed of a detailed discussion of the architectural design services published by a relevant professional association.
Architectural Design Services A review of literature in architectural design and other design services was undertaken, in a search for analogous processes. The Royal Australian Institute of Architects published a booklet (RAIA, 1994) designed to introduce the services of the architect. This provides an official, inside view of the professional services offered by architects. Architectural services seem to exhibit a frequent element of creativity, in this case in the utilization of space and form rather than of (advertising) copy and image, such creativity being a core element of the service provided. As with advertising creative services, this creative core of the product is used purely in the attainment of the specific needs of a client. According to the RAIA, architectural services range from advisory and design services prior to the completion of full plans and specifications to a range of project management, advisory and supervision services that can take the building project through to completion. An early task for clients of architects, like clients of advertising agencies, will be to carefully consider the extent and nature of the role(s) to be undertaken by the architect and the client respectively. To fail in this early roledelineation task when both architects and agencies offer such a range of services and an apparent willingness to take on an apparent leadership role in the particular undertaking would seem to invite considerable potential conflict in both cases. The role of architect seems to encompass a mix of the roles of account director, creative or creative director and planner, as well as some
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aspects of the advertising management role in the client company (RAIA, 1994, p. 19). The RAIA states that ‘architects are trained to interpret and develop your ideas and to transform them into reality’. This equates very closely to the role of advertising creatives in transforming product, consumer and positioning information of clients into creative ideas that can form the basis of a campaign. The ideas dealt with at an early stage, when schematic designs may be roughly and iteratively produced (RAIA, 1994, p. 11) seem equally intangible and to necessitate a highly interactive briefing process similar to that found in the advertising creative process. The RAIA (1994, p. 8) also states that ‘the ultimate success of your project depends on the quality of your brief . . . your ability to clearly describe for your architect the requirements and functions of your building . . . It is essential that you are specific . . . (about) your budgetary constraints’. This is a virtually identical notion to that of the structured information transfer process delineated as essential for successful advertising creative work by both agency creatives and their clients (Hill & Phelan, 1999). Furthermore, both the fully interactive nature of this process and the desirability of its thoroughgoing and structured nature is underscored in a section headed ‘You Are Part of the Team’. This discusses the need for ongoing client–architect communication and urges the use of written agreement forms, pro-formas for which are offered. Amongst other possible responsibilities outlined, an architect and client are urged to participate in an early period of discussion on the nature of the project, and to consider a variety of factors that must be taken into account including timing and budget. This discussion is very much akin to the situation analysis that will be undertaken prior to the briefing in of an advertising campaign. The architectural schematic design process is designed to yield ‘initial design options for you to consider’ (RAIA, 1994, p. 10). This shades over time, and prior to the commissioning of the actual building work, into a phase of more-detailed design development. Lastly, an agreed architectural design and set of specifications are mutually signed off as ready to go into an actual building project. Again, this whole process is largely analogous to the process that leads up to final acceptance of creative advertising ideas(s) that go forward into production. There are even quite close parallels to the types of mandatory and often legal requirements which advertising agencies must take into account in the creative work which they develop, such as conformance to the requirements of truth in advertising and other rele-
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vant legislation. In the case of the architect these include conformity to the requirements of various planning authorities. As an official publication of the leading national professional association for Australian architects, designed to educate potential clients, this material should offer a reliable internal view of how architects see the nature and operation of their service. It offers a view of a service that, in the same way as advertising creative work, seems to manifest a core benefit of applied creativity within a highinvolvement, high-cost product. At the early design and planning stages it appears to be extremely intangible, high on credence characteristics, and highly interactive. It appears to follow closely the process delineated by research with advertising clients. All of these comments are stated to apply at the early design stages only. At later stages the products of architectural design can be seen as tangible, indeed, ‘concrete’, in a way quite opposite to the often fleeting images and sounds of mass media advertising. Yet in the beginning, both buildings and advertising campaigns exist only as sketchily expressed ideas in response to client needs. A key finding from the above analysis is that architectural design, as described by the appropriate professional body, exhibits many features in common with advertising creative services. The similarities, in terms of the sequential process that clearly forms a major part of the performance of this service, are in fact quite striking. A preliminary delineation of roles, a structured transfer of information, and processes of reinterpretation and presentation are central to both services. Furthermore, the application of classificational/ descriptive frameworks such as those of Lovelock (1983) or Thakor and Kumar (2000) appears to produce very similar profiles for both services. Taken in association with evidence concerning business-client perceptions of risk and the centrality of creativity as the core of both services relative to other professional business services such as accountancy or management consulting, we have considerable evidence for a recognizable service product class of ‘applied creativity’.
Findings: Qualitative Studies The studies suggest that on the basis of two exemplar services, applied creativity is delivered via an extended and quite complex interactive interorganizational process. Furthermore, the delivery process follows a distinctive creative sequence which is well delineated in the creativity literature. The literature suggests that creativity can be con-
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ceived of in two ways. Firstly, it may be seen as resulting from a well-described but still not so well-understood sequence of steps, an output from a process (Amabile, 1988). Second, it may be understood as an individual psychological difference between individuals, perhaps innate but possibly also amenable to training, and linked to other traits, the output of an individual difference (Guilford, 1962, 1977). The ability to manipulate and use some variation of this process and/or these abilities on behalf of the client is the core of the creative-service product sought by clients such as advertisers. Amabile (1988), in a major review of studies on creativity, delineated a five stage creative process: 1. Problem finding: This may result from an external or internal stimulus. That is, the problem arrives, or is simply an existing interest. 2. Immersion or preparation: The motivated, aroused individual becomes immersed in the problem, recalling and collecting information as it seems relevant. 3. Idea generation: As in the case-study method taught in business schools, alternative solutions to the problem are generated. Experience, knowledge and imagination play a part. 4. Idea validation: The ideas generated are tested against their fit to the problem. 5. Application and outcome assessment: A selected solution is applied, and the results monitored. A distinctive feature of the applied creativity process which has emerged in this study however is that while stage three (‘idea generation’) seems relatively unambiguously the preserve of the creative professional (the agency creative or the architect) the other four stages are to a significant degree either shared (stages 2 and 4 – ‘immersion’ and ‘idea validation’), or are largely the preserve of the client (stages 1 and 5 – ‘problem finding’ and ‘application and outcome assessment’). Applied creativity occurs via an extended interactive process in an act of creation that is truly shared. Such creativity presents as a service that is distinctive in both its goals (the solution of a business need on the part of a client) as well as in its delivery process.
Discussion There are a number of implications flowing from the recognition that applied creativity is delivered via an interactive service process. One is that stakeholders should seek to under-
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stand the sequence and nature of the process of service delivery within which they seek such creativity. The typology offered in the introduction and the reported process description that emerged from qualitative research are steps towards such an understanding. The appearance of familiar components of the creative process in these services suggests management issues for consideration. For example, effective facilitation of this process of applied creativity will require managers to allow sufficient time for ‘problem finding’, ‘deep immersion’ and ‘illumination’ to occur. The shared nature of the process requires the effective use of structured information transfer techniques such as the footprinting of interactions (via meeting memos and the like) and the use of written briefs if mutually satisfying creative outcomes are to be achieved. It will be necessary for creative-service providers to make significant efforts to reduce client perceptions of high purchase risk. This need is mirrored on the part of clients in a need to emphasize the attainment of work outcomes that actually meet the brief, without allowing excessive influence on them by perceptions of the delivery process. Clients do need ‘on brief’ creative outcomes, not just reassurance along the way. This may be difficult within this highly intangible, highcredence service. The interactive nature of the process may have implications for the formation of customer satisfaction. Whose ‘fault’ is a poor outcome when the client is actively involved in delivery of the product, by way of initial problem definition, the provision of detailed information and an interactive and often extended process of refinement?
Research Implications The findings reported here require replication, preferably with other types of applied creativity. A key extension would see similar analysis undertaken concerning the delivery process of professional services where creativity is perceived by clients as less central, and which are seen as less risky. The current research has established two dimensions on which clients of professional services perceive genuine differences. However, are the processes of delivery of those services also substantially different? The ‘perceived centrality of creativity’ construct appears to be entirely new to the literature. Hence it requires more rigorous multi-item testing along the lines proposed by Churchill (1979). The various categories of risk proposed by Kaplan, Szybila and Jacoby
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(1974) can form the basis of extension of the work concerning risk perceptions, along with established measures of ‘credence’ characteristics. A further key extension would test the impact of these constructs on post-purchase constructs such as customer satisfaction/dissatisfaction (CSD, service quality, loyalty and word of mouth. For example, if ‘centrality of creativity’ is indeed consistently linked with a characteristic of high risk perception and credence qualities, does a good outcome provide even better subsequent satisfaction levels, quality perceptions, loyalty levels and positive word of mouth than results in product categories characterized by lower levels of risk and lower centrality of creativity? Furthermore, in the modelling of satisfaction with this type of high-credence, high-risk product, where service outcomes are difficult to assess until a very late stage, satisfaction with the quality of the interaction itself is likely to be important, and perhaps disproportionately so. Our theories of CSD formation will need to allow fully for the ‘process’ elements that are prominent in the extended interactive delivery process of these types of services. If it is important for providers to seek delivery processes that reduce risk perception, and for clients to pursue processes which facilitate the shared attainment of creative outcomes, then these processes, and not just apparent outcomes, should be included in the measurement of post-purchase evaluations such as CSD.
Conclusion Better understanding of the process of applied creative services delivery across many different fields for which creativity is central, may greatly assist both the providers and consumers of these products in attaining better work and greater satisfaction. It may be that knowledge of processes aimed at the attainment of applied creativity within business services may have application in many diverse fields – web-site design, graphic design, corporate videography/photography and many more.
References Amabile, T. (1988). A Model of Creativity and Innovation in Organizations. In Staw, B. and Cummings, L. (eds.), Research in Organizational Behavior. JAI Press, Greenwich, CT. Ausebel, D. (1978). The Nature and Measurement of Creativity. Pschologia, 21(4), 179–91. Bateson, J. (1989). Managing Services Marketing. Dryden Press, Chicago.
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Churchill, G.A., Jr. (1979). A Paradigm for Developing Better Measures of Marketing Constructs. Journal of Marketing Research, 16(Feb.), 64–73. Create Australia (CA) (2003). <www.createaust.com.au/?page=627&select=6> Department for Culture, Media and Sport (DCMS) (2003). <www.culture.gov.uk/creative_industries/default.htm> Deshpande, R. and Zaltman, G. (1982). Factors Affecting the Use of Market Research Information: A Path Analysis. Journal of Marketing Research, 19(1), 14–31. Deshpande, R. and Zaltman, G. (1984). A Comparison of Factors Affecting Researcher and Manager Perceptions of Market Research Use. Journal of Marketing Research, 21(1), 32–8. Deshpande, R. and Zaltman, G. (1987). A Comparison of Factors Affecting Use of Marketing Information in Consumer and Industrial Firms. Journal of Marketing Research, 24(1), 114–18. Dillman, D.A. (1978). Mail and Telephone Surveys: The Total Design Method. John Wiley & Sons, New York. Golann, S.E. (1963). Psychological Study of Creativity. Psychological Bulletin, 60(6), 548–65. Guilford, J.P. (ed.). (1962). Creativity: Its Measurement and Development. Scribners, New York. Guilford, J.P. (ed.). (1977). Three Faces of Intellect (2nd edn). Penguin, Ringwood. Hill, R. and Phelan, S. (1999). Expectations of Excellence in Creative Product: the Views of Senior Creatives and Advertising Clients Contrasted. Australasian Journal of Market Research, 7(1), 33–47. Hill, R. and Johnson, L. (forthcoming). Advertiser Expectations of Agency Creative Product. Services Marketing Quarterly, 25(4). Industry New Zealand (INZ), (2003). <www.industrynz.govt.nz/industry/creative-industries/> Jobber, D. and O’Reilly, D. (1998). Industrial Mail Surveys: A Methodological Update. International Marketing Management, 27, 95–107. Kaplan, L., Szybilo, G. and Jacoby, J. (1974). Components of Perceived Risk in Product Purchase; A Cross-Validation. Journal of Applied Psychology, (69), 287–91. Lovelock, C.H. (1983). Classifying Services To Gain Strategic Insights. Journal of Marketing, 47(Summer), 9–20.
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RAIA (1994). You and Your Architect. Royal Institute of Architects: Practice Services, Melbourne. Rossiter, J.R. and Percy, L. (1997). Advertising Communications and Promotion Management (2nd edn). McGraw-Hill, New York. Shostack, L. (1977). Breaking Free from Product Marketing. In Bradmore, D., Joy S. and Kimberley, C. (eds.), Marketing Visions: Classical and Topical Readings. Prentice Hall, New Jersey. Staw, B. (ed.). (1990). An Evolutionary Approach to Creativity and Innovation. John Wiley & Sons, New York. Swartz, T.A., Bowen, D.E. and Brown, S.W. (1992). Fifteen Years After Breaking Free: Services Then, Now and Beyond. In Swartz, T.A., Bowen, D.E. and Brown, S.W. (eds.), Advances in Services Marketing and Management. JAI Press Inc. Greenwich CT (Vol. 1, pp. 1–21). Thakor, M. and Kumar, A. (2000). What Is a Professional Service? A Conceptual Review and Bi-national Investigation. Journal of Services Marketing, 14(1), 63–81.
Railton Hill (
[email protected]) is Senior Lecturer in Marketing at Swinburne University of Technology, researching in the areas of services, maketing communications and social marketing. His work experience has also included marketing, consulting and training for the Australian Institute of Management-Victoria; freelance media work; small business and independent consulting experience; and work as Client Services Manager at Deakin Australia. Lester W. Johnson is Professor of Marketing and MBA Director at Mt Eliza Business School in Melbourne, Australia. He holds a PhD from the University of Connecticut. His teaching, research and consulting all focus on aspects of service marketing and management.
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Innovation, Competitive Position and Industry Attractiveness: A Tool to Assist SMEs Clive Thacker and Bob Handscombe This paper reports the development of a tool to help SMEs identify more clearly their positions in their markets and to provide pointers to strategies that might lead to increased profitability. A nine-cell matrix was constructed to form a new development based on the wellestablished General Electric Co. (GE) matrix. It was proposed that companies could be positioned in one of the matrix cells as a function of two critical business indicators – competitive position and industry attractiveness. Data were gathered from a 21-item innovation questionnaire completed by managing directors from 354 SMEs. Confirmatory factor analysis on data from the 21 items revealed two robust factors. The two factors could be labelled as the constructs ‘competitive position’ and ‘industry attractiveness’. These two constructs formed the axes of the matrix. Factor scores were calculated and used to place each company in its appropriate cell in the matrix. An individualised report was then generated and sent to each participating company. Positive feedback was received from companies who felt that the benchmarking and general pointers to strategic development included in their report provided value well in excess of their expectations.
Introduction
S
ubstantial amounts of public money are spent in attempts to achieve economic and social development in areas of below average economic performance. The simplistic answer is to innovate, but the literature guides us to be more discerning. In 1998 the Innovation Advisory Service (IAS) was set up at the University of Sheffield as a part of the University’s Technology Transfer Centre, a joint initiative of the Management School, the Department of Mechanical Engineering and the Institute of Work Psychology. The IAS was part-funded by the European Commission. The IAS was a response by the University of Sheffield to play a part in assisting SMEs in South Yorkshire to increase innovative activity and thereby increase economic activity. The IAS was particularly focused on the management issues of technological innovation. It sought to assist managers with the task of managing the human aspects of technological change and to develop tools to enable companies to innovate more successfully. There are numerous examples of how innovation breeds success and success breeds jobs.
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But what kind of innovation leads to success? Developing the right technology to match a growing market need clearly qualifies, and Fibernet’s impressive growth over the last fifteen years or so (Tidd, Bessant & Pavitt, 2001) nicely illustrates the point. More generally, there is ample evidence that companies can improve their market performance through the introduction of new products (Lucks, 1990; Souder & Sherman, 1994), the development and implementation of new processes (Kamata, 1983; Pisanno, 1996; Womack, Jones & Roos, 1991) and by offering new services (Dodgson & Rothwell, 1995; Pfeffer, 1994). What kind of company is capable of increasing its market performance? Whilst competitive advantage can come from size or possession of assets, the pattern is increasingly coming to favour those organizations which can mobilize knowledge and technological skills and experience, to create new products, processes and services (Kay, 1993). Size itself is only part of the story, and a survey of three high-tech industries (Chand & Tellis, 1998) suggests that the willingness of an organization to cannibalize from other projects is a more powerful driver of radical product innovation than firm size itself.
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There is an extensive literature that reflects the large number of factors involved in innovation. There is a complex interplay between those factors, varying with both internal and external conditions. Using evidence from a sample of 97 manufacturing enterprises, Papadakis and Bourantas (1998) suggested that the characteristics of the Chief Executive Officer significantly influence technological innovation. Although the environmental context can be very influential, the Chief Executive’s characteristics seem to outweigh environmental and internal organizational factors in the case of product innovation (Turgoose & Thacker, 2000). Numerous researchers (particularly Dougherty et al., 1998) also note the importance of organizational factors and in particular, the ‘interpretative flexibility of an organisation’ by which they mean how quickly a company can respond or how long it takes for a company to undertake a development. From a sample of 11 organizations they found a positive correlation between interpretative flexibility and sustained product innovation. Sanchez and McKinley (1998) also note the importance of internal features and concluded, in a multi-industry sample of manufacturing companies, that ‘whether or not environmental regulation inhibits or promotes product innovation seems to depend at least in part on certain internal feature of an organisation’. People and the interaction between people inevitably play a large part in enabling or restricting the innovation process. The resources available to teams do not necessarily predict overall team innovation. West and Anderson (1996) point out that whilst the quality of innovation (radicalness, magnitude and novelty) may be determined by the composition of the team involved, the overall level of innovation may be more a consequence of the team’s characteristic social processes. Burpitt and Bigoness (1997) amplify this with a focus on the issue of team empowerment. Patterson (1998) notes ‘the complex challenges confronting the managers who must ensure that their firms enjoy ongoing revenue growth opportunities’. He suggests that ‘in place of pat answers those managers require analysis and planning tools that offer clear insights into the effects their decisions have on their firms continued business success’. This is echoed by Chiesa, Coughlan and Voss (1996) who argue that success in innovation is related to good practice in the relevant management process. They suggest that the correct combination of certain core processes and enabling processes built around performance measure-
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ment systems and project evaluation procedures, gives an overall index of innovation that results in market competitive position. Factors relating to growth and competitive position are clearly of significant importance to the survival and success of SMEs, as has been succinctly stated by Bigne, Vila-Lopez and Kuster-Boluda (2000). Our research recognizes that importance and the consequent approach we have taken is described below.
The Research Approach The innovation and related literature is rich, yet national and European agencies continue to identify under-performance in the SME sector, and a need for interventions to assist. So, how might SMEs improve their performance and how might a support agency get involved? As already mentioned, the simplistic answer is for the company to innovate, but innovation takes many forms, the interaction of people is crucial and the drive must come from within the company (and usually from the top) for success to occur. Accordingly, the thrust of our research was to identify a tool that would help the senior officer or ownermanager to identify more clearly his/her company’s position in its markets and to provide pointers to strategies that would lead potentially to greater success. Our approach had three key stages, as follows: 1. To consider a matrix as a framework for representing business performance. 2. To develop a mechanism for assessing management perceptions of their company’s current condition. 3. To feed back this information, benchmarked and with generic guidance to the management of the company.
Matrix Analysis There is an established convention of viewing aspects of a company’s performance in terms of its position in a matrix. This convention has been developed by a number of highly credible organizations, including the Boston Consulting Group (BCG) and the General Electric Company (GE). Matrix representations allow the company to be viewed in terms of its performance on two discrete measures, and also in terms of the interaction between those measures. Figure 1, below, shows a simple two-by-two matrix of a company’s dominance in a market on the x-axis, plotted against industry growth rate on the y-axis.
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Market dominance
Strong
Industry growth rate
Weak
High
Low
Figure 1. BCG Matrix The axes may be reinterpreted and, for example BCG matrices can be seen with business growth rate substituted for industry growth rate and relative competitive position for market dominance. ‘Problem Child’, as a label, is sometimes replaced with ‘Question Marks’ or ‘Wild Cats’. The BCG constructs of competitiveness (or competitive position) and industry attractiveness are a very useful way of visualizing corporate strategy. If a firm’s business units are plotted on the matrix and the firm makes a projection of its future position, say in 3–5 years, time, then the matrix can help describe the scope and competitive advantage of a firm’s strategy, can assist in identifying some of the major strategic issues and can isolate some of the basic characteristics of the business. However, there are criticisms of the BCG matrix: 1. The use of a four-cell matrix is too simplistic, since the world contains middle positions as well as highs and lows. 2. Growth rate is inadequate as a descriptor of overall industry attractiveness. There are, for example, some industries with high growth rates in demand that have never been very profitable because supply has grown even faster. 3. Market share is inadequate as a description of overall competitive position, because it
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depends so heavily on a definition of the market. Mercedes has a small share of the total automobile market, but a very high share of the luxury automobile market, which may be a more relevant definition of use. A nine-cell matrix similar to that proposed by GE overcomes most of these difficulties. On such a matrix, both industry attractiveness and competitive position are composite measures that can be determined through a number of sub-factors, including growth rate and market share. The matrix we used in the present research is described below.
The IAS Matrix In the light of the arguments expounded above, it was decided to conduct the present research using a nine-cell matrix with the axes of competitive position and industry attractiveness to represent the current condition of companies as perceived by management. Figure 2, below, shows the nine-cell matrix used in the present research. GE suggested that companies could be plotted on a matrix by individual cell, or by drawing circles, the area of the circles being proportional to the size of the industry in which the various businesses compete. The pie slices within the circles reflect each business’s
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Competitive position
Industry attractiveness
Strong
Average
Weak
9
8
7
6
5
4
3
2
1
High
Medium
Low
Figure 2. IAS Nine-Cell Matrix market share. Thus we can picture a circle of reasonable size in the high row and lying across the average to weak columns. We might find that within this circle there is a very large pie shaded to denote market share. Thus we have a business that has a relatively weak competitive position yet a large market share. If the assessment is correct, then the task is to identify the factors responsible for the poor competitive position and to see whether they can be overcome at reasonable cost. Potentially this is an exciting business, but neglect could result in a fairly rapid decline in market share as the company loses out to the competition. Any business matrix has strengths and weaknesses. The BCG matrix is the simplest and requires least data. The GE model needs an appropriate analysis of sub-factors, including growth rate and market share. It is important to recognize that, in our research, the large-organization GE model has not simply been bolted on to try to meet the needs of SMEs. As Walsh and White (1981) pointed out, ‘a small business is not a little big business’. In the present research, the GE model has been adapted and significantly developed to serve as a framework that offers a level of detail appropriate to the needs of SMEs.
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There is the opportunity therefore to develop greater and greater complexity to overcome the shortcomings of the simpler matrices but with complexity comes the responsibility to obtain additional data and often these are not readily available. Consequently we felt that a matrix analysis with axes of industry attractiveness and competitive position is most appropriate, and the arguments already given seem substantially in favour of a nine-cell matrix. To recap, the nine-cell matrix illustrated above has been constructed for the following reasons: (a) A nine-cell matrix avoids the over simplicity of the four-cell BCG model, while at the same time providing companies with a necessary and sufficient amount of valuable information. (b) The competitive position occupied by a company is fundamental to that company’s successful development. The attractiveness of an industry incorporates information vital to a company’s continuing growth and success. Consequently both were deemed to be appropriate axes for the matrix.
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(c) As argued above, the interaction between competitive position and industry attractiveness has a direct bearing on a company’s successful development. Consequently the information provided by placing a company in one of the matrix cells can be of significant value to the senior management of that company.
Assessing SME Management Perceptions of Industry Attractiveness and Competitive Position Industry Attractiveness Industry-attractiveness criteria are derived from three sources. These sources were established through existing literature and through interviews with 25 managing directors of SMEs, conducted by the authors prior to the administration of the questionnaire. Consequently, the axis has both conceptual and real-world validity. The three sources are as follows: 1. The objectives and characteristics of the firm (for example, size, growth, profitability and social role). 2. The demands or constraints placed on the firm by outside influences (for example energy and environmental considerations). 3. The economic and technological characteristics of the industry (for example pricing, market diversity and structure, customer financial strength). The real problems are not in generating such lists but in restricting the number of criteria to manageable proportions and in ensuring that they are stated in sufficiently generic and meaningful terms so as to apply to all of the industries in which the firm competes. In the analysis of a single company, measurement of sub-factors may be applied in order to identify specific criteria. Such measurement should reflect as closely as possible the importance of the criteria to the objectives of the firm. Individual firms will have individual views on the importance of these sub-factors. Thus, in determining both axes for the present study, the number of factors was kept to a minimum. A key feature in successful growth is the vibrancy of the industry or industries that a company sells into. The more attractive these are in terms of size, growth rate and profitability, the greater the chance of the company growing and prospering. The key aspect is the industry in which a company competes (Porter, 1980). The measure of industry attractiveness used in the analysis is a composite
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measure of a number of key indicators, as follows: • demand predictability (demand becomes fairly easy to predict once the industry is mature, but in the growth phase can vary wildly); • growth (expected to be high in attractive, growing industries); • product and process innovation (companies are normally involved in a high degree of product and process innovation during the growth phase); • growth and investment in R&D (attractive, growing industries are the ones that generate the profit to enable company investment in R&D). Ten questions, based on five dominant themes, were generated. The responses to these questions reflected the perceptions of the managing directors and owner managers of the target companies. The themes were as follows. Growing industries: 1. 2. 3. 4. 5.
have relatively high levels of competition; have an unpredictability of demand; encourage product innovation; encourage process innovation; require investment in R&D.
Competitive Position The foundation of a firm’s competitive position is the set of capabilities (material resources, human skills and relationships and relevant knowledge) the firm uses to build the product features that appeal to the market place (Clark, 1987). Again, to do this assessment for an individual company needs the involvement of the firm’s top management, followed by a careful analysis of all the sub-factors. The simpler four-cell matrices have market share as an axis. Longitudinal studies of market share may well be revealing but a snapshot of current market share is not an adequate indicator of long-term profit potential, though there is a strong positive relationship between profitability and market share. The measure selected was a composite of key indicators derived from existing literature and through interviews with 25 managing directors of SMEs, conducted by the authors prior to the administration of the questionnaire, as was the case for industry attractiveness. Consequently, the axis also has conceptual and real-world validity. The key indicators identified were as follows: • high market share (successful companies seek to dominate in their chosen market);
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• new product activity (successful companies have the competencies and capability for new product development); • position in value chain (successful companies seek to move up the value chain); • investment characteristics (a clear sense of competitive mission [helps form] the foundation of effective investment decisions (Clark, 1987); • intellectual property management (competitive companies are alert to the value of intellectual property rights); • customer focus (competitive companies try to anticipate demand); • use of networks (competitive companies realize the value of collaboration and external inputs). Eleven questions, based on seven dominant themes used for the analysis, were generated. The dominant themes were as follows. Competitive companies: 1. 2. 3. 4. 5. 6. 7.
have a high market share; launch new products successfully; are not sub-contractors; regularly invest in the future; are active in patents and trademarks; respond to customer demand; collaborate with others and use networks.
Using the above approach it becomes possible to plot the sampled companies in a matrix. Simple coordinates were used to position the companies (rather than the more complex but possibly less transparent method of drawing circles based on market size). The process used to derive the coordinates is described in the Method section, below. A matrix approach of this nature is extremely useful in feeding back to the company general indications as to whether they appear to behave in broad groupings that may be given the tags ‘winners’, ‘losers’, ‘question marks’, ‘profit producers’ and ‘average businesses’. The matrix is also valuable for plotting the movement of a company over time, and to give it some measure of how the actions it takes translate into its perceptions of competitive performance. For the participating companies, then, the questions are, what sense can be made of the information about competitive position and industry attractiveness? Can we determine which companies suggest the most potential for intervention? What is the most useful feedback we can provide to the companies based on our analysis of their current business performance? How do we separate them into ‘hot shots’ and ‘bottom bouncers’? The question is also one of trying to determine what is the corporate strategy of the companies and then
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aligning ourselves with those whose strategy provides the best chance of successful growth. The methods employed to address these questions are described below.
Methodology Questionnaire Construction As outlined above, the matrix questionnaire was devised through systematic sampling and through information gathered from preliminary-depth interviews with managing directors of SMEs to identify the key indicators of competitive position and industry attractiveness. These indicators formed the basis of 21 items that represented the constructs of competitive position and industry attractiveness. The matrix questionnaire was embedded in a larger questionnaire on product and process innovation practices in SMEs. This larger questionnaire was part of a parallel but separate research programme, the outcomes of which are described elsewhere (Hall and Thacker, 2001).
Participants Seven hundred and thirty companies were initially contacted, and the questionnaire was administered to a sample population of managing directors/owner managers from 354 South Yorkshire SMEs who agreed to participate in the research. Company size varied from 6 to 125 employees.
Questionnaire Validity Factor Analysis As a crucial step in the process of examining questionnaire validity, data from the 21 items were factor analysed using SPSS 10, maximum likelihood algorithm (Lawley, 1943). The resultant factor solution was rotated obliquely using the Oblimin method with the d parameter set at zero.
Results The Kaiser-Meyer-Olkin measure of sampling adequacy was 0.84. Only two factors of importance could be initially extracted. The extraction sum of squared loadings accounted for 52.3 per cent of the total variance, with the eigenvalues for the first two factors = 5.02 and 4.96. Table 1, below, shows the structure matrix with the salient factor loadings (>0.500) on the 21 items of the questionnaire. Figure 3, below, shows the scree plot (Cattell, 1966) from the factor analysis described above.
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0.634 0.802 0.697
labelling of the first two extracted factors as ‘competitive position’ and ‘industry attractiveness’. It was deemed appropriate to progress to the next phase of the research. This phase involved using the factor analytic results to produce coordinates for a position in the ninecell IAS matrix for each of the 354 companies in the sample.
0.742
Cell Allocation
Table 1. Factor Loadings from Structure Matrix Item allocation Competitive position Position in supply chain Relative market share Decline/growth in market share Number of new products Number of new services Success of new products Success of new services Live patents Live trademarks Response to customer demand Collaboration with others Industry attractiveness
factor 1
factor 2
0.722
Regression factor scores from each of the two extracted factors shown in Table 1, above, were computed for the 354 companies in the sample. The range of factor scores for competitive position was sub-divided to represent the three sections of the x-axis: strong/average/weak. The same process was followed to produce the three industry attractiveness sections of the y-axis: high/medium/low. Depending on where it fell within the range of the two sets of scores, each company was allocated a relative position of strong, average or weak on competitive position and high, medium or low on industry attractiveness. Those positions were then used to determine in which cell of the matrix a company should be placed. For example, if Company A scored ‘strong’ on competitive position and ‘medium’ on industry attractiveness, its position in the matrix would be cell 6, as illustrated in Figure 2, above. The next methodological step was to conduct a study to establish the concurrent validity of the matrix cell positions described above.
0.671
Concurrent Validity
0.695 0.722 0.677 0.547 0.565 0.701 0.603
factor 1
factor 2
Increase/decrease in competition Demand predictability Level of product innovation Level of process innovation Growth in product n innovatio Investment in product innovation Growth in process innovation Investment in process innovation Growth in R&D Investment in R&D
0.788 0.687 0.755 0.701 0.809
0.693 0.609 0.579
Discussion of Factor Analytic Results The scree plot generated by the analysis appears to show a clear two-factor solution to the data. The rotated factor loadings are acceptably high, and by using a conservative parameter, the loadings demonstrate a distinct separation between two separate entities represented by the questionnaire items. The KMO statistic and the percentage of explained variance are also perfectly acceptable. It was concluded, therefore, that the statistical indicators were sufficiently robust to allow confirmatory
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As Kline (1986) has pointed out, the validity of any measured construct can be examined by correlating that measure with one or more measures that are deemed to represent a similar construct. This process is described as concurrent or convergent validity testing. In the interests of rigour, concurrent validity testing was followed for the IAS matrix. As part of a parallel but separate research programme being undertaken with South Yorkshire SMEs, managing directors from 72 companies from the present research sample completed two questionnaire-based measures of innovation-related commercial effectiveness. These measures were the Innovation Checklist (Clegg & Adams, 2000), a short 30item diagnostic of SME innovation capability, and the Innovation Audit (Clegg, Adams & Hall, 2001), a larger and more comprehensive diagnostic of SME innovation activity and factors affecting that activity.
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Eigenvalue
Scree plot
Factor number
Figure 3. Scree Plot from the Factor Analysis
There are two indices measured by the Innovation Checklist, and three indices measured by the Innovation Audit that are conceptually and practically related to the IAS matrix dimensions. These are shown in Table 2. Scores for the 72 SMEs on the five indices listed in Table 2 were correlated with their position on the IAS matrix as computed from the factor scores. The correlations are shown in Table 3, below. While it must be emphasized that no claims for full psychometric properties are being made for the constructs of the IAS matrix, there are clear indications that the matrix scores have strong concurrent validity with related measures of organizational performance.
Table 2. Indices Measured by the Innovation Checklist and Innovation Audit Innovation Checklist Product innovation capability Process innovation capability
Innovation Audit Profitability External factors affecting innovation Internal factors affecting innovation
Report Generation Once each company had been allocated to its matrix cell, an individual report was generated for all companies in the sample. All reports contained a rationale for using a matrix protocol and for using the two axes, competitive position and industry attractiveness. All reports also contained a brief description of the processes used to place companies in the matrix. Additionally, and most importantly, each report was individually tailored according to the nature of the responses to the matrix questionnaire and the company’s matrix position. Attention was drawn to strengths and possible weakness in innovation activity and in other aspects of business practice that fall within the remit of the matrix. In the case of any perceived weaknesses, recommendations
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Table 3. Correlations between Innovation Checklist, Innovation Audit and IAS matrix IAS matrix Innovation Checklist product innovation Innovation Checklist process innovation Innovation Audit profitability Innovation Audit external factors Innovation Audit internal factors
0.74* 0.72* 0.81* 0.69* 0.77*
* indicates statistical significance p < 0.05
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were made for best practice and other remedial steps that could be considered by the company. Benchmarks against regional SME performance were also included in the report. Lastly, the individual report was sent to each of the 354 respondents in the sample, with an invitation to contact the IAS for any further or more detailed information.
Follow-up with Companies Just over 60 per cent of companies were given some form of personal follow-up support, at their own request, both with regard to the nature of the matrix, and the information and recommendations contained in the report. Additionally, as part of a separate project, representatives from 21 companies from the original sample attended a breakfast workshop approximately three months after receiving the matrix report. As part of this workshop, they completed the matrix questionnaire for a second time, thus presenting the opportunity to compare their company’s position in the matrix. Although this initial follow-up sample was small, it was also valuable, as the time lag between the original study and the workshop was now over nine months. It was found that 11 of the 21 companies had changed matrix position significantly and positively. In discussion with the MDs of these companies it was evident that, to some extent, they had all been considering some form of organizational change or development, and the information highlighted by the matrix report had persuaded them to focus their attention on specific aspects of competitive position and industry attractiveness. It was concluded that this shift in attention had enabled them to improve their business performance, both to their own satisfaction and as reflected by the positive change in matrix position. Clearly, 11 out of 354 companies is only a very small sub-sample, but further research is currently being undertaken and will be the subject of further communication.
Discussion and Conclusion The nine-cell matrix with its twin axes of competitive position and industry attractiveness would appear to provide companies with valuable information about key areas of business activity, information that would be unlikely to be made available through alternative, un-dimensional measures of innovative practice. The added value of the IAS matrix to SMEs, it is argued, is realized in the following.
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1. The level of detail representing the interaction between competitive position and industry attractiveness could not be found in more simplistic representations of similar constructs, such as the BCG matrix. 2. The IAS matrix provides a valuable snapshot of current company activity, and in conjunction with the report it gives clear indicators as to how that activity might be changed or re-focused to enhance innovation and business performance. 3. The IAS matrix represents a clear development of the constructs of competitive position and industry attractiveness. This development is theoretically sound, empirically valid and is of real-world value to SME management. While the initial followup sample was small, the outcome of the discussion with managing directors who had received the matrix report was both favourable and encouraging. Finally, while the research was of necessity targeted on South Yorkshire SMEs, there is no reason to believe that the model could not be usefully applied to companies across and beyond the UK. To conclude, the principal objective of the study was to develop a tool to assist SMEs to improve their business performance. In this paper we have described the tool that was developed, and we are pleased to note the very positive response from the companies who used it. As with all multi-purpose tools, ours has limitations. The choice to use just two axes based on items derived from descriptive data from a range of companies has produced information that is as indicative as it is specific. But the argument for tools is based on the understanding that the random application of any single tool will not solve a company’s problems. The solution to the problem of improving business performance, if one exists, must lie with the management of the company. However, the correct selection and use of tools may assist them in their efforts. Our experience was that owner-managers and senior officers in the companies in the sample were genuinely surprised by the value of the report they received, both in terms of the specific comments appropriate to their matrix position, and the benchmarking with the other companies involved in the study. The descriptions for each of the nine cells and recommendations for action inevitably contained some generalizations. Nevertheless, it was possible to provide sufficient individualized information to cause the manager to consider whether such a position in the matrix was acceptable and if not, to begin to think how he/she might
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attempt to move the company to a preferred position. The real value of a tool shows itself by encouraging and supporting management to think through options and take action. We hope to have demonstrated in this paper that, despite the limitations of tool-based approaches, it is possible to provide companies with clear information that can help them improve their business performance. The processes that we have used can undoubtedly be refined and improved. Research aimed to achieve these improvements is currently being undertaken and will be a matter for further communication.
Acknowledgement The research was part-funded by a European Regional Development Fund grant to gather and disseminate information on innovative practices in South Yorkshire SMEs
References Bigne, E., Vila-Lopez, N. and Kuster-Boluda, I. (2000) Competitive positioning and market orientation: two interrelated constructs. European Journal of Innovation Management. 3, 190–98. Burpitt, W.J. and Bigoness, W. (1997) Leadership and innovation among teams – the impact of empowerment. Small Group Research, 3, 414–23. Cattell, R.B. (1966) The scree test for the number of factors. Multivariate Behavioural Research, 1, 245–76. Chand, R.K. and Tellis, G.J. (1998) Organising for radial product innovation: the overlooked role of willingness to cannibalise. Journal of Marketing Research, 4, 474–87. Chiesa, V., Coughlan, P. and Voss, C.A. (1996) Development of a technical innovation audit. International Journal of Product Innovation Management, 13, 105–36. Clark, K. (1987) Investment in New Technology and Competitive Advantage. In Teese, D.J. (ed.), The Competitive Challenge. Harper & Row, New York. Clegg, C. and Adams, M. (2000) The Innovation Checklist. IWP, Sheffield. Clegg, C., Adams, M. and Hall, L. (2001) The Innovation Audit. IWP, Sheffield. Dodgson, M. and Rothwell, R. (eds.) (1995) The Handbook of Industrial Innovation. Edward Elgar, London. Dougherty, D., Borrelli, L., Munir, K. and O’Sullivan, A. (1998) The interpretative flexibility of an organisation’s technology as a dynamic capability. Advances in Strategic Management: A Research Annual, 15, 169–204.
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Hall, L. and Thacker, C. (2001) Measuring Innovation Capability in Small and Medium-Sized Manufacturing Companies. IWP, Sheffield. Hofer and Schendel, W. (1978) Strategy Formulation: Analytical Concepts. West, New York. Johnson, G. and Scholes, K. (1999) Exploring Corporate Strategy. Prentice Hall, London. Kamata, S. (1983) Japan in the Passing Lane. Allen & Unwin, London. Kay, J. (1993) Foundations of Corporate Success: How Business Strategies Add Value. Oxford University Press, Oxford. Kline, P. (1986) Handbook of Test Construction. Routledge, London. Lawley, D.N. (1943) The application of the maximum likelihood method to factor analysis. British Journal of Psychology, 33, 172–75. Lucks, B. (1990) Quality as a strategic weapon. European Business Journal, 4, 34–47. Papadakis, V. and Bourantas, D. (1998) The chief executive office as corporate champion of technological innovation. Technology Analysis and Strategic Management, 1, 89–109. Patterson, M.L. (1998) Linking product innovation to business growth. Journal of Product Innovation Management, 5, 390–402. Pfeffer, J. (1994) Competitive Advantage Through People. Harvard Business School Press, Boston. Pisanno, G.P. (1996) The development factory: unlocking the potential of process innovation. Research Technology Management, 6, 57. Porter, M.E. (1980) Competitive Strategy. The Free Press, London. Sanchez, C.M. and McKinley, W. (1998) Environmental regulator influence and product innovation: the contingency effect of organisational characteristics. Journal of Engineering and Technology Management, 4, 257–78. Souder, W. and Sherman, J. (1994) Managing New Technology Development. McGraw-Hill, New York. Tidd, J., Bessant, J. and Pavitt, K. (2001) Managing Innovation. Wiley, New York. Turgoose, C. and Thacker, C. (2000) Innovation in Manufacturing SMEs in South Yorkshire. IWP, Sheffield. Walsh, J.A. and White, J.F. (1981) A small business is not a little big business Harvard Business Review, July–August, 118–35. West, M.A. and Anderson, N.R. (1996) The innovation in top management teams. Journal of Applied Psychology, 6, 680–693. Womack, J., Jones, D. and Roos, D. (1991) The Machine That Changed the World. Rawson Associates, New York.
Clive Thacker (Clive.Thacker@sunderland. ac.uk) is Senior Lecturer at the University of Sunderland Business School. Bob Handscombe is Director of the White Rose Centre of the University of Sheffield.
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How the Emotional Climate (Field) Impacts Performance George M. Prince Independently of the creativity movement, others have demonstrated the benefits of creating positive fields. I have reviewed a number of cases involving field below and added some from my own creativity experiences. I then explore the psychological explanation of why such fields are effective and go on to the findings of recent brain research, which not only reinforce the benefits of positive fields but also throw light on the difficulty of creating them. Finally, I offer some suggestions from my own experience of what can be done to create positive fields. I believe that this should now be the focus of our efforts: to the extent that we are successful, we should get the creativity and innovation we need as a by-product.
Introduction
The Case Histories
C
The Hawthorne Effect
reativity practitioners have long been aware that one of the reasons for the effectiveness of their techniques is that they create a ‘climate’ (or ‘culture’ or ‘field’) which is significantly different from that of normal working life. The term field was derived by Kurt Lewin and states that behaviour is determined by the totality of influences on an individual in a given situation (Lewin, 1935). I prefer ‘field’ to ‘climate’ and have used it throughout this paper. The climate is a given and there is nothing we can do to change it; we have to adapt to it. ‘Field’, as in electromagnetic field or interpersonal field (as psychologists now refer to it) enlarges the concept to include the changeable factor of emotions. The ‘field’ is something we can manage, if we have the necessary skills and knowledge. Alex Osborn (the inventor of brainstorming) demonstrated in the 1930s that by applying the ‘suspend judgement’ principle, many ideas were generated, because people had been given permission to express ideas they would normally censor. From the 1960s onwards, Synectics extended that protection to the convergent phase of idea development, by introducing a developmental judgement technique (Itemised Response) and other communication and behavioural ground rules. These approaches demonstrate efforts at developing positive field.
The first hint that field was making a difference came out of an elaborate series of experiments run in the 1920s by psychologists at a Western Electric Plant, the Hawthorne Works, near Chicago. The purpose was to study the effect of changing ‘conditions’ for the workers. The first experiment involved improving the lighting. Performance improved. The workers were given more frequent breaks and performance improved again. A number of variations in working conditions were tried, and each improved performance. Then the experimenters changed all the conditions back to what they were when the experiments started. Performance continued to improve. Many other experiments were tried over the next ten years and the results came to be known as The Hawthorne Effect. It ‘suggested that any workplace change, such as a research study, makes people feel more important and thereby improves their performance’ (Mayo, Encyclopaedia Britannica, 1920). The attention of the research observers made the field more positive, the workers felt more meaningful and engaged more of their potential.
Hawthorne Experiment 2: Interpersonal Field on a Production Line Over 50 years later, I had the opportunity to train a graduate trainee from the same
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Hawthorne plant in the Synectics problemsolving and field/relationship process. On his return, he was given the assignment of increasing productivity on the hundreds of small production lines repairing electronic devices. The lines were averaging 50 per cent of ‘standard’, with a high proportion of rejections. Twelve lines were selected for an experiment. The eight women on each line were taught the problem-solving and field/relationship management process, and given responsibility for improving their productivity. In the plant hierarchy there was one supervisor for every four lines. The women’s first request was that their supervisors be removed. Their criticism and contempt had created a toxic field. Their second request was that the quality-control men be barred from personally returning rejections. The QC men made discounting comments when returning rejects and the resulting field was destructive. Then the teams focused on their own performance and interactions and within three month the experimental lines had reduced rejections to virtually zero and increased production by 300 per cent – substantially over standard.
Southwest Airlines A Texas company with 18,000 employees makes the interpersonal field of their company a primary concern. They call it their ‘culture’. President Herb Kelleher believes that love really does make the business world go round, and that laughter really is the best medicine for employee loyalty. ‘Kelleher and other members of the senior management team believe that the relationship between Southwest and its people is the key to the airline’s success’ (Boal, 1997). When strapped for cash in the early days, rather than sell one of their four planes or letting people go, employees said they could cut turnaround time from the industry standard one hour to about 15 minutes and they did, establishing a Southwest tradition that no other airline has ever approached. Today, Southwest employs just over 86 people per plane in an industry where the average is over 200. Southwest has been profitable every year since 1972, including 1991 and 1992, when every other major airline lost money. US$1,000 invested in the company in 1971 would be worth more than US$250,000 today. ‘Herb Kelleher has done a remarkable job of crafting a unique culture [field] at Southwest Airlines through a combination of humour, altruism, concern for other people, and good old-fashioned straight talk,’ says James
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Campbell Quick, a professor of management at the University of Texas.
Three Other Companies In Maverick, Ricardo Semler, a Brazilian CEO, reports on how he systematically increased respect and responsibility by giving more and more power and control to the rank and file in his company. He created a field of mutual respect. His company grew 600 per cent in the first ten years of his continuing experiment (Semler, 1993). In The New Partnership, Tom Melohn (1994) gave himself the title of ‘Head Sweeper’ and tells how he methodically changed the field of the small manufacturing plant he purchased, from the traditional hierarchy to a system of high authority, respect and responsibility for each employee. His results are impressive: Sales up by 28 per cent each year, pre–tax profit up 2,400 per cent, productivity up 480 per cent. A third company’s experience is described in a detailed application for the ‘George Land World Class Innovator Award in 1997’, which they won (Rodin, 1997). Marshall Industries was, in 1990, a large service company distributing industrial electronics. In that year Rob Rodin, the CEO, read an article by Dr Deming about his 14 points. At the time, his company was organized and operated to foster internal competition. ‘We paid everybody on an M.B.O. incentive system. We put up lists and rated our people: who was number one, who was number ten, and so forth’. They created and reinforced a field that brought out individual initiative to do one’s best for him or her self. ‘The MBO system encouraged and caused employees to distort the system in order to obtain personal and financial gain’. But Rodin was so impressed with Deming’s diametrically opposed philosophy that he became a Deming student, went to Deming courses, and consulted with anyone who had information about this different way of operating (Deming, 1986). Deming’s 14 points for transforming management rest on a single imperative, one that is totally alien to all-American love of competition and winning at all costs: Learn to live without enemies . . . getting a product to market requires the heroic cooperation of a lot of different people and departments. Treat them as valued friends rather than adversaries . . . a permanent and satisfactory relationship will save a ton of money in the long run. Deming is most lauded . . . for point number 8: Drive out fear . . . Deming alone,
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among all the management wizards, correctly identifies fear as the basis of all barriers to improving a company (Nancy K. Austin, 1991). Rodin then began taking the actions that created a field that brought out a very different kind of behaviour. ‘The fundamental and scary change that we made over a series of years was to take every one of our individual departments off their own M.B.O., off their own incentive programs and out of the commission environment. We put every single person, all 1,360 at Marshall industries, solely on salary and profit sharing. The amazing thing was that, on the day we took all of management (a thousand people who had been preparing for the change for one year) off the old system, we immediately received new levels of co-operation. Through this period our sales grew from $530 million to $1 billion. Our expenses are down, our days outstanding are down, our (staff) turnover went down by 50%, and our earnings doubled. More importantly, intangibles are up: customer satisfaction, morale, teamwork, efficiency, productivity, consistency and relationships.
Two Teams at Union Carbide In 1981, I participated in an experiment to test the impact of fields at Union Carbide. Two teams of equal talent were formed. One received training in Brainstorming, an idea-getting system. The other was trained in Synectics, an idea-getting system that included instruction in maintaining a positive field. They were given the same problem to work on: ‘How to introduce and market a new fertiliser that required some unusual procedures of application’ At the end of the problem solving-period all participants voted on the ideas developed by both teams. Those developed by the ‘field conscious’ team were unanimous choices.
Pygmalion in the Classroom Cases of changes in the field dramatically improving results are not restricted to the business world. In education, Dr Rosenthal, a psychologist at Harvard, told teachers he had developed a test to identify children who were about to ‘break through’ and become much better students. He gave the test and identified the students. At year’s end, all had ‘broken through’ and were doing much better work. He then told the teachers that the test was not significant and he had selected the students at random (Rosenthal & Jacobson, 1992). The interpersonal field of friendly attention, appreciation and expectation created by the teachers had brought out more of the students’ potential.
Interpersonal Field in Marriage The intimate relationship between the two people in a marriage is often the most important in their lives. Dr John Gottman (1994) has conducted a longitudinal study of marriages to learn why they succeed or fail. He scientifically measured the emotional responses of the partners as they discussed their daily issues. He found that if there is more than one negative moment for every five positive moments, the marriage will fail. Destructive fields are triggered by criticism, contempt, defensiveness, withdrawal and aggressiveness. I believe that this same law of five positive interactions to one negative probably applies to all relationships whether at home or in the workplace.
The Psychological Background For over 50 years, pioneering psychologists have been assembling evidence that supports the critical importance of the field in individual well-being and ability to achieve.
The Need to be Meaningful Teams at the Harvard Graduate School of Design and MIT Sloan School In virtually the same experiment as at Union Carbide, teams were formed at these two graduate schools. In 1975 and 1984. One team had Brainstorming training, the other the ideagetting plus field management training of Synectics. At MIT the results were judged by faculty members. At Harvard, an outside jury of architects was used. In both instances the field-conscious teams far outperformed their rivals.
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From infancy to old age there is, in almost all of us, an ever-present need to be treated as people who matter, who are meaningful. When that fails to happen, it speaks to some deep part of us and we withdraw a part of ourselves as we raise our defence against hurt. ‘The need to be seen, to be recognised, however it changes in the complexity of its form, may never change in its intensity . . . Meaning is, in its origins . . . a survival activity . . . Meaning depends on someone who recognises you. Not meaning, by definition is utterly lonely. Well-fed, warm and free of
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disease, you may still perish if you cannot “mean” ’ (Kegan, 1982). There are important implications for equality/inequality. To be treated as an equal says to me that I am as meaningful as you. To be treated as less than equal says I am less meaningful and seems to lead to a degree of guardedness that makes my potential less available.
Negative Field and Babies In 1951 Dr John Bowlby reported on the effect on infants of putting them in institutions where care was physically healthful but without tenderness and loving attention. In this field, the infants suffered permanent damage to IQ and their ability to relate to others (Bowlby, 1951). At about the same time, psychiatrist Dr Harry Stack Sullivan was finding that infant and child development depended almost entirely on the interpersonal field created between infant and caregiver. When the caregiver lacks tenderness and appreciation, the child develops behaviour problems and fails to realize its potential for forming rewarding relationships (Sullivan, 1953).
The Synectics® Discovery From observation and analysis of thousands of creative problem-solving groups in business, it has become clear that when the unwritten laws governing relationships are ignored, it creates a field that brings out the least in participants. ‘Those who relate through coercion, or disregard for the other person, create negative energy’ (Wheatley, 1992). The coercion or disregard does not have to be intentional – it is the perception of the recipient that is critical. The vast majority of people in our culture are hypersensitive to any demeaning action; criticism, discounting, being found wanting, rejection, etc – far more so than is commonly appreciated. Discovery of this law of discount/revenge began with an amusing incident. The group was trying to devise a new, loss-proof stopper for a wide-mouthed Thermos bottle. About ten minutes into the session, one member jumped to his feet and said, ‘I think I’ve got it!’ He waved a hand over the top of the sample Thermos bottle and said, ‘Suppose we took a thin sheet . . .’ Another member of the group, the only woman, interrupted to say, ‘That would be too expensive’. We observers were puzzled: how could she know it would be too expensive, if she did not know what the idea was? We later replayed the videotape. Earlier in the session, when the group was organizing
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itself to work on the problem, we found the answer to her later behaviour. The man who had offered the ‘thin sheet’ idea had said to the woman, the only female in the group, ‘Your handwriting is probably good, so why don’t you be the note-taker for the group’. She had perceived this as a discount, she told us, relegating her to be secretary of the group. She was aware of that, but her ‘revenge’ reaction came as a surprise to her. At the time, we thought her reaction was perhaps a reflection of immaturity; a more mature person would not be so affected by an unintended discount. However, as we began to pay close attention to anything that might be perceived as a discount, we discovered that the negative reaction was all but universal – regardless of age or position. Usually there was some form of revenge, but on occasion, the discounted person simply withdrew from participation and support. The next surprise was the great range of actions (or inactions) that were perceived as discounts. Any sort of slight or negative attention or lack of acknowledgement was enough to change the field and set the discount/revenge syndrome in motion. The great impact of discounts on field, and on performance has been largely ignored. The enormous significance of this discovery is still being born out in recent brain research. Given the unlimited opportunities for such unintended discounts in the everyday operations of businesses and other organizations, the extent of the destructive fields and the resultant defensiveness and lack of commitment by employees is hardly surprising. Another surprise was the power of the reactions. The response is totally disproportionate to the provocation, which is often (usually?) unintended (as in the example given earlier). When a person feels discounted, they do their best to conceal any sign of its impact. However, by slowing the videotape replay it is possible to observe minute changes in expression and physical attitude, and it becomes clear that something significant has happened. It is likely that their next participation will be adversarial to the offender, even if that is destructive to the purpose of the meeting.
Recent Brain Research Recent brain research throws some light on the source of these negative reactions and the reasons why defensive manoeuvres develop out of conscious awareness. In the 1990s Joseph LeDoux (1996), scientist at NYU, Michael Gazzanica (1985), Daniel Siegel (1999)
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and colleagues began to unravel the specific ways the brain deals with fear and anxiety. Incoming information from the senses is routed through an organ called the amygdala and its system. The information is scanned for two things: threat and possibilities for nurture – danger and love. When the signal says danger, the system goes into emergency. It virtually by-passes the thinking part of the brain and goes into emotional fight or flight mode. Anxiety is triggered and an electrical/chemical neural cascade in the brain produces a defensive action (see also Goleman, 1995). This defence system begins to develop in infancy. When the infant is left alone too long, it senses that it has been abandoned and goes into an emergency display of screams and wriggling to get attention. Nature, knowing that abandonment will lead to death and meaninglessness, has sensitized the infant to defend itself. An infant first experiences anxiety at about six months when s/he senses that he has been abandoned by Mother, or that Mother is gripped by anxiety, or when the infant is confronted with a stranger (Kagan, 1984). This alarm and defence system does not discriminate. Any slightest threat and it goes into action. Any abuse or neglect triggers the cascade to defensive action. As instances of abuse or neglect are repeated, the neural cascade becomes hard-wired. The threat occurs, the behaviour happens without thought. As the infant matures, the brain continues to react to threat with anxiety, but this is a painful feeling and the brain develops ‘foresight function’. It perceives threat and to avoid the dread feeling of anxiety it substitutes a defensive action. In the case of an infant, the initial defensive action is screaming and wriggling. This gradually evolves to going numb. When the ‘more experienced’ infant perceives threat of abandonment, its brain by-passes the screaming and goes directly to numb. Defensive manoeuvres develop largely out of conscious awareness and we are often unmindful of what triggers a defensive reaction. Most of us have experienced the surprising rush of anger when, as we attempt pay for a purchase, the salesperson ignores us. Road rage and wife battering are extreme examples of inappropriate responses to a perceived threat to meaningfulness. Our internal field goes negative whenever meaningfulness is threatened. ‘The brain, in other words, learns and stores many things in networks that function outside of conscious awareness. . . . What a person is and what he or she thinks, feels and does, is by no stretch of the imagination influenced only by consciousness. Many of our
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thoughts feelings and actions take place automatically, with consciousness only coming to know them as they happen, if at all’ (LeDoux, 2002, p. 10). Think of a time when, in anger, you did something less than sensible. In anger, our limbic (emotional) self is not co-operating with our thinking self. We are not operating using our full talents. Consider the consequences of this reality: when, out of awareness, we suffer a discount, we begin to operate less than optimally. Then, consider the number of such discounts in the average work day (see Figure 1). Because the amygdala is approximate rather than precise, this limbic non-co-operation will be triggered whenever any event, even remotely, conveys ‘you are unimportant’, or that demeans, discounts; suggests that one does not matter; that one is meaningless. Any action of control, domination, demand, repression or imposed restrictions tends to set in motion this powerful counterforce. Often neither party to the discount/revenge is aware that it is happening.
A Possible Way Forward If we are all so hypersensitive to anything our ‘infantile’ emotional brain wrongly perceives as a threat, as both the brain research and Synectics research and experience suggests, how best can we go about ensuring that these defensive reactions do not occur? And when they do, how can we prevent them escalating into revenge cycles? As a start, I have mapped out a catalogue of the actions that appear to trigger negative actions and hence move toward disorder in the field; and conversely those that move toward co-operation and synergy (see Figure 2). Many of these are self-evidently positive or negative, but a significant number of the negative ones are generally considered to be acceptable and indeed productive behaviours in our society. Thus to challenge, disagree and argue are thought to be ways of achieving a high level of rigour in our thinking. To ask questions is a normal way of obtaining information and clarification. Even to ‘make fun of’ is ‘only a joke’. As transmitters of the message, we need to be aware that each of these behaviours has a hidden emotional charge, which is likely to have a negative effect (however positively intended). We then have to substitute ways of achieving the desired result, without the negative emotional impact. As recipients, our task is more difficult because our negative reactions are out of our immediate awareness and
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Clues for reading Field Convey Disrespect: ‘You are unimportant’ ‘Unconscious’ defensive manoeuvres Express pessimism Preach/moralize Be judgemental Be critical Disapprove Point out flaws Disagree Argue Challenge React negatively Discount Put down Be cynical/sceptical Insist on instant precision Correct Take the ball away from Pull rank Get angry Scare/threaten Blame Name call Compete
245
Make fun of Be dominant Command Order Direct Demand Inattention Act distant Do not listen Do not join Use silence against Put the burden of proof on her/him Ask questions Cross examine Give no feedback Put on a stone face Be impatient Nitpick Interrupt Be bored Assume no value Make no connections
Figure 1. Actions that Convey Disrespect
Clues for reading Field Convey Respect: ‘You are meaningful’ Non-defensive, collaborative manoeuvres Be optimistic See value in Focus on what is going for the idea Assume valuable implications Take responsibility for understanding Waste no energy evaluating early Jump to favourable conclusions Set win/wins Make it no-lose Stay loose until rigour counts Support confusion/uncertainty Value the learning in mistakes Accept ambiguity Protect vulnerable beginnings Acknowledge Credit Be attentive Listen
Be interested Show approval Give early support Accept connect with Join Be open – wholly available Build on it Speculate along with Share the risk Take on faith Temporarily suspend disbelief Assume it can be done Share the burden of proof Listen approximately Paraphrase Deal as an equal Eliminate status/rank Give up all rights to punish or discipline
Figure 2. Actions that Convey Respect
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control. Even so, there are skills in the positive category that can be developed to neutralise the negative reaction – for example, the use of Paraphrase buys time to check whether the message we are reacting to is really what was intended.
Conclusion The clear conclusion is that it pays great dividends to create positive fields in an organization. The behaviours that generate such fields are clear. So are the behaviours that toxify the field, but these are difficult to eliminate, partly because they are widely thought to be acceptable. More seriously, these contrary behaviours are actions that originated in our brains long ago, when we were infants and children, as a defence against the anxiety triggered by fears of neglect, abandonment and abuse. The development of these actions proceeded outside conscious awareness, and they are still active and defending us against ‘dangers’ that are no longer there. Although mainly out of our awareness, each of us is exquisitely sensitive to any signal that resonates, even slightly, with long-ago anxiety about neglect, or abuse – any hint that we are not being treated as the important person we know we are. When we examine the success stories above, each illustrates an effort to treat people as special, protecting them, as far as possible, from any of the toxic actions identified. They point clearly to the direction we need to go if we are to release natural excellence of the people we deal with. In addition, we will need to devise ways to bring the defensive reactions out of the unconscious realm and make them actions that are visible and unacceptable.
References Austin, N. (1991) Dr. Deming and the Q Factor. Working Woman Magazine. Boal, J. (1997) Different Strokes Management Styles. Creative Living (Northwestern Mutual), Milwaukee. Bowlby, J. (1951) Maternal Care and Mental Health. World Health Organization, Geneva.
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Deming, W.E. (1986) Out of Crisis. MIT Press, Cambridge, MA. Gazzaniga, M.S. (1985) The Social Brain. Basic Books, New York. Goleman, D. (1995) Emotional Intelligence – Why it can Matter More than IQ. Bantam Books, New York. Gottman, J. and Silver, N. (1994) Why Marriages Succeed or Fail. Simon & Schuster, New York. Kagan, J. (1984) The Nature of the Child. Basic Books, New York. Kegan, R. (1982) The Evolving Self. Harvard University Press, Cambridge, MA. LeDoux, J.E. (1996) The Emotional Brain. Touchstone New York. LeDoux, J.E. (2002) Synaptic Self. Viking Penguin, New York. Lewin, K. (1935) A Dynamic Theory of Personality. McGraw-Hill, New York. Melohn, T. (1994) The New Partnership, Profit by Bringing Out the Best in Your People, Customers, and Yourself. Oliver Wight Publications, Essex Junction. Rodin, R. (1997) World Class Winner Innovator Award Application. Rosenthal, R. and Jacobson, L. (1968) Pygmalion in the Classroom. Rinehart and Winston, New York. Semler, R. (1993) Maverick. Arrow Business Books, London. Siegel, D.J. (1999) The Developing Mind. The Guilford Press, New York. Sullivan, H.S. (1953) The Interpersonal Theory of Psychiatry. W.W. Norton, New York. Wheatley, M.J. (1992) Leadership and the New Science. Berrett-Koehler, San Francisco.
George M. Prince is retired founder of P Inc., the first creativity research Synectics ® company and was Chairman of the company until his retirement. He and his partners originated the idea of videotaping invention groups to learn how the process of inventing occurred. Prince published one of the early books about the process, The Practice of Creativity (Harper and Row, 1970). He has continued to investigate ways of improving group effectiveness – the interpersonal field – and recent brain research, which has emphasized the part emotions play in determining the way we deal with each other.
© Blackwell Publishing Ltd, 2003
INDEX
247
Index to Volume 12 (e.g. 2/79 = number 2, page 79)
BUIJS, Jan. Modelling Product Innovation Processes, from Linear Logic to Circular Chaos 2/76 DE WEERD-NEDERHOF, Petra and FISSCHER, Olaf. Alignment and Alliances for Research Institutes Engaged in Product Innovation. Two Case Studies 2/65 GEBERT, Diether, BOERNER, Sabine and LANWEHR, Ralf. The Risks of Autonomy: Empirical Evidence for the Necessity of a Balance Management in Promoting Organizational Innovativeness 1/41 GETZ, Isaac and ROBINSON, Alan G. Innovate or Die: Is that a Fact? 3/130 HILL, Railton and JOHNSON, Lester W. When Creativity is a Must: Professional ‘Applied Creative’ Services 4/221 HONG, Jon-Chao, HWANG, Ming-Yueh and LIN, Chan-Li. Chi and Organizational Creativity: A Case Study of Three Taiwanese Computer Firms 4/202 KRISTENSSON, Per and NORLANDER, Torsten. The Creative Product and the Creative Processes in Virtual Environments 1/32 LAPIERRE, Jozée and GIROUX, VincentPierre. Creativity and Work Environment in a High-Tech Context 1/11 MAHEMBA, Christopher M. and DE BRUIJN, Erik J. Innovation Activities by Small and Medium-sized Manufacturing Enterprises in Tanzania 3/162 MCGRATH, Cathleen A., VANCE, Charles M. and GRAY, Edmund R. With a Little Help from Their Friends: Exploring the Advice Networks of Software Entrepreneurs 1/2 NOLAN, Vincent. Whatever Happened to Synectics? 1/24
© Blackwell Publishing Ltd, 2003. 9600 Garsington Road, Oxford OX4 2DQ and 350 Main St, Malden, MA 02148, USA.
OLTRA, María J. and FLOR, Marisa. The Impact of Technological Opportunities and Innovative Capabilities on Firms’ Output Innovation 3/137 PINA E CUNHA, Miguel and GOMES, Jorge F.S. Order and Disorder in Product Innovation Models 3/174 PRINCE, George M. How the Emotional Climate (Field) Impacts Performance 4/240 RICKARDS, Tudor. Synectics: Reflections of a Little-s Practitioner 1/28 SALAVOU, Helen and LIOUKAS, Spyros. Radical Product Innovations in SMEs: The Dominance of Entrepreneurial Orientation 2/94 SCHOEMAKER, Michiel. Identity in Flexible Organizations: Experiences in Dutch Organizations 4/191 SEARLE, Rosalind H. and BALL, Kirstie S. Supporting Innovation through HR Policy: Evidence from the UK 1/50 SMULDERS, Frido, DE CALUWÉ, Léon and VAN NIEUWENHUIZEN, Olivier. The Last Stage of Product Development: Interventions in Existing Operational Processes 2/109 SUNDGREN, Mats and STYHRE, Alexander. Creativity – A Volatile Key of Success? Creativity in New Drug Development 3/145 THACKER, Clive and HANDSCOMBE, Bob. Innovation, Competitive Position and Industry Attractiveness: A Tool to Assist SMEs 4/230 VISSCHER, Klaasjan and RIP, Arie. Coping with Chaos in Change Processes 2/121 WEISENFELD, Ursula. Engagement in Innovation Management: Perceptions and Interests in the GM Debate 4/211
Volume 12
Number 4
December 2003
